Calgro M3’s memorial parks business helps diversify risk

LISTED affordable housing developer Calgro M3 Holdings maintains its new business venture focusing on the development of private memorial parks would de-risk the group from its dependence on power utilities for the provision of power.

Ben Pierre Malherbe, the chief executive, said yesterday that the memorial parks project was founded on the principle of using group-owned land parcels not suitable for residential development and was currently in the pilot phase of development.

“The project will also assist government in the delivery of and the meeting of the growing demand for safer and better maintained alternatives to the cemeteries available in the market.

“This model is viewed as a complementary business to Calgro M3’s existing business model and will not detract from or distract Calgro M3 from the company’s core business of property development. This new venture also offers a further risk diversification opportunity,” he said.

In regard to affordable housing, Malherbe said the group had benefitted from the introduction by the national human settlements department, in partnership with the provinces, of new initiatives, such as the mega and catalytic projects programme, particularly with “the ever increasing barrier to enter into the integrated market segment”.

Malherbe added that the expected decrease in the group’s exposure to infrastructure development after the 2014 elections did not materialise and increased urgency from government towards the provision of low to medium cost housing related to infrastructure was expected to continue to the 2016 local elections.

“Momentum was maintained in the installation of infrastructure while, simultaneously, the group benefitted from an increased focus on the construction of top structures.

“The introduction of external contractors to grow the group’s construction capacity to deliver on its projects has proven successful,” he said.

Calgro M3 yesterday reported a 32 percent growth in fully diluted headline earnings a share to 109.69c in the year to February from 83.16 in the previous year.

Revenue rose by almost 19 percent to R932.2 million from R784.9m. Operating profit improved by 58.6 percent to R83.8m from R52.85m. Calgro M3 did not declare a dividend.

Shares in Calgro M3 rose 6.76 percent yesterday to close at R15.80.