The company plans to finance a new kiln and artificial dryer at Kajansi and Kamonkoli to boost production
Kampala, Uganda | JULIUS BUSINGE | Shareholders of Uganda Clays Limited will earn Shs1.2bn (Shs1.35 per share) as dividend for the year ended December 30, 2020, following approval from the virtual Annual General Meeting held on June 30.
Management did not recommend dividend payment in the previous year after posting a Shs88m net loss. It posted a Shs4.9bn net profit up from a loss of Shs88m in 2019, the highest ever over a five-year period citing cost-reduction initiatives.
The company’s Chairman Board of Directors, Martin Kasekende, said during the entity’s AGM at Sheraton Hotel, Kampala that despite the COVID-19 pandemic that has affected the economy and many businesses, UCL remained resilient, producing unprecedented results.
“We believe this is not a one-off good performance and the company was well and truly on a trajectory of growth and profitability,” Kasekende said.
UCL’s Managing Director, Reuben Tumwebaze, said the COVID-19 pandemic also acted as a catalyst for change, prompting management to take decisive action to protect and upgrade the business.
The actions, he said, included a reassessment of costs and ensuring that the company is fit for the future and cemented its strong position to capitalize on continued improvement in its markets.
According to the company financial results, total assets grew by 11%; closing the year 2020 at Shs68.8bn, up from Shs62.2bn in the previous year.
The company’s asset base received a big boost from investments in personal protection equipment, purchase of treasury bills and reduction in the impairment of trade receivables during the period.
However, total revenue reduced by 3% from Shs30.7bn in 2019 to Shs29.7bn in 2020 as a result of the effects of COVID-19 pandemic on businesses.
The total overhead costs dropped from Shs11.1bn in 2019 to Shs9.3bn in 2020 as a result of cost management measures put in place during the period.
Meanwhile, Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) improved by 240% to Shs9.7bn from Shs2.8bn in the previous year.
Kasekende said, top management changes were made at the beginning of March 2020 to address the stagnation in the company’s performance over the past several years which saw the entry of senior managers from National Social Security Fund to revamp the company’s performance.
Muddy business environment
Despite the good performance in 2020, Tumwebaze said, all business operations were brought to a halt during the nation-wide lockdown March – October 2020 and that negatively impacted revenue especially in months of April and May.
Management decided to maintain production with limited staff residing at the factory to ensure the business remains as a going concern.
The decision to continue with production during the lockdown and accumulate products turned out to be a very prudent one, according to Tumwebaze.
Kasekende said, a new 5-year strategic plan was adopted in 2019 and management continues to implement it to achieve company goals.
“To achieve the strategic goals, the board has approved a substantial capital expenditure, which will be financed entirely from the company’s earnings,” he said.
Part of the funds will finance a new kiln and artificial dryer at Kajansi this year and Kamonkoli in 2022 to boost production to meet customer demand.
Tumwebaze said a new health and safety management system will also be implemented over the next 12 months.
The other focus areas will be on the social and environmental impacts of all construction activity banking on a new wave of industrialization redefining the way that residential and commercial buildings are constructed.
The company plans to have agents in South Sudan, Western Kenya-Kisumu, and Mwanza in Tanzania.