MASHONALAND Holdings Limited has recorded a 28% decline in after tax profit to $1,6 million for the half year ended March 31 2014 as compared to $2,7 million over the same period last year.
In a statement accompanying the group’s unaudited results, the company attributed the decline to the subdued economic environment.
Revenue declined by 6% to $3,6 million, other income declined to $75 988 from $76 514 and administrative expenses grew to $1,4 million from $974 419 in 2013.
Mashonaland Holdings chairperson Elisha Mushayakarara said the economic environment had remained subdued during the period under review. Consequently, the rental market stagnated, occupancy levels within the portfolio gradually declined and some tenants could not adequately discharge their lease obligations and mortgage finance remained elusive, curtaining activity in the real estate sector.
“Revenue at $3,6 million was 6% below the corresponding period last year due to high voids levels within the portfolio. Various initiatives are being pursued to mitigate the decline in revenue,” Mushayakarara said.
In the period under review, property expenses increased by 57% to $ 0, 6% million, operating cost relating to voids constituted 28% of this spend.
He said administrative expenses increased by 42% mainly driven by the payment for the performance-based incentive scheme.
Subsequently, the administrative expenses to income ratio were 37% as compared to 25% in 2013.
He, however, said the office development project in Belgravia was progressing well and was on schedule. Beneficial occupation by tenant is earmarked for end of August 2014.
“The group is also pursuing two residential projects, mainly at Westgate and Hazeldene. These projects are at different stages of municipal approvals .construction is anticipated to commence within the current financial year,” he said.
He added that the rental levels declined across all sectors of the portfolio. The office sector, which constitutes 46% of the portfolio, was most affected. Collection levels declined from 89% as at September 30 2013 to 81%.
Mushayakarara said the group was actively pursuing various initiatives to collect outstanding amounts.