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Calgro M3 grows its pipeline of projects

Calgro M3 Holdings had grown its secured pipeline of projects to more than R10 billion in the year to February from R8bn in the previous year and created more than 5 000 direct new sustainable job opportunities, the listed affordable housing developer said yesterday.

Ben Pierre Malherbe, Calgro's chief executive, said the company had been able to create these new jobs through the group's policy of using local labour and conducting skills training on site.

He stressed these were sustainable jobs because the average duration of its projects exceeded a three-year construction period. Malherbe added that the company was in an expansionary phase and well under way to converting its pipeline of business into construction projects. "In line with the National Development Plan, government's commitment to infrastructural spend remains a positive influence on the delivery of integrated housing as the success of these projects is based on private-public partnerships,"

Malherbe said. "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." However, Malherbe said the year was not without its challenges and labour unrest in the Western Cape made it difficult to operate at full capacity, which had affected the group's revenue as well as its profitability.

Calgro reported yesterday that headline earnings a share grew almost 40 percent to R71.84 in the year to February from R51.44 in the previous year. Revenue rose by 55 percent to R798.4 million. Operating profit more than doubled to R89.4m from R43.2m. A dividend was not declared, with Calgro's board opting to retain cash to fund growth in the absence of readily available development finance.

Cash on hand grew by 92 percent to R198m fbut cash generated from operations decreased by 29 percent to R49.4m.

Malherbe attributed this decline to longer-term construction time frames on bigger-than-previous bulk deals and the upfront investment in projects where professional fees and services on projects were installed prior to top structure construction.

He added that the continued focus on delivery of construction projects in Gauteng, the Free State and the Western Cape was complemented by the award of the Boitekong project in the North West, in line with the group's strategy of increasing its exposure in this province. But he stressed that the group's focus would remain on stabilising operations and building capacity to ensure effective implementation of pipeline projects before venturing into new provinces.

Other significant highlights included the award of the Vista View project in the Free State; the handover of the first fully subsidised units in the Fleurhof project; the completion of the first phase of the Jabulani Hostel redevelopment; and re-entering the mid to high end of the market with the La View Nouvelle retirement village project in Gauteng.

The shares fell 1.53 percent to close at R5.80 on AltX yesterday.