UAP Posts Ksh3.4 Billion Loss in Financial Year Ending December 2019

UAP Holdings Plc has recorded a loss amounting to Ksh 3.4 billion for the year ending December 31, up from Ksh.518 million loss in 2018.

On Wednesday, May 6, UAP said that the loss before tax was KSh 3,229 million in 2019 compared to the loss before tax of KSh 480 million in the previous year.

The loss was largely driven by the overvaluation of write-downs on the Group’s investment property portfolio brought by the softening of the markets in Kenya and Uganda as well as the prevailing operating environment challenges in South Sudan. The write-downs went up by 530 percent to Ksh.3.2 billion from Ksh.604 million.

This resulted in a sharp decline in the firm’s value of property investments, which dropped to Ksh16 billion from Ksh19.8 billion in the 2018 financial year.

Further, the company’s investment income fell by 78.3 percent to Ksh.634 million to push UAP to record the loss.

The NSE listed firm had already issued a profit warning to its shareholders in anticipation of less than ideal returns on inflicted fair value losses.

“There are indicators that the weakening performance of the property market in Kenya and the uncertain political environment in South Sudan will likely lead to further impairments in the carrying value of certain investment properties,” UAP board said.

Arthur Oginga, the company’s new Chief Executive Officer stated that UAP is optimistic about the recovery of the portfolio largely supported by improving market conditions.

“We believe we have hit the bottom end of the market and are optimistic the market in South Sudan will turn supported by easing tensions. Further, we expect stronger rental yields to support growth with half of our building already consisting of fairly new units with longer leases,” he said.

The board did not declare any dividend for the second year running as the company’s earnings per share dipped further to a negative Ksh14.23 from negative Ksh1.66.

On the other hand, UAP Holdings marked growth in its core insurance business from greater underwriting as net earned premiums hit Ksh.16.1 billion in value from Ksh.15.5 billion.

Further, Nairobi’s UAP Old Mutual Tower, for instance, reached an occupancy rate of 95 percent from a previous 73 percent while the Kampala based Nakawa Business Park hit an occupancy rate of 70 percent from 38 percent

UAP expects to face greater headwinds in its core business this year as a result of the Covid-19 pandemic including higher death claims, lower business in segments such as travel insurance, and premium withdrawals from customers.