Balwin feels the pinch in SA’s residential housing market

Balwin's The Blyde.

Balwin Properties has published its financial statements for the year ended February 2023, reporting a 29% decrease in group revenue to R2.4 billion (FY23: R3.3 billion) with 1 892 apartments recognised in revenue, a 32% reduction from the 2 788 apartments recognised in the prior year, “reflecting the challenging conditions in the residential housing market.”

Balwin’s annuity business portfolio experienced strong growth off a low base, increasing its revenue to R132.5 million and contributing 5.6% (FY23: 2.3%) to total group revenue.

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 Group notes that while it is imperative to assist in driving the volume of sales, these incentives contributed to the dilution in the gross margin.

Increased contributions from the annuity businesses supported the gross margin and contributed R131 million (FY23: R72.3 million) to the gross profit of the Group. The annuity businesses recorded an operating profit of R54.9 million at a 41% operating profit margin.

Consolidated operated expenditure incurred amounted to R350.3 million, a 11% reduction from the prior year following the Group’s focus on cost containment.

Balwin’s cash management and utilisation remain a priority for the Group and management continues to engage with funding partners to ensure that appropriate facilities and financial support remain in place.”

The Group closed the period with a cash balance of R289.6 million with its loan-to-value (LTV) ratio reducing marginally to 40.5% (FY23: 40.70%).

Balwin’s Board resolved not to declare a dividend for the 2024 financial year (FY23: 24 cents per share).