[2008-09-08]  FSG on the 'Brink' of Private Cemeteries
Funeral services provider FSG Limited plans to use the cash it will raise through listing on the Botswana Stock Exchange to establish private cemeteries and subsidiaries in other sub-Saharan countries.
The establishment of private cemeteries is a fairly new concept in Botswana.


On Monday, FSG issued 36,000,000 shares valued at P1.00 each, of which 28,000,000 are to be issued by way of private placing with institutional and other qualifying investors through the Private Placement. The offer will be closed on September 22, 2008.
According to their promoting brokers, Motswedi Securities, the balance of 8,000,000 shares is to be offered to the public through the initial public offering followed by the listing of the total 120,000,000 shares on the main board of the BSE.
The company will list on the Main Board in the Domestic Equities sector under its abbreviated name "FSG". The listing was approved on August 28, 2008 and dealings in the shares are expected to commence on October 6, 2008. The money is to be used for the development of private cemeteries, the liquidation of existing debt, and the expansion of the Group into South Africa and Zambia. FSG is a holding company incorporated in Botswana in 2003. It has four subsidiaries, namely, Lynn's Funeral Parlour, Kagiso Funeral Parlour, Private Cemeteries and V & N Coffin and Casket Limited, which is registered in and operates from Zambia.
The subsidiaries are collectively engaged in the provision of an entire range of funeral services through their network of funeral parlours across Botswana, the manufacturing of coffins and caskets and the development of private cemeteries.FSG claims to have a market share of approximately 65 percent of the Botswana funeral industry and to hold 36 percent of existing funeral policies in Botswana.
Analysts at Motswedi believe prospects for the Group and its subsidiaries are excellent as the Group expects to maintain growth in the near-term through the development of funeral parlours in under-serviced rural areas.
The Group assurance business is also expected to expand through aggressive marketing in the rural areas and expansion into the Zambian market. The Group has been performing exceptionally well with revenue rising by 36 percent from P18.8 million in 2004 to P25.5 million in 2007. Gross profit rose modestly by 31 percent from P14.1 million in 2004 to P18.5 million in 2007. Profit after tax jumped from P5.5 million in 2004 to P10.4 million in 2007, a growth of 89 percent. Total assets rose steadily from P51.9 million in 2004, to P77 million in 2007.
Looking ahead, the Group revenue is expected to grow by 12.3 percent to P28.6 million in 2008, while profit after tax is projected to rise by 13.8 percent to P11.8 million.
This growth is expected to be driven by, among others, the Private Cemeteries concept, which the Group says has a huge growth potential in providing cemeteries with a range of services to the family of the bereaved.
This is a new product for the Group, and FSD says the growth opportunity in this focus area would be to sell large blocks to corporate customers at discounted prices, which should give their customers exclusive access at affordable cost.
"These cemeteries will be aesthetically pleasing, well maintained, landscaped and (will) provide an opportunity for families to procure the right to be buried together," a statement from Motswedi Securities says."We believe Management's strategy to expand the Group by opening new branches and offering new products in the funeral service area will pay dividends in the medium- to long-term through an increase in the bottom line."
FSG was founded by Serbian Milivoje Nikolic and his wife Lynette. Some of the major shareholders of the Group, subsequent to listing, are Botswana Life Insurance Limited and Dusa Limited, which is owned by Tebelelo Seretse (Chairperson), Dorcas Kgosietsile, Reetsang Willie Mokgatlhe and Julia Majaha-Jartby, all of whom are citizens of Botswana.
Other prominent shareholders include Kate Maphage, Keletso Rakhudu and Tersia Stellenberg.


Source: WEEKLY