Thank you. Good morning, everyone, and thanks for joining Propel's FY 2025 and my final full-year results briefing. With me are fellow co-founders and long-time colleagues, Lilli Rayner and Fraser Henderson, who, as announced in June, will become co-CEOs of Propel from next Monday, following my decision to retire after 14 years. I congratulate Lilli and Fraser on their well-deserved promotions and also Arash Nain, who, after eight years with the company, will become CFO next week. Lilli, Fraser, and Arash know Propel's business, strategy, and culture inside out, and I'm pleased that I'll be leaving the company in great shape and in great hands, with no change in Propel's strategic direction. Moving to the presentation lodged with the ASX this morning. The three key takeaways from today's presentation are: firstly, FY 2025 was a record year for Propel.
The company exceeded guidance and delivered growth in key financial and operating metrics, despite industry volume headwinds during the second half, which are expected to be temporary. Secondly, Propel's funeral volumes have been seasonally stronger in recent months, and the company has made a positive start to FY 2026. With a strong balance sheet, Propel is well placed to continue consolidating what is a highly fragmented and essential service industry that stands to benefit from the aging population for decades to come. Thirdly, the internal executive leadership transition has been smooth, and it's very much business as usual at Propel. Please turn to slide six for the key highlights. Revenue increased 7.9% to AUD 225.8 million, above the top end of the guidance range, on the back of a 4.4% increase in total funeral volumes and a 2.3% increase in comparable average revenue per funeral.
Propel continued to grow earnings, operating EBITDA increased to AUD 56.2 million, again above guidance, and operating impact increased to AUD 21.6 million. Cash flow conversion remains strong at 102.2%. From a capital management perspective, the board has declared a final dividend of AUD 0.07 per share fully franked, resulting in total dividends of AUD 0.144 per share fully franked in connection with FY 2025, consistent with the prior year. Propel ended the year with a gearing ratio of 27%, a net leverage ratio of 2.1 times, and has available funding capacity of AUD 143 million, which will support Propel's acquisition-led growth strategy. Lilli will provide further details on the company's financials shortly. In terms of growth, Propel expanded its network by nine locations in FY 2025, deploying AUD 13 million on three acquisitions, and the company has now deployed AUD 302 million on acquisitions since its IPO in 2017. Fraser will provide an acquisition update shortly.
In terms of our outlook, the company expects to benefit from favorable demographics in Australia and New Zealand, its strong funding position, and acquisitions completed to date, and other potential future acquisitions in what remains a highly fragmented industry. I'll talk more about the outlook towards the end of the presentation, and will now provide an overview of the business. Turning to slide eight. This slide illustrates how Propel's network has evolved. Propel started with one funeral home in Queensland over a decade ago, and today it operates from 205 locations across Australia and New Zealand, including 41 cremation facilities and nine cemeteries. Of those 205 locations, the company owns 124 of the properties, which are held at cost on the balance sheet at AUD 247 million. Slide nine 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, Millington's 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. The dotted lines show the brands relating to acquisitions completed during FY 2025. These brands are an important part of the goodwill of each business. The charts on slide 10 illustrate Propel's track record. The company has maintained a strong growth trajectory. I won't go through each chart, but as you can see, Propel's funeral volumes, revenue, and operating earnings experience growth in FY 2025. The chart on slide 11 shows Propel's average revenue per funeral since FY 2015, which has grown at a compound annual growth rate of 3.1%.
In FY 2025, comparable average revenue per funeral was up 2.3% in line with inflation. 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 99% for over a decade. In FY 2025, cash conversion remains strong at 102%, which is pleasing. Propel is the only listed death care company on the ASX. Before I hand over to Lilli, I want to briefly touch on the company's performance since its IPO. The company listed in November 2017 with an issue price of AUD 2.70. As you can see from the chart on this slide, as at 30 June 2025, Propel's share price has materially outperformed the ASX 300 index.
For investors who participated in Propel's IPO and subsequent share issues, and who retained their shareholding as at 30 June 2025, Propel has generated a total shareholder return of 73% on a pre-tax basis, including dividends. This equates to total shareholder value accretion since the IPO of approximately AUD 324 million pre-tax. On behalf of everyone involved with Propel, I thank shareholders for their ongoing support. I'll now hand over to Lilli, who will provide further detail on the full-year financial results.
Thanks, Albin, and good morning, everyone. Propel delivered growth in key financial and operating metrics in FY 2025, above the top end of the guidance range, despite an estimated 3% contraction in industry death volumes in Australia in the second half. Today, I will cover five key areas. Firstly, I'll provide an overview of Propel's full-year results via an analysis of the income statement. Secondly, I'll touch on the key drivers of revenue, operating earnings, and margin. Thirdly, I'll provide an analysis of the cash flows. I'll then touch on the balance sheet, and finally, wrap up with capital management. Please turn to slide 15. Propel generated revenue of AUD 225.8 million in FY 2025, an increase of 7.9% on the prior year.
The increase reflected contributions from 13 acquisitions completed in FY 2024 and FY 2025, a 2.3% increase in comparable average revenue per funeral, and a 3% contraction in comparable funeral volumes in the second half, which mirrored estimated industry volumes and resulted in a full-year contraction of 1%. Propel reported a gross margin of 69.8% in line with the prior year, positively impacted by pricing and favorable sales mix, partially offset by the financial profile of recent acquisitions. Pleasingly, the comparable gross margin increased 20 basis points on FY 2024. The company generated operating EBITDA of AUD 56.2 million in FY 2025, an increase of 1.4% on the prior year, impacted by industry volume headwinds in the second half, the financial profile of recent acquisitions, and changes to executive remuneration.
In terms of other items of note on the income statement, interest expense on senior debt decreased by circa AUD 1.5 million in FY 2025, driven by lower drawn debt as a result of the capital raising completed in early 2024, and a lower average effective interest rate. Propel generated operating impact of AUD 21.6 million in FY 2025, circa 2.2% higher than FY 2024, noting that operating earnings per share was impacted by an increase in the number of shares on issue. In terms of non-operating items, acquisition costs totaled AUD 1 million, and the adjusted effective tax rate was 29.6%. The waterfall on slide 16 sets out the sources of revenue growth on the prior year. The chart shows the full-year impact of acquisitions made in FY 2024, the impact of acquisitions completed during FY 2025, and the organic performance of businesses held for the comparable period.
As you can see from the comments on the bottom left of the slide, total funeral volumes increased 4.4%, and average revenue per funeral increased 1.3%. In terms of organic, on the center of this slide, comparable businesses experienced a 1% contraction in funeral volumes, having cycled consecutive positive growth in FY 2022 and FY 2023, followed by a contraction in FY 2024, and a 2.3% increase in comparable average revenue per funeral, in line with inflation. As you can see on the bottom right of this slide, the operating EBITDA margin was 24.9%, primarily impacted by a contraction in comparable funeral volumes in the second half, margins of recent acquisitions, and changes to executive remuneration. Moving to the cash flow statement on slide 17, operating cash flows increased 4.4%, reflecting contributions from acquisitions and positive movements in working capital. Cash flow conversion was strong at 102%.
In respect of investing activities during the year, Propel deployed AUD 12.8 million in cash in connection with acquisitions and AUD 2.1 million relating to earnout payments. Acquired five freehold properties not connected to business combinations, two of which were previously leased, for a total consideration of AUD 10.3 million, and maintenance capex amounted to 4.2% of revenue, broadly in line with depreciation on property, plant, and equipment. The financing activities during the year largely reflect the proceeds from senior debt to fund acquisitions, property purchases, as well as dividends paid. Moving to slide 18, there are three main points of note on the balance sheet. One, as at year end, Propel had net debt of approximately AUD 132 million. Two, freehold properties owned by Propel are held at depreciated costs of approximately AUD 247 million.
Three, Propel's prepaid contract funds totaled approximately AUD 76 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 that turned at need in Australia accounted for less than 10% of the group's Australian funeral volumes, consistent with FY 2024. Turning to slide 19, in respect of capital management, Propel has available funding capacity of approximately AUD 143 million. The company remained comfortably in compliance with its debt covenants, reporting a net leverage ratio of 2.1 times against a covenant limit of five times. Propel declared fully franked dividends of AUD 0.144 per share in connection with FY 2025, noting that the company expanded its share capital by circa 17% in the prior year. I'll now hand over to Fraser, who will cover industry trends and acquisitions.
Thank you, Lilli, and good morning, everyone. Some of you may be familiar with the graphs on slide 21, which show that the number of deaths is forecast to both increase and accelerate in the countries in which Propel has operations, namely Australia and New Zealand. Death volumes are the most significant driver of revenue in the death care industry. In Australia, death volumes grew by 1.2% per annum between 1990 and 2024, and the ABFs forecast that they will increase by 2.8% per annum from 2025 to 2035 and 2.4% per annum from 2036 to 2045. Whereas in New Zealand, death volumes grew by 1% per annum between 1990 and 2024, and Stats NZ forecast that they will increase by 1.9% per annum from 2025 to 2035 and 1.8% per annum from 2036 to 2045. 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. The funeral industry is highly fragmented in both Australia and New Zealand, with Propel the second largest in both countries. Slide 22 shows how Propel's estimated market share in Australia has grown in the last nine calendar years, from circa 1% in 2015 to circa 9% in 2024. However, it is worth noting that notwithstanding that significant increase, circa 70% of the market in Australia is still owned by entities other than Propel and the largest operator. This dynamic is not dissimilar to the New Zealand market, where the majority of funeral home operators remain independent. Turning to slide 23, Propel remains focused on executing its core strategy of acquiring assets and social infrastructure which operate in the death care industry.
Since its IPO in November 2017, Propel has committed approximately AUD 302 million in acquisitions, including AUD 13 million on three acquisitions in FY 2025. Moving forward, Propel will continue to explore other potential acquisition opportunities, but the timing of any future acquisitions, as you would appreciate, remains uncertain. I'll now hand back to Albin.
Thanks, Fraser, and thank you, Lilli. As you can see from our presentation today, Propel delivered growth in key financial and operating metrics in FY 2025. The company operates in what is a stable, highly fragmented, and essential service industry, with assets and infrastructure that are difficult to replicate and stands to benefit from favorable demographic tailwinds. Propel is well funded to continue its acquisition-led growth strategy, and with the management team and non-executive directors who together own a substantial stake in the company, this ensures a strong alignment with fellow shareholders. As I flagged earlier, shareholders who participated in Propel's IPO have benefited from significant shareholder value creation through share price accretion and dividends, and we thank them for their continued support. In summary, Propel has a strong track record and a defensive market position in a favorable sector thematic and is well funded.
In terms of the outlook, demand for funeral services is not correlated to inflation, interest rates, or the economic cycle, and Propel continues to be well positioned to generate sustainable long-term growth and value creation. The company expects to benefit from favorable demographics in Australia and New Zealand, its strong funding position, and acquisitions completed to date, and other potential future acquisitions. In that regard, Propel has started FY 2026 positively. In July 2025, the company reported a record revenue month, which exceeded AUD 21.5 million and reflected seasonally stronger funeral volumes, average revenue per funeral growth of 2.7% over the PCP, and contributions from recent acquisitions. Finally, as announced in June, the internal executive leadership transition will take effect from Monday next week, with Lilli and Fraser becoming co-CEOs and Arash CFO. Once again, I congratulate Lilli, Fraser, and Arash, and I wish them every success.
Having co-founded this company 14 years ago, I'm obviously incredibly proud of what we have collectively achieved at Propel, and I'd like to take this opportunity to personally thank everyone involved in Propel's journey so far, especially our dedicated staff who have made the last 14 years the most fulfilling of my executive career. Of course, I'd also like to thank the board and our shareholders for their faith and support over many years, both prior to and since Propel's IPO back in 2017. With that being said, in conclusion, the three key takeaways from our presentation today are: one, FY 2025 was a record year for Propel. The company exceeded guidance and delivered growth in key financial and operating metrics, despite industry volume headwinds during the second half, which are expected to be temporary.
Two, Propel's funeral volumes have been seasonally stronger in recent months, and the company has made a positive start to FY 2026. With a strong balance sheet, Propel is well placed to continue consolidating what is a highly fragmented and essential service industry that stands to benefit from the aging population for decades to come. Three, the internal executive leadership transition has been smooth, and it's very much business as usual at Propel. With that, I'll hand back to the moderator to invite questions.
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 speakerphone, please pick up the handset and ask your question. Your first question comes from Chami Ratnapala with Bell Potter Securities. Please go ahead.
Thank you. Good morning, Albin, Lilli, and Fraser. Well done on a great result. A few questions from me, if that's okay. I think to start off with, good to see the revenue and EBITDA coming over the guidance. Within revenue, I'm noticing that cemetery and cremation and other revenues have grown much faster than funeral operations. Could you talk to what's driving this?
Oh, hi, Chami. It's Lilli. That's really driven in FY 2025 by the acquisition that we did around Decra, which operates in that space. We completed that acquisition in July last year, so we almost had the full period impact of that business. The normal price increases that you'd expect in the cremation services business throughout 2025 were also a factor. That was the main driver of the increase in that period, or sorry, I should say that sector over revenue from funeral operations.
Perfect. Thanks, Lilli. Maybe on the same point, there is a slightly different seasonality in the gross margins within first half and second half. Could you talk to that as well?
I think that just relates to the same point, Chami, around acquisitions. It wasn't overly material, but that does relate to acquisitions as well.
Perfect. Looking to FY 2026, good to see July, with that absolute revenue figure given, seems like it's comping much stronger over the PCP. How do we frame FY 2026? Comps do get better over the year. Also, on the margin expansion, given that there's limited dilution from acquisitions this time around, could you talk to both?
Yeah, I think you're absolutely right, Chami. From a margin, sorry, from a comping perspective, Q1 was definitely the strongest comp last year. You may remember in Q1, we called out that the Australian funeral volumes were materially higher than the PCP being in 2024. The comps do get easier as we sort of cycle through FY 2026, particularly in the second half, given we've called out that 3% contraction in the second half. In terms of the margin outlook, I guess, you know, we've delivered over a very long period of time, and you're well aware of this, of margins just over the mid-25s, Chami. That's been in periods where we've had, you know, organic volume growth and obviously organic volume contraction. There are some minor headwinds to that, as you point out.
Some of the acquisitions that we've done in the last 18 - 24 months are trading at a lower margin, and some of those come from New Zealand. There's obviously the impacts of the executive realm that we announced early in the year as well. In terms of guiding to the margin for 2026, it's around the mid-25s or slightly above if those volumes return to long-term trends.
Perfect. Thank you very much. I'll join back in the queue.
Thank you. Your next question comes from Sophia Mulligan with Macquarie. Please go ahead.
Hi, guys. We've got a deletion from your last result, Albin, and your first result as co-CEOs of Lilli and Fraser. I just have a couple of questions, if that's okay. Firstly, on the acquisition pipeline, I was hoping maybe Fraser could give a little bit of color on the health of the pipeline and the size of the deals potentially in it.
Hi, Sophia. Yeah, I mean, I think obviously FY 2025 was a quieter year, but I think off the back of a record year in FY 2024, where you'll remember we deployed close to AUD 100 million of capital. When I say quieter then, I mean in terms of announced transactions. That doesn't mean that the team weren't very busy on potential acquisitions. If you recall, there were two in the first half and one in this half, which were all sizable, didn't consummate for various reasons, but are still very much in the pipeline. The pipeline itself remains healthy, both in terms of those existing, those three sizable transactions that I've talked about, but a number of other ones. We remain confident in that pipeline and hope to be able to announce some of those over the course of the next 12 months.
That's great. Lilli, in terms of thinking of a bridge into FY 2026 in both revenue and EBITDA terms, the contribution, I guess, from acquisitions you see will be lower, given Fraser's point that there were less acquisitions completed last year. How should we think about the contribution from inorganic and organic growth in 2026?
I guess there's two sort of key components, Sophia, to the organic piece, which is obviously volume and pricing. From a volume perspective, as I said earlier, we're comping a strong PCP in the first quarter, and then those comps get easier beyond that, so second, third, and fourth quarter. It's also important to point out that there's been an unusual period of volatility in funeral volumes over the last few years, and I know you're well aware of that, at least from an industry point of view and from our volumes. We do kind of feel like there is, or has been, a period of rebasing, and volumes will revert to those long-term trends in the coming period, particularly given the first of the baby generation, i.e., those born within 1946 and beyond, are at the cusp of them reaching the average age of death.
I think that from a volume perspective. From a pricing perspective, I think we've been very clear. I think our materials from FY 2015 talk about slightly above inflation growth in average revenue per funeral over the 10-year period now. Fraser, myself, and Arash don't see any change in that sort of inflation or slightly above inflation growth in average revenue per funeral in 2026. I think you're right in terms of acquisitions. In terms of the ones that we did in 2025, Decra was obviously done at the start of the financial year, so a large part of that was in FY 2025. There were two smaller acquisitions that we did in the second half. As Fraser said, we're working on a number of opportunities at the moment, and that strategy was no change to that strategy from our perspective.
That's great. Fraser, just one last one on the July number that you spoke to. I guess, does that mean July was the only period in 2026 that's getting the annualization of Decra?
Just repeat the question, Sophia. Sorry.
With the July trading update, the revenue number you gave, is July the only period in 2026 that's getting the annualization of Decra?
Yes.
Great. Awesome. Thank you so much. Have a great day, both.
Thanks, Sophia.
Thank you. Your next question comes from the line of Amanda Kelly with Barrenjoey. Please go ahead.
Hi, team. Congrats on the result. I'm just helping Ari out today, so a couple from me, if all right. I guess firstly, in July 2025, if you could just share what the actual year-on-year revenue growth is.
Hi, it's Albin here. Thanks for your question. We haven't disclosed that year-on-year growth, but we have disclosed that July was a record month with revenue exceeding AUD 21.5 million.
Thank you. Is it fair to annualize the July 2025 revenue for FY 2026, given the seasonality? How should we be looking to put that July revenue figure into context across the year?
Yeah, the short answer is no. It wouldn't be fair to annualize the July revenue that we've disclosed. I would caution against annualizing one month's revenue, and, you know, a month that is traditionally seasonally stronger. I think you just need to be a little careful in doing that.
Amanda, maybe just to add to that, Albin, the company typically provides a Q1 trading update at its AGM. I think you get more meaningful data over a quarter rather than one month. I think that's important to remember as well.
Okay. I guess just lastly, does your comment imply that July 2025 organic funeral volumes are up quite substantially year-over-year?
No, I mean, I don't think we've made any comment about organic volumes, and I don't think you should read anything negative or positive into that. I think, forgive us for being a little cautious, we just have seen some quite significant swings, particularly during the second half of FY 2025, from month to month. Whilst it's been very encouraging start to FY 2026, we're just a little cautious to provide granular information about one month because I think the temptation will be for market participants to annualize one month's data. I think that, as I said in response to your prior question, that would lead to potentially incorrect conclusions or forecasts.
Thank you.
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. You may press star one on your telephone and wait for your name to be announced. Since there are no phone questions at this time, that concludes our conference for today. Thank you.