JSE-listed residential estates and memorial parks developer Calgro M3 has reported a decrease in revenue to R507-million for the six months ended August 31, compared with revenue of R689-million reported for the six months ended August 31, 2023.

Revenue generated from joint ventures (JVs), however, increased to R175-million from R23-million in the prior comparable period.

The company's earnings per share (EPS) and headline earnings per share (HEPS) also increased to R10.14.

“The group gross profit margin increased to 29.69%, with Residential Property Development at 27.86% and Memorial Parks at 57.79%. This, together with an increase in the share of profits from JVs, cost containment and share buybacks, gave rise to a 28.55% increase in HEPS,” said Calgro M3 CEO Wikus Lategan.

Strategic capital allocation remained a priority and a core element of the operational philosophy of the group, with significant investments made to ensure that the pipeline supports sustainability and puts a platform for growth in place.

The Residential Property Development pipeline exceeds 38 000 opportunities, and Memorial Parks has a pipeline of 120 000 graves.

During the interim period, the group handed over 869 residential units, with 1 539 units under construction, of which the majority will be completed and handed over before the end of February 2025.

“The intention is to start on another 1 592 units during the next six months, targeted for completion in the next financial year. Calgro M3 also has a further 2 609 fully serviced opportunities available and 5 021 opportunities ready for development.

“We have a strong pipeline of completed but not-as-yet transferred units, which we expect to sell and transfer within the next six months of the financial year,” said Lategan.

Further, cash and cash equivalents increased by 37.73% to R168.9-million, up from R122.6-million in February this year.

“We continued to make meaningful investments in infrastructure, with construction contract values increasing by 8.8% to R1.47-billion, up from R1.35-billion in February 2024, primarily owing to the accelerated pace of development in Fleurhof and Belhar as well as within Jabulani, Scottsdene and La Vie Nouvelle as part of trading this project out over the next 24 to 30 months. The increase also contributed to the uplift in gross profit margins.

“Group borrowings increased to R1.04-billion, up from R934.8-million in February 2024, primarily owing to the strategic drawdown of the remaining R100-million from the [financial services firm] Absa facility. This action was taken in preparation for the Bankenveld land transfer, which occurred in September.”

Calgro M3 has also invested R138-million in infrastructure across key projects, including Fleurhof, Jabulani and Belhar during the period. Jointly, these projects have just more than R100-million in bulk and link infrastructure costs remaining to unlock the balance of the units to be developed.

Further, Calgro M3's board announced its inaugural dividend policy, which provides for dividends to be paid yearly, calculated at a minimum of 5% of the HEPS.

No dividends were declared during the current interim reporting period.

“We issued our maiden dividend in May, so this would be for our second dividend. The main aim is to communicate to shareholders that they will receive at least 5% of HEPS, and that this is now a policy and will not be open to the board,” he told Engineering News.

Calgro M3’s national average sales price for a core two-bedroom family apartment during the period was R636 617, excluding value-added tax.

The group intended to launch a two-bedroom apartment for R499 000 and, for the first time, a single-bedroom apartment for R399 000, he said.

“With interest rates anticipated to decrease further during the coming financial year, these offerings should help us to capture the market.”

Meanwhile, the company's Memorial Parks segment saw revenue grow by 59.05% to R31.7-million, and accounting for 6% of group revenue.

“The main goal for this segment remains cash generation for the group, which was up 52.79% to R52.1-million and covers 100% of group overheads.

“The Memorial Parks segment is part of our risk mitigation, and the aim is to cover group administrative expenses and eventually to cover the group's interest rate bill. The segment covers group overheads and continues to grow even during times of trying economic conditions,” he said during the interview.

“Our robust pipeline, consisting of strategic large-scale developments Fleurhof, South Hills, Bankenveld and Belhar, combined with us trading out of other developments, positions us to deliver a future pipeline in excess of 38 000 units.

“These projects not only represent financial returns, but also our continued commitment to addressing South Africa’s housing needs and the offering of value-for-money homes that transform lives and communities.”

Housing development served as a catalyst for development, he emphasised.

“Housing development leads to job creation, the upliftment of social structures and the fixing of infrastructure or the development of new infrastructure.

“We built a water reservoir for our Fleurhof development that feeds water to the broader area and the substation not only helps to address Fleurhof's electricity challenges but also the adjacent industrial area's electricity challenges,” said Lategan.

Meanwhile, while the group had made significant investments over the interim period of R138-million, and significant investments during the prior financial year, there was minimal investment required going forward, he added.

“Not only do these investments position us for growth, but it also helps to make our balance sheet more liquid because we are sitting with land on which infrastructure is in place and this makes the units more sellable,” he noted.

Further, the focus in the coming months was to accelerate unit transfers, and boost sales for sustainable growth to roll out the 15-year pipeline and optimise cash flow.

Additionally, the group would refine operational efficiencies across all segments to enhance profitability and value for shareholders and stakeholders, he said.