Uganda Clays cautions public, delays releasing annual results
Uganda Clays, which manufactures building materials, continues to struggle with a number of challengers, among them heightened competition. FILE PHOTO
What you need to know:
- Completion. The plant, which will consume Shs63.7b is expected to be completed in two-and-half years.
Kampala. Uganda Clays Limited has asked stakeholders and the general public to exercise caution while dealing in its securities.
The caution comes amid delayed release of the company’s results for the year ended December 31, 2018.
All listed companies are required to publish details of their financial results before the end of April.
The caution, the company said, had been occasioned by flooding of its Kamonkoli factory in eastern Uganda, devaluation of some of its plots of land affected by the Kampala-Entebbe Express road construction and loan and interest due to National Social Security Fund.
In a statement, Mr George Inholo, the Uganda Clays managing director, said: “UCL inform[s] our shareholders and the general public [that] the [flooding of Kamonkoli factory, devaluation of certain plots of land and loan and interest due to National Social Security Fund] are expected to materially impact the results for the period ended December 31, 2018,” noting that the company will publish its results on or before May 21.
Asked about the implication of the caution, Mr Inholo told Daily Monitor at the weekend that the three factors will negatively or positively impact the company’s financials.
The flooding of the Kamonkoli factory and the devaluation of the value of some the company’s plots of land add to a pile of problems that Uganda Clays has been grappling with for over a decade now.
The company is currently grappling with loan repayments, among which include NSSF’s Shs23.2b.
NSSF has, however, resolved to convert the debt into equity, which would make NSSF the largest shareholder with a 50 per cent stake. NSSF currently holds a 32.5 per cent stake in Uganda Clays followed by National Insurance Corporation, which holds about 17.8 per cent.
Negotiations for the conversion of the loan, whose deadline was the 2016/17 financial year, are still ongoing.
Mr Inholo said the conversion was still work in progress because investors require a substantial amount of time before they commit, adding that NSSF was fast-tracking this development.
Mr Richard Byarugaba, NSSF managing director, said at the weekend that they were committed to converting the Shs23.2b into equity and negotiations are on-going.
He also urged shareholders to stay calm, saying the conversion of the debt will not affect the value of their shares.
About Uganda clays
Uganda Clays is the leading manufacturer of baked clay building products operating two plants in Kajjansi in Wakiso District and Kamonkoli in Budaka District. Uganda Clays has for over a decade posted losses resulting from heightened competition and a huge and unproductive investment in its Kamonkoli plant. However, the company has since 2016 returned to profitability posting about Shs26b as turnover and Shs27.2b in 2017, which represented growth of about 4.7 per cent and Shs2.3b in profits.
