- PAT rose from ZWL7.7 bn to ZWL236.4 bn
- Capital gains increased by 117%
- From ZWL3 bn, OP rose to ZWL34 bn
Harare- Mashonaland Holdings Limited, a prominent property and investment company listed on the Zimbabwe Stock Exchange (ZSE), has experienced a record-breaking surge in profit after tax during the first half of 2023 ended June 30. The Group’s profit after tax rose significantly from ZWL7.7 billion to a record high of ZWL236.4 billion. This is the first time the Group has crossed a ZWL100 billion profit mark. The Growth was attributed to two key factors: improved operational profitability and substantial capital gains recorded on investment properties.
During the first half of 2023, Mashonaland Holdings conducted an open market valuation of its investment properties, revealing an impressive portfolio value of ZWL453 billion. This valuation represented a substantial 117% capital gain compared to the previous year, highlighting the significant appreciation of the company's investment properties. The open market valuation process involves assessing the current market value of the investment properties based on prevailing market conditions and comparable property sales. The substantial capital gain realised through the open market valuation had a positive impact on the company's overall financial performance. It not only demonstrated the value appreciation of the investment properties but also contributed to the growth of rental income in inflation-adjusted terms. As the properties gained value, the rental income generated from these properties also increased, bolstering the company's financial position.
Operational profitability rose from ZWL3 billion to an impressive ZWL34 billion as the Group focused efforts on enhancing operational efficiency and optimising its business processes. By optimising its business processes, Mashonaland Holdings was able to eliminate inefficiencies, reduce costs, and enhance overall productivity. This resulted in increased revenues and improved profit margins.
Meanwhile, the fair value adjustments shot up from ZWL9 billion to ZWL244 billion. Fair value adjustments involve periodically re-evaluating the value of assets and liabilities based on their estimated fair market value. This valuation process takes into account current market conditions, supply and demand dynamics. By incorporating fair value adjustments, it ensures that financial statements provide a more precise and reliable representation of the value of its assets and liabilities. The substantial increase in fair value adjustments indicates that the market value of the Group’s assets and liabilities experienced significant changes during the period under review.
The Group made significant progress on its strategic initiatives and projects, showcasing the company's commitment to portfolio expansion and meeting market demand. Some notable achievements were the completion of all pre-construction works for the Pomona Commercial Centre. This milestone indicates that the necessary groundwork, such as site preparation, infrastructure development, and planning, has been successfully accomplished. Additionally, Mashonaland Holdings secured an anchor tenant and achieved a pre-leasing rate of 60% for the development. This demonstrates the company's ability to attract tenants and generate interest in its projects even before their completion.
The Milton Park Day Hospital project also made substantial progress, reaching 90% completion. This indicates that the construction of the day hospital is near its final stages, with only a small portion of the project remaining. Once completed, the day hospital will contribute to the healthcare infrastructure and services available in the area, meeting the needs of the community and contributing more income to the Group.
The Mashview Gardens housing project has reached significant milestones and is now in the final stages of completion. With the majority of the work already accomplished, the construction and development of the project are nearing their conclusion. The successful achievement of significant milestones and the nearing completion of the Mashview Gardens housing project highlight Mashonaland Holdings' commitment to meeting market demand and expanding its presence in the real estate sector.
The stronger than expected earnings and property milestones were achieved despite the tight property market conditions characterised by low activities in the formal sector of the economy. The CBD-office subsector experienced limited growth due to a sluggish absorption rate. However, there were pockets of growth observed in the retail and office park segments. The industrial segment remained strong, with steady demand for strategically located industrial warehouse space.
According to the Group, office tenants showed a clear preference for suburban and out-of-CBD office spaces. This preference was attributed to deteriorating infrastructure and urban issues such as congestion, overpopulation, and pollution in the city centre. The development submarket encountered challenges such as high construction costs, limited long-term financing options, and high capital costs. However, the residential property market presented notable investment opportunities due to a positive demand for housing. The supply-demand imbalance in the residential sector led to increased property prices for medium to high-income residential properties.
Going ahead, Mashonaland Holdings maintains a positive outlook. The company anticipates a strong rebound in the tourism sector and a backlog in housing demand, which will further support its growth trajectory. With its ongoing projects and strategic positioning in the market, Mashonaland Holdings is well-positioned for continued success in the short to medium term.
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