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Calgro patient with new venture

By Roy Cokayne , www.iol.co.za Johannesburg - The new business venture by Calgro M3 Holdings, focusing on the development of private memorial parks, was expected to make some contribution towards the listed affordable housing developer's year-end financial results.

The venture failed to make any material contribution to the financial results of the group in the six months to August, but Calgro chairman Ben Pierre Malherbe stressed that setting up a new business concept and changing market perceptions took time.

Calgro is a residential development company.

"Burials to date were well managed and it is expected that sales will gain momentum towards the end of this financial year," he said. "With a substantial inventory investment carried on the statement of financial position for this project to date, the expectation is to see some contribution from this business towards the year-end financial results."

The memorial parks project was founded by Calgro on the principle of using group-owned land parcels not suitable for residential development, while at the same time de-risking the group from its dependence on power utilities for the provision of power.

Sustainable solution

Malherbe said with the first memorial park launched and the first burials done, the group viewed this venture as a long-term sustainable solution to create sustainable parks, while at the same time contributing towards restoring dignity in the burial place.

Turning to the group's core business of affordable housing, Malherbe said the main focus during the six-month reporting period was the implementation of its R19 billion project pipeline to ensure sustainable growth.

Malherbe said the group now had 12 active projects on the ground and the last would 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," he said. Malherbe said all the projects currently in the ground were profitable and the group was maintaining in excess of 5 000 jobs created on construction sites.

The group's most significant project specific achievements during the reporting period included the installation of infrastructure resulting in the group now having 4 582 serviced opportunities and construction was underway on 3 857 units, he said. Malherbe said trading conditions in the construction and development sector remained challenging with uncertainty surrounding the micro and macro-economic environment, weak economic growth, a potential recession and higher inflation and interest rates.

However, Malherbe said the national Human Settlements Department recently launched its new catalytic housing project implementation plan, which should assist in alleviating some of the challenges experienced by the sector.

Calgro yesterday reported a 29.98 percent growth in headline earnings a share to 66.25c in the six months to August from 50.97c in the previous corresponding period. Revenue rose by 39.1 percent to R573.1 million from R412m. Calgro shares on the JSE yesterday rose 2.19 percent to close at R21.01.