Balwin Properties reported strong sales growth of its apartments in the six months to August 31 driven by semigration and the move towards green lifestyle estates.
An interim dividend of 9.9 cents per share (7.4 cents) was declared. CEO Steve Brookes said it was important for them to declare a dividend, because the group had promised to deliver consistent dividends at its listing.
“Developers are often viewed by the market as cowboys financially, and as wreckers of the environment. We aim to change that and a consistent dividend is part of it. We also have among the most green environmentally certified apartments in the world,” he said in a telephone interview.
Brookes said demand was sustained and strong and 1 360 apartments were recognised in revenue, an increase of 8%. Pre-sales of 1 551 apartments were not included in revenue.
He said client demand remained strong, despite rising interest rates and a weak economy. This was driven mainly by semigration to the Western Cape and “our unique lifestyle offering with a focus on green living,” he said.
He said the Mooikloof Smart City development near Pretoria had received the necessary approvals and the group was working on the construction of the development “like ants.”
Balwin plans to develop some 16 000 units at Mooikloof over the next few years, and might increase this figure substantially in later years.
Revenue was up 20% to R1.6 billion. Profit increased 48% to R173 million. Net asset value per share increased to 771.39 cents. Headline earnings a share increased 47% to 36.63 cents. The cash position was strong at R581.2m.
The shift to derive more annuity type income progressed, contributing R37.9m (R21m), mainly from fibre and bond origination.
Brookes said Balwin became the first South African company to have a science based target and net zero commitment approved by the international science-based target initiative.
In addition, 3 562 additional EDGE Advanced certifications from the International Finance Corporation (IFC) were received, bringing the total to 19 784.
During the period, 945 Green mortgages were approved providing a saving to clients of approximately R64m over a 20-year mortgage period.
Brookes said the apartments forward sold but not yet recognised in revenue would support growth in the next six months and beyond. The gross profit margin increased by 2% to 26% in the six months, due to cost containments and “more robust pricing” on the sale of early phase apartments.
Cost increases were limited through effective cost engineering and concentrated cost containment, supported by the in-house procurement department.
“We worked closely with our architects on creative design modifications and specifications to reduce costs without compromising on quality and environmental standards associated with our brand,” he said.
Revenue from Gauteng represented 47% of total revenue from sale of apartments (60%), with the coastal regions now making up the balance of 53% (40%).
Similarly, the contribution from the KwaZulu-Natal region increased to 21% of total revenue (10%), mostly from apartments handed over at Izinga Eco Estate in Umhlanga.
The Western Cape made up 32% of total revenue from sale of apartments (30%). The changes by region were mostly driven by semigration, which had a positive impact on both the number of apartments and selling prices achieved in the coastal regions.
The group has a secure development pipeline of 45 411 apartments across 27 developments, representing about a 15-year development horizon.
Brookes said the focus for the “next six months remained on cost containment, cash management and maintaining a focus on core operations.”
BUSINESS REPORT