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Calgro M3 shrugs off trough trading environment

by Coleen Goko,

HYBRID property developer and construction company Calgro M3 on Monday reported strong interim results despite the tough trading environment. In the six months to end August 2015, Calgro reported a 29.98% rise in headline earnings per share (HEPS) to 66.25c compared with the year-earlier period, while revenue climbed 39.10% to R573.1m.

The board said its main focus during the period under review was the implementation of its R19bn project pipeline.

"The group is pleased to report that we were successful in this endeavour and that we now have 12 active projects in the ground, of which the last will start generating revenue during the 2017 financial year. "These projects will contribute by generating cash and profits, which should improve the group's debt gearing ability and enable the group to fund the current and future project pipeline," it said. Calgro managed to reduce its net debt to R330.9m and increased its cash on hand to R152.7m.

About 80% of Calgro's revenue comes from integrated social housing and the rest from mid to higher residential houses. The group has developments in Fleurhof, Jabulani, South Hills, Scottsdene and Belhar. Last year, Calgro entered Namibia's housing market through a joint venture, but said it had no plans to expand further on the continent. Looking ahead, the company said trading conditions in the construction and development sector were set to remain challenging with uncertainty surrounding the micro-and macroeconomic environment.

"Human settlements, however, recently launched its new catalytic housing project implementation plan, which should assist in alleviating some of the challenges experienced by the sector. The group is also currently investigating other opportunities in the residential market, outside the public sector."

Calgro did not declare an interim dividend as "the board is of the opinion that the group must continue to retain cash to maintain the present growth and create shareholder value".