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Calgro M3 expands Memorial Parks business with the intention of it contributing a third to profit in the future

Johannesburg, 18 July 2018 - Calgro M3, the JSE-listed property and property related investment holding company involved in integrated residential developments, memorial parks and rental property, has expanded its Memorial Parks business to include two more provinces – the Western Cape and the Free State. This brings to five the total number of memorial parks owned and managed by the Group. There are further plans in place to acquire parks in KwaZulu-Natal, the Eastern Cape and more in Gauteng, specifically Tshwane.

"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," said Calgro M3 CEO, Wikus Lategan. He went on to add that the application to obtain underground burial rights at the Bloemfontein Memorial Park is currently in progress and 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 a move to strengthen existing operations, Calgro M3 has acquired the shareholding owned by Nexus Capital Holdings, its partner in the Nasrec Memorial Park south of Johannesburg for R63,6 million. The transaction is structured in such a way as to provide Calgro M3 with economic benefits from day one, but the acquisition price will be paid in yearly instalments 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, and that Calgro M3 would 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."

He added that Calgro M3 is keen to develop insurance-related products for the business by partnering with insurance specialists. "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."

The Group, which in 2015 expanded its operations 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."

Lategan indicates that he is pleased with how the business is performing. "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 (ROE) 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."

Lategansaid that with 921 graves sold in the last financial year alone and sales steadily increasing, the Group 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."