Proposed acquisition of five crematoria locations

RNS Number : 7027Z
Dignity PLC
31 May 2016
 

For immediate release                                                                                                                                      31 May 2016

 

Dignity plc

 

Proposed acquisition of five crematoria locations from Funeral Services Limited

 

Introduction

 

Dignity plc (Dignity or the Group), the UK's only listed provider of funeral related services, is pleased to announce that it has signed a conditional sale and purchase agreement to acquire five crematoria currently operated by Funeral Services Limited (trading as Co-op Funeralcare) for total consideration of £43 million (the Acquisition), to be satisfied in cash upon completion.

 

These crematoria are located in markets not served by existing Dignity crematoria. Of the crematoria acquired, three locations are freehold (Glasgow, Sheffield and Lichfield), with the other two leased from and managed on behalf of Local Authorities (Shropshire and Stockport). Completion of the acquisition of the freehold locations is conditional upon the transfer of trade and assets of the relevant locations to a new entity, which is expected to complete on or around 5 July 2016. Completion of the acquisition of the leasehold locations is conditional upon consent of the relevant Local Authority and transfer of the trade and assets of the location to a new entity. Consequently, one leasehold location is anticipated to complete on or around 25 July 2016, with the other leasehold location due to complete on or around 1 August 2016.

 

The Acquisition constitutes a Class 2 transaction for the purposes of the UK Financial Conduct Authority's Listing Rules. The Acquisition, including external transaction costs, is being funded from cash resources already held by the Group.

 

Overview of the Acquisition

 

The locations being acquired generated earnings before deducting interest, taxation, depreciation and amortisation of £2.9 million in the year ended 3 January 2016. The unaudited gross assets of the locations being acquired as at 3 January 2016 were approximately £10.9 million.

 

Opportunity and Rationale

 

Dignity currently operates 39 crematoria throughout the UK. Since flotation, Dignity has successfully acquired and integrated several crematoria locations into the Group. The locations being acquired provide the opportunity to expand the Group's geographical footprint into markets that are currently not served by the Group's existing locations and will therefore complement its existing locations.

 

Dignity anticipates that the integration of the Acquisition will involve limited reorganisation costs and minimal increase in overheads.

 

Allowing for the integration, the Group anticipates the annualised EBITDA from the Acquisition in 2017 to be broadly flat on the actual financial performance achieved in the 12 months to 3 January 2016. No cost savings have been assumed. The Group anticipates that the Acquisition will be earnings accretive in financial year ending December 2017.

 

Funeral acquisition facility

 

The Group also announces that, whilst not required to fund the Acquisition, it has extended the availability period of its £26.25 million debt facility with the Royal Bank of Scotland plc until 31 December 2016. This has allowed the Group to use its existing cash resources to fund this transaction, whilst maintaining appropriate resources for future corporate development activities that may arise.

 

Mike McCollum, Chief Executive of Dignity, commented on the Acquisition:

 

"This acquisition will allow us to extend our crematoria network into new geographical areas. It represents a good investment for Dignity, using cash already held by the Group, and supports our continued growth."

 

 

A conference call for analysts will be held at 10.30am on 31 May 2016. Please contact Buchanan if you have not received dial in details and wish to attend the call.

 

Further announcements will be made in due course.

 

For more information:

 

Dignity

Mike McCollum, Chief Executive

Steve Whittern, Finance Director

+44 (0) 121 354 1557

 

 

Investec Bank PLC, Joint Financial Adviser and Broker

Gary Clarence

Daniel Adams

 

+44 (0) 20 7597 4000

Panmure Gordon, Joint Financial Adviser and Broker

+44 (0) 20 7886 2500

Richard Gray

Andrew Godber

 

 

 

Buchanan

Richard Oldworth

Sophie McNulty

Catriona Flint

www.buchanan.uk.com

 

 

+44 (0) 20 7466 5000

Disclaimer

This announcement may include "forward-looking statements" with respect to certain of Dignity's plans in relation to the crematoria being acquired and its current goals and expectations relating to its future financial condition, performance and results.  These forward-looking statements sometimes contain words such as 'anticipate', 'target', 'expect', 'intend', 'plan', 'goal', 'believe', 'may', 'might', 'will', 'could' or other words of similar meaning.  By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to future events and circumstances which may be beyond Dignity's control, including, among other things, UK domestic and global economic and business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, the possible effects of inflation or deflation, the impact of tax and other legislation and regulations in the jurisdictions in which Dignity operates.  As a result, Dignity's actual future financial condition, performance and results may differ materially from those expressed or implied by the plans, goals and expectations set forth in any forward-looking statements, and persons receiving this announcement should not place reliance on forward-looking statements.

Dignity expressly disclaims any obligation or undertaking (except as required by applicable law) to update the forward-looking statements made in this announcement or any other forward-looking statements it may make or to reflect any change in Dignity's expectation with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.  Forward-looking statements made in this announcement are current only as of the date on which such statements are made.

All oral or written forward-looking statements attributable to the Directors of Dignity or persons acting on their behalf are qualified in their entirety by these cautionary statements.

None of the statements in this announcement are, nor are any intended to be, a profit forecast and none should be interpreted to mean that the profits or earnings per share of Dignity in the current or any future financial period necessarily is or will be above or below the equivalent figure for any previous period.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
ACQABMRTMBTJMJF

Companies

Dignity (DTY)
UK 100

Latest directors dealings