PFP Signed Sale Agreements With Multiple Vendors For Cedarwood And Kaitawa Crematorium Acquisition

PFP

Propel Funeral Partners Limited (ASX: PFP) is a company which is a provider of death care services, announced that it was successful in entering into the conditional sale agreements with multiple vendors in New Zealand. The deal includes the acquisition of the businesses, assets and a freehold property that are associated with the Waikanae Funeral Home and the Kaitawa Crematorium located in Waikanae which is approximately 60km north of Wellington as well as Howard & Gannon Funerals which lies in the coastal city of Napier.

The last financial year reported that the business generated a revenue of NZ$2.7 million from approximately 300 funerals during the period. The company’s projected transaction will include Cedarwood and Kaitawa Crematorium. Cedarwood spreads in the area of 3,057m2 and is a freehold funeral home with 200 seat chapel, a refreshment lounge, several private viewing areas, mortuary and preparation facilities, administrative offices and car parking.  

The Kaitawa Crematorium is a leasehold cremation facility situated in the Waikanae Cemetery.

After the completion of the transaction, PFP will be paying NZ$6.40 million. The company will spend another NZ$0.69 million in cash in case of certain achievement of financial milestone during the three years after the execution of the transaction.

Albin Kurti who is the managing director of the Propel Funeral Partners Limited stated that the acquisition made by the company would allow it to enter into two new regions where there was no presence of PFP. By entering into these two regions, the company expects that their business will be generating an increased annual revenue by approximately 2.5%.

After the completion of the transaction, PFP would pay A$10.3 million from its cash reserves. The company has a debt facility of $50 million which remains undrawn and is available general corporate purposes such as acquisitions. The company expects the transaction to be completed by 30 June 2019 which will depend on the satisfaction of terms and conditions like confirmatory due diligence and relevant consents from third parties.

Since the inception of PFP on ASX, the stock has generated a negative performance of 14.55%. In last one year, the stock has generated a negative return of 16.57%. However, its YTD performance has been 12.57%.

As per the annual report of PFP for FY2018 which ended on 30 June 2018, the funeral volume was up by 67.0% in FY2018. As a result, there was also an increase in revenue by 75.5%. The average revenue per funeral was up by 5.5% in FY2018. The operating EBITDA got increased by 75% in FY2018 to $21.5 million. The operating NPAT was up by 124.7% to $12.3 million.

By the end of the financial year on 30 June 2018, PFP had net cash and cash equivalent of $28.259 million.

At the closure of the trading session on 4 February 2019, the closing price of the stock was A$2.860 which was up by 1.418% as compared to its previous trading day’s closing price. The stock had the market capitalization of A$276.82 million and approximately 98.16 million outstanding shares.


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