Mpico Limited has attributed the drop in after-tax profit to K766 million from last year’s K1.45 billion to high interest rates paid on the money used to build Gateway Shopping Mall in Lilongwe.
The listed property management firm’s board chairperson Edyth Jiya said on the sidelines of an annual general meeting (AGM) in Lilongwe last week that despite total income increasing, the business has huge debts on its balance sheet.
She said: “Our total income increased from K4.5 billion in 2014 to K6 billion in 2015. This represents an increase of 35 percent and is attributed to the growth in rental income of 45 percent and the growth of the fair value adjustment of 32 percent.”
Jiya said the commercial and renting market in Malawi continues to be buoyant, but the same cannot be said about property sales due to, among others, high interest rates, which is a huge challenge and will continue to suppress property sales.
“The company has continued to maintain its vacancy levels at less than one percent and will continue to strive for this level as it seeks to de-risk its property portfolio in 2016 and 2017,” she said.
Jiya said the average rental increase achieved during 2015 was 28 percent across the commercial and residential portfolio.
However, rental collection from government remains a challenge, she said.
Looking into the future, Jiya said the Malawi Stock Exchange (MSE)-listed company remains positive about the future and will be working towards ensuring that diversification of the property portfolio is accelerated.
Former Mpico board chairperson Dye Mawindo, who is now chief executive officer of Millennium Challenge Account Malawi (MCA-M), said the company is on the right path, especially now that it has property such as Gateway Mall.
“We have had to make tough decisions along the way because of the challenges. We had to diversify through construction of Gateway Mall which is one of the best,” said Mawindo.
Mpico managing director Peter Du Plessis said the company is on the right direction. n