Calgro M3 Holdings Limited · JSE:CGR
Calgro M3 — FY2019 Earnings Presentation
55 slides from Calgro M3's earnings presentation, Feb 28, 2019
Slide 1: Results presentation
Results presentation Final results for the year ended 28 February 2019 www.calgrom3.com
Slide 2: Agenda
Agenda Calgro M3 is a property and property related investment company that is a market leader in the development of Residential Property Developments, Residential Rental Investments as well as the development and management of Memorial Parks 1. Overview of year | 2. Operations | 3. Responsible corp
Slide 3: Overview of year
1 OVERVIEW OF YEAR
Slide 4: Residential Property Developments as biggest revenue driver
Residential Property Developments as biggest revenue driver ……………. Then! March 2018 The rest of the year 4
Slide 5: Some impacts that marked the year
Some impacts that marked the year Impact Amount (Rm) Scottsdene land invasion security cost and damages R27.9 Fleurhof land invasion security cost and damages R43.1 Fleurhof electrification standing time cost R23.3 Cancellation and settlement of the Executive Share Scheme R69.3 IFRS 15 and IFRS 9 im
Slide 6: Pro-active project reviews
Pro-active project reviews Development / area Volume Amount (Rm) Belhar student housing private institution sale 2 200 beds R411.0 Belhar units to Afhco Calgro M3 Consortium 1 000 rental units R447.3 Scottsdene units to Afhco Calgro M3 Consortium 844 units R317.1 Fleurhof units to Afhco Calgro M3 Co
Slide 7: And now
And now ▪ Fleurhof first 900 units proceeding ▪ Balance close to being resolved No new invasions pre-elections 7
Slide 8: New transactions structured
New transactions structured Development New structure Amount (Rm) Belhar • Improved student housing, 2 700 beds R520 Belhar • ± 300 units originally sold to Afhco Calgro M3 R156 Consortium sold on open market (13% higher) Scottsdene • Negotiations on various transactions ongoing - • 178 units comple
Slide 9: Operational overview
2 OVERVIEW | —! < = © Le <x ag LL al O
Slide 10: Residential Property Developments
Residential Property Developments 10
Slide 11: Residential Project Pipeline
Residential Project Pipeline ▪ Pipline split between unserviced, serviced, under construction 11
Slide 12: Residential Property Developments
Residential Property Developments 2019 Subsidised GAP/FLISP Rental Affordable Mid to Total high Units 1 542 140 908 121 96 2 807 handed over Units under 788 1 525 748 107 53 Supports 3 221 strong construction pipeline Units sold – 2 050 656 1 059 665 6 4 436 construction commenced • South Hills • Fl
Slide 13: Residential Property Developments
Residential Property Developments ▪ Potential factors that could reduce additional working capital: – Availability of infrastructure funding from public sector – Bulk deals structured with progress payment principles – Due diligence and option fees for potential new projects 13
Slide 14: Residential Property Developments – strategic exit of Eastern Cape
Residential Property Developments ▪ Housing shortfall estimated between 5.2m - 6.3m ▪ Operate in lower-end where demand is high ▪ Maximise cash flows and roll-out of existing project pipeline ▪ Refocused business for exposure to three/four provinces – Strategic exit of Eastern Cape – Funds re-deploy
Slide 15: Integrated Residential Developments
Integrated Residential Developments Focus: ▪ Trade with caution in current times ▪ Increased focus on pipeline roll-out (not new projects) while unlocking value locked in balance sheet ▪ Balance exposure between clients and projects ▪ Realising retail, commercial and industrial sites on developments
Slide 16: Memorial Parks
ell CALGRO M3 Group
Slide 17: Memorial Parks
Memorial Parks ▪ Potential factors that could reduce additional working capital: – Land availability instead of upfront land purchases – Utilising land that is already owned and paid for (e.g. Witpoortjie, Fleurhof and KwaNobuhle) – Reduction of infrastructure cost of parks into smaller phases 17
Slide 18: Memorial Parks – current status of provinces
; =—_—__ Memorial Parks CALGRO M3 Group Current status of provinces Johannesburg City Parks in Johannesburg is encouraging residents to Bloemfontein Only three of the 12 cemeteries in Bloemfontein and Botshabelo consider other options of still have burial space Three of the city’s cemeteries are alr
Slide 19: Memorial Parks
Memorial Parks ▪ Estimated grave shortage - 8m over next 15 years ▪ Overcrowding, lack of sufficient security and maintenance of government cemeteries provides opportunities ▪ Restoring dignified burials ▪ Average sales price 59% higher in last year ▪ Maximise cash flows and roll-out of existing mem
Slide 20: Memorial Parks
Memorial Parks Focus: ▪ Target short to medium-term revenue growth of ±100% ▪ Future roll-out of Witpoortjie (16 000), Fleurhof (22 000) and KwaNobuhle (48 000) ▪ National roll-out plan developing rapidly – target: ▪ Tshwane ▪ KwaZulu-Natal ▪ Increased marketing and sales campaigns ▪ Innovative use
Slide 21: Residential Rental Investments
Residential Rental Investments 21
Slide 22: Residential Rental Investments
Residential Rental Investments ▪ Potential factors that could reduce additional working capital: – Faster roll-out of other businesses resulting in additional free cash flow – Above expected yields, requiring less capital to be invested 22
Slide 23: Residential Rental Investments
Residential Rental Investments ▪ 50% of Ruimsig tenanted in first 3-months ▪ Increase South Hills house tenanting from 6% to 42% in first 2-months ▪ Scottsdene renegotiation with tenants begun ▪ Belhar units decreased from 1 000 AFHCO-bought – First phase sold to enhance cashflow in new year – Renta
Slide 24: Dissolution of rental unit agreement
Dissolution of rental unit agreement Annuity income rentals embarked upon 2015 Afhco Calgro M3 Consortium 2016 – 2017 End agreement | accommodate lower initial yields | long-term strategy 2018 Remain committed to long-term annuity income generation 2019 2020+ Dissolution concluded in March 2019, acc
Slide 25: Residential Rental Investments
Residential Rental Investments ▪ Growing business to risk reduction & annuity income remains priority ▪ Estimated shortage of 1.5m affordable residential rental units ▪ Investigating other developments for acquisition opportunities ▪ Data illustrate rentals between R5 000 - R12 000 pm – Experienced
Slide 26: Dissolution of rental unit agreement
Dissolution of rental unit agreement Take back completed and partly SA Corporate Real Estate exit completed units: • South Hills Calgro M3’s 49% interest in JV • 152 houses and retain: • All of Fleurhof, Scottsdene and Belhar • 752 South Hills units • 288 Jabulani Units Effectively repay R155m outst
Slide 27: Residential Rental Investments
Residential Rental Investments Focus: ▪ Enhanced product offering for take-up and longer term tenants ▪ Free uncapped fiber data ▪ Free gardening service ▪ Environmentally and technologically advanced units in demand ▪ First 95% take-up of current stock before new stock introduced ▪ Gearing current
Slide 28: Responsible corporate
3 CORPORATE | ial Oo 0) 2 . O Vat mp) WW AN 02
Slide 29: ESG
ESG Environment Water Energy • Save a Flush • Heat pumps • Rain water harvesting • Gas • Water rehabilitation and • Induction geysers natural water sources • Solar and solar geysers Green spaces 39% 38% Health, Safety and Environmental 17% 6% (“HSE”) Management System implemented (awaiting certifica
Slide 30: A sense of responsibility
A sense of responsibility CALGRO M3 Group What counts in life is not the mere fact that we have lived. It is what difference we have made to the lives of others that will determine the significance of the life we lead. Melson Mandela AZ QUOTES 30
Slide 31: Education and Training
Education and Training South Hills creche Cell C Bring a Girl Child to Hosted 10 grade 11 learners as part of Cell C Take a Girl Child to Work Day campaign Work 2 251 direct and indirect beneficiaries in education 14 846 high school learners reached through Smart Bucks initiative Smart Bucks – Mind
Slide 32: Infrastructure
Infrastructure Witpoortjie park South Hills swimming pool Scottsdene open spaces Scottsdene soccer field Witpoortjie park South Hills open spaces 32
Slide 33: Board structure
] Board structure Calgro M3 Board of Directors Independent Chairperson Lead Independent Director Pumla Radebe Executive Directors Wikus Lategan (CEO) Waldi Joubert (FD) Derek Steyn Manda Nkuhlu : Wayne Williams Ralph Patmore —————"" CALGRO M3 Group Independent Non- Non-Executive Executive Directors
Slide 34: Board attendance
Board attendance Effective Board structure with qualified Directors Scope of authority, responsibilities and functions of the Board are reviewed on an annual basis Manda Nkuhlu 5 2 3 Derek Steyn 6 3 Wayne Williams 6 2 3 Waldi Joubert 6 5 4 3 Wikus Lategan 6 5 3 3 3 Board (6) Ben Pierre Malherbe 6 3
Slide 35: AGM results
AGM results Resolutions % vote - For Re-election of PF Radebe as non-exec director Re-election of H Ntene as non-exec director Ordinary Appoint PricewaterhouseCoopers as independent auditors Appoint RB Patmore to Audit Committee Appoint ME Gama to Audit Committee General payments to shareholders Con
Slide 36: Financial review
4 FINANCIAL REVIEW
Slide 37: IFRS 15 and IFRS 9 – 1 March 2018
IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments – 1 March 2018 37
Slide 38: Statement of Comprehensive Income
Statement of Comprehensive Income 38
Slide 39: Statement of Comprehensive Income analysis
Statement of Comprehensive Income analysis R’000 39
Slide 40: Statement of Comprehensive Income analysis
Statement of Comprehensive Income analysis 40
Slide 41: Statement of Financial Position - Assets
Statement of Financial Position - Assets 41
Slide 42: Statement of Financial Position - Equity and Liabilities
Statement of Financial Position - Equity and Liabilities 42
Slide 43: Statement of Cashflows
Statement of Cashflows R’000 43
Slide 44: Covenants
Covenants Audited year Audited year ended ended 28 February 2019 28 February 2018 Net debt to equity ratio 1.09 0.70 Covenant 1.5 1.5 Debt service cover ratio (“DSCR”) 1.47 1.57 Covenant 1.2 1.2 44
Slide 45: Looking forward
5 LOOKING FORWARD
Slide 46: Highlights
Highlights Category recognises gender-strong organisations involved in the innovative, sustainable and efficient enhancement of infrastructure development Level 1 B-BEE Contributor 46
Slide 47: We still managed to achieve
We still managed to achieve Cash generated from operations (post interest of R115m) R 202m Units sold, construction to commence 4 436 / R 1,7 bn (exc VAT) Management valuation (unlock in tangible assets in b/s ex-commercial / retail) R1,4 bn Opportunities Total No. Effective No. Selling price to Tot
Slide 48: Medium to long-term strategy
Medium to long-term strategy 48
Slide 49: Progress
Progress Securing annuity 1 ROE 2 Contribution to group profit 3 income Ave past 8 years 26% Initially secured through the Residential Rental 2019 ROE Investments business (still Residential Property 1,3% in infancy) Developments Memorial park funeral Memorial Parks 2,5% insurance to be added in nex
Slide 50: Take away
Take away ▪ Roll out existing diversified pipeline across businesses within theme of property development ▪ Stabilised the Residential Property Developments business for consistent cash flow and profits – Sites will return to capacity towards end 2019 as uncertainty reduces • Belhar and Jabulani to
Slide 51: 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 www.calgrom3.com • Annual Financial Statements 2019 • Sustai
Slide 52: 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 53: Appendix
6 APPENDIX
Slide 54: Business model
. ee Business model CALGRO M3 Group Identify project and due diligence 2 Secure land Township establishment Value is Infrastructi created through a eens Residential turnkey approach Marketing Property to capitals and sales Development and Rental Investments $ ee end user Construction 8 Handover to c
Slide 55: Business model – Memorial Parks
] Business model Memorial Parks —S—" CALGRO M3 Land identified/ acquisition @ q Landscaping and infrastructure @ development Value is created through operating in strategic locations and @ Marketing and sales providing superior customer service " Holistic burial and remembrance services @ Maintenanc