“The group experienced a renewed commitment from Government to increase investment in infrastructure allowing the group to deliver on infrastructure for integrated developments,” Calgro M3 said in a statement.
“The six months under review saw an increase in the installation of infrastructure, and although this put the gross margin under severe pressure, it will enable the group to increase its higher margin construction of top structures during the next six months.”
The mixed-use and integrated residential development company’s revenue was up eight per cent from 400.6 million rand for the six months ended 31 August 2012 to 434.6 million rand.
Profit after tax for [DATA CGR:Calgro M3] was also up 26.9 per cent from 40.1 million rand in 2012 to 51 million rand.
Gross profit margins however decreased from 17.4 per cent in the previous year to 14.26 per cent. This was due to increased activity in the installation of civil and electrical infrastructure.
“As projected, construction capacity has reached a stage where the use of external contractors is increasing to ensure that quality is maintained and committed time lines with regards to delivery met. This is in line with the group’s commitment to partner with local and emerging contractors,” the group said.
External revenue for the group’s construction land development increased from 312.8 million rand in 2012 to 428.7 million rand however, external revenue for land sales, took a significant dip, decreasing from 84.1 million rand to 1.9 million rand.
However, there was an increase in external revenue, for its professional services, from 3.6 million rand in 2012 to 3.9 million rand.
“The group benefitted from its exposure to Social Housing and units aimed at the FLISP (Finance Linked Individual Subsidy Programme) market that is currently gaining traction,” the company explained.
“With the FLISP pilot project successfully completed more units are currently under construction on both the Fleurhof and Jabulani projects.”
Calgro M3 specialises in integrated housing developments in high growth markets, comprising a combination of RDP/BNG housing priced below 55,706 rand, GAP, social and rental housing up to 350,000 rand, and affordable housing from 350,000 rand to 500,000 rand.
“Government’s undertaking to close the gap between fully subsidized housing and the entry level affordable bonded market by providing Social Housing and the newly revised FLISP units is continuing to create exciting new opportunities and the group is well positioned to make use of opportunities presented,” the company said.