Hisanet Africa Blog
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Uchumi out of the woods with 63M in profit
Posted: March 2, 2008, 1:24 pm by admin
On 31st May 2006 the Board and Management of Uchumi Supermarkets Ltd. Passed a resolution to cease trading and the company operations were shut down, a closure that lasted from June 1, to July 14, 2006. Following the decision, the company’s secured debenture holders were compelled to appoint Receiver Managers on June 2, 2006. Subsequently, stakeholders that included GOK, the debenture-holders, unsecured creditors and a few Uchumi shareholders spearheaded a Framework Agreement (FA) governing Uchumi revival route.
On July 14, 2006 the debenture holders under the FA appointed a Specialized Receiver Manager (SRM) who commenced reopening Uchumi retail branches for operations on July 15, 2006 with the last branch of the fourteen reopened being done on Feb 9, 2007. The SRM in consultation with an Advisory Committee crafted The Uchumi Rescue Plan (URP) that is at an advanced stage of implementation, and the successful turnaround is pinned on the URP among others.
The 2005/6 performance highlights relative to the previous year were the declining sales revenue (by 31.7%), downswing in trading margins and customer numbers, and increased debt carrying capacity resulting in higher financing costs and a recorded annual loss of Shs 751 million, culmination in to a closure of operation by end May 2006.
The operating REVIVAL year 2006/7 marked an upswing in sales revenue, and trading margins by 27% and 22.8% respectively compared to the previous year. These were despite operating fewer branches for fewer months in the year. The positive results were attributed to the implementation of the URP that included the successful re-launch of the brand and refocused and redefined core purpose and business objective. Further, in line with the FA, the business substantially met its bargain in corporate obligations to the pre-receivership creditors and current suppliers. The operating costs included one-off exit costs on facilities that were regarded as unviable to operate. The resultant performance was reduced loss of Shs 256 million from Shs 751 million in previous year.
The six months from July to December 2007 of the current operating year is a remarkable period as effects of the URP are realized. The turnaround from loss to profitability of Shs 63 million was recorded with steady decrease in loss from Sh 4.17 and Shs 1.43 per share for 2006 and 2007 respectively to profit of Sh 0.35 per share in the first six months in 2007/8. The balance sheet in terms of increased total assets and decreased current liability in the period strengthened in line with the improvement in profitability.
The positive outlook is pegged on completion of implementation of the blue print URPO including invitation of strategic equity partners, and the planned business growth in all strategic adjacencies. These will be coupled with roadmap to lifting of receivership and application for readmission to NSE, all expected in the middle of 2008.
UCHUMI SUPERMARKETS LTD (IN RECEIVERSHIP)
CONSOLIDATED INCOME STATEMENT
UNAUDITED
JULY-DEC 07
AUDITED
JUNE 2007
AUDITED
JUNE 2006
KShs ‘000
KShs ‘000
KShs ‘000
Net Sales
3,422,376
4,503,241
3,551,833
Cost of Sales
(2,790,350)
(3,694,845)
(2,907,847)
Gross Profit
632,027
808,396
643,986
Other Income
69,921
155,298
141,500
EXPENSES
Admin & Establish
(494,791)
(1,019,791)
(1,314,510)
Selling & Distrib
(48,079)
(48,339)
(54,202)
(524,871)
(1,068,130)
(1,368,712)
Profit (Loss) – Ops
159,077
(104,436)
(583,226)
Finance Costs
(96,003)
(152,124)
(167,854)
Profit (Loss) before tax
63,075
(255,560)
(751,080)
Taxation
-
-
-
Profit (Loss) after tax
63,075
(255,560)
(751,080)
Profit (Loss) per share
0.35
(1.43)
(4.17)
CONSOLIDATED BALANCE SHEET
Assets
Non-current assets
763,199
820,220
1,004,007
Current Assets
937,327
763,537
487,117
Total Assets
1,700,526
1,583,757
1,491,124
Shareholder’s Equity & Liabilities
Capital and Reserves
(1,007,937)
(1,071,012)
(813,072)
Non current Liabilities
Terms Loans
1,597,950
1,597,950
802,472
Current Liabilities
1,110,514
1,056,819
1,501,724
Total S/Holders Fund & Liab
1,700,526
1,583,757
1,491,124
Blah blah blah
Fish cakes
Alas a fish cake.
Yet more fish cakes
Guess what ... yeah ... fish cakes.
The end of the fish cakes
