- Revenue increases by 4%
- Profit before tax up by 8%
Property Management Company, Letlole La Rona Limited (LLR) has reported a 4 percent year-on-year revenue increase for the half-year ended 31 December 2022 driven by annual lease escalations and a strong tenant base.
According to the company half-year results, Letlole also recorded a significant increase in other income mainly on the back of foreign exchange gains on its Orbit Africa Logistics (OAL) shareholder loan.
The company’s collections efforts also continue to bear fruit, with outstanding debtors showing a steady decline while collection rates were largely above 100 percent during the period under review. The report says the quality of tenants improved following the exit of some tenants who were defaulting on their lease obligations. “As a result, the provision for bad and doubtful debts recorded a decline year-on year,” LLR says.
While its expenses increased sharply during the period under review, the company says this is in line with expectations and is mainly on the back of resourcing for some of the key positions and internal promotions to support the company’s strategy. Letlole notes that its investments in associates have also performed exceptionally well during the period under review, leading to strong growth in finance income and share of profit from associates.
The property portfolio remained resilient, recording a fair value gain of P7.3 million. “This is, however, below the P11 million gain recorded in the previous year, with the variance largely attributable to refurbishments made to investment properties during the period under review,” says LLR in the results.
“Profit before tax increased by 8 percent to close the period under review at P49.7 million.” The company’s balance sheet remained strong, with the investment portfolio recording growth of 14 percent year-on-year largely on the back of acquisition of a 30 percent stake in OAL in July 2022. Long-term loans increased significantly during the period under review on the back of the funding requirements for JTTM Properties (Proprietary) Limited (JTTM) and OAL.
The net asset value of the company closed at P872.3 million, representing an increase of 7 percent from the prior year’s figure of P813.9 million, showing consistent year-on-year value enhancement to unitholders. Giving an operational overview, the report says Letlole’s its investment portfolio continues to generate strong cash flows and has supported the solid financial performance of the company in the first half of the 2022/23 financial year.
“This is underpinned by relatively medium-term leases and the good quality of our tenants, as well as the strong demand of warehousing spaces, which has effectively resulted in very high occupancy levels,” says the report. The company’s weighted average lease expiry period stands at 3.3 years and escalation rates are at an average of 6.8 percent per annum. According to the report, the investment portfolio value has increased by 14 percent year-on-year to close the period at P1.4 billion.