Letlole La Rona anticipates lower profit
Due to the impact of the Covid- 19 pandemic on the property market, the revaluation gains of investment property were moderate, amounting to P7.7 million when compared to the prior year figure of P33.9 million
Public property investment company, Letlole La Rona ( LLR) Limited anticipates 20 percent decline in its year end profits due to the impact of Covid- 19.
In the year ended June last year, the company recorded 24 percent increase in profit to P78.2 million. The Company’s Board of Directors announced that they are expecting profit before tax from continuing operations for the year ended 30 June 2021 to be between 10 percent and 20 percent ( P7.8 million and P15.6 million) lower than the prior year’s profit.
“Due to the impact of the Covid- 19 pandemic on the property market, the revaluation gains of investment property were moderate, amounting to P7.7 million when compared to the prior year figure of P33.9 million,” states the company in a statement.
However, the revenue and operating profit remains on an upward trajectory with an increase of 27 percent and 37 percent respectively, above the prior year. LLR Board of Directors pointed out that the Company’s cash position remains strong as the decline in profit is due to lower revaluation gains which do not have an impact on the cash flow of the Company and, as a result, the Company has been able to successfully maintain its distribution to shareholders, with the distribution in the current year being eight percent above the prior year distribution.
In its financial results last year, LLR Chairperson, Boitumelo Mogopa explained that the improved profitability was mainly as a result of the recovery from the prior years’ profit which was depressed by a once- off book loss of P27 million upon the sale of the hospitality portfolio. “The investment property portfolio remains resilient to the effects of the Covid- 19 pandemic with the properties achieving a 32 percent capital growth from the prior year’s fair value gain of P26.3 million. The investment property portfolio, with the addition of the new properties acquired during the year under review, now stands at P961 million.”
Meanwhile, during the year, LLR accorded its tenants rental deferrals for a period of three months from April 2020, with the view of recovering the deferred amounts in future. Mogopa stated that the company understands the cashflow challenges which businesses are going through due to the effects of the lockdowns. “Tenants have experienced business interruptions due to COVID- 19 lockdowns, this has resulted in tenants falling behind on rentals.”