31st Jul 2019 10:17
(Alliance News) - Funeral services provider Dignity PLC's shares fell Wednesday as the firm axed its dividend following a disappointing first half performance.
Shares were 9.0% lower on Wednesday morning, at a price of 559.49 pence each.
This removal of the dividend is "temporary", Dignity assured. It had returned 8.64p per share to shareholders in the 26 weeks to June 2018.
"Although the group has significant cash resources at hand and continues to be cash generative, in order to maintain maximum flexibility and liquidity during the transformation, the board has concluded that it is prudent to temporarily cease dividend payments," said Dignity.
"The group has an established track record of returning cash to shareholders at appropriate times over many years and once the current uncertain competitive environment becomes clearer, it anticipates resuming dividend payments or returning excess cash to shareholders."
For the half to June 28 this year, Dignity's pretax profit slumped 61% to GBP14.9 million, with the underlying figure falling 45% to GBP23.9 million.
Dignity's revenue fell 12% to GBP153.3 million, with the underlying figure down 11% to GBP155.3 million. The number of deaths during the period was 7% lower year-on-year, at 300,000.
"While the number of deaths in the first half meant that our financial performance for the period was lower than originally anticipated, we remain confident the changes we are introducing will generate sustainable growth in the medium to long-term," said Chief Executive Mike McCollum.
"Longer-term expectations, based on the ONS forecasts remain unchanged, with increases in the long-term number of deaths, reaching approximately 700,000 per year by 2040."
In 2018, Dignity set up a transformation plan after a "major" strategic review, with the plan seeing a more modern product offering, a simpler operating model, and an investment into technology to centralise administration.
The plan is on track, Dignity said, and it is confident the move will bring about a turnaround.
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