Birmingham-based Dignity (DTY), the UK’s largest provider of funeral services, has posted a sharp rise in its underlying half-year profit and said its outlook for the rest of 2008 was positive.
The Sutton Coldfield group, Britain’s only listed funeral company, said revenue in the six months to June 27 grew 12 per cent to £90.6 million. Pre-tax profit was up 21 per cent at £22.1 million, compared with £18.3 million for the same period last year.
The company, which owns 548 funeral locations and 23 crematoria in the UK, declared an interim dividend of 3.66p a share, up from 3.33p last year.
“The group has performed strongly in the first half of the year and the board’s expectations for the rest of 2008 remain positive,” the company said in a statement yesterday.
The group’s operations are managed across three main areas, namely funeral services, crematoria and pre-arranged funeral plans. Funeral services revenues relate to the provision of funerals and ancillary items such as memorials and floral tributes. Crematoria revenues arise from cremation services and the sale of memorials and burial plots at the Group’s crematoria and cemeteries. Pre-arranged funeral plan revenue represents deals to cover the costs of marketing and administering the sale of plans.
Some of Dignity’s key performance indicators rely on the total number of estimated deaths for each period, information which is obtained from the Office for National Statistics (ONS).
During 2007 the ONS implemented a new computerised births, marriages and deaths system and Dignity said: “It is unclear at present whether the new computerised system will cause similar or smaller differences between the initial and final published deaths in any period and therefore it is unclear to what extent the 2008 estimates are directly comparable to the 2007 estimates, which were reported under the old system.
“Nonetheless, the figures continue to give a good general background to the group’s performance.”
The estimated number of deaths in the UK in the first half of 2008 stood at 286,600, down slightly on the figure of 288,700 for the same period last year.
During the first half, Dignity performed 36,400 funerals, up from 34,700 last year.
Underlying operating profits stood at £25.3 million, an increase of 11.9 cent on the same period last year, when the figure was £22.6 million.
The period also saw the firm complete 20,300 cremations – around seven per cent of the total number of estimated deaths in the UK.
Revenues from this operation stood at £14.7 million, up from £13.2 million in 2007.
Unfulfilled pre-arranged funeral packages were 200,000 at the end of the first half, compared with 192,400 in 2007.
The company said the majority of these plans continued to represent the growth of the funeral division.
Acquisition activity in the period saw the firm grow its location portfolio by a further nine sites, plus an additional crematorium. Total cost of the investment was £16.9 million.
Chief executive Peter Hindley said: “The group has had a strong start to the year, increasing operating profits by 12 per cent and earnings per share by 16 per cent.
“Our expectations for the rest of 2008 remain positive.”
In reaction, Investec Securities said Dignity fairly well insulated from the recession and the credit crunch and it retained its buy rating on the firm.