By Wainaina Wambu
Business
The loss came despite the firm posting a 233 per cent growth in gross revenue
Listed real estate developer Home Afrika has sunk into a Sh849 million loss for the year ending
December 2019.
Last year, the firm reported a Sh346 million loss.
Managing Director Dan Awendo attributed the loss to a depressed
valuation of land and housing assets which contributed Sh391 million to
the woes.
The loss came despite the firm posting a 233 per cent growth in gross
revenue - from Sh109 million to Sh363 in 2019 up from Sh109 in 2018.
“There has been significant depression of valuations of the real estate
asset class in Kenya in the recent past, with some companies even
recording more than Sh3 billion loss owing to impairment in their
property investment portfolio,” said Awendo. “In our case, the depressed
valuation contributed up to Sh391 million of our loss for the year.”
Depressed environment
Mr Awendo said Home Afrika’s actual sales grew from Sh582 million in
2018 to Sh645 million in 2019, meaning the firm sold more property in
2019 despite a depressed economic environment.
“Unfortunately, the International Financial Reporting Standards (IFRS)
only allow us to recognise deposits from sales as revenue once a plot
owner has completed the payment, the title processed and the project is
complete,” said Awendo.
“This means the billions we have sold year-on-year and sales deposits
collected are still reflected as deferred income liabilities in our
books thus presenting a negative outlook on our balance sheet position.”
He observed that Migaa Golf Estate, one of Home Afrika’s long-term
projects, is expected to realise its profitability towards the end of
the project in about four years.
The book value of the group’s sellable land and other inventory stood at Sh3.5 billion in 2019.
The firm has embarked on cost reduction measures including salary cuts.
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