Under-fire funeral boss slams ‘torpid’ strategy as firm slumps into the red

Sutton Coldfield funeral provider Dignity has slipped into the red – a week after a bid was made to oust its executive chairman.

The firm announced its preliminary full-year results this morning (March 17) in which it revealed a pre-tax operating loss of £19.6m during 2020 – down from a profit of £44.1m a year earlier.

Last week, the largest shareholder of funeral services provider Dignity called a general meeting to consider removing the company’s executive chairman, Clive Whiley.

Phoenix UK Fund, which owns 29.9% of Dignity, wants to remove Whiley and appoint Gary Channon as an executive director.

Channon is the founder and chief investment officer of Phoenix Asset Management Partners, which manages Phoenix UK Fund.

Whiley hit back this morning; in a statement accompanying the results, he called the strategy pursued by Dignity over recent times as “torpid” – after a “root and branch” review of the firm revealed shortcomings.

He said: “The shortcomings exposed by the root and branch review, arguably self-inflicted by torpid strategic direction over the last decade, as exacerbated by the extreme volatility in volume created by the pandemic, that exposed the business most during the year.

“The Transformation Plan, launched with great fanfare and at considerable expense in 2018, in my opinion introduced too narrow a focus upon one element of the group, without considering the capacity to grow the business organically across its full bandwidth.

“In short, that was tantamount to admitting defeat as a group that had elected for many years to utilise the majority of its capital investment buying its way out of deteriorating funeral market share (2001: 491 funeral locations and 11.8 per cent funeral market share; 2019: 820 funeral locations and 11.7 per cent funeral market share).

“At best that consolidated the heritage of strong family businesses and staff that perform well to this day, at worst business integration ceased at legal completion: leading to Dignity essentially becoming the industry retirement plan for independent funeral directors.”

Dignity’s Transformation Plan, which was paused indefinitely on 3 April 2020 with the onset of the pandemic, was expected to cost £50m over a three year period to deliver mid-range EBITDA benefits of approximately £10m a year.

Whiley’s statement added: “The root and branch review, initiated upon my appointment, identified benefits of £8 million in 2020 alone, alongside preserving cash spending on transformation of in excess of £30 million, simply from better housekeeping. Furthermore Project 20:20, which is the final component of the root and branch review, will now shoulder the burden of effecting appropriate changes to staff working practices within our funeral division. This project is designed to determine the optimal scope, size and logistics of our care centre and branch network, having due regard to both the extensive learnings from the Transformation Plan alongside output from the pricing, product and other trial propositions in train.”

On the challenge to remove him from Dignity’s board, Whiley said: “Unfortunately, notwithstanding the significant progress the business has made since my appointment, our largest shareholder Phoenix Asset Management Partners, with whom we believed we were having a constructive dialogue in relation to the future strategy of the business, has chosen this moment to seek to assert what would, in effect, be executive control at board level.

“Whilst, in my view, the group is now sufficiently robust to sustain this wholly avoidable and unnecessary challenge, it is nonetheless an unwelcome distraction as we remain dedicated to dealing with the ongoing fallout from the pandemic. To minimise disruption, the independent directors have been charged with taking the necessary steps to convene the required general meeting of shareholders and they will share their views on the resolutions to be considered at that time. It will then be for shareholders to decide on the merits of the Phoenix proposal.”

Dignity’s revenues stayed steady during 2020 – growing by 5% to reach £357.7m.