One of Britain’s largest undertakers, Dignity Funerals Limited, has taken steps to reduce its debts after raising concerns about its ability to continue as a going concern. The company, which was taken private from the London Stock Exchange in April last year in a £789 million deal, filed accounts revealing “material uncertainties” that could cast significant doubt on its future.
Dignity, employing around 3,500 people and managing 600 branches, 45 crematoriums, and 27 cemeteries, is one of the two major funeral companies in the country. The accounts, filed at Companies House, indicate that a “severe but plausible downturn” in the group’s financial performance could lead to a breach of its debt service covenants. However, the company’s “base case” predicts sufficient liquidity.
To address the situation, Dignity’s majority shareholders have issued a non-binding letter of support for up to £25 million. Since the accounts were signed off in May, the company has reduced its debt by £81 million to approximately £400 million, with plans for further payments.
A spokesman for Dignity expressed confidence in the company’s long-term strategy and its ability to deliver high standards of care and service to customers. The board of Dignity has undergone changes, with the appointment of Zillah Byng-Thorne as chief executive and Shirley Garrood as chairwoman.
As part of a long-term solution to improve its capital structure, Dignity is exploring options such as asset sales or additional capital from shareholders to repay its loan notes.
Despite the challenges, Dignity reported a nearly 10% increase in revenue to £277.5 million last year, with increased funeral volumes and price rises offsetting cost inflation. The company’s loss before tax also improved from £217.4 million in the previous year to £36.1 million.
The takeover of Dignity by Sir Peter Wood and Gary Channon aimed to address the company’s underinvestment and management issues. The new leadership team remains focused on the long-term goals and is confident in the success of the business.
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