Orion shares take a beating after displeasing results

LISTED company Orion Real Estate shares took a beating, shedding more than 9 percent on the JSE after the company released a disappointing set of financial results.

The group reported a decline of 65.7 percent in operating profit to R3.5 million for the six months to end December, down from R10.2m reported in 2015.

The total comprehensive income for the period also decreased from R5m to R2.6m, constituting a decline of R46.9 percent.

Confident The share price dropped to 50 cents a share, down from Monday’s closing price of 55c a share. It closed at 50c a share on the JSE at the end of the day.

Despite the drop in profits, the group is still confident about its prospects for the year. The company has been encouraged by an improvement shown in the occupancy rate in the portfolio.

As a result of an improved occupancy rate, the company saw its revenue for the six months improving by 11.45 percent to R47.7m.

“While trading conditions remained tight during the reporting period, the future prospects have improved since the prior period with an increase in revenue over the prior period due to increase in occupancy and improved controls being implemented,” the company said.

The group said it is expecting this trend to continue well into the second half of the year.

The group revenue increased to R47.7m, up from R42.8m in December 2015, as a result of the normal lease escalations as well as a marginally better occupancy rate within the properties, the group said.

Orion also saw some of the expenses escalating in the period. The other direct, operating and management costs increased by 18.9 percent to R36.3m, up from R30.5m as compared to 2015. The majority of the increase in the other direct, operating and management costs is as a result of an increase in utilities of R5.5m where disputes have been logged with council along with an increase in levies of R1.3m.

Other notable financial changes in the period were the reduction in repairs and maintenance. Repairs and maintenance decreased from R2.3m to R1.2m, due to better efficiencies and cost control, the group said.

During the period the group disposed an investment property, a building owned by SBD Investments for R4.5m.