Funeral Service Providers On The Charts – InvoCare and Propel Funeral Partners

Funeral industry provides services for the dead and their families. The services provided by these firms include burial homes, burial and memorial products, pre-planned burial services and provision of a chapel for the funeral. Funeral service providers offer complete guidance and support with funeral planning.

Goals of Funeral industry

• Support in Funeral Planning

Players in the funeral industry not only offer services to terminally ill patients and their families in making plans for the death but also provide advisory services on several options when the person dies. In case, the person has not made funeral plans and dies, these service providers advise the family on different arrangements such as securing licenses and burial permits.

• Better and Planned Services

The main goal of these companies is to make all the arrangements according to the bereaved family. Nobody wants any disruption and hustle during such time. There is a rising tendency towards performing cremation easily and inexpensively. Better and planned services provide the suffered family with a simple way to execute the process in a hassle-free manner during a tough time. These companies are also teaching the people an environment-friendly method of decomposition.

• Generating Profit

Any business exists to generate profit and the same concept is applied to funeral companies. It can be said that funeral business is perpetually sustainable, as people are always dying. However, to stay relevant in such a competitive environment, funeral companies also need to differentiate themselves from competitors by providing some add on services to their clients.

Funeral services are becoming expensive and companies are offering a comprehensive range of services in a most simplified manner to generate handsome profits. The industry has a huge growth potential, which is evident from the plans of several big firms to acquire traditional family owned businesses operating in the related segment.

In this article, we are discussing two ASX listed players that are providing funeral and other related services.

InvoCare Limited (ASX: IVC)

InvoCare Limited is a leading funeral services provider. The company provides cemetery, crematoria and other related services. In countries including Australia, New Zealand and Singapore, the company operates 290 funeral locations and sixteen cemeteries and crematoria. IVC has a staff of nearly 1,800 people across the globe, while its annual turnover stands at ~ $400 million.

Change in Directors’ Interest

On 9 October 2019, the company announced a change in interest of one of its directors (Martin Alistair John Earp) with effect from 4 October 2019. The number of securities held by the director post change was 21,957 direct ordinary shares, 5,804 indirect ordinary shares (unvested), 714 indirect ordinary shares (vested), 42,997 performance rights (unvested), 53,438 options (vested) and 670,063 options (unvested).

Additionally, on 4 October 2019, the company unveiled a change in the interest of director (Bart Vogel) with effect from 4 October 2019. The number of securities held by the director after the announcement was 16,129 ordinary shares.

Dividend Reinvestment Plan (DRP) - On 24 September 2019, InvoCare declared a Dividend Reinvestment Plan share price of $13.85 for the 2019 interim, fully franked dividend, which was paid on 4 October 2019. The DRP has not been underwritten.

Net Profit Soars 97 Per Cent in H119

On 15 August 2019, the company announced half yearly results for the period ended 30 June 2019. Below are the few highlights from the announcement.

• On a consolidated basis, operating sales revenue increased by 7 per cent to $241.5 million for the six months to June 2019 compared to the same period of previous year.
• Operating EBITDA of the company grew by 16.9 per cent to $62.8 million compared to PCP.
• Operating earnings after tax decreased by 5.2 per cent to $22.3 million.
• Net profit of the company increased by 97 per cent to $41.1 million
• The company declared a fully franked dividend of 17.5 cents per share for the period of six months.
• Cash and cash equivalents of the company at the end of H119 stood at $12.1 million.

Regional Expansion

• Total acquisitions since January 2018 surpass 4,000 funeral cases and circa $27 million in revenue per annum.
• Recent acquisitions have been successfully transferred into the InvoCare ownership.
• The company has a strong and active pipeline of acquisition opportunities and Invocare will utilise national brands in greenfield developments.
• Local leaders are providing the company with valuable insights and learnings into the regional markets.

Stock Performance

The stock of IVC was trading at $13.540 on ASX on 24 October 2019 (AEST 02:09 PM), down by 0.733 per cent from its previous closing price. The company has a market cap of $1.6 billion and approx. 117.18 million outstanding shares. The 52-week high and low value of the stock is at $16.770 and $10.100, respectively. The stock has generated a negative return of 11.66 per cent in the last six months and a positive return of 33.33 per cent on a year-to-date basis

Propel Funeral Partners Limited (ASX: PFP)

Propel Funeral Partners Limited owns funeral homes, crematoria, cemeteries and related assets in Australia and New Zealand. The company provides succession solutions for vendors, and most of its funeral homes are operating since late 1800s and early 1900s. Proper Funeral is the 2nd largest provider of death care services in ANZ and is officially listed on the Australian Stock Exchange since 2017.

PFP is scheduled to hold its 2019 annual general meeting on 19 November 2019 in Sydney, New South Wales. Following resolutions will be discussed during the meeting.

• Resolution to re-elect Naomi Edwards as a director
• Resolution to adopt the remuneration report
• Resolution relating to financial assistance
• Resolution relating to the ratification of the issuance of ordinary shares (Morleys)
• Resolution relating to the proposed issuance of ordinary shares (Dils Group)

New Zealand Acquisition

On 18 October 2019, Propel Funeral announced to have executed a conditional sales agreement to acquire Graham’s Funeral Services and four freehold properties in North Island, New Zealand.

The purchase price payable on completion of the transactions with include approximately NZ$7.28 million in cash and 227,510 ordinary shares to be issued at $3.07 (issue price) each, which would be subject to escrow arrangements for three years. In addition, up to NZ$0.50 million in cash will be payable if certain milestones are attained during the three-year period following the proposed transaction completion.

Graham’s Funeral Services is expected to increase Propel’s annualised revenue by circa 2.1 per cent. The completion of the proposed transaction is expected to occur in Q2 FY20, following satisfaction of conditions such as confirmatory due diligence.

FY19 Revenue Up 17.6 Per Cent

On 26 August 2019, the company announced FY19 results for the period ended 30 June 2019.

• Revenue increased by 17.6 per cent to $95.1 million compared to the previous corresponding period (PCP)
• Operating EBITDA grew by 10.6 per cent to $23.8 million compared to PCP
• Cash in hand stood at ~$8.0 million as at 26 August 2019
• Proper performed 11,304 funerals in FY19, representing an increase of 11.8% year-on-year

Stock Performance

The stock of PFP was trading at $3.060 on ASX on 24 October 2019 (AEST 02:10 PM), up by 0.328 per cent from its previous closing price. The company has a market cap of $300.45 million and approx. 98.51 million outstanding shares. The 52-week high and low value of the stock is at $3.340 and $2.420, respectively. The stock has generated a negative return of 2.24 per cent in the last six months and a positive return of 21.76 per cent on a year-to-date basis

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