Propel Funeral Partners Limited (PFP) Earnings Call Transcript & Summary

Good morning everyone. I am 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. 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. 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. After my introduction, Albin will provide some comments on last year's financial results and trading in Q1 of FY '22, 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. [Operator Instructions] 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. 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. COVID-19 continued to present significant challenges for the funeral industry during FY '21, 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 FY '21, in often challenging circumstances. We have endeavored 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 FY '21, 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 7 states and territories of Australia and in New Zealand, including regional and metropolitan markets, delivered growth and resilience in earnings and operating cash flows in FY '21, and Albin will discuss that in more detail shortly. The Board elected to reward shareholders by declaring total dividends of $0.1175 per share, fully franked, in connection with FY '21, reflecting a payout ratio of 81% of distributable earnings. Our shareholders would be aware, throughout FY '21, the company was externally managed by Propel Investments Pty Ltd, who I'll refer to as the manager, under a management agreement dated 11th September 2017. On 31 May '21, the company announced that following negotiations initiated and led by myself and our 2 other independent non-exec directors, we entered into an implementation agreement with the manager to give effect to an internalization of key senior management functions of the company. On 26 July '21, the company announced that following receipt of overwhelming shareholder approval, the management agreement was terminated, resulting in, among other things, the payment of $15 million termination fee to the manager, settled 50% in cash and 50% in Propel shares. And Albin, Fraser and Lilli became employees of the group. The internalization of management has aligned the company with more standard management structures for ASX-listed operating entities. And it's 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 internalization. Subsequent to year-end, Propel expanded its senior debt facilities to $200 million and also extended the debt maturity date. Obviously, there's a balance between prudently taking advantage of the low interest rate environment and high liquidity in debt markets and not overstretching 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 capitalize on growth opportunities as and when they materialize. With that in mind, last month, Propel successfully completed circa $50 million equity raising via 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 5:00 p.m. yesterday, and I'm pleased to announce that applications received under SPP have exceeded the intended raising amount of $10 million. 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 totaling $0.3965 per share or circa $0.57 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 focused 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 symmetries 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 aging 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 capitalize on such acquisition opportunities. On behalf of the Board, I'd 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'd like to thank our shareholders for your ongoing support. I hope we can look forward to being able to meet in person at future AGMs. I'll now invite Albin to take you through last year's results and some other matters which, I'm sure, will give of interest to you. Following his presentation, we'll then return to the formal part of the business, matters requiring resolution, which were outlined in the Notice of Meeting. Albin?

Thanks, Brian. Good morning, everyone. Thanks for joining. Although COVID-19-related restrictions are easing, and we have reasons to be cautiously optimistic about the future, I would like to acknowledge and express my sympathies to bereaved client families, many of whom have farewelled loved ones in very challenging circumstances during the past 18 months, especially in lockdown areas where strict funeral attendee limits and travel restrictions have applied. Having to limit and choose who can attend a funeral has been extremely distressing, with many families significantly constrained and unable to grieve in a way that they ordinarily would, surrounded and supported by family and friends. As you can imagine, this has placed additional pressure on families and our staff. So I echo Brian's sentiments and thank all of Propel's dedicated staff in Australia and New Zealand for their hard work, professionalism, flexibility and commitment to providing essential and caring services to their communities, despite the challenges of COVID-19. In terms of today's presentation, I'll start with a brief recap of FY '21. I'll then provide an overview of Propel's business, touch on COVID-19 impacts and responses, industry tailwinds, acquisitions and capital management before concluding with the trading update and our outlook. FY '21 was another record year for Propel. Revenue increased 8.7% to $120.4 million on the back of a 4.6% increase in funeral volumes, including contributions from acquisitions, with average revenue per funeral up 4.3%. Propel continued to grow earnings with operating EBITDA up 11.9% to $36.3 million and operating NPAT up 7.6% to $15.3 million. Cash flow conversion remained strong at approximately 102%, which is pleasing. From a capital management perspective, as Brian mentioned, total dividends for the year were $0.1175 per share, up 17.5% on the prior year. In August, the company announced that it expanded its senior debt facilities by $50 million to $200 million, a strong vote of confidence from our debt financier, Westpac. Furthermore, and importantly, the debt maturity date was extended to October 2024., the cost of borrowing was reduced to circa 2%, and a key covenant limit was increased. And in October, the company successfully raised approximately $50 million in equity via a placement of new shares to new and existing institutional shareholders. Including the target proceeds from the SPP, Propel's pro forma net leverage ratio is circa 1.1x, and pro forma funding capacity is approximately $150 million, which will support Propel's future growth initiatives, including acquisitions. In terms of growth, Propel added 6 locations during FY '21 and has added 2 locations since year-end, bringing its total network to 138 locations currently. And management has been focused on executing Propel's acquisition-led growth strategy, committing over $140 million on acquisitions since the company's IPO. In terms of our outlook, despite COVID-19 impacts, the financial resilience and growth demonstrated by Propel in FY '21 has continued into the start of FY '22, which I'll discuss towards the end of the presentation. In terms of COVID-19 impacts, strict funeral attendee limits in lockdown areas of Australia and New Zealand during FY '21 affected the company's ability to offer a full range of services to client families and temporarily resulted in a higher mix of lower-value funerals performed across Propel's network. However, as can be seen from the chart at the top of this slide, unlike the widespread impacts in the final quarter of FY '20, in FY '21, average revenue per funeral impacts were generally isolated to COVID-19 hotspot areas that were in temporary lockdown and average revenue per funeral growth across Propel's network returned to pre-COVID-19 levels, which is encouraging. Funeral volumes were also impacted. During FY '21, particularly in the first half, death volumes were below long-term trends in key markets in which Propel operates. For example, total registered deaths in New South Wales and Queensland declined 4.2% compared to the prior year. Social distancing measures, travel restrictions, an increased focus on personal hygiene and effective flu vaccinations contributed to unusually benign flu seasons in 2020 and 2021. And as illustrated in the chart at the bottom right, reported flu cases in Australia was circa 99% below the prior 5-year average to 2019, which is expected to result in a deferral of death volumes into future periods. This slide sets out some of our responses to COVID-19 and how we, our staff and our client families have had to adapt. Our focus has been on people safety, essential service continuity and financial resilience. I won't go through each point listed on this slide, but the measures implemented ranged from reducing and rearranging seating capacity in our chapels; limiting attendance and increasing the scheduled time between services; increased online streaming of funerals, changing the way funerals are arranged; controlling operating costs, staff working from home, where feasible; and accessing government subsidies, where eligible, and enabling headcount to be maintained. With the support of our dedicated staff and the understanding of our client families, Propel is focused on continuing to trade effectively through COVID-19 disruptions, as they occur. This slide summarizes the management internalization which was completed in late July 2021. Shareholders vote overwhelmingly in favor of a proposal to internalize the senior management functions of the company with the 2 shareholder resolutions being carried with over 98% of votes in favor. In summary, the management internalization involved termination of the management agreement; a $15 million termination fee paid to the manager, which was settled 50% in cash and 50% in shares; Lilli, Fraser and I are becoming employees; the transfer of intellectual property to the company; changes to the constitution and escrow arrangements relating to approximately 14.7 million Propel shares. As Brian mentioned, the management internalization 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 terms of the business overview, this slide illustrates how Propel's network has evolved over the past 8 years. We started with one funeral home in Queensland, and today, we operate from 138 locations across Australia and New Zealand, including 32 cremation facilities and 9 cemeteries. Of those 138 locations, the company owns 76 of them, which are currently held at cost on the balance sheet for approximately $129 million. This slide 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, Millingtons has been operating in and around Hobart for over 100 years. And in New Zealand, Davis Funerals has operated in and around Auckland since 1875. The green dotted lines show the various brands relating to acquisitions completed or announced during and since FY '21. These brands are an important part of the goodwill of each business we acquire. As you can see on the left of this slide, the company performed over 13,900 funerals in FY '21, up 4.6%. The chart on the right shows the Propel generated revenue of $120.4 million in FY '21, up 8.7%. In terms of earnings growth, operating EBITDA was $36.3 million in FY '21, a more than tenfold increase since FY '15 and up 11.9% on the prior year; and operating NPAT was $15.3 million, up 7.6%. Propel's average revenue per funeral since FY '14 has grown at a compound annual growth rate of 2.7%. In FY '21, average revenue per funeral was up 4.3% on FY '20 and up 2.8% on the pre-COVID-19 period. Propel's cash conversion has averaged circa 99% during the last 7 years. In FY '21, cash conversion remained strong at approximately 102%, which is pleasing, particularly given the continued growth in operating cash flow. Cash conversion continues to be a key focus. I'll now touch on industry trends, acquisitions and capital management. These charts show that the number of deaths in Australia and New Zealand is forecast to both increase and accelerate according to the Australian Bureau of Statistics and Stats NZ. I won't go through the specific growth rates, but the 2 observations I'd make are, firstly, few industries have the certainty of this tailwind profile; and secondly, death volume growth is not linear and it can fluctuate over shorter time horizons, from week-to-week, quarter-to-quarter and from year to year. The industry remains highly fragmented in Australia and in New Zealand, with Propel the second largest in both countries. In the last 3 calendar years, Propel's estimated market share in Australia has increased more than fivefold from circa 1.2% in 2015 to circa 7% in 2020. Notwithstanding this significant increase, approximately 70% of the market is still owned by independent operators. Since its IPO 4 years ago, Propel has committed over $140 million on acquisitions, which are geographically spread across Australia and in FY '21, the company deployed approximately $30 million on 3 acquisitions, comprising Dils Group in Auckland, Mid West Funerals in Western Australia and Pets RIP in Queensland. Subsequent to year-end, in September 2021, we announced the commitment of approximately $15 million in connection with 3 new acquisitions, facilitating Propel's entry into a new metropolitan market in Adelaide via Barry Funeral Directors and Glenelg Funerals and expansion in an existing metropolitan market in Auckland via State of Grace Funerals. Those acquisitions are expected to contribute positively to Propel's financial results during the remainder of FY '22 and beyond. Moving forward, the team remains in active discussions and continues to explore other potential acquisition opportunities, but the timing of any future acquisitions, as you would appreciate, remains uncertain. The Board regularly discusses capital management and the company's funding needs, particularly in light of its acquisition pipeline and the fact that in the last 4 financial years, Propel has committed over $140 million on acquisitions. As you can see from this slide, with the expansion of the company's senior debt facilities, recently completed placement and assuming the target amount is raised via the SPP, Propel is in a strong funding position with pro forma funding capacity of approximately $150 million. Moving to our outlook. Propel continues to be well positioned to generate sustainable long-term growth and value creation. We operate in a highly fragmented and essential service industry with assets and social infrastructure that are difficult to replicate, which stands to benefit from favorable demographic tailwinds over the long term. Although death volume growth is certain, unavoidable and predictable over the longer term, that growth is not linear and it fluctuates over time. In other words, death is certain but its timing is not. Historical experience suggests that the below-trend death volumes in 2020 should be temporary given prior period declines have rebounded quickly and the growing and aging population. I'm pleased to report that the financial growth and resilience demonstrated by Propel in FY '21 have continued into the start of FY '22. In the first quarter of FY '22, Propel generated revenue growth of approximately 13% on the prior corresponding period, or PCP; performed a record number of funerals with total funeral volume growth above 10% on the PCP, including comparable funeral volume growth above 5% on the PCP; experienced resilient average revenue per funeral in line with the PCP, notwithstanding the impacts of extended lockdowns and strict funeral attendee limits in New South Wales, Victoria and New Zealand during the quarter; achieved an operating EBITDA margin of approximately 28%; and maintained strong cash flow conversion. In terms of the company's financial results, we expect to benefit from death volumes reverting to long-term trends given the growing and aging population; the company's strong funding position; the acquisitions completed and announced during and since FY '21; and other potential future acquisitions. Thankfully, funeral attendee limits have eased significantly in recent weeks in New South Wales and Victoria, and we expect funeral restrictions in Auckland will continue to ease as vaccination rates increase. Our experience since the start of the pandemic has been that the financial impacts of strict funeral attendee limits have been temporary and average revenue per funeral has rebounded quickly as restrictions have eased. This not only reinforces the value that society places on physical attendance at a funeral service as a vital part of the grieving process, it also highlights the defensive nature and social infrastructure characteristics of Propel's network of funeral homes, cremation facilities and cemeteries. In conclusion, I think the 3 key takeaways from today's presentation are, one, FY '21 was another record year for Propel despite below-trend death volumes and COVID-19 impacts; two, Propel stands to benefit from death volumes reverting to long-term trends and, in that regard, following a resilient FY '21, Propel has started FY '22 with materially higher funeral volumes; and three, with a strong funding position, Propel remains well positioned to continue consolidating what remains a highly fragmented and essential service industry with favorable demographic tailwinds. Before I hand back to Brian, I'd like to quickly thank my fellow Board members for their guidance and support during and since FY '21; my colleagues, Lilli, Fraser and the small team at Propel's head office for their flexibility, hard work and dedication; and finally, our shareholders for their ongoing support. With that, I'll hand back to Brian to cover the formal matters of the meeting and obviously, happy to take questions during the Q&A session. Thank you. Brian?

So thanks, Albin. So ladies and gentlemen, we now come to the formal part of the business, matters requiring resolution, which were outlined in the Notice of Meeting. Before moving to the specific resolutions, I'd just note the following, the resolutions for consideration today may only be voted on by shareholders, proxy holders and shareholder company representatives. Shareholders have the opportunity to ask questions on each matter being put to shareholders either via the platform or for those that have obtained the relevant pin via the telephone. Other than resolution 6, the resolution set out in the Notice of Meeting are to be considered as an ordinary resolution and as such, to be passed, must be approved by a simple majority of the votes cast. There is no requirement for shareholders to vote on the first item of business, and resolution 6 is to be considered as a special resolution and as such, to be passed, must be approved by at least 75% of the votes cast. The poll on all items has already been opened and, as I said earlier, will remain open until I call the poll to a close. Please ensure that you vote now if you haven't already. The company's registry, Link Market Services Limited, is appointed to act as scrutineer and returning officer for the purpose of the polls. Any directed proxies that are not voted at the meeting will automatically default to the Chairman, and I'm required to vote those proxies as directed. Subject to any applicable voting restrictions, the Board recommends that shareholders vote in favor of each item of business that requires a vote. Any open proxies that have been received by the Chairman of the meeting or the directors will be voted in favor of each item. As I said earlier, votes received prior to the cutoff time in relation to the resolutions requiring a shareholder vote at today's meeting are overwhelmingly in favor of each resolution. I'll now introduce the items of business and the formal agenda of the meeting. The first item of business is to receive and consider the company's financial report, directors' report and auditor's report for the year ended 30 June 2021. I note there is no requirement for shareholders to approve those reports. At this time, I'd like to invite shareholders to ask questions or make comments regarding these reports. Please keep questions about specific resolutions until the time we consider that resolution. So is there any shareholder who would like to ask a question. So Fraser, are there any questions online?

No, Brian, there are no questions online for that resolution.

Okay. Thank you, Fraser. So we'll now move on to the next resolution. As the next item of business relates to my proposed reelection, I'll hand over to Jonathan Trollip who chairs our Remuneration and Nomination Committee. Please go ahead, Jonathan.

Thank you, Brian. The next item of business is resolution 2, being the reelection of Mr. Brian Scullin as a Director. Brian, as shareholders are well aware, is the independent Chairman of the company and also a member of the Audit and Risk Committee and a member of the Remuneration and Nomination Committee. Brian retires at this meeting and, being eligible, offers himself for reelection. Brian's credentials are detailed in the Notice of Meeting. Are there any questions in relation to resolution 2? Fraser, can you just confirm that we have not received any questions on this?

No questions online on that resolution, Jonathan.

Okay. Thank you, Fraser. Given there are no questions, I will now move on to the resolution. I now formally propose resolution 2, which is specified in the Notice of Meeting. I confirm that the directors, with Brian abstaining, unanimously recommend that shareholders vote in favor of this resolution. If you haven't already, please now select either for, against or abstain for resolution 2. [Voting]

Thank you. And I'll now hand back to Brian.

Thank you, Jonathan. The next item of business is resolution 3, which is the reelection of Mr. Fraser Henderson as a director. Fraser is an Executive Director of the company, is Head of M&A, our General Counsel and he's the Company Secretary of Propel. Fraser retires at this meeting and, being eligible, offers himself for reelection. Fraser's credentials are detailed in the Notice of Meeting. Are there any questions in relation to resolution 3? So Fraser, can you confirm whether you have received any questions online?

No, there are no question online on that resolution.

So I now formally propose resolution 3, which is as specified in the Notice of Meeting. I confirm that the directors, with Fraser abstaining, unanimously recommend that shareholders vote in favor of this resolution. If you haven't already, please now select either for, against or abstain for resolution 3. [Voting]

We now come to resolution 4, which is the nonbinding advisory vote on the adoption of the company's remuneration report. The remuneration report is included in Propel's 2021 annual report, which is available on our website. Are there any questions in relation to resolution 4? So Fraser, have you received any questions in relation to resolution 4 online?

No, Brian, there are no questions online on that resolutions.

Okay. So if there are no further questions, we'll move to the resolution. I now formally propose resolution 4, which is also specified in the Notice of Meeting. If you haven't already, please now select either for, against or abstain for resolution 4. [Voting]

We now move to resolution 5 regarding the proposed increase to the maximum total aggregate remuneration payable to the non-exec directors. So are there any questions in relation to resolution 5? So Fraser, have you received any questions online in relation to resolution 5?

None online for that resolution, Brian.

Okay. So if there are no further questions, I formally propose resolution 5, which is also specified in the Notice of Meeting. If you haven't already, please now select either for, against or abstain for resolution 5. I can confirm that the directors with the non-exec directors abstaining unanimously recommend the shareholder vote in favor of this resolution. [Voting]

So moving now to resolution 6 regarding the giving of financial assistance, which is a special resolution. Are there any questions in relation to resolution 6? Fraser, have you received any questions online in relation to resolution 6?

None online for that particular resolution.

Okay. So I now formally propose resolution 6, which is also specified in the Notice of Meeting. If you haven't already, please now select the for, against or abstain for resolution 6. I can confirm that the directors unanimously recommend that shareholders vote in favor of this resolution. [Voting]

Finally, we move to resolution 7 relating to the ratification of the issuance of ordinary shares in connection with the acquisition of Berry Funeral Directors. Are there any questions in relation to resolution 7? Fraser, have you received any questions online in relation to resolution 7?

No, Brian, nothing online for that particular resolution.

Okay. So if there are no further questions, we'll move on to the resolution. I now formally propose resolution 7, which is also specified in the Notice of Meeting. If you haven't already, please now select either for, against or abstain for resolution 7. I can confirm that the directors unanimously recommend that shareholders vote in favor of this resolution. Shareholders are reminded that they can submit their vote online now. Voting will close in 2 minutes. [Voting]

While the last of your finalize voting, we now move to the shareholders' question-and-answer session of this meeting. During this time, representatives of Link will count the votes with the intention to announce the results prior to the close of the meeting. Shareholders were invited to submit questions in advance of the meeting, and I thank those shareholders who took the time to do so. I believe, between us, Albin and I, have addressed the questions asked in advance already. It's my duty as Chairman to allow a reasonable opportunity for shareholders as a whole at the meeting to ask questions on my comments on the operations and management of the company; audit matters, noting that the company's auditor is present; the remuneration report; and other items of business before today's meeting. Is there any shareholder on the call who would like to ask a question? Fraser, as company secretary, can you please confirm whether there are any questions that have been submitted online, which remain unanswered?

Brian, there's one question from a shareholder, if I can read that out to you. The question is about the high number of against votes in the resolutions. This could represent largely a protest vote from non-executive shareholders. Is the Board concerned that Propel's high remuneration of executive directors and changes to the management contract, Propel, a public company, is setting a culture that is out of touch with ordinary shareholders? So just before I pass on to Brian, thank you Mr. [ Baird ] for the question.

Okay. Thanks very much. So thanks for the question. So the resolution is in relation to an increase in the cap on directors' fees. I'll just make the first point that the executive directors do not receive any director fees. In relation to the remuneration of the management team, the independent directors received advice from remuneration consultants, which attempted to benchmark our team against other operations of a similar size and/or operations that are in similar industries, and then came up with recommendations on what each of our team should be remunerated. So I think the independent directors felt that what they are being remunerated as executives is very fair and reasonable. If the question relates to the $15 million paid to tear up the management agreement and become employees, so again, the independent directors led that process and obtained independent advice on what would be a reasonable payment to the manager for it to forego its rights and entitlements under the management agreement and instead become employees of the company and then negotiated accordingly with the manager. So the independent directors were very happy with that outcome. They thought it was very fair and reasonable. And then, of course, we got a resounding, what I think, in excess of 98% vote at the following the AGM, which didn't seem to me to represent any significant protest vote. In my experience, when you increase the cap on fees that can be paid to directors, there's always some level of objection because people think that the directors are voting themselves a pay rise. In this case, the main reason for increasing the cap is so that, if needed and appropriate, we could appoint additional directors. The Board is very effective, but it is small, with only 3 non-exec directors. And so we thought that as we plan for growth in the future, as we need to refresh the Board from time to time, we may need to increase the size of the Board even if only temporarily and, therefore, we'd need to have the capacity to pay additional fees. So it's not so much about voting existing directors a fee rise but allowing for us to recruit additional directors if considered needed and appropriate. So I think in answer to the question, thank you for the question, but I think the non-exec directors, the independent directors, are comfortable with the arrangements that we've entered into over the recent time. Fraser, are there any other questions?

Thanks, Brian. There's no other questions. And obviously, given the fulsome of that response, we've now gone over the 2 minutes. I think you can declare the poll closed.

Okay. Was that an implicit criticism?

No, not at all.

Okay. So I now declare the poll closed. If [ Kirsten ] could please count the votes and upload the results once counted. It's expected this will take approximately 5 minutes. We'll hold an intermission whilst the votes are counted. [Voting]

Brian, Link have advised that they've concluded the counting. So I think you can close the meeting, and we'll announce the results through the ASX later today, if you're okay with that, Brian?

Yes, I'm fine with that. So I'll do that now?

Yes.

Okay. So thank you, everybody, for waiting. I can confirm the returning officer has counted the votes, and they will be announced via the ASX later today and will be made available on the Investors section of Propel's website. There being no further business at today's meeting, I now declare the company's 2021 Annual General Meeting closed. Thanks for your attendance, for participating in the meeting. We're pleased that technology enabled participation today. Please keep safe, and we look forward to hopefully seeing you next year, if not before. Thank you.

That does conclude today's conference. Thank you for your participation.