ANGER AHEAD AT KENYA'S UNGA GROUP PLC?

Kenya's Unga Group may be heading for financial year end when it may be hard pressed to hold in check shareholders anger or frustration over relatively poor results.

According to interim figures for the half year to December 2018 published recently, there is not to celebrate and indeed, if the trend continues in the last half, Unga may close with very thin bottom line.

By the first half, the Group's profit margin had dropped to 4.84% from 6.61% recorded at the same time in previous financial year. All because at almost evert turn, things turned for the worse.

The Group's total income dropped by 18.2% to Ksh 9075.1m under pressure from 18.4% decline in core revenue to Ksh 9034.2m from Ksh 11,077.7m.

The slightly lower % total income drop was due to the only real good news the half year offered: Leap in Other income from Ksh 16.6m to Ksh 41.1m.

From then on, it tough going all the way. Firstly, operating expenses declined by only 1.69% to Ksh 8610.4m from Ksh 10,361.1m  leading to 40% drop in operating income to Ksh 423.8m from Ksh 716.8m.

Then, loss from forex linked operations dropped a bomb by springing to Ksh 25.4m from just Ksh 0.30m similar loss by December 2017.

In the end, from the 18.2% drop in total revenue, Unga Group settled for 40% decline in profit before tax to Ksh 439.6m from Ksh 733.1m. Hence the dive in its profit margin.

Now, investors frown ( anger?) or smiles by year end in June this year depends on whether the trend continues or something can be done to increase revenue and also have greater control over operating costs.

UNGA GROUP. 1/2 Year Kshm
                           Dec 2018  Dec 2017
Total income.    9075.1.     11,094.3
Core revenue.    9034.2.     11,077.7
Operating cost. 8610.4.      10,361.1
Operating profit.  423.8.          716.8
Other income.        41.1.             16.6
Forex gain.           (25.4).          (0.30)
Profit b4 tax          439.6.          733.1
Profit margin %     4.84.             6.61
Working capital  3341.4.       3027.6
          

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