Real Estate Investments Zambia Plc has advised shareholders that it expects to have a lower basic loss per share when it publishes its audited financials for 2020, according to a statement from the company.
“In accordance with the Lusaka Securities Exchange Limited (“LuSE”) Listings Requirements, the Board of Directors advises the Shareholders of Real Estate Investments Zambia PLC (“the Company”) that for the financial year ended 31 December 2020, the basic loss per share for the year ended 31 December 2020 is expected to be approximately 251% lower than for the year ended 31 December 2019”, read a statement issued by the Finance Manager and Company Secretary, Louis Chilufya Pulu on 28th May 2021 on SENS in Lusaka.
According to the statement, “the drop in earnings is primarily attributed to the below main factors:- The Covid -19 Pandemic had a negative impact on the company’s earnings as some tenants in the retail and hospitality sector were statutorily shut down for a period of time preventing the company from invoicing these clients for a period of four months”.
In their 2019 annual report, REIZ Board Chairman, Kenny H. Makala, advised shareholders that during the year under review, overall vacancy rate dropped from 29.1% to 21.5% which according to him was no mean achievement under the then operating environment. However, Covid-19 and the aftermath of stakeholder interventions quickly erased value in the following year. “Following the cessation of the government-imposed restrictions, the company continued to extend up to 50% rental discount in relief to its clients to enable them to recover from adverse effects of the ensuing downturn in the economy”.
Macroeconomic factors also weighed heavily on the real estate company. “The depreciation of the Kwacha against the United States Dollar by over 50% during the financial year exposed the company’s foreign borrowing to high exchange losses and increased its finance costs significantly”.
As a dollar-based business, it was forced to change aspects of its business model to accommodate the depreciating currency. “The company’s revenue reduced further when it had to cap its Dollar exchange rate to its tenants at ZMW14 to 1USD during the financial year, as a further cushioning measure, whilst the Dollar traded on average at ZMW18.57 and closed the year-end at ZMW 21.15 to 1USD”.
As a socially responsible company, its covid relief efforts had a negative impact on revenue. “The covid reliefs extended to our clients resulted in an unforeseen revenue reduction of ZMW 17.2 million against escalating operating and finance costs during the year”.
The company has issued a cautionary with the published statement. “Shareholders are advised that the information contained in this trading statement has not been reviewed or reported on by the external auditors of the Company”.
The Company expects its results for the financial year ended 31 December 2020 to be released on SENS and published in the local press on or about 31st May 2021. Accordingly, shareholders are advised to exercise caution when dealing in the Company’s Securities until the publication of the results.