Following the publication of our previous article on the Financial Performance FY 2023 of Smart Pension Limited ("Smart Pension" or "Company"), Pensions Monitor was contacted by the Company who asked us to provide the readership with additional information on its current performance:
The (unaudited) results for H1 2024 have improved significantly:
EBITDA (that is: Earnings Before Interest, Tax, Depreciation and Amortisation) has improved to +£5.5mn (compared to -£23.8mn in H1 2023).
Half-yearly revenue has increased by 93% reaching £41.2mn from £21.4mn.
Gross profit margin has increased from 72% to 83%.
Furthermore, a spokesperson from Smart Pension added:
“It is ten years since Smart launched, and we’ve invested heavily to build the best technology solution of its kind in Keystone, which is now being used in multiple markets around the world. Naturally, building and growing a global technology business of this kind requires significant capital expenditure at its early stages. Having now reached maturity, we are at the stage of profitability, we achieved this for H1 of this year and will be profitable for the year overall. We are in the unique position of being the only platform proven to be able to deliver for the End of Service Gratuity reform market, serving many savers within the UAE and elsewhere.”
Our view (II)
The improvement in financial EBITDA performance is impressive indeed, and it is a good first sign that Smart Pension is on the path to turning the corner. However, it is important to consider the full financial picture:
Net Income (= P&L result) that includes the cost of debt, annual charge of capitalized expenditure, etc.
Apart from EBITDA, the Company incurred other significant costs in FY 2023 including:
Finance cost: £9.73mn
Amortisation: £10.58mn
Depreciation : £4.99mn
These significant costs total to ~£25mn in FY 2023 and will likely remain at similar levels in FY 2024.
Note: This is also before any other additional impairments, write-downs and other one-off costs, which have appeared regularly in financial statements of previous years. Hence in our opinion, it will be extremely challenging for Smart Pension to reach profitability in FY 2024, given the first half year’s EBITDA of +£5.5m (despite the noted improvement).
Furthermore, it is certainly true that Smart Pension is currently the only 'proven' system in the UAE for the purpose of mandatory EOSB Savings that has been deployed by Zurich Workplace Services since 2020 to administer the DEWS scheme in Dubai International Financial Center.
However, there have since been a number of other credible technology solutions that are entering the new mainland EOSB Savings market in UAE, some of which have already completed integration with approved fund managers for the mainland scheme. More on these technology developments will be announced in the coming weeks. In the meanwhile, please see our previous articles on FinFlx, Aurem, Benefitster.
In addition, there are also local insurance players to consider namely Hayah Insurance and Sukoon Insurance that are set to enter the EOSB Savings market - whether in DIFC or the mainland. We will take a closer look at their systems in due course. Hence, in our view, technology solutions are no longer limited to a single provider in the UAE which ultimately is great news for employers and employees.
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