UAP Holdings Plc full-year loss rises to Sh3.2 billion
UAP Holdings Plc recorded a loss before tax of Sh3.2 billion in 2019 compared to a loss before tax of Sh480 million the previous year.
The decline was mainly driven by one-off fair value write-downs on the group’s investment property portfolio due to the softening of the markets in Kenya and Uganda and prevailing operating environment challenges in South Sudan.
Excluding the property business performance, profit before tax (PBT) for 2019 was Sh1.65 billion, representing a substantial improvement compared to profit before tax of Sh847 million in 2018 on a like-for-like basis. “This was in line with the actions we as a Group have been taking to improve the operating performance,” Group CEO Arthur Oginga said.
At the business level, General Insurance Business reported a profit before tax of Sh2.33 billion representing a 133 per cent improvement over 2018.
Life Insurance Business reported a profit before tax of Sh392 million, an improvement of 113 per cent over 2018.
However, the properties business reported a loss before tax of Sh4.88 billion, representing a decline of 268 per cent.
Oginga, said net earned premiums were up 3.8 per cent in 2019, while income contribution from outside Kenya increased to 39 per cent from 36 per cent over a five-year period in line with the Group’s strategy to geographically diversify its business.
This, he said, was despite reduced contribution from South Sudan owing to the adverse operating environment.
Oginga said the net claims payable increased by 11.8 per cent, primarily driven by elevated claims experience in the Kenya Health business, due to withdrawal of NHIF coverage from several private health institutions and increased reserving across all the Group’s Health businesses.
The group’s operating expenses were up 9.1 per cent, largely due to a revaluation loss of the owner-occupied investment property portion.
In line with accounting standards (IAS 16 and IAS 40) this portion is classified as Property Plant and Equipment and therefore any revaluation losses are accounted for under operating expenses rather than investment income.
Excluding this impact, the expense growth was below inflation in line with UAP Holdings Plc focus to drive increased efficiency in its operations.