- Game City construction delayed
- Government deny tenants trading licenses
Profits of property titan, Turnstar Holdings Limited, declined by a massive P164 million for the period ending 31st January 2018, owing to unfavourable trading conditions.
During the previous corresponding period, Turnstar, a company ran by Managing Director Gulaam Abdoola, made over P237 million as profit after tax. This time around, the company made only P73 million as profit after tax, a massive decline.
Abdoola said there was a delay in the completion of the construction of the new section of Game City. He further said government did not issue trading licenses to the prospective tenants who had signed pre-leases.
“These issues delayed the leasing of the new wing of Game City. However, the majority of the premises have now been rented and rentals revenues have been received during the last few months of the financial year under review,” he said.
In Tanzania, the delay in the completion of the construction resulted in a delay in the leasing of the new developments, according to the company boss, adding that the current downturn in the economy has affected the Mlimani Commercial Office and Conference Centre revenues.
“Leasing inquiries are now being received and the commercial offices have commenced tenanting. However, pending the leasing, the group had to incur overheads such as utilities, security, cleaning etc. The interest expenses on the completed construction project, has to be incurred as well,” he said.
The delayed income from the newly completed areas has affected the group’s operating profit. However, Abdoola said the rental revenues from the areas which are being leased in the new developments, will largely convert into bottom line profits, since the overheads relating to these areas are already being incurred.
Further, the US dollar depreciated against the Botswana Pula significantly during the year ended 31st January 2018, thereby affecting the group’s profits. The foreign exchange translation gains and losses are unrealized and dependent on the US $ / BWP exchange rate as at year end. Turnstar said it has ensured that the US dollar dominated liabilities are serviced by US dollar income, and hence the group is not exposed to actual exchange fluctuations. The translation loss reported for the year ended 31st January 2018 occurred when translating the US Dollar denominated investments and other financial assets of the group’s Tanzanian subsidiary, Mlimani Holdings Ltd. The subsidiary reports in US dollar currency, whilst the group’s functional currency is Botswana Pula.
Further, Turnstar announced the successful acquisition of an office block in Dubai. It said the acquisition provides the Turnstar Group with further diversification in terms of geographic location as well as a currency hedge. The property, fully funded internally, is fully tenanted as from the date of purchase and provides a yield of approximately 9 percent per year. The property was purchased towards the end of last year through the group’s wholly owned subsidiaries, Turnstar Investments Ltd and Palazzo Venecia Holdings Ltd, incorporated in the United Arab Emirates.
The group consists of Turnstar Holdings Limited (Botswana), Island View (Proprietary) Limited (Botswana), Mlimani Holdings Limited (Tanzania), Turnstar Investments Limited (UAE) and Palazzo Venezia Holdings Limited (UAE).