Balwin bracing for headwinds after a solid 2019

The coronavirus was not left out of Balwin Properties' [JSE:BWN] voluntary business and trading statement for the year ended in February 2020, as the company said headwinds expected in 2020 might undermine the gains of a solid 2019.

Consolidated earnings per share and headline earnings per share for the year ended in February this year were expected to decrease by between 6% and 11% over 2019, translating into a decrease from the prior financial year’s R95.82 cents and headline earnings per share of R95.84 to a range of between R85.3 and R90.5 cents per share.

Balwin Properties' operations did well enough in 2019 that the company initiated the process to buy embattled Tongaat-Hulett's Umhlanga property for R167.2 million, a deal that the property company concluded last month.

According to the property company’s shareholder notice released on Wednesday, the company sold and recognised revenue from approximately 2700 apartments in in 2020, compared to 2437 apartments in 2019.

The notice said Balwin enjoyed a R150 million increase in cash and cash equivalents with approximately R475 million cash on hand at year end.

It added that Balwin continued to experience strong demand for its lifestyle apartments for the year ended in February this year, despite continued economic headwinds and increasing consumer pressure.

"The sustained demand is reflected in an approximate 11% increase in the number of apartments recognised in revenue during the financial year, when compared to the prior year," the notice said.

The board, however, remained apprehensive about the macro-economic climate and policy uncertainty that came with challenges including the arrival of the coronavirus in South Africa.

"In this context, and as advised at the interim results, the Board continues to place an emphasis on appropriate cash management and cost containment.

"The board is also concerned about the possible implications of the coronavirus Covid-19 on our people, our communities, our operations and the financial implications to the business," the notice said.

The notice said the board was taking proactive steps to appropriately understand and manage the risks associated with the virus. Balwin's share on the Johannesburg Stock Exchange stood at R2.70 by midday on Wednesday.

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