The National Investor (TNI)

The National Investor is a leading Abu Dhabi-based investment management and advisory firm.
We have three principal lines of business: Asset Management, Investment Banking and Private Equity.

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Chairman’s Message

Dear Shareholders, Clients and Colleagues,

I am pleased to report the strategic turnaround initiatives that we undertook last year have allowed us to make solid progress against this agenda. 2016 was a year of good progress as we worked intensively to transform TNI and its subsidiaries to create a stronger, more efficient and more focused investment company.
2016 coincided with a period of considerable volatility in the financial, hospitality and real estate markets. In spite of these challenges, and keeping in mind that this annual report covers the financial results for the 9-months period only, we managed to deliver full year consolidated revenues of AED 105 million up from AED 81 million when compared to the corresponding period in the previous year. Overall, the group returned to profitability with attributable net income of AED 3.4 million, a significant improvement from last year’s reported net losses of AED 34.5 million. Consolidated assets stood at AED 833 million and our shareholders’ equity closed at AED 661 million.
On a segmental level, our asset management business witnessed improved profitability as a result of our rightsizing substantially being completed. Our merchant banking business is getting closer to executing our long pipeline of mandates. On the principal investments front, we have materially reduced our overall listed equities portfolio risk to a level that makes us less vulnerable to market volatility yet allows us to prosper when markets improve. It would be reasonable to expect that with an improvement in market conditions, and improved connectivity between our three core businesses lines, we will generate further momentum.
Although TNI operates in a cyclical industry and was therefore affected by what was happening in the regional landscape, we would like to put things into perspective, predominantly the matters that have adversely affected our results during the 9-months period ended 31 December 2016:
1. Colliers (a wholly owned subsidiary of TNI) announced that the court of cassation has ruled against Colliers as a result of a transaction conducted during 2007. This case was tried in six different courts over the past ten years and each court had ruled in Colliers’ favor, and accordingly no provision was required in the past. However in August 2016, we were surprised when we received a preliminary ruling that was not in favor of Colliers. Despite the fact that this case is still being appealed as of the date of the writing of this report, management has recorded a provision in the income statement of approximately AED 9.1 million. The resolution of this significant legacy litigation issue required considerable effort and patience on the part of management and employees of both TNI and Colliers. This will continue to be our first and foremost priority, and will endeavor to recover any professional indemnity insurance in the event of our appeal being rejected.

2. Abu Dhabi’s retail and hospitality sectors remain reliant on corporate demand which have been significantly affected by the decline in oil prices, reduced government spending and corporate consolidation. These sectors witnessed moderate declines in 2016, and as a result, Mafraq Hotel’s profitability came lower than expected on the back of these challenging market conditions. By virtue of the same token, these adverse conditions have negatively impacted Colliers’ overall performance, specifically the retail & hospitality divisions which became a drag on fiscal year earnings. Moreover, the aforementioned slowdown has
resulted in downturns in investment and financing options available for hospitality projects. All of this meant fewer consultancy projects and a price war between consultants during the second half of 2016 which translated to an overall reduction in both fee levels and volumes for Colliers.
During our last Annual General Assembly Meeting, I referred to a real estate project being jointly developed by TNI and LEAD Development in Masdar City’s investment and free zone. I am pleased to announce that the design and development aspects of this project are currently underway and progressing according to plan. Both TNI and LEAD have made a capital commitment of AED 150 million each over the next five years, and have already contributed AED 30 million each, representing 20% of their respective capital commitments. The total project is expected to cost AED 2 billion. The plot size is approximately 800 thousand sq.m and has a maximum GFA of 239,170 sq.m and residential components of the project will comprise 1,600 units comprising low rise apartment buildings, townhouses and villas. We project that returns will exceed 25%.

Going forward and as the regional economic situation begins to recover, we will we will focus on our key strengths in our fee generating businesses that deliver sustainable recurring income streams – private equity and merchant banking. At the subsidiaries’ level, we will also continue to focus our attention on controlling those areas that we can directly influence – starting with costs. We believe the operating leverage we are creating will provide a cushion in periods of unsupportive market conditions.

Nevertheless, we firmly believe that the UAE and regional markets hold promising growth opportunities in the medium term. As we progress through 2017, TNI remains committed to supporting the growth of the UAE’s financial services sector and will continue to take the necessary gradual and prudent steps towards achieving its strategic objectives.
On behalf of the Board of Directors, I would like to thank you for your continued trust in TNI. I’m optimistic about our future and confident in our ability to deliver value to our shareholders.

Abdullah M. Mazrui
Chairman of the Board

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