Home Afrika Ltd has recorded 18 percent growth in revenues, from 222 million shillings in 2016 to 262 million shillings in 2017.
The real estate developer also realized an 8.4 percent annual increase in gross sales, an improvement that is a reflection of the restructuring initiative that the company has been undertaking.
At its Migaa Golf Estate, the premier golf estate development in Kiambu County, the company recorded an improvement in the stage of completion as one of its projects to 48 percent in 2017 from 43.16 percent in 2016.
The improvement has been attributed to an investment of 100 million shillings most of which was spent on roads construction, water reticulation and street lighting in Migaa.
Dan Awendo, Home Afrika Ltd, Managing Director, said that the completion of parts of the ongoing works has seen the book value of the listed developer’s sellable land and other inventory increased from 3.1 billion shillings in 2016 to over 3.7 billion shillings in 2017.
“In as much as 2017 was generally a tough year for business, our sales team beat the odds to grow gross sales to 921 million shillings from 849 million shillings in 2016. And in line with our strategy post restructuring, we reinvested the revenues into the infrastructure works with a view to meet our completion rate targets,” Awendo said.
The listed developer recorded 350 million shillings increase in deferred revenue to 2.35 billion shillings in 2017 from the sale of serviced plots. The average projects’ stage of completion, which determines how much deferred revenue is booked as sales of the listed real estate developer, will continue to increase over time, as the company continues to implement the ongoing infrastructure works.
In adhering to the IFRS (9), the company hence recorded a 7 percent increase in loss of 180 million shillings in 2017 compared to 168 million shillings year on year.
“Our financial reporting system allows us to only recognise deposits from sales as revenue once a plot owner has completed payment, the title has been processed and the project is complete. This means the billions we have received in deposits are reflected as liabilities in our books thus presenting a more depressed outlook on our financial position,” he said.
To fast track the completion of its projects and effectively see a majority of its deferred revenue and deposits from the sale of plot translate into revenue, the firm is seeking to raise 1.8 billion shillings from a strategic investor before the end of the year to complete its real estate projects. At least 15 high net-worth investors made up of individuals and corporates have expressed interest in funding the company.
“Home Afrika is laying a great emphasis on new sales, collections and management of creditors in order to improve our cash position. We will also continue to streamline our operating costs and increase efficiency to improve profitability and grow shareholder value,” Mr Awendo concluded.