Octodec Results - Year ended 31 August

This is a Power 98.7 Podcast. Now, we're talking. Subscribe to Power 98.7 Podcasts in iTunes, wherever you get your podcasts. There's more on power987.co.zadeh.

this conversation now. Octadec released its financial results for the year ending August 31, reporting a 4.1% increase in group revenue to 2.1 billion rand despite a challenging economic environment. The real estate investment trusts reported positive growth in its residential and shopping centre portfolios. Now Annabel Vieira, financial director at Octadec, joins us on the line to take us through the fresh set of results.

Annabelle, a very good evening and a welcome to PowerBinness. Good evening to you and to your listeners. I guess Annabelle, could you take us through your overall thoughts then on the latest set of numbers?

So, yeah, you just mentioned our revenue increase by 4.1% but unfortunately our final number wasn't the number that we would really like to achieve. We would have liked to do better than that, but can you help me impact it by challenges? Things like the Aljohannesburg property that have been impacted by the unrestricted roadworks as a result of the gas explosion.

and above that also the interest rates which haven't come down during our reporting period really had expected them to come down. So all those factors and obviously it's low economic growth has impacted our risk. All right. And then Annabelle, the company declared a total dividend of 125 cents per share. How does this reflect in your confidence in Octadex financial stability and future prospects?

Yes, sir, look, the dividend is in line with our reduction in distributable income. So it's a similar reduction as we've applied to our dividend. And we could sort of be a little bit more, I can say, grateful, distributing a higher dividend. But we've also got you in terms of our strategy, make sure this our balance sheet remains strong. So it's always been our strategy to retain certain amounts to our developments, maintenance, and possible acquisitions if they arise.

So we do keep round about 25% so we've achieved a payout ratio of 78.9% for the current financial year.

with a risk really being held back in order to increase in our property. So I don't think it's too bad. It's with like a little bit higher, but we also have to be a little bit conservative in terms of our requirements, our capital requirements. Yeah. And then taking a look then at residential properties, especially the fields, that's all significant successes this year. What strategies then are in place to replicate this success across other properties in the portfolio?

So the field was a little bit unique because that was the student's market. So what really drove that increase was through football that there was a lot more certainty in the accommodation allowance by no thanks. So that's obviously we would be ready to go forward and market it for right from the beginning. Whilst in the prior, it was a uncertainty right at the leading phase. So it created a lot of unsettledness.

amongst the students and amongst the property owners as well, not knowing really how to market the property than with the safety of rainfall. This year, obviously, there was a lot of uncertainty in that. And also, we've applied some capital towards creating students' facilities, et cetera, and making sure that the property is highly involved and competitive in relation to the other properties in the area. Learning that out to other properties is a little bit more difficult because it's not the same.

But we have introduced a new product. We obviously develop in it, hopefully, to be launched in January. And that is a lower entry product. That we aim to sort of start out to the lower entry market. That contrary, we have sold our normal rate of infrastructure.

And then taking a look then at the retail shopping centre portfolio that showed strong resilience despite rising vacancies. How has the optimisation of tenant mix contributed to performance and what are your future plans in for the retail sector?

So let's, in terms of shopping centers, your tenant makes it extremely important. Even their location within the shopping center is extremely important. And that draws the rental. So moving one tenant from one place to the other can basically double your rental income. And that's really what we've worked with. Obviously, we've got you with a lease expire as well. So you can't always do everything when you're identified.

But when the opportunity arises, then you can take care of it. And similarly, like with me, we had a major failure bar with SPAC. We were able to relocate cleanliness and fill those spaces. So all these shopping fences are not optimally delayed. And you should see the benefit thereof in the coming year, with grossing rainfall income. Yeah.

And I want to take a look then at the damage to Lillian and Goya Street in Johannesburg. Has that affected rental income and tenants operations? How are you guys managing these challenges and when do you expect the situation to really stabilize? So to your second part of the question, I haven't got any answer. That unfortunately is in the hands of your authority like a council and what a council alone. I think it's also that Johannesburg

It's another department that's involved in. So it's very difficult. I mean, they do take care of those that keep on shifting. So very difficult to control. But we are just enough lines to assist in with rental concessions. And there are also these rental concessions are given as they prove they claim to our insurance because obviously we've also got a business interaction claim from our insurance.

So, as and when they provide the information, so we get drawn in the window conversation. Let's see some of our big opinions, specifically the national, but also trying to secure the space. The impact is the patient of the roads being fixed, because obviously once it's fixed, that's also going to change the size of Johannesburg CBB.

I think that in college it's just knowing when exactly it's going to be complicated. I guess we'll have to keep our eyes out appealed for that. But moving then on to solar energy and other energy saving measures, they're becoming a focus for Octadec. How are these investments expected to enhance tenant satisfaction and reduce operational costs? Look, the tenant in itself, basically all they have is

I'm not a low-cheating use process, or I keep for the funding. So the tenant doesn't really benefit from that. But the benefit that we get is in reducing our energy costs. So we still solve the electricity to our tenants, like the normal rates with its bulk retail. But we do have a savings that's from an off-to-date perspective.

our investments are returned on our investment in capital. But I think most important is to look at the environmental impact.

and in terms of reducing our allowance from the council and using green energy. So I can assess the most important part. Okay. And then I want to know then, you know, the group ended the period with 679 million rand in cash and unutilized facilities. How does this financial cushion position Octadec for future growth or potential challenges?

It looks like a big amount, and if you see a big amount, however, we are a little bit hands-strong in terms of RCR happening, so we would not allow a lot of April and May, but knowing that these facilities are available should one fund and not want to refinance for whatever reason that money is available. So it's great to have that. We can't really reach a large as much of it as what we'd like to, because RCR is a little bit under pressure.

that DEXE wants to, you know, our economy grows and things for tuning, and I am optimistic that I haven't said a lower interest rate cycle and more confidence in the economy that's involved in. And the market that's offered at operating is very, very susceptible to interest rates and any movement there. It takes a little while, but it definitely benefits that market.

And looking at interest rates and the sort, you know, looking ahead, what are the key risks and opportunities? Do you anticipate that in the coming year, Annabelle? And how are you planning to navigate through them? It's a little bit difficult to say how much we anticipate. We've budgeted 100 basis points, a few of which are already pocketed. So that's great, you know.

I'm sure we'll achieve the next 55th century reduction, but the impact of this is remissive of low on our team and our team and all, how can I say cash customers and any impact and interest rates, in fact, in impact bar retailers, in impact so many things. So we live in an ecosystem where any shift they affects everything.

So, a reduction in interest rates is going to, I think, impact our loved ones positively. It's also going to impact our cost of funding. And you can see now that we are not hedged at the usual amounts of 80% in the bills. We both hold that down so that we can take advantage of the lower interest rates. And obviously, it will reduce our cost of funding. At the same time, also impacting our staffing strategy, we

really experience difficult things in terms of telling the property that we want to sell and the lower interest rate environment will certainly impact the purchases of our properties and it should be the open doors for them. All right. Well, on that note, Annabelle, we'll leave it there. Thank you so much for your time. All right. Thank you very much. Good evening. Thank you.

Fantastic. That was the Annabelle Vieira Financial Director at Okta Dick, taking us through their financial results for the year ended the 31st of August.