NIC sounds profit warning

April 28, 2019 in Business, Companies, Investment, Markets by Editor

Listed underwriter NIC Holdings Limited has issued an advisory to stockholders warning of a negative balance sheet position for the year to December 31 2018, marking a reversal of fortunes after a profit that was just short of UGX7 billion the previous year.

In a market statement released this week, NIC says it expects to post a loss at the group level. The Board attributes the development to the settlement of a seven year dispute with Makerere University over a retirement scheme the company was managing prior to divestiture in 2010.

“Pursuant to Rules 38, 40 and 1(1) of Appendix 4 of the Uganda Securities Exchange Listing Rules 2003, the Board of NIC wishes to inform esteemed shareholders and the general public that the Company is expected to post a loss position under NIC’s Group’s financial Performance results for the year ended 31 December 2018.

“This is primarily driven by the impact of the resolution of Civil Suit No.351 of 2011 (Makerere University vs NIC) filed by Makerere University and the Registered Trustees of the Makerere University Retirement Benefit Scheme against the Company in which the parties have filed a consent judgement, now endorsed by Court, to amicably resolve the matter,” NIC’s statement reads in part.

NIC says with this settlement, all issues relating to the Makerere University Deposit Administration Plan (DAP) Scheme have been resolved.

The company does not give an indication of the level of impairment associated with the settlement but it has previously paid UGX10 billion while it disputed a claim by Makerere DAP for an addition UGX 7 billion.

An audit conducted by PWC on behalf of the Auditor General, has previously found that NIC owed the scheme UGX 22 billion, which took the outstanding claim to UGX 12 billion.

The initial UGX 10 billion payment plan that was supported by two loans from Dfcu Bank and UBA.