Balwin Properties’ sales grow but red tape slows earnings

Balwin Properties, the sectional title unit developer, achieved strong sales growth in the six months to August but saw its earnings decline considerably because of delays in registration transfers and related accounting rules.
Balwin Properties’ sales grow but red tape slows earningsBalwin has managed to sell 15 to 30 units per development location. It had 14 developments under construction during the reporting period and built 1,033 apartments, in line with its sixmonth forecast at an average selling price of R995,911 per unit.

Despite this “solid performance in a constrained economic environment, the group’s operating profit was negatively impacted by a delay in registration transfers”, CEO Stephen Brookes said.

Currently, revenue is only accounted for on registration. As many as 1,033 apartments were handed over during the reporting period, of which only 756 were registered.

The subsequent effect was a 36% decline in headline earnings a share to 37c.

Operating profit dropped 26% to R235m and, had all the units been registered, profit after tax would have been R237m.

“Operationally our performance was in line with expectations, but the fact that we currently only account for revenue on transfer significantly impacted our results. Subsequently we obtained an expert opinion from our auditors and we are engaging our shareholders to change the estimate of timing to recognise revenue on the earlier registration in the deeds office and occupation. This will lead to greater predictability of our earnings,” Brookes said.

The group’s share price closed 4.01% higher at R7.01 on Tuesday, 15 November.

Balwin listed on October 15 2015. It develops and sells large-scale residential estates. These estates average in size between 500 and 1,000 units and are designed for young professionals and people seeking a “lock-up-and-go” lifestyle.

Balwin launched three new developments during the reporting period. Delays in transfer were experienced at Malakite on the East Rand, which affected 89 units. All these had been transferred by October. Delays at Amsterdam on the West Rand affected 69 units, and these units were in the process of being registered. There were also delays at Grove Lane in Pretoria, where 119 units were affected. All of these units too had been transferred by October.

During the review period, Balwin acquired the development rights of three land parcels in the Waterfall node.

New residential, retail development for Woodstock

Cape Town property developers Signatura, and Indigo Properties, the owners of the Old Biscuit Mill and Woodstock Exchange, have announced a new development for the Woodstock creative hub. WEX One has been designed by Vivid Architects and will comprise 217 apartments on six floors, two full floors (and two half levels) of parking, and over 1500m² of retail space on the ground floor.
New residential, retail development for WoodstockSituated directly opposite and closely linked to the creative business community of the Woodstock Exchange, the site is bounded by Albert Road and Davison, Grey and Alexander Streets. There is immediate transport access to the Woodstock railway station, MyCiti bus route and cycle lanes, with traffic flowing to the city centre via Albert Road.

Growing portfolio

“We have gradually been buying former industrial buildings in this location, and acquired the final portion for this development about nine months ago,” said Jody Aufrichtig, co-founder of Indigo Properties, a growing portfolio that includes the River Club in Observatory and the Daddy Hotels.

“While we have extensive local knowledge of the Woodstock neighbourhood, there is no-one who understands residential development better and has more experience in quality residential developments than John Rabie (founder of Signatura). So we should make a formidable team, as this is a very high growth area that is much in demand.”

Woodstock is one of Cape Town’s oldest suburbs and this development will embrace its vibrant mix of tradition, industry and creativity, said Signatura MD David Cohen.

“We will, in addition, incorporate the highest standards of architecture, interior design and landscaping that buyers expect from Signatura. This is not the first development in Woodstock, but it will offer lifestyle and user-friendly features that will make living at WEX One very appealing – and not just because it is so conveniently located about three kilometres from the city centre.

“Our partnership with the owners of the Woodstock Exchange and Biscuit Mill is long-term and we intend to bring more people – some of whom would never have considered the suburb before – to this great area.”

Residential units

The residential units, mainly north-facing, will be on floors four to nine, with extensive views of the mountain, city and harbour. They will range from 42m² studios for R1.4m (excluding optional parking), to one-bedroom units for 53m², and two-bedroom units spanning 70m²-92m².

Each unit is allocated one parking bay, but buyers may choose to forego this option to reduce unit purchase costs. Given the choice of public transport options, and the increasing use of uber and other innovative transport solutions, parking bays are not essential for all.
The WEX One design “represents a contemporary and contextual response to the traditional brick warehouses in the area”, said Vivid Architects associate Charles Louw. “It will adopt the brick, glass and steel of the rail-side industrial warehouses, reformed into a contemporary aesthetic, while still aiming to retain a classic, timeless appeal.”

Nikki Wright, senior interior designer at Francois du Plessis Interiors, said the look and feel of the WEX One residential units and public areas will be “eclectic, fresh and funky” – indicative of the area and appealing to a younger clientele.

“We will allude to the Woodstock neighbourhood by using furniture and fittings from the designers, artists and craftspeople of Woodstock Exchange, Woodstock Foundry and The Old Biscuit Mill.”

Commercial sector

The commercial sector of the new development will be treated as an extension of the Woodstock Exchange. Pedestrian connectivity will be encouraged from the station along Davison Road to Albert Road, said Louw. The groundfloor shops will be fronted with five-metre steel and glass shopfronts and there will be public access into a highly visible, yet well-protected internal retail street running parallel to Albert Road. New landscaping and paving will tie this new building to the Woodstock Exchange.

Construction starts in May 2017 and should finish in the final quarter of 2018.

National, regional entrepreneur winners announced

The national winners in the 2016 Business Partners/SME Toolkit Global Entrepreneurship Week’s Business Plan Competition for Aspiring Young Entrepreneurs are Bahle Nteleki and Mazizi Njokweni.
Based in Johannesburg, the entrepreneurs are behind the business idea, MB.co Podiatrists, a business that offers podiatric interventions for clients, as well as providing a variety of customised innersole accessories, orthotics and footwear modification techniques.

Competition judge, Tiisetso Tsiki of Business Partners Limited (BUSINESS/PARTNERS), says that Nteleki and Njokweni, submitted a high-quality business plan, which included a strong implementable concept and catered to a gap in the market. “Over and above the business plan, something else we look for is passion, dedication, drive and enthusiasm – all of which are not quantifiable – and they both demonstrated these traits,” says Tsiki.

SME Toolkit winners (in the middle from left) – Mazizi Njokweni and Bahle Nteleki with Petro Bothma, group enterprise development manager at Business Partners and Christo Botes, executive director at Business Partners
SME Toolkit winners (in the middle from left) – Mazizi Njokweni and Bahle Nteleki with Petro Bothma, group enterprise development manager at Business Partners and Christo Botes, executive director at Business Partners

Both certified podiatrists, with proven experience in the industry, this partnership has its sights set on the occupational health industry and plan to focus on individuals who are employed in industries requiring the use of safety boots. “While protecting the foot from external dangers, safety footwear can cause severe complications in the lower limbs and feet,” says Nteleki. “Such injuries can prevent the sufferer from functioning properly in his or her role and can result in poor work performance.”

As part of the winner’s prize, MB.co Podiatry will receive R 25,000 in cash, business mentorship worth R12,000 and a smart tablet device.

Regional winners

This year the competition received 347 entries initially and, after completion of the workshops, 99 business plans were received for judging, from which eight regional winners were selected to contend for the overall national title.

All regional winners received business mentorship valued at R6,000 each. The other regional winners this year are:

• Alyssa Reddy – SGD Training and Consulting (KwaZulu-Natal – Richards Bay): Start, Grow, Develop Training and Consulting is the brain child of 25-year-old Reddy, who realised that soft skills and human resources training was hard to come by in her home town of Richards Bay. The business is initially targeting small and medium enterprises, matriculants and employees looking to broaden their skills-set, but Reddy hopes to eventually branch out and offer her services to larger organisations and the public sector.

• Japhta Mokoko – Jayspectrum Trading and Projects: Randfontein local Mokoko is an artistic glass designer and manufacturer who has identified a large gap in his local market for sandblasting and decorative blasting. While the target market for his glass design is wide – ranging from homeowners to shopping centres and industrial parks – he will also be incorporating glass gifting into the business, making the diversity of his products a core business strength.

• Johnson Mthembu – Stokvella (KwaZulu-Natal – Greater Durban): Mthembu is the driver behind Stokvella, a mobile app developed to address the issues of transparency, security and accountability that members of the R45bn stokvel industry face. The Stokvella system aims to put all stokvel members in control of their own monies.

• Mpho Rasimphi – #FYI Tutoring (Limpopo): Five years ago, Rasimphi began tutoring struggling high school learners in Polokwane in preparation for their final exams. Today, #FYI Tutoring employs university students and part-time educators and targets Grade 12 learners from local high schools by offering extra lessons in mathematics, physical science, accounting, economics and business studies.

• Murray Senyatsi – iRez modern low cost rental apartments (Limpopo): Polokwane is the hub of tertiary education in Limpopo, attracting students from all across the province and even the country. Aspiring property entrepreneur, Senyatsi, aims to address the serious lack of quality accommodation for these students by providing low cost, well managed, safe and secure housing for students who are currently living in poor conditions and at great distances from their learning institutions.

• Nosisa Ndabandaba – Supriim Vegan (Western Cape): Cape Town based Ndabandaba is capitalising on the healthy eating trend gaining popularity around the world, by providing wholesome vegan and gluten-free snacks to those seeking tasty, environmentally friendly food. Starting with an outlet in Cape Town’s city centre, this health conscious entrepreneur aims to delight customers with “junk food with a clean and healthy twist” by sourcing all her organic ingredients locally and providing a 100% vegan alternative where very few options currently exist.

• Prudence Biziwe Jackson – Chosen Fun House (Free State/Northern Cape): Chosen Fun House, founded by Jackson, assists businesses and individuals who are hosting events by taking responsibility for all activities associated with the event. This includes catering, travel and accommodation for guests, in addition to co-ordinating the event itself. Services are provided either separately or as a turnkey package, while events can range from weddings to corporate gatherings to large family reunions and holiday catering services.

Celebrating Global Entrepreneurship Week

Now in its seventh year, the competition is in celebration of annual Global Entrepreneurship Week, taking place this week 14-20 November, which invites youth between the ages of 18 and 35 to submit their business ideas and attend one of 12 workshops held around the country. These regional workshops focus on teaching the complexities and fundamentals of compiling a business plan, as well as the basics of running a business. All 2016 entrants also received a Sales and Marketing e-Learning course from SA BusinessHub to the value of R750 each.

Discussing takeaways from the various workshops, Petro Bothma, enterprise development manager at BUSINESS/PARTNERS, notes that it was evident that the young, hopeful entrepreneurs in attendance do not fully comprehend the vast amount of work that goes into developing a plan and starting a business, with the financial side of a business being largely neglected by many aspiring business owners.

The latest 2015-2016 GEM South Africa report states that the low prevalence of entrepreneurial activity among the youth is of concern in the South African context. “While many young aspiring entrepreneurs have the passion and ambition, they often stumble with the technicalities of starting a business.

“If we want to encourage our youth to become successful entrepreneurs, we need to adequately support and equip them with the basics and foundations of starting and running a business, which is the very reason why we launched this competition seven years ago,” concludes Bothma.