1 ST QUARTER REVIEW - 2017 THE YEAR THAT 2017 HAS TO BECOME AND MORE - PowerPoint PPT Presentation

1 ST QUARTER REVIEW - 2017 THE YEAR THAT 2017 HAS TO BECOME AND MORE

OUR VISION – TO PROVIDE CLIENTS WITH PIONEERING PROPERTY AND CONSTRUCTION SOLUTIONS ACROSS AFRICA THROUGH OUR PASSIONATE PEOPLE IN A UNIQUELY BALANCED MANNER TO CREATE SUSTAINABLE VALUE. WHO WE ARE

The year 2017 has come with not only one or two surprises, but Prepare many surprises across all spheres of our daily lives. If this first valuations for payment quarter is anything to go by, we are not in for a few more surprises certificates to be but one roller-coaster of a year! issued by the principal agent We would like to firstly wish everybody a prosperous remainder of Conclude final the year, may all the plans, be it personal or business come to full account(s) fruition without any further challenges that we may have faced in the first quarter already. INTRODUCTION

WHATS HAPPENING AT HOME ? In traditional style, we always must focus on South Africa, where our business is rooted when planning begins. We recently had the state of the nation speech which served as guidance on what the biggest spender in the land intends to do. In typical style, we had a few disturbances that we came to know so well ever since the SONA moved to prime-time television but through it all there was a message in the speech. The key points that we as EQUATE focus on are mainly related directly to our line of business primarily being: - The economy is to take center stage with a target of 5% growth, as such levels of growth envisaged we would see a serious turn of events with the construction and property development sectors. But is this realistic? - Energy projects have come into the limelight. With the push for nuclear, which we will only require in 15 years and the increase in IPP’s this has seen Eskom reconsider the future of their coal fire stations? The downstream effects of a mixed power supply basket are not only environmentally friendly, the long term employment effects have proven to be as successful, - Infrastructure will be scaled up. This “ monkey on our back ” seems to be creeping up on us. The President reported that R847billion will be spent in the next three years. - Corporation between the government and private business will be promoted. This focus in our sector will be vital in unlocking vast skill and monetary potential that would benefit the state in its delivery agenda across all sectors. One would have expected that this critical relationship would have taken center stage many moons ago. Also in recent weeks, the budget speech also took center stage. The focus as per the years preceding is that, as a country we need to cut back on a few luxuries, reduce corruption and simply get the country back to work! SONA

This, in our view, was a speech and a plan to send out a strong message with increases in income taxes to 45% for those few that are fortunate enough to earn more than R1.5million per year, budget deficit is predicted to reduce from 3.4% to 3.1% and for the first time since 2010, tax revenue growth did not match economic growth. A snap shot of the highlights can be seen below : Economic projections Indicator 2016/17 2017/18 2018/19 2019/20 GDP growth 0.5% 1.3% 2% 2.2% Total GDP R4.3 trillion R4.66 trillion R5.03 trillion R5.44 trillion CPI 7.2% 6.4% 5.9% 5.8% BUDGET

Fiscal framework 2016/17 2017/18 2018/19 2019/20 Total Revenue R1.3 trillion R1.41 trillion R1.54 trillion R1.67 trillion Total expenditure R1.45 trillion R1.56 trillion R1.68 trillion R1.81 trillion Budget deficit -R148 billion -R149 billion -R142 billion -R146 billion Total debt R2 trillion R2.2 trillion R2.44 trillion R2.67 trillion Debt as % of GDP 45.5% 47% 47.6% 48.1% The next question is, what does this mean for us at EQUATE? In order to see real meaningful growth: • We would require our GDP growth to tick over 3%, • We need to cut out corruption as that is limiting the delivery of essential infrastructure which is desperately needed by the population. • Re-introducing the roster system could be a way of ensuring that the budgets are equitably split between deserving and CAPABLE companies and, • We also need to speak in one voice that commands certainty! A simply example would be the contrasting growth predictions between the SONA and Treasury. In simple terminology “ If we fail to plan, we plan to fail!” BUDGET

South Africa has always been the golden child of this beautiful continent, but as EQUATE, with presence in over 9 African Countries, we have seen that the light is shining brighter and brighter for our fellow brothers and sisters across the continent. With the slump in commodity prices in recent years, this has had a huge impact on the delivery of infrastructure and property development projects especially in Nigeria, Angola, Zambia, Ghana to name but a few. 2017 seems to have a glimpse of a silver lining on the horizon, all the countries mentioned above have a minimum GDP growth of 3.5% with Ghana’s GDP predicted to be 8.7% from 5.8%. These figures indicate that such growth be it not 2012 -2014 highs, they indicate recovery and with recovery come opportunities to re-focus our energies on either incomplete projects or new projects. As specialist Hotel, Data Center, Residential and Infrastructure cost consultants, we have seen an increase in enquiries across the African continent compared to the last 24 months. What is more promising is the level of readiness of some projects that are coming into play. Developers aren’t merely bringing land parcels to market but rather, better managed and packaged developments, an indication that in recent years there has been more research on the actual need for certain projects to come into market. AFRICA

What next for 2017 ? It is without a doubt that the next coming months will be a challenge, not only domestically but on the international stage as well. We have a jam packed political and economic calendar in 2017. But not all is “ doom n gloom ” like the daily newspapers and the channels in the 400 ’s on DSTV make it out to be. What sets South Africa apart is merely : - We have an intensified focus on fixing what’s wrong i.e. corruption, #feesmustfall and the economy - The economy has weathered the storm . Through it all the Rand was the best performing emerging currency in world in 2016. 2017 can only be better ad is already better! - South Africa’s underlying improvement QUIETLY continues. “ Over the past ten years, the percentage of income earners in the four lowest income bands (adjusted for inflation), has fallen from 50% to 20% “ Rian le Roux - South Africa has a history of “CAN DO” and numerous success stories, - The world recognises South Africa’s potential With these 5 positives we must then ask what developments will be prioritized during this year. EQUATE has been fortunate enough to have maintained a steady growth pattern of between 15-25% for the last four years. Positives for 2017

This growth has been carefully managed and enabled us to build teams that are focused, streamlined and specialists in their sectors. Our hotel and leisure portfolio will see three developments break ground this year in Zambia, Zimbabwe and Cameroon. This is in addition to two projects that are being completed in Botswana and Durban. The calling as for Student accommodation will finally lead to a few projects breaking ground in 2017 from our Centurion Head Office. EQUATE will be involved in a 250 Bed Development in Johannesburg due to break ground in the 3 rd quarter and in the pipeline for 2017 are additional beds planned for Vereeniging (60 Beds), Durban (150 Beds) and Midrand PH 1 (250). Our constant insatiable appetite for affordable housing will also see EQUATE involved in numerous projects across the country. 2017 will see us deliver residential units in Diepsloot (350), Protea Glen (60), Pretoria North (30), Meredale (60), Kimberly (75) and Port Elizabeth (98). These developments are more Student accommodation units which EQUATE is involved in than just bricks and mortar in our business, they form the backbone of giving dignified, quality accommodation to the engine room of our economy, the lower LSM of our population. Data Centers and Tri-Generation plants still form a big part of our project delivery sectors. 2017 will see us break ground with projects in Botswana, Sandton and Pretoria. Due to the nature of our clients, more information and details of these projects is kept confidential. OUR PIPELINE

In recent years with the new regulations and promotion of sustainable developments, there has been a trend to re- develop existing buildings. At EQUATE, we pride ourselves as the best re-development cost consultancy in South Africa. With innovative ways and value engineering techniques that we have gathered throughout the years, we have seen a 30% increase in this sector. What also gives the edge is our full and complete understanding of the Green Building council’s requirements to achieve 4 Star ratings when we do re-developments. This year we expect to complete 10 600m2 of A- Grade Offices in Pretoria and Randburg. In the pipeline to begin in the 4 th quarter is a further redevelopment of an office portfolio for DBSA. EQUATE is also involved in retail developments in Kwa-Zulu Natal, we are also the lead cost consultants in one the new Special Economic Zone’s that aim to promote investment and development in former industrial parks, our involvement includes specialized warehousing, increasing bulk capacities and creating new economic hubs in these areas. OUR PIPELINE