Voluntary Operational Update
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”)
VOLUNTARY OPERATIONAL UPDATE
The Board of Calgro M3 would like to provide stakeholders with an update on the operations and the
environment in which the Group currently operates. In addition, we would like to provide an update
on the impact that amendments to the accounting standards (IFRS 15) will have on revenue
recognition for the Group.
Historically, the revenue on certain contracts within the integrated development environment was
accounted for by the Group through combining contracts into a single overarching integrated
contract due to the cross-subsidisation nature of these developments, with most of the revenue
being accounted for on a percentage of completion basis in terms of IAS 11. With the application of
IFRS 15 (Revenue from contracts with customers) from 1 March 2018, all contracts will be dealt with
as separate standalone contracts which will result in revenue recognition being delayed on certain
contracts. The Group will follow a modified retrospective approach when accounting for any
adjustments to retained earnings because of these changes. It is however important to note that the
application of IFRS 15 will not affect the cash flow or overall profitability of the projects negatively.
Although tough economic trading conditions persist, the Group is optimistic about the future but
remain cautious and have continued conducting operations in a controlled, sustainable manner
through protecting its cash flow.
Calgro M3 Memorial Parks business continues to grow monthly and the incorporation of the
Durbanville and Bloemfontein Memorial Parks (previously known as Avalon) are well underway. The
sales performance at Durbanville is also looking very promising with a notable increase since
acquisition. Investigations with strategic partners are also underway to develop more annuity-based
The Residential Rental Investment business is well underway with a total of 1,140 units handed over
to the consortium. The balance of the first 3,842 units are being delivered on a staggered, monthly
basis. The handover of the first units acquired by the consortium from a third-party developer,
located in Ruimsig, Johannesburg, will commence in October 2018, also on a staggered basis.
The Residential Developments business has experienced delays on circa 4,000 of the 7,093 units
under construction and/or ready for construction in the Fleurhof, Belhar, and Scottsdene
developments. These delays have been brought about by illegal, and attempted illegal, occupation of
partially and fully completed units, electrification and water shortages. Management has resolved
certain of these issues, with the remainder being attended to.
Sales performance in the private sector has been affected by the decrease in activity on site and has
also come under pressure. Sales at the Belhar project are however showing high demand with 124
units sold within the first 18 days of marketing.
The Group has received the final tranche of Proparco funding (R109 million) after the Health, Safety
and Environmental audit was completed. The Group will continue its focus on these areas to ensure
continued compliance and create a safe working environment for all. The appointment of personnel
in specific departments to ensure sufficient capacity is available, is well underway.
The company did not undertake any corporate action during the current financial year when
compared to the prior year and the financial effect of this operational performance is not yet clear
because of the new IFRS 15 accounting treatment.
31 July 2018
Grindrod Bank Limited
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