Companies / 23 October 2018, 11:00am / Roy Cokayne
PRETORIA – Land invasions at two of Calgro M3’s major affordable housing developments were among issues that contributed towards the listed affordable housing and memorial parks developer experiencing one of its most difficult periods ever in the six months to August.
Wikus Lategan, the chief executive of Calgro, said yesterday its Scottsdene project in Cape Town and Fleurhof project in Johannesburg were shut down because of illegal occupations, resulting in additional security and repair costs of about R65 million.
Lategan said claims associated with this were in the assessment process but had not been finalised and therefore had not been accounted for yet.
He said the R65m did not include the opportunity and holding costs of capital, adding that, between those two sites, between R350m and R400m of capital was tied up.
Lategan said Fleurhof was still closed despite the illegal occupiers having been removed because there was also an electrification issue with City Power, which had resulted in standing time cost of about R14.5m.
“Scottsdene was closed from Easter until about five weeks ago, and the next units will be ready for handover in November, so we are getting to the end of that.
“But the next six months (to February) is also not going to be trouble-free, because these numbers do spill over a bit,” he said.
Lategan added that the cancellation of the group's executive share scheme resulted in the remaining R44m expense of the scheme being fast-tracked through profit and loss in the current financial year, which increased administrative expenses.
He said the pre-tax effect of these three items combined, with no associated cash flow, amounted to a R123.5m in once-off expenses, which had a negative 50c a share impact in the six months to August.
Calgro yesterday reported a 93.48 percent decrease in headline earnings a share to 3.11 cents for this reporting period, from 47.71c in the previous year.
Changes to accounting standards made comparisons with the prior period difficult.
Combined revenue, under the previous accounting standards, decreased by 37.4 percent to R815.7m, which was attributed to the deliberate slowdown in operations by management.
Lategan said the 10 projects in the ground contributed to revenue, which made the impact of delays more manageable, with a total of 5 279 units under construction during the period, of which 1 843 were handed over.
He said that with more than 9 500 serviced or near-serviced opportunities, the group remained well positioned to increase sales to the private sector and assist the government in the eradication of the housing backlog once finance from the government became available.
Lategan said Calgro was investigating alternative uses for some of its mid- to high-end land parcels to improve the cash-generation cycle.
He said this could involve selling these parcels or developing them into other things for clients.
Lategan said Calgro, for instance, owned all the land behind the Broadacres Shopping Centre in Fourways. There was a heavy supply of residential in the area, but there was a great need for something like self-storage.
“We might develop it into something like self-storage and sell it on,” he said.
Shares in Calgro on Monday rose 26.16 percent to close at R9.50.