African housing financier Shelter Afrique nears complete turnaround

14 Juillet 2020

Nairobi, Kenya, July 14 (Infosplusgabon)  – African housing development financier, Shelter Afrique, is moving towards full business recovery after reporting a massive reduction in its operating losses, company executives said on Monday.

The Company reduced its operating loss to US$590,000 in 2019 down from the US$9.23M loss recorded in 2018, representing a 94% drop year-on-year, Shelter Afrique Chairman Dr. Steve Mainda said.

He 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," Chimphondah said.

He said with the commencement of loan commitments leading to disbursements on the robust loan pipeline of US$501.30 million from 2020 and beyond, the Company was poised to return to profitability and provide returns to the 46 shareholders.

Chimphondah said with the improved financial performance in 2019 and the significant milestone conclusion of the Debt Restructuring Agreement (DRA) with the eight global  lenders, the Company was optimistic of returning to full financial viability from 2020.

The Company maintained a strong liquidity position with a cash balance of US$56.97 million 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 US$ 9.79 million was received during the year, which increased total paid-up capital by 8%, from US$ 130.65 million in 2018 to US$140.64 million in 2019.

Similarly, Shareholder Funds increased by 8% from US$106 million in 2018 to US$115 million in 2019 due to the new capital subscriptions.

The Company also recorded a significant reduction in interest expense by 33% from US$9.98 million in 2018 to US$6.70 million in 2019 on the back of a 39% decrease on borrowings from US$116.77 million in 2018 to US$71.66 million in 2019.

“Severe impacts from the COVID-19 Pandemic notwithstanding, we believe this is still achievable. We shall focus on our immediate strategic ambition of achieving US$1 billion plus in housing finance delivered directly and through funds mobilized and leveraged from third parties.

The six key focus areas post COVID-19 pandemic are going to be capital raising, business continuity, cost realignment, strategic repositioning, refinement of the business model and digital transformation,” Mr. Chimphondah said.

FIN/ INFOSPLUSGABON/VGV/GABON2020

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