Propel Funeral Partners : 2021 AGM - Addresses and Presentation

For personal use only

ASX

ANNOUNCEMENT

18 November 2021

2021 Annual General Meeting

Attached are the addresses and accompanying presentation to be delivered by the Chairman and Managing Director at the 2021 Annual General Meeting of Propel Funeral Partners Limited (Company) (AGM) commencing today at 9.30am (Sydney time).

Please note that:

• slide 24 of the presentation includes commentary on Q1 FY22 trading and general comments regarding the Company's outlook; and
• slide 7 of the presentation makes reference to the Company's non-underwritten share purchase plan (SPP), which closed at 5.00pm (Sydney time) yesterday and in relation to which application amounts exceeded the intended raising amount of
  $10 million. The Company will release final details regarding the SPP, including whether there will be a scale back or whether over subscriptions will be accepted, to shareholders via an ASX announcement in the coming days.

-END-

About Propel:

Propel is listed on the Australian Securities Exchange and is the second largest private provider of death care services in Australia and New Zealand. Propel currently operates from 138 locations, including 32 cremation facilities and 9 cemeteries.

For further information, please contact:

Lilli Gladstone Head of Finance + 612 8514 8644

Authority to release:

This document has been authorised for release by the Company's board of directors.

Important notice:

This announcement may contain forward-looking statements, which include all matters that are not historical facts. Without limitation, indications of, and guidance on, future earnings and financial position and performance are examples of forward-looking statements. Forward-looking statements, including projections or guidance on future earnings and estimates, are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. No representation, warranty or assurance (express or implied) is given or made in relation to any forward-looking statement by any person (including Propel). In particular, no representation, warranty or assurance (express or implied) is given that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur. Actual results, performance or achievement may vary materially from any projections and forward-looking statements and the assumptions on which those statements are based.

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Propel Funeral Partners Limited (ACN 616 909 310), Level 18.03, 135 King Street, Sydney NSW 2000

t 61 2 8514 8600 f 61 2 8514 8666 w propelfuneralpartners.com.au

For personal use only

Propel Funeral Partners Limited - Chairman's and Managing Director's Addresses

PROPEL FUNERAL PARTNERS LIMITED

Thursday, 18 November 2021 (9.30am)

2021 Annual General Meeting

Address from the Chairman, Brian Scullin:

Slide 3

Good morning everyone.

I'm Brian Scullin, Independent Chairman and Non-Executive Director of Propel Funeral Partners Limited.

On behalf of the Board, it is my pleasure to welcome you to Propel's 2021 Annual General Meeting, which is being conducted through a virtual meeting platform provided by Link, our share registrar.

In light of travel and other restrictions in place as a result of the COVID-19 pandemic, the Company's board of directors determined it prudent for the 2021 AGM to be held online only.

We hope that by doing so, we will assist in further curbing the spread of the COVID-19 virus and enable greater participation and engagement among our shareholders.

One of the benefits of a virtual meeting is that it allows shareholders to attend and participate no matter where they live.

Let me thank you in advance for your patience as we go through the meeting. We will try to ensure that every shareholder who wants to have an opportunity to participate in the meeting, can participate, equivalent to the one they would have had if attending in person.

If we experience any technical issues today, a short recess or an adjournment may be required.

I have confirmed with the Company Secretary that we have a quorum present and the meeting has been validly constituted, so I declare the meeting open.

The Notice of Meeting was duly given and the meeting has been properly convened. We will turn to the resolutions towards the end of the meeting.

Slide 4

With me online and joining from Sydney and Hobart are your other independent Non-Executive Directors, Naomi Edwards and Jonathan Trollip, as well as Executive Director, Fraser Henderson and Managing Director, Albin Kurti.

Fraser and I present ourselves for re-election at today's Meeting.

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For personal use only

Propel Funeral Partners Limited - Chairman's and Managing Director's Addresses

Also online are:

• Lilli Gladstone, Propel's Chief Financial Officer;
• our audit partner from Nexia, Lester Wills, who is here to address any questions you may have of him; and
• representatives from Link and Mont Lawyers.

Slide 5

After my introduction, Albin will provide some comments on last year's financial results and trading in Q1 of FY22, among other matters. The formal matters of the Meeting will then be addressed and you will have the opportunity to raise questions. The online platform is now open for shareholders' questions. Shareholders can click on the 'Ask Question' button, type their question and click submit or, for those shareholders who have obtained their pin, can ask questions via the phone number provided to you. Please note we have sought to address questions received prior to the meeting, during the presentations.

As set out in the Notice of Meeting, in terms of the formal matters of the Meeting, all resolutions will be decided on a poll. In order to provide everyone with an opportunity to vote and in case anyone cannot stay for the whole Meeting, I now formally declare the poll open on all items, and the poll will remain open until I declare it closed. Please note that only shareholders, proxy holders and shareholder company representatives may vote on today's resolutions. Shareholders can cast their vote using the electronic voting card. Shareholders attending the meeting online will be able to cast their vote using the electronic voting card received when online registration was validated.

Slide 6

The table on the screen shows the votes received prior to the cut off time in relation to the resolutions requiring a shareholder vote at today's meeting. As you will see, there has been overwhelming support for each of the resolutions. I will come back to the resolutions later.

Slide 7

COVID-19 continued to present significant challenges for the funeral industry during FY21, including Propel's staff in Australia and New Zealand. On behalf of the Board, I would firstly like to acknowledge and thank all of our staff for continuing to provide caring funeral and related services throughout FY21, in often challenging circumstances.

We have endeavoured to keep you, our shareholders, appropriately informed about COVID-19 impacts on the Company's trading, through various ASX announcements since the start of the pandemic.

Despite the challenges in FY21, I am pleased to report that Propel continued its track record of delivering revenue and earnings growth. The Company's acquisition led growth strategy and diversification in providing essential funeral and related services across seven states and

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For personal use only

Propel Funeral Partners Limited - Chairman's and Managing Director's Addresses

territories of Australia and in New Zealand, including regional and metropolitan markets, delivered growth and resilience in earnings and operating cash flows in FY21, which Albin will discuss in more detail shortly.

The Board elected to reward shareholders by declaring total dividends of 11.75 cents per share fully franked in connection with FY21, reflecting a payout ratio of 81% of Distributable Earnings.

As shareholders would be aware, throughout FY21, the Company was externally managed by Propel Investments Pty Ltd (who I will refer to as the Manager), under a management agreement dated 11 September 2017.

On 31 May 2021, the Company announced that, following negotiations initiated and led by myself and Propel's two other independent non executive directors, it had entered into an Implementation Agreement with the Manager to give effect to an internalisation of key senior management functions of the Company.

On 26 July 2021, the Company announced that, following receipt of overwhelming shareholder approval, the Management Agreement was terminated, resulting in, among other things, the payment of a $15.0 million termination fee to the Manager (settled 50% in cash and 50% in Propel shares) and Albin, Fraser and Lilli becoming employees of the Group.

The internalisation of management has aligned the Company with more standard management structures for ASX listed operating entities, which is expected to increase investor participation, provide corporate governance and financial benefits, while ensuring continuity of the Company's strategy, its Board and management. In that regard, it has been encouraging to see the Company's share price and liquidity increase since the announcement of the management internalisation.

Subsequent to year end, Propel expanded its senior debt facilities to $200 million and also extended the debt maturity date. Obviously, there is a balance between prudently taking advantage of the low interest rate environment and high liquidity in debt markets, and not over stretching the balance sheet.

As you would expect, the Board is mindful to strike the right capital structure to ensure the Company is appropriately funded, so that Propel can continue to capitalise on growth opportunities, as and when they materialise. With that in mind, last month Propel successfully completed a circa $50 million equity raising via a placement of approximately 12.2 million new ordinary shares to existing and new institutional shareholders, at an issue price of $4.10 per share. I thank our existing, and welcome our new, institutional investors who participated in the Placement.

In addition to the Placement, Propel has offered all eligible existing shareholders the opportunity to apply for new Propel shares through a share purchase plan or SPP.

The offer period under the SPP closed at 5.00pm yesterday and I am pleased to announce that applications received under the SPP have exceeded the intended raising amount of $10 million.

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For personal use only

Propel Funeral Partners Limited - Chairman's and Managing Director's Addresses

I thank all shareholders who submitted applications under the SPP for their ongoing support of Propel.

After today's AGM and following relevant confirmations from the Company's share registry provider, the Company will release final details regarding the SPP to shareholders via an ASX announcement in the coming days.

Since listing on the ASX in November 2017 with an IPO issue price of $2.70, the Company has paid fully franked dividends totalling 39.65 cents per share, or circa 57 cents per share on a grossed up basis. At yesterday's closing share price of $4.25, this equates to total shareholder value accretion of approximately $215 million since the IPO, before tax.

Propel remains focussed on a clearly defined growth strategy to acquire social infrastructure and assets which operate within the death care industry in Australia and New Zealand such as:

• private funeral home operators;
• funeral related properties and infrastructure; and
• cemeteries and crematoria.

This strategy is consistent with what was outlined in the Company's Prospectus prepared in connection with its IPO, approximately 4 years ago.

Demand for death care services is expected to grow in Australia and New Zealand because of increasing death volumes due to population growth and ageing of the "baby boomers".

The death care industry is highly fragmented and the Company believes there is significant opportunity for further consolidation in Australia and New Zealand. Propel is well positioned to capitalise on acquisition opportunities.

On behalf of the Board, I would like to thank the Propel management team and all our staff for their hard work and dedication. I also express my gratitude to my fellow directors. I thank you all for your considerable efforts.

Finally, I would like to thank our shareholders for your ongoing support. I look forward to hopefully being able to meet in person at future AGMs.

I now invite Albin to take you through last year's results and other matters which I am sure will be of interest to you. Following Albin's presentation, we will then return to the formal part of the business - matters requiring resolution, which are outlined in the Notice of Meeting.

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