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BALWIN PROPERTIES LIMITED - Audited Financial Results for the year ended 29 February 2016

Release Date: 23/05/2016 07:36
Code(s): BWN     PDF:  
Wrap Text
Audited Financial Results for the year ended 29 February 2016

BALWIN PROPERTIES LIMITED
(Previously Balwin Properties
Proprietary Limited)
Incorporated in the
Republic of South Africa
Registration number 2003/028851/06
Share code: BWN
ISIN: ZAE000209532
("Balwin" or "the Company")

AUDITED
FINANCIAL
RESULTS
for the year ended 29 February 2016

HIGHLIGHTS

57%                         69%                          
Earnings per share          Operating profit             
83%                        54%                          
Net asset value per share   Revenue                      
                            63%                          
                            Total comprehensive income   


COMMENTARY
Corporate overview
Balwin is a specialist, niche, national large-scale, turnkey, sectional-title,
residential property builder and developer (typically between 500 and
1 000 sectional-title residential units per development) targeting high-
density, high-growth metropolitan areas in South Africa.

Balwin estates offer secure, affordable, high-quality, environmentally
friendly and conveniently located one, two and three bedroom sectional-
title residential units which range in size from 45m2 to 120m2 and in price
from R599 999 to R1 699 000 per unit (including modern fitted kitchen
appliances) within the normal operating model. Units are designed to
appeal to a wide range of home buyers, including first-time, move-up,
active adult, young professional, young family, older family, retirees as
well as buy-to-let. All larger estates (comprising ±500 units and above
only, such as Greenstone Ridge, The William, De Velde, etc.) also have
a lifestyle centre with well-established concierge and other all-inclusive
value added services including a spa, restaurant, gym, squash court,
action sports field, games room, movie theatre, heated swimming pools,
playgrounds and free wi-fi within lifestyle centres.

All residential estates are developed and marketed under the Balwin
Properties brand.

Key differentiators in Balwin's build-to-sell model comprise the ability to
deliver a superior offering through economies of scale, in-house turnkey
development including construction and construction management,
focus within a defined middle-income market segment, quality, broad
market appeal, partnerships with relevant stakeholders and competitive
pricing of developed units in-line or below market.

History and international acclaim
Balwin was founded by Stephen Brookes to address the need of
South Africans for secure, quality newly developed, value-for-money,
convenient, sectional-title homes without the homeowner having to
involve themselves in the cumbersome day-to-day management of
building their "dream" home. The Company commenced operations
in 1996, with its first development (a small 50-unit sectional-title
development in the south of Johannesburg), which was sold for
R99 000 per unit.

With the support of three of the largest five banks in South Africa
and consistent innovation and hands-on management guided by
the vision of Mr Brookes, Balwin is now considered as South Africa's
largest homebuilder targeting the middle income market segment, with
operations in all three of South Africa's largest cities. The Company
has developed various iconic residential estates in recognised middle-
to-high income, high-density, high-growth residential nodes such as
Bryanston, Fourways, Greenstone, Oakdene, Kyalami and Sunninghill
with a growing presence in Pretoria East, Somerset West and Milnerton
amongst others.

This unprecedented growth has led to Balwin being consistently
recognised as the national homebuilder of choice in South Africa with
various awards and industry recognition including:
  
- theInternational Property Awards' Rolls-Royce African Property
  Award for the De Velde estate in the Western Cape. The award,
  which was granted in the Africa/Middle East region, recognises the
  highest levels of achievement by companies operating in all sectors
  of the property and real estate industry; and
  
- theConcrete Masonry Association award for build excellence in
  Balwin's Monte Carlo estate.

Balwin operates exclusively within South Africa and has its headquarters in
Bedfordview, Johannesburg and a local office in Stellenbosch, Cape Town.

Product offering
Balwin currently develops and sells in the range of 1 750 to 2 500
sectional-title residential units per year, but has the ability to increase
its development capacity to approximately 3v000 sectional-title
residential units per year based on its existing infrastructure and owned
undeveloped land pipeline.

The construction of new developments is generally undertaken against
pre-sales to interested buyers.

All Balwin estates are built to a 
standard specification (unique Balwin)
design, standard finishes, no customer changes), typically not more than
four storey blocks with 10 homes per block (three bedroom units on the
ground and first floors, and one and two bedroom units on the upper
floors) enabling the Company to benefit from significant economies of
scale. Residential estates are built and marketed in phases (between 50
and 100 units), allowing for appropriate risk management at all stages
of the development process.Balwin's residential estates typically include:
- 24-hour security with well-equipped guard houses;

- high-quality, ergonomically designed units designed to maximise
  unit space and functionality;

- eco-friendly fittings, appliances and utilities (such as pre-paid
  electricity meters and gas and water supply meters);

- close to amenities including shopping centres, entertainment and
  leisure facilities, medical centres and schools, which are largely
  within walking distance of the estate; and

- lifestyle centres complete with free wi-fi, concierge service, heated
  swimming pools, playgrounds, spa, restaurant, gym, squash court,
  action sports fields and running tracks (larger estates comprising
  ±500 units and above only, such as Greenstone Ridge, The William,
  De Velde, etc.)

Operational review
Balwin has produced strong results for the financial year ended
29 February 2016 through its continued focus on the development of
sectional title residential units within strategic locations in key target
nodes. Despite, tough trading conditions, increasing interest rates
and a challenging macro-economic environment, demand for Balwin's
residential apartments remains robust driven by increased urbanisation
and the demand for affordable estate living.

Balwin was successful in delivering the following key operational
highlights during the year under review:

- Developments under construction increased by 143% from the
  prior year due to management's concentrated effort to deliver on
  the secured development pipeline;

- Malakite, a development in Johannesburg East which had been
  earmarked for rental, has been released for sales due to significant
  demand;

- Sales in the award winning De Velde (Somerset West) development
  has been on an upward trajectory during the financial year with a
  total of 385 units being registered, which has allowed management
  to free up cash for the purchase of The Sandown (Cape Town) land
  in the region;

- Grove Lane (Balwin's first development in Pretoria) was released for
  sales during the financial year, with the 136 unit development being
  largely sold out through pre-sales by the end of the financial year;
  and

- New developments under construction during the financial year
  have performed exceptionally well with the launch of various
  developments such as The Cambridge (Johannesburg North),
  Amsterdam (Johannesburg North), Balboa Park (Johannesburg
  South), Westlake (Johannesburg East), Grove Lane (Pretoria East),
  Paardevlei (Somerset West) and The Sandown (Cape Town).

In keeping with Balwin's long term strategic objectives of expanding
into select identified target nodes, Balwin has expanded its operating
footprint in Pretoria East and the Western Cape. During the year under
review, two land parcels were acquired in the Pretoria East node. The
land parcels were acquired for the development of the "Grove Lane"
(136 units) and ''River Walk'' (6 000 units) estates. These represent
Balwin's first acquisitions in the city of Pretoria, signalling the next
phase in expansion of the Company's geographic footprint. Balwin
further expanded into the Western Cape through the acquisition of land
in the Milnerton node earmarked for the The Sandown (Cape Town)
development. Strategic acquisitions during the financial year:
- The Cambridge (Johannesburg North);
- Amsterdam (Johannesburg North);
- The Clulee (Johannesburg East);
- The Reid (Johannesburg East);
- Westlake (Johannesburg East);
- The Whisken (Johannesburg North); and
- The Sandown (Cape Town).

The Company's secured development pipeline comprised
16 167 units at financial year end, which pipeline is expected to be
developed over the next seven years. In addition to this pipeline,
as announced by Balwin on the Stock Exchange News Service on
6 April 2016, the Company has concluded an agreement to acquire
the development rights to develop approximately 15 000 units in
Johannesburg's Waterfall node subject to conditions precedent,
further expanding Balwin's footprint into one of South Africa's major
development and growth nodes.

Financial review
Sales for the 2016 financial year have been exceptional, with revenue
increasing 54% to R2.1 billion (2015: R1.4 billion). The strong increase
in revenue is a result of the achievement of record sales in a number
of developments for the period under review. A total number of 2 087
units were registered during the financial year, compared to 1 655
during the comparative period. The average selling price achieved per
unit amounted to R998 328. It is noted that the average selling price per
unit varies in terms of the mix of one, two and three bedroom units sold
during a reporting period.

Development-specific registrations for the 2016 financial year were as
follows:

                                           Unaudited units
                                         registered in the
Development        Location            2016 financial year
The William        Johannesburg North                  233
De Velde           Somerset West                       385
                   (Western Cape)
Central Park       Johannesburg South                   76
Greenstone Ridge   Johannesburg South                  532
Kyalami Hills      Johannesburg North                  263
Greenstone Crest   Johannesburg East                   269
Stanley Park       Johannesburg South                  110
Balboa Park        Johannesburg South                  110
The Cambridge      Johannesburg North                   59
Westlake           Johannesburg East                    50
Total                                                2 087

Gross profit margin for the 2016 financial year was 42.6%, significantly
higher than the 35.9% achieved in the comparative period and above
the long term target of 40%. The average gross profit margin on a
development is 40% with a lower margin achieved on earlier phases
and a higher margin achieved in later phases. The increase in margin is
due to a number of projects being in the later phases of development.
In addition, Balwin's high margin is due to the achievement of significant
economies of scale, effective cost controls, budgeting and focused
project management, including the negotiation of competitive pricing
with contractors in the face of inflationary pressures and the weakening
of the rand to international currencies. The business is focused on the
use of locally produced construction material and contractors and as
such the exposure to variations in exchange rates is minimal.

Operating expenses increased by 68% year-on-year. The increase is as
a result of the recognition of a short term employee incentive scheme
expense, as well as higher professional fees which were incurred as a
result of listing.

Earnings per share increased by 57% to 132 cents per share. Headline
earnings per share of 131 cents per share had been achieved for the
financial year. The Company's share capital was restructured on its listing
in October 2015, with the result that 470 million shares are in issue as at
the end of the financial year.

Land debt obtained through the acquisition of additional land parcels
were mostly settled on listing. The ungearing of the balance sheet
significantly reduces risk and provides Balwin with the capacity to raise
finance for future acquisitions. Cash flow management remains a key
focus in the business. Cash flow generated is closely monitored to ensure
that proceeds are reinvested into the business in order to create long
term value for shareholders as well ensuring an appropriate margin of
safety.

Cash and cash equivalents increased by 256%, to R462 million. The
significant increase in the cash holding is as a result of effective cash
management and management's focus on ensuring an adequate margin
of safety. Balwin aims to reinvest 70% of cash generated from operations
and distribute 30% to shareholders as a dividend on a bi-annual basis.

Development finance for the 2016 financial year remains in line with the
comparative period, despite a 76% increase in construction. This is as
result of a focused effort to reduce gearing in order to increase the ability
to raise finance for future acquisitions.

Residential property market overview and company prospects:
Balwin are pleased with this set of results against the backdrop of a
challenging economic environment and remains committed to delivering
sustainable value for shareholders. The company remains focused on
the delivery of the secured pipeline as well as securing further strategic
projects to supplement this pipeline.

Management expects the residential property market to continue to
be driven by macroeconomic trends in the short to medium term. The
consumer's disposable income is expected to decline as a result of the
current South African economic outlook, which directly impacts on the
ability to afford more expensive homes. The number of households in
key target nodes has however increased significantly over the past five
years and it is expected to continue to expand in the upcoming years.
To this end, the demand for middle segment residential units is expected
to remain strong and management anticipates the demand for the
Balwin product to remain robust.

The business remains adaptable and flexible to the changing market
environment, having the ability to vary the one, two and three bedroom
development model in response to the ever changing needs of the
consumer.

Management remains focused on the core business of property
development, with an emphasis on the build-to-sell model. Development
of a rental portfolio remains a long term objective of the business with
the aim of supplementing the build-to-sell model which will remain the
core business of Balwin.

RECONCILIATION OF HEADLINE EARNINGS
FOR THE YEAR ENDED 29 FEBRUARY 2016

                                                                               Audited            Audited
                                                                       12 months ended    12 months ended
                                                                           29 February        28 February
                                                                                  2016               2015
Basic and headline earnings per share
Basic                                                        (cents)               132                 84
Headline                                                     (cents)               131                  –
Diluted earnings                                             (cents)               131                 84
Diluted headline earnings                                    (cents)               131                  –
Tangible net asset value per share                           (cents)               318                174
Net asset value per share                                    (cents)               318                174
Weighted average shares in issue                                           424 541 867        400 000 000
Net asset value                                                  (R)     1 502 190 933        694 825 563
Reconciliation of profit for the year to headline earnings
Profit for the year                                                        558 566 637        335 174 309
Adjusted for:
– Profit on disposal of investment property                                (1 133 108)       (23 678 436)
– Profit on disposal of property, plant and equipment                         (48 738)                  –
Headline earnings                                                          557 384 792        311 495 873
Weighted average number of shares
Weighted average number of shares in issue                                 424 541 867        400 000 000
Potential dilutive impact of share options                                   2 530 355                  –
Weighted average diluted shares in issue                                   427 072 222        400 000 000

As at 28 February 2015, Balwin's share structure comprised of 10 000 A class, 4 000 B class, 4 000 C class, 40 000 D class and 40 000 E class shares.
This share capital was restructured prior to listing, with the effect that 400 000 000 ordinary shares were in issue prior to listing. The figures calculated
above for the 2015 financial year have been based on these numbers are they represent the best approximator of the share capital in issue at Balwin
prior to listing.

SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 29 FEBRUARY 2016

                                                                 Audited            Audited
                                                         12 months ended    12 months ended
                                                             29 February        28 February
Figures in Rand                                                     2016               2015
Revenue                                                    2 083 512 353      1 354 928 529
Cost of sales                                            (1 188 400 247)      (868 037 064)
Gross profit                                                 895 112 106        486 891 465
Other income                                                  13 095 888         47 092 186
Operating expenses                                         (134 584 815)       (80 042 044)
Share based payment charge                                   (6 030 155)                  –
Operating profit                                             767 593 024        453 941 607
Interest income                                               10 796 991          5 489 646
Finance costs                                                  (251 050)        (4 283 353)
Profit before taxation                                       778 138 965        455 147 900
Taxation                                                   (219 572 328)      (119 973 591)
Profit for the year                                          558 566 637        335 174 309
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translating foreign operations           603 237          7 159 672
Total comprehensive income for the year                      559 169 874        342 333 981
Basic and headline earnings per share
Basic                                                (cents)         132                 84
Diluted earnings                                     (cents)         131                 84

SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 29 FEBRUARY 2016
                  
                                                                 Audited            Audited
                                                         12 months ended    12 months ended
                                                             29 February        28 February
Figures in Rand                                                     2016               2015
ASSETS                  
Non-current assets                  
Property, plant and equipment                                 40 805 624         30 697 348
Investment property                                                    –          2 392 460
Deferred tax                                                   5 678 890          1 899 978
                                                              46 484 514         34 989 786
Current assets                  
Developments under construction                            1 342 792 726        687 449 735
Other receivables                                             32 448 462        143 672 689
Other financial assets                                         7 375 152         33 672 067
Current tax receivable                                           490 827                  –
Cash and cash equivalents                                    462 288 496        129 928 165
                                                           1 845 395 663        994 722 656
Total assets                                               1 891 880 177      1 029 712 442
Equity and liabilities                  
Equity                  
Stated capital/share capital                                 661 853 712              5 800
Foreign currency translation reserve                           (833 830)        (1 437 067)
Retained income                                              841 171 051        696 256 830
Total equity                                               1 502 190 933        694 825 563
LIABILITIES                  
Non-current liabilities                  
Other financial liabilities                                   80 957 013         51 528 508
Current liabilities                  
Trade and other payables                                      93 765 036         67 126 716
Loans from shareholders                                                –            229 939
Other financial liabilities                                  161 242 284        195 952 492
Current tax payable                                           39 800 568         13 263 587
Provisions                                                    13 924 343          6 785 637
                                                             308 732 231        283 358 371
Total liabilities                                            389 689 244        334 886 879
Total equity and liabilities                               1 891 880 177      1 029 712 442

SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 29 FEBRUARY 2016

                                                           Foreign
                                                          currency
                                                Share  translation        Retained            Total
Figures in Rand                               capital      reserve          income           equity
Balance at 1 March 2014                         5 800  (8 596 739)     455 200 168      446 609 229
Profit for the year                                 –            –     335 174 309      335 174 309
Other comprehensive income                          –    7 159 672               –        7 159 672
Total comprehensive income for the year             –    7 159 672     335 174 309      342 333 981
Dividends                                           –            –    (94 117 647)     (94 117 647)
Balance at 1 March 2015 (audited)               5 800  (1 437 067)     696 256 830      694 825 563
Profit for the year                                 –            –     558 566 637      558 566 637
Other comprehensive income                          –      603 237               –          603 237
Total comprehensive income for the year             –      603 237     558 566 637      559 169 874
Issue of shares                           661 847 912            –               –      661 847 912
Share-based payment                                 –            –       6 030 155        6 030 155
Dividends                                           –            –   (419 682 571)    (419 682 571)
Balance at 29 February 2016 (audited)     661 853 712    (833 830)     841 171 051    1 502 190 933

SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 29 FEBRUARY 2016

                                                                 Audited            Audited
                                                         12 months ended    12 months ended
                                                             29 February        28 February
Figures in Rand                                                     2016               2015
Cash flows from (used in) operating activities
Cash generated from operations                               268 191 992         94 023 372
Interest income                                               10 796 991          5 489 646
Finance costs                                                  (251 050)        (4 283 353)
Taxation paid                                              (197 305 086)      (121 763 970)
Net cash from (used in) operating activities                  81 432 847       (26 534 305)
Cash flows from investing activities
Purchase of property, plant and equipment                   (15 689 532)       (11 183 612)
Proceeds on sale of property, plant and equipment                105 817         19 192 241
Proceeds on sale of investment property                        3 525 568        191 700 475
Net movement of financial assets                              26 296 915         21 628 719
Net cash from investing activities                            14 238 768        221 337 823
Cash flows from (used in) financing activities
Proceeds on share issue                                      661 847 912                  –
Other financial liabilities repaid                         (700 076 113)      (434 393 389)
Other financial liabilities raised                           694 794 410        455 344 072
Net movement in shareholders loan                              (194 922)        (3 552 019)
Net movement in finance leases                                         –          (842 429)
Dividends paid                                             (419 682 571)       (94 117 647)
Net cash from (used in) financing activities                 236 688 716       (77 561 412)
Total cash and cash equivalents movement for the year        332 360 331        117 242 106
Cash and cash equivalents at the beginning of the year       129 928 165         12 686 059
Total cash and cash equivalents at end of the year           462 288 496        129 928 165

SEGMENTAL ANALYSIS
FOR THE YEAR ENDED 29 FEBRUARY 2016

                                                        United Kingdom                         South Africa
Figures in Rand                                      Audited            Audited            Audited            Audited
                                             12 months ended    12 months ended    12 months ended    12 months ended
                                                 29 February        28 February        29 February        28 February
                                                        2016               2015               2016               2015
Segmental statement of financial position                                                     2016               2015
Assets
Property, plant and equipment                              –            706 907         40 805 624         29 990 441
Investment property                                        –          2 392 460                  –                  –
Deferred taxation                                          –                  –          5 678 890                  –
Developments under construction                            –                  –      1 342 792 726        687 449 735
Other receivables                                    444 914                  –                  –            479 931
Trade and other receivables                               90                  –         32 003 458        140 472 022
Other financial assets                                     –                  –          7 375 152         33 672 067
Cash and cash equivalents                          3 223 969          1 633 426        459 064 527        128 294 738
Investments                                                –                  –                100                100
Liabilities
Trade and other payables                             144 597            131 374         93 620 434         64 275 637
Other financial liabilities                                –                  –        242 199 297        247 481 000
Loans from shareholders                                    –                  –                  –            229 932
Current taxation payable                                   –                  –         39 800 568          9 243 595
Provisions                                                 –                  –         13 924 343          6 785 637
Segmental statement of comprehensive income
Revenue                                                    –          2 582 062      2 083 512 353      1 352 346 467
Cost of sales                                              –            148 124      1 188 400 247        881 068 618
Operating expenses                                 1 457 585          6 723 399        133 127 229         73 318 645

The basis of segmentation is by geographic area. Segmental disclosure were adopted in the 2016 financial year for the first time.

The 2016 financial year is the first year that the segmental analysis disclosure is required as the Company listed during the financial year.

NOTES TO THE SUMMARISED CONSOLIDATED STATEMENTS
FOR THE YEAR ENDED 29 FEBRUARY 2016
1. Basis of preparation
   The audited summarised consolidated provisional financial statements have been prepared in accordance with the JSE Listing Requirements
   and the Companies Act 2008 of South Africa and the framework concepts and the
   measurement and recognition requirements of IFRS and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
   Financial Pronouncements as issued by the Financial Reporting Standards Council and must also as a minimum contain the information required by
   IAS 34: Interim Financial Reporting. They have been prepared on the historical cost basis, except for certain financial instruments which are measured
   at fair value, and are presented in South African Rand, which is the Group's functional and presentation currency.

   The audited consolidated financial statements from which these summarised consolidated provisional financial statements were derived from are
   available at our registered office, Block 1, Townsend Office Park, 1 Townsend Avenue, Bedfordview, Johannesburg at no charge.

   The accounting policies are in terms of International Financial Reporting Standards ("IFRS") with framework concepts, measurements and recognition
   requirements of IFRS. In the prior year, the financial statements were prepared in accordance with IFRS for small and medium sized entities. There
   have been no change in the measurement basis applied upon the first time adoption of IFRS. Furthermore, there has been no change to the balances
   presented in the financial statements and thus no reconciliations are required to explain the impact of the transition to IFRS on the group's reported
   financial position, financial performance and cash flows.

   The audited summarised consolidated provisional financial statements have been externally prepared under the supervision of J Weltman, in his
   capacity as Chief Financial Officer and were approved by the board on 20 May 2016.

   The summarised consolidated provisional financial statements have been audited by Deloitte & Touche, who issued an ISA 810 opinion, they are
   Group's external auditors. The ISA 810 opinion is available for inspection at the registered office. The auditor's report does not necessarily report
   on all the information contained in the announcement/financial results. Shareholders are advised that in order to obtain a full understanding of the
   nature of the auditor's engagement, they should obtain a copy of the auditor's report together with the accompanying financial information from
   the issuer's registered office. Foward looking statements are not reported on by the external auditors.

2. Exchange rates
   The following exchange rates were used in foreign interest and foreign transactions during the periods:
                                                                                                             29 February   28 February
   Rand/British Pound                                                                                               2016          2015
   Closing rate                                                                                                    22.25         18.01
   Average rate                                                                                                    20.36         17.92

3. Subsequent events
   Shareholders are referred to the stock exchange news service announcement dated 6 April 2016 in which Balwin announced that it had concluded
   a formal acquisition agreement with Portimix Proprietary Limited for the acquisition of development rights in the Johannesburg Waterfall node in
   terms of which an approximate 15 000 residential units may be developed.

   Rex Tomlinson (non-executive director) resigned effective 31 March 2016.

   CIS Secretarial Services resigned from the office of Company Secretary effective 30 April 2016.

   Juba Statutory Services (Proprietary) Limited, represented by Sirkien Van Schalkwyk has been appointed as Company Secretary effective form 6 May
   2016.

4. Final dividends
   Notice is hereby given that the directors have declared a final gross dividend of 21 cents per ordinary share, payable out of income reserves for the
   year ended 29 February 2016 to ordinary shareholders in accordance with the timetable below.
   
                     2016
   Declared        23 May
   Cum dividend    9 June
   Ex dividend    10 June
   Record date    17 June
   Payment date   20 June
   
   Dividends tax amounting to 3.15 cents per ordinary share will be withheld in terms of the Income Tax Act. Ordinary shareholders who are not exempt
   from dividends tax will therefore receive a dividend of 17.85 cents net of dividends tax. The company has 472 192 592 ordinary shares in issue.
   Balwin's income tax reference number is 9058216848.
   
   Share certificates may not be dematerialised or rematerialised between Monday, 10 June 2016 and Friday, 17 June 2016, both days inclusive.

   Number of shares                                                                                            2016     2015
5. Stated capital/share capital
   Authorised
   Ordinary shares                                                                                    1 000 000 000    5 800
   Issued
   Ordinary shares                                                                                      661 853 712    5 800
   The unissued shares are under the control of the directors until the next annual general meeting.
   Reconciliation of shares in issue:
   Opening balance                                                                                            5 800    5 800
   Shares in issue converted on listing                                                                     (5 800)        –
   Conversion of existing 5 800 shares                                                                  400 000 000        –
   Shares in issue on 15 October 2015                                                                    69 662 237        –
   Closing balance                                                                                      469 662 237    5 800

                                                                                                  Audited            Audited
                                                                                          12 months ended    12 months ended
                                                                                              29 February        28 February
                                                                                                     2016               2015
6. Related party disclosure
   Related party balances
   Loan accounts – Owing by (to) related parties
   Balwin Properties (UK) Limited                                                                       –                  –
   Slade Properties Proprietary Limited                                                            82 534              1 672
   Friedshelf 966 Proprietary Limited                                                                   –         33 670 395
   SV Brooks                                                                                            –          (229 939)
   U Gshnaidtner                                                                                        –            477 831
   RN Gray                                                                                        444 944              2 100
   Related party transactions
   Interest received from related parties
   Slade Properties Proprietary Limited                                                                 –          (699 262)
   Sale of units to related parties
   SV Brookes                                                                                  84 421 619
   R Gray                                                                                      17 849 211         3 753 947
   J Weltman                                                                                    3 289 211           571 842
   Property rental management fee from related parties
   SV Brookes                                                                                     136 997                 –
   R Gray                                                                                          31 373                 –
   J Weltman                                                                                        1 046                 –
   U Gschnaidtner                                                                                  10 458                 –
   Purchases from related parties
   Friedshelf 966 Proprietary Limited                                                          38 760 000                 –
   Compensation to directors and other key management
   Directors emoluments                                                                        21 509 368        14 067 629

7. Fair value information
   Fair value hierarchy
   The different levels are defined as follows:
   Level 1: Quoted unadjusted prices in active markets for identical assets or liabilities that the group can access at measurement date.
   Level 2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly.
   Level 3: Unobservable inputs for the asset or liability.
 
   No changes have been made to the valuation technique.
 
   The fair values of financial instruments that are not traded in an active market are determined using standard valuation techniques. These valuation
   techniques maximise the use of observable market data were available and rely as little as possible on company specific estimates.
 
   The fair values disclosed for the financial assets and financial liabilities are classified in level 3 of the financial instrument hierarchy have been assessed
   to approximate their carrying amounts.
 
   There were no transfers between Levels 1, 2 and 3 during the year.

8. Financial instrument disclosure
                                                            Financial     Equity and non-
                                           Loans and   liabilities at    financial assets
   Categories of financial instruments   receivables   amortised cost     and liabilities                 Total
   GROUP 2016
   Assets
   Non-current assets
   Property, plant and equipment                   –                –          40 805 624            40 805 624
   Deferred tax                                    –                –           5 678 890             5 678 890
                                                   –                –          46 484 514            46 484 514
   Current assets
   Inventories                                     –                –       1 342 792 726         1 342 792 726
   Loans to shareholders                     444 914                –                   –               444 914
   Other financial assets                  7 375 152                –                   –             7 375 152
   Current tax receivable                          –                –             490 827               490 827
   Other receivables                      32 003 548                –                   –            32 003 548
   Cash and cash equivalents             462 288 496                –                   –           462 288 496
                                         502 112 110                –       1 343 283 553         1 845 395 663
   Total assets                          502 112 110                –       1 389 768 067         1 891 880 177
   Liabilities
   Non-current liabilities
   Other financial liabilities                     –       80 957 013                   –            80 957 013
   Current liabilities
   Other financial liabilities                     –       161 242 28                   –           161 242 284
   Current tax payable                             –                –          39 800 568            39 800 568
   Trade and other payables                        –       63 419 075          30 345 961            93 765 036
   Provisions                                      –                –          13 924 343            13 924 343
                                                   –      224 661 359          84 070 872           308 732 231
   Total liabilities                               –      305 618 372          84 070 872           389 689 244
   
                                                              Financial      Equity and non-
                                              Loans and  liabilities at     financial assets
   Categories of financial instruments      receivables  amortised cost      and liabilities                 Total
   GROUP 2015
   Assets
   Non-current assets
   Investment property                                –               –            2 392 460             2 392 460
   Property, plant and equipment                      –               –           30 697 348            30 697 348
   Deferred tax                                       –               –            1 899 978             1 899 978
                                                      –               –           34 989 786            34 989 786
   Current assets
   Inventories                                        –               –          687 449 735           687 449 735
   Loans to shareholders                        479 931               –                    –               479 931
   Other financial assets                    33 672 067               –                    –            33 672 067
   Other receivables                        143 192 758               –                    –           143 192 758
   Cash and cash equivalents                129 928 165               –                    –           129 928 165
                                            307 272 921               –          687 449 735           994 722 656
   Total assets                             307 272 921               –          722 439 521         1 029 712 442
   Liabilities
   Non-current liabilities
   Other financial liabilities                        –      51 528 508                    –            51 528 508
   Current liabilities
   Loans from shareholders                            –         229 939                    –               229 939
   Other financial liabilities                        –     195 952 492                    –           195 952 492
   Current tax payable                                –               –           13 263 587            13 263 587
   Trade and other payables                           –      42 785 213           24 341 503            67 126 716
   Provisions                                         –               –            6 785 637             6 785 637
                                                      –     238 967 644           44 390 727           283 358 371
   Total liabilities                                  –     290 496 152           44 390 727           334 886 879

9. Board of directors
   The following changes to the board of directors were effected during the reporting period:
      
   - Ms Basani Maluleke was appointed as an independent non-executive director with effect from 25 September 2015;
   - Mr Hilton Saven was appointed as an independent non-executive director with effect from 21 September 2015;  
   - Ms Kholeka Winifred Mzondeki was appointed as an independent non-executive director with effect from 25 September 2015;
   - Mr Rex Tomlinson was appointed as an independent non-executive director with effect from 21 September 2015 (resigned effective 30 April 2016);
   - Mr Ronen Zekry was appointed as a non-executive director with effect from 21 September 2015;
   - Mr Rodney Norman Gray was appointed as an executive director with effect from 23 November 2015;
   - Mr Ulrich Gschnaidtner resigned as a director with effect 20 September 2015.

  DISCLAIMER
  
  We may make statements that are not historical facts and relate to analyses and other information based on forecasts of future results and estimates
  of amounts not yet determinable. These are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words
  such as "prospects", "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "indicate", "could", "may", "endeavour" and "project" and
  similar expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements. By their
  very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that predictions, forecasts,
  projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove
  incorrect, actual results may be very different from those anticipated. The factors that could cause our actual results to differ materially from the plans,
  objectives, expectations, estimates and intentions expressed in such forward-looking statements are discussed in each year's annual report. Forward-
  looking statements apply only as of the date on which they are made, and we do not undertake, other than in terms of the Listings Requirements of
  the JSE Limited, any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. All profit forecasts
  published in this report are unaudited.
  
  CORPORATE INFORMATION                             
  BALWIN PROPERTIES LIMITED                         
  (Previously Balwin Properties Proprietary Limited)
  Incorporated in the Republic of South Africa      
  Registration number 2003/028851/06                
  Share code: BWN                                   
  ISIN: ZAE000209532                                
  ("Balwin" or "the Company")     
  
  Registered office                                                      
  Block 1, Townsend Office Park                                          
  1 Townsend Avenue                                                      
  Bedfordview                                                            
  Private Bag X4, Gardenview, 2047                                       
  Telephone: 011 450 2818                                                
                                                                                                                                        
  Directors                                                        
  H Saven (Chairperson)*#
  SV Brookes (Chief Executive Officer)                           Transfer secretary                                                     
  J Weltman (Financial Director)                                 Computershare Investor Services Proprietary Limited                    
  R Gray (Managing Director)                                     (Registration number 2004/003647/07),                                  
  B Maluleke*#                                                   70 Marshall Street, Johannesburg, 2001. (PO Box 61051, Marshalltown,   
  KW Mzondeki*#                                                  2107)                                                                  
  R Tomlinson*#                                                                                                                         
  R Zekry#                                                       www.balwin.co.za                                                       
  * Independent                                                  Johannesburg, 23 May 2016                                              
  # Non-executive                                                                                                                   
  Company secretary                                                                                                                     
  JUBA Statutory Services   
  
  Sponsor
  Investec Bank Limited                                                                                                            




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