Balwin Properties has released its financial results for the year ended February 2023, reporting a 6% increase in revenue to R3.3 billion and an increase in profit of 20% to R437 million.
Additionally, a revised pricing strategy has contributed to “robust” selling prices and a 2% increase in the company’s gross profit margin to 29%.
Balwin recognised 2 788 apartments in revenue for the year, down 6% from 2 962 in the prior comparative year. Balwin Chief Executive, Steve Brookes, attributes this to a normalisation in the sales cycle which is comparable to pre-Covid-19 trends:
“Post the pandemic there was a lot of pent-up demand, further boosted by the launch of our iconic Munyaka Beach Living Apartments in Waterfall and the very popular Izinga Eco Estate in Umhlanga which spiked forward sales. The current numbers are in line with the forward sales trends prior to the pandemic,” he commented.
Coastal regions contributed 52% of revenue during the year under review, up 12% from the previous financial year, mainly as a result of semigration, with especially three-bedroom apartments growing by 23%.
The company’s development pipeline of 43 781 apartments, spread across 26 projects, anticipates a development horizon spanning approximately 18 years.
Balwin’s recently launched annuities businesses recorded an aggregate revenue of R83.1 million, an increase of 61% on the prior financial year. The business segment further recorded profit of R45.8 million. Its annuity businesses predominantly comprise of Business Fibre, with 8 230 active clients, Balwin Mortgages where 1 648 bonds were secured during the reporting period, Balwin Energy – which is currently operating across nine sites, and Balwin rentals, a newly launched rental management company.
In line with its sustainability objectives, all new developments undertaken by Balwin Properties are aimed at achieving EDGE Advanced ratings, which recognize excellence in design for greater efficiency. A total of 21 768 apartments developed by Balwin have been registered as EDGE (Excellence in Design for Greater Efficiency) with the International Finance Corporation.
Moreover, Balwin has achieved significant milestones with over 14 000 apartments registered as EDGE Advanced, demonstrating energy savings of 40% or more and water savings of 20% or more.
Nine of Balwin’s lifestyle centres have achieved six-star green ratings and have been accredited with Net Zero Carbon ratings by the Green Building Council of South Africa, affirming their ability to generate and maintain a net zero carbon footprint.
In the pursuit of sustainable financing options for its clients, Balwin has secured 1 648 green bonds for home buyers during the period. These bonds not only provide financial benefits but also contribute to significant savings, amounting to a total of R98 million over a span of twenty years.
The company closed the year with a strong cash position of R607.3 million. It’s loan-to-value (LTV) was 40.7%, flat on the prior financial year’s number and well within the minimum loan covenant requirements.
“The ongoing deterioration in the economic climate will no doubt taper demand to some extent. Our healthy forward sales position of 870 apartments, coupled with successful sales initiatives will mitigate this impact, but we do expect moderate margin pressure in the current year.”
“From an operational perspective, we’ll continue to focus on leveraging our existing land bank and pipeline of developments, with strategic acquisitions considered on an ad-hoc basis, especially in the Western Cape. The emphasis will however be on continued prudent cash management and responsible environmental management,” concluded Brookes.