JSE-listed property development company Calgro M3 recorded a 32.69% year-on-year decrease in revenue to R868.9-million for the financial year ended February 28, but its gross profit margin increased to 29.43%, up from 27.21% in the prior financial year.

Earnings a share decreased by 10.14% to 171.72c and headline earnings a share decreased by 9.31% to 171.36c.

Cost efficiency remains a key focus area for the group, with administrative expenses having decreased by 2.71% to R95-million.

The group’s net asset value, meanwhile, increased by 12.07% to R14.86 a share, Calgro M3 CEO Ben Pierre Malherbe pointed out on May 12.

Similarly, the company increased its cash generation by 26.18% to R154.7-million, up from R122.6-million at the end of February 2024. Its net debt to equity level is stable at 0.65, up slightly from 0.63 in the prior financial year.

Calgro M3 declared a final dividend of 8.64c a share, down from 9.49c a share in the preceding financial year.

Further, the company's pipeline is valued at R29.2-billion, with 36 000 housing opportunities secured at the end of the financial year.

The pipeline includes the newly acquired Bankenveld District City Development, which will add at least 20 000 units to the group’s pipeline.

Additionally, the company’s strategic shift towards open market sales was evident. This reflects a clear focus on private-sector demand and revenue diversification. It currently has 1 543 housing opportunities under construction, with projects nearing completion for handover and revenue recognition.

“Amid challenging economic conditions and the large volume of stock on hand [during the financial year to end February], the group prioritised the completion of infrastructure installations across its existing development pipeline,” Malherbe noted.

Significant progress had been made in completing bulk infrastructure requirements in the Fleurhof development, with R208.8-million having been invested in infrastructure within the Fleurhof, Jabulani, South Hills and Belhar projects during the year. This impacted on the net cash from operations but was expected to create long-term value from a capital allocation perspective, he said.

Calgro M3 acquired the Bankenveld land in September 2024. The development presented a significant opportunity for the group, as it was well positioned in close proximity to the Sandton and Waterfall City hubs, as well as bordering Alexandra and the Marlboro Gautrain station. It represented the last large-scale undeveloped property in the Sandton area, the group noted.

The first phase of infrastructure installation started in the first quarter of this year.

The development would also see intersection upgrades on Marlboro drive and the N3 highway and the strategic link in Woodmead on the M1, as well as the development of an undercarriage to Linbro Park, which would open up access to developments in this area, said Malherbe.

“Location remains critical for our developments. We must move people closer to opportunities so that they do not spend 40% of their income travelling to work and back. This aligns with Phase 2 of Operation Vulindlela.”

Operation Vulindlela is a Presidential initiative that aims to modernise and transform network industries, including electricity, water, transport and digital communications.

Further, there was sufficient water, electricity and transport capacity in the area to start development of the 20 000 units without expanding this capacity. However, further upgrades would be required over the next ten years and Calgro M3 would build an electricity substation and more water reservoirs to reach the full 20 000 units, he noted.

OUTLOOK
Calgro M3 has residential products ranging from fully subsidised to premium homes above R3-million.

“This strategic diversity allows us to navigate current economic and market conditions effectively. Our focus is on delivering value-for-money homes in integrated developments and lifestyle estates, reaching a wide spectrum of different market segments with a keen focus on those in dire need of housing,” Malherbe said.

The company's robust pipeline provided diversity across provinces and projects and ensured a balanced portfolio while effectively managing concentration risk, he added.

“With the roll-out of the remaining pipeline, we will continue to invest in innovating our building designs to minimise financial and environmental impacts. This will ensure that Calgro M3 remains at the forefront of industry innovation, and thereby maintaining our competitive edge in the market while ensuring that we deliver on our purpose of 'Building legacies. Changing lives',” Malherbe said.