- Registered a profit after tax of ZMW46.9 million from a loss of ZMW10.8 million
- operating profit before investment property revaluation registered increases of close to 8%
- The group gained ZMW114.8 million in fair value of investment property portfolio
Harare – Real Estates Investments Zambia (REIZ) registered a growth in profit for the half year period ended 30 June 2020 compared to a loss experienced in the prior comparable period.
The group recorded a profit after tax of ZMW 46.9 million compared to a loss after tax of ZMW 10.8 million for the same period in 2019.
The profit was primarily attributed to a ZMW114.8 million gain in the fair value of the group’s investment property portfolio driven mainly by the impact on ZMW-equivalent of property values of a depreciation of the ZMW against the USD.
However, in USD terms, the investment property value declined by $10.9 million.
Group revenue for the six months to 30 June 2020 decreased by 10.67%, in comparison with same period in prior year.
The company attributed the low revenue to higher vacancies and Covid-19 related non-invoicing and discounted invoicing for some tenants that were not operating during the second quarter after Government directives for closure of certain businesses such as restaurants, cinema, bars, casinos and hair-saloons.
Overall portfolio vacancies increased from 25.72% to 31.27% between June 2019 and June 2020.
REIZ commented that, “The ZMW/US$ exchange rate at an average of ZMW14.7/US$1 played in favour of the H1 2020 rentals revenue compared to H1 2019 when the average exchange rate was around ZMW12.5/US$1 but this was not sufficient to fully compensate for the reduction in revenue due to vacancies and Covid-19 restrictions.
“The Company performance followed a somewhat different trend as both revenue and operating profit before investment property revaluation registered increases of close to 8%.”
The company also highlighted that properties in the Company’s portfolio, being in other sectors not the retail sector, were less affected by the Covid-19 restrictions.
The company’s bottom-line at ZMW16.46 million further benefitted from the gain in ZMW property portfolio revaluation of ZMW97.9 million which more than compensated for the increased exchange losses and net finance costs of ZMW74.1 million and ZMW15.2 million respectively, up from ZMW16.9 million and ZMW11.5 million in 2019.
On the outlook the company expects the property industry to remain challenging for the remainder of the year with the adverse market forces that characterized the first half of 2020 continuing to prevail in the second half particularly regarding occupancy levels and market rental rates.
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