Financial review
What were the main operational areas affected by COVID-19 disruptions?
Although thepandemichas createdanunprecedented sense of uncertainty on theglobal and localmarket, therehavebeen signs of resilience and a turnaround in economic confidence as demonstrated by interest in real estate projects both by individuals and corporates as well as banks’ willingness to support our endeavours. The newnormal operating environment will inevitably incor- porate enhanced risk management strategies and a shift in priorities to adjust to market needs, food sustainability, adapted hospitality and real estate products.
The impact of COVID-19 has certainly been more severe on the Hospitality cluster, where the negative external effect of the pandemic was the least anticipated by the Group. The Agribusiness cluster has been already at a stall given the anticipation of the change in scale with the transition to the new farm to be set up at Henrietta. Real estate developments are currently in the sales phase andweremostly impactedby a slowdown in transactions due to market uncertainties raised by the pandemic. However, we expect COVID-19 to also have future consequences on construction costs as scarcity of raw materials is being felt globally. How does that reflect in the financial indicators? Can you outline the steps taken to maintain Trimetys’ capital efficiency and financial health? TheHospitality cluster will have to be supported through the injectionofmore capital coupledwith a reductionof the debt burden to remain afloat. The Group has already engaged in negotiations with regard to both and has thankfully come up with sustainable solutions, including rescheduling long- term debt. In real estate, most efforts were focused on sustaining sales levelswhile reassuring current clients of theGroup’s engage- ment to safeguard their best interest in theseuncertain times. With regard to Cap Tamarin Smart & Happy Village, which is a capital-intensive, long-term development, will the Group be able to carry out its plans as intended? Once sales have beenmaintained and clients reassured, the remaining significant challenge in the Real estate cluster will be to deliver projects at the agreed pricing. Construc- tion commodity costs are already witnessing a hike and a slowdown in sales will defer the delivery of units. Although the former is inevitable, we have been pleased at Cap Tamarin to see sustainedmarket appetite for real estate projects to date amid signs of growing confidence in the sector as an alternative investment. Can you explain the drivers behind the Group’s value added strategies in a ‘new normal’ operating environment? Under pre-COVID-19 circumstances, the Group has always focused on sustainable and inclusive projects and develop- ments in order to preserve the environmental ecosystem, as evidenced by the integrated Cap Tamarin Smart & Happy Village. Same is reflected in our pioneering approach to free- range poultry farming.
What are the highlights of the Group’s performance over the year?
Wehave continuedour investment-focusedapproachadopt- ed since 2019 with completion of the core infrastructure of Cap TamarinSmart &Happy Village. Amidst all the challenges faced throughout the year, Tekoma Boutik Hotel reopened in September 2020, with three of our four hotels operating within the limited local market. Needless to say that border closure has had a drastic impact on revenue generated by the Hospitality cluster. Revenue recognition fromCapTamarinSmart &HappyVillage remains dependent on starting individual projects and oper- ations in the Agribusiness cluster have been scaled down for the period pending the setting up of a new farm. The Group has thus been adversely impacted on both Revenue and Operating Profit levels, given the need to sustain operating costs across the clusters. It is noteworthy to highlight that additional P&L expenses arising from foreign losses of Rs 32mhave been incurred on our foreign currency debts in Cap Tamarin Smart & Happy Village and the Hospitality cluster. Previously capitalised interest expenses have alsobeenexpensed (Rs 23m) following completion of infrastructure work at Cap Tamarin Smart & Happy Village. TheGroup’s assets have followed a continuous upward trend with the capitalisation of investments financed by the addi - tional debts reflected in our increased gearing. With economic recovery expected as soon as 2021, Trimetys Group can only look forward to better days ahead, priming resilience in times of adversity.
Hans Sooknah Group CFO HS
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