Drug maker, Cipla Quality Chemical Industries Limited commonly known as Quality Chemicals, has issued a profit warning, informing shareholders and people who intend to buy its shares that it recorded a loss in the first quarter of 2020 compared to a profit posted over the same period in 2019.
In a statement issued today by Doreen Pachuto Awanga, the Company Secretary said the loss is emanating from delays in collection of receivables from Republic of Zambia.
She also said that the Company’s revenue reduced after suspension of Sales to Zambia, which impact was partly offset by increased sales to international donor Organizations.
Pachuto also cited change in product mix in orders received which affected the gross margin as a result of the change referred above as well as increased competition in some of the Product ranges which in turn increased pressure on pricing in order to remain competitive.
“The Board with the help of Government of Uganda has engaged the Government of Zambia to expedite the settlement of the outstanding balance. Any funds collected from this engagement will result into reversal of the ECL to that extent,” Pachuto said.
The Company Secretary also revealed that despite other sectors hit by COVID-19 pandemic, the company has continued with normal operations during the current COVID-19 pandemic and will continue to increase deliveries of life saving medicines should the need arise.
“Shareholders and potential investors are advised to exercise caution when dealing with the shares of the company. Further details of the Company’s financial performance will be disclosed in the Company’s financial statements to be published and circulated to shareholders,” she warned.
It should be noted that CiplaQCIL announced its Initial Public Offer (IPO) by floating a total of 657,179,319 shares on to the Uganda Securities Exchange (USE) in August 2018.
The total shares floated represented 18% of all the shares owned by the company. Cipla Ltd, the Indian pharmaceutical giant manufacturers remained as the majority shareholders with 51%, having floated 11% of its shares it holds in CiplaQuality Chemicals Industries.
Initially, it owned 62% of the company while Quality Chemicals, who remained with 31% shares, was owning 38% shares.
The Initial Public Offer (IPO) kicked off with a market stimulating fee of Ush256.5 per offer share. The minimum shares to be sold to each individual were 1000 shares.
This meant that one needed to pay at least Shs256,500 to become a shareholder in CiplaQuality Chemicals Industries Ltd.
However, CiplaQCIL’s share price on the bourse has since fallen to Shs128 per share as of today.
During the official listing event in 2018, Nevin Bradford, the CiplaQuality Chemical Industries Ltd Chief Executive Officer, said they intended to become a centre of excellence in the manufacturing of quality, affordable and newer medicines that improve the quantity and quality of life.
The development comes at the time both National Insurance Corporation Holdings Limited (NIC) and Uganda Clays Limited, both listed on Uganda Security Exchange, informed their shareholders of delays to publish their financial statements after the two businesses were left grappling with effects of Coronovirus in Uganda.
The statement from NIC issued by Elias Edu, Company Secretary noted that the Coronovirus affected all Business activities, the completion of the 2019 Audit exercise was also affected and the company won’t be able to publish results as of April 30th as expected by shareholders but rather have results published in June 2020