Calgro M3 at a loss after land invasions


Calgro M3 at a loss after land invasions

Published Date: 2019-05-14 | Source: Stephen Gunnion | Author: Stephen Gunnion

Calgro M3 at a loss after land invasions

The affordable housing and memorial parks developer faced a series of obstacles last year that pushed it into a full-year loss.

Calgro M3 had already prepared investors for the worst following a year of operational challenges and transactions and a switch to a new accounting method, so its shares were unmoved when it delivered its 2019 financial statements yesterday.

Among the issues it faced last year were land invasions at its Scottsdene and Fleurhof housing projects - and the resulting security costs - delays to connect Fleurhof to the power grid, the cancelation of its executive share scheme, and a write-down in the value of its La Vie Nouvelle Lifestyle & Wellness Estate project. Add to that the change over to new International Financial Reporting Standards (IFRS) 15 codes and it was hit with exceptional costs of close to R250 million. Security costs and damages at Scottsdene and Fleurhof alone came to R71 million.

The group said the difficulties it experienced highlighted that risks surrounding relationships with municipalities and local communities had increased. As a result, it's decided to focus only on Gauteng, the Western Cape, KwaZulu-Natal and the Free State in the short to medium term and is looking to exit its KwaNobuhle project in the Eastern Cape.

While its Residential Property Development business experienced an extremely tough year, exacerbated by the weak economy and political uncertainty, its Memorial Parks unit fared significantly better. It grew revenue to 66%, with a 93% increase in cash received and a total pipeline of R2.3 billion.

Overall, group revenue fell by 43% to R997 million and would have been 39% lower at R1.1 billion under the previous accounting standard. It attributed the decline to a slowdown in its operations. It reported an operating loss of R28.9 million from a R150 million profit a year earlier. Basic earnings per share (EPS) fell 97% to 2.53c and headline EPS declined by 121% to a 19.01c loss.

It said the focus for the year ahead would be to stabilise its Residential Property Development business to ensure a consistent stream of cash flow and profits. It said emphasis would be placed on cash flow extraction formats various projects.

Its shares didn't trade yesterday, closing unchanged at R5.95.

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