We have extracted the financial summary from the full year abridged report of RDC Properties Limited listed on the Botswana Stock Exchange under the share code RDCP.bw. RDC Properties is a property management, development and rental company in Botswana.
The following is an excerpt from the full year abridged report:
The Year Review & Prospects
It is a pleasure to present to you the audited Financial Statements of the Group for the year ended 31st December 2018, a very positive year with a strong set of financial results. We are particularly satisfied in view of the contribution of our diversification drive, underpinned by the strength of our investment in Capitalgro, despite difficult conditions in the region. The investment and property portfolio is up 19% to P1,943 million and rental revenue is up 57% to P156.0 million.
The capital raised in November 2015 (a 57% increase in capital), has been deployed creating substantial value to our shareholders. Within 3 years our rental income has grown from P87 million to P156 million (growth of 79%), the property portfolio has grown from P1,103.8 million to P1,942.6 million (growth of 76%), operating profits from P62.8 million to P114.9 million (growth of 83%) and distribution to shareholders from P21.3 million to P45.6 million (growth of 114%). Of major significance in analyzing our financial results is the positive rebalancing of our income stream by sector and geography.
The local market remains challenging, although rental income has been good from the hospitality sector. In Q4 of 2018 the redevelopment of the ICC Flats was completed at the desired cost. This is a prime residential property with 65 flats in the centre of Gaborone, Botswana, with rentals and uptake very pleasing. The revenue from the flats will contribute positively in 2019. Our vision of creating a retirement offering in Gaborone is now closer as we wait for approvals by authorities. The first offering includes 12 houses, 55 apartments, a central block with frail care and step down facilities.
In March 2018 we invested an additional R120 million into Capitalgro, South Africa, giving us a 63% stake in the company. This additional investment enabled Capitalgro’s acquisition of the AAA certified green commercial building known as “The Edge”, in Cape Town’s Tyger Valley, housing blue chip tenants. The Capitalgro portfolio continues to ensure strong rental income streams. Evidence of this has been the low vacancy factor across the portfolio, which was 1.2% at year-end. The portfolio was valued at R680.6 million year-end, representing a capital appreciation of 6.8%. RDC have recently signed a memorandum of understanding with a Cape Town developer for the redevelopment and construction of a 5-storey office block in the vibrant and growing Woodstock corridor. Our participation in the development company will be on a 50-50 basis. Thereafter, we shall sell a ‘turn-key’ rental enterprise to Capitalgro upon completion in mid-2020.
We have entered negotiations with third parties, which subject to conclusion, will result in the Company participating in the development of a large branded hotel leading to its acquisition once completed. The development is perfectly located in the vibrant and multicultural district of Rosebank, north of Johannesburg city centre.
Our development in the United States is proving positive and by end 2018, 65% of the apartments were sold. Completion of the development and the initial pay-out of our share are expected by Q2 2019. We have started to review possible other investments since we want to retain some US Dollar exposure as hedge to the local currencies.
Unfortunately in Namibia, we are still awaiting the finalization of the land acquisitions before starting the developments. This protracted process has set us back with tenancies too.
The economy in Mozambique is experiencing difficulties despite large finds in the oil and gas sector. It is still believed that the positive effect will be felt once the gas fields start operating. The retail market remains very difficult. Despite completing the extension of the Xai Xai shopping centre, and securing a number of line shops, we experienced a set back with a large Botswana based supermarket retailer not carrying out the fit-out of their unit. Fortunately, the shopping centre is well positioned in the town. We are actively sourcing another anchor tenant and remain positive for the future. Advanced civil works have started on the Zimpeto (Maputo) site and
we expect the petrol station component to follow as soon as possible.