REG - Dignity PLC - Trading Update

DignityAnnouncement

23/01/2023 07:01

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RNS Number : 4747N  Dignity PLC  23 January 2023

 

For immediate
release
23 January 2023

Dignity plc

('Dignity' or the 'Group')

 

Trading Update

 

The Board of Dignity plc ("the Board"), one of the UK's largest national
providers of funeral plans and end of life services, provides the following
trading update on the Group's unaudited financial performance for the 52 weeks
ended 30 December 2022.

 

Key financial highlights (for the 52 weeks ended 30 December 2022) - unaudited

·    Underlying revenue 1  (#_ftn1) is expected to be no more than £275m
(FY21: £312.0m);

·    Underlying operating profit1 is expected to be no more than £20m
(FY21: £55.8m);

·    Underlying operating profit before depreciation and amortisation
(pre-IFRS 16) 2  (#_ftn2) is expected to be no more than £37m (FY21:
£72.5m);

·    At the end of FY22, the Group expects approximately £8.5m in Trading
Group cash on the balance sheet (implying a net debt position 3  (#_ftn3) of
£508.0m) (£55.9m and £471.2m as at end of FY21)

 

Commentary

The Group continues to make good progress in the implementation of its new
strategy through new initiatives. This is delivering early signs of increases
in market share growth and progress in addressing operational challenges.

However, as previously reported, performance continues to be impacted by
changes in pricing strategy and the continued shift towards lowered-priced
products, despite higher-than-average death rate persisting post-COVID 19.

Furthermore, excluding the impact of the lower promotional expense, the cost
base of the Group has increased in the year because of planned investments
across the estate and in facilities, as well as ongoing increases in
regulatory and operational costs which have been partly driven by
macroeconomic factors.

As a result, for the 52 weeks ended 30 December 2022, underlying revenue,
underlying operating profit and underlying operating profit before
depreciation and amortisation will be no more than £275m, £20m and £37m.

The Group continues to benefit from the previously secured bondholder consents
in the form of the covenant waiver and consent to deleverage the capital
structure, which remain valid until March 2023 and September 2023,
respectively.

The Group expects to end the year with cash of approximately £8.5m and net
debt of approximately £508.0m. Dignity will continue to draw upon available
facilities to invest in the business and manage liquidity.

As announced on 4 January 2023, Dignity is in discussions with Yellow (SPC)
BidCo Limited ("BidCo"), a newly formed indirect wholly-owned subsidiary of
Valderrama Limited ("Valderrama"), a joint venture between SPWOne V Limited
("SPWOne") and Castelnau Group Limited ("Castelnau", whose discretionary
investment manager is Phoenix Asset Management Partners Limited ("PAMP"))
(together, the "Consortium") about a cash offer (together with the ability for
shareholders to rollover part of their current investment via alternative
offers), which the Board is intending to recommend unanimously to Dignity
shareholders.

The FY22 underlying operating profit and underlying operating profit before
depreciation and amortisation referred to above constitute profit estimates
for the purposes of Rule 28 of the Takeover Code ("the Code"). The Offer
Document produced pursuant to the acquisition of Dignity plc by Yellow (SPC)
Bidco Limited will include relevant reports as required by Rule 28.1.

 

For further information please contact:

Kate Davidson, Chief Executive Officer

Dean Moore, Interim Chief Financial Officer

Dignity plc     +44 (0)20 7466 5000

 

Chris Lane

Hannah Ratcliff

Verity Parker

Buchanan     +44 (0)20 7466 5000

www.buchanan.uk.com       Dignity@buchanan.uk.com

 

Rule 26.1 disclosure

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
available (subject to certain restrictions relating to persons resident in
restricted jurisdictions) at https://www.dignityplc.co.uk/ by no later than 12
noon (London time) on the business day following the date of this
announcement. The content of the website referred to in this announcement is
not incorporated into and does not form part of this announcement.

 1  (#_ftnref1) All measures marked as "underlying" throughout this
announcement are alternative performance measures ("APMs") and have been
prepared in a manner consistent with the basis of preparation of these
measures included in the 2021 Dignity plc Annual Report and Accounts. The
Board believes that whilst statutory reporting measures provide financial
performance information on the Group under IFRS, APMs provide additional
useful information to enable readers to fully understand the trading
performance and financial position of the business. The APMs provided are
aligned with those used in the day-to-day management of the business and allow
for greater comparability across periods. For this reason, the APMs provided
exclude the impact of consolidating the Trusts and the changes which relate to
the application of IFRS 15, as well as non-underlying items comprising certain
non-recurring transactions and non-trading transactions which do not relate to
the normal day-to-day transactions of the business.

 2  (#_ftnref2) Underlying operating profit before depreciation and
amortisation (pre-IFRS 16) is not an APM that is ordinarily reported by
Dignity but has been provided to illustrate the pre-IFRS 16 underlying
operating profit before depreciation and amortisation of Dignity Group

 3  (#_ftnref3) Net debt is presented on a reported basis (consistent with the
basis used for this measure in the 2021 Dignity plc Annual Report and
Accounts) and excludes any liabilities recognised in accordance with IFRS 16

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