adminZPI’s operating profit in the year to May was down 29 percent to $696 232 as the weakening of the economy has resulted in weak rental income and poor project sales.
Rental income was down 3 percent to $1,49 million but 8 percent above the budget of $1,38 million.
Managing director Mr Edson Muvingi in a trading update at the AGM, project sales were 44 percent below prior year but 34 percent above budget at $525 582 as the group sold most of its stock last year.
Other income was 25 percent above last year at $76 887 but total income closed 17 percent lower at $2,1 million but 11 percent ahead of budget at $1,88 million.
Total admin costs were 9 percent ahead of last year at $868 513 (budget was $809 820). Personnel costs went up 20 percent to $547 124 from $454 677 and project costs were 29 percent better at $536 053 due to a slowdown in the projects pipeline.
“In spite of all the constraints the group managed to post a positive operating profit albeit lower than last year.
“The operating environment is characterised by declining property values, increased debtors and the continued increase in voids.”
In terms of ratios, Mr Muvingi noted that staff costs/income was at 26 percent from 18 percent last year, admin costs/income 38 percent from 29 percent last year while the operating profit margin was at 33 percent against 39 percent last year.
Mr Muvingi expressed optimism that the numbers would correct in the third quarter leading to an improved out-turn at year end.
Rent collections were at 92 percent but had gone down to as low as 66 percent in April.
“What we have found out is that the older the debt, the more difficult it is to collect. We have also noticed that there is some barter trading that’s creeping into the some sectors of the economy and this highlights the extent to which businesses are struggling.”
Voids were at 21 percent from 19 percent last year.
“Voids are going up significantly especially in the city centre. We expect the CBD to continue having problems until the informalisation problem is sorted.”
On the projects pipeline, Mr Muvingi said that 243 stands out of 288 had been sold in Tynwald with revenue amounting to $2,89 million against the project cost of $2,64 million.
The group had now recovered its costs while the expected return is at 50 percent.
Zimre Park Masvingo had sold 235 out of 338 stands, a figure which Mr Muvingi said was disappointing. Eighty-three percent of the costs had been recovered from revenue of $4,14 million while the group expects a 40 percent return.
Parklands Bulawayo costs had been fully recovered but only 98 stands had been sold out of 136 with revenue earned of $1,3 million.
“We expect a 168 percent return on the project considering it was started during the Zim dollar era.”
Work on Zimre Park Extension in Ruwa will soon begin after the group was awarded a permit. The project, covering 60ha which will be divided into 236 stands, will cost $5 million.
“We expect revenue of $6,2 million giving us an expected return of 24 percent. We are, however, cautious of the number as any increase in costs will mean that the number will come down significantly.”
The group also expects a 20 percent return from the sale of houses in Tynwald after having retained 40 stands. The average unit price is $65 000 with all finishes and fittings.
At the AGM, directors fees for last year were approved at $89 410 and auditors fees at $44 397.
The group also extended its share buyback programme after having purchased 15,5 million shares. — Wires.
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