Listed property developer Home Africa has published its annual financial statements for the year ended December 2019.
The data shows that while the group saw revenue growth of 233% in 2019, it posted a substantial loss before tax for the period ending of KSh. 887 million compared to KSh. 392 million posted in 2018.
The firm has attributed this to the depressed valuation of the company’s inventories in the form of land and incomplete houses which contributed up to KSh.391 million of the losses.
Actual sales, not adjusted for percentage of completion, grew from KSh. 582 million in 2018 to KSh. 645 million in 2019. This includes sales in one of the company’s major projects, Migaa Golf Estate, a long-term project expected to realize profitability towards the end of the project in 3- 4 years’ time.
The company said it received Ksh. 400 million in deposits from plot sales for the project in 2019, raising the total from KSh. 2.6 billion in 2018 to KSh. 3 billion at the end of 2019. According to the firm, it expects to realize the sales as gross revenues in subsequent statements of profit or loss as the percentage of completion of the project improves from the current 48% over the next couple of years.
“In line with our accounting policy, sales proceeds of the project are carried in the balance sheet as current liabilities both as deferred income,” the firm wrote.
The book value of the group’s sellable land and other inventory stood at KSh. 3.5 billion in 2019. “We continue to invest in the infrastructure of the various projects which will help improve the market value of the land bank as the land becomes more desirable,” the firm said.
Home Afrika attributes its decline in performance to the impact of the slowed growth in the economy in general and real estate sector in particular and the depressed valuation of the company’s assets in the form of land and buildings
The company’s board has pivoted its marketing strategy to include deep engagement in digital marketing and diaspora marketing. The board has also ventured into sale and agency services for third-party properties and property management in a bid to increase liquidity.
This is in addition to cost reduction measures including reduction of salaries and other operating costs. The firm said the board is also in the process of identifying assets that can be disposed of to raise cash flows. The firm had a negative equity of position of over Ksh. 1.9 billion at the end of 2019.
According to the financial report, the firm’s auditor (PKF) was unable to form an opinion on the company’s financial statements, issuing a disclaimer of opinion. Meanwhile, the Board insists that it remains confident in Home Afrika’s long-term strategy.