October 17 11:00
SOUTH AFRICA
JSE-listed Calgro M3, the constructor and property-related investment group specialising in the development of integrated residential housing developments and the creation and management of Memorial Parks, released interim results for the period to-end August 2024 on Monday.
The group achieved an a gross profit margin of 29.69% owing to its unit mix as well as
historic land and infrastructure costs.
Wikus Lategan, the outgoing CEO of Calgro M3, said that strategic capital allocation was a priority, with significant investments made to ensure that the company’s development pipeline supported sustainability and puts a formidable platform for growth in place.
The residential property development pipeline exceeded 38 000 opportunities, and that of the Memorial Parks business was “a healthy 120 000 graves”.
“Our continued focus on creating affordable, high-quality homes and dignified final resting places while
adapting to market fluctuations demonstrates our unwavering commitment to the housing and memorial
park markets in South Africa,” he said.
The residential property development segment, which remains the largest revenue source accounting for
94% (August 2023: 97%), operated in Gauteng and the Western Cape, with nine projects.
Lategan said revenue for the segment decreased for the period under review, driven by reduced unit sales due to pressure on already constrained consumers, and delayed transfers given a high
interest rate and depressed economic cycle. He added that the group banked over R200m in cash
during the first two weeks of September.
During the period, 869 units were handed over, while 1 539 units are under construction, with the majority expected to be completed by the end of February 2025. The intention is to start on another 1 592 units during the next six months, targeted for completion in the next financial year. The Group also has 5 000 serviced and being serviced opportunities available.
To service the lower, high-demand end of the unhoused market, Calgro M3’s national
average sales price for a core two-bedroom family apartment during the period was R636 617 (excluding
VAT). The Bankenveld District City (“Bankenveld”) land was transferred to the Calgro M3 and Eris Property Group joint venture in September 2024.
“This is a strategic milestone, and bulk and link infrastructure construction will commence in the first quarter of 2025,” said Lategan.
The first phase of the infrastructure spend totals R250m, 60% of which will be funded by Calgro M3.
Lategan said that the group has also invested R138m in infrastructure across key projects, including
Fleurhof, Jabulani, and Belhar during the period. Jointly, these projects have just over R100m in bulk
and link infrastructure costs remaining to unlock the balance of the units to be developed.
In the memorial parks segment, Lategan explained that revenue grew by 59.05% to R31.7m,
accounting for 6% of group revenue.
“The main goal for this segment remains cash generation for the Group that was up 52.79% to R 52.1m million and which covers 100% of group overheads,” Lategan said.
Group revenue decreased from R689m to R507m, but revenue generated within joint ventures increased from R23m to R175m. The group gross profit margin increased to 29.69% with residential property development at 27.86% and memorial parks at 57.79%.
Cash and cash equivalents increased 37.73% to R168.9m million , reflecting the strength of liquidity management.
“We continued to make meaningful investments in infrastructure, with construction contract values
increasing by 8.80% to R1.47bn primarily because of the accelerated pace of development in Fleurhof and Belhar as well as within Jabulani, Scottsdene and La Vie Nouvelle as part of trading this project out over the next 24 to 30 months. The increase also contributed to the uplift in gross profit margins,” said Lategan.
No dividends were declared during the current interim reporting period.
alistair@propertyflash.co.za
