Calgro M3 has published its financial results for the year ended February 2022, declaring an increase of 50.3% in its overall revenue to R1.322 billion (2021: R879.1 million), marking the group’s third highest revenue number in its history.
Gross profit margin recovered to 21.3% (2021: 12.3%) from 19.7% at August 2021 due to cost containment and the outsourcing of construction activities. This, combined with enhancements made to the development process, resulted in the strengthening of its gross profit margin towards its target range of +- 25%.
Basic earnings per share increased to 108.58 cents per share (2021: 14.88 cents per share) with headline earnings per share improving to 105.63 cents per share (2021: 15.17 cents loss per share).
Cash and cash equivalents at the end of the year increased to R191.1 million (2021: R154.6 million). Additional liquidity in the form of a R100 million undrawn overdraft from Standard Bank as well as an undrawn US$20 million facility from the Development Finance Corporation, will enable the group to execute its short to medium-term goals. It has also continued to generate positive cash from operations of R228 million (2021: R114.8 million) for the year.
Calgro M3 CEO, Wikus Lategan says the group’s balance sheet is strong with a net debt to equity ratio of 0.71:1. “This is below the communicated target of 0.9:1 and well below the regulated covenant of 1.5:1. The debt levels are expected to decrease in line with the targets as set by management, however additional funding may be raised should short-term funding be required at any given stage due to the seasonal nature of the group’s cash flow. The group has settled debt of R107.4 million in the current financial year, which includes the first repayment of the Proparco facility which fell due in the current financial year”.
Current liabilities decreased by a further 11.83% to R1.262 billion (2021: R1.431 billion) and have substantially reduced from R1.75 billion at February 2020.
Calgro M3’s combined pipeline for residential property development and memorial parks currently stands at R17.4 billion with its residential property development business remaining the largest contributor to revenue, operating primarily in Gauteng and the Western Cape with a total of nine projects. The revenue pipeline for residential property development is R15.3 billion.
“In addition, there was meticulous capital allocation to high yielding projects, plus we enhanced our product and lifestyle offering while taking affordability into account. Ultimately, the revenue diversification between projects and provinces and our sustainable mix of customers are ensuring consistent handovers and cash flows”, points out Lategan.
With 4 583 opportunities under construction (compared to 4 654 a year ago), 2 685 opportunities completed and a pipeline of 24 563 opportunities due to the subsequent disposal of Safdev Tanganani (Pty) Ltd. and the densification of various projects, Lategan says Calgro M3 is well positioned, sufficiently capitalised and it has the liquidity to address market demand.
While limited infrastructure investment took place during the year, the group is planning on self-funding approximately R120 million of infrastructure investment during the 2023 financial year. “Although we are confident that the cash generated from operations will be more than sufficient to fund this, cash generation remains somewhat seasonal and net debt to equity might increase slightly for a brief period of time”.
Lategan cautioned that given predicted interest rate increases, the group remains watchful of the economic impact on its customers and the potential tightening of lending criteria from banks. “We remain confident though that we have made major strides in containing costs and will continue working on making building design and layouts more efficient, to contain building costs that impact margins”.
In its memorial parks business, the year under review ensured further tightening of the strategic objectives of this segment of the group. As previously communicated, Waldi Joubert has taken the reigns as MD of memorial parks, to ensure a dedicated leader and strategist is in place to grow this business.
Lategan said that memorial parks remain a key expansion area for the group, with the medium-term objective being to grow cash receipts to support all overheads and interest obligations.
With 2 324 burial opportunities sold in the year (2021: 1 769), and a remaining total pipeline of 101 545 burial opportunities as well as other products at current parks, Calgro M3 remains bullish on growth opportunities in this business segment.
No dividend was declared for the reporting period (2021: nil) . Its share price has increased by 90% over the past year.