Mpico plc has moved to minimise business risks by indicating that it will not renew some of the leases it has with government to move away from over-reliance on a single client.
Malawi Property Investment Company (Mpico) plc board chairperson Edith Jiya said this in Blantyre yesterday during the firm’s 49th Annual General Meeting in response to minority shareholders’ concern over government’s K3.8 billion rental arrears which are constraining its operations.
Jiya, who is also Old Mutual (Malawi) plc group chief executive officer, said looking at the high level of government indebtedness which has persisted for some years, the board resolved to limit its exposure to a single client whose debt has affected the Malawi Stock Exchange-listed firm’s cash flow.
She said: “Three years ago, government occupied about 46 percent of our office space, but the board took a decision then that we need to limit the exposure that we have to this particular single client. I am happy to say that we have reduced this to about 26 percent as at December 2021.
“This has been done to ensure that once leases are expiring, we are not renewing some of those, the reason being that we would want to diversify away and limit the exposure that we face with government.”
Jiya said for the outstanding rental arrears, Mpico plc will continue to focus on them and if need be, get legal redress.
“We do note that we cannot be competitive if we remain with high level of exposures to that particular client,” she said.
Jiya said going forward, the firm, using its group expertise will focus on property development as it has focused much on rental business to diversify its revenue streams.
Government rental arrears owed to the property firm has dropped to K3.8 billion from K8.7 billion in 2021.
In the year ended December 31 2021, Mpico plc has registered a profit after-tax of K6.4 billion, a 49 percent increase from the previous year’s K4.3 billion.
Meanwhile, Jiya says the country’s economic growth prospects remain weak with significant downside risks from uncertain weather patterns and productivity inhibitors such as insufficient power supply, possible future waves of Covid-19 and restrained business activity with the economy projected to grow by three percent in 2022from the initial forecast of four percent.
Mpico plc managing director Damien Kafoteka earlier said they are affected by government rental arrears as they are failing to pay some service providers.
Mpico plc board has since approved a final dividend of K712.4 million or 31 tambala per share in respect of 2021 profits.
During the previous year, the firm declared dividends worth K643.5 million or 28 tambala per share.
Mpico plc has 27 investment properties mainly in Lilongwe and Blantyre, which it rents out to government agencies and the private sector.
Among those occupied by government are Zowe House, which accommodates Ministry of Lands, Department of Lands, Department of Urban Development and Department of Physical Planning and Tikwere House, home to Ministry of Lands Deeds Registry.
Mpico plc, a subsidiary of Old Mutual Group, is engaged in development, rental and management of properties.