Calgro M3 Holdings Limited · JSE:CGR
Calgro M3 — FY2020 Earnings Presentation
51 slides from Calgro M3's earnings presentation, 2020
Slide 1: Results Presentation
Results Presentation Audited results for the year ended 29 February 2020 www.calgrom3.com
Slide 2: Building legacies. Changing lives | Calgro M3 Group
=>=_ ] Building legacies. Changing lives | CALGRO M3 Group
Slide 3: Agenda
Agenda 1. Where we were and who we are 2. Businesses update 3. Financial review 4. Environment, people and rules 5. Looking forward 6. Appendix 3
Slide 4: Where we were and who we are
WHERE WE WERE 1 AND WHO WE ARE
Slide 5: Where we were
Where we were ▪ Left in the dark on Fleurhof ▪ Land invasions at Fleurhof and Scottsdene ▪ Cash burn and investment during this 1 March 2015 - 28 February 2019 cash resources period of R485 million dropped by R7 million from R130 million to R123 million ▪ Overheads including interest reached R300 mi
Slide 6: Where we are
Where we are ▪ Excellent cash generation and balances at Earnings per share increased to year end (without asset sales) 3.84 cps (2019: 2.53 cps) ▪ Enhanced focus on efficiencies and sales Headline earnings per share across businesses increased to 1.77 cps (2019: 20.30 loss per share) ▪ Outsourced f
Slide 7: Cash focus
Cash focus Cash generated from operations 55.6% Able to generate sufficient cash flow Net cash generated from operations 69.9% from operations to settle debt maturities Settle R52.7m in financing activities Not investing in capital intensive projects Increase cash balances to R255.1 million 108% Cur
Slide 8: Lessons learnt
Lessons learnt • Remain true to who we are • Know and understand our core skills • Cash flow is not everything – its the only thing that matters • Keep fixed cost to a minimum • Don’t stop dreaming Residential Property Residential Rental Development Memorial Parks Investments ▪ Be aware of growing t
Slide 9: Variable cost structure
Variable cost structure ▪ Cost containment major focus area for year ▪ Reduce fixed cost base to ensure better efficiencies ▪ Outsource construction – reduced fixed monthly cost by approximately R5 million – further reduction of R1 million once division completely closed ▪ Margin evaluation ▪ Non-te
Slide 10: Awards and recognition
Awards and recognition South Hills development ISO 14001:2015 and won United Nations ISO 45001:2018 (“UN”) Sustainable certification achieved Cities and Human Settlements award Proud Level 1 B-BBEE Contributor Attained United Nations Global Compact advanced level status 10
Slide 11: Business Update
2 BUSINESS UPDATE
Slide 12: Residential Property Developments
Residential Property Developments 12
Slide 13: Residential Property Developments
Residential Property Developments ▪ Total available opportunities (excluding Frankenwald) – 36 868 or R18bn ▪ 1 495 units completed in current year ▪ 2 393 units are under construction ▪ 7 326 serviced opportunities ▪ 2 168 services underway at snails pace • South Hills • Fleurhof • Witpoortjie Mult
Slide 14: Frankenwald
Frankenwald => CALGRO M3 Group Midrand CO) Morningside BR ws Sandton. .. O ze: Buccleuchiie== te O e) Frankenwald ea bag “Mlexandra ; O @) Linbro Park
Slide 15: Residential Property Developments
Residential Property Developments ▪ Challenging third successive year – Land invasions – Electrification - budget approval and work begun on Fleurhof and South Hills substations – Faltering economy ▪ Liquidity preserved by – Suspending operations at various sites – Cost cutting – Reassessment of int
Slide 16: Integrated Residential Developments
Integrated Residential Developments Specific Focus: ▪ Smaller transaction with balanced client exposure ▪ Sufficient capital to switch sales back on at large ▪ Increased focus on pipeline roll-out while unlocking value in balance sheet ▪ Enhance product offering while sales prices kept low ▪ Consist
Slide 17: Memorial Parks
=>=_ CALGRO M3 Group —_—_—_——— Nasrec Phase 1 ‘State-of-the-art security cameras with artifical intligence Easy access * 4 =e x B Rand Show (Nt) offramp 0.5 km Oe /
Slide 18: Memorial Parks
. Sr Memorial Parks CALGRO M3 Group * ® © @® @ NASRE FOURWAYS ENOb H A 2BAN LE B Eh NTEIN MEMORIAL PARK MEMORIAL PARK MEMORIAL PARK MEMORIAL PARK MEMORIAL PARK
Slide 19: Memorial Parks
Memorial Parks ▪ Group remains bullish on growth opportunities Total cash received (R million) ▪ Revenue growth improved by 22.8% to R25.7 million 34,1 18,5% 28,8 growth ▪ Various corrective actions during year included: – Group Head of Marketing and Sales 14,9 deployed to Memorial Parks full-time –
Slide 20: Memorial Parks pipeline
. = Memorial Parks CALGRO M3 Group ® Memorial Parks pipeline Anticipated Anticipated project project turnover turnover Total Project/Park Region — City Province Quantity (R’000) | Quantity (R’000) (R’000) Nasrec Memorial Park City of Joburg Gauteng 2074 20470 29160 934 619 955 089 Fourways Memorial
Slide 21: Memorial Parks
Memorial Parks Focus: ▪ Match profitability of property development business in medium to long-term ▪ Grow market share ▪ Establish national footprint ▪ Consistency and predictability in sales, underpinned by marketing campaigns ▪ Optimise sales force, while implementing technology to promote effici
Slide 22: Excess rental stock
Sr Excess rental stock CALGRO M3 Group > =o Pees! 2 ) work SQ | Communition “= | Sheps and Parke
Slide 23: Residential Rental Investments
Residential Rental Investments ▪ Short-term focus to dispose of all existing rental units Ruimsig Scottsdene South Hills ▪ Sale contracts being ▪ Advanced discussion ▪ Free-standing houses finalised with third party being sold in open market ▪ Once liquidity returns to a satisfactory level, portfoli
Slide 24: Financial Review
HPT FINANCIAL REVIEW
Slide 25: Statement of Cashflows
Statement of Cashflows 2020 2019 Cash generated from operating activities Cash generated from operations 464 208 720 298 290 312 Finance income received 14 598 305 10 647 074 Finance cost paid (117 612 227) (115 459 090) Tax (paid)/refunded (17 817 929) 8 604 779 Net cash generated from operating ac
Slide 26: Statement of Cashflows (continued)
Statement of Cashflows (continued) 2020 2019 Cash flows (repaid in)/from financing activities Proceeds from borrowings 145 000 000 273 000 000 Repayment of borrowings (157 000 000) (193 000 000) Loans received from joint ventures and associates - 23 000 000 Equity paid back - (25 112 453) Repayment
Slide 27: Covenants
Covenants Audited Audited year ended year ended 29 February 2020 28 February 2019 Net debt to equity ratio 1.04 1.09 Debt service cover ratio (“DSCR”) 1.93 1.47 Date Target By 28 February 2021 0.90:1 By 28 February 2022 0.75:1 By 28 February 2023 0.60:1 27
Slide 28: Segmental revenue contribution
Segmental revenue contribution Revenue Audited Audited year ended year ended 29 February 2020 28 February 2019 Residential Property Development 950 342 471 976 144 785 Memorial Parks 25 692 483 20 919 743 Residential Rental Investments 8 095 532 - Total 984 130 486 997 064 528 28
Slide 29: Residential project contributions
Residential project contributions (to Residential Property Development segment) Combined revenue 2020 Combined revenue 2019 9% 17% 26% 11% 34% 21% 4% 4% 3% 8% 46% 17% Fleurhof Jabulani Witpoortjie Fleurhof Jabulani Witpoortjie South Hills Belhar Third parties South Hills Belhar Third parties 29
Slide 30: Statement of Comprehensive Income
Statement of Comprehensive Income Revenue Audited Audited year ended year ended 29 February 2020 28 February 2019 Revenue 984 130 486 997 064 528 Cost of sales (883 521 154) (868 374 4810 Gross profit 100 609 332 128 960 047 Other income 11 314 454 36 538 480 Administrative expenses (89 116 268) (18
Slide 31: Statement of Comprehensive Income (Continued)
Statement of Comprehensive Income (Continued) Revenue Audited Audited year ended year ended 29 February 2020 28 February 2019 Profit after taxation 5 342 794 1 227 712 Other comprehensive income - - Total comprehensive income 5 342 794 1 227 712 Profit after taxation and other comprehensive income a
Slide 32: Statement of Financial Position - Assets
Statement of Financial Position - Assets Assets 2020 2019 Non-current assets Investment property 13 833 550 14 019 768 Property, plant and equipment 27 490 484 12 173 346 Intangible assets 159 655 377 159 676 781 Investments & investment in joint ventures and associates 164 647 175 164 095 843 Defer
Slide 33: Statement of Financial Position - Equity and Liabilities
Statement of Financial Position - Equity and Liabilities Equity and Liabilities 2020 2019 Total Equity 815 191 931 806 587 711 Non-current liabilities 219 242 079 214 300 153 Current liabilities Borrowings 1 062 842 931 969 195 006 Loans to joint ventures and associates - 23 000 000 Current income t
Slide 34: 12-month maturities
12-month maturities Bond exchange Bond Capital Repayment March 2020 April 2020 May 2020 June 2020 July 2020 CGR 32 38 000 000 August 2020 September 2020 CGR 33 59 000 000 October 2020 CGR 21 70 000 000 November 2020 December 2020 January 2021 February 2021 CGR 24/29/38 102 000 000 Total 269 000 000
Slide 35: Environment, People, and Rules
4 ENVIRONMENT, PEOPLE, AND RULES
Slide 36: ESG – Lifestyle – Open spaces
ESG We are acutely aware that the value we create for the business is closely tied to the value we create for our stakeholders ▪ Dynamic working environment not only supports staff but also communities we operate in ▪ Encourage skills, entrepreneurship and enterprise development ▪ Invest and take ca
Slide 37: Covid-19
Covid-19 1st half 2020 2nd half 2020 1st half 2021 (onwards) Endured losses, Turnaround sufficient to implemented action to Covid-19 strikes! make up losses rectify Calgro M3 Covid-19 action plan deals with: ▪ Detailed action plan in place Market Potential customers ▪ Able to pay full salaries to em
Slide 38: Covid-19 at present
Covid-19 at present ▪ Memorial Parks business continues to operate, understanding requirements ▪ Construction across three to four projects re-started ▪ Consumer under pressure driven by higher unemployment ▪ Banks are providing 100% bonds 38
Slide 39: We did our part
We did our part Kept various police Hand sanitiser and Hand sanitiser and stations and officers other safety food delivered across supplied with masks, disposables to staff our projects to gloves and hand and their families communities at large sanitiser Price lock and No yearly house sales Hand san
Slide 40: Looking Forward
5 LOOKING FORWARD
Slide 41: Where to from here
Where to from here ▪ Remainder of 2020 onwards is uncertain ▪ Navigate economy suffering from negative growth and downgrade ▪ Resilient business model ▪ Optimal capital allocation between new opportunities and working capital ▪ Cash flow generation and preservation Memorial Parks Residential Propert
Slide 42: Value locked-up
Value locked-up Opportunities Total No. Effective No. Selling price to Total external party Rand (including VAT) Mid to high-end portfolio – serviced & unserviced land 690 690 349 326 241 174 475 Low to mid-market portfolio – serviced opportunities 9 623 8 674 119 670 1 038 024 102 Partially service
Slide 43: Take away
Take away ▪ Strong pipeline ▪ Strong cashflow and continued focus on liquidity, • Housing shortage capital structure and right sizing 5.6 million • 66.5% housing market in – manage liquidity and downside risks Gauteng and Western Cape – ensuring optimal capital application on projects ▪ Emphasis pla
Slide 44: Mindful of
Mindful of SS CALGRO M3 Group Action without vision is only passing time, vision without action is merely day dreaming, but vision with action can change the world. Nelson Mandela (1918-2013)
Slide 45: Take away
Take away Committed to Great project and parks, Low interest rate sustainable growth well located Make a meaningful and Unique product and sustainable difference in service offering the lives of South Africans 45
Slide 46: Thank you
Thank you Wikus Lategan (CEO) Email: wikus@calgrom3.com Waldi Joubert (FD) Email: waldi@calgrom3.com Tel: +27 11 300 7500 www.calgrom3.com Keyter Rech Investor Solutions – Vanessa Rech Tel: 083 307 5600 Email: vrech@kris.co.za Available on website: ▪ ESG Report 2020 ▪ Corporate Governance Report 202
Slide 47: 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 48: Appendix
6 APPENDIX
Slide 49: Business model
a CALGRO M3 Business model Group Identify project and due diligence Secure land Township establishment Infrastructure (outsourced) Value is \ created through a turnkey approach to capitals Marketing and sales Transfer to end user 2 (Freestanding houses P and bulk deals) @ Construction (outsourced) c
Slide 50: Business model
. ee Business model CALGRO M3 Group Memorial Land identified/ Parks @ = acquisition Landscaping and @ infrastructure H development (outsourced) Value is created through operating in | strategic locations and | Marketing and sales e@ Holistic burial and remembrance services @ Maintenance 50
Slide 51: Board composition
-)+ ———"" Board composition CALGRO M3 Group Board composition Executive Independent Non- Lead Independent Black Directors Executive Directors Director a. } a —C:s‘Ciéds 5% 1 - White Independent Chairperson Oto1year 1to5years 5Sto10years 10+ years e @ 82 % 18% a = == = Male Female Average: 7 years