By Festus Okoromadu
Apparently, these are not good times for Union Homes Savings and Loans Plc as its finances degenerated badly from a profit after tax of N6.5billion in 2010 to a loss after tax of N2.39billion in the financial year ended December 31, 2011.
The audited financial report recently made available to the investing public showed that the company’s gross earnings (revenue) for the review financial period dropped by 18.8 per cent from N7.22billion in 2010 to N5.86billion. This simply means that the company got less patronage from its customers in 2011 compared to 2010 which led to a revenue cut of N1.36billion.
The account recorded a decline in every performance measuring parameters except for share of profit accruing to the company from associated entities as well as income from investment, creating the impression that the company had some serious managerial crisis during the period.
The mortgage finance bank had its balance sheet shrunk by 13.5 per cent on total assets which stood at N42.042 billion in 2011 down from N48.598 billion in 2010 while total liabilities dropped by 4.4 per cent to N44.632 billion from N46.7 billion. During the period under review retirement benefit obligations rose by 106.5 per cent to N1.850 billion compared with N896 million in the prior year.
A look at shareholders’ fund suggests that the company would need to raise fresh funds to keep the entity going as shareholders’ fund is in the red. It stands at a negative N2.59billion as against a healthy N1.897 billion in 2010.
Meanwhile, investors who participated in the Union Homes Real Estate Investment Trust (REIT) in 2008 may have to wait a bit longer to get returns from their investment. It would be recalled that Union Homes floated a REIT hybrid offering of 970,873,787 units of N50.00 at N51.50 per unit. Currently, the Union Homes REIT which is listed on the Nigerian Stock Exchange (NSE) sells at nominal value of N50.00 per unit, amounting to a loss of N1.50 or 3 per cent on every unit of the REIT purchased at the offer price.
Apart from the depreciation in unit price, the Union Homes REIT has equally failed to deliver on other promises made to the investing public during the offer. Despite proposing to payout 90 per cent of net income accruing from the REIT to investors annually as dividend, the managers of the REIT has not paid any dividend since inception. However, a similar fund managed by Skye Shelter Fund REIT paid a dividend of N3 per unit in 2010.
Besides the lackluster performance, the investing public is already awaiting the 2012 financials which is already due for submission to the NSE. Although, the board of directors of Union Homes Savings and Loans Plc has not announced when it will be holding its annual general meeting (AGM) there are indications that shareholders of the company are eager to know what the future hold for them in the company.
Union Homes is a subsidiary company of Union Bank Plc and parades itself as Nigeria’s leading mortgage finance institution. It was established in 1994.