BALWIN PROPERTIES LIMITED - Voluntary Pre-Close Statement for the Interim Period ending 31 August 2018

Release Date: 30/08/2018 07:05
Code(s): BWN
 
Wrap Text
Voluntary Pre-Close Statement for the Interim Period ending 31 August 2018

Balwin Properties Limited
(Incorporated in the Republic of South Africa)
Registration number 2003/028851/06
Share code: BWN
ISIN: ZAE000209532
(“Balwin” or “the Group”)

VOLUNTARY PRE-CLOSE STATEMENT FOR THE INTERIM PERIOD ENDING 31 AUGUST 2018

Operational overview

Balwin has continued to deliver a positive trading performance notwithstanding continued
macroeconomic headwinds and increased consumer pressure linked to inflation, overall policy
uncertainty and high levels of consumer debt. In addition, the one percent increase in the VAT rate
which took effect in April 2018 was absorbed into the selling prices of Balwin apartments, impacting
profitability, but contributing to the affordability of our apartments in line with that of the prior period.

Despite the above, Balwin’s operating performance continues to be underpinned by consistent demand
for its high quality, affordable apartments and innovative lifestyle product to the South African market
and the Group’s ability to respond proactively to changing market conditions and customer demands.
This is evidenced by the reconfiguration of the block design to introduce a new one-bedroom, one-
bathroom apartment and two-bedroom, two-bathroom apartment designs which have proven to be
affordable to the market and exceptionally popular in the current environment. Based on the sales
achieved, management anticipates handing over approximately 1 020 apartments in the six month
interim period.

The exceptional quality of the developments and the creative design of the Balwin product was
recognised at the recent Africa & Arabia Property Awards where Balwin was awarded with two awards
in the categories of “Apartment, For South Africa” for its Paardevlei Square development and the
“Leisure Interior” award for The Polo Fields.

Within this challenging market environment, cost management and improved efficiencies have remained
important focus areas and the integration of the centralised procurement system introduced last year
has been completed. Cash management and preservation also remains a priority and all cash allocation
strategies are currently under review by management, including the existing dividend policy.
Management is also actively monitoring the land reform policy and is taking the necessary actions to
ensure that its secured pipeline of property developments is not negatively impacted. In this regard
Balwin is also investigating its empowerment options. Progress has also been made towards a strategic
objective to deliver a residential rental model in which phases will be sold to a consortium who will
derive income from leasing the apartments. Management will keep the market updated in this regard.

Regional overview

Waterfall
Kikuyu and The Polo Fields both enjoyed successful launches of their Lifestyle Centres during the period.
Kikuyu in particular continues to receive exceptional demand and The Polo Fields has benefitted from
increased interest subsequent to the launch of its sensational award winning Lifestyle Centre.

Johannesburg
Construction is currently underway at four developments in the Johannesburg region. Construction at
The Reid, Sandton, commenced in the period and the development has attracted significant interest
with 165 apartments sold to date. The Whisken, Kyalami is the next Johannesburg development to
launch its Lifestyle Centre in October 2018. Development continues at The Amsterdam, Olivedale where
the final phases have been converted to rental apartments in line with the Group’s strategy of incubating
a rental model in key demand areas that complement our position in the market. Construction also
commenced at Greenpark, Boksburg which has been identified as a development for rental and has
attracted significant demand with approximately 80% of the first phase already being tenanted.
Construction of a further rental development, Greenlee, Sandton is planned to commence early in the
second half of the year.

Tshwane
Development at The Blyde in Tshwane is on track and includes the construction of sub-Saharan Africa’s
first ever Crystal Lagoon. The lagoon is complete and will be launched to the public in September 2018.
The launch of this unique feature is expected to increase the demand for the development significantly.
The Greencreek and Greenwood developments, situated adjacent to The Blyde and comprising
approximately 1 800 apartments each, have been earmarked for the rental and will form part of Balwin’s
rental initiative.

Western Cape
Balwin continues to expand its footprint in the Western Cape with three developments currently in
progress. The first phase of the Jade, Somerset West enjoyed exceptional demand and was successfully
handed over and registered in the reporting period. Demand for the development remains strong with
the remaining phases nearly sold out and planned for hand over in the current year. De Zicht,
Durbanville which has also enjoyed significant demand but delays on the construction of phase three
were experienced due to objections. These objections have been resolved and construction has resumed
with an additional two phases planned for the financial year. The Paardevlei developments, which
comprise Paardevlei Lifestyle Estate, Paardevlei Lifestyle Centre Apartments, Crescent Houses, Duplexes
and Paardevlei Square remain on track.

Kwa-Zulu Natal
Construction of Ballito Hills commenced in the period and the development has received extraordinary
interest. The first three phases are sold out and two of these phases are expected to be handed over in
the current financial year. The exceptional demand has continued for the remaining two phases that
have been launched.


Bedfordview
30 August 2018

Sponsor
Investec Bank Limited

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