Wrap Text
Audited abridged results for the year ended 28 February 2013
Calgro M3 Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2005/027663/06)
Share code: CGR ISIN: ZAE000109203
("Calgro M3" or "the Company" or "the Group")
HIGHLIGHTS
Revenue up 55.05% to R798 million
Operating profit up 106.79% to R89 million
Headline earnings up 39.66% to R91,3 million
Construction pipeline in excess of R10 billion
AUDITED ABRIDGED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2013
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Year Year
ended ended
28 Feb 29 Feb
R’000 2013 2012
Revenue 798 394 514 913
Cost of sales (650 436) (435 398
Gross profit 147 958 79 515
Other income 1 265 567
Other expenses (5 146) (284)
Administrative expenses (54 703) (36 579)
Operating profit 89 374 43 219
Share of profit of
Joint ventures (Net of tax) 29 406 34 326
Net finance income (1 540) 391
Profit before taxation 117 240 77 936
Taxation (25 937) (12 556)
Profit after taxation 91 303 65 380
Attributable to:
Equity holders of the Company 91 303 65 380
Minority interest - -
Earnings per share - cents 71.84 51.44
Headline earnings per share - cents 71.84 51.44
Fully diluted earnings per share - cents 71.84 51.44
Fully diluted headline earnings per share - cents 71.84 51.44
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
Year Year
ended ended
28 Feb 29 Feb
R’000 2013 2012
ASSETS
Non-current assets
Property, plant and equipment 4 245 3 878
Deferred tax 13 908 12 889
Other non-current assets 135 101 99 333
153 254 116 100
Current assets
Inventories 264 580 249 306
Construction contracts and work in progress 139 251 87 514
Trade and other receivables 45 339 15 827
Other current assets 8 353 23 446
Cash and cash equivalents 198 343 103 691
655 866 479 784
Total assets 809 120 595 884
EQUITY AND LIABILITIES
Equity
Capital and reserves 327 358 236 054
Total equity 327 358 236 054
Non-current liabilities
Deferred tax 26 863 19 315
Other non-current liabilities 216 245
27 079 19 560
Current liabilities
Borrowings 299 890 225 111
Other current liabilities 154 793 115 159
454 683 340 270
Total liabilities 481 762 359 830
Total equity and liabilities 809 120 595 884
Net asset value per share - cents 257.6 185.7
EARNINGS RECONCILIATION
Audited Audited
Year Year
ended ended
28 Feb 29 Feb
R’000 2013 2012
Determination of headline and diluted headline earnings
Attributable profit 91 303 65 380
(Loss)Profit on disposal of property - (3)
Headline and diluted headline earnings 91 303 65 377
Determination of earnings and diluted earnings
Attributable profit 91 303 65 380
Earnings and diluted earnings 91 303 65 380
Number of ordinary shares (‘000) 127 100 127 100
Weighted average shares (‘000) 127 100 127 100
Fully diluted weighted average shares (‘000) 127 100 127 100
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
Year Year
ended ended
28 Feb 29 Feb
R’000 2013 2012
Net cash from operating activities 12 585 39 276
Net cash from/(utilised in) investing activities 8 269 (16 243)
Net cash from financing activities 73 798 69 745
Net increase in cash and cash
equivalents 94 652 92 778
Cash and cash equivalents the beginning
of the year 103 691 10 913
Cash and cash equivalents the end
of the year 198 343 103 691
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital Share Premium Share based
payment
reserve
Balance at 1 March 2011 1 271 96 020 450 -
Share options scheme - - 4 488 750
cancelled
Bonus paid as - - (4 488 750)
consideration for
cancellation of share
option scheme
Share based payment - - -
reserve
Comprehensive income
Profit for the year - - -
Other comprehensive - - -
income
Total comprehensive - - -
income
Balance at 01 March 2012 1 271 96 020 450 -
Comprehensive income
Profit for the year - - -
Other comprehensive - - -
income
Total comprehensive - - -
income
Balance at 28 February 1 271 96 020 450 -
2013
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
Retained Non- Total Equity
Income controlling
interest
Balance at 01 March 2011 74 652 237 - 170 673 958
Share options scheme - - 4 488 750
cancelled
Bonus paid as - - (4 488 750)
consideration for
cancellation of share
option scheme
Share based payment - - -
reserve
Comprehensive income
Profit for the year 65 380 048 - 65 380 048
Other comprehensive - - -
income
Total comprehensive 65 380 048 - 65 380 048
income
Balance at 01 March 2012 140 032 285 - 236 054 006
Comprehensive income
Profit for the year 91 303 538 - 91 303 538
Other comprehensive - - -
income
Total comprehensive 91 303 538 - 91 303 538
income
Balance at 28 February 231 335 823 - 327 357 544
2013
CONDENSED SEGMENT REPORT FOR THE GROUP
R’000 Land Professional
Construction Development Services Total
Feb 2013
Segment revenue 765 925 2 698 32 182 800 805
Inter-segment revenue - - (2 411) (2 411)
Revenue from external
Customers 765 925 2 698 29 771 798 394
Operating profit/(loss) 67 543 (4 909) 28 875 91 509
Finance cost (9 970) - - (9 970)
Assets
Goodwill 28 515 - 4 155 32 670
Inventories 20 206 244 374 - 264 580
Construction contracts 139 251 - - 139 251
Liabilities
Borrowings (221 000) (78 890) - (299 890)
Feb 2012
Segment revenue 508 370 3 732 5 635 517 737
Inter-segment revenue - - (2 824) (2 824)
Revenue from external
Customers 508 370 3 732 2 811 514 913
Operating (loss)/profit 46 804 (3 945) 2 131 44 990
Finance cost (1 463) - (1 463)
Assets
Goodwill 28 515 - 4 155 32 670
Inventories 22 130 227 175 - 249 305
Construction contracts 85 459 - - 85 459
Liabilities
Borrowings (147 221) (77 890) - (225 111)
RECONCILIATION OF ADJUSTED PROFIT BEFORE TAX
Audited Audited
Year Year
ended ended
28 Feb 29 Feb
R’000 2013 2012
Adjusted profit before tax for reportable segments 81 538 43 527
Group overhead cost (2 135) (1 771)
Share of profit of joint ventures – Net of tax 29 406 34 326
Total segments 108 809 76 082
Finance income – net 8 431 1 854
Profit before tax 117 240 77 936
RELATED PARTY TRANSACTIONS
Audited Audited
Year Year
ended ended
28 Feb 29 Feb
R’000 2013 2012
Compensation paid to key employees and personnel 20 925 24 542
Finance income from related parties 6 409 1 801
Contract revenue received from joint ventures 391 117 287 672
Services fees received from joint ventures 29 103 19 139
COMMENTARY
INTRODUCTION
The Group is well under way to converting its pipeline of projects into
construction projects, as demonstrated in this set of results. The
Company is committed during this expansionary phase, to ensure
controlled growth and the controlled increase in overheads. The focus
will remain on stabilizing operations and building capacity to ensure
effective implementation of pipeline projects before venturing into new
provinces. The Group will continue to closely monitor and maintain a
healthy cash balance while balancing exposure between financial
institutions.
The Group will not deviate from its stated strategy to become the
residential developer of choice for government, financial institutions
and funding partners, equity and debt alike, and will concentrate its
efforts on the sustainable delivery of quality integrated developments
while re-entering the mid- to high-segment of the market with the launch
of the La Vie Nouvelle retirement project in Gauteng.
With the Fleurhof integrated development now functioning as a community
rather than merely a construction project, the principle of integrated
developments has been firmly established and demonstrating benefits to
role-players in the market segment. We are proud of the results thus far
and of the accolades Fleurhof has been receiving.
The Group benefited from established relationships with funding partners
and clients and used these relationships to grow the business. We are
pleased to report that Calgro M3 has managed to grow its secured
pipeline of projects to in excess of R10 billion from the reported
pipeline of R8 billion a year ago. Risk was contained throughout and
resources grown and effectively managed. Continued focus on delivery of
construction projects in Gauteng, Free State, and the Western Cape was
complemented by the award of a project in the North West province in
line with the Group’s strategy of increasing its exposure in the
province.
Cash generated from operations and from structured debt-raising, enabled
the Group to provide bridging finance to fast track the implementation
of projects.
Through the policy of utilising local labour and skills training on
site, the Group was able to create in excess of 5 000 direct new job
opportunities in a sustainable way as the average duration of these
projects exceed a three year construction period. The effect of job
creation is multiplied when one takes into account the number of
indirect jobs which were created as a knock-on effect in the
manufacturing of building materials.
The Group’s most significant achievements during the year comprised:
- the awarding of the Boitekong project in the North West Province in
line with a strategic thrust to obtain a footprint in the province
thereby benefiting from the new Mining Charter becoming effective
2014;
- the awarding of the Vista View project in the Free State,
increasing the group’s footprint in the province;
- creating in excess of 5 000 job opportunities in line with
government’s drive for job creation;
- reporting zero fatalities and no serious injuries in the work
place;
- construction of the first top structures commenced in the Western
Cape;
- the handover of the first fully subsidised units in the Fleurhof
project;
- completion of the first phase of the Jabulani Hostel re-development
project;
- receiving environmental approval to proceed with the South Hills
project;
- transferring the first sectional title units and handing over to
end-users and body corporates in the Jabulani project;
- installing infrastructure on the La Vie Nouvelle retirement village
project to enable the group to launch in the new financial year;
and
- nearing completion of the Jukskei View project by selling out all
units.
FINANCIAL RESULTS
When compared with the previous financial year, the Group’s revenue
increased by 55.05% from R514 million to R798 million while the gross
profit margin increased from 15.44% to 18.53%.
Operating profit increased 106.79% due to the increase in Group revenue
and effective cost containment. Profit before tax increased by 50.43%
due to challenges experienced on JV projects resulting in lower profit
contribution from them (these issues were resolved by year end). A
higher tax rate resulted in a 39.65% increase in profit after tax.
Cash on hand is at a healthy R198 million (2012: R103 million). Cash
generated from operations decreased from R69.8 million in 2012 to R49.4
million for the period under review. This was as a result of longer term
construction time frames, on bigger than previous bulk deals. Another
contributing factor was the upfront investments in projects (included in
construction contracts) where professional fees and services on projects
were installed prior to top structure construction (Scottsdene – R 29
million and La Vie Novelle - R 13 million). Taking the stressed economic
environment into account management is focused on the continual
proactive monitoring of capital and more specifically, cash liquidity.
As at year-end the Group held in excess of 40% of its total liabilities
in cash. Listed bonds to the value R 40 million were repaid and
R 126 million was raised.
An inventory write-down of R 5 146 385 to net releasable value was
charged to the statement of comprehensive income during the financial
year on the Mabopane project.
OPERATIONAL REVIEW
In line with the National Development plan, government’s commitment to
infra-structural spend remains a positive influence on the delivery of
integrated housing as the success of these projects is based on
private/public partnerships. With the public and private sector both
actively involved in the provision of housing, the Group was able to
partner both sector role-players, and refine the integrated model by
optimising the product offering to the benefit of the communities
residing in the projects.
The year was however not without its challenges. Labour unrest in the
Western Cape Province made it difficult to operate at full capacity
during the top structure construction phase of the project, thereby
affecting both revenue and profitability. Although labour action and
transport strikes now form part of the South African trading
environment, the violent nature of intimidation on these strikes caused
the project to be delayed beyond expectations.
On the back of construction capacity, build-up during the last few
years, and the success experience with regards to construction quality,
the Group continued to make use of in-house capacity in order to ensure
quality is maintained at the highest level, and will look at making use
of external contractors only to complement capacity if and when needed.
The Group further commenced the installation of services on the La Vie
Nouvelle project, aimed at the mid to high segment of the market, to be
launched in the new financial year. The group will continue to
“landbank” the balance of properties while attempting to reduce its
exposure to financial institutions, and monitor the recovery of the
market.
Statements contained in this abridged results announcement regarding the
prospects of the Group have not been reviewed or reported on by the
Company’s auditors.
SAFETY, HEALTH & ENVIRONMENT (“SHE”)
The board is pleased to report on the Group’s exceptional SHE track
record. Despite the dramatic increase in the number of employees on
construction sites, the Group was not only fatality-free again, but also
free of any serious injuries in the workplace again. This reflects the
Group’s on-going and absolute commitment to ensuring that the Group
maintains its zero harm target achievements.
BOARD OF DIRECTORS
Rob Wesselo resigned as non-executive director during May 2012 due to a
conflict of interest. The Group was able to retain the services of all
executive and other non-executive directors. In order to comply with the
requirements of the new Companies Act and King III, the role of
financial director and company secretary was split post year-end. Wayne
Williams was appointed as company secretary effective 1 April 2013.
ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of shareholders
will be held on 25 June 2013 at 10h00 at the main boardroom, Calgro M3,
Ballywoods Office Park, Cedarwood, 33 Ballyclare Drive, Bryanston, to
transact business as stated in the notice of the Annual General Meeting
posted to shareholders as detailed above.
The annual report containing notice of the annual general meeting will
be posted to shareholders on or about 30 May 2013.
APPRECIATION
The positive turnaround experienced in the last two years would not have
been possible without the support and dedication of our loyal staff,
senior management and executive team. We would like to thank every
Calgro M3 employee, whose continuous commitment and enthusiasm has
contributed towards the success of Calgro M3.
The board would also like to thank all other stakeholders, particularly
its financial and development partners and government for their
continued and loyal support.
Notes
1. Basis of preparation
These consolidated condensed financial statements are prepared in
accordance with International Financial Reporting Standards (IFRS) on
Interim Financial Reporting, SAICA financial reporting guides as issued
by the Accounting Practices Committee and Financial Pronouncements as
issued by Financial Reporting Standards Council, IAS 34, the South
African Companies Act and the Listings Requirements of the JSE Limited.
The accounting policies are consistent with those used in the annual
financial statements for the year ended 29 February 2012. The financial
statements have been prepared by Mr WA Joubert (CA)SA under supervision
of Mr WJ Lategan CA(SA), and were approved by the board on 7 May 2013.
2. Independent audit
These consolidated condensed financial statements have been audited by
our auditors, PricewaterhouseCoopers Inc., who have performed the audit
in accordance with the International Standards on Auditing. A copy of
the unqualified audit report and audited financial statements is
available for inspection at the registered office of the Company.
3. Dividends
Cash will be retained to fund growth in the absence of readily available
development finance. The board of directors has therefore resolved not
to declare a dividend for this reporting period.
BP Malherbe WJ Lategan
(Chief executive officer) (Financial Director)
Johannesburg 7 May 2013
Directors:
PF Radebe (Chairperson) *, BP Malherbe (Chief executive officer), WJ Lategan
(Financial Director), FJ Steyn, DN Steyn, JB Gibbon*#, H Ntene*, R Patmore*#,
ME Gama*#)
(*Non-executive)
(# Independent)
Registered office: Cedarwood House, Ballywoods Office Park, 33 Ballyclare
Drive, Bryanston 2196. (Private Bag X33, Craighall 2024)
Transfer secretaries: Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
Sponsor: Grindrod Bank Limited
Auditors: PricewaterhouseCoopers Inc.
www.calgrom3.com
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