Calgro M3 poised for growth

It is well positioned for future sustainable growth, backed by effective cost control, financial discipline, and affordable housing solutions.

Highlights:

Johannesburg, 12 May 2025 – JSE-listed Calgro M3, the property and property-related investment company specialising in the development of Integrated Residential Housing Developments and the development and management of Memorial Parks, today announced results for the year ending 28 February 2025.

Chief Executive Officer (CEO), Ben Pierre Malherbe said that, “The financial year was marked by strategic resilience, with gross margin growth maintained despite revenue pressures, strategic expansion of the Group’s pipeline, and expansion of the Memorial Parks business segment.

Our development pipeline comprises 36,136 residential opportunities and 117,471 burial rights, representing a combined revenue pipeline of R31.8 billion”.

Despite experiencing challenging economic conditions, the Group improved its gross profit margin , reaching 29.43%. The gross profit margin positively benefited from historic land and infrastructure costs which optimised margin growth, a focus on open market sales and stringent cost control.

For the year, Group revenue and profit declined by 32.68% and 15.19%, respectively. This reduction is a result of the Group’s strategic decision to slow production in the first half of the year, in response to political uncertainty surrounding the national elections as well as to unlock existing stock value by leveraging prior investments in land and infrastructure costs.

Focus on skills development, training and education remains a key pillar of the Group. Female representation remains a critical target at 50%, with current levels at 47% at the end of the financial year. Historically disadvantaged employees represent 76% of the Group’s total staff complement, highlighting our continued commitment to the employment equity plan.

Operational overview

The Residential Property Development segment remains the most significant contributor to Group performance. With nine active projects in Gauteng and the Western Cape, all contributing to revenue and profitability, our products range from fully subsidised to premium homes above R3 million.

“This strategic diversity allows us to navigate current economic and market conditions effectively. Our focus is on delivering value-for-money homes in integrated developments and lifestyle estates, reaching a wide spectrum of different market segments with a keen focus on those in dire need of housing”, Malherbe said.

This focus on delivery mix and the shift to greater open market sales has significantly contributed to growth in the Group’s gross profit.

Malherbe indicated that, “With a robust pipeline we are contributing to addressing the housing shortage, with  36,000 residential opportunities secured at the end of the financial year”. The pipeline includes the newly acquired Bankenveld District City Development which will add in excess of 20,000 units to the Group’s pipeline.

Calgro M3, in partnership with our joint venture partner Eris Property Group, exercised the option to acquire the Bankenveld land in September 2024. The development presents a significant opportunity for the Group, being positioned near the Sandton and Waterfall City hubs and bordering Alexandra and the Marlboro Gautrain station, representing the last large-scale undeveloped property in the Sandton area. The first phase of infrastructure installation commenced in the first quarter of 2025.

Amid challenging economic conditions and the large volume of stock on hand, the Group prioritised the completion of infrastructure installations across its existing development pipeline. Significant progress has been made in completing bulk infrastructure requirements in the Fleurhof development.

Currently, the Group has 1 543 housing opportunities under construction, with projects at various stages of completion . Although interest rates began trending downward in the latter half of 2024, the full impact on home loan affordability is expected to materialise by the third quarter of 2025 – approximately nine months after the rate cut cycle commenced.

The Memorial Parks segment delivered another year of growth with the segment’s revenue contribution to the Group increasing to 8%, up from 4% in the previous year, reflecting significant growth and expansion within the business segment.

Cash receipts grew by 41.3% in the year. “This upward trend reflects success in our improved sales strategies, increased market penetration, and enhanced customer confidence. Layby cash receipts saw an exceptional 57.5% increase to R24.57 million, underscoring the effectiveness of our structured payment options in driving affordability and accessibility,” Malherbe explained.

Management has identified the expansion of the layby book as a strategic short-term goal with an aim of stabilising future cash flows and mitigating seasonal fluctuations in cash collections.

Financial review

Gross profit margins increased to 29.43% (February 2024 (restated): 27.21%), exceeding the target range of 20% to 25%. This improvement was primarily driven by unit sales in the open market and non-public sector, along with a favourable project and product mix that benefited from historic land and infrastructure costs.

Revenue declined by 32.69% to R869 million, reflecting the Group’s strategic decision to slow production in the first half of the year in response to political uncertainty and macroeconomic pressures impacting consumer demand, which translated into lacklustre open market sales.

Cost efficiency remains a key focus area, with administrative expenses decreasing by 2.71% to R95 million. Marketing costs continue to represent a significant portion of administrative expenses, as the Group maintains its emphasis on selling available stock and enhancing brand awareness.

The share of profit from joint ventures surged to R43 million (2024: R9 million), mainly driven by the strong performance of the South Hills joint venture which was prioritised due to the relative stage of completion at the time of national elections.

EPS decreased to 171.72 cents (2024 (restated): 191.10 cents), while HEPS decreased to 171.36 cents (2024: (restated) 188.95 cents), these metrics have seen a benefit from the reduction in the number of shares as a result of the share buy-backs executed in the previous financial year.

A final gross cash dividend of 8.63703 cents per ordinary share was declared.

Outlook

As Calgro M3 enters its transformative growth phase and breaks ground on new developments, its robust pipeline provides diversity across provinces and projects, ensuring a balanced portfolio while effectively managing concentration risk.

“With the roll out of the remaining pipeline, we will continue to invest in innovating our building designs to minimise financial and environmental impacts. This will ensure that Calgro M3 remains at the forefront of industry innovation thereby maintaining our competitive edge in the market, whilst still ensuring that we deliver on our purpose of “Building legacies. Changing lives”,” Malherbe said.

The Memorial Parks segment has shown robust growth in the year, expanding its footprint to six active Memorial Parks.

“Our aim remains the expansion of our footprint, whilst leveraging off our remaining pipeline, thereby bringing dignified burial solutions to a larger community, with regular investment opportunities being investigated and considered by the Group.”

Malherbe concludes, “With resilient profitability and strong margins, Calgro M3 is well-positioned for growth and value creation. This positioning is important to us, as echoed in the words of Dr. Adrian Saville at a presentation to the Gauteng Investment Committee: “It is time for companies to move from resilience to contributing towards  growth.”. In line with this, Calgro M3’s mantra for the year ahead is #sustainablegrowth.”

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