Despite slowed global economic growth, the Eastern African region’s real GDP growth accelerated from 5.3% in 2012 to 6.2% in 2013 with all countries in the region registering growth. However the growth was partly adversely affected
by spill-over effects of the March 2013 general elections in Kenya, incidents of insecurity mainly attributed to terrorism across East Africa, high bank borrowing rates, Euro debt related challenges, and challenges pertinent to transition to the
new constitutional dispensation in Kenya, and insufficient rains in calendar year 2013. Though there was a general decline in inflation in the East African economies, the rate was still high and this translated in to lower unit consumption.
Uchumi Group achieved cross listing in the stocks and securities exchanges in Nairobi-Kenya, Kigali-Rwanda; Kampala-Uganda during the year with listing in Dar es Salaam Tanzania being effected in August 2014. Uchumi shares are now trading in Kenya,
Rwanda, Uganda and Tanzania, making us a truly Eastern African company
Uchumi continued actualizing the Growth phase of the then Rescue Plan. During the 2013/14 financial year, 8 new branches opened in green sites, that is – Mombasa Moi Avenue branch-October 2013, Juja branch-Dec 2013, Mbale (Eastern Uganda)-Jan 2014, Kisumu and Maua branch- March 2014, Segerea in Dar es Salaam-April
2014 Makumbusho in Dar es Salaam in May 2014 and Shekilango - June 2014. By the close of the financial year 2013/14, our total branch network stood at 37 (i.e. 27 in Kenya, 4 in Tanzania and 6 in Uganda).
The Uchumi Group has continued to record growth and profits for the eighth consecutive year since reopening. The economic and social environments were negatively impacted by challenges like the Euro debt crisis, general elections
(effect in Uganda and Kenya), freezing of public spending and effect of devolution in Kenya, high cost of living and borrowing affecting infrastructural development and customer propensity to spend among others. Total Group sales registered a marginal growth of 1% mainly due to the drop during the year in the Uganda subsidiary by 12% mainly attributed to competition, supply chain challenges and some locations becoming untenable due to infrastructural and tenancy mix challenges which may lead to our divestiture and relocation to already identified more promising locations in the coming financial year. Tanzania sales on the other hand grew by 10% versus prior year while Kenya registered a 2% growth in sales. Gross profits grew by 2% from Kshs.2.77 billion in 2012/13 to Kshs 2.81 billion in 2013/14 as a result of initiatives aimed at maximization of trading margins. Annual customer numbers increased by 13% in 2013/14 relative to 2013/14. Operating costs also grew in line with operations as well as a result of runaway inflation. Finance costs increased to Kshs 64 million from Kshs 16 million as a result of new loan facilities in the year from ICDC and KCB. Consequently, the Group net profits before tax came down by 6.8% from Kshs 486 million in 2012/13 to Kshs 453 million in 2013/14 mainly attributed to inordinate losses in the Uganda subsidiary due to the challenges mentioned above, and the effect of investment in new branches in Kenya and Tanzania, which are yet to mature. The statement of financial position grew by 24% (or Kshs.1,311 Million), from Kshs.5,574 Million in 2012/13 to Kshs. 6,885 Million in the year 2013/14.The Government of Kenya loan advanced during Receivership for purposes of reviving Uchumi in 2006 was fully settled upon paying the last installment of Kshs. 31 million on 30th June 2014.
Due to the expected sustained future growth in profits, the Board of Directors is recommending for approval by the shareholders a first and final dividend of Kshs 0.30 per ordinary share.
CLOSURE OF REGISTER AND DATE OF PAYMENT
The register of members will be closed on Monday 29th September 2014. If approved, the dividend will be paid, net of with-holding tax where applicable, within three month of approval by shareholders at the next Annual General Meeting to the members whose names appear in the Register at the close of business on Friday 26th September 2014.
The Uchumi Group is expected to continue to grow in performance and business base as the new outlets mature and we have adopted cautious strategic growth approach in the Eastern African region, an initiative that will be fully supported by the impending Rights Issue and the positive effect of Cross Listing in the EAC countries. Uchumi shares are now trading in Kenya, Rwanda, Uganda and Tanzania, making us a truly Eastern African company.
By order of the Board
Ms. KHADIJA MIRE DR. JONATHAN CIANO, MBS
CHAIRPERSON CHIEF EXECUTIVE OFFICER
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