Shares in Dignity (DTY) rose 5p to 560p on Monday on news the funeral services specialist carried out a greater number of burials and cremations in the first nine months of 2020 due to the tragic Covid-19 pandemic.

Dignity is unable to provide any guidance on the rest of 2020 and beyond given the uncertainty around funeral restrictions and the potential changes to the funeral industry that could be on their way.


In the nine months ended 25 September, Dignity conducted 61,700 funerals in the UK. That was up from 52,100 in the first three quarters of 2019, as the coronavirus pandemic drove a 15% increase in the number of UK deaths to 498,000.

Dignity’s results for the nine months showed 4% growth in underlying revenues to £234.5 million, although underlying operating profit actually fell 8% year-on-year to £44.2 million.

This reflected the impact of Covid-19 restrictions on attendance at funerals, which have made it challenging for Dignity to sell its higher-price full-service funerals to families and have also raised the group’s operating costs.

‘Following the terrible impact of Covid-19 in the second quarter this year, the number of deaths in the third quarter was broadly flat on the prior year,’ explained Dignity, continuing to carry out pricing and product trials amid fierce industry competition.

‘The final quarter of 2019 witnessed 152,000 deaths and deaths in October were broadly flat on the prior year,’ added the company. Dignity won’t speculate on the most likely outcome for the remainder of the year, though the company stressed it is ‘possible that the tragic events of 2020 may mean 2021 and 2022 could experience a lower number of deaths than in 2019’.


At the end of the third quarter, Dignity was sitting with roughly £64 million cash in its coffers. Given that it has paused its Transformation Plan, as well as dividends and crematoria developments, the use of this cash balance is expected to be ‘limited’ and the company is looking to conserve cash where it can.

Dignity’s ‘root and branch’ strategic review has been delayed to allow the business to focus its energies on addressing the pandemic.

The review is now expected to continue until the second quarter of 2021, with an investigation into the funeral market by the Competition and Markets Authority (CMA) due no later than 27 March 2021. At the same time, Dignity is also readying itself for regulation of the pre-need funeral plan part of its business by the Financial Conduct Authority.

So there is a lot of change potentially coming for Dignity, but Shore Capital believes that as ‘one of the market leaders, the company can adapt to the changing environment’.

The broker added that an independent property valuation commissioned by Dignity ‘suggests property assets are significantly undervalued versus book value, which should help underpin the share price and there remains asset backing to the evolving transformation plan under Clive Whiley’s leadership, as Executive Chairman.’


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Issue Date: 09 Nov 2020