| Thu 10 May 2012, 16:46 | | CGR - Calgro M3 - Audited abridged results for the year ended 29 February 2012 |
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CGR
CGR
CGR - Calgro M3 - Audited abridged results for the year ended 29 February 2012
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")
AUDITED ABRIDGED RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2012
Highlights:
Revenue up 82.69% to R515 million
Headline earnings up 282% to R65.4 million
Cash on hand of R103 million
Property Fair value R1.385 billion vs. cost of R506 million
Construction pipeline of R8 billion
Transferred to the main board of the JSE Limited
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Year Year
ended ended
29 Feb 28 Feb
R`000 2012 2011
Revenue 514 913 281 849
Cost of sales (435 398) (246 825)
Gross profit 79 515 35 024
Other income 567 4 153
Other expenses (284) (9 309)
Administrative expenses (36 579) (30 239)
Operating profit/(loss) 43 219 (371)
Share of profit/(loss)of
Joint ventures (Net of tax) 34 326 16 343
Net finance income /(cost) 391 (661)
Profit before taxation 77 936 15 311
Taxation (12 556) 1 644
Profit after taxation 65 380 16 955
Attributable to:
Equity holders of the Company 65 380 16 955
Minority interest - -
Earnings per share - cents 51.44 13.34
Headline earnings per share - cents 51.44 13.48
Fully diluted earnings per share - cents 51.44 13.34
Fully diluted headline earnings per share - cents 51.44 13.48
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
Year Year
ended ended
29 Feb 28 Feb
R`000 2012 2011
ASSETS
Non-current assets
Property, plant and equipment 3 878 4 765
Deferred tax 12 889 11 624
Other non-current assets 99 333 65 767
116 100 82 156
Current assets
Inventories 249 306 234 945
Construction contracts and work in progress 87 514 40 646
Trade and other receivables 15 827 14 602
Other current assets 23 446 6 119
Cash and cash equivalents 103 691 14 954
479 784 311 266
Total assets 595 884 393 422
EQUITY AND LIABILITIES
Equity
Capital and reserves 236 054 170 674
Total equity 236 054 170 674
Non-current liabilities
Deferred tax 19 315 9 496
Other non-current liabilities 245 3 680
19 560 13 176
Current liabilities
Borrowings 225 111 154 262
Other current liabilities 115 159 51 269
Bank overdraft - 4 041
340 270 209 572
Total liabilities 359 830 222 748
Total equity and liabilities 595 884 393 422
Net asset value per share - cents 185.7 134.4
EARNINGS RECONCILIATION
Audited Audited
Year Year
Ended ended
29 Feb 28 Feb
R`000 2012 2011
Determination of headline and diluted headline earnings
Attributable profit 65 380 16 955
(Loss)Profit on disposal of property (3) 179
Headline and diluted headline earnings 65 377 17 134
Determination of earnings and diluted earnings
Attributable profit 65 380 16 955
Earnings and diluted earnings 65 380 16 955
Number of ordinary shares (`000) 127 100 127 100
Weighted average shares (`000) 127 100 127 100
Fully diluted weighted average shares (`000) 127 100 127 100
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
Year Year
ended ended
29 Feb 28 Feb
R`000 2012 2011
Net cash from operating activities 39 276 24 266
Net cash (utilised)/from investing activities (16 243) 9 137
Net cash from /(utilised) financing activities 69 745 (11 287)
Net (decrease)/increase in cash and cash
equivalents and bank overdraft 92 778 22 116
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 103 691 10 913
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital Share Premium Share based
payment
reserve
Balance at 1 March 2010 1 271 96 020 450 -
Comprehensive income
Profit for the year - - -
Other comprehensive - - -
income
Total comprehensive - - -
income
Balance at 01 March 2011 1 271 96 020 450 -
Share options scheme - - 4 488 750
cancelled
Bonus paid as - - (4 488 750)
consideration for
cancellation of share
option scheme
Share based payment - - -
reserve
Comprehensive income
Profit for the year - - -
Other comprehensive - - -
income
Total comprehensive - - -
income
Balance at 29 February 1 271 96 020 450 -
2012
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
Retained Non- Total Equity
Income controlling
interest
Balance at 01 March 2010 57 696 796 - 153 718 517
Comprehensive income
Profit for the year 16 955 441 - 16 955 441
Other comprehensive - - -
income
Total comprehensive 16 955 441 - 16 955 441
income
Balance at 01 March 2011 74 652 237 - 170 673 958
Share options scheme - - 4 488 750
cancelled
Bonus paid as - - (4 488 750)
consideration for
cancellation of share
option scheme
Share based payment - - -
reserve
Comprehensive income
Profit for the year 65 380 048 - 65 380 048
Other comprehensive - - -
income
Total comprehensive 65 380 048 - 65 380 048
income
Balance at 29 February 140 032 285 - 236 054 006
2012
CONDENSED SEGMENT REPORT FOR THE GROUP
R`000 Land Professional
Construction Development Services Total
Feb 2012
Segment revenue 508 370 3 732 5 635 517 737
Inter-segment revenue - - (2 824) (2 824)
Revenue from external
Customers 508 370 3 732 2 811 514 913
Operating (loss)/profit 46 804 (3 945) 2 131 44 990
Finance cost (1 463) - (1 463)
Assets
Goodwill 28 515 - 4 155 32 670
Inventories 22 130 227 175 - 249 305
Construction contracts 85 459 - - 85 459
Liabilities
Borrowings (147 221) (77 890) - (225 111)
Feb 2011
Segment revenue 239 890 37 329 4 630 281 849
Inter-segment revenue - - - -
Revenue from external
Customers 239 890 37 329 4 630 281 849
Profit on sale of
Investment - - - -
Operating (loss)/profit 2 053 (1 766) 394 681
Finance cost (862) (1 165) - (2 027)
Assets
Goodwill 28 515 - 4 155 32 670
Inventories 20 213 214 733 - 234 946
Construction contracts 39 614 - 1 032 40 646
Liabilities
Borrowings (62 369) (91 893) - (154 262)
COMMENTARY
INTRODUCTION
The directors present the audited condensed consolidated financial results for
the year ended 29 February 2012 ("the year"), which reflects a recovering
integrated residential market segment.
During the year under review Calgro M3 has again grown and further established
itself as the leader in the integrated residential market segment. With new
projects coming on line the risk profile of the Group reduced with the spread
of its funding exposure over more projects and with different financial
institutions, together with the extension of its operations to two other
provinces (the Western Cape and Free State).
The Group benefited from established relationships with funding partners and
clients during the year, and leveraged these relationships to grow the
business. Calgro M3 managed to increase its secured pipeline of projects to
R8 billion from the reported pipeline of R5 billion a year ago, at the same
time containing risk and managing resources.
FINANCIAL RESULTS
The Group has reported an increase in revenue of 82.69% from R282 million to
R515 million and gross profit margin increase of 3.02% in comparison to the
previous financial year. The Group`s joint venture projects earned total
revenues of R414 million. As expected the Fleurhof, Jabulani CBD, Jabulani
Hostel Redevelopment, Brandwag and Jukskei View projects all contributed
towards revenue. The contribution by the Scottsdene project in the Western
Cape, although small, was a welcome surprise as expectations were that a
venture into a new province would take longer to contribute.
With a 409.0% increase in profit before tax, the Group increased earnings by
285.6% from R16.9 million to R65.4 million. Overall operating margins
increased due to our continuous focus on the containment of costs. Despite the
82.7% increase in revenue, operating overheads increased by a modest 21.0%.
This increase can be attributed to existing capacity that was utilised to
support growth. The Group foresees that overheads will further increase in the
next two years to accommodate growth.
Cash on hand is at a healthy level of R103 million (2011: R11 million) due to
the conversion of profits into cash and additional working capital raised.
This enabled the Group to provide bridging finance to projects to expedite
their development. Cash generated by operations grew to R69.8 million from
R53.3 million (31.0% increase).
As the Group`s business cycle is longer than one year, all debt is reflected
as current, to better match operating assets and operating liabilities. The
external valuation of all properties in the Group (including joint ventures)
equate to R1.385 billion when compared with a R506 million book value - this
is primarily as a result of purchasing un-zoned land and completing the zoning
process together with the installation of bulk infrastructure onto these
projects.
Management`s challenge will be to continue to grow the pipeline beyond the
next six years while containing the increases in overheads in order for the
full benefits of growth to be realised.
The return on average shareholders` funds/equity has grown from 10.45% in 2011
to a healthy level of 32.14% for 2012.
OPERATIONAL REVIEW
After almost five years of listing on the AltX, the Group`s move to the main
board signalled another milestone in its development and growth path.
Renewed government commitments to infrastructural spend remains a positive
influence on the delivery of integrated housing as the success of these
projects is based on private public partnerships. Continued budget constraints
within local governments, for the roll-out of subsidised units, has however,
resulted in the subsidised component of these projects falling behind in
comparison to the open market segment of the projects. These budget
constraints and the limited availability of development finance for new
projects require private sector players to inject more and more equity into
projects, thereby raising the entry level for new players into this market
segment, to an unnaturally high level.
The Group`s venture into the Western Cape was not as trying as expected and
operations came on line earlier than initially planned. This was made possible
by a strong administration system and logistics capability created during the
Group`s previous venture into the Free State Province. The installation of the
infrastructure on the Scottsdene project is progressing well and the
construction of units on the Elsies Rivier project neared completion towards
the end of the year under review.
As a result of building in-house construction capacity over the last few years
and the success currently experienced with regard to construction quality, the
Group will continue to make use of in-house capacity in the short-term in
order to ensure on time delivery of completed units at the highest level of
quality.
The lower segment of the residential market again proved to be stronger than
the higher segment of the market. The challenge for the Group this year will
be to provide itself with more serviced stands at a pace dictated by market
demand rather than the ability to raise development finance.
As expected the mid-to-high income housing segment of the market did not
recover to the levels of 2007 and as a result the projects acquired for this
market segment have not contributed to revenue or gross margins during the
year. The Group will therefore continue to "landbank" these properties while
attempting to reduce Calgro M3`s exposure to the financial institutions on
these properties.
SAFETY, HEALTH & ENVIRONMENT ("SHE")
The board is pleased to report on the Group`s exceptional SHE track record.
Despite the dramatic increase in the number of employees on construction
sites, the Group was again not only fatality-free, but also free of any
serious injuries in the workplace. This reflects the Group`s on-going and
absolute commitment to ensuring the Group sustains its target of zero harm.
BOARD OF DIRECTORS
The Group was able to retain the services of all executive directors but saw a
change in non-executive directors with the appointment of Dr Mdu Gama as
independent non-executive director, the resignation of Rob Wesselo as non-
executive director and the appointment of Ralph Patmore as lead independent
non-executive director. This was necessitated in order to comply with the
requirements of the new Companies Act and King III.
PROSPECTS
The secured pipeline of integrated development projects will allow Calgro M3,
in line with its evolving public private partnership policy, to assist
government in its endeavour to eradicate the housing shortage. With the
Group`s undertaking to venture into new provinces once operations in Gauteng
have stabilised, the Company can now report that it is currently targeting the
Free State and Western Cape provinces with fully operational offices in these
provinces. The Group recognises the immense opportunity in other provinces and
will again ensure controlled growth by venturing into new provinces only once
operations in the provinces in which the Group currently does business are
fully operational and self-sustaining.
The above prospects statements have not been reviewed or reported on by the
Company`s auditors.
ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
A further announcement will be released on SENS in due course confirming the
posting of the integrated report which will contain a notice of the annual
general meeting.
APPRECIATION
The Group`s venture into the lower segment of the residential market is
starting to bear fruit. The turnaround experienced in the last two years would
not have been possible without the support and dedication of the senior
executive team, senior management and loyal staff. The board would like to
thank every Calgro M3 employee, whose continuous commitment and dedication,
contributed towards the success of Calgro M3.
The board would also like to thank all its other stakeholders, particularly
its financial and development partners and government for their continued and
loyal 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. The financial statements have been prepared by the financial director,
Mr WJ Lategan CA(SA) and were approved by the board on 10 May 2012.
2. Independent audit
These consolidated condensed financial statements have been audited by our
auditors PricewaterhouseCoopers Inc., who have performed the audit in
accordance with the International Standards on Auditing. A copy of the
unqualified audit report and audited financial statements is available for
inspection at the registered office of the Company.
3. Dividends
No dividends have been declared for the financial year.
BP Malherbe WJ Lategan
(Chief executive officer) (Financial Director)
Johannesburg 10 May 2012
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*,ME Gama*#)
(*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)
Sponsor: Grindrod Bank Limited
Auditors: PricewaterhouseCoopers Inc.
www.calgrom3.com
Date: 10/05/2012 16:46:01 Produced by the JSE SENS Department.
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