Dignity posts 12% rise in revenues

Dignity reported a 12% increase in revenues and operating profits for the 26 weeks to 27 June, despite a small decline in the number of deaths over the period.

Morningstar.co.uk Editors 29 July, 2008 | 7:58AM
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Revenues for the undertaker rose from £81.1m to £90.6m, while pre-tax profits rose from £18.3m to £22.1m. The group now manages funerals for around 12.5% of all estimated deaths (up from 12% for the previous year) and cremations for 7.1% of all estimated deaths (no change on the previous year). The group will pay an interim dividend of 3.66p per share, up from 3.33p for the same period last year.

The group said that a new automated system of births, deaths and marriages implemented by the Office of National Statistics is making previous year comparisons difficult, but the initial estimated deaths in Great Britain for the first half of 2008 were 286,600, down from 288,700 for the same period last year. However, they continue to give a good general background to the group’s performance.

The group has invested £17m in nine new funeral locations and one crematorium since the start of the year. At the same time, net debt has been reduced by £4.3m, but remains high at £237.2m.

Richard Connell will stand down as chairman in December 2008. Peter Hindley, the current chief executive, will replace him as non-executive chairman. Mike McCollum, currently finance director will take over as chief executive.

The share price has been stable over the past six months, reflecting Dignity’s position as the ultimate defensive stock. Shares were unchanged today at 731p, which leaves it on a P/E of 17.9x. The group plans further growth by taking over small, family-run businesses. The future does not look exciting, but the group has visible earnings, which are highly prized in this environment. Its debt levels will probably do it no favours, but interest cover remains at around 2.52x.

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