Unfortunately Shuaa Capital did not provide pro forma comparative 2018 financials, after it acquired Abu Dhabi Financial Group (“ADFG”) in 2019, for its 2019 audited financial statements. The board of director’s report states “…comparatives within this report for the newly combined segments are not provided, as they are no longer relevant.” This seems odd, at least on the asset management side as both companies had asset management businesses during that period.

Shuaa Profit Questions

There are a number of questions regarding the profits of Shuaa Capital after it acquired ADFG.

Large drop in profits

The combined entity announced a profit of AED 45.7 million in 2019. The profit for ADFG in 2018 was AED 57.2 million and that for Shuaa in 2018 was AED 28.5 million. To calculate the pro forma consolidated profit in 2018 needs related party and consolidation information in terms of profits of 2018 profits of Shuaa derived from ADFG and vice versa. At one end of the scale, if there was no related party or consolidated profits between Shuaa and ADFG, the pro forma profits would be AED 85.7 million, i.e. the 2019 profit of AED 45.7 million is a decrease of -47% from the pro forma of 2018.

Continue reading →

In its April 11, 2019 edition The Economist magazine published an article analysing some of the region’s airlines. The logic used is flawed.

Shuaa reported a 2018 net profit of AED 28.5 million. AED 31.4 million of that is attributed to negative goodwill, an intangible asset and not part of recurring ordinary operating income. This means that if you use the market values of assets as opposed to their accounting treatment based on appraisals of the value, then Shuaa’s P/L could be considered a loss of AED -2.9 million.