UPDC Sends Profit Warning, Expects Lower Earnings

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UACN Property Development Company Plc has sent a profit warning to the Nigerian Stock Exchange (NSE), saying it will record lower earnings for the financial year ended December 31, 2016.

The company had recorded profit before tax of N132.9 million for the nine months ended September 30, 2016, compared to a loss of N109.7 million in the corresponding period of 2015.

However, while shareholders are expecting the company to consolidate on the nine months recovery, UPDC said it would post lower earnings for 2016 full year.

In a filing at the NSE, UPDC said the lower earnings were mainly as a result of  recognition of losses on certain projects and impairment of investments in one joint venture project . It added that the results were further worsened by foreign exchange losses and negative performance of its hotel asset.

UPDC said: “We have carried out a preliminary review, subject to audit, of the management accounts of our company for the year ended December 31, 2016 and expect to report materially lower earnings. This is mainly as a result of the recognition of losses on certain projects and impairment of investments in one joint venture project occasioned by significant increase in finance costs. The results were further worsened by foreign exchange losses and negative performance of our hotel asset.”

The company assured stakeholders that despite the continued lull in the real estate sector occasioned by the headwinds of the macro-economic environment, the fundamentals of  the business remain strong.

Besides, the company said it is restructuring   and repositioning its operations to better deal with the challenges of the times and explore emerging opportunities.

UPDC recently applied to raise additional funds through  a rights issue of 1.719 billion ordinary shares of 50 kobo each at N3.00 per share on the basis of one new share for every one share already held.

The Chairman of UPDC, Mr. Larry Ettah had last year disclosed plans by the company to raise fresh capital to boost its operations.

“Our strategy for 2016 and beyond includes deleveraging the business through equity capital injection by way of rights issue, sell down of surplus stake in the REIT and disposal of low-performing assets, as well as leveraging on partnerships and alliances that are in sync with the company’s long term goals,” Ettah said.