Calgro M3 Holdings Limited · JSE:CGR
Calgro M3 — H1 2018 Earnings Presentation
51 slides from Calgro M3's earnings presentation, 2017
Slide 1: Calgro M3 Group Interim results
CALGRO M3 Group Interim unaudite six months ende www.calgrom3.com Building legaci gacies. Changing li g lives
Slide 2: Agenda
Agenda ▪ The world today ▪ Introduction and operational overview ▪ Financial review ▪ Prospects ▪ Appendix 2
Slide 3: The world today
The world today 1
Slide 4: The world and South Africa
The world and South Africa South Africa ▪ Low growth ▪ Exchange rate ▪ Political pressure ▪ Gap in State budget ▪ Potential downgrade 4
Slide 5: Our market
Our market ▪ Housing shortfall will not disappear in the near future - in fact it may increase – Government funding GAP – Population growth ▪ Consumer will most likely come under even more financial pressure – Real household disposable income at very low levels – Bad debts are rising – Credit raisin
Slide 6: Results highlights
Results highlights Revenue Core HEPS HEPS 40.24% to 18.38% to 26.74% to R1.0 billion 77.10 cps 47.71 cps Net debt:equity NAV 61.58% 6.97% to (Feb 2017: 854.00 cps 41.82%) Fatality free, despite growth in both employees and sub-contractors 6
Slide 7: Theme
Theme How we adapt to a changing South Africa and world Calgro M3 has: ▪ Diversified the business ▪ Taken account of water ▪ Positioned for more annuity shortages with sustainable income solutions ▪ Appointed separate senior ▪ Identified new private sector management team for each projects business
Slide 8: Practical challenges
Practical challenges ▪ Economic and political landscape ▪ Effect of shift in focus ▪ Who is our client – What does our client want ▪ How do we assist public sector without reliance ▪ Transformation ▪ How do we create the most efficient team and business – How do we retain that team ▪ How do we creat
Slide 9: Introduction and operational overview
Introduction and operational overview 2
Slide 10: Calgro M3
Calgro M3 Contributed 3.2% to Group profit Through a cost Integrated Real Estate effective Residential Memorial turnkey Property Investments Parks solution Developments * (rental units) Turnkey property development 10
Slide 11: Integrated developments
Integrated developments Sales increase year- 42.5% 21.5% Sales increase from previous 6 months ending 28 Feb 2017 on-year Houses under 7 473 1 057 Handed to customers 8 000 Opportunities serviced construction Projects ready to Projects in operation Projects delayed commence • Fleurhof • Jabulani CBD
Slide 12: Our mantra
Our mantra Calgro M3 provides homes, not merely houses, in a constant drive to change lives and provide South Africans with an asset and a lifestyle to support economic dignity 12
Slide 13: Real Estate Investments
Real Estate Investments ▪ First Investment - Partnership with SA Corporate ▪ Initial sale of 3 852 units of which 1 372 is near completion with hand over before February 2018 ▪ 95% of the remaining balance will be handed over in first 6 months of next financial year ▪ Next phase negotiations well un
Slide 14: Memorial Parks
Memorial Parks ▪ Contributed 3.2% to Group Unit sales profits 434 308 ▪ Grave sales up 41% 123 ▪ Expansion to two new provinces being finalised Mar 2016 - Sep 2016 - Mar 2017 - Aug 2016 Feb 2017 Aug 2017 14
Slide 15: Brand awareness
SS CALGRO M3 Group Brand awareness South His! Fett Invest in a quality Calgro ts hme ty, A528 RK CEMETERY
Slide 16: Brand awareness
=> CALGRO M3 Brand awareness 16
Slide 17: Making a difference
Sr . . CALGRO M3 Making a difference Group
Slide 18: Making a difference
Sr . . CALGRO M3 Making a difference Group
Slide 19: The difference we can make
The difference we can make “Education is the most powerful weapon which yOu can use to change the world.” ee CALGRO M3 Group
Slide 20: Making a difference
=> CALGRO M3 Group Making a difference 20
Slide 21: Making a difference
SS CALGRO M3 Group Making a difference 21
Slide 22: Financial review
Financial review 3
Slide 23: Comprehensive income
Comprehensive income R’000 Change Unaudited Unaudited Audited % 6 months 6 months Year end 31 Aug 2017 31 Aug 2016 28 Feb 2017 Revenue 40.24 1 010 069 720 233 1 554 680 Cost of sales 62.41 (875 940) (539 331) (1 220 517) Gross profit 134 129 180 902 334 163 Gross profit margin 13.3% 25.1% 21.5% Othe
Slide 24: Unrealised profit impact
Unrealised profit impact R’000 Change Unaudited Unaudited % 6 months 6 months 31 Aug 2017 31 Aug 2016 Revenue 40.24 1 010 069 720 233 Reversal of unrealised profit adjustment 47 078 - Adjusted revenue 46.78 1 057 147 720 233 Profit attributable to owners of parent 61 144 82 754 Unrealised profit (ne
Slide 25: Financial Position - Assets
Financial Position - Assets R’000 Change % 31 Aug 2017 28 Feb 2017 Non-current assets 5.93 211 028 199 211 Property, plant and equipment 5 800 5 806 Intangible assets 159 673 159 691 Investment in joint ventures & associates 17 872 12 348 Deferred income tax asset 21 164 14 847 Investment property 6
Slide 26: Financial Position - Equity & Liabilities
Financial Position – Equity & Liabilities R’000 Change % 31 Aug 2017 28 Feb 2017 Total Equity 6.97 1 094 400 1 023 081 Total liabilities 1.66 1 750 301 1 721 674 Borrowings 585 751 571 646 Deferred income tax liability 327 314 302 358 Trade and other payables 837 236 847 670 Total equity and liabili
Slide 27: Cash flow
Cash flow R’000 Unaudited Unaudited Audited 6 months 6 months Year end 31 Aug 2017 31 Aug 2016 28 Feb 2017 Net cash generated from operating activities (186 446) 94 224 238 183 Net cash utilised in investing activities (10 925) (97 194) (116 891) Net cash from financing activities 14 005 (6 556) 39
Slide 28: Cash from operations
Cash from operations Negative cash generated from operations due to: ▪ Private sector units (turnkey) ▪ Construction of units for the REIT JV ▪ Limited infrastructure spend 28
Slide 29: International funding €25 million
International funding €25 million 6 years Final contracts Formal to be signed announcement 26 October First disbursement anticipated December 2017 29
Slide 30: Prospects
Prospects 4
Slide 31: What makes Calgro M3 different
What makes Calgro M3 different Integrated Developments ▪ 8 000 available, serviced opportunities ▪ More than 1 500 units sold still not comenced construction on ▪ Focus on development for rental stock as well as open market sales ▪ Continued focus on marketing and education (Captain Calgro) Real Est
Slide 32: The difference we can make
The difference we can make our 32
Slide 33: Take away
Take away 1 2 Diversification and flexibility Promotion and enhancement of social principles 3 Agility and hands-on approach 4 Underlying theme of property development 5 Sustainability and responsibility 6 Understanding public sector 7 Building annuity income 33
Slide 34: Investor Relations contacts
Investor Relations contacts Wikus Lategan (CEO) – Email: wikus@calgrom3.com Waldi Joubert (FD) – Email: waldi@calgrom3.com Tel: +27 11 300 7500 www.calgrom3.co.za Keyter Rech Investor Solutions – Vanessa Rech Tel: 083 307 5600 vrech@kris.co.za 34
Slide 35: Thank you
Thank you
Slide 36: Disclaimer
Disclaimer Calgro M3 has acted in good faith and has made every reasonable effort to ensure the accuracy and completeness of the information contained in this presentation, including all information that may be defined as 'forward-looking statements'. Forward-looking statements may be identified by
Slide 37: Appendix
Appendix 5
Slide 38: Memorial Parks
Memorial Parks Memorial Parks selling prices R30 000+ R25 000 R20 000 R15 000 R10 000 R8 500 Focus on family burials Direct pre- death sales Lower-end facilitated through customised funeral policies for entire family Annuity income ——— CALGRO M3 Group 38
Slide 39: Integrated Developments
Integrated Developments Housing segments and Group credit exposure Private sector Up to R450 000 = subject to change Provincial and Institutional subsidy and private sector funding to value of R300 000 Public sector Subsidy as per National Community residential units ("CRU") policy Subsidy of the da
Slide 40: Residential portfolio market
Residential portfolio market ▪ Housing shortage compounded by absence of Public Sector infrastructure budget ▪ Lack of sufficient rental opportunities in metropolitan areas ▪ High barrier to entry into property development ▪ Government commitment to eradicating housing shortfalls, but unable to do s
Slide 41: REIT structure
Sr CALGRO M3 Group { SA CORPORATE = f REAL ESTATE CALGRO M3 Vv Vv 100% 100% Afhco Holdings Ltd Calgro M3 Real Estate (Pty) Ltd Vv Vv 51% 49% Four directors, managed and controlled Three directors Vv Afhco Calgro M3 (Pty) Ltd
Slide 42: REIT phases
eee CALGRO M3 REIT phases Group Initial Phase Future Phases Acauisition of prope Future acquisitions from Calgro q ebbi call M93’s pipeline, other developments © Portfolio of R10 billion peut Ls ws ee LS and the acquisitions of to R15 billion valued at R1.6 billion . . i established portfolios
Slide 43: Turnkey Approach
Sr CALGRO M3 Group Turnkey Approach
Slide 44: Cash Flow Cycle: Identify project & due diligence
Cash Flow Cycle 01 Identify project 01 & Due diligence Identify project & Due diligence Determine target market, environmental studies, funding requirements 0 - 6 months R0 – R2m 44
Slide 45: Cash Flow Cycle: Secure land
Cash Flow Cycle 02 02 Secure land 01 Secure land Identify project & Due diligence Land ownership enables control of the development process & choice of partners 6 months R0 - R50m 45
Slide 46: Cash Flow Cycle: Township establishment
Cash Flow Cycle 02 03 Township Secure land 01 Township establishment establishment Identify project 03 In-house town planning, urban & Due diligence design, architecture and various other professional services. Control development timelines 18 - 36 months R0 (Included in overheads) 46
Slide 47: Cash Flow Cycle: Infrastructure
Cash Flow Cycle 02 04 Infrastructure 01 Secure land Township establishment Identify project 03 & Due diligence Installation of roads, stormwater, water, sewer Infrastructure and electrical infrastructure are all tendered out 04 6 - 9 months R50 - R100m (Depending on phase & size) 47
Slide 48: Cash Flow Cycle: Marketing & Sales
Cash Flow Cycle 02 05 Marketing & Sales 01 Secure land Township establishment Identify project 03 & Due diligence Marketing of residential units Infrastructure and burial sites. Core to our business model 04 Marketing 6 - 9 months & Sales 05 R5m - R10m (Depending on phase & size) 48
Slide 49: Cash Flow Cycle: Transfer to end user
Cash Flow Cycle 02 06 Transfer to end user 01 Secure land Township establishment Identify project 03 & Due diligence Full title transfer Infrastructure Free-hold, affordable market 04 Marketing 1 month & Sales Transfer to end user 05 Conveyancing cost 06 49
Slide 50: Cash Flow Cycle: Construction
Cash Flow Cycle 02 07 Construction 01 Secure land Township establishment Identify project 03 & Due diligence Majority of construction is done in-house and capacity Infrastructure is supplemented by the appointment of subcontractors 04 Marketing 3 - 18 months 07 & Sales Construction Transfer to end u
Slide 51: Cash Flow Cycle: Handover to clients
Cash Flow Cycle 02 08 Handover to clients 01 Secure land Township establishment Identify project 03 & Due diligence Quality assurance receives 08 Infrastructure high priority Sectional title Handover to clients 04 Marketing 1 month 07 & Sales Construction Transfer to end user 05 In-house capacity 06