The Group reported a profit after tax of ZMW 67.7 million for 2022 compared with a loss of ZMW 324.5 million in 2021.
The Group and Company earned a profit mainly on account of increase in fair values of the investment properties and reduction in finance costs. The investment properties values increased due to improved group occupancy rates which stood at 76.2% as at 31 December 2022, an increase of 10% from 66% as at 31 December 2021. The biggest improvement in occupancy rates was at Arcades Shopping Mall from 60% in 2021 to 78.7% in 2022. The depreciation of the Zambian Kwacha against the United States Dollars by 8.5% during the financial year 2022 also contributed to the increase in fair values of investment properties which are valued in United States Dollars. The stability in the exchange rate especially in the first 10 months of the financial year reduced the finance cost by 13% compared to prior year and this led to the Group and Company making a profit after finance costs.
Revenue in Zambian Kwacha terms was 5% below prior year purely due to the rental billing average exchange rate of ZMW16.98 to 1USD being lower in 2022 as compared to ZMW17.98 to 1USD in 2021. In reality the revenue in United States Dollar terms was 2% higher in 2022 over the previous year. The increase in revenue in dollar terms was due to improved occupancy at Arcades Shopping Mall and Counting House, and no discounts or rental concessions being granted to tenants during the year.
FAIR VALUE OF INVESTMENT PROPERTY PORTFOLIO
The fair value of the Group’s investment property portfolio increased from ZMW757 million in 2021, to ZMW837 million in 2022 mainly on account of the increased occupancy levels and the depreciation of the Zambian Kwacha against the United States Dollar by 8.5% during the financial year from ZMW 16.66 to 1USD as at 31st December 2021 to ZMW18.08 to 1USD as at 31st December 2022. The fair value of the Group’s investment property portfolio was determined by external independent and professional property valuation experts, Rochdale Property Consultants, who possess the appropriate internationally recognised professional qualifications and have the requisite experience in the location and category of the properties that were valued. The fair valuation of the investment properties is performed twice a year as at 30th June and at 31st December in order for the Group’s financial statements to provide reliable, relevant and up-to-date information about its financial position and performance.
The Group recorded an increase in net cash generated from operating activities from ZMW11 million in the prior year to ZMW25 million in 2022. This represents an increase of 127% and is mainly attributable to lower finance and administration costs in 2022 as compared to 2021. The Group experienced an increase in cash and cash equivalents during the year to ZMW12 million in 2022 from ZMW1 million in 2021. The increase was due to the successful rights issue which resulted in the Group and company issuing new shares and raising ZMW156,505,000 with most of the funds being used to partly pay off the corporate bonds.
The Directors resolved not to pay any dividend for the year ended 31 December 2022. (2021: Nil)
Early last year the directors of the Company engaged consultants to run with the process of raising capital to finance the settlement of the corporate bonds which matured in November 2022. The company in December 2022 was recapitalised through a rights issue and the corporate bond debt was significantly reduced by 66% from the rights issue proceeds. The rights issue resulted in the coming in of a new majority shareholder LM& C Properties Limited who has a proven track record of operational excellence when it comes to property management. The Group is expected to perform significantly better in 2023 due to reduced finance costs and increased revenue as a result of reduced vacancies.
BY ORDER OF THE BOARD
Issued in Lusaka, Zambia on 16 March 2023
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