NAIROBI, KENYA, AUGUST 29 ― Sanlam Kenya has announced the commencement of a strategic business recovery strategy, after posting an after tax loss of Ksh1.5 billion in the first half of the 2018 financial year.
The Nairobi Securities Exchange listed non-bank financial service provider released its half year trading results on Wednesday.
The loss is a major dip from the Ksh90.5 million profit the firm reported in a similar period last year.
Announcing the business recovery strategy, Sanlam Kenya Group CEO, Patrick Tumbo said that for the firm to maintain prudent standards, it had opted to proactively impair financial assets including corporate bonds worth more than Ksh1.1 billion earlier invested in companies currently showing signs of financial strain.
Immediate collection efforts on the outstanding amounts, he said, have already started with a high chance of recovery.
Sanlam Kenya posted a Ksh1.53 billion loss which the firm has attributed to “a 100 per cent prudent impairment of distressed financial assets, slower economic growth and continued interest rates capping effects within the period under review.”
To ensure business stability, Tumbo said the business will be adopting a variety of remedial interventions including an enhanced investment policy to facilitate sustained growth.
The interventions which also feature the firm’s management team reorganisation are expected to accelerate growth from alternative market segments and new revenue streams including enhanced focus on the firm’s General and Life Insurance businesses.
“It will no longer be business as usual. We have adopted a revised business model and we will be pursuing key initiatives geared at elevating the business back on a profitability path,” Tumbo said, adding that, “on this journey, we shall be anchoring our business operations on an enhanced investment policy, to secure the interests of all our stakeholders.”
Compounded by economic headwinds that have characterized the local market, Sanlam Kenya in keeping with prudent business practice has impaired financial assets amounting to Ksh 1.114 billion covering earlier corporate bond investments in distressed local enterprises.
Some of the corporate bond investees included Athi River Mining (under administration) Ksh 574 million, Real People Ksh398 million and Kaluworks Ksh169 million.
“These facilities are at various stages of financial distress and it remains prudent for us to maintain a balance sheet that reflects this status as collection and recovery efforts progress,” Tumbo explained.
Reflecting the prevailing depressed market climate for non-bank financial services providers, Sanlam Kenya’s gross written premiums for the year to June remained flat at Ksh3.3 billion.
Total revenue during the period stood at Ksh3.7 billion.
The firm’s investment income largely affected by the impairment of financial assets dropped by 24 per cent to Ksh1.194 billion down from Ksh1.571 billion posted during the same period last year.