Listed real estate developer, Home Afrika, has fallen deeper into losses for the year ended December 31, 2019, posting a substantial loss before tax for the period ending Dec 31st 2019 of Kes. 887 million compared to Kes. 392 million posted in 2018. This is especially attributed to the depressed valuation of the company’s inventories in the form of land and uncompleted houses which contributed up to Kes.391 million of this loss.
The company continues to attribute the decline in profit 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 Board has put in place measures to ensure that the company reverses this position sooner rather than later.
The company reported a 233% growth in gross revenue for the year ending 31st December 2019 compared to the same period in 2018 growing from Kes 109 million to Kes. 363 million. Actual sales, not adjusted for percentage of completion, grew from Kes. 582 million in 2018 to Kes. 645 million in 2019. This means that the group managed to sell more property than they did in 2018 even in the wake of a depressed economic environment.
The company says the Migaa Golf Estate, being a long-term project, is expected to realize its profitability towards the end of the project in 3 – 4 years’ time. In line with the firm’s accounting policy, sales proceeds of the project are carried in the balance sheet as current liabilities both as deferred income and as deposits from sales of plots totals of which is now lingering at KSh. 3 billion as at 31st December 2019 compared with KSh. 2.6 billion for the same period in 2018. This amount will convert to gross revenues in our statement of profit or loss as the percentage of completion of the project improves from the current 48% over the next couple of years
”Smart plot sales are largely booked as deposits for plots in the balance sheet and will gradually find their way to the profit and loss statement upon full purchase price payment and processing of titles documents,” the company said in a statement.
The book value of the group’s sell-able land and other inventory stood at Kes.3.5 billion in 2019 as the company continues to investment 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 directors of the company have not issued a dividend recommendation for the period ending 31st Dec 2019.