UAP issues profit warning on softening property prices

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UAP issues profit warning on softening property prices

The local property market has slowed down this year. FILE PHOTO | NMG 

UAP Holdings Limited has issued a profit warning citing depressed property prices and a tough environment in South Sudan, signaling the second consecutive year in loss territory.

The board said Thursday that the performance for the financial year ended December 2019 is set to drop by at least 25 percent. 

This means the firm will sink deeper into losses, having closed last year with a Sh518 million loss- the first in a decade.

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

However, the board says it expects underwriting margins and results from operations to improve as it turns around the performance of the core insurance businesses.

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Meanwhile, the firm has announced the entry of two non-executive directors- Richard Treagus and Shailesh Devchand- whose appointment became effective November 13.

The diversified financial services firm had also issued a profit warning last year citing lower asset valuations and one-off retrenchment costs. It last returned a profit in 2016 totaling Sh608 million.

The company last year cut staff head count by 89 at a cost of Sh342 million and also booked property valuation write-downs of Sh604 million due to reduced rent prices.

In addition, it wrote off Sh300 million corporate bond in ARM and a further Sh100 million it held as deposits in Tanzania’s Bank M.

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