SICO BSC c : FY 2022 Financial Results

SICO BSC (c)

CONSOLIDATED FINANCIAL

STATEMENTS

31 DECEMBER 2022

Comprehensive investment services for the Bahrain and GCC securities market

Commercial registration	:	33469
Board of Directors	:	Abdulla bin Khalifa Al Khalifa
		Chairman of the Board and the Investment Committee
		Hisham Al Kurdi
		Vice Chairman of the Board & the Investment Committee
		Khalid Al Jassim
		Member of the Board & the Investment Committee
		Waleed Al-Hashar
		Member of the Board & the Investment Committee
		Mohammed Abdulla
		Member of the Board & Chairman of the Nominations, Remuneration
		& Corporate Governance Committee
		Khurram Ali Mirza
		Member of the Board & Vice Chairman of Nominations,
		Remuneration & Corporate Governance Committee
		Dana Raees
		Member of the Board & the Nominations, Remuneration &
		Corporate Governance Committee
		Tala Fakhro
		Member of the Board & Chairperson of the Audit, Risk and
		Compliance Committee
		Abdulla Kamal
		Member of the Board & Vice Chairman of the Audit, Risk and
		Compliance Committee
		Naseema Haider
		Member of the Board & the Audit, Risk and Compliance Committee
Chief Executive Officer	:	Najla M. Al Shirawi
Office	:	Bahrain World Trade Center
		Isa Al Kabeer Avenue 365, Block 316, Kingdom of Bahrain
		Telephone [phone], Fax [phone]
Bankers	:	BBK BSC
Auditors	:	KPMG Fakhro

SICO BSC (c)

CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2022

CONTENTS	Page
Chairman's report	1 - 3
Independent auditors' report to the shareholders	4 - 6
Consolidated financial statements
Consolidated statement of financial position	7
Consolidated statement of profit or loss	8
Consolidated statement of comprehensive income	9
Consolidated statement of changes in equity	10-11
Consolidated statement of cash flows	12
Notes to the consolidated financial statements	13 - 52

SICO BSC (c)

CHAIRMAN'S REPORT

For the year ended 31 December 2022

By all accounts 2022 has been one of the most challenging periods of economic, political, and environmental upheaval that we have yet to witness. The optimism fueled by the post-COVID economic recovery was quite short-lived when very early in the year Russia invaded the Ukraine. In addition to the profound humanitarian issues brought on by a war that is now entering its second year, we saw commodity prices spike, stock markets crash, and supply chain issues intensify. By mid-year we were witnessing spiraling levels of inflation that have not been seen since the 1980's. To combat the soaring prices, the FED embarked on an aggressive tightening cycle that included a total of seven rate hikes in 2022 alone. Economists worldwide sounded alarm bells to signal that the world may soon be edging towards a prolonged period of recession.

In parallel with the economic turmoil, concerns about the environment, global warming and the clean energy transition continued to mount as we witnessed record-breaking heat waves in Europe, deadly floods in Pakistan and Nigeria, and energy supply shortages perpetuated by sanctions against Russia. It was no surprise that this perfect storm did not fare well for financial markets. Global stock and bond markets experienced massive selloffs and lost trillions in value during the course of the year.

It's safe to say that it was not a good year for investors, but the GCC remained a bright spot in 2022. Markets in our region were in a relatively stronger position than the rest of the world. Most GCC countries ended the year with a fiscal surplus on the back of higher oil prices that surpassed USD 80. While global markets were largely inactive, the GCC experienced strong IPO activity in 2022, particularly in the UAE and KSA. Our region outperformed other emerging markets and remains attractive as a defensive play.

But for financial institutions like SICO, with exposure to global markets, it was an exceptionally tough year that had a negative impact on our prop book performance. However, we still managed to close the year without losses despite the global market sell-off across asset classes.

SICO reported BD 3.6 million (USD 9.4 million) in consolidated net profit, a decrease of 44% compared to the BD

6.4 million (USD 17 million) recorded at year-end 2021. The lower investment income due to market sell-offs was offset by strong growth in other interest income as well as steady brokerage and net fee income for the year. Net fee income experienced a slight decline of just 5% for the twelve-month period, reflecting lower performance fees versus the previous year. Net interest income grew 43% year-on-year to BD 2.6 million (USD 6.9 million) while brokerage and other income recorded BD 2.5 million (USD 6.6 million) compared to BD 2.7 million (USD 7.1 million) in 2021. Earnings per share stood at 8.45 Bahraini fils down from15.18 Bahraini fils in 2021 as a result of lower net profit for the year.

Solid operational performances across our lines of business are an ongoing source of pride, particularly in a challenging year like 2022. Our assets under management (AUM) hit a new record high at USD 4.8 bn on a gross basis reflecting an increase of 6% year-on-year. The SICO asset management team continues to outperform the market and to introduce new products and services in both Bahrain and KSA. Our investment banking division maintained its momentum in Bahrain with the successful completion of a large cross boarder transaction while carving out a niche in the Saudi mid-cap space, a promising segment where we can leverage our capabilities and years of experience as the investment advisors of choice in Bahrain.

We remain highly optimistic about our growth prospects in KSA, even more so now that we have completed the purchase of the remaining shares of our Riyadh based subsidiary, SICO Capital from Bank Muscat. Now that SICO Capital is a fully owned subsidiary of SICO, we are fast-tracking the consolidation between the two entities so that we can be better positioned to capture new opportunities across all our lines of business.

Heading into 2023 I believe that our ability to weather an economic downturn and to deliver recurring revenue growth is a key indicator of SICO's long term ability to perform under duress. It is what makes us

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SICO BSC (c)

CHAIRMAN'S REPORT

For the year ended 31 December 2022

a strong, agile organization that is capable of delivering positive returns for our clients irrespective of market volatility.

As we build an agile business increasing our digital adaptation across SICO's offices is a top priority and an integral component of our group strategy. Our new offices at Bahrain's World Trade Center are equipped with the most advanced systems and cybersecurity solutions but as technology continues to move forward at an exponentially fast pace, so must we.

The hallmarks of a resilient organization are preparedness, adaptability, collaboration, trustworthiness, and responsibility. SICO exemplifies all these qualities which is why I am optimistic about the future and look forward to embarking on a new era of resilient growth.

I wish to extend my utmost thanks and appreciation to my fellow Board Members, who have worked tirelessly to ensure that the interests of SICO's shareholders and stakeholders are met and that our talented management team receives that guidance and support that is necessary to navigate the volatility of the past years while staying true to SICO's core vision and strategy. All of you bring unique perspective to the table, and I am proud to be a member of such a diverse group of ladies and gentlemen.

To the senior management team at SICO, I am grateful for your hard work, dedication, and resourcefulness in the face of significant challenges. Your ability to stay the course and deliver on your targets is commendable to say the least. I look forward to our continued success across the region.

On behalf of the Board and the entire team at SICO, we would like to take this opportunity to give our humble thanks to His Majesty the King and His Royal Highness the Crown Prince and the Prime Minister of Bahrain, Salman bin Hamad Al Khalifa for the vision that they have set out for the country and the support they have given to the financial sector. Special thanks also go out to our partners and regulators, the Ministry of Finance and National Economy, the Central Bank of Bahrain, and the Bahrain Bourse (BHB) for the steadfast support they have given us over the years.

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SICO BSC (c)

CHAIRMAN'S REPORT

For the year ended 31 December 2022

SICO's Executives remuneration in BD'000

	Total paid	Total paid	Any other cash/
	in kind	Aggregate
Executive management	salaries and	remuneration
remuneration	Amount
	allowances	(Bonus)
	for 2022
Top 6 remunerations for executives,	793,900	196,000	88,770	1,078,670
including CEO and CFO

Details of SICO's Board remuneration in BD'000

Fixed remunerations

Variable remunerations

Aggregate

amount

Name

Independent Directors:

Remunerations of the chairman and BOD

Total allowance for attending Board & committee meetings

Salaries

Others

Total

Remunerations of the chairman and BOD

Bonus

Incentive plans

Others

Total

End-of-service award

(Does not include expense allowance)

Expenses Allowance

Tala Fakhro								9,091	9,000	-	-	18,091	-	-	-	-	-	-	18,091	-
Non-Executive Directors:
Naseema Haider	1				9,091	9,000	-	-	18,091	-	-	-	-	-	-	18,091	-
Khalid Al-Jassim					9,091	8,000	-	-	17,091	-	-	-	-	-	-	17,091	-
Executive Directors:
Shaikh Abdulla bin Khalifa Al Khalifa	2	18,181	8,000	-	-	26,181	-	-	-	-	-	-	26,181	-
Hisham Alkurdi	1					9,091	8,000	-	-	17,091	-	-	-	-	-	-	17,091	-
Waleed Al Hashar	1			9,091	8,000			17,091							17,091	-
Mohammed Abdulla Isa	1		9,091	7,000	-	-	16,091	-	-	-	-	-	-	16,091	-
Khurram Ali Mirza	2			9,091	7,000	-	-	16,091	-	-	-	-	-	-	16,091	-
Dana Raees	2							9,091	7,000	-	-	16,091	-	-	-	-	-	-	16,091	-
Abdulla Kamal	2						9,091	9,000	-	-	18,091	-	-	-	-	-	-	18,091	-
																				-
Total								100,000	80,000	-	-	180,000	-	-	-	-	-	-	180,000	-

1. Remuneration amount and meeting attendance allowance are paid to the account of the shareholder being represented by the respective Director
2. Remuneration amount is paid to the account of the shareholder being represented by the respective Director

Abdulla bin Khalifa Al Khalifa	Hisham Al Kurdi
Chairman of the Board	Vice Chairman

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