Shelter Afrique Reduces Its Operating Losses To Ksh 59 Million

Shelter Afrique has reduced its operating loss to 59 million shillings in 2019, down from the 923 million shillings loss recorded in 2018, representing a 94 percent drop year-to-year.

Addressing the Press in Nairobi, Shelter Afrique Chairman Dr. Steve Mainda said despite the minimal loss, the Company had put the distressful past behind it and had successfully turned around to become financially viable.

“Enhanced corporate governance practices backed by a strong, diverse, competent and ethical Board, robust enterprise risk management, a new business model, and debt restructuring plans have played key roles in fast-tracking the recovery process,” Dr. Mainda said.

Shelter Afrique Managing Director Andrew Chimphondah said the Company had projected a return to financial viability by 2020 and overall financial sustainability by 2023.

“The return to financial stability as indicated by a significant reduction in our operating loss in 2019 is an indication that the turnaround strategy has been both successful and effective. With the commencement of loan commitments leading to disbursements on the robust loan pipeline of KSh50 billion (US$501.30M) from 2020 and beyond, the Company was poised to return to profitability and provide returns to the 46 shareholders,” Mr. Chimphondah said.

During the period under review, the Company maintained a strong liquidity position with a cash balance of 5.6 billion shillings closing the year with a liquid ratio of 29%, 14 percentage points above the 15% minimum policy limit.

The strong liquidity was achieved on the back of enlarged share capital receipts from shareholders and successful collections from the non-performing loan book.

A total of 979 million shillings was received during the year, which increased total paid-up capital by 8 percent, from 13 billion shillings in 2018 to 14 billion shillings in 2019.

Similarly, Shareholder Funds increased by 8 percent from 10.6 billion shillings in 2018 to 11.5 billion shillings in 2019 due to the new capital subscriptions.

The Company also recorded a significant reduction in interest expense by 33% from KSh998 million (US$9.98M) in 2018 to KSh670 million (US$6.70 M) in 2019 on the back of a 39% decrease on borrowings from KSh11.67 billion (US$116.77 M) in 2018 to KSh7.16 billion (US$71.66 M) in 2019.

Interest income and fees fell to 1.53 billion shillings 130 million shillings in 2019 respectively, as a result of slow underwriting of new business.

Total assets under management reduced by 16 percent, from 22.9 billion shillings in 2018 to 19.3 billion shillings in 2019 as a result of a 31 percent decrease in net loan assets from 16.5billion shillings in 2018 to 11.46 billion shillings in 2019 due to effective loans collection policies on the back of reduced lending.

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