Chief executive Wikus Lategan said yesterday that the year had been “exceptionally difficult” due to a multitude of operational challenges and transactions, many outside the control of management, coupled with changes in accounting standards.
Some of the challenges included the Scottsdene land invasion security cost and damages of R27.9million, and the Fleurhof development land invasion security cost and damages of R43.1m.
The electrification standing time at Fleurhof cost of R23.3m, cancellation of the executive share scheme cost R43.9m, there was a R56.2m impact from the IFRS 15 and IFRS 9 accounting changes, while the realisable value of retirement development La Vie Novelle was written down by R54m.
Lategan said in an interview that in the year ahead they would “focus on what we have learnt this year” and to stabilise the residential property development business so that a consistent stream of cash flow and profits could be attained.
Revenue decreased by 42.78percent to R997.1m and combined revenue decreased by 44.82percent to R1.3billion.
Although cash flow from operations was positive by R298m (R206m), it had come under pressure from the slower than anticipated handover of units to the Reit joint venture, the temporary closure of the Fleurhof and Scottsdene projects and associated costs, and delays in installing and registering water and electrical meters on units in Gauteng.
The dividend was passed, so cash could be retained to fund growth.
The group had 10 projects in the ground, contributing to revenue that made the challenges more manageable – 4436 units were sold, with construction due to start.
The Memorial Parks business sales increased to R20.9m from R12.6m in 2018, mainly due to the increased sales prices across the product range, although the same level of price increases could not be expected in the new financial year.
He said the Memorial Parks business was essentially restoring dignity to burial spaces, something that had been lagging in South Africa for many years, due mainly to local governments needing to fund more urgent social delivery services.
Lategan said further cost-cutting would be implemented if there was no improvement in construction activity to acceptable levels after the 2019 election.
Memorial parks in Tshwane and KwaZulu-Natal were being investigated, as were a new residential development project as well as some potential properties to be acquired and developed for the residential rental investment business.
The internal focus was to roll out the current projects in the pipeline. Careful consideration would be given to the best use of cash on each project.
“Memorial Parks and the Residential Rental Investments businesses are areas with a particularly high growth opportunity.”