- Investment portfolio value stands at P1.2 billion
- Profit before tax grew by 71 percent
- Share price appreciates by 29 percent
The investment portfolio value of Letlole La Rona has increased by 22 percent following the acquisition of a 32.79 percent stake in JTTM Properties, a company that owns the Rail Park Mall.
JTTM, a subsidiary of Botswana Railways, is the sole owner of Rail Park Mall, a 32,000sqm prime commuter mall situated in the heart of the Gaborone bus and taxi terminus.
In November last year, LLR announced that it had entered into a Sale of Share Agreement with Botswana Railways and JTTM for acquisition of 49,775.22 shares accounting for 32.79 percent of the shareholding in JTTM. The company said in a notice to the unitholders that the consideration for the sale of shares amounting to P152 million, being 32.79 percent of JTTM’s net asset value as at 30 June 2021 of P463.5 million, would be settled in cash upon fulfillment of the set conditions in the Sale of Shares Agreement.
The company has now announced in its financials for the year ended 30 June 2022 that its investment portfolio value now stands at P1.2 billion, which is a 22 percent increase from the prior year’s P1 billion. The growth in the investment value is attributed to the acquisition of a portion of shares in a company that owns Rail Park Mall.
The company says the acquisition of Rail Park Mall has substantially boosted the share of profit from associates as the investment which was acquired for P152million in December 2021 showed a 13 percent growth in value to close at P171million by year-end. “The acquisition was fully financed through a long-term loan facility, hence the 41 percent increase in finance costs from P15million in the prior year to P21 million,” says the company.
Other factors that contributed to the growth in the value of the investment portfolio is improved trading conditions and lower vacancy rates, which saw the fair value gains of the investment property increasing significantly from P8 million in the prior year to P25 million for the period under review. LLR says it has continued to deliver exceptional results during the period under review. Its revenue increased by 5 percent year-on-year to close at P108 million from the prior year’s figure of P103 million. This growth, LLR has announced, was on the back of average annual lease escalations of 6.7 percent supported by extremely low vacancy rates of less than 1 percent.
“There was a significant improvement in collection rates which exceeded 100 percent of the total monthly rentals billed, resulting in the credit loss allowances during the year being 35 percent lower than the prior year’s figure of P3 million,” the company stated. In addition, LLR says the improved rental collections and cash management led to higher cash reserves which were invested in various fixed deposits and money market instruments, hence the significant growth in finance income.
All the items mentioned have led to a growth in profit before tax of P45million (71 percent) to close at P109million for the period under review. LLR says it holds a well-diversified investment portfolio with strong cash-generating ability, resulting in the consistent delivery of solid financial and operational results. The industrial sector, which is the heart of LLR’s revenue, has reportedly proved to be resilient over the past 12 months with the demand for warehousing space continuing to be strong.
“On the back of the quality assets that the company holds, the portfolio has enjoyed remarkably high occupancies of 99 percent over the past 12 months.” The company believes its ability to negotiate long-term leases and maintain the weighted average lease expiry at 3.2 years as well as average annual escalation rates at 6.7 percent in an economy that is yet to return to the robust growth of years gone by is a testimony to the quality of its assets.
Another development worth noting is the performance of LLR’s share price which the company says has been pleasing. Having opened the financial year at P2.32 per share, it appreciated by 29 percent to close at P3.00 per share. The company stated that it has historically traded at a discount to net asset value but is now trading at net asset value. Its net asset value as at 30 June 2022 amounted to P846 million, a growth of 8 percent from the prior year’s value of P788million.
