UAP-Old Mutual let go of 89 additional staff in the first six months of the year in a reorganisation exercise that cost Sh335.12 million, the financial services group said on Monday.
The firm largely blamed the 61.58 per cent drop in after-tax profit for the half year to Sh190.86 million from Sh496.79 million in 2017 on the one-off retrenchment cost and a deferred tax obligation. “The group has been making significant investments in technology and process improvements including installation of new core business systems,” the firm said in a statement. “The consequent increase in operating efficiency necessitated the optimisation of headcount and we conducted a reorganisation exercise in H1 2018.”
The company’s profit before tax, which fell 32.4 per cent to Sh445.59 million, would have risen 14.5 per cent to Sh780.72 million without the retrenchment costs,” the company said. “We expect to realise substantial savings in expenses going forward,” chair Joe Wanjui and chief executive Peter Mwangi said in the statement.
Deferred tax expenses in some of its subsidiaries also pushed the tax bill to Sh254.74 million from Sh162.00 million, eating into its net earnings. The lay-off follows a similar exercise between February and March last year which affected about 100 staff in its Kenyan business.
The loss of jobs underlines the tough times facing the banking and insurance sectors where more than 1,500 jobs have been wiped out since last year.
UAP-Old Mutual, whose shares are publicly traded over-the-counter (OTC) at Dyer & Blair Investment Bank, also operates subsidiaries in Uganda, Tanzania, South Sudan, Rwanda and the DRC.
“Other reasons for the decrease in revenue include economic contraction in South Sudan and a more challenging operating environment in Tanzania.”