Letlole La Rona Limited increased revenue and operating profit in the year ended June 2026, but a reversal in property valuations and higher finance costs cut its profit before tax by more than half.
The Botswana-listed property group reported P62.9 million in profit before tax, down 52% from P131.2 million in the previous financial year. Despite the sharp decline at the bottom line, operating profit increased 8% to P128.4 million, from P118.8 million, as rental income continued to grow across the portfolio.
Revenue increased 7% to P215.2 million, compared with P201.8 million in 2025, driven primarily by contractual rental escalations. Letlole said occupancy and rental collections remained stable at 97%, providing support to the underlying performance of the property portfolio.
The improvement in operating profit came despite higher property-related costs and a challenging economic environment. The group’s cost-to-income ratio improved to 36% from 38%, reflecting tighter cost management.
However, the improvement in the underlying business was overshadowed by a sharp swing in the valuation of Letlole’s investment properties. The group recorded a P23.6 million fair value loss during the year, compared with a P49.8 million fair value gain in 2025.
Letlole attributed the valuation decline to increased risk within certain retail assets, including challenging market conditions, concentrated lease expiries, higher capitalisation rates and increased property operating costs following recent council rate revaluations in Gaborone.
Despite the valuation loss, the carrying value of the group’s investment property portfolio increased 2.4%, which Letlole said was primarily due to the inclusion of the existing development within the Selebi Phikwe project. The group’s investment property portfolio stood at approximately P1.9 billion at year-end.
Finance costs provided another significant drag on earnings, increasing 25% to P62.0 million from P49.7 million. The increase reflected higher lending rates and additional borrowings used to fund the Selebi Phikwe development.
Letlole also refinanced part of its existing facilities and secured additional funding from a South African lender to support its development pipeline. The new Rand-denominated borrowings resulted in foreign exchange losses on translation, although the company said these were predominantly non-cash accounting movements.
The combination of the valuation loss and higher financing costs reduced profit attributable to owners of the company to P55.0 million, from P77.6 million. Earnings per linked unit fell to 22.78 thebe, compared with 41.18 thebe in 2025.
Letlole’s balance sheet expanded during the year, with total assets increasing to P2.25 billion from P2.11 billion. Equity attributable to owners of the parent rose to P971.0 million, while total capital and reserves, including non-controlling interests, reached P1.25 billion.
Cash and cash equivalents increased to P62.6 million, from P35.3 million, while the group generated P120.8 million in net cash from operating activities. At the same time, it undertook significant financing activity, including P252.2 million in repayments of borrowings and P326.5 million in new borrowing advances.
The group’s property portfolio remained heavily concentrated in industrial and retail assets. As at June 2026, the portfolio had a 46% industrial and 54% retail sectoral split, with no residential exposure reported.
Letlole said its refinancing has been concluded ahead of existing facilities maturing at the end of December 2026, although the remaining work involves perfecting security. The new funding environment is expected to materially increase the group’s cost of debt, prompting management to prioritise available cash towards debt reduction.
The company also declared a P6.5 million final distribution to linked unit holders, comprising a dividend of 0.05 thebe per ordinary share and interest of 2.22 thebe per debenture. The payment is expected on or about 28 October 2026 to investors on the register at the close of business on 16 October.
The total distribution for the year amounts to 6.67 thebe per linked unit, down from 12.76 thebe in 2025.
Looking ahead, Letlole expects the operating environment to remain challenging, with pressure on occupancy, tenant performance and rental collections. Management said it will focus on protecting cash flows, maintaining occupancy and collections, controlling costs and pursuing selective growth opportunities.