The company accounted for a US$7,7 million fair value adjustment on its investment property, an increase of 73% from the prior period, which ultimately lifted its bottom line, with earnings per share jumping 69% to US0,44 cents.
Revenue for the period increased by 26% to US$3,95 million, from US$3,13 million in 2010. Rental income contributed 77% and project sales contributed 21% to total revenue.
However, operating profit went down 13% to US$1,7 million weighed down by a jump in administration costs of US$1,7 million due to a larger provision for doubtful debts made worse by liquidity challenges.
Despite the improvement in average rental collection to 90% from 77% in 2010, the deteriorating operating environment increased void space since most companies failed to pay rentals on time.
This resulted in the company increasing its provision for bad debts to US$583 664, from US$344 000 in 2010. Portfolio voids increased to 10,7%.
The company declared a US 0,019 cents dividend per share, totalling US$324 450, despite a negative cashflow position from operations, an indication that the business was not generating enough cash to sustain its core operations.
The company also increased its borrowings by US$1,4 million during the period to prop up its cash position.
Among the group’s projects, the developing and servicing of 372 stands in Rhodene, a low density residential area in Masvingo at a total cost of US$4 million, had to date realised US$1,2 million from the disposal of 65 stands.
In Bulawayo, the disposal of stands in the Parklands projects was ongoing with the selling price having firmed to US$15 per square metre from the initial US$8.
ZPI has already realised US$800 000 from the expected US$1,7 million.
Liquidity constraints in the economy ultimately impacted on the company’s ability to access financing for ITS property investments.
The company said projects would remain its strategic focus area, adding that negotiations to acquire significant land banks in Harare were at an advanced stage. The Adylinn cluster houses project, comprising 80 units at an estimated cost of US$5 million, is expected to commence in May 2012.
Upon completion, ZPI expects to realise earnings of US$6,5million from the project with each unit selling for US$80 000. Completion of the project will greatly depend on availability of funding, the company said.
ZPI said it would focus on cash generation from the disposal of completed projects and vigorous rent collection.