Uganda Post Limited almost doubled its profit from Shs528 million to Shs1.1 billion in the financial year ended June 2016 but full recovery is still stuck in the post, bogged down by inadequate cash flows.
Turnover grew 7.9% to Shs20.4 billion in what management attributed to higher volumes of foreign mail distributed in Uganda. Managing Director James Arinaitwe described the numbers as a “modest but sustainable performance improvement”.
However, although cash in the bank and cash equivalents more than doubled to Shs519 million, they were more than shadowed by a short-term debt facility of Shs795 million, ostensibly borrowed to shore up operating capital.
The company, which manages the post offices across the country, has been facing disruption from digital communications. Revenues from the core business of delivering letters and renting out postal boxes were down marginally to Shs14.1 billion while costs of sales were flat at Shs4.5 billion.
The boost in net income came from other income, which rose by Shs2.4 billion to Shs6.2 billion. Operating expenses were flat at Shs10 billion and administrative expenses down from Shs2.2 billion to Shs1.9 billion, but other expenses more than doubled from Shs431 million to Shs1.2 billion.
Details were not available from the abridged financial results published this week. “During the next financial year attention shall be turned towards overhaul of the company’s operations to fully embrace IT and modernisation,” Mr Arinaitwe, the MD, said in the statement.
“The plans to digitise P.O. Boxes and give every Ugandan a mobile postal address are in advanced stages of procurement.” The statement noted further plans to focus on its courier and logistics business units as well as expand physical rental boxes in municipalities across the country.
The company, which is fully owned by the Ugandan government, received an unqualified opinion on its latest financials by the Office of the Auditor General – an improvement from a 2013 audit, which found glaring abuses of office and financial impropriety.
Despite the progress, the company remains on shaky financial footing. Trade and other receivables – the money owed to the company by it’s clients – rose by about Shs3 billion to Shs15.9 billion, while the amount it owes also rose, from Shs15.5 billion to Shs17.2 billion. Provisions for bad debts were flat at Shs1.1 billion.
A long-term facility of Shs1.6 billion was settled in the reporting period and replaced with a short-term facility of half the amount. With cash flow challenges, the company is likely to try and replace its short-term borrowings with longer-term debt.
Overall the company’s net worth grew marginally from Shs79.3 billion to Shs80.2 billion but the annual general meeting, scheduled for March or April 2017, is likely to consider recapitalisation as well as the company’s strategic future in a disrupted business landscape.
The cash flow problem will be presented to the government for resolution at the upcoming AGM, the statement noted.
Neither Mr Arinaitwe nor the Board Chairman, Dr Jackson Odimbe Were were available for comment.
The company, formed after the split of the Uganda Posts and Telecommunications Corporation in the late 90s, has been battling with its spin-off sibling, the troubled Uganda Telecom Limited, over ownership of the main Post Office building in the centre of Kampala City.