Home Afrika loss narrows to Sh168m after staff cuts

Home Afrika is listed on the Nairobi Securities Exchange. file photo | nmg 

By MUGAMBI MUTEGI

More by this Author

Summary

• Property developer Home Afrika narrowed its net loss by over a half to Sh168.5 million by letting go of one-third of its staff and reduced its directorship positions.
• The layoffs which kicked off late 2015 saw the firm part with about 20 of its then 50 staff as management sought to reel in expenses to combat dwindling revenues.
• The firm also reduced the number of directors it had from about 30 to seven, cutting sharply its salaries and allowances bill.

Home Afrika last year let go of one-third of its staff and reduced its directorship positions by three-quarters in cost cutting measures that helped the property developer narrow its net loss by over a half to Sh168.5 million.

The layoffs which kicked off late 2015 saw the NSE-listed firm part with about 20 of its then 50 staff as management sought to reel in expenses to combat dwindling revenues.

The firm also reduced the number of directors it had from about 30 to seven, cutting sharply its salaries and allowances bill.

“The reorganisation was meant to address challenges such as rising management costs and our sub-optimal operating and business model,” Joshua Kihoro, Home Afrika’s chief finance officer, told the Business Daily in an interview.

“For each project, we used to incorporate a separate company, each with its own set of directors. These positions have since been condensed to just seven. The company was also bloated in terms of staff count and we had to downsize.”

Home Afrika’s total operating expenses during the 12 months to December dropped sharply to Sh152.1 million from the previous year’s Sh349.9 million.

The business also more than halved its net loss from the previous year’s Sh390 million, even as its 2016 revenues dipped 15 per cent to Sh222 million.

The company’s deposits from sale of plots and deferred income increased by 14.8 per cent to a total of Sh2.01 billion.

These items, which are booked as liabilities until the project is completed and revenues booked, pulled the company’s to a negative equity position of Sh210.2 million.

Mr Kihoro said the company is in advanced stages of raising about Sh2 billion in a mixture of debt and equity by the end of this year, with another Sh3 billion fundraising round planned for 2019.

“We are looking for a strategic investor who will inject equity and structured debt that will help push the projects to completion,” he said.