Calgro M3 in better shape to weather Covid-19


Calgro M3 in better shape to weather Covid-19

Published Date: 2020-05-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

Calgro M3 in better shape to weather Covid-19

The residential property and memorial parks developer is exiting its rental portfolio and outsourcing construction as it reduces debt.

Calgro M3 says it has made good progress in turning its business around, with cash generation jumping last year and helping it to settle some debt. It now plans to sell its residential rental investments to further reduce its gearing.

Calgro M3 specialises in residential property development and memorial parks. Releasing results for the year to end-February, it said it was in advanced talks to sell units in its Ruimsig and Scottsdene developments as a bulk transaction, while free-standing houses in South Hills would be sold in the open market. Once liquidity returned to a satisfactory level, it said it would re-establish its residential rental portfolio.

The group also restructured its property development business with the phased closure of its in-house construction division and the outsourcing of all construction activities.

Calgro M3 generated 55.6% more cash from its operations over the period, with net cash generated from operating activities jumping 70%. This enabled it to settle, on a net basis, R52.7 million in financing activities, while more than doubling its cash balances to R255 million.

Revenue decreased by 1.3% to R984 million over the year due to the rightsizing initiatives and it reported an operating profit of R48 million from a R29 million loss previously. Basic earnings per share (EPS) rose 52% to 3.84c and it reported headline EPS of 1.77c from a 20.3c loss last year.

It said its current cash burn rate was around R14 million a month for fixed overheads and interest. On top of cash resources of more than R100 million, it said it had a full overdraft of another R100 million available.

Its shares fell 51% to R3.90 yesterday. The decline occurred before the release of its results.

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