Balwin Properties Ltd. · JSE:BWN
Balwin Properties — H1 2023 Earnings Presentation
43 slides from Balwin Properties's earnings presentation, October 2022
Slide 1: Results Presentation for the Six Months Ended 31 August 2022
RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 Your lifestyleour focus BALWIN PROPERTIES RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 1
Slide 2: Agenda
AGENDA 1 2 3 OPERATIONAL OVERVIEW FINANCIAL OVERVIEW SUSTAINABILITY 4 5 6 LOOKING FORWARD ANNUITIES ANNEXURES Cover image: Izinga, Umhlanga, KwaZulu-Natal BALWIN PROPERTIES RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 2
Slide 3: Operational Overview
1 OPERATIONAL OVERVIEW Steve Brookes Chief Executive Officer MUNYAKA BALWIN PROPERTIES RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 3
Slide 4: Operational Highlights
OPERATIONAL HIGHLIGHTS 1 360 1 551 Annuity businesses Apartments sold and recognised in Apartment pre-sold for future years Revenue contribution to the Group revenue for the period increased by 80% IZINGA THABA-ECO VILLAGE 45 411 Sustainable building Six Apartments in development pipeline, Internati
Slide 5: Operational Review
OPERATIONAL REVIEW Sustained strong demand with 8% increase in the number of apartments handed over for the first six months of the year Revenue has increased 20% over the prior comparative period Semigration is playing a key role in revenue growth in the coastal regions Maintain focus on core opera
Slide 6: Monthly Sales
MONTHLY SALES APARTMENT SALES PER MONTH (SEPTEMBER 2021 – AUGUST 2022) 350 300 250 200 150 100 12 month average sales per month is 262 apartments 50 0 Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug BALWIN PROPERTIES RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 6
Slide 7: Development Pipeline
DEVELOPMENT PIPELINE Total Total apartments Total Total apartments sold but not apartments in Total apartments recognised in recognised in Total unsold Development development apartments sold registered revenue revenue apartments Balwin pipeline Gauteng 41 689 8 144 7 543 7 619 525 33 545 34 070 Kwa
Slide 8: Financial Overview
2 FINANCIAL OVERVIEW Jonathan Bigham Chief Financial Officer THE HUNTSMAN BALWIN PROPERTIES RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 8
Slide 9: Financial Overview
FINANCIAL OVERVIEW R1.6 billion 20% 26% 2% R173 million 48% 36.63 cents 47% Revenue Gross profit margin Profit for the period Headline earnings per share FYNBOS KIKUYU 9.9 cents R581.2 million Loan-to-cost 39.7 % 771 cents 11% Gross dividend per share Healthy cash position Reduction in LTC
Slide 10: Condensed Consolidated Statement of Profit and Loss
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 AUGUST 2022 Unaudited Unaudited Audited six months ended six months ended year ended 31 August 2022 31 August 2021 28 February 2022 R’000 R’000 R’000 Revenue 1 580 626 1 312 208 3 125 269 C
Slide 11: Financial Review: Revenue
FINANCIAL REVIEW Revenue Revenue increased by 20% with 1 360 apartments handed over (H1 2022: 1 261 apartments) Coastal regions contributed 53% of revenue (H1 2022: 40%) Increase in revenue contribution from Signature developments from 15% to 23% Continued strong demand for one- and two-bedroom apar
Slide 12: Apartments Recognised in Revenue
APARTMENTS RECOGNISED IN REVENUE BY REGION (%) Apartments recognised in Development Region Development brand revenue in period Munyaka Johannesburg Classic Collection 170 31 35 H1 2023 H1 2022 Greenbay Western Cape Green Collection 130 Greencreek Tshwane Green Collection 124 1 360 50 1 261 De Aan-Zi
Slide 13: Average Selling Price Analysis: Green Collection
AVERAGE SELLING PRICE ANALYSIS Average selling price (Rands Selling price Description incl. VAT) growth 1-bedroom 676 060 3% 2-bedroom 922 685 9% 3-bedroom 1 139 043 11% Total 8% GREEN COLLECTION REVENUE CONTRIBUTION BY APARTMENT TYPE 49% 43% 43% 43% 14% 8% 1-bedroom 2-bedroom 3-bedroom H1 FY23 H1 F
Slide 14: Average Selling Price Analysis: Classic Collection
AVERAGE SELLING PRICE ANALYSIS Average selling price (Rands Selling price Description incl. VAT) growth 1-bedroom 974 550 10% 2-bedroom 1 615 422 11% 3-bedroom 2 085 814 18% Total 11% CLASSIC COLLECTION REVENUE CONTRIBUTION BY APARTMENT TYPE 41% 38% 31% 31% 28% 31% 1-bedroom 2-bedroom 3-bedroom H1 F
Slide 15: Financial Review: Gross Profit and Operating Expenses
FINANCIAL REVIEW Gross profit Gross profit margin growth remains a key focus Gross profit margin improved to 26% (H1 2022: 24%) despite cost increases Construction industry cost increases managed through effective cost engineering, modifications and cost containment Drive to flatten the yield curve
Slide 16: Financial Review: Operating Expenses and Earnings per Share
FINANCIAL REVIEW Operating expenses | continued Unaudited Unaudited six months ended six months ended 31 August 2022 31 August 2021 R’000 R’000 % change Balwin Properties 159 216 142 034 12% Fixed expenditure 102 002 96 009 6% Variable expenditure¹ 57 214 46 025 24% Balwin annuities 15 578 11 223 39
Slide 17: Financial Review: Dividend
FINANCIAL REVIEW Dividend Interim gross dividend of 9.9 cents per share declared (H1 FY22: 7.4 cents) Dividend payable in accordance with timetable below Declared 31 October 2022 Last day to trade (cum dividend) 06 December 2022 Ex dividend 07 December 2022 Record date 09 December 2022 Payment date
Slide 18: Condensed Consolidated Statement of Financial Position
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST 2022 Unaudited Unaudited Audited as at as at as at 31 August 2022 31 August 2021 28 February 2022 R’000 R’000 R’000 Assets Non-current assets Property, plant and equipment 313 487 223 542 259 397 Other non-current assets 39 330 3
Slide 19: Developments Under Construction
DEVELOPMENTS UNDER CONSTRUCTION Land and infrastructure Development Costs of costs Rights construction Total August 2022 February 2022 R'000 R'000 R'000 R'000 % % Region Gauteng 1 388 389 515 979 1 829 477 3 733 846 73% 70% Western Cape 374 485 - 203 541 578 025 11% 14% KwaZulu-Natal 386 911 - 409 7
Slide 20: Financial Review: Balance Sheet, Cash and Debt
FINANCIAL REVIEW Developments under construction Increase by R527.1 million to R5.3 billion (February 2022: R4.8 billion) driven by continued investment at Munyaka (Waterfall development node) and registration of final portion of land at Mooikloof Smart City (Tshwane) and related infrastructure cost
Slide 21: Funding Overview
FUNDING OVERVIEW August 2022 February 2022 R’000 R’000 Land 863 453 856 133 General banking and investment facility 1 105 492 887 206 Top structure 320 292 525 622 Common costs 93 210 57 591 Infrastructure 50 641 133 124 Development rights 21 245 15 934 Total 2 454 333 2 475 610 Loan-to-cost 39.7% 4
Slide 22: Consolidated Statement of Cash Flows
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 31 AUGUST 2022 Unaudited Unaudited Audited six months ended six months ended year ended 31 August 2022 31 August 2021 28 February 2022 R’000 R’000 R’000 Cash flows from operating activities Cash generated from/(used in) operations 190 018
Slide 23: Sustainability
3 SUSTAINABILITY Steve Brookes Chief Executive Officer GREENCREEK BALWIN PROPERTIES RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 23
Slide 24: Sustainable Business Practices
SUSTAINABLE BUSINESS PRACTICES Continued commitment to reducing our environmental impact through innovation in design and building techniques The first South African company to have a science-based target and Net Zero commitment approved by the International Science based target initiative All new d
Slide 25: Looking Forward
4 LOOKING FORWARD Steve Brookes Chief Executive Officer MUNYAKA BALWIN PROPERTIES RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 25
Slide 26: The Future
THE FUTURE Maintain focus on core operations by leveraging existing land bank and existing pipeline of developments Healthy position with 1 551 apartments forward pre-sold Balwin Annuities to leverage the Balwin brand, enhance the client experience and unlock further shareholder value Continued focu
Slide 27: Annuities
5 ANNUITIES Raaziq Ismail Head of Legal & Annuity THE REID, JOHANNESBURG EAST, GAUTENG BALWIN PROPERTIES RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 27
Slide 28: Annuities Overview
ANNUITIES OVERVIEW Purpose To enhance the client experience and enhance shareholder value Strategy Identify business opportunities that can add value to Balwin clients and/or value to the Balwin Group Investigate the viability of opportunities If applicable – identify strategic partners with suffici
Slide 29: Annuity Businesses Profit and Loss
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 AUGUST 2022 Balwin Annuity Balwin Fibre Balwin Mortgages Balwin Energy Other businesses Financial update Unaudited Unaudited Unaudited Unaudited Unaudited six months six months six months six months
Slide 30: Balwin Fibre Statement of Profit and Loss
BALWIN FIBRE (PTY) LTD – STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 AUGUST 2022 Financial update Unaudited Unaudited Audited August 2022 August 2022 February 2022 R’000 R’000 R’000 Revenue 22 573 15 462 23 676 Cost of Sales - - - Gross Profit 22 573 15 46
Slide 31: Balwin Mortgages Statement of Profit and Loss
BALWIN MORTGAGES (PTY) LTD – STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 AUGUST 2022 Financial update Unaudited Unaudited Audited August 2022 August 2022 February 2022 R’000 R’000 R’000 Revenue 10 670 - - Cost of Sales - - - Gross Profit 10 670 - - General
Slide 32: Balwin Energy Statement of Profit and Loss
BALWIN ENERGY (PTY) LTD – STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 AUGUST 2022 Financial update Unaudited Unaudited Audited August 2022 August 2022 February 2022 R’000 R’000 R’000 Revenue 2 851 - - Cost of Sales - - - Gross Profit 2 851 - - General Expe
Slide 33: Other Annuity Businesses Statement of Profit and Loss
OTHER ANNUITY BUSINESSES STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 AUGUST 2022 Financial update Unaudited Unaudited Audited August 2022 August 2022 February 2022 R’000 R’000 R’000 Revenue 3 551 - - Cost of Sales (2 462) - - Gross Profit 1 089 - - General
Slide 34: Questions and Answers
QUESTIONS AND ANSWERS Stephen Brookes Jonathan Bigham Raaziq Ismail Chief Executive Officer Chief Financial Officer Head of legal Tel: +27 11 450 2818 Tel: +27 11 450 2818 Tel: +27 11 450 2818 BALWIN PROPERTIES RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 34
Slide 35: Annexures
6 ANNEXURES DE AAN ZICHT BALWIN PROPERTIES RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 35
Slide 36: Operating Model
OPERATING MODEL Development of large-scale residential estates in key target nodes Targeting an average profit margin of low to mid 30% range over the lifecycle of each project Drive efficiencies through turnkey approach to development Maintaining costs and cash preservation MUNYAKA Development pipe
Slide 37: Turnkey Development Model
TURNKEY DEVELOPMENT MODEL THE HUNTSMAN MUNYAKA DE AAN-ZICHT BALWIN PROPERTIES RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31AUGUST 2022 37
Slide 38: Corporate Overview
CORPORATE OVERVIEW Specialist, national residential property developer of large- scale sectional title estates Focus on high quality, environmentally efficient, affordable apartments with an innovative and all inclusive lifestyle offering for clients Currently developing approximately 3 000 apartmen
Slide 39: Governance Process: Development Opportunities
GOVERNANCE PROCESS DEVELOPMENT OPPORTUNITIES Development opportunities identified Internal due diligence process followed: › Costs › Infrastructure › Zoning › Independent review of nodal residential demand Presented for approval to: MOOIKLOOF-ECO ESTATE › Executive Committee › Transactions Committee
Slide 40: Investment Case
INVESTMENT CASE Well positioned to address the undersupply of quality, affordable housing in the low to middle market income market Long-term development pipeline in key strategic locations Proven and flexible business model for large-scale developments Strong management with more than 25 years expe
Slide 41: Development Brands: Green Collection
DEVELOPMENT BRANDS GREEN COLLECTION BRAND Model targets a slightly lower income consumer than the Classic Collection Prices range from R599 900 to R1 299 900 Developed on a phase-by-phase approach Distinctive architecture and high-quality standards Residents have access to traditional lifestyle offe
Slide 42: Development Brands: Classic Collection
DEVELOPMENT BRANDS CLASSIC COLLECTION BRAND Core development model One-, two-, and three-bedroom four storey walk up apartments Prices range from R769 900 to R2 439 900 Developments located in high density, high growth nodes across key metropolitan areas Benefits from economies of scale, in-house co
Slide 43: Development Brands: Signature Collection
DEVELOPMENT BRANDS SIGNATURE COLLECTION BRAND Three elite model developments, The Polofields (Johannesburg, Waterfall) and Izinga Eco Estate (KwaZulu-Natal, Umhlanga) Apartments built to higher specifications with luxurious finishes Prices range from R2 299 900 to R3 199 900 Developments built on ex