16 December 2012

Ethiopia: Habesha Boasts 5 Million Br Profit

Habesha Construction and Materials Development S.C. (HCMD) reports a five million Br profit for the year ending June 30, 2012.

The announcement was made on December 6, 2012, at the company's general assembly, held at the Hilton Hotel, in Addis Abeba.

The company, which has 46,567 shareholders, is paying out 15.8pc of each share as a dividend. The shareholders will also receive an additional five percent interest, in accordance to an agreement made during the initial purchase of shares.

The profit comes from the sale of 349 houses and 25 shops, for a total of 386 million Br, although the buyers have thus far paid just 95 million Br of this. The remaining payments will be completed in two years, for buyers who are also shareholders, and one year for all others, according to Eskinder Desta, the company's board director.

The company believes that all outstanding payments, amounting to 291 million Br, will be paid on time. There is an agreement through which the owners will be fined eight per cent of the value of their house if the payment arrives late, and the company fined nine per cent, if the delivery is delayed, says Eskinder.

Habesha has only 1,067sqm of land that it has leased independently. The bulk of its work is carried out on the additional 64,840sqm of land, held by businesses, with whom they are working in partnership with.

"We will be more successful if we can get more land," Bekele Gadisa, CEO of the company told Fortune.

The shareholders have similar concerns.

"Unless the company secures enough land, I cannot say it is a construction company, as construction has to take place on land and not thin air," said a shareholder during the general assembly.

The company's expense for the reporting period was 6.8 million Br, most of it going towards promotion, salary, commission payment and rent.

HCMD was registered as a Share Company in May 2010, with 2,080 members, a total number of 46, 576 shares and a paid up capital of 31 millionBr.

Habesha is planning to raise an extra 50 million Br from the sale of additional shares, according to Eskinder.

"The more shareholders come together, the more the capital of the company will increase and the profits will also be higher," Eskindir says.

Plans for the current fiscal year include the sale of an additional 200 houses and a further 50 shops. The company also plans to engage in the production of construction materials, but despite having already acquired concrete block manufacturing machinery, has yet to commence the production process.

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