In compliance with the requirements of the Securities (Registration of Securities) Rules, 1993, and the listing rules of the Lusaka Securities Exchange, Real Estate Investments Zambia PLC announces the financial results of the Group for the six months ended 30th June 2017. These interim financial results are derived from the Group’s Management Accounts, which have been approved by the Directors, but have not been audited.
Reported Kwacha rental income declined by 5.85% for the first six months period in 2017 compared to the same period in 2016. This reduction is attributed to the strengthening of the Kwacha against the USD to average K9.69/$ compared to K10.88/$ in 2016. In USD Dollar terms, revenue increased by 5.71% on account of annual escalations and new leasing.
Consequent to the exchange rate driven reduction in rental income and inflation related increase in operating costs; profit before other income, finance cost and tax declined by 9.34%. The lower change in fair value of investment property of K1.987 million compared to K14.627 million in 2016 impacted profit after tax closing the half year with K24.95 million compared to K38.09 million in 2016.
Despite the negative impact of the exchange rate on the operating results, the Board is pleased to confirm that the restructuring measures in the Group’s operations to enhance its profitability are bearing fruit and have greatly contributed to the Group’s solid and fundamental performance in the first half of the 2017 financial year.
The decrease in the fair value of investment property between the two periods was reported on in the 2016 annual report and was attributed to the revaluation of investment property at 31st December 2016 which resulted in a decrease in value due to strengthening of the Kwacha against the USD during the year despite the Group’s investment property portfolio posting growth in USD rental income and improvements in service cost recovery. The fair value of investment property has been reassessed as at 30th June 2017 by external independent property valuers Knight Frank Zambia Limited who possess appropriate recognised professional qualifications and have requisite experience in the location and category of the properties valued. Revaluation is done at 30th June and at 31st December each year in order for financial statements to provide reliable and more
relevant information about the Company’s financial position and its financial performance.
Arcades Shopping Mall
Refurbishment and redevelopment of the Arcades Shopping Mall is on course. The refurbishment and redevelopment program will increase lettable space, provide a facelift and
achieve efficient distribution of foot traffic to the Mall. Once the refurbishment and redevelopment project is completed, consumers will have at their disposal a high class modernised mall that offers the entertaining way to shop.
The Directors resolved to pay an interim dividend for the year ending 31st December 2017 of K0.10 per share. The interim dividend will be payable to members registered in the books of the company on close of business on Friday 27th October 2017. Warrants in payment will be posted during the week commencing Monday 30th October 2017.
The Directors will review the results for the full year and will recommend a final dividend that will take into account the interim dividend paid for approval by Shareholders at the Annual General Meeting (AGM) that will be held before 31st March 2018.
BY ORDER OF THE BOARD
2017 Interim financial results