Full Year 2026 Propel Funeral Partners Ltd Earnings Call

August 25, 2026

Speaker #1: Thank you for standing by, and welcome to the Propel Funeral Partners Ltd FY26 results briefing. All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session.

Operator: Thank you for standing by, and welcome to the Propel Funeral Partners Limited FY26 results briefing. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Ms. Lilli Rayner, Co-CEO. Please go ahead.

Speaker #1: If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Ms. Lily Rehner, Co-CEO.

Speaker #1: Please go ahead.

Speaker #2: Thanks, Ryan. Good morning, everyone, and thanks for joining Propel's FY26 full-year results briefing. It's a pleasure to present to you today alongside my fellow Co-Founder and Co-CEO, Fraser Henderson, and Propel's CFO, Arash Naim.

Lilli Rayner: Thanks, Ryan. Good morning, everyone, and thanks for joining Propel's FY26 full year results briefing. It is a pleasure to present to you today alongside my fellow co-founder and Co-CEO, Fraser Henderson, and Propel's CFO, Arash Noaeen. Before I start, we would like to take this opportunity to acknowledge client families who have farewelled loved ones, particularly those who have suffered a recent loss. We would also like to extend our thanks to Propel's staff for their continued commitment to providing essential and caring funeral and related services to the communities we serve across Australia and New Zealand. In terms of the agenda for the presentation lodged with the ASX this morning, I will summarize the FY26 results and then provide a brief overview of Propel's business. Arash will cover the financials in more detail. Fraser will touch on industry trends, acquisitions, and make some concluding remarks, including in respect of the outlook.

Speaker #2: Before I start, we'd like to take this opportunity to acknowledge client families who have farewelled loved ones, particularly those who have suffered a recent loss.

Lilli Rayner: Before I start, we would like to take this opportunity to acknowledge client families who have farewelled loved ones, particularly those who have suffered a recent loss. We would also like to extend our thanks to Propel's staff for their continued commitment to providing essential and caring funeral and related services to the communities we serve across Australia and New Zealand.

Speaker #2: We would also like to extend our thanks to Propel's staff for their continued commitment to providing essential and caring funeral and related services to the communities we serve across Australia and New Zealand.

Speaker #2: In terms of the agenda for the presentation lodged with the ASX this morning, I'll summarize the FY26 result and then provide a brief overview of Propel's business.

Lilli Rayner: In terms of the agenda for the presentation lodged with the ASX this morning, I will summarize the FY26 results and then provide a brief overview of Propel's business. Arash will cover the financials in more detail. Fraser will touch on industry trends, acquisitions, and make some concluding remarks, including in respect of the outlook.

Speaker #2: Arash will cover the financials in more detail. Fraser will touch on industry trends, acquisitions, and make some concluding remarks, including with respect to the outlook. Then we'll take questions.

Lilli Rayner: Then we will take questions. Turning to slide 6 for a summary of the results. Revenue increased to AUD 226.6 million in FY26 within guidance on the back of a 1.1% increase in total funeral volumes. Comparable average revenue per funeral was circa 2% above FY25. Noting that network average revenue per funeral was marginally below the prior year, impacted by recent acquisitions and ForEx. Propel reported operating EBITDAR of AUD 55.3 million, again within guidance, and operating NPAT of AUD 20.7 million. Cash flow conversion remains strong at over 100%. From a capital management perspective, the board declared a final fully franked dividend of AUD 0.069 per share, resulting in total fully franked dividends of AUD 0.144 per share in connection with FY26, consistent with the prior year.

Speaker #2: Turning to slide 6 for a summary of the results. Revenue increased to $226.6 million in FY26, within guidance, on the back of a 1.1% increase in total funeral volumes.

Speaker #2: Comparable average revenue per funeral was approximately 2% above FY25, noting that network average revenue per funeral was marginally below the prior year, impacted by recent acquisitions and foreign exchange.

Speaker #2: Propel reported operating EBITDA of $55.3 million, again within guidance, and operating NPAT of $20.7 million. Cash flow conversion remained strong at over 100%. From a capital management perspective, the board declared a final fully-franked dividend of $6.9 cents per share, resulting in total fully-franked dividends of $14.4 cents per share, in connection with FY26, consistent with the prior year.

Lilli Rayner: Propel reported operating EBITDAR of AUD 55.3 million, again within guidance, and operating NPAT of AUD 20.7 million. Cash flow conversion remains strong at over 100%. From a capital management perspective, the board declared a final fully franked dividend of AUD 0.069 per share, resulting in total fully franked dividends of AUD 0.144 per share in connection with FY26, consistent with the prior year.

Speaker #2: And Propel ended the year with a gearing ratio of approximately 30%. Following the refinancing of its debt facilities earlier in the year, Propel's net leverage ratio was 2.2 times at year-end, and it currently has funding capacity of approximately $170 million, which will support Propel's acquisition-led growth strategy.

Lilli Rayner: Propel ended the year with a gearing ratio of circa 30%. Following the refinancing of its debt facilities earlier in the year, Propel's net leverage ratio was 2.2 times at year-end, and it currently has funding capacity of circa AUD 170 million, which will support Propel's acquisition-led growth strategy. Arash will provide further details on the company's financials shortly. In terms of growth, Propel expanded its network by 6 locations in FY26, and Propel has now deployed AUD 314 million on acquisitions since its IPO in 2017. Fraser will provide an acquisition update and talk more on the company's outlook later in the presentation. Before he does, I will provide a brief overview of Propel's business. Turning to slide 8. This slide illustrates how Propel's network has evolved.

Speaker #2: Arash will provide further details on the company's financials shortly. In terms of growth, Propel expanded its network by 6 locations in FY26, and Propel has now deployed $314 million on acquisitions since its IPO in 2017.

Speaker #2: Fraser will provide an acquisition update and talk more about the company's outlook later in the presentation. But before he does, I will provide a brief overview of Propel's business.

Speaker #2: Turning to slide 8. This slide illustrates how Propel's network has evolved. Propel started with one funeral home in Queensland in 2013, and today it operates from 213 locations across Australia and New Zealand, including 42 cremation facilities and 9 cemeteries.

Lilli Rayner: Propel started with one funeral home in Queensland in 2013, and today it operates from 213 locations across Australia and New Zealand, including 42 cremation facilities and 9 cemeteries. Of those 213 locations, the company owns 130, which are held at depreciated cost on the balance sheet at over AUD 250 million. Slide 9 shows Propel's main operating brands in Australia and in New Zealand. Each brand has a distinct identity and is well known in their respective markets. Some have been around for many decades. For example, in Tasmania, Millingtons has been operating in and around Hobart for over 100 years. In New Zealand, J. Fraser and Sons has operated in Southland since the late 1800s. The dotted lines show the brands relating to acquisitions completed during and since FY26. These brands are an important part of the goodwill of each business.

Speaker #2: Of those 213 locations, the company owns 130, which are held at depreciated cost on the balance sheet at over $250 million. Slide 9 shows Propel's main operating brands in Australia and New Zealand.

Speaker #2: Each brand has a distinct identity and is well known in their respective markets. Some have been around for many decades. For example, in Tasmania, Millingtons has been operating in and around Hobart for over 100 years, and in New Zealand, J. Fraser has operated in Southland since the late 1800s.

Speaker #2: The dotted lines show the brands relating to acquisitions completed during and since FY26. These brands are an important part of the goodwill of each business.

Speaker #2: The charts on slide 10 illustrate Propel's track record since FY15. I won't go through each chart, but notwithstanding a period of earnings moderation in FY26, Propel has delivered growth across key metrics for more than a decade.

Lilli Rayner: The charts on slide 10 illustrate Propel's track record since FY15. I will not go through each chart, but notwithstanding a period of earnings moderation in FY26, Propel has delivered growth across key metrics for more than a decade. The chart on slide 11 shows Propel's average revenue per funeral since FY15, which has grown at a compound annual growth rate of 2.7%. In FY26, comparable average revenue per funeral was up 2% in constant currency. Turning to slide 12, cash conversion continues to be a key focus. As you can see from this chart, Propel's cash conversion has remained consistently high, averaging approximately 99% since FY15. In FY26, cash conversion remained strong at over 100%. The pie charts on slide 13 illustrate the diversified nature of Propel's revenue in FY26.

Speaker #2: The chart on slide 11 shows Propel's average revenue per funeral since FY15, which has grown at a compound annual growth rate of 2.7%. In FY26, comparable average revenue per funeral was up 2% in constant currency.

Speaker #2: Turning to Slide 12. Cash conversion continues to be a key focus. As you can see from this chart, Propel's cash conversion has remained consistently high, averaging approximately 99% since FY15.

Speaker #2: In FY26, cash conversion remained strong at over 100%. The pie charts on slide 13 illustrate the diversified nature of Propel's revenue in FY26. The chart on the left shows Propel's country split, which was weighted approximately 75% to Australia and 25% to New Zealand.

Lilli Rayner: The chart on the left shows Propel's country split, which was weighted approximately 75% to Australia and 25% to New Zealand. The chart in the middle of the slide shows Propel's regional metro split, which was weighted 53% to regional in FY26. Importantly, when we look at revenue by operating business on the right-hand side, this chart demonstrates the significant diversification of Propel's network, which comprises over 60 operating businesses across Australia and New Zealand. In summary, Propel is an essential service provider of scale with diversified and defensive revenue streams. I will now hand over to Arash, who will provide further detail on Propel's FY26 results.

Speaker #2: The chart in the middle of the slide shows Propel's regional-metro split, which was weighted 53% to regional in FY26. Importantly, when we look at revenue by operating business on the right-hand side, this chart demonstrates a significant diversification of Propel's network, which comprises over 60 operating businesses across Australia and New Zealand.

Speaker #2: In summary, Propel is an essential service provider at scale, with diversified and defensive revenue streams. I'll now hand over to Arash, who will provide further detail on Propel's FY26 results.

Speaker #3: Thanks, Lily, and good morning, everyone. Today, I will cover five key areas. Firstly, I'll provide an overview of Propel's four-year results via an analysis of the income statement.

Arash Noaeen: Thanks, Libby, and good morning, everyone. Today, I will cover 5 key areas. Firstly, I will provide an overview of Propel's full-year results via an analysis of the income statement. Secondly, I will touch on the key drivers of revenue, operating earnings, and margin. Thirdly, I will provide an analysis of the cash flow statement. I will then touch on the balance sheet. Finally, I will wrap up with some commentary on capital management. Please turn to slide 15. In FY26, revenue increased to AUD 226.6 million, within guidance and reflecting comparable average revenue per funeral growth of circa 2% on the prior year, contributions from acquisitions, partially offset by unfavorable ForEx impacts. Propel reported a gross margin of 69.8%, with a comparable gross margin of 69.9%, 10 basis points above FY25. Operating costs were well-maintained at 45% of revenue, in line with the prior year.

Speaker #3: Secondly, I'll touch on the key drivers of revenue, operating earnings, and margin. Thirdly, I'll provide an analysis of the cash flow statement. I'll then touch on the balance sheet, and finally, I'll wrap up with some commentary on capital management.

Speaker #3: Please turn to slide 15. In FY26, revenue increased to $226.6 million, which is within guidance and reflects comparable average revenue per funeral growth of approximately 2% on the prior year.

Speaker #3: Contributions from acquisitions were partially offset by unfavorable forex impacts. Propel reported a gross margin of 69.8%, with a comparable gross margin of 69.9%, which is 10 basis points above FY25.

Speaker #3: Operating costs were well maintained at 45% of revenue, in line with the prior year. Operating EBITDA was $55.3 million, within guidance, and included a circa $1 million unfavorable forex impact.

Arash Noaeen: Operating EBITDA was AUD 55.3 million, within guidance and included a circa AUD 1 million unfavorable ForEx impact. In terms of other items of note on the income statement, depreciation was up 2% on the prior year, reflecting acquisitions and property purchases made during FY26. Interest expense on the senior debt was in line with FY25, with the impact of higher drawn debt used to fund acquisitions and property purchases offset by a lower average effective interest rate following the refinancing of Propel's banking facilities earlier in the year. Operating NPAT was AUD 20.7 million, with an adjusted effective tax rate of 29.5%. The waterfall on slide 16 sets out the movement in revenue on the prior year. The chart shows the full period impact of acquisitions made in FY25, the part period impact of acquisitions completed during FY26, ForEx movements, and the organic performance of businesses held for the comparable period.

Speaker #3: In terms of other items of note on the income statement, depreciation was up 2% on the prior year, reflecting acquisitions and property purchases made during FY26.

Speaker #3: Interest expense on the senior debt was in line with FY25, with the impact of higher drawn debt used to fund acquisitions and property purchases offset by a lower average effective interest rate following the refinancing of Propel's banking facilities earlier in the year.

Speaker #3: Operating impact was $20.7 million, with an adjusted effective tax rate of 29.5%. The waterfall on slide 16 sets out the movement in revenue on the prior year.

Speaker #3: The chart shows the full-period impact of acquisitions made in FY25, the part-period impact of acquisitions completed during FY26, forex movements, and the organic performance of businesses held for the comparable period.

Speaker #3: As you can see from the comments on the bottom left of the slide, total funeral volumes increased 1.1%, and average revenue per funeral for the group was marginally below FY25, with the benefits of pricing being offset by forex and acquisition impacts.

Arash Noaeen: As you can see from the comments on the bottom left of the slide, total funeral volumes increased 1.1%, and average revenue per funeral for the group was marginally below FY25, with the benefits of pricing being offset by ForEx and acquisition impacts. It is noted that recent acquisitions generated below network average revenue per funeral. In terms of organic, on the center of this slide, comparable businesses reported funeral volumes circa 2% below the prior year and a circa 2% increase in average revenue per funeral, reflecting pricing impacts and funeral mix. As you can see on the bottom right of this slide, the operating EBITDA margin was 24.4%, 0.5% below the prior year, primarily impacted by recent acquisitions and operating deleverage. Comparable operating costs were 0.7% below FY25, reflecting, among other things, disciplined cost controls. Moving to the cash flow statement on slide 17.

Speaker #3: It is noted that recent acquisitions generated below-network-average revenue per funeral. In terms of organic, on the seventh of these slides, comparable businesses reported funeral volume approximately 2% below the prior year and an approximately 2% increase in average revenue per funeral, reflecting pricing impacts and funeral mix.

Speaker #3: As you can see on the bottom right of this slide, the operating EBITDA margin was 24.4%, 0.5% below the prior year, primarily impacted by recent acquisitions and operating leverage.

Speaker #3: Comparable operating costs were 0.7% below FY25, reflecting, among other things, disciplined cost control. Moving to the cash flow statement on slide 17, operating cash flows were $54.9 million, with cash flow conversion strong at over 100%.

Arash Noaeen: Operating cash flows were AUD 54.9 million, with cash flow conversion strong at over 100%. In respect of investing activities during the year, Propel deployed AUD 5.2 million in connection with acquisitions and AUD 1.3 million related to earn-out payments. Acquired seven freehold properties, four of which were previously leased, for a total consideration of AUD 7.5 million and incurred capital expenditure of circa AUD 10.4 million, with maintenance CapEx at 4.6% of revenue. The financing activities during the year largely reflect the proceeds from senior debt to fund acquisitions and property purchases. Moving to slide 18. There are four main points of note on the balance sheet. One, as at 30 June 2026, Propel had a net debt of AUD 151.2 million. Two, freehold properties owned by Propel are held at a depreciated cost of approximately AUD 252 million, representing circa 60% of Propel's market capitalization as at 30 June 2026.

Speaker #3: In respect of investing activities, during the year, Propel deployed $5.2 million in connection with acquisitions, and $1.3 million related to earn-out payments. We acquired seven freehold properties, four of which were previously leased, for a total consideration of $7.9 million, and incurred capital expenditure of approximately $10.4 million, with maintenance capex at 4.6% of revenue.

Speaker #3: The financing activities during the year largely reflect the proceeds from senior debt to fund acquisitions and property purchases. Moving to slide 18, there are four main points of note on the balance sheet.

Speaker #3: First, as of 30 June 2026, Propel had net debt of $151.2 million. Second, freehold properties owned by Propel are held at a depreciated cost of approximately $252 million, representing around 60% of Propel's market capitalization as of 30 June 2026.

Arash Noaeen: Three, prepaid contract funds total approximately AUD 83 million, which are largely invested with third-party friendly societies who primarily invest the funds in cash and fixed interest. During the year, prepaid contracts with terms at need account for less than 10% of the group's funeral volumes. Finally, the movement in equity on the prior balance date related to a non-cash reduction in the foreign exchange reserve as a result of a greater than 10% strengthening of the Australian dollar against the New Zealand dollar. Turning to slide 19. In respect of capital management, Propel refinanced its debt facilities early in the year, extending the maturity date of its existing AUD 275 million debt facilities to October 2029, improving the pricing and entering into a new AUD 50 million accordion facility. Propel currently has available funding capacity of approximately AUD 170 million.

Speaker #3: Third, prepaid contract funds total approximately $83 million, which are largely invested with third-party friendly societies, who primarily invest the funds in cash and fixed interest.

Speaker #3: During the year, prepaid contracts returned at-need account for less than 10% of the Group's funeral volumes. And finally, the movement in equity on the prior balance sheet related to the non-cash reduction in the foreign exchange reserve as a result of a greater than 10% strengthening of the Australian dollar against the New Zealand dollar.

Speaker #3: Turning to slide 19, in respect of capital management, Propel refinanced its debt facilities early in the year, extending the maturity date of its existing $275 million debt facilities to October 2029, improving the pricing, and entering into a new $50 million revolving facility.

Speaker #3: Propel currently has available funding capacity of approximately $170 million. The company remains comfortably in compliance with its debt covenants, reporting a net leverage ratio of 2.2 times against a covenant limit of 5 times. Finally, Propel declared a fully franked dividend of 14.4 cents per share in connection with FY26, in line with the prior year.

Arash Noaeen: The company remains comfortably in compliance with its debt covenants, reporting a net leverage measure of 2.2 times against a covenant meter of 5 times. Propel declared a fully franked dividend of 14.4 cents per share in connection with FY26, in line with the prior year. I will now hand over to Fraser, who will, among other things, cover industry trends and acquisitions before making some concluding remarks in respect of the outlook.

Speaker #3: I will now hand over to Fraser, who will, among other things, cover industry trends and acquisitions before making some concluding remarks regarding the outlook.

Fraser Henderson: Thanks, Arash, and good morning, everyone. Turning to slide 21. This slide shows that the funeral industry remains highly fragmented in both Australia and New Zealand, with Propel the second largest operator in both countries. Propel's estimated combined Australian-New Zealand market share is circa 10%, having performed close to 23,000 funerals in FY26. Significant consolidation runway remains, with more than 500 businesses still independently owned by entities other than Propel and the largest operator. During and since the end of FY26, Propel completed the acquisition of 5 businesses and has now deployed approximately AUD 340 million on acquisitions since its IPO in FY18, averaging circa AUD 37 million per year. Propel continues to explore other potential acquisition opportunities with multiple vendor discussions continuing. However, the timing of any future acquisitions, as you would appreciate, is unknown.

Speaker #4: Thanks, Arash, and good morning, everyone. Turning to slide 21, this slide shows that the funeral industry remains highly fragmented in both Australia and New Zealand, with Propel the second-largest operator in both countries.

Speaker #4: Propel's estimated combined Australian-New Zealand market share is approximately 10%, having performed close to 23,000 funerals in FY26. Significant consolidation runway remains, with more than 500 businesses still independently owned by entities other than Propel and the largest operator.

Speaker #4: During and since the end of FY26, Propel completed the acquisition of five businesses and has now deployed approximately $340 million on acquisitions since its IPO in FY18, averaging around $37 million per year.

Speaker #4: Propel continues to explore other potential acquisition opportunities, with multiple vendor discussions ongoing. However, as you would appreciate, the timing of any future acquisitions is unknown.

Speaker #4: Some of you may be familiar with the graphs on slide 22, which show that the number of deaths is forecast to both increase and accelerate in Australia and New Zealand, as the baby boomers approach and exceed the median age of death. Please note that the eldest of the baby boomer generation will reach the median age of death next year and the year after, depending on their gender.

Fraser Henderson: Some of you may be familiar with the graphs on slide 22, which show that the number of deaths is forecast to both increase and accelerate in Australia and New Zealand as the baby boomers approach and exceed the median age of death. Noting that the eldest of the baby boomer generation reach the median age of death next year and the year after, depending on their gender. Death volumes in Australia and New Zealand are forecast to increase by 2.8% per annum from an historical average of 1.1% per annum. Death volumes are the most significant driver of revenue in the death care industry, and few industries have the benefit of the certainty of this sort of tailwind. However, death volume growth is not necessarily linear and can fluctuate from time to time. Slide 22 also lists some of the evolving market trends the industry is experiencing.

Speaker #4: Death volumes in Australia and New Zealand are forecast to increase by 2.8% per annum, up from a historical average of 1.1% per annum. Death volumes are the most significant driver of revenue in the death care industry, and few industries have the benefit of the certainty of this sort of tailwind.

Speaker #4: However, death volume growth is not necessarily linear and can fluctuate from time to time. Slide 22 also lists some of the evolving market trends the industry is experiencing.

Speaker #4: I won't go through all of these, but by way of example, the majority of client families choose a full-service funeral, despite no service or no-attendance offerings being available.

Fraser Henderson: I will not go through all of these, but by way of example, the majority of client families choose a full-service funeral despite no service, no attendance offerings being available. Lower value, digitally led competitors remain active, especially in metropolitan markets, noting that these providers are largely reliant on third parties for both infrastructure and resources, and there is evidence of recent material price increases by those providers. Client families are increasingly researching providers online, and whilst the funeral industry is not immune from digitization, including AI, the human element of a funeral remains central to the overall experience of client families. Turning to slide 23. This slide summarizes some of the ways Propel is positioning itself to capture growth against the favorable long-term demand backdrop I have just talked about.

Speaker #4: Lower-value, digitally led competitors remain active, especially in metropolitan markets. Notably, these providers are largely reliant on third parties for both infrastructure and resources, and there is evidence of recent material price increases by those providers.

Speaker #4: Client families are increasingly researching providers online, and while the funeral industry is not immune from digitization, including AI, the human element of a funeral remains central to the overall experience of client families.

Speaker #4: Turning to slide 23, this slide summarizes some of the ways Propel is positioning itself to capture growth against the favorable long-term demand backdrop I've just talked about.

Speaker #4: Inorganically, our acquisition-led growth strategy is underpinned by a highly fragmented industry, a strong pipeline with relationships developed—some over many years—our position as a trusted partner and preferred succession path for many vendors, and Propel's available funding capacity.

Fraser Henderson: Inorganically, our acquisition-led growth strategy is underpinned by a highly fragmented industry, a strong pipeline with relationships developed, some over many years. Our position as trusted partner and preferred succession partner for many vendors and Propel's available funding capacity. From an organic perspective, key focuses are digital marketing and website enhancement, sharpening lead generation and conversion, and deepening grassroots community engagement. Propel businesses are also seeking to reinforce the value of a funeral among their communities, as well as enhancing their product offerings and benefiting from digitization efficiencies. As a business, Propel is also selectively expanding some of its metro brands to other areas, which can leverage off existing infrastructure, including company-owned cremation facilities. Of course, meanwhile, we continue to focus on BAU matters such as procurement initiatives, network efficiency, cost discipline, and asset utilization. Moving to slide 25, which provides an investment summary overview.

Speaker #4: From an organic perspective, key focuses are digital marketing and website enhancement, sharpening lead generation and conversion, and deepening grassroots community engagement. Propel's businesses are also seeking to reinforce the value of a funeral among their communities, as well as enhance their product offerings and benefit from digitization efficiencies.

Speaker #4: As a business, Propel is also selectively expanding some of its metro bands to other areas, which can leverage off existing infrastructure, including company-owned cremation facilities.

Speaker #4: Of course, meanwhile, we continue to focus on BAU matters, such as procurement initiatives, network efficiency, cost discipline, and asset utilization. Moving to slide 25, which provides an investment summary overview.

Speaker #4: Propel is the number two provider in the Australian and New Zealand funeral industry, and owns assets and infrastructure that are difficult to replicate. It operates from over 210 locations, including 130 owned properties, which are valued at a depreciated cost of over $250 million.

Fraser Henderson: Propel is the number 2 provider in the Australian and New Zealand funeral industry and owns assets and infrastructure that are difficult to replicate. It operates from over 210 locations including 130 owned properties, which are valued at depreciated cost of over AUD 250 million. Propel operates in a highly fragmented and essential service industry and stands to benefit from favorable demographic tailwinds. Propel is well-funded to continue its acquisition-led growth strategy and with a management team and non-executive directors together owning a substantial interest in the company, this ensures a strong alignment with fellow shareholders. In terms of the outlook, please turn to slide 26.

Speaker #4: Propel operates in a highly fragmented and essential service industry, and stands to benefit from favorable demographic tailwinds. Propel is well funded to continue its acquisition-led growth strategy, and with a management team and non-executive directors together owning a substantial interest in the company, this ensures a strong alignment with fellow shareholders.

Speaker #4: In terms of the outlook, please turn to slide 26. Propel expects to benefit from favorable demographics in both Australia and New Zealand, a strong funding position, acquisitions completed to date, and other potential future acquisitions in what remains a highly fragmented industry.

Fraser Henderson: Propel expects to benefit from favorable demographics in both Australia and New Zealand, a strong funding position and acquisitions completed to date, and other potential future acquisitions in what remains a highly fragmented industry, noting that negotiations with multiple vendors are continuing regarding the opportunity to join Propel's growing network. The company intends to provide an FY27 trading update at the AGM in November, but with respect to the month of July 2026, Propel generated revenue of circa AUD 21.5 million, benefiting from comparable average revenue per funeral growth exceeding 3%, which is above the company's long-term CAGR, and resilient funeral volumes despite a benign winter flu season and a material contraction in industry death volumes, which is expected to be temporary.

Speaker #4: Noting that negotiations with multiple vendors are continuing regarding the opportunity to join Propel's growing network. The company intends to provide an FY27 training update at the AGM in November, but with respect to the month of July 2026, Propel generated revenue of circa $21.5 million, benefiting from comparable average revenue per funeral growth exceeding 3%, which is above the company's long-term pay guard.

Speaker #4: And resilient funeral volumes despite a benign winter flu season and a material contraction in industry death volumes, which is expected to be temporary. Before I hand back to the moderator for questions, I want to echo Lily's earlier comments and thank our client families for entrusting the funeral homes in the Propel network at what often is a very difficult time.

Fraser Henderson: Before I hand back to the moderator for questions, I want to echo Lily's earlier comments and thank our client families for entrusting the funeral homes in the Propel network at what often is a very difficult time. I also want to take this opportunity to thank all our staff for their ongoing dedication to the communities we serve. Finally, I want to recognize Brian Scullin's retirement from the board earlier today. We were extremely fortunate when he agreed to join Propel as Chair when Propel was little more than an idea on a whiteboard. Lily, Arash, and I have learned much from Brian over the last 14 or so years, and we wish him well in his retirement. With that, I'll now hand back to the moderator to invite questions.

Speaker #4: I also want to take this opportunity to thank all our staff for their ongoing dedication to the communities we serve. And finally, I want to recognize Brian Skellum's retirement from the board earlier today.

Speaker #4: We were extremely fortunate when he agreed to join Propel as Chair, when Propel was little more than an idea on a whiteboard. Lily, Arash, and I have learned much from Brian over the last 14 or so years, and we wish him well in his retirement.

Speaker #4: With that, I'll now hand back to the moderator to invite questions.

Speaker #1: Thank you. If you wish to ask a question, please press *1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press *2.

Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speaker phone, please pick up the handset to ask a question. Your first question comes from Christian Waked from Jarden. Please go ahead.

Speaker #1: If you are on speakerphone, please pick up the handset to ask a question. Your first question comes from Christian Wigg from Jordan. Please go ahead.

Speaker #3: Good morning. Thank you for taking my questions. First question on the July trading update: I mean, it implies flat year-on-year revenue. And given prices are up 3% and FX is a 3% headwind, is it fair to assume like-for-like volumes are down 4% for the month?

Christian Waked: Good morning. Thank you for taking my questions. First question on the July trading update. It implies flat year-on-year revenue. Given prices are up 3% and ForEx is a 3% headwind, is it fair to assume like-for-like volumes are down 4% for the month?

Speaker #2: Black Christian, thanks. Thanks for your question. So, I think you did summarize that well in terms of the revenue for July. We disclosed $21.5 million, but obviously that included that $600K FX headwind.

Lilli Rayner: Hi, Christian. Thanks for your question. I think you did summarize that well in terms of the revenue for July. We disclosed AUD 21.5 million, but obviously that included that AUD 600K ForEx headwind. So, if you back that out, revenue would've been close to AUD 22 million. What we also disclosed was that there was a material contraction in industry death volumes based on the BDM data in Australia and certainly, Propel wasn't immune from that contraction. I think that's an important point to point out. Obviously July is an important month for the industry as well. From an average revenue per funeral perspective, obviously that ticked up above 3% in July. So that was pleasing from our perspective.

Speaker #2: So, if you back that out, revenue would have been close to $22 million. What we also disclosed was that there was a material contraction in industry death volumes based on the BDM data in Australia.

Speaker #2: And certainly, Propel wasn't immune from that contraction. So I think that's an important point to mention. And, obviously, July is an important month for the industry as well.

Speaker #2: From an average revenue per funeral perspective, obviously that ticked up above 3% in July, so that was pleasing from our perspective. But we think we will give more color on FY27 trading as we get to the AGM and go through that busier winter and early spring trading period.

Lilli Rayner: We think we will give more color on FY27 trading as we sort of get to the AGM and went through that busier winter and early spring trading period.

Speaker #3: Yeah, and just to follow up on that, on the market volume specifically—as far as we're seeing, the market appears to be down more like 8% to 10% in July.

Christian Waked: Yeah. Just to follow up on that, on the market volume specifically, from what we are seeing is the market appears to be down more like 8% to 10% in July. Are you back to winning share in July? I guess what has changed in July versus prior halves when there has been implied share loss?

Speaker #3: Are you back to winning share in July? And, I guess, what has changed in July versus prior quarters when there's been implied share loss?

Speaker #2: Yes. So the contraction in July from an industry perspective was material, as you point out, but it's four weeks of trading, Christian. So I don't think we want to get hung up on super short periods of time.

Lilli Rayner: Well, the contraction in July from an industry perspective was material as you point out, but it is 4 weeks of trading, Christian, so I do not think we want to get hung up on super short periods of time, given the industry volumes do oscillate. So I do not think you can glean anything meaningful into market share losses or gains in a 4-week trading period.

Speaker #2: Given the industry volumes do oscillate, I don't think you can glean anything meaningful about market share losses or gains in a four-week trading period.

Speaker #3: Yeah, yeah, understood. And just one last question. I guess C2B growth in FY26 was very well controlled. If firms were tougher again in FY27, could you replicate the 2% cost growth of FY26, or is there no more room for efficiencies?

Christian Waked: Yeah. Understood. Just one last question. I guess C2B growth in FY26 was very well controlled. If volumes were tougher again in FY27, could you replicate the 2% cost growth of FY26 or is there no more room for efficiencies?

Arash Noaeen: Thanks, Chris. I will take that. Look, I think, yeah, we have managed the cost quite well. I think it will depend partly on the volume growth, but I think, being below in PCP with some of the acquisition packs would be difficult, but I think we can still manage the costs well.

Speaker #4: Thanks, Chris. I'll take that. Look, I think, yeah, we've managed the cost quite well. I think it will depend partly on the volume growth, but I think being below PCP with some of the acquisition tax would be difficult.

Speaker #4: But I think we can still manage the cost as well.

Speaker #3: Yeah, understood. Thank you for taking my questions.

Christian Waked: Yeah. Understood. Thank you for taking my questions.

Speaker #1: Thank you. Your next question comes from Elizabeth Milliatis from Macquarie. Please go ahead.

Operator: Thank you. Your next question comes from Elizabeth Miliatis from Macquarie. Please go ahead.

Speaker #5: Good morning, and thanks for taking my questions. The first one's just around acquisitions. Obviously, it sounds like that's still a key part of the strategy.

Elizabeth Miliatis: Good morning and thanks for taking my questions. The first one is just around acquisitions. Obviously, it sounds like still a key part of the strategy, and you have got a great balance sheet to support that. We have not really made very material acquisitions since calendar year 2023. Just curious, what the pipeline is looking like. Are we, hopefully, nearing closer to a period of more acquisitions coming through? Any color would be great. Thank you.

Speaker #5: And you've got a great balance sheet to support that. We haven't really made any very material acquisitions since calendar year 2023. Just curious what the pipeline's looking like?

Speaker #5: Are we hopefully getting closer to a period with more acquisitions coming through? Any color would be great. Thank you.

Speaker #4: Hi, Elizabeth. Thanks for the question. Yeah, I mean, hopefully, we are. Yeah, I mean, I think the team is busy, and we have got a number of conversations at various stages of those negotiations to bring acquisition opportunities to the table.

Fraser Henderson: Hi, Elizabeth. Thanks for the question. Yeah, hopefully we are. I think the team is busy and we have got a number of conversations at various stages of those negotiations to bring acquisition opportunities to the table. So we still remain confident about the pipeline. I think you talk about scale, and some of those opportunities in the pipeline are large multi-brand, multi-location opportunities. I think it would have been good to announce some today, but I think there is nothing to disclose as of this morning, but the pipeline remains robust.

Speaker #4: So we still remain confident about the pipeline, and I think, when you talk about scale, some of those opportunities in the pipeline are large, multi-brand, multi-location opportunities.

Speaker #4: So yeah, I think it would have been good to announce something today, but I think there is nothing to disclose as of this morning.

Speaker #4: But the pipeline remains robust.

Speaker #5: Okay, got it. That's really clear. And just if I can touch on the winter, sort of the weak winter period, and obviously not great for volumes—is there typically a bit of a catch-up period, where if there is a weak winter or a weak flu season, maybe 6 or 12 months later there's a bit of a catch-up, or might that take a few years to roll through?

Elizabeth Miliatis: Okay, got it. That is really clear. Just if I can touch on the winter, sort of the weak winter period, and obviously, not great for volumes. Is that typically a bit of a catch-up period, where if there is a weaker winter and a weaker flu season, maybe 6 or 12 months, there is a bit of a catch-up or is that it might take a few years to roll through? Thank you.

Speaker #5: Thank you.

Speaker #4: Yeah. I mean, I think, yeah, look, if you think about it, people generally die because they're old, Elizabeth. There's an event that might trigger it, but it's because people are getting older.

Fraser Henderson: Yeah. Look, if you think about it, people generally die because they are old, Elizabeth. There is an event that might trigger it, but it is because people are getting older. So although flu is sort of a precursor to that, I think if you have not died this winter, then you are more likely to die in the coming season. So when there is a sort of pullback of death volumes, you would expect all other things being equal, so there will be a catch-up in due course.

Speaker #4: And so, although flu is sort of a precursor to that, I think if you haven't died this winter, then you're more likely to die in the coming season.

Speaker #4: So when there is a sort of pullback of death volumes, you would expect, all other things being equal, that there would be a catch-up in due course.

Speaker #5: Okay. Thank you.

Elizabeth Miliatis: Okay. Thank you.

Speaker #4: No worries.

Fraser Henderson: No worry.

Speaker #1: Bye. Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced.

Operator: Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Chami Ratnapala from Bell Potter Securities. Please go ahead.

Speaker #1: Your next question comes from Shami Ratnapala from Bellporter Securities. Please go ahead.

Speaker #5: Thank you. Good morning, Lily, Fraser, and Arash. Thanks for taking my questions. I think the first one would be just on the volume of the trading update that you have provided for the month of July, or more thinking about where the industry is at the moment?

Chami Ratnapala: Thank you. Good morning, Lily, Fraser, and Iraj. Thanks for taking my questions. The first one would be-

Chami Ratnapala: Just on the volume of the trading update that you have provided for the month of July, or more thinking about where the industry is at the moment, could you talk to the differences in Australia versus New Zealand?

Speaker #5: Could you talk to the differences in Australia versus New Zealand?

Speaker #2: And in terms of FY26, Shami, or the July trading—just to clarify?

Lilli Rayner: In terms of FY26, Shammi, or the July trading, just to clarify?

Speaker #5: Yeah, more June into July. I mean, underlying current trading conditions.

Chami Ratnapala: More June into July, underlying current trading conditions.

Speaker #2: Okay. So, from a sort of late FY26 perspective, I think it's fair to say that volumes in New Zealand were slightly stronger than in Australia.

Lilli Rayner: Okay. From a late FY26 perspective, I think it is fair to say volumes in New Zealand were slightly stronger than in Australia. From a July perspective, we do not have any industry information on New Zealand at this point in time for early FY27. The stats that we referred to was the BDM stats, which are available for the eastern states of Australia. I think you know, Shami, that roughly makes up about 80% of guests in Australia, roughly. It is a good indicator of what is going on across the country. That is the only industry data that we have got. There is obviously no ABS data out that sends that data out this line.

Speaker #2: From a July perspective, we don't have any industry information on New Zealand at this point in time for early FY27. So the stats that we referred to were the BDM stats, which are available for the eastern states of Australia.

Speaker #2: I think you know, Shami, that that sort of roughly makes up about 80% of deaths in Australia, roughly. So it is a good indicator of what's going on across the country.

Speaker #2: But that's the only sort of industry data that we've got. There's obviously no ABS data out, nor Stats NZ data out, for July.

Speaker #5: Perfect, thanks for that, Lily. And then the second question is just on in-time and costs, our overall cost base. For the second half, it looks pleasing—the employment costs seem to be down around 2%.

Chami Ratnapala: Perfect. Thanks for that, Lily. The second question is just on employment costs or overall cost base. For the H2, it looks pleasing, the employment costs seem to be down around 2%. Is that more of an adjustment in the cost base? In other words, what is the ability in the fixed cost base to adjust to a flat or low revenue environment?

Speaker #5: Is that more an adjustment in the cost base, or, maybe in other words, what's the ability in the fixed cost base to adjust to a flat or low revenue environment?

Speaker #4: Thanks, Shami. So, on the second half, what did you mention on the employment costs?

Arash Noaeen: Thanks, Shami. On the H2, what did you mention on the employment cost?

Speaker #5: I think the employment costs seem to be down around 2% in the second half, Arash. Just in terms of the ability of the fixed cost base.

Chami Ratnapala: I think the employment costs seem to be down around 2% in the H2, Arash.

Arash Noaeen: Mm-hmm. Yeah.

Chami Ratnapala: Just in terms of the ability of the fixed cost base to sort of navigate this flat revenue environment.

Speaker #5: To sort of navigate this flat revenue environment.

Speaker #4: Yeah. I mean, on the employment costs, it's probably important to note two things. One, that we do have probably roughly 30% of our headcount as casuals.

Arash Noaeen: Yeah. On the employment cost, it is probably important to note two things. One, that we do have probably roughly 30% of our headcount is casuals. So there is flex there, which does move with volume movements. The second part is probably around the natural cushioning of certain incentives. So, depending on results, that also cushions the result, but on the other side, has other impacts. I think it is usually reasonable to assume the cost base to grow somewhere in line with our pricing. That is usually what we tend to guide for, or if it is flat inflation. In terms of levers, it does depend on the volume dynamics, to be honest. So we have maintained it pretty well for the last two years. I think we can continue to do that going forward.

Speaker #4: So there's flex there, which does move with volume movements. The second part is probably around the natural cushioning of certain incentives. So, depending on results, that also cushions the result but, on the other side, has other impacts.

Speaker #4: I think it's usually reasonable to assume the cost base will grow somewhere in line with our pricing, and that's usually what we tend to go for.

Speaker #4: Or flash inflation. In terms of levers, it does depend on the volume dynamics, to be honest. So we've maintained it pretty well for the last two years.

Speaker #4: And I think we can continue to do that going forward.

Speaker #5: Perfect, thanks for that. And maybe the third one, or the last one, would be the stock supply price increases. I mean, how much would that be as an offset, or could you talk to the 3% into the start of FY27 versus the 2% that you did in the average revenue per funeral?

Chami Ratnapala: Perfect. Thanks for that. Maybe the third one or the last one would be, just on supplier price increases, how much would that be as an offset, or could you talk to the 3% into the start of FY27 versus the 2% that you did in the average revenue per funeral? And the incremental benefit, or where are you at in terms of FY27 from what you are seeing in supplier price increases coming through?

Speaker #5: And the incremental benefit or, sort of, where are you at in terms of FY27 from what you're seeing in supply price increases coming through?

Lilli Rayner: Shammi, I will take the average revenue and then maybe Arash, you can look into the cost side of things for 2027. Shammi, you are right. Obviously, average revenue per funeral is a function of four main things: pricing, funeral mix, ForEx, and the impacts of acquisitions, with the majority being influenced by price. I think you can assume that our price increases that went in on 1 July, had regard to inflation forecasts, but there is also a slight mix impact to that as well. Arash, you just touch on the cost side.

Speaker #2: So Shami, I'll take the average revenue, and then maybe, Arash, you can look into the cost side of things for '27. So, Shami, you're right.

Speaker #2: And obviously, average revenue per funeral is a function of sort of four main things: pricing, funeral mix, FX, and the impacts of acquisitions, with the majority being influenced by price.

Speaker #2: So, I think you can assume that our price increases that went in on 1 July had regard to inflation forecasts, but there's also a slight sort of mixed impact to that as well.

Speaker #2: And yeah, Arash, you just touched on the cost side.

Speaker #4: Yeah. In terms of supply increases, not too dissimilar to probably the levels being reported in CPI, in terms of just over 3%. I think that's probably reasonable on that level.

Arash Noaeen: Yeah. In terms of supply increases, not too dissimilar to probably the levels they report on in CPI in terms of just over 3%. I think that is probably reasonable at level. There are still some opportunities that we do have in terms of managing those costs low.

Speaker #4: There are still some opportunities that we do have in terms of managing those costs, so yeah.

Lilli Rayner: Yeah. Arash, the only other thing I would point out, Shammi, on that is, our biggest cost base is obviously the employment side, as we have talked about many times before. Wages inflation running at just over 3%. I think it is fair to assume that that assumption makes sense given the salary increases that our staff received at 1 July.

Speaker #2: And, Arash, the only other thing I'd point out, Shami, on that is our biggest cost base is obviously the employment side, as we've talked about many times before.

Speaker #2: And wage inflation is sort of running at just over 3%. So, I think it's fair to assume that that assumption makes sense, given the sort of salary increases that our staff received at 1 July.

Speaker #5: Perfect. Thank you very much for taking my questions, team.

Chami Ratnapala: Perfect. Thank you very much for taking my questions, team.

Speaker #4: Pleasure.

Arash Noaeen: Pleasure.

Speaker #1: Thank you. There are no further questions at this time. I will now hand back to Mr. Henderson for closing remarks.

Operator: Thank you. There are no further questions at this time. I will now hand back to Mr. Henderson for closing remarks.

Speaker #4: Thank you, everyone, for joining today's call. Lily, Arash, and I look forward to catching up with some of you over the coming days and to providing further updates on the company's progress in due course.

Fraser Henderson: Thank you, everyone, for joining today's call. Lily, Arash, and I look forward to catching up with some of you over the coming days and to providing further updates on the company's progress in due course. With that, I will bring today's call to a close.

Speaker #4: With that, I'll bring today's call to a close.

Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.

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