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ISSUED PROFIT WARNING

UAP Old Mutual posts Sh518 million loss in 2018

In Summary

• The company spent Sh324 million to retire 89 employees in 2018.

• It spent another Sh780 to cover credit.

UAP Old Mutual chief financial officer Joe Mutugu, group chief executive Peter Mwangi and general Insurance managing director James Wambugu during an Investor briefing in Nairobi on March 13, 2017
UAP Old Mutual chief financial officer Joe Mutugu, group chief executive Peter Mwangi and general Insurance managing director James Wambugu during an Investor briefing in Nairobi on March 13, 2017
Image: ENOS TECHE

UAP Holdings has posted a Sh518 million loss for the year ended December 2018, a massive hit from a Sh608 million profit after tax  recorded the previous year.

Consequently, the firm’s gross losses hit Sh480 million, a whopping 136 per cent plunge compared to Sh1.3 billion gross profit in 2017.

The insurer had in December issued a profit warning citing lower asset valuation and one off restructuring costs.

 

Speaking at the investor briefing on Tuesday, Group CEO Peter Mwangi attributed the loss to poor operating environment in Kenya and South Sudan.

"A combination of bearish performance on the Nairobi Securities Exchange, contracting economy is South Sudan, increased competition and one-off restricting cost led to the loss," Mwangi said.

The bearish performance at NSE that saw the headline NSE20 drop by more than 18 per cent saw UAP Holdings shed  Sh478 million in value while the one-off restructuring of 89 employees exerted Sh324 million on the firm’s books during the year under review.

In addition, the company spent Sh780 million provisioning for IFRS9  new financial reporting standard that took effect January last year.

Also on rise were net payable claims mostly originating from health and motor insurance segments.

Mwangi said the company is re-organising its investment profile, cutting on equities in preference for long-term investments including private and government securities.