Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted strong revenue growth for the year ended 30 June 2024, underpinned by the consolidation of its investment in JTTM, which contributed for nine months of the year under review. 

In October 2023, LLR acquired an additional stake in JTTM Properties Proprietary Limited (JTTM), thereby increasing its shareholding in JTTM from 32.79% to 57.79%, making JTTM a subsidiary of LLR in terms of International Financial Reporting Standards. 

LLR CEO, Ms Kamogelo Mowaneng commented:

“The consolidation of JTTM resulted in strong growth in LLR’s investment portfolio, from P1.5 billion in the prior financial year, to P1.9 billion as at 30 June 2024. 

“JTTM was only consolidated for nine months in this financial year and contributed P63 million to the total revenue growth of P71 million, while the direct property investments contributed P8 million or 11% to the revenue growth.”

Ms Mowaneng added that this set of financial results represented a historic moment for LLR, as it is the first time it presents group consolidated results, driven by the gradual increase in shareholding in JTTM achieved over the last couple of years, which resulted in JTTM ultimately becoming a subsidiary of LLR in October 2023.

The Botswana portfolio performed exceptionally well at a fundamental level, reporting a very high occupancy rate of 99.03%, which the Group ascribes to its good quality assets and strong tenant relations. 

Equally, collection rates averaged 100% during the year under review, with arrears well contained. 

“Our high occupancy rate, robust collection efforts, and prudent cost management supported our strong cashflow position,” Ms Mowaneng explained. 

The weighted average lease expiry (WALE) period improved from 3.5 years to 3.6 years, mainly as a result of a new 10-year lease signed with a multinational company, while rental escalations of between 6% and 8% were reported, which are in line with the market. 

Ms Mowaneng however caveats that the stellar performance of the Botswana portfolio was diluted by challenges in its associate company in Kenya. 

She explained that although this investment only comprises 0.2% of the Group’s total investment portfolio as at the financial year-end, as the Group had to provide for a significant non-cash expected credit loss of P100.1 million.

As at 30 June 2023, the shareholder loan was valued at P99.2 million. On 30 June 2024, the value of the loan had increased to P104.1million as a result of interest capitalised to the loan account and exchange rate gains. An impairment assessment was performed in line with the requirements of International Financial Reporting Standards (IFRS) 9 Financial Instruments and, consequently, a non-cash expected credit loss provision amounting to P100.1 million had to be recognised. This resulted in the in the shareholder loan value dropping from P99.2 million to P3.7 million. In addition, the Group further recognised an impairment loss of P5.5 million on the equity component of the investment.

“The Group continues to monitor the performance of its Kenyan associate company, as it ordinarily does through its investment monitoring process.” Ms Mowaneng said. 

These provisions significantly impacted on LLR’s overall results, with profit before tax from continuing operations declining by 66% on a year-on-year basis, from P119.3 million to P41.1 million. 

As a result, the board adopted a more cautious stance on cash management, to preserve value for stakeholders. A final distribution of 5.29 thebe per linked unit was declared in June 2024, bringing the total distribution for the financial year to P14.40 thebe per linked unit. 

Going forward, LLR said it continues to refine its Go-to-Africa strategy to align it to an ever-changing operational environment and the Group’s evolving risk appetite, especially for its portfolio outside of Botswana. 

The Group said that sectoral and geographical diversification remain a priority to strengthen its ability to adapt to changing market conditions. Ongoing investments into a range of commercial, industrial, and alternative assets are expected to be more defensive, shielding the Group from market fluctuations and economic downturns. 

LLR further announced that it is planning a capital raise shortly, with proceeds to be used for the conversion of its attractive asset pipeline.