Housing developer Calgro M3 counts cost of invasions
‘Terminating subcontractor employment in times when employment is scarce … was disconcerting and morally challenging’
Illegal invasion and occupation of houses under construction cost Calgro M3 R65.2m during the first half of its financial year, some of which it hopes to recoup from insurers.
Calgro estimated the damage and security costs caused by squatters at its Fleurhof development came to R36.3m, and R21m at its Scottsdene development.
The combined R65.2m loss from the squatting problem contributed to Calgro’s net profit for the six months to end-August halving to R29.7m from R60.7m, its interim results released on Monday morning showed.
The cost of land invasions and other problems contributed to the professional fees Calgro incurred during the reporting period increasing fourfold to R6.6m from R1.6m.
“Macro- and microeconomic uncertainty coupled with uncertainty pertaining to land expropriation” made the reporting period “one of the most difficult ever experienced”.
The results statement showed a 38% decline in interim revenue to R628.6m, but the group warned that comparisons between the two periods were complicated by a switch in accounting standards.
Calgro said it had opted not to restate the prior year’s interim statement, and the timing of revenue recognition was now different because its latest results used version 15 of the International Financial Reporting Standards (IFRS).
The group has 10 projects under way, with 3,377 units under construction during the reporting period, and 1,843 completed.
Calgro said it was forced to temporarily halt work at its Fleurhof and Scottsdene developments.
“The implementation of the required actions are far more complex and costlier than originally anticipated,” the results statement said.
“Terminating subcontractor employment in times when employment is scarce, and unemployment is on the rise, was disconcerting and morally challenging to say the least.”