Southview Park to drive Fidelity's profitability

Published: 13 March 2014

Fidelity Life will focus on the development of Southview Park in FY14 with proceeds from stand sales expected to drive the group's profitability to an estimated $30 million, MD Simon Chapereka told an analyst briefing yesterday.

Presenting on the project yield, he stated that the number of stands to be sold in 2014 is 3 500 worth $34 million and 2 474 stands in 2015 totalling $34.58 million.

He indicated that the direct cost of sales in 2014 will be $11.30 million and $9.875 million in 2015. Meanwhile, net profit expected to be realised from these sales in 2014 is $21.15 million, $23.22 million in 2015 and $12.79 million between 2016 and 2022.

Therefore, the total net profit expected from the whole project is $57.17 million.

"Assume we post the same $13 million (comprehensive income) on the insurance business and you add $21 million from the proceeds from Southview Park. We're expecting more than $30 million in terms of net profit this year.

"The major thrust for us this year will be on the development of Southview Park. It is a game changer for us considering the expected yield from the project," he said.

He stated that they will issue a $5 million bond and use the proceeds to develop Southview Park. The bond was been granted a prescribed asset status by the government.

Giving an update on the developments at the Southview Park, Chapereka noted that subdivision permit has been issued by the city authorities and 70% of the required equipment has been purchased and some has now been received.

The topographical survey, environmental impact assessment and cadastral survey were performed and completed.

"Over 2 000 stands have been presold and $4.5 million has been raised from deposits and installments," he added.

Commenting on the operating environment, he said; "First item to note is the tight liquidity condition which persisted in the market during 2013. This has had an impact on the business in terms of the ability of companies to pay premiums."

Chapereka stated that the manufacturing industry is still in financial dire straits therefore affecting the collection and generation of premium income.

However, despite all this, he noted that there is a lot of potential in the industry and country with the growing informalisation of the economy, hence potential for innovative products that appeal to the informal sector.
- zfn

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