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UAP half year profit down 61pc on S. Sudan woes, retrenchment costs

The firm’s Chief Executive Peter Mwangi attributes the decline in profitability to difficult operating conditions in South Sudan and to a lesser degree in Tanzania

NAIROBI, Kenya, Aug 27 – UAP has announced a Sh190 million profit for the first six months of 2018, a 61 percent decline compared to Sh496 million in the first half of 2017.

The firm’s Chief Executive Peter Mwangi attributes the decline in profitability to difficult operating conditions in South Sudan and to a lesser degree in Tanzania as well as the restructuring exercise that saw 100 staff leave the company between January and May 2018.

“The cost of the reorganization hit Sh335 million, excluding other costs. Profit Before Tax was at Sh780.7 million compared to the current PBT of Sh445.6 Million. Additionally, an increase in deferred tax expense in some of the subsidiaries increased tax expense for the first half of 2018 which also reduced PAT,” Mwangi told Capital FM Business.

However, Life business went up by 14 percent while Investment Income grew by 11 percent in the period under review.

He said peace agreement in South Sudan gives ground for cautious optimism.

Going forward the firm is investing on digital optimization and process improvements including installation of new business systems.

“We have rolled out The Dream Enabler App to enhance interacting with customers and intermediaries. This also coincides with the ongoing brand repositioning campaign which will allow our customers experience a truly customer centric brand,” he added.

Meanwhile, Old Mutual, a UK based financial services group has entered into a Share Purchase Agreement with two key shareholders of UAP-Old Mutual Holdings.

Old Mutual will acquire a combined stake of 6 percent, equivalent to 12.7 million shares from Joe Wanjui, the Chairman and James Muguiyi, a Director at UAP-Old Mutual Holdings.

The transaction is valued at sh3.1 billion.

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Analysts at Cytonn Investments says the transaction puts the value of UAP-Old Mutual Holdings at Sh52 billion and implied transaction multiple of 2.7x price to book value.

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