PEARL Propertiesâ€™ earnings attributable to shareholders increased to US$45,4 million for the financial year ending December 31 2008 from US$12,2 million at the same period last year after making a provision for tax of US$17,3 million.
The tax was deferred on fair value adjustments to property and equity investment.
During the period under review the companyâ€™s rental incomes grew by 63% to US$394 982. This was mainly driven by rental incomes for the last two months of the year which was received in barter commodities.
â€œThe rent per square metre at US$0,28 is still below the regional average of at least US$10 for a similar mix of properties,â€ said Pearl managing director Francis Nyambiri when announcing the results.
The total income per square metre of US$0,03 reflects the fair value of investments which depreciated in value in December last year due to the volatility in the picking of investments, especially barter items.
The Initial Public Offer quoted investments have been accounted for under capital reserves in accordance with international Financial Reporting Standards.
â€œTotal assets have increased from US$39,1million in December 2007 to US$95,1 million by December 2008 due to property revaluations (US$56,1 million), plant equipment revaluation (US$284 774) and capital expenditure (US$507 468),â€ said Nyambiri.
Nyambiri said the company had maintained the property valuations which were carried out by Knight Frank as at June 30 and plant and equipment were revalued through a directors desktop valuation.
The increase in the property valuations was due to the 2007 valuation being carried out in Zimbabwe dollars and translated to US dollars, compared to the 2008 valuation which was carried out in US dollars.
â€œUS$1,2 million was realised from investment disposed of during the year to construct the TM Northen Project.â€
â€œRental yield was 1,21% compared to 1,66% last year, reflecting the low rental income and property valuations. Total costs of US$215 036 were catered for fully through rental income,â€ Nyambiri said.
Nyambiri said Pearl Properties adopted a hands on approach to the construction of the TM Northen project in order to manage and mitigate against set-backs and potential delays by the main constructor. Whilst the intention was to have the project completed by the end of December last year was not possible due to various difficulties faced.
â€œBy the end of the year the project was 90% complete and it is now targeted for completion during the first quarter of the year,â€ said Nyambiri.
The board did not declare a dividend in order to conserve working capital and to retain cash.
Going forward, Pearl Properties said the â€œmulti-currencyâ€ environment offered them an opportunity to pursue real growth.
â€œHowever it does not come without its own challenges which include the high foreign currency cost of doing business in the country,â€ Nyambiri said.
Nyambiri said, chances are that some tenants may not be able to sustain the more competitive globalised operating environment.
BY PAUL NYAKAZEYA