Uchumi Supermarkets has narrowed its full year loss to 1.68 billion shillings, from 2.83 billion shillings helped by improved cost management.
The auditors have however given a qualified opinion due to assets write off and loss of control of business in Uganda and Tanzania.
Uchumi Supermarkets has been closing some of its loss-making branches in rationalization process to help it reduce operational costs.
Outlets in Uganda and Tanzania as well as some in Kenya have been closed. This has however been a basis alongside assets write off for the auditor general to give a qualified opinion.
The auditors believe closure of regional outlets and the sale of land by Uchumi Supermarkets is one of the factors that have impacted the retailer’s performance in the year to June this year.
The auditor’s opinion reads in part: “Some of the key audit matters where significant judgment was exercised by Management include impairment loss on trade and other receivables, contingent liabilities in respect of claims and litigation, recognition of deferred tax asset, valuation of investment property and completeness and the existence of trade payables.”
During the period under review the retailer posted a 39 percent improvement in after tax loss to 1.68 billion shillings on account of improved cost management implementation.
The retailer says during the period under review, the management implemented initiatives aimed at recovery and turnaround in performance.
However, this seems to have come at the expense of growing the business with net sales reducing by more than half to 2.6 billion shillings, down from 6.4 billion shillings posted during the same period the previous year.
This impacted on the gross profit that shrunk by more than half to 449 million shillings, from 976.9 million shillings recorded in the previous year.
Uchumi Supermarkets is exploring cash injection from a strategic investor and the government to support its operations. The retailer says: “Discussions are ongoing with a potential strategic investor and government shareholder loan is imminent with the expected release of KES700 million.’’ Due to the loss, the directors of the retailer have not proposed a dividend payout.