Despite continued weakness in funeral market conditions in Australia (which is expected to be temporary), Propel
Funeral Partners Limited (ASX: PFP) (Propel):
• expects its 1H FY19 Operating NPAT1
to be in line with the prior corresponding period (PCP) of $6.27 million;
• is on track to generate like for like average revenue per funeral growth within its target range of 2% to 4%; and
• intends to declare a fully franked interim dividend at the time it releases its 1H FY19 financial results.
As foreshowed in October 2018, the funeral industry has been cycling through a strong PCP (due to the severe 2017 flu season)
and below trend funeral volumes (due to the benign 2018 flu season) during 1H FY19, which has continued since October.
For example, in Tasmania, registered deaths from 1 July 2018 to 30 November 2018 declined 17.9%2 on the PCP. Although
Propel’s Tasmanian market share increased marginally during that period, the number of funerals performed by its Tasmanian
network was materially below the PCP.
In other key Australian markets within which Propel operates, estimated death volume declines have also been material, with most
relevant markets experiencing at least a 5% volume decline in 1H FY19 on the PCP. As a result, Propel’s like for like volumes in
1H FY19 are expected to be approximately 550 funerals below the PCP, despite observable market share remaining stable across
Propel’s network. This equates to approximately $4.0 million in incremental revenue from funeral operations forgone in 1H FY19,
which Propel expects will be deferred (rather than lost) to future periods.
Albin Kurti, Propel’s Managing Director, said “Notwithstanding the unusual and unprecedented industry wide decline in the number
of deaths, Propel’s like for like average revenue per funeral growth has remained within our target range of 2% to 4% and we
expect to report 1H FY19 Operating NPAT1
in line with the PCP. Propel’s financial performance and operating cash flows have
proved resilient during weak market conditions and its long term, acquisition led growth strategy remains sound.”
Propel reported an Operating NPAT1 of $6.27 million in the PCP and is scheduled to release its 1H FY19 financial results on
25 February 2019. Consistent with the dividend policy set out in the Prospectus, the Board intends to pay dividends on a semiannual
basis, with a target payout ratio of 75% to 85% of Distributable Earnings3
. In that regard, Propel intends to declare a fully
franked interim dividend at the time it releases its 1H FY19 financial results.
In terms of the outlook for the remainder of FY19 and beyond, Propel remains well placed to benefit from:
– a strong Balance Sheet, with a current net cash position of approximately $11 million and a $50 million undrawn debt facility;
– acquisitions completed during 1H FY19 (Newhaven Funerals NQ, Manning Great Lakes Memorial Gardens and Martin
Williams Funeral Directors);
– recently announced NZ acquisitions (Dils Funeral Services, Schnapper Rocks Cremations and Rowley Funeral Services);
– other potential future acquisitions (although timing is uncertain); and
– funeral volumes reverting to long term trend (although timing is uncertain).
Mr Kurti added: “Historical experience suggests that the significant, year on year decline in death volumes we’ve seen in calendar
year 2018 should be temporary, given the growing and ageing population, and prior year on year declines have rebounded quickly.
When the rebound occurs, Propel will be well placed to benefit, given operating leverage within the business.”
courtesy of Bell Direct
( DYOR )
i do not hold this share
wow !! i was only just giving this a look-over yesterday
perhaps a buying opportunity today ??
( will take a while to come good, if it does )
Propel Funeral Partners Limited (ASX: PFP) (Propel) is pleased to announce it has executed a conditional sale agreement to acquire
the businesses, assets and related infrastructure (including two cremation facilities) associated with the businesses trading as
Community Funerals and Cremation for Pets (Businesses). The Businesses operate from four locations in and around Cairns in
Queensland, one of which will be acquired as part of the transaction and the other three will be leased.
Community Funerals was established in 2008 and performs approximately 250 funerals per annum. Cremation for Pets was
established in 2017 and conducts approximately 400 pet cremations per annum. Together, the Businesses generate revenue of
approximately $1.7 million per annum and the acquisition will facilitate Propel’s entry into a new market.
The total purchase price payable on completion of the transaction (Completion), including the acquisition of the freehold property, is
circa $2.7 million1
• circa $2.4 million1
in cash payable on Completion; and
• 64,240 ordinary shares in the capital of Propel to be issued at $4.672 each (Issue Price) on Completion, which will be subject to
escrow arrangements for up to 3 years3
In addition, an amount of up to $0.23 million in cash will be payable if certain financial milestones are achieved during the 3 years
Completion is expected to occur during Q2 FY23, following satisfaction (or waiver) of conditions such as confirmatory due diligence
and consents from third parties such as lessors and government agencies. Propel intends to fund the cash amount payable on
Completion from its debt facilities.
The transaction is Propel’s seventh acquisition announced in the past 12 months and is expected to be earnings accretive in year one.
courtesy of Bell Direct
( DYOR )
i hold PFP ( bought @ $3 in December 2020 )