Shares in funeral provider Dignity (DTY) shot up on release of these half-year results, as cash profits of £56.4m exceeded market expectations. Helped by a 5 per cent increase in the number of deaths during the period, the company is committed to putting its January profit warning firmly in the rear-view mirror. This will take the form of a three-year transformation plan, hopefully underpinned by what continues to be a strong level of cash generation.
First, lowering prices has helped to stem the loss of market share, while other actions have been taken to claw back £8m in costs by 2021. Marketing expenses are set to rise, as are general costs relating to property and equipment, but company bosses have said part of the recovery plan includes investing in and simplifying the business’s operating model. In fact, the company estimates it will spend £50m over the next three years, although £17m will be funded via property disposals. Any provisions made as part of the financial statements in relation to these investments will be made in the second half of the current year.
Analysts at Peel Hunt expect pre-tax profits of £48.5m for 2018, giving EPS of 77.2p, compared with £77.8m and 128p in 2017.
| DIGNITY (DTY) | ||||
| ORD PRICE: | 1,078p | MARKET VALUE: | £539m | |
| TOUCH: | 1,076-1,080p | 12-MONTH HIGH: | 2,620p | LOW: 736p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 144p* | NET DEBT: | £497m | |
| Half-year to 29 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 170 | 45.3 | 72.5 | 8.64 |
| 2018 | 175 | 38.5 | 61.4 | 8.64 |
| % change | +3 | -15 | -15 | - |
| Ex-div: | 20 Sep | |||
| Payment: | 26 Oct | |||
| *Includes intangible assets of £389m, or 778p a share | ||||
