Calgro M3 has expanded its Memorial Parks business to include two more provinces, namely the Western Cape and the Free State, bringing the total number of memorial parks owned and managed by the group to five.
The company has further plans to acquire parks in KwaZulu-Natal, the Eastern Cape and Tshwane.
Calgro M3 CEO, Wikus Lategan commented:
“With three Memorial Parks in Gauteng, our acquisition in March this year of the Durbanville Memorial Park in the Western Cape and more recently in June, that of the Bloemfontein Memorial Park – formerly known as The Avalon, fulfils our objective of making dignified burial sites available to people across the whole country.”
Lategan went on to add that the application to obtain underground burial rights at the Bloemfontein Memorial Park is currently in progress which will broaden market proposition in the Free State.
“However, we want to ensure that these recent acquisitions and existing operations within the various regions are well-established before moving onto further acquisitions. There are small nuances of difference in each province that we must become accustomed to first. A priority is therefore to ensure the long-term sustainability and success of the current business first before expanding further. In view hereof, we only envisage further expansion in late 2019 or early 2020.”
In order to strengthen existing operations, the group has acquired the shareholding owned by Nexus Capital Holdings, its partner in the Nasrec Memorial Park, situated south of Johannesburg. The acquisition’s value is R63.6 million and the transaction is structured in such a way as to proved Calgro M3 with economic benefits from day. The acquisition price will be paid in yearly installments over the next four years, interest free.
Lategan said that the two latest Memorial Parks follow the same successful blueprint as those located in Gauteng; Calgro M3 will be enhancing the Memorial Parks business with innovative initiatives: “A sales call centre and free Wi-Fi with associated voluntary contact capturing are just a few of the plans being implemented to enhance sales.”
“Besides the actual funerals, there is a flourishing funeral insurance industry in the country. In fact, funeral insurance is the most popular insurance cover in South Africa, and according to research, this part of the insurance industry is worth over R7 billion.”
Calgro M3 expanded its operations in 2015 to include the implementation and management of Memorial Parks, operates in three distinct synergistic property development segments, namely Residential Developments, Memorial Parks and Real Estate Investments (focusing on rental housing).
“Management intends maintaining a strong focus on the Memorial Parks business in its endeavour to achieve equal profit contributions from all three its businesses. With a strong management team in place, we believe that we have suitable individuals with appropriate skills in management positions within the business to provide strategic focus and to take this segment forward.”
“It currently contributes 5.14% to the Group’s profits after tax, with a pipeline of R2.2 billion, and a targeted Return on Equity of more than 30%. Furthermore, our concept truly provides families with tranquil and beautiful settings in which to lay their loved ones to rest. All of the parks are safe, fully landscaped, well-maintained and, due to their location and visual appeal, add to the overall aesthetics of the areas within which they are located.”
The appealing nature of Calgro M3’s Memorial Parks has been recognised externally, with the Nasrec Memorial Park winning the “Landscape Construction” and the “Landscape and Turf Maintenance” Water-Wise Awards at the 2017 South African Landscapers Institute Awards.
“Our parks are very accessible and expand substantially on the offerings and services provided by traditional municipal cemeteries, including the ability to acquire burial sites for your entire family in one location, rather than scattered across various locations as is the case with many traditional cemeteries.”
Lategan said that with 921 graves sold in the last financial year alone and sales steadily increasing, the company was confident that the Memorial Parks business – the target for which is to contribute more than 10% to the overall profitability of the Group in the next financial year – is now set up to continue growing, making Calgro M3 the preeminent provider in this sector in South Africa.
“According to a study released by Forbes in June 2017, half a million funerals take place in South Africa every year with an estimated value of R9 billion. A typical funeral in South Africa can cost anything from R10 000 for a basic service, to much more for additional requirements. The cost depends on the size of the event, determined by the number of people that attend, and most importantly, traditional requirements, based on the individuals’ ethnicity and culture. Our research has shown that a funeral in the middle-income group typically costs between R12 000 and R50 000. We are now well-positioned to effectively provide a high standard of service into this market” concluded Lategan.