Balwin Properties has released its audited consolidated annual financial statements for the year ending 29 February 2024, revealing significant impacts from the country's macro-economic conditions, including high interest rates, inflationary pressures, and prolonged loadshedding.
The results reflect a challenging year for Balwin, marked by decreased consumer demand, reduced loan affordability, and slowed investment in fixed property.
Group revenue fell to R2.4 billion from R3.3 billion the previous year, a 29% decline. This was largely due to a 32% drop in the number of apartments recognised in revenue, down to 1,892 from 2,788.
These figures highlight the difficulties faced in the residential housing market.
Financial results:
Revenue: Decreased by 29% to R2.4 billion
Profit for the year: Decreased by 50% to R217.4 million
Earnings per share: Decreased by 51% to 46.18 cents per share
Headline earnings per share: Decreased by 48% to 47.94 cents per share
Net asset value per share: Increased by 4% to 858.49 cents per share
Despite the overall revenue decline, Balwin's annuity business portfolio showed strong growth, with revenue increasing to R132.5 million, contributing 5.6% to the total group revenue, up from 2.3% the previous year.
This segment, although not yet a significant portion of the group's income, provided essential support in maintaining profit margins during tough trading conditions.
The gross profit margin from the sale of apartments experienced pressure during the reporting period, reducing to 24% (FY23: 27%).
The group’s investment in sales incentives for both buyers and investors supported demand and included a CEO loyalty programme, a referral fee campaign, as well as a sales incentive for first-time homeowners.
The property developer noted that while it is imperative to assist in driving the volume of sales, these incentives contributed to the dilution in the gross margin.
Operating expenditures for the group were reduced by 11% to R350.3 million due to significant cost-containment efforts and streamlined overhead structures. Balwin reported a profit after tax of R222.3 million, a 49% decrease from the previous year.
In light of the current and anticipated trading conditions and market uncertainties, the board decided not to declare a dividend for the 2024 financial year, a shift from the 24.0 cents per share dividend in 2023.
The primary focus remains on reducing the group's debt exposure, with the board set to reconsider the dividend declaration for the 2025 financial year, it said.
Shares in Balwin are down some 33% over the past year.
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