Balwin’s 18-year project plan that is set to drive earnings

BALWIN Properties, which lifted profit 20% to R437 million in the year to February 28, has a development pipeline that now spans 18 years consisting of up to 43 781 apartments across 26 projects.

“I have been criticised about the extent of our land bank before, but we have found that rezoning land takes time and we don’t want to have to continually stop-start our development work,” CEO Steve Brookes said in a telephone interview yesterday.

Speaking at the release of their annual results, he said the performance was boosted by pent-up demand after the pandemic, and the launch of Munyaka Beach Living Apartments in Waterfall, and of Izinga Eco Estate in uMhlanga, which spiked forward sales.

A final dividend of 14.1 cents per share was declared bringing the total for the year to 24c (20.9c).

Brookes said they planned to continue delivering dividends to offer consistency to shareholders – they had only once not paid a dividend through the pandemic. He said share buyback was being considered.

Last week at the recently launched Munyaka Estate in Waterfall, Midrand, residents staged a sit-in protest about being without electricity for several days.

Brookes said the problem was a regional node issue due to a transformer problem, which had since been resolved. He said their developments were solar-power assisted, and generators would only be considered “very carefully”, as it would likely result in increased costs to consumers, and there were environmental and technical factors to weigh up.

On the outlook, he said the economic deterioration was likely to taper demand to some extent, but this would be mitigated by a healthy forward sales position of 870 apartments, coupled with successful sales initiatives.

“The higher interest rates are not good for our business, but we hope they will be lowered towards the end of the year, and then we will be quick to recover,” he said.

The group recognised 2 788 apartments in revenue – down 6% from 2 962 the prior year – which Brookes attributed to a normalisation in the sales cycle comparable to pre-Covid trends.

“The past 12 months were tough with increased construction costs, with interest rates and higher levels of load shedding …

“Our focus on cost containment, design efficiencies and careful price adjustments enabled us to show positive growth of 6% in revenue to R3.3 billion and increase profit 20% to R437 million,” said Brookes.

A revised pricing strategy also contributed to a 2% lift in gross profit margin to 29%,“he said.

General increases in selling prices across the portfolio of 12% helped cover rising construction costs.

Coastal regions contributed 52% of revenue during the year, up 12% from the previous financial year mainly as a result of semigration.

The recently launched annuities businesses recorded a 61% increase in revenue to R83.1m and profit of R45.8m.

These businesses comprise mainly Balwin Fibre, Balwin Mortgages, Balwin Energy, and new launched Balwin Rentals.

In line with sustainability objectives, 21 768 apartments had been registered as Edge (Excellence in Design for Greater Efficiency) with the International Finance Corporation.

More than 14 000 were registered as Edge Advanced, demonstrating energy savings of 40% or more and water savings of 20% or more.

Some 1 648 green bonds were secured for home-buyers. The bonds not only provide financial benefits, but also contributed R98m over 20 years.

The group closed the year with cash of R607.3m. The loan-to-value was well within minimum loan covenants.