Mashonaland Holding's 4 months revenue down 4%

Mashonaland Holding's 4 months revenue down 4%
Published: 03 March 2014
Mashonaland Holdings' 4 months to January 2014 revenue declined by 4% to $2.5 million, CE Manfred Mahari told the AGM earlier today.

However, he said this was 9% ahead of financial plan of $2.3 million because of new lettings not anticipated at budget. Voids were 16 771 square metres representing 16% of the lettable portfolio compared to the budgeted 15%.

"The property expenses at $302 009 were 13% up from $268 371 last year, but were in line with the current budget of $301 097. Voids related costs constituted 40% (versus 28% in the prior period) of this spend and continued to be the key driver of this cost line," noted Mahari.

Furthermore, property expenses to income ratio was 12% and in line with budget.

Under administrative expenses, he pointed out that they went up 51% to $1 million against the same period last year at $0.7 million.

"The increase was mainly driven by the provision for performance based long term incentive scheme and payments for the short term incentive scheme which were made during the first 4 months of the current financial year. Administrative expenses to income ratio was 40%, with budget at 38%," he said.

Mahari said operating profit at $1.2 million was 28% below comparable period last year but was 7% above current budget of $1.1 million.

The operating profit margin dropped to 48% from 63% recorded in FY13 and against the budget of 50%.

He added that "the profit margin at 48% is now at par with the industry average but is expected to improve to 54% by year end."

Occupancy ratio went down to 84% from 85% recorded in FY13 and against 80% industry level.

Rental debtors grew to $1.4 million from the year end position of $1 million and the resulting arrears ratio was16% compared to 11% in September 2013.

"This position is consistent with this period of the year after annual shut down. An adequate provision for bad debts has been made and despite the weakening fundamentals, management continues to actively ensure that arrears remain under control," he added.

Turning to property maintenance, he noted that new lift installations at ZB Life Towers and ZB Centre are near completion and their preventative maintenance remains in place to ensure preservation of market value.

On property developments, Mahari told the meeting that the Natal project in Avondale is progressing well and is on target and the total project cost is $5.1 million.

"To date, we have spent $2.7 million and beneficial occupation is earmarked for end of August," he added.

The firm is also undertaking residential projects in Westgate and Hazeldene and the projects are at different stages of municipal approvals.

He said it is anticipated that construction will commence within the financial year.

Giving the outlook, Mahari indicated that liquidity constraints are set to worsen and "this will impact negatively on availability of mortgage finance and therefore demand for new stock."

He added that rental market has stagnated and may remain subdues for the rest of the year. Tenant retention, as noted by Mahari, will remain the firm's top priority.

"Various development opportunities are being pursued by group," Mahari said.
- zfn


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