Property developer Home Afrika Ltd has said its 2015 profit would be at least 25 per cent lower than the previous year, hurt by an increase in financing costs for its ongoing infrastructure projects.
The firm, which is listed on the Nairobi bourse’s segment for small firms, posted a 73 per cent drop in its 2014 first half year pre-tax profit, while its 2013 pre-tax earnings fell 22 per cent.
“The board of directors of the company projects that the company’s net earnings for the current financial year ending 31 December 2015 will be lower than the level of earnings in the previous financial year 2014,” said the firm in a Friday notice.
It, however, said it hopes to return to higher profitability this year after several of its projects begin paying off.
“The group received a long-term funding of Sh500 million during the year of, which proceeds have been utilised in the various project development with resultant benefits in the form of revenue and profits to be generated in 2016,” it said.
It explained: “There was an increase in finance costs due to the effect of the private placement financing and cessation of capitalisation of interest at the now completed Mitini Scapes Housing Development located in Migaa Golf Estate.”
Home Africa, however, assured its shareholders that it continues to have substantial amounts held as “deferred income, inventories and deposits received,” adding this would convert into revenue and thereby profit as development in its various projects continues.
“The group has also increased its marketing efforts to achieve sale of the private developer sites at each of the projects and also to sell the remaining units at the now completed Mitini Scapes.
“We have also taken measures to further grow shareholder’s value by diversifying our revenue streams to cushion the company against short and medium term profitability and cash flow gaps,” it said.
The latest profit warning by Home Afrika makes it the 16th Nairobi Securities Exchange company that expects its full year returns to fall by at least 25 per cent.