Managing Director's interview
Our focus in 2022 will be on the continuous improvement of our property and facilities management functions to add even more value to our tenants’ businesses.
As everyone else in our industry, we were disappointed to experience another lockdown just a year after the first. However, we were more prepared and had all the right protocols in place to face the crisis this time around. For instance, obtaining Work Access Permits (WAPs) for our teams was easier, thus allowing our staff to provide continued support to our tenants, hence ensuring a smoother transition as compared to last year. We continued to provide support to our retail tenants on rentals during the lockdown, extending this to the end of June for our restaurants at 246 Edith Cavell Court, as they were particularly hard hit by the measures in place. In terms of office spaces, as dealing with cases of Covid became the new normal, we observed a demand for additional space from some of our tenants, as they looked to improve social distancing within their workplace. Another impact of the 2nd wave on Lavastone Properties has been the sharp increase in construction costs - primarily related to the rise of material costs -, coupled with delays in procurement, stemming from the global effect of the pandemic on the shipping & logistics industry. The construction of the Sunrise Attitude in Belle Mare, initially planned for October 2020, was successfully completed and welcomed its first clients on 1 October 2021. We are particularly pleased with our partnership with the Attitude Group and firmly believe we have created an enriching place for guests to enjoy and staff to work, thereby creating value for our stakeholders and shareholders. Although Covid presented itself as a huge challenge, we seized the opportunity for a closer collaboration with our contractors and consultants to deliver a superior product at relatively little extra costs. Turn to pages 28 to 29 to see how we turned this challenge into an opportunity. Finally, the delays caused by the 2nd lockdown and disruptions to the construction industry, has meant we were not able to complete the Case Noyale morcellement in time to receive our Morcellement Permit and register the profits which come with such developments. These profits will thus be shown in our 2022 results. Tell us more about overcoming the Covid-19 pandemic. What was the impact of the 2nd wave on Lavastone?
How would you rate Lavastone’s performances for the financial year 2021?
Despite the challenges pought about by the second lockdown and the long-term effects of the Covid-19 pandemic on our industry and the country as a whole, I am satisfied of Lavastone’s overall performances for the year under review.
When compared to last year, we increased our revenues by 9.9%, reaching Rs 216M, and our operating profits by 10.5%, reaching Rs 108M, with Edith Cavell Properties Ltd contributing positively to Group profits despite a very challenging year. The biggest difference in our results, when compared to the previous financial year, is a fair value gain of Rs 123.9M, which partly offsets the impairment of Rs 190.6M recorded last year.
When doors closed, we saw favourable circumstances for improvement. One of our achievements in 2021 involved reviewing our operating procedures and improving our approach to risk management, anti-money laundering and data protection, across all levels. Our focus on rental collections meant 96.2% of rentals were collected for the financial year 2021 and we have also agreed on payment plans for the balance owed. Overall, we ended the year with an occupancy of 94.4%, which does not account for the arrival of a group of prominent Notaries at 246 Edith Cavell Court during the first quarter of 2022, which will ping our occupancy at 95.4%. Our WALE as at 30 September 2021 was 5.25 years.
On another note, I am pleased that Lochiel has secured the contract to manage Victoria Station amid stiff competition - a testament of their knowledge and capabilities to handle this complex project, one that marks an important milestone in the regeneration of Port Louis.
We were also pleased to note our offices at 246 Edith Cavell Court retained market attraction despite the challenging situation. Some of our office tenants increased their footprint and, as mentioned above, we will be taking on new tenants during the first quarter of 2022, meaning we are left with only 8.7% of spaces available today.
At Plaine Lauzun, we renovated the Ex CarFit space to welcome a new, more prominent and long-term tenant, FleetPro Ltd, which is part of the Rose Hill Transport Group.
Last year, you talked about rethinking your investment priorities over the short-term. What is the situation today?
Because of a lack of visibility and the uncertainties surrounding the country’s economy in 2020, we had to put on hold the development of a selection of projects:
- The acquisition of the 7th floor of Les Cascades Building will now close during the first quarter of 2022, allowing renovations to start as soon as this is completed.
- The development of the retail warehouse in Riche Terre was scheduled for April 2021. Increased construction costs and the disruptions pought about by the Covid-19 pandemic meant we had to delay this project, which we will relaunch once we are satisfied that increased costs can be absorbed by the market and as soon as we have secured enough pre-let agreements. It is worthy to note that we successfully completed the construction of the slip lane since August 2021, enabling us to ping services to this plot and make it a premium site for development.
- Unfortunately, the Covid-19 pandemic, resulting in the closure of Rodrigues, meant the renovation and extension of the Play Mourouk Hotel could not start as intended in March 2021. The hotel will likely be completed in late 2022 if flights resume in January 2022.
As projects were delayed, so was the issuance of medium-term notes, meaning the Group was able to maintain a low gearing and save on finance costs.
That said, we have agreed with our financiers to extend the notes programme by a full year which gives us great flexibility and showcases our agility and ability to map new routes for growth. When people were locked inside their homes, our team was freely planning the future. Our focus in 2022 will be the relaunched of 246 Edith Cavell Court together with several initiatives to boost trading, thereby providing our tenants and customers with an even more enriching environment to work and play. We will strengthen our property and facilities management functions through a continuous improvement programme to add more value to our tenants’ businesses. Other objectives for the next financial year include: My greatest thanks go to our team members for living Lavastone’s values of agility, humility, care and passion, despite these challenging times. Their continued commitment and dedication were also key in helping us reach our goals. I would like to thank my fellow colleagues on the Board of Directors, in particular our Chairman, Colin Taylor, for his continued help, support and guidance during this challenging year. Finally, I wish to thank our shareholders, tenants, suppliers, contractors, consultants and customers, for their trust and loyalty in Lavastone. What are your objectives for the financial year 2022?
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