Dignity PLC (LON:DTY) has swung into a loss in its full year as the funeral firm continued to face a looming boardroom challenge from its major shareholder.
In its results for the year ended December 25, the company reported a pre-tax loss of £19.6mln compared to a £44.1mln profit in the prior year despite revenues rising to £314.1mln from £301.3mln in 2019.
READ: Dignity loses two long-standing board members as it works on new strategy
The company said its average revenues had been lower during the year as a result of coronavirus (COVID-19) restrictions imposed by the UK government, although it added that its performance had remained “robust” with its crematoria and pre-need divisions performing well.
"During 2020, we have continued to be focused and resilient in the light of many changes, however, the business has remained robust. Whilst COVID-19 featured heavily in our day-to-day activities into the first quarter of 2021, we did not lose sight of the numerous project work-streams initiated in the last year, aimed at affording the board the time and collateral necessary to allow the business to self-heal, without recourse to dilutive funding initiatives”, Dignity’s executive chairman Clive Whiley said in a statement.
Dignity also said a root and branch review of its business, which has already claimed several long-standing board members such as finance director Steve Whittern and corporate services director Richard Portman, both of whom resigned in December, is scheduled to conclude in the second quarter of 2021.
However, the company’s turnaround strategy is now facing a challenge from Phoenix Asset Management Partners, which owns around 30% of the firm and has requisitioned a general meeting in a bid to remove Whiley as executive chair and appoint its own chief investment officer Gary Channon as an executive director.
“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”, Whiley said.
“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”, he added.