CAPE TOWN - Balwin Properties said yesterday that demand remained strong for its lifestyle apartments in spite of increased economic headwinds and record sales were achieved in the year to February 29.
A total of 2715 apartments were recognised in revenue for the year, 278 more than the prior financial year. Sales were bolstered by especially one- and two-bedroom apartments, and strong demand for its lower-specification green developments, where demand outstripped the average rate of construction of 20 units per month.
Balwin chief executive Steve Brookes said a focus on operational performance, cash preservation and executing on the development pipeline during the year had paid off.
“We’ve adapted our sales offering to include more one- and two-bedroom apartments in response to consumer demand and the weak economy, and the demand for the Green developments exceeded expectations by far,” he said.
Revenue increased by 11percent to R2.9billion and cash on hand improved by R147.2million to a healthy R476.5m.
Operating expenses increased in line with market guidance to R235.6m, largely as a result of more staff at
mid- and top management level, as well as marketing costs. Operating profit subsequently fell by 9percent to R574m.
Despite strong sales, the profit margin of 27.1percent (down from 30.1percent in the prior financial year) was impacted by the inclusion of its two elite model developments.
Excluding these developments, the gross margin was 31.2percent, in line with management expectations.
The elite model apartments would be discontinued once the existing two developments had been completed, due to current market conditions.
Selling prices remained flat on average at R1063667 per apartment (R1066452) mainly due to price increases in the core model being offset by higher sales of the Green developments at relatively lower selling prices.
The core developments continue to provide the majority of revenue at 79percent (78percent) with the Green developments contributing 6percent (3percent) to total revenue.
It was expected that the Green developments would increasingly contribute to revenue.
“The launch of Munyaka, our flagship development in Waterfall and home to the largest lagoon in the southern hemisphere with Crystal Lagoons technology resulted in Balwin breaking all sales records in March this year, with more than 807 sales achieved for the month,” said Brookes.
The strength and resilience of Balwin’s brand continued to be evident post the lockdown period, with more than 200 sales achieved through its online platforms and 250 apartments being financially secured through the group’s bond origination departments.
Several contingencies in partnership with key suppliers and contractors had been implemented to deal with any potential eventualities.
Balwin’s share price jumped 14percent to close at R2.28 on the JSE yesterday.