The Sunday Mail
CFI HOLDINGS, smarting from low capacity utilisation and high financing costs, is seeking sanctuary in the property sector as the listed industrial concern plans to splash an estimated US$15 million in rolling out 635 high-density housing units, it has been established.
The new investment is forecast to materially impact on the company’s bottom line as an average high-density housing unit currently fetches about US$20 000 on the market.
In an interview last week, CFI chief executive officer Mr Steve Kuipa said the initiative, which is being undertaken by a local developer, is in sync with Government’s broad objective of providing low-cost housing in line with the country’s economic blueprint, Zim-Asset.
“The group is undertaking a development with 635 high-density units around Suncrest Chickens (in Harare) with a local developer. The various critical approvals are largely in place and the actual development will commence shortly.
“We will price the units in line with the other projects being undertaken in the market; (and) we are fortunate in that the site for the project is favourably located for a cost-effective development, and we are looking forward to playing a major role in supporting aspirations for offering affordable housing under the current Government thrust to promote affordable housing to our populace,” said Mr Kuipa.
CFI is also planning more property development at its 1 057-hectare Crest Breeders’ property located at Saturday Retreat Estate in Harare.
The land was recently incorporated into the Harare City Council’s municipal boundaries. Overall, the group intends to unlock value from its properties and at the same time consolidate its poultry operations within a smaller area.
In its 2013 annual report, CFI said that both the property development initiative and the poultry business would provide internal resources to fund operations and restructure the balance sheet to ensure operational and financial sustainability.
Work on plans and feasibility studies has already started and several financiers have shown interest in the project.
Mr Kuipa, however, would not identify the financiers, saying it was “premature to discuss the status of this matter given where we are in our discussions with the banks currently”.
“As a listed entity, we will obviously be referring the finer details on the proposed transactions to our shareholders, at which stage the information will become public.
“We are however working on a number of transactions involving other land belonging to Crest Breeders,” he said.
Analysts say property development could help CFI redirect the course of its business as most of its subsidiaries performed badly last year owing to a plethora of challenges, including inadequate working capital.
CFI recorded a loss of US$6,5 million in 2013 compared to US$4 million in the prior year. It has a market capitalisation of US$2,4 million and CFI’s three subsidiaries – Agrifoods, Victoria Foods and Suncrest – are looking for partners to enhance productivity.
A foreigner investor, Grindrod, had expressed interest in snapping up a 49 percent stake in Victoria Foods but the deal collapsed under unclear circumstances.
Mr Kuipa said after Grindrod’s pullout from the Victoria Foods transaction, they had entertained other potential investors.
“Some of them (transactions) are at different stages of the due diligence process. Unfortunately, we can’t disclose identities of the parties involved as this is done under confidential cover through non-disclosure agreements as is standard with transactions of that nature and magnitude,” he said.
Some insiders say the disappointing performance of the group’s subsidiaries is a result of poor management, a claim described by Mr Kuipa as “malicious”.
Group turnover for 2013 declined by six percent to US$87,3 million compared to US$92,4 million in 2012. Revenue also declined by 20
percent and 16 percent for poultry and specialised divisions, respectively, due to the impact of inadequate working capital.
CFI posted an operating loss from continuing operations before depreciation and financing costs of US$2,1 million against US$1,2 million a year earlier.
During the period under review, only the retail division – boosted by incorporation of Vetco – saw the division registering a 20 percent revenue growth.
