By Almot Maqolo.
HARARE – (News of The South) – Mashonaland Holdings posted a 13432% rise in net profits after tax for the year ended September 30, 2019, with basic and diluted earnings per share jumping 13448.8% to 55.55 cents as it declared a dividend of 0.224 cents.
Growth in the group’s revenue was more subdued, only rising by 28% to Z$17.6 million from Z$13.8 million in the comparative period. Due to inflationary pressures in the market, the group embarked on a shorter term review to hedge against of erosion of rental value while occupancy rates remained flat at 77%.
Commenting on the performance board chairman Ron Mutandangayi said, “Property yields continue to weaken as the property market cycle continue to trudge an extended trough and we forecast a sluggish market in the short to medium term.”
“The decline in aggregate demand as a result of reduced real wages and purchasing power is likely to continue to put pressures on demand for real estate space and properties.”
Mashonaland Holdings have developed a strong leasing pipeline for future developments and existing vacancy space and will continue implementing measures to attract tenants into the property portfolio. In the period arrears declined by 20.6% to 9.4% from 30% as the group will continue to pursue targeted collection strategies to manage “credit risk”.
The company acquired an additional sub urban land bank meant for the development of a pre-leased health facility. This is in line with the group’s portfolio diversification and value preservation strategies. In the same vein, the property concern obtained its Estate Agency License and was engaged for consultancy services by three third party business clients. Third party business is projected to improve the return on equity in the coming financial year.
In USD terms, the property portfolio value eased 6% reflecting the increasing property investment risks impacting on the income earning capacity of the investment assets. The CBD offices were the most affected, with a notable resilience in land holdings and upmarket residential properties.
Property expenses rose 8% to Z$3.7 million from Z$3.5 million previously. This was on the back of rise in staff costs, void related costs and a reduction on expenditure on repairs and maintenance.
On projects, the group is currently working on several dynamic development projects. The development of a 25 cluster housing facility with phase 1 complete, which is the installation of civil engineering services.
Phase 2 which is going through pre-construction phase with house construction set to commence in Q2 2020. There is also the development of a modern office park in Belgravia and the revitalization of Charter House to a 5 star boutique hotel, following a successful change of use application. It is also planning a mixed-use development in Ruwa, “designed to effectively respond to local demand”.
Administrative expenses was up 83% to Z$5.7 million from Z$3.3 million due to an increase in staff related costs as the company cushioned its staff from rising costs of living and an increase in advertising and consultant’s fees relating to various projects.
Under the approved share buyback scheme, 363 842 shares were bought. The total number of shares repurchased to date now stands at 168 364 253, leaving a balance of 31 635 747 shares still available for purchase by the firm.
Operating profit increased by 79% to Z$12.6 million from Z$7.1 million.
In the outlook, the group highlighted that it will continue to pursue tactical and strategic measures to improve performance of the CBD portfolio.
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