Dignity PLC - Preliminary Results

Dignity plc (Dignity, the Company or the Group), the UK's only listed provider of funeral related services, announces its preliminary results for the 52 week period ended 28 December 2018.

Financial highlights

 

52 week
period ended
28 December
2018

52 week
period ended
29 December
2017

Increase /
 (decrease)
per cent

Revenue (£million)

315.6

324.0

(3)

Underlying operating profit (£million)

80.2

104.6

(23)

Underlying profit before tax (£million)

54.4

77.8

(30)

Underlying earnings per share (pence)

85.8

128.3

(33)

Underlying cash generated from operations (£million)

101.9

115.4

(12)

Operating profit (£million)

66.3

98.0

(32)

Profit before tax (£million)

40.5

71.2

(43)

Basic earnings per share (pence)

63.0

115.8

(46)

Cash generated from operations (£million)

94.9

112.5

(16)

Interim dividend paid in the period (pence)

8.64

8.64

-

Final dividend proposed in respect of the period (pence)

15.74

15.74

-

Number of deaths

599,000

590,000

2

         

 

Key points

 

·              Number of deaths as expected;

·              Comparable funeral market share increased slightly following significant declines in 2016 and 2017;

·              Simple funeral pricing reset;

·              Unbundled funeral replacing full service package;

·              Simplicity service offering expanded;

·              Transformation team in place;

·              3 year detailed Transformation Plan established;

·              Good performance from crematoria; and

·              Pre-need environment remains challenging.

Chairman's statement

Overview

In 2018 we delivered a resilient performance, ahead of market expectations in what was a challenging and transitional year.  Against a backdrop of continued change in the funeral market we began the transformation of our business while remaining focused and committed to our customers, shareholders and wider stakeholders. 

The Group is undergoing radical change.  We have built momentum and our plan is on track.  The Board is confident that we will achieve our goal of transforming the Group as planned over the next three years.

Along with change has come opportunity and a renewed vision and ambition for the Group.  Quite simply, the Board's vision is to lead the funeral sector in terms of quality, standards and value-for-money.  To achieve this we are building a more coherent, cohesive and technology-enabled business, one geared to meet the changing needs of our customers. 

Our ambition is to fully reposition Dignity in the funeral market and ensure a sustainable and successful long-term future. Offering customers an enhanced and very competitive range of services and price options is at the core of this change.

Industry regulation

More broadly, we have continued to advocate that the funeral industry must also change.  Regulation is needed and we support moves to bring this about.  Customers must be treated fairly and be assured of minimum acceptable standards whichever funeral director they choose. 

We therefore noted with great interest the Competition and Markets Authority's ('CMA') proposal in November 2018 to launch a full investigation into the funeral market as part of its interim report into the industry.  At the time of writing, that full investigation has not yet been confirmed. We have made public our support for such an investigation if it happens and believe it could help improve standards across the sector and deliver better outcomes for customers.  We are also keen to work closely with the CMA and help them understand the challenges of providing a quality funeral service.

In addition, we have made the following points to the CMA:

On competition: the funerals market is already competitive, however, more can be done to improve the ability of customers to exercise the choice that exists, especially through greater pricing transparency. 

On improvements in the sector: we hope that the CMA will take more account of the lower prices and greater transparency that already exists in the sector, including Dignity's own pricing structure which has already changed significantly over the past year.  We believe it is essential that the CMA clearly acknowledges the variation in quality among different funeral providers.

On vulnerable consumers: we are especially keen to work with the CMA to improve the experience of all customers organising a funeral, and ensure they are given the appropriate support to take informed decisions.

On regulation: research indicates that 92 per cent of consumers believe the industry is already regulated, and many are surprised that it is not.  We hope that the CMA investigation will examine how regulation can improve standards and transparency in the sector.

In short, we want to continue to play a leading role as a responsible and progressive corporate citizen in the funeral industry as it undergoes long overdue change.

Dividends

The Board is proposing a final dividend of 15.74 pence (2017: 15.74 pence) per share, which, subject to approval at the AGM, will be paid on 28 June 2019 to shareholders on the register at close of business on 17 May 2019. This will bring the total dividend for the year to 24.38 pence (2017: 24.38 pence) per share.

Company Secretary change

During the period, Richard Portman relinquished his role as Company Secretary while continuing as Corporate Services Director.  He was replaced as Company Secretary by Tim George, who joined the Group in 2018.

My role as Chairman

The Board has been seeking my successor following the announcement of my intention to retire in 2019. The Board is in the process of conducting an extensive search and will announce my successor in due course.

Our people and resources

I want to thank our people for continuing to deliver outstanding customer service in what has been an uncertain and challenging year. This speaks volumes for their professionalism and commitment to our customers. Their continued loyalty and commitment will be essential if we are to deliver our Transformation Plan.

Executive performance and remuneration

A new Remuneration Policy will be presented to the annual general meeting for approval. This follows a period of consultation with our significant shareholders and institutional voting services.

Planned change of name

Given the increasing focus on our brands across our entire business, the Company will, as permitted by its Articles of Association, change its name. The Company will confirm its new name later in the year. This change will help to remove confusion between our trading brands and our corporate profile.

Outlook for 2019 and beyond

The Board's expectations for the year ahead are unchanged from the most recent guidance. 2019 is likely to see underlying profitability lower than 2018 but in line with market expectations.  In the medium-term the Board believes that targeting solid single digit increases in underlying EPS is appropriate and achievable.