11th May 2020 10:32
(Alliance News) - Dignity PLC on Monday reported a fall in profit in its first quarter, with Covid-19 restrictions meaning the company was forced to provide more low-cost funerals than it did in the year prior.
These type of services are likely to be the norm for the near future too, Dignity said. The funerals provider added that it has stopped church services and the provision of limousines.
Underlying revenue in the 13 weeks to March 27 was 2.5% higher year-on-year at GBP83.1 million from GBP81.1 million, but underlying profit fell 11% to GBP19.4 million from GBP21.7 million.
Average income per funeral was 2.8% lower year-on-year at GBP2,823 from GBP2,904.
"Average income in the first quarter of the year was lower than the last quarter of 2019. This reflects the continued roll out of the group's tailored funeral options, trials of different lower priced propositions, and the early impact of Covid-19. Underlying ancillary income per funeral was lower in the first quarter, reflecting lower sales of memorial and other items," Dignity said.
"The absolute number of deaths increased by approximately one per cent to 161,000 from 159,000 in the comparative period last year. Sadly, since the end of the quarter, the UK has witnessed in excess of 20,000 deaths in a single week, the highest since the beginning of 2000. The number of possible incremental deaths as a result of Covid-19 is a matter of substantial speculation."
The company also provided a detailed update on its financial position, specifically its loan covenants.
Though it expects to meet its primary financial covenant of an earnings before interest, taxes, depreciation and amortisation to total debt service above 1.5 times, Dignity said it will "not achieve" a restricted payment condition.
The RPC is not a covenant, Dignity noted, and it requires both a higher Ebitda to total debt service ratio of 1.85 times and a free cash flow to total debt service of at least 1.4 times.
Dignity met its RPC in March, with an Ebitda to total debt service score of 2.06 times and free cash flow to total debt score of 1.63 times. It does not expect to meet the RPC in June, however.
Dignity said: "Failure to pass the RPC at June would not be a covenant breach and would not cause an acceleration of any debt repayments. Furthermore, any cash not permitted to be transferred whilst the RPC is not achieved will be available to be transferred at a later date once the RPC requirement is achieved.
"Therefore, given the group had already taken the decision to temporarily suspend dividend payments, in practical terms, failure of the RPC will not have a material impact on the day-to-day operation of the group."
Dignity added that it is progressing in its search for a new chief executive officer.
Shares in the company were 3.4% higher at 242.00 pence each in London on Monday morning.
By Eric Cunha; [email protected]
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