Balwin Properties sold fewer apartments in the year to February 28, but its gross profit margin improved and cash and loan-to-value positions were well within targets, the group said in a business update and trading statement on Friday.
Management said the 6.1% reduction in apartments sold, to 2780 units, was from adopting a more defensive strategy in the handover to owners, to ensure the forward sales position remained robust.
“This is to provide sales protection into the new financial year, which is anticipated to present challenging trading conditions,” they said in the statement.
Consolidated headline earnings per share was expected to increase by between 16% and 21%, translating into an increase from the prior financial year’s 75.88 cents to a range of between 88.0 and 91.8 cents per share.
Earnings per share was expected to increase between 17% and 22%, representing an increase of between 90.4 and 94.2 cents per share, from the prior financial year’s 77.24 cents.
The group said behind the pleasing performance were home buyers who continued to reward Balwin for its unique product offering in the South African residential property sector.
“The construction and handover of quality apartments in developments with modern lifestyle centres continues to be a key differentiator. Balwin’s drive towards energy efficiency and green living, while not only environmentally responsible, is also proving financially rewarding for the group and assists in mitigating the large increases being experienced by our clients in the cost of utilities and higher interest rates.”
In the past year, revenue growth was buoyed by selling price growth and a bigger contribution from the annuity businesses.
Some 900 apartments had been forward sold beyond the financial year-end, lower than the prior financial year’s 1 900 apartments, mainly due to pent-up forward sales demand for developments launched during that period.
“The group believes the current forward sales position provides a healthy buffer as the group continues to negotiate an increasingly complex trading environment.”
In response to the tough macroeconomic environment, sales incentives had been introduced for home buyers and investors, including incentives for first-time homeowners, a loyalty programme, a referral fee and a planned rental guarantee for investors.
BUSINESS REPORT