Calgro M3 H1 headline earnings up 26.96%

CEO Ben-Pierre Malherbe praised Calgro M3’s ability to maintain a strong order book during the reporting period.

JSE-listed residential project developer Calgro M3 (CGR) has reported a 26.96% rise in diluted headline earnings per share to 40.16c for the six months ended August 2013 from 31.63c a year ago.

The group reported an 8% rise in revenue to R434.6m‚ while operating profit declined to R33.7m from R42.5m. Profit after tax was R51m from R40.2m previously.

Gross profit amounted to R62.0m from R68.3m a year ago. Gross profit margins decreased to 14.26% from 17.04% a year earlier due to the increased activity in the installation of civil and electrical infrastructure with a lower margin that precedes top structure construction scheduled for the next 18 months‚ when the margin and related cost from operations will increase again.

CEO Ben-Pierre Malherbe praised Calgro M3’s ability to maintain a strong order book during the reporting period.

It said the group’s operations showed improvement in the period under review‚ despite the tough trading environment in the development and construction sectors.

The continuing labour unrest in the Western Cape‚ delays in electrical supply to the Jabulani project and increased activity in the lower margin installation of services contributed to margins being under pressure.

Despite the prevailing negativity‚ the group’s pipeline has increased to more than R10bn.

Revenue in Joint Ventures (JVs) increased to R347m‚ lifting profits from JVs to R27.6m from R12.4m a year ago. Calgro M3 fulfils the leading role in these JVs as development partner and contractor.

The company said the installation of bulk infrastructure will commence on two new projects during the second half of the 2014 financial year‚ converting more of the pipeline into construction projects.

It experienced a renewed commitment from government to increase investment in infrastructure allowing the group to deliver on infrastructure for integrated developments.

Looking ahead‚ it said trading conditions in the construction and development sector remain challenging‚ but support from local government and strong end user sales in the Finance Linked Individual Subsidy Programme (FLISP)‚ gap and affordable markets are all contributing in making integrated developments based on Private Public Partnerships successful.

Government’s undertaking to close the gap between fully subsidised housing and the entry level affordable bonded market by providing Social Housing and the newly revised FLISP units is continuing to create exciting new opportunities and the group is well positioned to make use of opportunities presented‚ it said.