| Mon 17 Oct 2011, 8:00 | | CGR - Calgro M3 Holdings Limited - Unaudited interim results for the six |
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CGR
CGR
CGR - Calgro M3 Holdings Limited - Unaudited interim results for the six
months ended 31 August 2011
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 2011
HIGHLIGHTS
* Revenue up 117% from R96.2 million to R209.0 million;
* HEPS up 372% from 3.61 cents per share to 17.03 cents per share; and
* Net cash and cash equivalents up 92% from R10.9 (February 2011)
million to R20.9 million; and
* Current pipeline of projects in excess of R5 billion.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
Six Months Six Months
31 August 31 August
R`000 2011 2010
Revenue 208 987 96 171
Cost of sales (173 911) (76 267)
Gross profit 35 076 19 904
Net administrative expenses (17 887) (13 879)
Operating profit/(loss) 17 189 6 025
Net finance cost 386 299
Share of profit/(loss) of associates/ 9 390 _
Joint ventures(Nett of tax)
Profit before taxation 26 965 6 323
Taxation (5 315) (1 736)
Profit after taxation 21 650 4 587
Attributable to:
Equity holders of the company 21 650 4 587
Earnings per share - cents 17.03 3.61
Headline earnings per share - cents 17.03 3.61
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Audited
Six Months Year
31 August 28 Feb
R`000 2011 2011
ASSETS
Non-current assets
Property, plant and equipment 3 822 4 765
Loans to associates 11 790 10 994
Other non-current assets 77 200 63 397
92 812 82 156
Current assets
Inventories 241 127 234 945
Construction contracts 70 482 40 646
Trade and other receivables 19 757 14 601
Other current assets 6 397 6 120
Cash and cash equivalents 25 524 14 954
363 287 311 266
Total assets 456 099 393 422
EQUITY AND LIABILITIES
Equity
Capital and reserves 192 323 170 674
Total equity 192 323 170 674
Non-current liabilities
Other non-current liabilities 16 831 13 176
16 831 13 176
Current liabilities
Current borrowings 157 259 154 262
Other current liabilities 85 018 51 269
Bank overdraft 4 668 4 041
246 945 209 572
Total equity and liabilities 456 099 393 422
Net asset value per share - cents 151.32 134.28
EARNINGS RECONCILIATION
Unaudited Unaudited
Six Month Six Months
31 August 31 August
R`000 2011 2010
Determination of headline earnings
Attributable profit 21 650 4 587
Headline earnings 21 650 4 587
Determination of diluted earnings
Attributable profit 21 650 4 587
Diluted earnings 21 650 4 587
Number of ordinary shares (`000) 127 100 127 100
Weighted average shares (`000) 127 100 127 100
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Unaudited Unaudited
Six Months Six Months
31 August 31 August
R`000 2011 2010
Net cash from operating activities 8 639 31 284
Net cash from investing activities (1 079) (12 897)
Net cash from financing activities 2 383 (17 365)
Net (decrease)/increase in cash and cash
equivalents and bank overdraft 9 943 1 022
Cash and cash equivalents and bank
overdraft at the beginning of the year 10 913 (11 203)
Cash and cash equivalents and bank
overdraft at the end of the year 20 856 (10 181)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Retained Total
Capital premium income equity
(Figures in Rands)
Balance at 1 March 2010
1 271 96 020 450 57 696 796 153 718 517
Total comprehensive income for
Year 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
Balance at 1 March 2011
1 271 96 020 450 74 652 237 170 673 958
Total comprehensive income for
Year ended 31 August 2011
21 649 354 21 649 354
Balance at 31 August 2011
1 271 96 020 450 96 301 591 192 323 312
CONDENSED SEGMENT REPORT FOR THE GROUP
R`000 Land Professional Inter Group Total
Figures in rands Construction Development Services Holding
Aug 2011
Revenue 204 791 1 899 2 297 208 987
Operating (loss)/profit 15 670 (2 032) 2 077 1 474 17 189
Aug 2010
Revenue 60 792 33 539 1 840 96 171
Operating (loss)/profit 5 653 (666) 1 577 (539) 6 025
August 2011
Total assets 118 041 221 051 5 187 111 820 456 099
Total Liabilities (68 130) (89 129) (106 516) (263 775)
Feb 2011
Total assets 88 341 214 734 - 90 347 393 422
Total Liabilities (53 638) (91 893) - (77 217) (222 748)
COMMENTARY
The directors present the condensed consolidated interim financial results for
the six months ended 31 August 2011 ("the period"), which reflects a
substantial improvement in a number of key financial indicators (the most
noteworthy being increases in revenue, HEPS and net cash and cash
equivalents), despite the challenging trading conditions in the construction
and property development sectors.
A strong project pipeline, supported by healthy relationships with clients,
financiers and suppliers again enabled the Group to deliver top and bottom
line growth.
FINANCIAL RESULTS
Group revenue increased by 117% to R209 million (Aug 2010: R96 million) and
headline earnings rose 372% to R21,7 million (Aug 2010: R4,6 million). The
growth is directly attributable to the pipeline of projects, as announced in
April 2011, beginning to translate to profit. Four major projects are running
concurrently, with others expected to commence during the second half of the
2012 financial year.
Net administration expenses rose by 28.9% to accommodate the increase in
revenue. The Group`s delivery is defined and controlled by capacity,
therefore as demand grows, inevitably capacity growth will also follow. Fixed
cost increases for the period related to the appointment of a divisional
director for the recently opened Cape Town office and a divisional director
responsible for Group Procurement.
Net cash on hand again grew, to a positive R20.9 million (Feb 2011: R10, 9
million).
The Group continues to monitor debt levels and gearing has stabilised at 70%,
which allows it to increase over the next 5 years in proportion to working
capital demands.
The statement of financial position (balance sheet) is appropriately
structured for future growth. For the period, total assets increased by 16%
to R456 million (Feb 2011: R393 million).
OPERATIONAL REVIEW
Ongoing delays in infrastructure spend by government continues to impact on
integrated housing and the Group was not excluded from this trend. However,
the Group has limited the risks by accelerating the privately financed
composition of its integrated developments. Government`s roll-out of 80 000
Social Housing units filled the gap left by non delivery in the Fully
Subsidised segment.
In line with the Group`s strategy, no external contractors have been appointed
and all construction is currently run in-house to ensure that the highest
level of quality is maintained. With benchmarks set by management in terms of
quality and pricing, the Group is set to look externally for capacity to
complete the five year pipeline of projects.
The infrastructure for the first phase of the Fleurhof project (Exts 2, 3, 4
and 6) is nearing completion thus integrating the development into the
surrounding area. Construction of residential units aimed at the Fully
Subsidised, Social, Rental and GAP markets is well underway with 480 units
completed to date and more than 550 additional units under construction.
The installation of infrastructure for the first phases of both Jabulani CBD
and Jabulani Hostel projects is on track for completion in the next six
months. Construction of 500 units in the Hostel re-development project is
nearing completion and handover is scheduled for later in 2011. Construction
of 325 units in the CBD project has commenced and this will be significantly
increased to over 800 units in the next financial year to fulfil contractual
obligations.
The recovery of the Affordable Housing sector continued to grow during the
period, with end-user finance becoming ever more readily available as more
financial institutions offer 100% bonds to entry-level consumers. Marketing of
the units in the Jukskei View project will ensure that the project will
conclude in line within expected completion dates.
Construction of the first phase of 264 units on the Brandwag project in
Bloemfontein is nearing completion. The second phase of the project has
commenced. The number of units under construction will increase to an
additional 495 units. This Brandwag project marks the Group`s first venture
outside its traditional Gauteng base.
The expected improvement in the Mid-to-High income Housing sector has not
occurred as was expected; the units under construction in this sector did not
significantly contribute to Group results. All development rights are in
place and the Group will continue to "landbank" these properties.
HEALTH & SAFETY
The group has maintained its exceptional safety record and was again fatality
and serious injuries free in the workplace. This reflects the Group`s
commitment to sustaining its target level of zero harm.
PROSPECTS
Government`s undertaking to deliver on Social Housing is an opportunity for
the Group. Sales of these units to Social Housing institutions were noticeably
higher during the period in comparison to the period in 2010. This increased
exposure is proving an effective risk mitigator as it dilutes dependency on
Fully Subsidised units.
Recent published guidelines such as the ABSA House Price Index and Residential
Property Perspective, the Standard Bank Residential Property Gauge, and the
FNB Property Barometer, are making it easier to analyse the affordable housing
sector. Standard Bank`s December 2010 edition has an excellent section on
Soweto, suggesting that there is indeed data to analyse enabling the banks to
determine the risks of lending into the `affordable` market. For policy makers
as well as product providers such as Calgro M3, the information regarding the
low income housing sector is a major tool to effectively plan and execute
projects.
The affordable & GAP housing market makes up 58% of all registered residential
properties in the Deeds Registry, when including the government subsidized
housing sector (this property market services 88% of South African
households). With end-user finance becoming more readily available and the
fact that banks exceeded the charter lending targets in the five years to end-
2008 and have since continued to generate home loans to the tune of R4bn/year
to the gap market shows that they are more than willing to lend to lower-
income households. According to the Banking Association, the greater problem
is that there`s very little stock available in this GAP market. Calgro M3 is
ideally poised to make stock available for this market segment. Calgro M3 sees
extensive opportunity in the provision of quality housing for the integrated
and GAP housing market segments, with a shift in focus to Social and Rental
units within these segments.
The above prospects statements have not been reviewed or reported on by the
company`s auditors.
EVENTS AFTER 31 AUGUST 2011
The recent award to the Group of the Scottsdene development in the Western
Cape, with mayoral and city council approval for commencement marks a further
extension of the Group`s geographical expansion. The Group has opened a new
regional office under a divisional director, which will create an ideal
springboard for further expansion into the Western Cape. The four-year R554
million Scottsdene development is a fully integrated housing project
comprising 2200 GAP, Social Housing, Rental Housing, Community Residential
Units ("CRUs"), fully subsidised RDP/BNG units and freehold Affordable Housing
units. The expected completion date of the project is towards the end of
2015.
APPRECIATION
Our management and their teams have been instrumental in enabling the Group to
continue its turnaround as promised, and to achieve these results. We thank
them and look forward to continuing on this successful path. We also thank
our partners, clients and shareholders for maintaining confidence in us, which
we trust our achievements will continue to support.
Notes
1. Basis of preparation
These consolidated condensed financial statements are prepared in accordance
with International Financial Reporting Standards (IFRS) on Interim Financial
Reporting (IAS34), the South African Companies Act and the Listings
Requirements of the JSE Limited. The accounting policies are consistent with
those used in the annual financial statements for the year ended 28 February
2011.
2. Independent audit
These consolidated condensed interim financial statements have not been
reviewed.
3. Dividends
No dividends have been declared for the period.
BP Malherbe (Chief executive officer) WJ Lategan (Financial Director)
Johannesburg 17 October 2011
Directors:
PF Radebe (Chairperson) *, BP Malherbe (Chief executive officer), WJ Lategan
(Financial Director), FJ Steyn, DN Steyn, JB Gibbon*#, H Ntene*, R Patmore*#,
RN Wesselo*.
(*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.
www.calgrom3.com
Date: 17/10/2011 08:00:17 Produced by the JSE SENS Department.
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