A slowdown in infrastructure investment in the lead-up to municipal elections and community unrest at various projects, paired with the construction of units sold to the private sector only starting towards the end of the reporting period, saw property developerCalgro M3 post flat interim earnings on Monday.
For the six months ended August 31, Calgro realised basic earnings a share of 65.11c – 1.72% lower than the comparative period of 2015 – and headline earnings a share of 65.13c apiece – 1.69% lower than for the first half of 2015.
Combined revenue also decreased by 9.9% to R922.7-million, but with its Fleurhof operations now accounting as a subsidiary and no longer as a joint venture, the company saw an 11.4% increase in its earnings before interest and taxes to R119.6-million, with group revenue up 25.7% to R720.2-million.
During the period, 4,542 houses were under construction, of which 1,272 have been handed over to owners. An additional 5,239 opportunities are being serviced of which the majority were started post the municipal elections.
On completion of these services, just over 10,000 serviced opportunities will be available for future construction.
Further, the company points out that, with government remaining committed to the roll-out of catalytic and mega-housing projects, Calgro is well positioned to benefit from this when spending normalises.
MD Wikus Lategan added that government could not eradicate the housing shortfalls, currently estimated to be about 2.1-million in subsidised opportunities, by itself. “We really want to play our role,” he added.
Lategan explained that the group’s strategy to diversify within residential market sectors, through the establishment of a real estate investment trust with SA Corporate Real Estate, would further benefit its earnings.
The company is planning to increase its portfolio from R10-billion to R15-billion.
CEO Ben Malherbe will step down on February 28, 2017, and will be appointed non-executive director with effect March 1, 2017. Lategan will succeed Malherbe as CEO.
