Residential-focused property developer Calgro M3 has issued a maiden dividend of 9.49c a share after posting a record gross profit margin of 27.25% for the financial year ended February 29, and profit after tax increased to R196.8-million, up from R186.29-million in the preceding financial year.

The company also published a dividend policy that will see it pay yearly dividends to a minimum of 5% of headline earnings a share. The total dividend payable is R10.86-million for the financial year under review.

During the year under review, the company posted record earnings a share of 192.01c, headline earnings a share of 189.87c and net asset value growth of 40.60% a share.

These results were driven primarily by strategic initiatives and focused and effective capital deployment, which includes share repurchases. Calgro M3 undertook a share buyback of 25.91-million shares, or 18.5% of shares in issue, at an average price of R2.92 a share and to the amount of R73.02-million.

The group continued to embrace its role as the architect of lifestyle, security and high-specification offerings in its residential developments and memorial parks, with the group yielding an above-average gross profit margin of 27.25%, above the normal range of 20% to 25%, said Calgro M3 CEO Wikus Lategan.

The group's improved performance was owing to an increase of 3.8% in gross profit margin, coupled with a 4.18% reduction in administrative expenses. Despite these gains, total revenue fell by 15.79% to R1.28-billion, down from R1.525-billion in the 2023 financial year.

Further, while revenue across the group’s nine residential property development projects had decreased in the financial year, the overall gross profit from this improved to R330.63-million, or 26.62%, which is a noteworthy increase from the prior year's 23.15%.

“We also made commendable progress in increasing other income, achieving a 28% increase owing to higher bond commissions, supporting the focus on open-market housing. These gains reflect our commitment to revenue diversification, ensuring stable customer handovers and consistent cash flow,” he said.

During the year under review, 1 794 residential developments were handed over, with a further 1 748 under construction and nearing completion for hand-over and related revenue recognition.

Included within the serviced developments were 1 100 residential developments, with construction starting in the first six months of the 2025 financial year. More than 2 970 residential developments were currently being serviced, he noted.

“Despite the tough market, major banks continue to support the industry, often issuing 100% of the bond, and recognise the need for housing and its role in job creation and societal wellbeing.

“We increased our pipeline of existing projects by 2 182 opportunities, driven by an additional 804 opportunities arising from the group acquiring strategic land next to our Belhar project, with the remaining increase stemming from more efficient designs to improve our product offering.”

Further, the group invested R314.58-million in infrastructure at the Jabulani, Fleurhof, South Hills and Belhar projects during the year under review, impacting on the net cash from operations but creating long-term value from a capital allocation perspective, added Lategan.

“We have navigated the complexities of the market and the evolving needs of our customers, thereby ensuring that growth aligns with our commitment to service excellence,” he highlighted.

He added that the group was confident in its pipeline to issue the dividend policy, with seven of nine of its projects being cash generative, as well as its net debt-to-equity remaining stable at 0.63 and the group achieving the highest net asset value a share of R13.37 a share, up 40.6% from R9.51 a share in the 2023 financial year.

Cash and cash equivalents at the end of the year decreased to R122.64-million, down from R172.61-million in the prior financial year, with the decrease largely being attributed to cash invested in near-completed units, which were expected to be handed over, and the revenue accounted for, in the next six months, noted Lategan.

“The notable increase in gross profit can be attributed to diligent cost control strategies and effective project management within both reportable segments. Additionally, the mix of units sold this year, predominantly in the open market, played a crucial role,” he said.

“In a challenging market, these achievements underscore our deep understanding of the markets we serve, the prioritisation of long-term sustainability and expanding market share while rolling out existing pipeline opportunities in a controlled but flexible manner.”

In an interview with Engineering News, Lategan said Calgro M3’s sustainability efforts included various elements, including ensuring that every staff member goes home at the end of a workday feeling that she or he has made a difference in someone's life.

“When our employees feel that they have made a difference, it contributes to the value recognised by our clients in terms of service and property, and leads to more sales as they speak to friends and acquaintances.

“In terms of development sustainability, we aim to offer the best-in-class value for money, and we use the same water saving mechanisms, the same energy-saving geysers, basins, kitchens and other elements in the houses we build. Additionally, we are using quartzite instead of granite because it is more sustainable.

“We are doing what we can to bring benefits to our clients without making the price higher,” he said.

“Our potential new product offering targeting lower living standards measurements groups for affordable housing and memorial services intends to capture the current market demand.

“This, coupled with diverse revenue streams across various market segments, positions us to make the most of the considerable housing deficit and robust memorial services sector demand,” Lategan concluded.