Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Shares in Dignity PLC fell on Wednesday, despite the funeral services operator posting a swing to profit for 2021, as the company warned of lower profit ahead in the short term due to lower prices and the death rate normalising as the pandemic begins to wind down.
Shares in the Sutton Coldfield, England-based funeral services provider were 12% lower at 469.88 pence on Wednesday in London. Dignity's share price has dropped 30% over the past 12 months.
For 2021, the group reported a pretax profit of £32.0 million, compared to a loss of £19.6 million the year before, due mainly to a doubled gain in the remeasurement of financial assets held by the trusts at £94.8 million. On an underlying basis, pretax profit dropped 12% to £26.8 million.
Revenue slipped just 1.1% to £353.7 million from £357.5 million, due to a weaker performance from the Funeral Services segment. Dignity noted a marginal rise in UK deaths to 664,000 in 2021 from 663,000 in 2020.
Looking ahead, Dignity expects to report lower profit in the short term. This is due to lower prices and a normalising the UK death rate as the danger of Covid-19 dissipates and the excess death effect of the past two years start to reverse.
In addition, Dignity said it is putting forward a new business strategy, which includes the setting up of a new organisational structure with 12 regions, and preparing the company for regulation in the pre-paid funeral plan market by the UK Financial Conduct Authority.
This will require additional investment into the business, which will in turn lead to higher costs in the future.
‘2021 was a year of great change at Dignity as we set out and started implementing the new strategy which at its core promotes a culture focused on serving families and communities in all their end-of-life needs. There isn't a part of Dignity that hasn't been affected by the transformation so far as we inverted the whole organisation, empowered those serving clients and organised ourselves in a more collaborative structure,’ said Chief Executive Gary Channon.
‘Although there is still much work to do to complete the restructuring, we know what we need to do.’
Dignity declared no dividend for 2021, the same as for 2020, and does not expect to so until it returns to a more sustainable financial footing.
Copyright 2022 Alliance News Limited. All Rights Reserved.