JSE-listed property developer Balwin Properties has increased revenue by 6% to R3.3-billion and group profit by 20% to R437-million for the year ended February 28.

The company also declared a final gross dividend of 14.1c a share, bringing the total dividend for the year to 24c, up from 20.9c a share in the 2022 financial year.

The group’s gross profit margin also showed further improvement, increasing to 29%, up from 27% in the prior financial year. The improvement in gross profit margin is a pleasing achievement, particularly on the back of high cost increases experienced in the construction industry during the year, said Balwin CE Steve Brookes.

Coastal regions contributed 52% of revenue during the year under review, up 12% from the previous financial year, mainly as a result of semigration, with especially three-bedroom apartments growing by 23%.

General increases in selling prices across the apartment portfolio of 12% helped cover rising construction costs and sustain margin growth.

Balwin further reported a robust development pipeline consisting of 43 781 apartments spread across 26 projects, projecting a development horizon spanning about 18 years.

“The past 12 months were tough, with increased construction costs, whilst interest rates and higher levels of loadshedding impacted consumer confidence. Our relentless focus on cost containment, innovative design efficiencies and careful price adjustments to offset increased costs enabled us to show positive growth and increase profit. Additionally, a revised pricing strategy has contributed to robust selling prices and a 2% increase in our gross profit margin to 29%,” said Brookes.

Balwin also recognised 2 788 apartments in revenue for the year, which was 6% down from 2 962 in the prior financial year. Brookes attributes this to a normalisation in the sales cycle that is comparable to pre-Covid-19 trends.

“Post the pandemic there was a lot of pent-up demand, further boosted by the launch of our iconic Munyaka Beach Living Apartments in Waterfall and the very popular Izinga Eco Estate in Umhlanga which spiked forward sales. The current numbers are in line with the forward sales trends prior to the pandemic,” he said.

The group closed the year with a strong cash position of R607.3-million. Its loan-to-value was 40.7%, flat on the prior financial year’s number and well within the minimum loan covenant requirements, he noted.

Meanwhile, Balwin's annuities businesses recorded aggregate revenue of R83.1-million, which is an increase of 61% on the prior financial year. The business segment further recorded profit of R45.8-million.

Balwin’s annuity businesses predominantly comprises of Balwin Fibre, with 8 230 active clients, Balwin Mortgages, where 1 648 bonds were secured during the financial year, Balwin Energy, which is currently operating across 9 sites, and Balwin rentals, which is a newly launched rental management company.

Meanwhile, Balwin has secured 1 648 green bonds for home buyers during the period. These bonds provide financial benefits and contribute to significant savings of R98-million over 20 years.

Further, in line with its sustainability objectives, all new developments undertaken by Balwin Properties are aimed at achieving Excellence in Design for Greater Efficiency (EDGE) Advanced ratings, which recognise excellence in design for greater efficiency. A total of 21 768 apartments developed by Balwin have been registered as EDGE with development finance institution International Finance Corporation.

“Balwin has achieved significant milestones with more than 14 000 apartments registered as EDGE Advanced, demonstrating energy savings of 40% or more and water savings of 20% or more,” he said.

Additionally, nine of Balwin's lifestyle centres have achieved six-star green ratings and have been accredited with net-zero carbon ratings by the Green Building Council of South Africa, affirming their ability to generate and maintain a net-zero carbon footprint.

“The ongoing deterioration in the economic climate will no doubt taper demand to some extent. Our healthy forward sales position of 870 apartments, coupled with successful sales initiatives will mitigate this impact, but we do expect moderate margin pressure in the current year.

“From an operational perspective, we will continue to focus on leveraging our existing land bank and pipeline of developments, with strategic acquisitions considered on an ad-hoc basis, especially in the Western Cape. The emphasis will, however, be on continued prudent cash management and responsible environmental management,” Brookes said.