Wrap Text
Audited provisional summarised results for the year ended 28 February 2019
BALWIN PROPERTIES LIMITED
Incorporated in the Republic of South Africa
Registration number 2003/028851/06
Share code: BWN
ISIN: ZAE000209532
("Balwin" or "the group")
Audited Provisional SUMMARISED RESULTS
FOR THE YEAR ENDED 28 FEBRUARY 2019
Highlights
6% increase in REVENUE
8% decrease in EARNINGS PER SHARE
15% increase in NET ASSET VALUE PER SHARE
8% decrease in PROFIT FOR THE YEAR
8% decrease in HEADLINE EARNINGS PER SHARE
49% decrease in DIVIDENDS
Commentary
CORPORATE OVERVIEW
Balwin Properties is a specialist, national residential property developer of
large-scale, sectional title estates for South Africa's growing low-to-middle
income population, with a focus on high quality, affordable apartments with
an innovative lifestyle offering for clients.
Estates typically consist of between 500 and 1 500 sectional title residential
apartments and are located in high-density, high-growth nodes across key
metropolitan areas in Johannesburg, Tshwane, the Western Cape and KwaZulu-
Natal. The group has a secure pipeline of 28 419 apartments across 23 developments
in key target nodes with an approximate eight-year development horizon.
Balwin estates offer secure, affordable, high-quality, environmentally friendly
and conveniently located one-, two-, and three-bedroom apartments, ranging
in size from 33m2 to 120m2. Prices range from R599 900 to R1 999 900 per
apartment within the core operating model. Apartments are designed to appeal
to a wide range of home buyers, catering for first-time, move-up, active adult,
young professional, young family, older family, retirees as well as buy-to-let.
Lifestyle centres are an integral part of the larger estate developments with
facilities offered as all-inclusive value-added services. These lifestyle centres
typically include free Wi-Fi, a wellness spa, restaurant, gym, squash court,
running track, action sports field, games room, cinema room, swimming pools,
playgrounds, laundromat and a concierge.
Business model
Balwin's business model comprises four key elements:
- Core business model
The core business focuses on providing a quality, affordable build-to-sell
product. Balwin benefits from economies of scale, in-house construction
and management while retaining flexibility throughout individual phases
of large developments. Estates are developed on a phase-by-phase basis
and the dynamic nature of the product enables Balwin to change the
block design configuration in response to changing market conditions
and customer demands.
- Elite model developments
Balwin's portfolio incorporates two elite developments, being The
Polo Fields (Waterfall) and Paardevlei Lifestyle Estate (Somerset West).
These apartments are built to higher specifications and achieve selling prices
from R1 999 900 to R2 999 900. Built on existing land in selected nodes,
the elite developments follow the standard phase-by-phase approach used
in all Balwin developments.
- Purpose-built product for sale to property funds
Balwin takes responsibility for the design and construction of developments
that are purpose-built for sale to large-scale residential property funds, such
as Balwin Rentals Proprietary Limited. Balwin will market and secure lease
agreements for the apartments with prospective tenants before selling
them on to investors in line with the existing proven model of a phase-by-
phase approach. These apartments will have a distinctive architecture that
is different to Balwin's core business model, yet will remain synonymous
with Balwin quality.
Monthly lease rentals range from R5 100 to R9 500 and provide tenants
access to the lifestyle features associated with the Balwin brand, including
the lifestyle centre, gym, restaurants and concierge.
- Annuity income
While Balwin expects to generate annuity income from the purpose-built
developments for sale to property funds over time, the business also
produces annuity income by leveraging its asset base and expanding its
service offering to home owners. Partnerships have been established to
provide high-speed fibre connectivity in Balwin estates as well as solar
installations which generate renewable energy. The annuity business is
complementary to Balwin's business model and enhances the lifestyle
offering to customers, with limited additional construction costs required
to generate annuity returns.
OPERATIONAL REVIEW
Balwin continued to experience strong demand for its lifestyle apartments for
the year ended 28 February 2019, despite ongoing economic headwinds and
sustained consumer pressure. Key focus areas for the year under review were
operational performance, cash preservation and executing on the existing
development pipeline, with pleasing results being achieved.
Balwin recognised in revenue 2 437 apartments during the reporting period.
This included 2 281 build-to-sell apartments (2018: 2 084 apartments) while
156 of the newly introduced purpose-built apartments were sold to Balwin
Rentals Proprietary Limited ("Balwin Rentals"), a residential property fund,
in the current year. This demonstrates the consistent demand for Balwin's high
quality, affordable apartments and innovative lifestyle product offering to the
South African market.
The rate of sales across the developments was in line with management's
expectations. However, exceptional sales continue to be recorded at The Blyde
(Tshwane East) and Ballito Hills (Ballito), with sales rates significantly exceeding
the development average of approximately 25 apartments per month. The
success at The Blyde can largely be attributed to the opening of the Crystal
Lagoon during the year, the first of its kind in sub-Saharan Africa. Conversely,
the sales rate at the Balwin elite model developments, namely The Polo Fields
(Waterfall) and Paardevlei Lifestyle Estate (Somerset West) continue to be below
the sales rate of the core business model developments due to the current
challenging economic conditions. The group does not plan to build any further
elite developments once the existing developments have been completed.
Balwin continues to be adversely affected from a cash flow perspective by
council delays which prevents the timeous registration of apartments, a common
occurrence in the industry. As a result of these delays, the group was unable
to register 864 apartments by year-end. By the end of April 2019, only 66
apartments had not been registered and are expected to lodge and register
imminently. The majority of the unregistered apartments at year-end related
to the initial phases at The Reid and The Whisken developments which have
subsequently been registered.
A total of 1 224 apartments have been pre-sold for the 2020 financial year
and not recorded in revenue in the current financial year.
Demand for one- and two-bedroom apartments remained strong. As highlighted
in the interim results in October 2018, the group proactively adapted its
apartment mix and block configuration during the year, introducing more
affordable one-bedroom, one-bathroom and two-bedroom, two-bathroom
apartments to satisfy the changing market demand.
Balwin successfully implemented one of its strategic objectives by introducing
a purpose-built product for sale to a large-scale residential property fund. In
addition to complementing the existing business model, this product will allow
Balwin to utilise and unlock its existing land bank at a faster rate. In the current
year, Balwin concluded the sale and registration of 156 apartments to Balwin
Rentals, a strategic alliance partner, for a total consideration of R85.6 million.
A further 96 apartments were sold to Balwin Rentals but have not yet registered
and will be recognised in revenue in the 2020 financial year.
Balwin also entered into a right of first refusal agreement granting Balwin
Rentals the right to acquire 4 544 residential apartments on existing land
parcels of Balwin. Balwin holds a 25% share in Balwin Rentals and expects to
derive annuity income over time through its share of profit in this investment.
Giving consideration to the existing right of first refusal agreement, the board
will consider each transaction to ensure that it is the most favourable to the
group and its shareholders.
The first rental development launched to the market is Greenpark in Boksburg.
Three further rental developments, all under the 'Green' brand, are planned
for Gauteng, totalling over 6 000 apartments.
The group is currently developing 11 estates. The majority of these developments
are at an early stage and require extensive investment in civils and infrastructure
works.
The group is 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.
Management remains committed to delivering annuity income to its shareholders
through the fibre, solar and rental businesses and remains alert to other annuity
type business opportunities that are complementary to the existing business.
ACHIEVEMENTS
The exceptional quality of the developments and the creative design of the Balwin
product was recognised at the recent Africa and Arabia Property Awards where
Balwin received four awards in the categories of "Apartment, For South Africa"
for its Ballito Hills development (Ballito), "Leisure Architecture" and "Leisure
development for South Africa" for The Blyde development (Tshwane East) and
"Developer website for South Africa" for the Balwin website.
BALWIN FOUNDATION
Living our commitment as an invested corporate citizen of South Africa, the
Balwin Foundation NPC supports and empowers the younger generation and
previously disadvantaged individuals to gain greater knowledge and skills through
technical vocational education and training. Students, employees, contractors and
unemployed community members are trained in building industry-related trades
which include tiling, painting, plastering and bricklaying as well as managing
construction resources, all skills which are key to the success of the business.
In addition, the Foundation offers courses in computer operations, financial
management and time management.
Balwin Properties donates funds from the sale of each apartment to the Foundation
which has successfully trained over 300 previously disadvantaged individuals and
has funded 16 tertiary students and two scholars through its bursary programme.
FINANCIAL PERFORMANCE
Revenue
An increase in the number of apartments recognised in the current financial year
contributed to revenue growth of 6% over the prior year. The average selling price
per apartment reduced in line with expectations to R1 069 462 (2018: R1 177 848)
owing to a different product mix as well as the inclusion of the revenue from the
apartments sold to Balwin Rentals which return a lower selling price than the core
business model apartments. The average selling price is expected to continue
to decrease in the upcoming financial year due to an increase in the number of
apartments sold to Balwin Rentals or another residential property fund that is
expected to be included in the financial results.
Gross profit
The gross profit margin for the year was 30.1%. Although this represents an
increase from the 27.3% reported for the interim period, the margin has decreased
from 32.8% in the previous financial year.
The reduction in the margin resulted from a number of factors, including:
- the increase in the VAT rate from 14% to 15%, effective from April 2018,
was absorbed into the selling prices of Balwin apartments;
- an increase in the mix of apartments from the Western Cape that derive a
lower gross margin;
- the mix of sales includes a large number of early stage developments which
traditionally return a lower gross margin; and
- the inclusion of the revenue recognised from the sale of the apartments to
Balwin Rentals which returned a lower margin than the group's targeted
gross profit margin.
Management remains confident that the gross profit margin of the build-to-sell
model will improve as the current early stage developments mature. This trend
is expected to continue in the upcoming financial year. This is due to the proven
formulae whereby the phase-by-phase growth in the selling price exceeds the
development costs. This is evidenced by the improvement in the gross margin
in the second half of the year. The business continues to target a gross profit
margin of approximately 35% through the lifecycle of a project, with typically
higher margins being achieved on Gauteng-based projects. Shareholders should
note that the revenue from the inclusion of the apartment sales to residential
property funds will be margin dilutive as this product returns a lower margin than
the group targeted gross profit margin.
Cost management and improved efficiencies have remained important focus
areas and the integration of the centralised procurement system introduced last
year has been completed.
Operating expenses
Operating expenses grew by R32.8 million to R173.8 million. The increase
reflects the inclusion of R9.9 million operating costs of Balwin Fibre Proprietary
Limited for a full period compared to costs of R1.5 million in the prior year
while the subsidiary was in its start-up phase. The majority of these costs
pertain to core network operating costs. In addition, employee-related costs
increased by R23.1 million owing to growth in total headcount, the provision
for executive bonuses in accordance with the remuneration policy as well as
the growth in the management team. Apart from these increases, operating
expenses have remained largely flat from the prior year.
The management and containment of overhead costs remains a focus area
for the upcoming financial year.
Earnings per share and headline earnings per share
Earnings per share and headline earnings per share both decreased by 8% to
96 cents (2018: 104 cents), in line with the group's voluntary business and
trading update issued on 14 March 2019.
Developments under construction
Developments under construction, including the value of land, land contribution
costs and development costs, increased by R455.8 million to R3.04 billion.
Land costs account for 35.7% of the value of work in progress. Management
are focused on delivering on the existing development pipeline and were able
to reduce this pipeline by exiting its position on certain pieces of land during
the current year as part of the active management of the developments under
construction, an ongoing focus area for management. Apart from limited
key strategic opportunities, management does not intend on expanding on
its pipeline in the current financial year.
Cash resources, funding structure and costs
The group has made pleasing progress in the management and utilisation of cash,
with cash resources at year end improving to R329.4 million from R100.0 million
in the previous year. Cash management and preservation remain key focus areas
for the upcoming financial year.
Development finance is obtained on a phase-by-phase basis and is secured
against the pre-sales of the specific phase being financed. Development finance
is obtained at an approximate loan to cost of 70% with the remainder of the
construction costs financed through equity.
Land funding is obtained from major financial institutions at a range of 50% to
70% of the cost of the land.
The group's long-term debt-to-equity ratio at the end of the reporting period
was 23% compared to 25% in the prior corresponding period.
A focus area for management in the current year will be sourcing funding of
infrastructure costs that will assist in unlocking the development value.
Dividend
Notice is hereby given that the board have declared a final gross dividend of
14.51 cents per ordinary share, payable out of income reserves for the year ended
28 February 2019 to ordinary shareholders in accordance with the timetable below:
Declared Wednesday, 15 May 2019
Cum dividend Tuesday, 11 June 2019
Ex dividend Wednesday, 12 June 2019
Record date Friday, 14 June 2019
Payment date Tuesday, 18 June 2019
Dividend tax amounting to 2.902 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 11.608 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 Wednesday, 12 June 2019 and
Friday, 14 June 2019, both days inclusive.
Prospects
Management remains optimistic on the business' medium- to long-term
prospects and believes the group is well-positioned to remain resilient in the
current economic climate.
Continued urbanisation and the growth of the South African middle-class
will continue to support the demand for affordable high-quality sectional title
apartments.
Balwin is confident in its ability to deliver growth in the sale of the purpose-
built product for sale to large residential property investors which maximises
wealth for shareholders.
The group remains committed to growing revenue and profitability through
its annuity income businesses.
Balwin remains committed to its unique lifestyle offering and the opportunity to
expand on its partnership with Crystal Lagoon to bring the beach life to clients.
Pipeline
Total
Expected Expected Total Total apartments
commencement date of apartments Total Total apartments sold but not Total
date of completion of Status in apartments apartments recognised recognised unsold Balwin
construction construction (*) development sold registered in revenue in revenue apartments pipeline
JOHANNESBURG
Waterfall
Kikuyu Commenced Mar 2022 A 1 270 696 483 515 181 574 755
The Polofields Commenced Jun 2023 A 1 512 583 548 505 78 929 1 007
Munyaka TBC TBC I 5 020 - - - - 5 020 5 020
Total 7 802 1 279 1 031 1 020 259 6 523 6 782
Johannesburg East
The Reid Commenced May 2022 A 1 294 237 - 190 47 1 057 1 104
Westlake Commenced Complete C 820 820 820 820 - - -
Westlake 2 TBC TBC I 312 - - - - 312 312
Total 2 426 1 057 820 1 010 47 1 369 1 416
Johannesburg North
Amsterdam Commenced Aug 2019 A 1 040 720 705 706 14 320 334
The Whisken Commenced Jun 2022 A 1 490 422 - 338 84 1 068 1 152
Total 2 530 1 142 705 1 044 98 1 388 1 486
Johannesburg South
Majella Park TBC TBC I 280 - - - - 280 280
Total 280 - - - - 280 280
KwaZulu-Natal
Ballito Hills Commenced Jan 2024 A 1 320 398 - 61 337 922 1 259
Ballito Creek TBC TBC I 1 872 - - - - 1 872 1 872
Marshall Dam TBC TBC I 1 092 - - - - 1 092 1 092
Total 4 284 398 - 61 337 3 886 4 223
Total
Expected Expected Total Total apartments
commencement date of apartments Total Total apartments sold but not Total
date of completion of Status in apartments apartments recognised recognised unsold Balwin
construction construction (*) development sold registered in revenue in revenue apartments pipeline
Tshwane
The Blyde Commenced Nov 2027 A 3 580 552 280 401 151 3 028 3 179
Total 3 580 552 280 401 151 3 028 3 179
Western Gape
De Zicht Commenced Jul 2020 A 876 451 263 339 112 425 537
Paardevlei Lifestyle Estate Commenced Feb 2022 A 342 124 91 97 27 218 245
Paardevlei Square Commenced Complete C 87 81 68 74 7 6 13
The Jade Commenced Sep 2019 A 432 336 245 247 89 96 185
The Sandown Commenced Complete C 636 636 634 635 1 - 1
The Huntsman Jun 2019 Oct 2023 I 1 044 - - - - 1 044 1 044
Gordons Bay TBC TBC I 1 272 - - - - 1 272 1 272
Fynbos TBC TBC I 1 116 - - - - 1 116 1 116
Paarl TBC TBC I 336 - - - - 336 336
Total 6 141 1 628 1 301 1 392 236 4 513 4 749
Developments for sale to
property funds
Greenlee May 2019 Aug 2023 I 1 728 - - - - 1 728 1 728
Greenpark Commenced May 2022 A 1 200 240 144 144 96 960 1 056
Greencreek Jun 2019 Jun 2025 I 1 760 - - - - 1 760 1 760
Greenwood Jul 2025 Jul 2031 I 1 760 - - - - 1 760 1 760
Total 6 448 240 144 144 96 6 208 6 304
Grand Total 33 491 6 296 4 281 5 072 1 224 27 195 28 419
* A - active; I - inactive; C - complete
Note that the group pipeline has not been audited.
Reconciliation of HEADLINE EARNINGS
FOR THE YEAR ENDED 28 FEBRUARY 2019
Audited Audited
12 months 12 months
ended ended
28 February 2019 28 February 2018
Basic and headline earnings per share
Basic (cents) 95.82 104.56
Headline (cents) 95.84 104.56
Diluted earnings (cents) 95.80 104.06
Diluted headlines earnings (cents) 95.83 104.05
Tangible net asset value per share (cents) 567.51 491.98
Net asset value per share (cents) 567.51 491.98
Weighted average number of shares in issue ('000) 472 105 469 915
Net asset value (R'000) 2 653 856 2 311 906
Reconcilliation of profit for the year to headline earnings
Profit for the year (R'000) 452 383 491 345
Adjusted for:
- Loss/(profit) on disposal of property, plant and equipment (R'000) 101 (15)
Headline earnings (R'000) 452 484 491 330
Weighted average number of shares
Weighted average number of shares in issue ('000) 472 105 469 915
Potential dilutive impact of share options ('000) 88 2 278
('000) 472 193 472 193
Summarised Consolidated Statement of
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 28 FEBRUARY 2019
Audited Audited
12 months 12 months
ended ended
28 February 2019 28 February 2018
R'000 R'000
Revenue 2 613 905 2 454 635
Cost of sales (1 826 024) (1 649 406)
Gross profit 787 881 805 229
Other income 16 002 6 587
Operating expenses (173 808) (140 995)
Operating profit 630 075 670 821
Interest income 4 590 15 273
Finance costs (6 176) (3 559)
Profit before taxation 628 489 682 535
Taxation (176 106) (191 190)
Profit for the year 452 383 491 345
Exchange profit on translating foreign operation 103 651
Total comprehensive income for the year 452 486 491 996
Basic and diluted earnings per share
Basic (cents) 95.82 104.56
Diluted (cents) 95.80 104.06
Summarised Consolidated Statement of FINANCIAL POSITION
AS AT 28 FEBRUARY 2019
Audited Audited
12 months 12 months
ended ended
28 February 2019 28 February 2018
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 89 486 73 214
Intangible assets 6 125 31
Investment in associate 1 -
Deferred taxation 5 573 1 540
101 185 74 785
Current assets
Developments under construction 3 042 919 2 587 088
Inventories - 1 384
Loans to related parties 9 981 -
Trade and other receivables 913 194 859 408
Development loans receivable 3 450 3 858
Current tax receivable - 4 566
Cash and cash equivalents 329 382 100 033
4 298 926 3 556 337
Total assets 4 400 111 3 631 122
Equity and liabilities
Equity
Share capital 652 978 664 354
Foreign currency translation reserve (477) (580)
Share-based payment reserve * -
Retained income 2 001 355 1 648 132
Non-current liabilities
Development loans and facilities 375 473 579 628
Current liabilities
Development loans and facilities 1 148 208 672 050
Trade and other payables 91 062 63 771
Contract liability 91 344 -
Current tax payable 30 181 2
Provisions 9 987 3 765
Total liabilities 1 746 255 1 319 216
Total equity and liabilities 4 400 111 3 631 122
* Denotes a value of less than R1 000.
Summarised Consolidated Statement of CASH FLOWS
FOR THE YEAR ENDED 28 FEBRUARY 2019
Audited Audited
12 months 12 months
ended ended
28 February 2019 28 February 2018
R'000 R'000
Cash flows from operating activities
Cash generated from/(used in) operations 285 417 (129 913)
Interest received 4 590 15 273
Finance costs paid (43 443) (78 962)
Taxation paid (145 394) (196 636)
Net cash generated from/(used in) operating activities 101 170 (390 238)
Cash flows from investing activities
Purchase of property, plant and equipment (29 050) (40 182)
Proceeds on sale of property, plant and equipment 57 45
Purchase of intangible assets (6 097) (31)
Loans advanced to related parties (9 981) -
Movement in development loans receivable 408 26 271
Associate acquired (1) -
Net cash used in investing activities (44 664) (13 897)
Cash flows from financing activities
Development loans repaid (1 108 495) (939 838)
Development loans raised and utilised 1 254 398 1 090 636
Investment loan and general banking facilities raised and utilised 126 100 -
Dividends paid (99 160) (193 599)
Net cash generated from/(used in) financing activities 172 843 (42 801)
Total cash and cash equivalents movement for the year 229 349 (446 936)
Cash and cash equivalents at the beginning of the year 100 033 546 969
Cash and cash equivalents at end of the year 329 382 100 033
Summarised Consolidated Statement of CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2019
Foreign
currency
translation Share-based Retained
Share capital reserve payment income Total equity
R'000 R'000 reserve R'000 R'000
Balance at 1 March 2017 664 354 (1 231) - 1 350 386 2 013 509
Profit for the year - - - 491 345 491 345
Other comprehensive income - 651 - - 651
Total comprehensive income for the year - 651 - 491 345 491 996
Dividends paid - - - (193 599) (193 599)
Balance at 1 March 2018 664 354 (580) - 1 648 132 2 311 906
Profit for the year - - - 452 383 452 383
Other comprehensive income - 103 - - 103
Total comprehensive income for the year - 103 - 452 383 452 486
Recognition of share-based payment reserve - - * - *
Treasury shares acquired (11 376) - - - (11 376)
Dividends paid - - - (99 160) (99 160)
Balance at 28 February 2019 652 978 (477) * 2 001 355 2 653 856
* Denotes a value of less than R1 000.
Notes to the SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2019
1. Basis of preparation
The audited summarised consolidated financial statements have been prepared in accordance with the JSE Listings Requirements and the Companies
Act 2008 of South Africa.
The JSE Listings Requirements require the provisional results to be prepared in accordance with the framework concepts and the measurement
and recognition requirements of International Financial Reporting Standards ("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 also as a minimum
contains 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 Rands rounded to the nearest R'000, which is the group's
functional and presentation currency.
The audited consolidated financial statements and the unmodified opinion from which these summarised consolidated 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 IFRS. The accounting policies are consistent to those of the prior year annual consolidated financial statements,
except for the new accounting policies applied in the current year. The application of the new accounting policies had no impact on the consolidated
financial statements.
The audited summarised consolidated provisional statements and annual consolidated 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 14 May 2019.
The summarised consolidated provisional financial statements have been audited by Deloitte & Touche, the external auditor, who issued an unmodified
ISA 810 opinion. The ISA 810 opinion and the audit report on the consolidated financial statements are available for inspection at Balwin's registered
office. The auditor's report does not necessarily report on all the information contained in the announcement/financial results. Shareholders are
therefore 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 Balwin's registered office. Forward-looking statements are not reported on by
the external auditors.
Audited Audited
12 months 12 months
ended ended
28 February 2019 28 February 2018
R'000 R'000
2. Revenue
Revenue from sale of apartments 2 598 944 2 449 942
Donations 3 348 -
Bond commission 7 334 4 463
Rental of electronic communication 4 279 230
2 613 905 2 454 635
Audited as at Audited as at
28 February 2019 28 February 2018
R'000 R'000
3. Developments under construction and inventories
Developments under construction 3 042 919 2 587 088
Merchandise - 1 384
3 042 919 2 588 472
Developments under construction include the following:
Costs of construction 1 106 277 891 888
Land and land contribution costs 1 086 425 888 499
Development rights 850 217 806 701
3 042 919 2 587 088
Development rights pertains to the rights assigned to Balwin Properties including all the rights to use the Polo Fields and the Waterfall Fields properties for the
purpose of undertaking the developments.
The cost of developments under construction recognised as an expense during the current year was R1 826.0 million (2018: R1 649.4 million). Costs previously
capitalised to developments under construction to the value of R5.8 million were written off in the current year (2018: Rnil).
A mortgage bond is in place over certain portions of land which acts as security for the development loans advanced. At year end, the following mortgage
bonds were registered:
Audited Audited
value of value of
mortgage bond mortgage bond
2019 2018
Land R'000 R'000
Remaining Extent of Portion 14 Farm 197 Olivedale 200 000 200 000
Erf 20252 Somerset West 200 000 300 000
Retention of a first covering notarial deed of lease over Portion 822 (a portion of portion 62) of the 400 000 400 000
Farm Waterval
Remaining Extent of Portion 6 and Portion 241 of Farm Zwartkoppies No. 364 JR 300 000 200 000
Portion 837 (a portion of portion 1) of the Farm Waterval 5 IR 200 000 200 000
Erf 2 Richmond Park; Remaining Extent of Erf 36555 Milnerton and Erf 38435 Milnerton 200 000 200 000
Holdings 92, 102, 103, 104, 105 and 106 Crowthorne Agricultural Holdings, City of Johannesburg 187 256 187 256
Remaining extent of Holding 20, Holdings 28, 29, 30, 31, 32, 33, 35, 36, 37 and 38 Linbro Park 183 536 183 536
Agricultural Holdings
Erven 19311, 19312, 19314, 19468 and Erf 19533 Somerset West 200 000 -
Portion 1 of Holding 20, Holdings 21, 22, 23, 24, 25, 26, 27; Holding 34, Linbro Park 224 385 -
Agricultural Holdings
Portion 1 of Erf 4484 Ballitoville, Kwadukuza 190 579 -
Sections 26 to 36, 60 to 64, 66 to 67, 74 to 78 Paardevlei Square, Somerset West, City of Cape Town, 35 788 -
Division Stellenbosch
4. Share capital
Audited Audited
Number of shares Number of shares
28 February 2019 28 February 2018
'000 '000
Authorised
Ordinary shares 1 000 000 1 000 000
Audited Audited
as at as at
28 February 2019 28 February 2018
R'000 R'000
Issued and fully paid up
Ordinary shares 652 978 664 354
The unlisted shares are under the control of the directors until the next annual general meeting.
Audited Audited
Number of shares Number of shares
28 February 2019 28 February 2018
'000 '000
Reconcilliation of shares in issue
Opening balance 469 915 469 915
Treasury shares converted 2 227 -
Shares bought back and held in treasury (4 510) -
Closing balance 467 632 469 915
Audited as at Audited as at
28 February 2019 28 February 2018
R'000 R'000
5. Development loans
Held at amortised cost
Development loans 1 397 581 1 251 678
General banking facility 75 000 -
Investment loan facility 51 100 -
1 523 681 1 251 678
Audited as at
Average nominal 28 February 2019
Development loans interest rate % Maturity date R'000
Non-current loans
Portimix Proprietary Limited 8.00 Between June 2020 and June 2025 375 473
Current loans
ABSA Bank Limited 10.25 Between March 2019 and February 2020 554 563
Nedbank Limited 10.25 Between March 2019 and February 2020 218 566
Investec Bank Limited 10.00 - 10.25 Between March 2019 and February 2020 218 196
Portimix Proprietary Limited 8.00 June 2019 30 783
1 022 108
1 397 581
Investment loan and general
banking facilities
Current loans
Nedbank Limited 9.50 March 2019 75 000
Absa Bank Limited 10.25 April 2019 51 100
126 100
Audited as at
Average nominal 28 February 2018
Development loans interest rate % Maturity date R'000
Non-current loans
Portimix Proprietary Limited 8.00 Between June 2019 and June 2025 453 165
ABSA Bank Limited 10.25 Between March 2019 and August 2019 126 463
579 628
Current loans
Nedbank Limited 10.25 Between March 2018 and February 2019 359 501
Investec Bank Limited 10.00 - 10.25 Between March 2018 and February 2019 208 106
Portimix Proprietary Limited 10.50 June 2018 54 283
ABSA Bank Limited 10.00 - 10.25 August 2018 50 160
672 050
1 251 678
Audited as at Audited as at
28 February 2019 28 February 2018
R'000 R'000
Non-current liabilities
At amortised cost 375 473 579 628
Current liabilities
At amortised cost 1 148 208 672 050
1 523 681 1 251 678
Fair value of the financial liabilities carried at amortised cost
Development loans 1 397 581 1 251 678
Investment loan and general banking facilities 126 100 -
1 523 681 1 251 678
Development loans include funding provided for top-structure funding as well as land loans. Top-structure funding payable to the financial institutions is
secured by a pre-defined level of pre-sold apartments for which financial guarantees are in place. Land loans are secured by bonds registered over the land.
The development loans payable to Portimix Proprietary Limited pertain to the development rights agreement for the property. The loans reflect the discounted
contractual cash flows and have been discounted at the average lending rate of the group at inception of the transaction.
Investment loan and general banking facilities pertain to short-term bridging loan facilities.
6. Related party disclosure
Audited as at Audited as at
28 February 2019 28 February 2018
R'000 R'000
Related party balances
Loan accounts owing by related parties
Balwin Rentals Proprietary Limited 9 981 -
Related party transactions
Sale of apartments to related parties
SV Brookes* - 141 189
RN Gray* - 54 119
Volker Properties Proprietery Limited*@ 9 391 44 056
ML Brookes# - 9 947
S Brookes*# 1 511 2 612
J Weltman* 629 1 333
Balwin Rentals Proprietary Limited 85 588 -
Rent paid to related parties
SV Brookes 1 635 763
Volker Properties Proprietary Limited@ 252 -
Management fee from related parties
SV Brookes - 176
RN Gray 129 119
U Gschnaidtner 29 22
J Weltman 6 4
Balwin Rentals Proprietary Limited 69 -
Purchases from a director and shareholder
SV Brookes - 10 600
Malewell Investment Proprietery Limited - 5 000
Compensation to directors and other key management
Directors emoluments 33 968 39 396
* Certain of the above transactions were purchased under the group's staff discount policy.
@ The entity is controlled by SV Brookes.
# Child/spouse of SV Brookes.
7. Financial instruments
Audited Audited
as at as at
28 February 2019 28 February 2018
R'000 R'000
Financial assets at amortised cost
Trade and other receivables 912 119 856 024
Cash and cash equivalents 329 382 100 033
Development loans receivable 3 450 3 858
Loans to related parties 9 981 -
Financial liabilities at amortised cost
Development loans (1 523 681) (1 251 678)
Trade and other payables (79 195) (63 771)
Contract liability (91 344) -
8. Fair value information
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 techniques.
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 where available and rely as little as possible on company specific estimates.
The group does not hold any financial instruments that are classified as Level 3. There were no transfers between Levels 1, 2 and 3 during the year.
9. Events after reporting period
The directors are not aware of any material event which occurred after the reporting date and up to the date of this report.
Disclaimer
This report, for the relevant period ended 28 February 2019 has been prepared in accordance with International Financial Reporting Standards (IFRS).
The financial information and financial statements included in this report are presented in Rands. Certain numerical figures included in this report have
been rounded. Therefore, discrepancies in tables between totals and the sums of the amounts listed and between figures in tables and their respective
analysis in the text of the report may occur due to such rounding. All changes in percentage and ratios were calculated using the underlying data in
ZAR thousands.
This report contains information, data and predictions about our markets and our competitive position. We have not verified the accuracy of such
information, data or predictions contained in this report that were taken or derived from industry publications, public documents of our competitors or
other external sources. We believe that the information, data and predictions presented in this report provide fair and adequate estimates of the size of
our markets and fairly reflect our competitive position within these markets. However, our internal estimates have not been verified by an external expert,
and we cannot guarantee that a third party using different methods to assemble, analyse or compute market information and data would obtain or
generate the same results. In addition, our competitors may define our and their markets differently than we do.
The report includes forward looking statements, which, although based on assumptions that we consider reasonable, are subject to risk and
uncertainties, which could cause actual results, events or conditions to differ materially from those expressed or implied herein. 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. Investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly the result of any revisions to these
forward-looking statements which may be made to reflect events or circumstances after the date hereof, including, without limitation, changes in our
business or strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events. 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
Incorporated in the Republic of South Africa
Registration number 2003/028851/06
Share code: BWN
ISIN: ZAE000209532
("Balwin" or "the Group")
Directors
H Saven (Chairperson)*#
SV Brookes (Chief Executive Officer)
J Weltman (Chief Financial Officer)
RN Gray (Managing Director)
A Shapiro*#
O Amosun*#
KW Mzondeki*#
T Mokgosi-Mwantembe*#
R Zekry#
* Independent
# Non-executive
Company secretary
JUBA Statutory Services Proprietary Limited
Registered office
Block 1, Townsend Office Park
1 Townsend Avenue
Bedfordview
Private Bag X4, Gardenview, 2047
Telephone: 011 450 2818
Sponsor
Investec Bank Limited
Transfer secretary
Computershare Investor Services Proprietary Limited
(Registration number 2004/003647/07)
Rosebank Towers, 15 Biermann Avenue, Johannesburg, 2196
(PO Box 61051, Marshalltown, 2107)
www.balwin.co.za
14 May 2019
Date: 15/05/2019 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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