By Adedapo Adesanya
Despite the macro-economic challenges faced as a result of slow economic environment, UACN Property Development Company (UPDC) said it achieved operational improvement in the third quarter of 2019 compared with the same period last year.
The leading property development firm’s profit margin grew above 120 percent, driven by management’s focus on the sale of high margin properties. This occurred as it recorded a gross profit of N380.2 million as at September 30, 2019 in contrast to N170.8 million recorded in the corresponding period of last year.
The company, however, recorded a loss of N14.7 billion as at Q3 ’19 compared to N4.8 billion at the same period last year.
Speaking on this development, the company’s Chief Financial Officer, Folakemi Fadahunsi, said, “We are encouraged by the underlying operational performance, having grown our gross profit significantly.”
Despite this, the company’s revenue from contracts with customer dropped to N1.89 billion in the period under review compared to N1.99 billion realized in 2018.
As at the current period under review, the company noted a lesser operating loss compared with the previous as the company made a deficit of N385.9 million compared to a higher N491 million recorded last year.
The company’s overall performance was also affected by the N12.6 billion impairment charge on its investment in the UPDC Real Estate Investment Trust (REIT) leading to a loss at the end of the quarter of N13.3 billion.
Fadahunsi noted that, “While the one-off impairment charge linked to the proposed unbundling of the REIT has affected performance for the year, it is a key stage in the wider process to transform our balance sheet.”
The company saw its finance costs reduced by N1.3 billion equivalent to 37 percent from N3.5 billion last year to N2.2 billion as at September due to the successful refinancing of the company’s high interest-bearing short-term debt obligations.
In a public announcement in September, UPDC Property indicated its intention to shortly raise equity via a N15.96 billion rights issue and the proceeds of the proposed exercise to be used to repay the company’s short term debt obligations, by implication significantly reducing its interest burden in the future and strengthening the company’s capital structure.
CFO Fadahunsi stated that, “The planned rights issue will be used to refinance short term debt and reduce leverage levels, establishing a stable platform for UPDC over the long term, and enabling it to take advantage of emerging opportunities in the sector.”
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