Calgro M3 Holdings Limited · JSE:CGR
Calgro M3 — H1 2021 Earnings Presentation
44 slides from Calgro M3's earnings presentation, October 2020
Slide 1: Results Presentation
Results Presentation Interim results for the six months ended 31 August 2020 www.calgrom3.com
Slide 2: Agenda
Agenda 1. Period in perspective 2. Business update 3. Financial review 4. Looking forward 5. Appendix 2
Slide 3: Period in Perspective
1 PERIOD IN PERSPECTIVE
Slide 4: The period in perspective ….. and then Covid-19
The period in perspective The Ugly (past 3 years) The Bad (Covid-19) ▪ Having to stand ready with a ▪ No power loaded gun after head winds ▪ Land invasions of past 3 years ▪ Constrained liquidity ▪ Serviced land ▪ High cost structure ▪ Sales ▪ Shortage of back up ▪ Cash to roll this out cash ….. and
Slide 5: Progress report
Progress report What was required? Current status Maximise cash generation Generated cash despite Covid-19 Cash preservation and liquidity R245 million onhand (reduced cash resources by R10 million despite Covid-19 cost) Consistent, predictable cash 66% improvement flow from Memorial Parks Debt matu
Slide 6: Purposeful location choices
Purposeful location choices “We are the masters of our fate and captains of our soul” 6
Slide 7: Building Legacies and Changing Lives
Building Legacies and Changing Lives Even though retrenchments Made sure all staff were paid in were unavoidable - paid 3x full during lockdown normal Fast tracked and shortened Staff able to work from home SMME payments and were allowed to retentions Continued to fund training and Kept thousands of
Slide 8: Building Legacies and Changing Lives
Building Legacies and Changing Lives Empowerment credentials South Hills development won United Nations (“UN”) Sustainable Cities and Human Settlements award ISO 14001:2015 and ISO 45001:2018 certification retained Retained United Nations Global Compact advanced level status 8
Slide 9: The period in perspective
The period in perspective (Financial) Despite difficult trading Net debt : equity ratio conditions, group generated 1.04:1 – R38 million debt cash from operations settled Reduced debt maturities to Concluded construction R85 million to January 2023 closure and cost cutting Facility for R215 million
Slide 10: Lessons learnt
Lessons learnt • Remain true to who we are • Know and understand our core skills • Cash flow is not everything – it is the only thing that matters • Remain lean and don’t be seduced by opportunity • Have an end goal and don’t let the mountain ahead of you, make you, rather turn left or right if you
Slide 11: Business Update
2 BUSINESS UPDATE
Slide 12: Residential Property Developments
Residential Property Developments 12
Slide 13: Residential Property Developments
Residential Property Developments (Excluding Frankenwald, KwaNobuhle) 13
Slide 14: Residential Property Developments total available opportunities
Residential Property Developments 36 127 total available opportunities Under contruction 8% ▪ Covid-19 effect Serviced – Reduction in revenue from opportunities already low base 18% – Standing time costs (R35,8 million) Services ▪ Restructure cost underway 5% – Construction division successfully clo
Slide 15: Social impact of integrated developments
Social impact of integrated developments Well located integrated developments: ▪ Social integration and upliftment ▪ Better communities and schooling for all ▪ Cost and time saving on traveling ▪ Covid-19 reduced this benefit but highlighted need for good living conditions where people can enjoy wor
Slide 16: Integrated Residential Developments
Integrated Residential Developments ▪ Still largest contributor to revenue ▪ 2 months no construction with slow startup post that ▪ No cost of units - interest allocation during lockdown and much higher security cost ▪ Meticulous capital allocation ▪ Sufficient capital to switch construction off, sw
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 Split of cash received (including VAT) (R'm) Total cash received (including VAT) (R'm) Enokuthula Bloemfontein 5% 0% 33.50 25.80 Fourways 65,7% 29% Nasrec 45% 15.50 Durbanville 21% Aug-19 Aug-20 Feb-20 19
Slide 20: Memorial Parks
Memorial Parks ▪ Risk diversifier for lumpy cash-intensive residential development business ▪ Market share gain, increased sales activity and increased mortality provided growth ▪ R2,6 million confirmed Covid-19 burials ▪ Continue to focus on distribution channels ▪ Build relationships with funeral
Slide 21: Residential Rental Investments
Residential Rental Investments 21
Slide 22: Residential Rental Investments
Residential Rental Investments Short-term focus to dispose of all existing rental units Ruimsig Scottsdene South Hills ▪ Unconditional – ▪ Advanced discussion ▪ Free-standing 17 Sept 2020 with third party houses being sold in open market ▪ Settled R104 million in debt ▪ First transfers end October 2
Slide 23: Financial Review
HPT FINANCIAL REVIEW
Slide 24: Statement of Cashflows
Statement of Cashflows R’000 Aug 2020 Aug 2019 Feb 2020 Cash generated from operating activities Cash generated from operations 115 662 449 469 464 209 Finance income received 4 512 10 376 14 598 Finance cost paid (60 552) (63 703) (117 612) Tax paid (13 654) (20 660) (17 818) Net cash generated fro
Slide 25: Statement of Cashflows (continued)
Statement of Cashflows (continued) (R’000) Aug 2020 Aug 2019 Feb 2020 Cash flows repaid in financing activities Proceeds from borrowings - - 145 000 Repayment of borrowings (38 000) (111 000) (157 000) Loans received from joint ventures and associates - (23 000) (23 000) Repayment of capital portion
Slide 26: Covenants
Covenants Unaudited Audited August 2020 February 2020 Net debt to equity ratio 1.04 1.04 Debt service cover ratio (“DSCR”) 3.69 1.93 26
Slide 27: Segmental revenue contribution
Segmental revenue contribution Revenue Unaudited Unaudited Audited (R’000) six months to 31 six months to 31 year ended August 2020 August 2019 29 February 2020 Residential Property Development 372 861 508 037 950 342 Memorial Parks 19 251 11 000 25 692 Residential Rental Investments 3 717 1 744 8 0
Slide 28: Residential project contributions
Residential project contributions (to Residential Property Development segment) HY2020 HY2019 100% 90% 37 132 80% 107 178 70% 12 902 293 246 60% 39 481 18 098 50% 40% 65 093 30% 141 369 20% 9 783 141 748 10% 11 679 3 189 0% Fleurhof Jabulani Witpoortjie South Hills Belhar Third parties 28
Slide 29: Statement of Comprehensive Income
Statement of Comprehensive Income Revenue Unaudited Unaudited Audited (R’000) Six months to Six months to year ended 31 August 2020 31 August 2019 29 February 2020 Revenue 395 829 520 781 984 130 Cost of sales (364 572) (481 010) (883 521) Gross profit 31 257 39 771 100 609 Other income 3 728 8 936
Slide 30: Statement of Comprehensive Income (Continued)
Statement of Comprehensive Income (Continued) Revenue Unaudited Unaudited Audited (R’000) Six months to Six months to year ended 31 August 2020 31 August 2019 29 February 2020 Profit after taxation attributable to: Equity holders of the Company (39 036) (1 875) 4 919 (Loss)/earnings per share – cent
Slide 31: Statement of Financial Position - Assets
Statement of Financial Position - Assets Assets Unaudited Unaudited Audited (R’000) Aug 2020 Aug 2019 Feb 2020 Non-current assets Investment property 13 834 14 037 13 834 Property, plant and equipment 24 758 29 550 27 490 Intangible assets 159 651 159 665 159 655 Investments 12 549 11 915 12 270 Inv
Slide 32: Statement of Financial Position - Equity and Liabilities
Statement of Financial Position - Equity and Liabilities Equity and Liabilities Unaudited Unaudited Audited (R’000) Aug 2020 Aug 2019 Feb 2020 Total Equity 782 081 804 160 815 192 Non-current liabilities 211 004 178 088 219 242 Current liabilities Borrowings 1 025 479 962 822 1 062 843 Current incom
Slide 33: Borrowing maturities
Borrowing maturities Detail Amount (Rands) Balance at 31 August 2020 1 031 000 000 New Debt 315 000 000 NHFC facility (6 years) 215 000 000 CGR 48 – Ashburton (3 year) 50 000 000 CGR 49 – Ashburton (4 years) 50 000 000 Bonds repaid (314 000 000) CGR 33 (59 000 000) CGR 21 – Taquanta (early) (70 000
Slide 34: Looking Forward
4 LOOKING FORWARD
Slide 35: What does Calgro have to work with
What does Calgro have to work with ▪ Housing shortage 5.6 million ▪ 66.5% housing market in Gauteng and Western Cape ▪ Strong pipeline ▪ Deep, strong market presence ▪ Current grave shortage for next 15 – 20 years ± 8 million ▪ Funeral insurance industry growing 12% pa ▪ Deep, strong market presence
Slide 36: Take away – what lies ahead?
Take away – what lies ahead? ▪ Remainder of year will be carefully managed to ensure risks and liquidity are sufficient to weather more Covid-19 woes or even another lock down ▪ Retain higher cash levels despite lazy balance sheet in short-term ▪ Balance end-user sales with bulk sales where cashflow
Slide 37: 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 38: 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 39: Appendix
5 APPENDIX
Slide 40: 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 41: 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 41
Slide 42: 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
Slide 43: 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 44: 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