Registration Number C/92
Chapter 485A of the Laws of Kenya
The Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002
(UGANDA) LIMITED AND USL TANZANIA LIMITED
The Board (the “Board”) of Uchumi Supermarkets Limited (“Uchumi”) has resolved to cease support to its operations in Uganda and Tanzania with immediate effect.
Uchumi Supermarkets (Uganda) Limited (“Uchumi UG”) and USL Tanzania Limited (“Uchumi TZ”), wholly owned subsidiaries of Uchumi, have experienced serious financial difficulties over the last few years. Uchumi TZ incurred a net loss of Tanzanian Shillings two billion, two hundred and fifteen million (2,215,000,000) (approximately Kenya shillings one hundred and five million) for the year ended 30 June 2014 and Tanzanian Shillings two billion, seven hundred and six million (Tsh 2,706,000,000) (approximately Kenya shillings one hundred and four million) for the year ended 30 June 2013. Uchumi UG incurred a net loss of Ugandan Shillings ten billion, three hundred million (Ush 10,300,000,000) (approximately Kenya shillings twenty eight million) for the year ended 30 June 2014 and Ugandan Shillings eight billion, nine hundred million (Ush 8,900,000,000) (approximately Kenya shillings twenty five million) for the year ended 30 June 2013.
Uchumi has been providing approximately Kenya shillings two hundred million every month to Uchumi UG and Uchumi TZ to enable the two entities meet their financial obligations. Unfortunately, efforts to turn these businesses around have proved futile and the Board considers that it is no longer tenable to continue the support. The financial drain arising from supporting the two subsidiaries which together comprise less than five per cent (5%) of the revenues of the group is placing pressure on the liquidity of Uchumi and it is imperative that urgent action is taken to stem further losses.
Consequently the Board of Directors of Uchumi, taking into consideration all available options, has resolved to cease support of the operations in Uganda and Tanzania with immediate effect and recommend to the respective boards of Uchumi Tanzania and Uchumi Uganda that the two companies cease operations and make arrangements as may be necessary for settlement of their creditor’s claims.
The Board of Uchumi is cognisant of the responsibilities in respect of obligations of the two subsidiaries to various stakeholders. It is pursuing various avenues of raising funds to meet these obligations as well as to finance its activities over the coming Christmas and New Year period which is typically a busy one for the retail sector. We are in the process of engaging with all key stakeholders including suppliers, employees, financiers and regulators in the jurisdictions in which we operate. Most of all, Uchumi is cognisant of its obligations as a public listed company to keep its shareholders, investors and the general public informed of all material developments and will endeavour to do so.
BY ORDER OF THE BOARD
John K. Wambugu
15 October 2015
This announcement has been issued with the approval of the Capital Markets Authority in Kenya.