By Nkiruka Nnorom
AFRILAND Properties Plc, yesterday, secured shareholders approval to increase its authorised share capital to N686.95 million from N675 million through the creation of additional 23.90 million ordinary shares.
Consequently, the shareholders whose names appeared in the register of members at close of business on March 7, 2017, would be rewarded with bonus shares of N125 million, amounting to one new share for every 10 ordinary shares of 50 kobo each previously held.
Addressing shareholders at the Annual General Meeting, AGM, in Lagos, the chairman, Mrs. Erelu Angela Adebayo, lamented the effect of the economic crisis on the real estate sector, saying that the middle to high end market of the real estate industry was largely stagnant during the year.
According to her, “This was due to shortages of corporate clients in the commercial office market as most companies were under pressure from falling revenues on the back of reducing consumer demand, weakening naira and increasing operation cost. The prices of residential properties equally dropped due to decrease in demand for luxury residential rentals traditionally occupied by multinational companies.”
She noted that due to restriction on access to foreign exchange during the year, the cost of construction became very high, while many other prime projects were suspended. “This also affected foreign capital inflow as issues around foreign exchange liquidity and volatility have led to concerns about the ability to source dollars to repatriate naira denominated returns. This came with attendant negative impact on access to funding for property development and finance cost,” she said.
Reviewing the company’s result for the year ended December 31, 2016, Adebayo said the company’s financial performance was badly affected by the events in the larger economy as the company achieved N0.92 billion operating profit, 60 per cent reduction over N2.33 billion recorded in 2015. She attributed the decline in operating profit to 80 per cent fall in valuation gains as a result of the falling prices of properties in the country.
Profit before tax and profit after tax at N0.54 billion and N0.31 billion were 69 per cent and 74 per cent reduction compared to N1.73 billion and N1.15 billion posted respectively in the 2015. “However, your company continues to maintain a strong asset base with total assets growing by 10 per cent to N16.77 billion from N15.27 billion in the previous year.
She, however, assured that the company would key into opportunities and structural reforms of the federal government which might impact positively on housing and real estate sector. Speaking on behalf of other shareholders, Mr Heric Akinduro, Chairman, Ibadan Zone Shareholders Association, urged the company to retool its operations and seek for alternative ways of improving it income.
He said that diversification into other sectors and developing properties that meet the need of low income earners would go a long way in helping the company to come out of the woods.