Shelter Afrique posts Sh7.8 million in net profit
Shelter Afrique turnaround plan during the second quarter resulted in its net profit of Sh7.8 million (US$ 78, 000) for the period ending June 30, 2019 down from a loss of Sh500 million (US$ 5.1 million) it recorded in the second quarter of June 30, 2018.
The revitalization was backed by growth in fees and commissions from new projects, performing loan book and from loan recoveries.
Speaking on Friday during a media briefing, Shelter Afrique chairman Nghidinua Daniel said the Company was on course to deliver on its mandate pegged on implementation of its 5-year strategic plan.
“Enhanced corporate governance practices, robust enterprise risk management, a new management team, a new strategic plan, a new business model, and debt restructuring plans played key roles in fast-tracking the turnaround process,” Nghidinua said.
He said the efforts to return the company to financial sustainability is bearing fruit adding that Shelter Afrique restructured its business and developed a 5-year strategic plan in 2016 resulting in positive profit growth.
“The return to profitability ahead of time is an indication that the turnaround strategy has come full circle and is now ready for business,” Nghidinua said.
During the period under review, fee and other incomes, however, grew by 11 per cent to Sh80 million (US$0.8 million) from recurring fees on performing loan book. Liquidity the position remained stable with an average liquidity ratio above 15 per cent minimum threshold.
However, interest income recorded a 19 per cent decline during the period under review to Sh779 million (US$7.79 million) due to declining loan portfolio on the back of no new lending for past two-and-half years.
Consequently, interest expense declined by 35 per cent due to lower debt load. Operating expenses also declined by 9 per cent to US$3.8m as a result of stringent cost containment measures.
Total assets declined by 26 per cent year-on-year to Sh20.8 billion (US$208 million) due to decreased loan book. Cash balances, however, rose by 4 per cent to Sh400 million (US$4 million). Shareholders’ Funds declined by 16 per cent year-on-year to Sh11 billion (US$110 million) due to impact of operating losses in the last three years and IFRS 9 Transition Adjustment made on December 30, 2018.
“The picture continues to improve with sustained equity capital subscription receipts of Ksh870 million (US$8.7 million) to date,” said Shelter Afrique Managing Director Andrew Chimphondah.
The Company temporarily halted the undertaking of new projects in 2016 to pave way for the restructuring of its operations and for the development of a new strategic direction. It resumed full operations early 2019.
Some of the projects the Company has launched this year include Richland Pointe, Everest Apartments, and Karibu Homes in Kenya, and Rugarama housing project in Rwanda.
The company has invested in the Kenya Mortgage Refinance Companies (KMRC), and signed memoranda of understanding (MoU) with the governments of Liberia, Ivory Coast, Central Africa Republic, and Cameroon, for the provision of affordable housing. It has also signed MoUs with Habitat for Humanity International and iBUILD, to enhance its capital-raising efforts.
“Research from our Centre of Excellence (CoE) shows that the overall shortage of housing in Africa is estimated to be 56 million housing units. This shows that the need for Shelter Afrique and like-mined organisations are even more pressing,” Chimphondah said.
