Dignity reports higher profits

The UK's largest provider of funeral-related services has said a higher number of deaths in the first half of the year helped it deliver a strong performance.

Dignity, which owns 616 funeral locations and operates 36 crematoria, said initial estimated deaths in the UK in the six months to June 29 were up 1% at 285,000.

The Sutton Coldfield-based firm said the higher level of deaths boosted its funeral operations, although total funerals held in the period dropped slightly to 33,400.

The group reported an 8% rise in underlying operating profits to £39.2 million in the period, helped by a 10% rise in funeral profits and a 23% jump in earnings from pre-arranged funeral plans.

The FTSE 250-listed company, which employs 2,500 staff, also saw a 6% increase in profits in its crematoria division to £12.3 million. The group performed 26,200 cremations, up from 25,400 the previous year, which reflects the increase in the number of crematoria being operated.

Dignity bought eight additional funeral locations in the period, as well nine satellite locations, and closed one site.

The number of unfilled pre-arranged funeral plans, which allow customers to plan a funeral in advance and make provisions towards the cost through its Dignity Guaranteed Funeral Plan, was 275,000 at the end of the period, compared with 265,000 last year.

The plans effectively represent future potential business for the funeral division.

Shares were more than 1% higher after the group unveiled an increase in its interim dividend from 4.87p last year to 5.36p.

Sebastien Jantet, analyst at broker Investec, said: "We remain of the view that Dignity offers good value for a highly defensive business, capable of delivering reliable growth with no exposure to the euro."