KEY H1 2023 HIGHLIGHTS
Robust growth in operating income
- Operating Income rose 5% year on year (YoY) to AED 578 million driven by a 10.7% YoY increase in total transactions across the Group’s offerings.
EBITDA holds steady despite increased operating cost
- EBITDA came in at AED 299 million, little changed from a year ago despite a rising operating cost environment.
Bank notes and WPS are top performers
- Strong growth in Bank Notes business driven by the tourism boom and peak travel period.
- Wage Protection System supported by strong growth in the number of wage disbursals on the back of strong customer retention and acquisition.
Corporate business continues to grow, in line with expectations
- 33.9% YoY surge in the value of transactions to corporate customers, in line with Group’s efforts to boost offering to an underserved but promising segment.
Digital channels are gaining in popularity
- 31% YoY growth in number of transactions conducted across Group’s digital channels, supporting efforts to enhance customer journey and lower costs to serve.
Planning to expand into Oman through acquisition of one of the leading exchanges
- Group secures approval to acquire controlling stake in leading exchange company in Oman, in line with strategy to expand in GCC region.
Exchange unit progressing nicely with network expansion plans
-15 new Al Ansari Exchange branches opened across the UAE since H1 2022, in line with Group’s ambitions to further cement its domestic leadership position.
Reaffirming commitment to dividend in October 2023
- Board reaffirms commitment to distributing a minimum of AED 600 million to shareholders, with the first interim payment expected in October 2023
Al Ansari Financial Services PJSC (DFM: ALANSARI), (the “Group”), one of the leading integrated financial services groups in the UAE and the parent of Al Ansari Exchange, today announced its financial results for the fiscal first half (“H1”) and second quarter (“Q2”) 2023, ended 30 June 2023. Operating income for the Group increased by 5% year on year (YoY) in H1 2023, on robust demand across all products with significant contribution from offerings and services to corporate customers.
H1 2023 Financial Performance Commentary
- H1 2023 Operating Income increased 5.0% YoY to AED 578 million driven by a 10.7% YoY increase in the total number of transactions. This marks the highest six-month period operating income to date.
- The increase in the number of transactions was predominantly driven by very strong demand from the Corporate business segment underpinned by expansionary economic conditions in the UAE. It was also owed to a strong increase in the Bank Notes business including multi-currency Prepaid Cards on the back of the tourism boom and the peak holiday season. These increases were partly offset by a marginal reduction in the number of Remittance transactions.
- H1 2023 EBITDA held steady at AED 299 million compared to H1 2022 despite an increase in costs.
- Increase in costs during the period is directly related to the opening of 15 new branches since H1 2022, in line with Group’s organic expansion plans.
- Costs have also increased as a result of the rising cost environment, a factor impacting the exchange industry across the UAE.
- H1 2023 Net profit was AED 263 million, registering a 2.5% decline compared to H1 2022. The drop in net profit was predominantly driven by lowering remittance margins, higher costs as well as an increase in financing costs related to interest paid on a loan drawn in December 2022.
- CAPEX increased by 62% YoY to AED 20 million as the Group continues to invest in scaling its business, in line with its growth strategy.
- The Group sustained a healthy FCF of AED 278 million, supported by strong cash conversion.
Q2 2023 Financial Performance Commentary
- Q2 2023 Operating Income increased 1.2% YoY to AED 291 million mainly attributed to strong growth in the Bank Notes, WPS and Other services, while we saw a slight decline in the income from Remittance business.
- Q2 2023 EBITDA income declined 8.3% to AED 147 million, on the back of higher operating costs, driven predominantly by Group’s network expansion as well as generally rising costs, an industry-wide phenomenon and lower margin on the Remittance business.
- Net profit for the three-month period declined 10.7% to AED 130 million, on the back of higher depreciation charge as a result of an expansion in the branch network and increasing finance costs due to interest payment on an AED 300 million term loan drawn in December 2022.
Performance of other offerings
- Worldwide Cash Express, the Group’s money transfer operator, saw a strong 32% YoY growth in the number of transactions in H1 2023, a reflection of the strong demand for this service from corporate customers.
- The Wage Protection Services business saw a strong increase in Operating Income, up 18.5% in H1 2023 versus H1 2022. This is predominantly driven by growth in the number of newly acquired corporate customers and the increase in the number of wage disbursals.
- CashTrans, the Group’s end-to-end cash management solution, is gaining remarkable momentum, with the number of trips increasing by 32.4% YoY. The Group expects the growth momentum to continue as it ramps up operating and sales efforts within this product line and as its state-of-the-art cash center in Dubai commences operations in Q3 2023.
Dividend
- Given the Group’s strong financial and liquidity position, the Board reaffirms its commitment to distributing a minimum amount of AED 600 million as announced during the IPO, and outlined in the Prospectus, for FY 2023 to be paid out semi-annually with the first half expected to be distributed in October 2023 and the second payment to be disbursed in April 2024.
Rashed A. Al Ansari, Group CEO of Al Ansari Financial Services, commented on the results, highlighting their focus on executing the growth strategy and achieving strong financial outcomes. The UAE's thriving economy and diverse offerings led to solid demand from various customer segments, including SMEs and tourism. This sustained top-line growth was supported by quality services, value-added products, team efforts, and a recognized brand. The company's expansion efforts span domestic and GCC markets, with plans to enter the Oman market pending regulatory approvals. Investment in areas like domestic expansion, CashTrans cash management, and digital channels is driving competitive edge and cost optimization. The Board's confidence in unlocking shareholder value is evident through the distribution of a promised minimum AED 600 million in cash dividends.
Mohammad Bitar, Deputy Group CEO of Al Ansari Financial Service, expressed the company's dynamic and successful period. Notably, they're witnessing robust demand for new offerings and maintaining a leadership position in core services like Remittances and Bank Notes. The Bank Notes business thrived due to factors like increased inbound tourism, footfall in prime locations, and higher outbound travel. The Travel Card product's impressive performance reflects their commitment to meeting customer needs. Similarly, the success of WPS is attributed to customer growth and wage disbursals. The company's B2B efforts are yielding results with transactions exceeding AED 54 billion, driven by corporate demand for various services. Digital channels are growing popular, although face-to-face remittances still dominate. The ongoing cost increase is associated with expansion, Emiratisation goals, and industry trends. The new branches are expected to contribute to profitability once they break even. The Financial Stability Report by the Central Bank highlighted Al Ansari Exchange's substantial market share and contribution to operating income and net profit among UAE exchange houses. This underscores the success of the Group's efficient growth strategy.
News Source: Dubai Media Office
