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Calgro lauds strong order book in reporting period

CALGRO M3, a builder specialising in Reconstruction and Development Programme (RDP) houses, grew its headline earnings per share 26.96% to 40.16c in the six months to August, the group reported on Monday.

Group revenue climbed 8% to R434.6m.

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

Mr Malherbe said there had been increased activity in the installation of civil and electrical infrastructure overall in SA, which gave the group its revenue boost. "The six months to August saw an increase in the installation of infrastructure, and although this put the gross margin under pressure, it would enable the group to increase its higher margin construction of top structures during the next six month period," he said.

"The pipeline was sustained in excess of R10bn. 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," Mr Malherbe said. He said the group had experienced a renewed commitment from the government to increase investment in infrastructure allowing the group to deliver on infrastructure for integrated developments. The state is currently implementing a multibillion rand infrastructure roll-out.

Various companies including Duro, a manufacturer of pressings, doors and related goods, have over the last year tried to get contracts with the state to provide affordable housing. Some companies have wanted to spur the building of RDP houses in South Africa.

Calgro M3 said its safety record was strong in the reporting period. "The group maintained its exceptional safety record and was again free of fatality and serious injuries in the workplace. The group will strive to maintain its target level of zero harm," it said. Mr Malherbe was optimistic about the low-cost housing industry in South Africa. He said the group benefited from its exposure to social housing and units aimed at the Finance Linked Individual Subsidy Programme (Flisp) market that was gaining traction.

"Trading conditions in the construction and development sector remain challenging, but support from local government and strong end-user sales in the Flisp and affordable markets are all contributing in making integrated developments based on private public partnerships successful," he said.