| Fri 22 Oct 2010, 7:05 | | CGR - Calgro M3 - Unaudited interim results for the six months ended 31 August |
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CGR
CGR
CGR - Calgro M3 - Unaudited interim results for the six months ended 31 August
2010
Calgro M3 Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2005/027663/06)
Share code: CGR ISIN: ZAE000109203
("Calgro M3" or "the company" or "the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2010
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
R`000 Unaudited Audited
Six months Year
ended ended
31 August 28 February
2010 2009 2010 2009
Revenue 96,171 112,832 188,726 233,054
Cost of sales (76,267) (92,277) (161,058) (182,205)
Gross Profit 19,904 20,555 27,667 50,849
Net Administrative expenses (13,879) (14,270) (26,704) (35,787)
Impairment of inventory - (11,385) (13,065) (8,991)
Gain on cancellation of put
Option - - - 17,035
Impairment of goodwill - - - (14,714)
Profit on sale of investment - 29,450 29,305 -
Operating profit 6,025 24,350 17,203 8,392
Net Finance income/expense 299 226 (1,003) (506)
Profit before taxation 6,323 24,576 16,200 7,886
Taxation (1,736) (2,974) (712) (1,864)
Profit after taxation 4,587 21,602 15,488 6,022
Total comprehensive income 4,587 21,602 15,488 6,022
Profit attributable to:
Owners of the company 4,587 21,602 15,488 6,022
Earnings per share - cents 3.61 17.00 12.19 4.74
Headline earnings per share - cents 3.61 (2.93) (7.64) 16.32
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
R`000 Unaudited Audited
Six months Year
ended ended
31 August 28 February
2010 2009 2010 2009
ASSETS
Non-current assets
Property, plant and equipment 5,961 8,388 7,150 8,100
Loans to associates 28,549 19,888 15,424 -
Other non-current assets 39,740 51,639 40,375 49,433
74,250 79,915 62,949 57,533
Current assets
Inventories 246,188 254,414 266,393 260,115
Construction contracts 9,106 67,125 32,217 64,389
Trade and other receivables 10,860 6,824 14,428 18,368
Other current assets 19,115 13,361 15,502 13,836
Cash and cash equivalents 5,258 25,930 6,059 30,594
290,527 367,654 334,599 387,302
Assets of a disposal group
classified as held for sale - - - 126,301
Total assets 364,777 447,569 397,548 571,136
EQUITY AND LIABILITIES
Equity
Capital and reserves 158,306 159,833 153,719 138,231
Total equity 158,306 159,833 153,719 138,231
Non-current liabilities
Non-current borrowings 138,426 165,702 154,379 117,957
Other non-current liabilities 2,032 14,725 6,704 19,266
140,458 180,427 161,083 137,223
Current liabilities
Current borrowings 8,740 10,036 9,650 69,350
Other current liabilities 41,834 82,364 55,834 104,094
Bank overdraft 15,439 14,909 17,262 15,842
66,013 107,309 82,746 189,286
Assets of a disposal group
classified as held for sale - - - 106,396
Total equity and liabilities 364,777 447,569 397,548 571,136
Net asset value per share - cents 124.55 125.75 120.94 108.76
EARNINGS RECONCILIATION
R`000 Unaudited Audited
Six months Year
ended ended
31 August 28 February
2010 2009 2010 2009
Determination of headline earnings
Attributable profit 4,587 21,602 15,488 6,022
Impairment of goodwill - - - 14,714
Loss/(profit) on disposal of
property, plant and equipment - - - -
Profit on sale of investment
- net of tax - (25,327) (25,202) -
Headline earnings 4,587 (3,725) (9,714) 20,736
Determination of diluted earnings
Attributable profit 4,587 21,602 15,488 6,022
Share option expense - - - (963)
Diluted earnings 4,587 21,602 15,488 5,059
Number of ordinary shares 127,100 127,100 127,100 127,100
Weighted average shares 127,100 127,100 127,100 127,100
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
R`000 Unaudited Audited
Six months Year
ended ended
31 August 28 February
2010 2009 2010 2009
Net cash from operating activities 31,284 33,272 958 68,240
Net cash from investing activities (12,897) 7,614 (4,128) (30,666)
Net cash from financing activities (17,365) (44,617) (22,785) (20,625)
Net (decrease)/increase in cash
and cash equivalents and
bank overdraft 1,022 (3,731) (25,955) 16,949
Cash and cash equivalents and bank
overdraft at the beginning of
the period/year (11,203) 14,752 14,752 (2,197)
Cash and cash equivalents and
bank overdraft at the end of
the period/year (10,181) 11,021 (11,203) 14,752
CONDENSED SEGMENT REPORT FOR THE GROUP
Land Profes- Inter-
Construc- develop- sional group &
R`000 tion ment services holding Total
Aug 2010
Revenue 60,792 33,539 1,840 - 96,171
Operating (loss)/profit 5,653 (666) 1,577 (539) 6,025
Aug 2009
Revenue 104,363 8,276 519 (326) 112,832
Operating (loss)/profit 4,098 21,835 (820) (763) 24,350
Aug 2010
Total assets 29,149 237,452 - 98,176 364,777
Total liabilities (53,740) (93,426) - (59,304) (206,471)
Feb 2010
Total assets 50,952 255,078 - 91,518 397,548
Total liabilities (5,364) (100,392) - (138,073) (243,830)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Rands) Attributable to the owners of the company
Share Share Retained Total
capital premium income equity
Balance at 01 March 2009 1,271 96,020,450 42,208,687 138,230,408
Profit for the year - - 15,488,109 15,488,109
Total comprehensive income
for the period ended
31 August 2009 - - 15,488,109 15,488,109
Balance at 28 February 2010 1,271 96,020,450 57,696,796 153,718,517
Profit for the period - - 4,587,329 4,587,329
Total comprehensive income
for the period ended
31 August 2010 - - 4,587,329 4,587,329
Balance at 31 August 2010 1,271 96,020,450 62,284,125 158,305,846
Notes
1. Basis of preparation
These consolidated condensed interim financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) on Interim
Financial Reporting (IAS34), the Listings Requirements of the JSE Limited and
Schedule 4 of the South African Companies Act. The accounting policies are
consistent with those applied in the audited annual financial statements for the
year ended 28 February 2010.
2. Independent review
These consolidated condensed interim financial statements have not been
reviewed.
3. Dividends
No dividend has been declared for the period.
COMMENTS
The directors present the condensed consolidated interim financial results for
the six months ended 30 August 2010 ("the period"), that reflect anticipated
significant improvement in a number of key financial indicators. The results
reflect an upturn in sales across the board and predominantly in the affordable
housing sector. This affirms the group's growth strategy and flexible business
model which enables Calgro M3 to selectively accelerate the profitable
component/s of any integrated development.
Calgro M3 achieved a number of major operational milestones during the period,
including:
*? completion of the civil and electrical infrastructure on Phase I of the
Fleurhof project;
* start of construction of housing structures in Phase 1 of the Fleurhof
project;
* successful bulk sales in the sectional title GAP component of both the
Jabulani and Fleurhof projects;
* adding of value to land acquired for the mid-to-high income Housing segment
to be ready for project implementation on recovery of the market.
FINANCIAL RESULTS
The start of top structure construction in the Fleurhof project significantly
boosted both the group's profit and cash flow for the period. Although an
upturn in revenue is also expected going forward, the benefits of executing two
or more large projects simultaneously will only be partially realised during
2011, but will have a greater impact during FY2012. The lag is attributable to
the lead time required to complete infrastructure prior to top structure
construction commencing.
The public sector strike during the period, which crippled the deeds office, has
caused a delay in the number of property transfers expected to conclude during
the period, to the six months ahead.
The group reversed the headline loss of the previous comparable period,
generating earnings of R4,5 million (31 August 2009: R21,6 million)and headline
earnings of R 4,5 million (August 2009 : R(3,7 million)headline loss . A
headline profit per share of 3.61 cents was achieved, compared to the headline
loss of 2.93 cents incurred in the previous comparative period and headline loss
of 7.64 cents for February 2010. Earnings per share of 3.61 cents for the period
was down from 17 cents. These results are regarded by management as a
satisfactory outcome in the current, still pressured economic climate.
Calgro M3 continued to invest further in the Pennyville project. The group
undertook construction in-house to rectify latent defects as a result of poor
quality and non-performance under the sub-contractor agreement. This resulted
in the termination of the sub-contractor agreement, as reported February 2010.
Cash generated by operations increased substantially to R31,2 million from R1
million for the year ended 28 February 2010. The increase is attributable to
cash now being utilised in the development and construction of current and new
projects. The group's balance sheet restructuring and debt reduction programme
proved successful in terms of current financial goals and are at a level
believed by management to be sustainable.
Cash on hand at 31 August 2010 increased marginally to negative (R10.2) million
from negative (R11.2) million at 28 February 2009. Although not a material
improvement, management considers it to be significant after taking account of
the additional cash injection into the construction of Fleurhof.
Total goodwill amounted to R32.7 million, consistent with the previous
comparative period. No major capital expenditure was incurred.
OPERATIONAL REVIEW
Of the more than 400 sale agreements currently concluded for full-title units at
Fleurhof, construction of 199 began in July following completion of the civil
and electrical infrastructure on Phase I. Early indications affirm that the
calculated risk of installing services on the Fleurhof project during 2009/10
should start to realise benefits for the group in the second six months ahead.
The group's mid-to-high income housing operations started to show a slow
increase in sales, which is expected to contribute positively during FY2012. The
reason for the non-immediate translation of impact is that a certain level of
pre-sales need be achieved prior to installation of civil infrastructure and
commencement of construction. In this regard the group does not foresee balance
sheet write-downs at this time. However, any cash lucrative offers will be fully
assessed and considered.
Strict discipline and intense focus by management saw the group successfully
contain costs and continue to decrease overhead expenses while still retaining
skilled project managers and construction-related staff in anticipation of
future housing projects. An escalation in staff is expected when current
projects reach full production and smaller projects are possibly brought on
board. It is intended that any future increase in overheads will, where
possible, be calculated on a variable cost per project basis.
HEALTH & SAFETY
Calgro M3 maintained its exceptional record of safety and was again not only
fatality free, but also free of any serious injuries in the workplace. This
reflects the group's commitment to sustaining its target level of zero harm.
PROSPECTS
Notwithstanding continued cash flow and funding constraints at government levels
during the period, the integrated housing market continues to hold promising
prospects. The shortfall in delivery of housing units during 2009/10 to date,
has only exacerbated the existing housing backlog in South Africa with pressure
for delivery mounting in the run-up to the 2011 local elections. Further, with
the likelihood of the Financial Services Charter being reinstated, financial
institutions and developers alike will have renewed pressure to deliver on
housing with a specific focus on the GAP market.
Calgro M3 will continue to target development in the Gauteng province. Expansion
into other regions in South Africa will be considered once Gauteng operations
become settled in servicing the recovering market.
With construction of units in the first phase of the Fleurhof project underway
and the installation of infrastructure on the subsequent phases continuing,
Calgro M3 is well poised to deliver on housing leading into 2011.
Looking ahead, in addition to Fleurhof, progress on the Jabulani and Jukskei
View projects is expected to have a positive effect in the six months ahead to
year-end. The initial success of the Fleurhof and Jabulani projects (see
`Operational Review') bodes well for future growth in the affordable housing
segment of the market. This is further supported by factors such as the
decreasing impact of the National Credit Act which will improve opportunities to
secure end-user finance on behalf of prospective home-buyers.
Any forward looking statement included in this interim results announcement has
not been reviewed or reported on by the company's independent auditors.
APPRECIATION
We express our appreciation to our fellow directors, staff and stakeholders for
their continued support during this tough but exciting period. We believe that
we can now look ahead, and that the group is well positioned to go from strength
to strength.
BP Malherbe WJ Lategan
(Chief executive officer) (Financial Director)
Johannesburg 20 October 2010
Directors:
PF Radebe (Chairperson) *, BP Malherbe (Chief executive officer), WJ Lategan
(Financial Director), FJ Steyn, DN Steyn, JB Gibbon*#, H Ntene*, N Maninjwa*#, M
Phetla-Lekhethe*#.
(*Non-executive)
(# Independent)
Registered office: Cedarwood House, Ballywoods Office Park, 33 Ballyclare Drive,
Bryanston 2196. (Private Bag X33, Craighall 2024)
Transfer secretaries: Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
Designated advisor: Grindrod Bank Limited
Auditors: PricewaterhouseCoopers Inc.
Company Secretary: Barnards Inc.
www.calgrom3.com
Date: 22/10/2010 07:05:02 Produced by the JSE SENS Department.
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