eBusiness Weekly
Tawanda Musarurwa
Zimbabwe-focused leisure and property firm Brainworks expects to post a profit for the year to December 30, 2018 as it waits to release a delayed set of financials covering a period the group says was marked by increase in revenue on the back of growth across all its segments. The Johannesburg Stock Exchange (JSE)-listed group owns property, hotels and a logistics firm in Zimbabwe, some of which are listed on the Zimbabwe Stock Exchange (ZSE).
And with the latest currency and exchange developments in the country affecting financial reporting for ZSE-listed firms, Brainworks anticipates to publish its results by the end of this month.
Notwithstanding the delay, the group is expecting a recovery in its basic earnings per share for FY2018. Basic earnings per share is the key measurement of profit most commonly used in South Africa.
“The board has a reasonable degree of certainty that positive basic earnings per share will be achieved for the financial year ended December 31, 2018. This would mark a notable turnaround given the fact that the Group recorded net losses after tax of US$8 million in the prior year,” said chief executive Brett Childs in a trading update to March 29, 2019.
“The positive earnings will be driven by growth in revenues, reduction in finance charges and the positive contribution to profitability recorded as a result of the group exiting the financial services sector. A further updated range will be provided on earnings per share and headline earnings per share once the board has sufficient certainty as to the impact of the currency reforms on the financial statements of the group.”
Although listed on the JSE, Brainworks is incorporated in Mauritius.
According to Childs’ update, the group’s revenues rose on the back of revenue growth across all the group’s segments.
Its hospitality segment, however, was the best performer.
“The hospitality business segment’s revenue improved, which was spurred by a 7 percent increase in occupancy from 52 percent recorded in the prior year to 59 percent for the year under review and a 17 percent increase in average daily rate (ADR) from US$93 recorded the prior year to US$109, as the hotels continued to align domestic rates to the implied exchange rate between US$ and RTGS dollar,” said Childs.
Occupancy growth was driven by strong performance from all our source markets with room nights sold for domestic, international and regional increasing by 12 percent, 14 percent and 7 percent, respectively.
The Real Estate segment also recorded notable increase in revenue, with 70 percent of the growth attributable to our inaugural revenues recorded from property sales.
This segment’s performance was driven by completion of Brainworks’ first development project in Harare.
“Over 60 percent of the units were sold in 2018 and although there was demand for the remaining 22 units, the group adopted a strategic decision of deferring sales as the Zimbabwe currency environment became volatile during the third quarter of 2018.
“The recent currency pronouncements by the monetary authorities are, however, expected to drive confidence and stabilise the exchange rate in Zimbabwe, which will provide the group with a basis to resume sales of the remaining property units. Efforts to sell the remaining units resumed in 2019,” said Brainworks.
Management said they continue to strategically focus on reducing its debt burden.
Brainworks recorded a notable reduction in its debt reducing it by 55 percent from the US$38,3 million reported as at the end of the prior year, attracting a weighted average interest rate of 12 percent.
Last year, Brainworks completed the disposal of its shareholding in GetBucks Microfinance Bank Ltd and the financial impact of the exit was notably positive to profitability.
The group also sold its entire equity interest in GetSure Life Assurance Company (Private) Ltd.
“These disposals effectively complete the Group’s initiatives to exit the financial services sector in order to concentrate on core business sectors, namely, hospitality and real estate,” said the chief executive.
