Dignity Annual Report 2021

FY2021 Annual Report · Dignity
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ANNUAL REPORT 2021
Dignity plc Annual Report & Accounts

Who we are

DIGNITY'S VISION IS TO BE THE MOST TRUSTED, RESPECTED AND VALUED 
END-OF-LIFE SERVICE PROVIDER IN THE UK, AND THE MOST INSPIRATIONAL
AND REWARDING EMPLOYER FOR THOSE WHO SERVE THIS GOAL.  

At the heart of our organisation is a core purpose to help people say goodbye, 
to remember and to celebrate the life of those lost. We help people to plan 
ahead for their own funeral so that their wishes are clearly articulated, with 
peace of mind that the costs are covered rather than falling to loved ones. 

The way that people mourn for their loved ones is changing, as is the type of
funeral they want to pay tribute to their life. New competitors have emerged
across diﬀerent parts of the sector, particularly in the provision of at-need 
funeral services. Dignity’s new strategy will help us to better serve the changing
needs of the bereaved and provide support to a greater number of people. 

It is through the ongoing dedication of our people, our commitment to
responsible business practice, and by making a meaningful contribution to
society, that we will ensure we fulﬁl both our purpose and our potential.

About this Annual Report

This Annual Report & Accounts details our activities during 2021 and sets out 
our plan to deliver our strategic vision for the future.

2021 was a unique and challenging year for Dignity. Against the backdrop of the
ongoing pandemic, we embarked upon an ambitious new strategy and began 
to change the culture of the business whilst implementing the changes required
by the Competition and Markets Authority (‘CMA’) and simultaneously preparing
for future regulation by the Financial Conduct Authority (‘FCA’).

Dignity is at the beginning of its journey to deliver on our new vision. We will 
use this report to set out our strategic priorities, how we are changing the
organisational structure and culture, our vision for how we will be benchmarking
our performance, and ultimately create value for shareholders and our wider
stakeholders; our clients, colleagues and communities.

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In this Report 

CONTENTS

Strategic Report 

Financial Statements 

02
03
04
21

26

Chairman’s statement 
At a glance 2021 
Strategic review 
Stakeholder engagement  
& decision-making 
Environmental, Social and  
Governance (‘ESG’) 
Principal risks and uncertainties 
Viability statement 

40
47
48 Non-ﬁnancial information statement 
49

Key performance indicators 

Performance and  
Financial Results 

Summary Group results 
52
53
Financial review 
58 Divisional performance 

Governance 

Chairman’s introduction to governance 

65
72 Governance structure 
73
Board of Directors 
74 Directors’ statement on corporate 

governance 
Audit Committee report 
79
83 Nomination Committee report 
85
101 Directors’ report 

Report on Directors’ remuneration 

Group Accounts 

105 Independent auditor’s report to the  

members of Dignity plc 

114 Consolidated income statement 
114 Consolidated statement of  

comprehensive income  
115 Consolidated balance sheet 
116 Consolidated statement of changes  

in equity 

117 Consolidated statement of cash ﬂows 
118 Notes to the ﬁnancial statements 

Company Accounts  

167 Dignity plc Company balance sheet 
168 Dignity plc Company statement of 

changes in equity 

169 Notes to the Dignity plc ﬁnancial 

statements 
177 Financial record 

Other Information 

179 Alternative performance measures 
186 Shareholder information 
187 Contact details and advisers  
188 Financial calendar 

Transparent reporting 

We aim to report in a transparent and integrated way to clearly reﬂect how we operate. 
Within this year’s report we have also sought to address the additional requirements arising 
from Section 172 of the Companies Act 2006 and the 2018 UK Corporate Governance Code.  

This Annual Report & Accounts contains forward-looking statements with respect to the 
Group’s plans and its current goals and expectations relating to its future ﬁnancial condition, 
performance, results, strategic initiatives and objectives.

Dignity plc Annual Report & Accounts 2021    

01

 
 
 
 
 
 
 
 
 
 
 
 
 
STRATEGIC REPORT

CHAIRMAN’S STATEMENT  

GIOVANNI (‘JOHN’) CASTAGNO, 
NON-EXECUTIVE CHAIRMAN

I joined Dignity in July 2021at a pivotal time 
for the Group.

With the backdrop of the on-going COVID-19
pandemic, the Executive team, led by Gary,
had embarked on an ambitious plan to 
grow the business by further improving our
operating model to better serve the bereaved
as well as implementing the changes required
by the Competition and Markets Authority
(‘CMA’) whilst simultaneously preparing 
for future Financial Conduct Authority 
(‘FCA’) regulations. 

Our People
Our people responded splendidly to these challenges and 
on behalf of the Board, I would like to publicly thank all our
colleagues and everyone in the sector for the way they have
supported the bereaved. Our people are vital to Dignity’s success
and in the challenging circumstances created by COVID-19 they
have demonstrated the utmost dedication and resilience by
continuing to provide an excellent and respectful service. Whilst
they may not have received, or sought, the public recognition that
has been bestowed on other keyworkers, their quiet, selﬂess
commitment has been admired by everyone that experiences
their actions. This thanks extends across the entire funeral,
crematoria and bereavement sector.

It is these colleagues who are at the centre of our new strategy 
as it is they who provide a caring and high-quality service to 
our clients and are at the heart of our communities each day. 
I am conﬁdent that by empowering and trusting our people, and
providing them with the right tools and resources, the business
can approach the future with great optimism.

Strategic overview
I would also like to thank Gary and his team for executing the ﬁrst
stage of our ambitious plan which has been to restructure our
branch and crematoria network to better serve the bereaved.
Notwithstanding the diﬃcult trading environment of the pandemic,
we have created 12 integrated trading regions, empowering all
colleagues so that their expertise can be applied with greater 
focus and speed to the needs of those communities. The support
departments based in Sutton Coldﬁeld have also been reorganised
and refocused, so they are better aligned to servicing the needs of
our front-line colleagues. These changes lay the foundations of the
vision to be a federation of respected local businesses supported 
by a strong national brand.

During this period, we have also complied with the changes
introduced by the CMA and are preparing for regulation by the 
FCA having submitted our formal application to continue selling 

pre-need Funeral Plans. You will ﬁnd further details about our
approach to regulation, standards and compliance on page 16.

I believe that the new strategy, the cultural change being
implemented by the Executive Committee and supported by 
the Board and the forthcoming regulatory framework will create
opportunities for Dignity. The Principles developed and launched 
by the Executive Committee will underpin the cultural change being
implemented and will further support the growth ambitions of the
business. But this optimism for growth should be tempered by
volatility expected in the medium-term mortality rates which are
likely to be lower than those experienced during the pandemic 
and the historic ﬁve-year average rate. 

The volatility expected in the mortality rate and the investment
needed in executing the strategy will impact cash generation. It is
therefore appropriate that the Board considers options available 
to review Dignity’s current capital structure and to that end, we
continue to make good progress.

The Board recognises the role of Environmental, Social and
Governance (‘ESG’) in creating value for all stakeholders. This year
we committed to a formal climate pledge, to be net-zero across the
Group by 2038. We are committed to engaging with these issues and
to transparency of actions and disclosure, you can read more in the
Sustainability & ESG section of this report. Consequently, the Board
will receive frequent reports from management on ESG matters.

Governance during a time of change
During this period of signiﬁcant change, having appropriate
corporate governance is of great importance. When I joined Dignity, 
I committed to strengthen governance and make the business 
Code compliant as well as introducing diversity to the Board.

To this end, I’m pleased to report that in addition to my appointment,
we have secured the support of Graham Ferguson and Kartina
Tahir Thomson as Independent Non-Executive Directors and 
chairs of the Audit, Remuneration and the newly constituted Risk
Committee. I’m also delighted that Kate Davidson, who previously
sat on the Executive Committee, joined the Board in January 2022
as Chief Operating Oﬃcer. I welcome Graham, Kartina and Kate 
to the Board and look forward to working closely with them. 

We continue our search for a new Chief Financial Oﬃcer and 
hope to make an appointment soon. Once this appointment is
made it is the intention for Dean Moore to regain his position as an
Independent Chair of the Remuneration Committee. This will ensure
a smooth hand over to the newly appointed Chief Financial Oﬃcer.
This is subject to appropriate review and approval by the Board.

Gary Channon was appointed to Executive Chairman following a
General Meeting in April 2021, and subsequently to Chief Executive
at the time of my appointment. In line with Gary’s undertakings at
the time of the General Meeting at the appropriate time, the Board
will seek to replace Gary as the Chief Executive, with a process for
identifying Gary’s replacement now under way. Again, ensuring 
a smooth transfer to new Chief Executive will be central to the 
Board’s plans.

Dividend policy
Dignity has not paid a dividend since June 2019 and the Directors 
do not expect to do so until the business has returned to a more
sustainable ﬁnancial footing. We retain signiﬁcant cash resources,
continue to be cash generative and understand the importance of
optimising total shareholder return whilst maintaining a balance
between diﬀerent stakeholders, and it is the Directors’ intention to
return to paying a dividend as soon as we believe it is ﬁnancially
prudent to do so.

02

Dignity plc Annual Report & Accounts 2021    

AT A GLANCE 2021

What we do

WE ARE THE ONLY END-OF-LIFE PROVIDER IN THE UK THAT IS UNIQUELY POSITIONED 
TO PROVIDE ALL THE REQUIRED ELEMENTS OF A FUNERAL SERVICE:

• We oﬀer a range of trusted Funeral Plans that give customers peace of mind by allowing 

them to arrange and pay for their funeral in advance.

• From our national network of 776 funeral branches we help families arrange funerals when
someone has passed away, and care for their loved ones respectfully, compassionately, and 
to a high standard.

• We also operate 46 crematoria and 28 cemeteries, providing a place of peace and tranquillity
where mourners can remember and say goodbye to loved ones, as well as a range of special
and unique memorial options.

EST.

1812

46

CREMATORIA

74,800

CREMATIONS

581,000

ACTIVE PRE-ARRANGED
PLANS

776

BRANCHES

£1.1bn

ASSETS IN THE
TRUSTS

79,200

FUNERALS

3,375

NUMBER OF
EMPLOYEES

1,659

IN FLEET

91

SERVICE CHAPELS

CIRCA

5,400

MORTUARY
CAPACITY

£312m

UNDERLYING
REVENUE (1)

(1) See our Performance and Financial Results for more details.

Dignity plc Annual Report & Accounts 2021    

03

STRATEGIC REPORT

STRATEGIC REVIEW  

GARY CHANNON, 
CHIEF EXECUTIVE

This is my ﬁrst report to shareholders since
being appointed in April 2021, and it is likely
to be my last. I want to take this opportunity
to set out what has been happening at
Dignity over the past year and why; what
happens next and how we are going to
measure our progress against our objectives
going forward.

The Plan

“We strive to be the most trusted, respected
and valued end-of-life provider in the UK, and
the most inspirational and rewarding employer
for those who serve this goal.”

Our vision is for Dignity to be a confederation of strong local
businesses serving their communities backed up by the strength 
of a national organisation. We need to bring the beneﬁts from that
scale without the bureaucracy, costs and hierarchy that can go with
it. We are liberating and empowering local businesses to serve their
communities individually whilst being able to call upon and utilise
the knowledge and resources of the wider Group. We seek to serve
all end-of-life needs and are uniquely placed to do that.

Although complex, we believe this model will best succeed because
it is based upon clients and their needs. Ultimately our service is
delivered by our people, and they make the diﬀerence. There isn’t 
a person who spends time around Dignity who isn’t struck by the
compassionate and empathetic nature of our colleagues. 

We receive a lot of positive and thankful feedback about our service,
and it almost always refers to the people. Therefore, the ﬁrst thing
we need to do is be a place where those drawn to and interested 
in our industry want to come to work, grow and thrive. We haven’t
been strong in this area and have enjoyed loyalty beyond what we
probably deserved in the past because of the strength of the calling.
We have set about redressing that but still have a way to go. We
have raised pay levels as part of that process.

As we cultivate an environment that attracts and retains the best
people, we empower them to deliver the service that meets the
needs and aspirations of the families we serve. We have made
signiﬁcant changes in the past nine months to empower our 
client-facing colleagues, breaking down some of the barriers 
to change around trust and decision-making. 

Our ongoing regional restructure takes that a step further by
creating locally empowered businesses. That will be completed 
this year and when done will have completely inverted the
organisation. We are giving our people the freedom to innovate 
and make decisions autonomously, to have ideas, and operate 
the businesses in a way that meets the needs and aspirations 
of our clients, colleagues and communities.

Once we have the best people and have empowered them, we
need to give them the tools to deliver the best proposition in their
communities. One element of the proposition is price. We had
previously allowed our prices to rise above the market level, which
is not the way to serve clients well and doesn’t align with colleagues
motivated to do the best for their clients. High prices were the
single biggest factor causing the underlying business to lose share
year after year (before acquisitions) and was leading to likely failure.
We changed that in 2021 and have lowered prices substantially. 

Our pricing philosophy now is to oﬀer the best value-for-money
and not have price be the reason for not choosing us. This is a big
change for Dignity and the eﬀect of lowering prices is to reduce 
how much we earn per funeral. However, our experience since we
changed prices has been that the market share loss stops and then
reverses, and so in time we expect that revenue loss to be more
than compensated by volume growth, especially when combined
with all the other elements of our strategy.

After people, empowerment and price, we come to our premises.
We need to have the facilities to match our proposition and
therefore have embarked on a much-needed programme of capital
expenditure across the estate. This has begun but we have a long
way to go considering the scale of our organisation with over 800
locations at the time of reporting.

Next, our products. In addition to delivering funeral and cremation
services for families at the time of need, our other services include
pre-arranged funeral plans. An important part of our end-of-life
service proposition, in this area we are working on innovations,
redesigns and new introductions to better serve the needs of our
customers. We believe that the world of funeral plans is about to
change dramatically for the better as it will fall under the FCA rules
and regulations which apply from July 2022. It is a big undertaking
to prepare for but holds signiﬁcant potential for Dignity, as greater
trust by consumers in the products from regulation and the

04

Dignity plc Annual Report & Accounts 2021    

withdrawal of unregulated competitors will give us an opportunity
to grow the market and our business. As the original innovator in
the funeral plan sector since 1985, and as the UK’s largest end-of-life
business we have a great opportunity in this new era.

You will see that the Principles embed a strongly ethical culture 
that will build a strong long-term reputation which will attract
clients, employees and beneﬁt the owners of the business.

We are uniquely placed as the only national operator carrying out
funerals and cremations, whilst also manufacturing our own coﬃns
at our facility in the North East and oﬀering memorial services
through our crematoria. 

Vehicles are another important ingredient to having the best
proposition. Whether clients are seeking to add a personal touch 
to the service with a motorcycle or campervan hearse or choosing 
a traditional hearse, vehicles form a key focal point for a funeral,
and we used our vehicles 98,000 times in 2021. Along with our
people and premises, vehicles are a key part of the overall impression
families and attendees form of our funeral businesses on the day of
a service. We have 1,659 vehicles in our ﬂeet, yet we have underspent
capital expenditure in our ﬂeet by around £25 million in the past
ﬁve years. We also do not organise our ﬂeet in a way that gets best
overall utilisation. We have started to increase the investment in 
the ﬂeet, and we will introduce new ways of organising it to gain 
a beneﬁt from our scale.

Strategic Element One

Element One of our strategy, as outlined
above, is to have the Best Proposition and that
comes from getting People, Empowerment,
Price, Premises, Products & Vehicles right.

The most ambitious element of our strategy is to introduce, foster
and embed a culture which will enable us to deliver that best
proposition and keep adapting and learning as we do. After an
internal process over six months, we crafted our Principles (see
pages 10 and 11). They set out all the key attitudes, priorities, values
and philosophies consistent with a culture that we think will make
Dignity a special and successful organisation. They are written for
ourselves, they are for colleagues, they are about who we are, how
we conduct ourselves, and how we aspire to be but let me explain
their purpose from a shareholder perspective.

We aim to be a learning organisation, in other words an organisation
that is able to continuously learn from experience, including and
especially by learning from our failures. Such a culture creates a safe
environment for trying new ways of working, knowing that both
success and failure contain lessons from which to grow. If we do 
this then the business will continuously adapt to the changing needs
and aspirations of clients. With so many businesses empowered to
do things their own way, if we achieve this culture then we will have
a constant source of learning in variance, in other words diﬀerent
outcomes in diﬀerent places. Good ideas can then be spread
around the organisation as well as lessons learned from failure.

The speciﬁc Principle for shareholders is:

WE ARE GOOD STEWARDS OF OUR OWNER’S CAPITAL 
Our goal is to create excellent long-term value for our shareholders. 
We will allocate capital wisely, organise ourselves prudently, spend
money frugally and report openly and honestly.

The leading principle that will drive the focus of many of the
decisions of the organisation is the focus on our clients, the families
and communities we serve. If we apply that properly, and have it
drive all that we do, we will be a formidable competitor.

Strategic Element Two

Element Two of our strategy is to have 
a strong Culture that focuses on Clients,
creates a Learning Organisation and 
embeds good values.

If we have the Best Proposition (‘Element One’) then we make 
the task of acquiring new clients easier. There are many routes 
to conversion and the very best is the word-of-mouth repeat
business from families who trust us. Approximately one in eight 
of all funerals were handled by one of our funeral directors, and if
we include cremations in our crematoria then we were involved in
approximately one in ﬁve of all funerals in the UK in 2021. Doing our
very best for those clients is our best source of future business.

Increasingly many other routes are used to choose a funeral
director and the internet now plays a large part in that. Having 
an eﬀective digital strategy aligned with our local propositions is 
an essential part of our eﬀort to grow our share of funerals and
cremations in all areas. We have a number of changes coming in
this area in 2022. To really get the beneﬁts of these eﬀorts you 
need the Best Proposition.

Funeral Plans are one of the most eﬀective ways for us to acquire 
a potential future funeral and forms part of that acquisition strategy.
We would like to engage our customers when they are still alive 
to deal with their end-of-life wishes and requirements. We believe
that the very best way for anyone to share and capture their wishes
for a funeral is to do so personally – enabling a truly personal 
and reﬂective funeral that meets their needs as well as those 
of their families.

Dignity plc Annual Report & Accounts 2021    

05

STRATEGIC REPORT

STRATEGIC REVIEW CONTINUED

Strategic Element Three

Element Three of our strategy is to have an
eﬀective Customer Acquisition Strategy
aligned with our Best Proposition.

Dignity is an amalgamation of hundreds of businesses bought and
combined over the past few decades. However, in the way that we
were organised we had not achieved any beneﬁts from scale,
underlying central costs bloating from 7.5 per cent of underlying
revenues in 2016 to 12.6 per cent of underlying revenues in 2021.
We have been reorganising the group to make the centre smaller,
more cost eﬀective and more aligned with the new strategy. We
made some painful decisions in January 2022 and lost some loyal
and capable colleagues who had done nothing wrong. That was the
most diﬃcult step we have had to take so far. We attempted to do it
in the least painful way for all concerned and to get it done quickly.

We need to show that there is a beneﬁt to scale. There are excellent
independent funeral directors thriving without the need for any
national organisation behind them. If there isn’t a beneﬁt in being
part of Dignity then we lose our raison d’être. We believe if done
correctly that this should create advantage from factors like pooled
sourcing, manufacturing, digital capabilities, property expertise,
dealing with regulatory needs, shared learnings, shared resources,
training and development, marketing expertise and recruitment.
Most of these are identiﬁed and are in the early stages of being
implemented for the new strategy.

Strategic Element Four

Element Four of our strategy is to be organised
to gain the Beneﬁts of Scale and Breadth.

Those are the key elements but there are other ingredients like
Dignity Ventures, a new division that we set up in 2021 to back
innovative businesses in the end-of-life space who might beneﬁt
from working with the Dignity organisation without becoming 
part of it, and in our property division we believe we have value 
and income potential within the property estate. At our coﬃn
manufacturing facility in East Yorkshire, we believe we have the
capability to grow our business outside of Dignity.

Business Model
We are conﬁdent that as the strategy works then the business
should grow, increase its share of the market and through growth
increase its competitiveness and proﬁtability. An important feature
of our business model is the operational leverage. Around two
thirds of our cost of doing a funeral is ﬁxed cost and so the marginal
cost of every unit of growth is only one third of the overall cost. 
On our current numbers (taking total funeral overhead costs and
dividing them by the funerals undertaken in 2021) it costs us £1,830
to deliver a funeral. 

If we grow volumes by say, 20 per cent, then that cost would drop 
to £1,520 which we could use to be either more competitive or more
proﬁtable. The success of the strategy lies in its ability to create this
virtuous circle of improvement, and these are the numbers we will
focus on along with the underlying average revenue on funerals
(£2,548 in 2021 versus £2,522 in 2020) and cremations (£887 in
2021 versus £885 in 2020). 

The business model for us, whether it is for funerals or cremations,
is quite simply a function of volume multiplied by the diﬀerence
between the average revenue per funeral or cremation less the cost
of carrying out funerals and cremations and the cost of acquiring
clients. From that result you take oﬀ the central overhead. We will
give you the building blocks of the business model so you can judge
how we are getting on. (See below). 

When it comes to funeral plans their contribution comes from any
surplus that can be generated by holding the proceeds of plan sales
in trust less the cost of acquiring plans and the ultimate cost of a
funeral. In 2021 a strong return on the Trust assets of 9.1 per cent
(£88.2 million on starting assets of £967.1 million) was generated
but that came after a lower return last year of 4.0 per cent (£38.3
million on £947.5 million). It's a measure that must be judged over
multiple years and our long-term goal is to exceed the rise in
funeral cost inﬂation by three per cent per annum. See alternative
performance measures on page 184 for how it's calculated. 

The returns that the business makes need to be judged against 
the capital used to make them. To assist this we have developed 
a measure we call Cash Return on Core Capital (‘CROCC’). In 2021
the CROCC fell to 9.7 per cent from 16.9 per cent in 2020. Returns
that are not distributed are retained in the business and it is one 
of the key responsibilities of the Chief Executive to see that they are
allocated wisely. See alternative performance measures on page 
185 for how it's calculated and why we use it.

Capital Structure
The performance of the business is supported by the capital
supplied by shareholders and bondholders. We have previously
discussed our desire to operate a lower level of indebtedness. We
currently owe £527.1 million on our bonds and have Trading Group
cash of £55.9 million. In February, we sought and were granted in
March a waiver on the application of the covenants on our bonds
for 12 months. We took this prudent measure to mitigate the
uncertainty and potential for a drop in the death rate following 
the pandemic.

It is still our intention to address the capital structure most likely by
use of the crematoria portfolio but to do it in a way that does not
change the integrated nature of the Group.  

06

Dignity plc Annual Report & Accounts 2021    

  
Annual General Meeting (‘AGM’)
At last year’s AGM we explained the rationale and underpinnings 
for the change of strategy and this year we intend to show you what
has been achieved so far. 2021’s accounts have been compiled in 
a way consistent with 2020 and at the 2022 AGM we want to share
with you how we will be reporting to you from 2022 onwards. Like
last year we will make a presentation on the strategy.

Last year we had to hold the meeting remotely but this year we
expect to do it in person. If you are able to, please come. We will
again do our best to answer all your questions candidly. We will 
also bring along colleagues from within the business who will give
you a perspective from beyond the Board. You own shares in 
a very special company, come and learn more. 

Outlook
The strategy as set out above is likely to lead to lower proﬁts in the
short-term as we see a full year eﬀect of the lower prices we have
been using since September. Costs have been rising as we have
raised the pay of our lowest paid staﬀ. Conversely, there will be a
beneﬁt coming through from a reduction in the central costs. The
biggest factor aﬀecting us is likely to be the death rate and there is 
a real risk that after COVID-19 passes the excess death eﬀect of the
past two years starts to reverse itself which it will do at some point.

The business is likely to use more cash than it generates as we 
are investing in our facilities to make up for past under investment
and to roll out our new strategy and local branding programmes.
Investment is also needed in technology to improve our productivity
in many areas and the implementation of new procedures and
controls associated with the impending FCA regime.

These ﬁnancial headwinds are a predictable consequence of the
strategy execution. We can ﬁx competitiveness quickly but the
beneﬁts of that in terms of growth and greater productivity come
after. We need to look through to the long-term value being created
by turning Dignity from a business perpetually losing share in
structural decline into a successful and growing business. The
nature of our business model and its vertically integrated structure
means that growth delivers and compounds value.

We still expect to do some form of transaction to ease the leverage
in the capital structure and to align it with the long-term strategy.

We have a stream to cross at the bottom of the valley before we
start our climb to higher ground.

Dignity plc Annual Report & Accounts 2021    

07

STRATEGIC REPORT

STRATEGIC REVIEW CONTINUED

GREAT SERVICE AND GREAT 
CULTURE ARE SYMBIOTIC

Dignity’s people are our most valuable and important asset.
Their dedication, commitment and local knowledge are the
foundations of what we do as an organisation. It is those
colleagues, that provide a service to our clients each day, 
that have been in the forefront of our new strategy and 
our ambitions for organisational change.

Organisations can succeed and fail based on the culture 
they nurture.

It runs deeper than how you treat colleagues. It means that 
each client or stakeholder that connects with your organisation
experiences the beneﬁt of that culture through the service,
partnership or engagement received.

A good culture should reward all of those stakeholders: 

• Clients receive a better service, and in turn we become more

competitive.

• Morale amongst colleagues is high, helping to increase 

retention rates. 

• Trust and empowerment ensures decisions are made quickly 

and decisively.

This is only achievable if we have truly empowered and trusted
people that are well supported and given the right tools and
resources by the business.

Dignity’s people are our most valuable and important asset. Their
dedication, commitment and local knowledge are the foundations 
of what we do as an organisation. It is those colleagues, that provide
a service to our clients each day, that have been in the forefront of
our new strategy and our ambitions for organisational change.

We are our community
We operate in a truly unique sector. The funeral profession remains
one of a few timeless pillars in communities. It has existed for
millennia and had a role in society for centuries. 

• Colleagues feel safe to try new things, to share ideas, and learn

You can see that heritage across the Dignity network today.

from each other.

• A reputation for making ethical decisions means third parties 

are proud to partner.

• A safe environment to test and learn results in people becoming

more dynamic and entrepreneurial.

• Performance improves and businesses experience stability 

and growth.

Central to this is ensuring Dignity has a clear business vision and 
an understanding of our social purpose that people and culture 
can align to.

Last year we set a clear direction for Dignity’s future. Our vision is to be
the most trusted end-of-life service provider in the UK, but also the most
inspirational and rewarding employer for those who work with us.

Not only do the services we deliver reach families across all
generations at an immediate time of loss and need; we also care for
those no longer with us and provide a place for people to remember
loved ones for decades to come in our memorial grounds and
cemeteries.

The people in our business that operate those locations are from 
and are embedded in their community more than many of the
businesses on their respective High Street and are likely to have 
done so for periods spanning decades. 

Our culture must nurture the unique position our teams ﬁnd
themselves in; channelling that knowledge, insight and relationships
into the strategies that deliver high-quality services, improve choice
and ﬂexibility for clients, and grow market share locally.

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Dignity plc Annual Report & Accounts 2021    

  
Centuries of history and heritage 
in our communities

Our oldest funeral directors have been providing services for
their local community on the south side of Glasgow since 1812. 

J Rymer Funeral Service was originally founded in 1848 in York,
and the branch moved to its current premises in 1967. Today it 
is managed by the sixth generation of the Rymer family, who is
also a newly appointed Head of Region for the North East. 

Similarly, Gordon Barber opened the doors to his ﬁrst funeral
home in the late 1960’s, exchanging hands through four
generations of family. His great granddaughter was recently
appointed to Anglia’s Head of Region.

East London Cemetery in Plaistow was laid out in 1872 to meet
the increasing demand from the City and surrounding areas 
of East London. It is the oldest cemetery managed by Dignity.

Charles Paine opened his ﬁrst funeral home in Station Road, 
New Malden, in 1884. Ten years later the business was passed on
to his eldest son, Frederick W Paine, who opened further funeral
homes over the next few years. 14 of these continue to serve
their local communities in south west London as part of the
Dignity network under a newly appointed Business Leader.

Birmingham Crematorium is the oldest crematorium operated 
by Dignity, and when it was opened in 1903, was one of only nine
such facilities in the UK.

Funeral & Crematoria Services & Client Call Centres

Heads of Regions

Central Teams

Leadership

Board

In our new inverted structure, our Business Leaders and operational
funeral and crematoria teams are the focus of how we allocate resource,
how me make decisions, and how we adapt our services to meet the needs
of communities. The Board, senior leadership and central support
functions are there to serve our regional colleagues.

We will learn and grow
A true Learning Organisation is where people feel safe to fail, and
eager to learn. It is where an organisation's structure is cleverly
designed to tap into their peoples' commitment and experience,
and where openness and collaboration ﬂourish. 

Inverting our business
Dignity plc, in its previous construct, grew its network of crematoria
and funeral businesses by acquisition, but the challenge has been
bringing its colleagues along on that journey. 

It is where colleagues can be ﬂexible and are trusted to make
decisions, and where the trying is celebrated as much as the
successes. And it is where the organisational leaders model 
these attributes, and are fair, transparent and good mentors.

A review of how we are structured identiﬁed the need to deepen
the connection between our Board, senior leadership, and those
that are in operational roles to help breakdown some of the 
internal barriers.

Our teams already provide an excellent service to our clients, but 
a localised structure that delivers a community focussed service,
improves decision-making, and taps into experience and knowledge
at a business and community level, will deliver a better service.

We are therefore focussed on turning the business on its head,
through better support, greater investment, and true
empowerment of our people. This is delivered by:

This is the culture and environment we are beginning to develop 
at Dignity. 

The most important thing we can do for our long-term success 
is to consistently deliver exceptional client service, and the best
route to this is through having happy and highly motivated staﬀ.

We have taken signiﬁcant steps forward in 2021 to achieve an
inverted culture through an organisational review and restructure.
However, we must ensure an eﬀective framework is developed
to help colleagues, leadership and stakeholders live and breathe
our new culture and ways of working. Our new Guiding
Principles will be that framework.

• Providing more local autonomy and trust in our people and teams;
• Supporting them with the expertise and scale of our central

What have we done:

support functions;

• Creating a culture of continuous improvement; and
• Facilitating investment where and when it’s needed.

This means moving away from a more traditional organisational
structure of hierarchy, management layers, and top-down decision-
making. Decisions shouldn’t be driven primarily by corporate goals,
rather centred around improving the delivery of our services to
clients and led by local teams. This is underpinned by professional
expertise in our support functions and a framework that helps our
local teams make the right decision for their clients.

• Inverted pyramid so that decision-making is led by client needs 

not corporate goals.

• Delayered the business to enable quicker, more localised 

decision-making.

• Empowered colleagues to operate their business as if it were 

their own. 

• Introduced our new Guiding Principles.
• Established a common purpose through our new vision.
• Made an investment in colleague development, including

performance reviews, training (‘Dignity Academy’).

• Introduced the Real Living Wage.
• Improved and increased channels of communication to reach all
colleagues, including new news bulletins, improved functionality 
of our internal news site and a new virtual Town Hall.

Dignity plc Annual Report & Accounts 2021    

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OUR GUIDING 
PRINCIPLES

By inverting the pyramid, we are putting trust in our frontline
colleagues to make the right decisions for our business. Colleagues
will have the freedom to innovate, try new ways of doing things and
push our sector forward.

To empower our colleagues to seize this opportunity and make 
a success of it, we must foster a culture where it is safe to fail and
learn from mistakes. We needed to create a framework giving our
colleagues the tools to make decisions and innovate while knowing
that it is the right thing to do for our families, suppliers, partners, local
communities and fellow colleagues. This is why we have created
Dignity’s new Principles.

What are the Principles?
Our 12 Principles create a framework for our colleagues to live by.
They are the foundations of everything we do. These are much more
than just a mission statement or set of values, they are our moral
compass and the essence of our culture. 

Strategy is important in delivering business growth, but having the
right culture is the catalyst to successful delivery. The Principles will
play an important part in the inversion of our organisation and
culture change by giving our colleagues guidance to base their
decision-making on.

The Principles are not a prescriptive list of do’s and don’ts. They are
there to guide and inspire our colleagues to do the right things
especially when it means not making the easy choice. Our colleagues
are all working towards the same goals, but, by using the Principles,
they can choose how best to get there based on their own
demographics, experiences and relationships locally.

What do they mean for Dignity?
The Principles set out how we treat our clients, how we treat each
other, and how we operate our business. They bring together our
core beliefs enabling us to hire, develop and retain colleagues 
whose ethos matches our own and hold each other accountable 
for our actions.

We want to deliver the best results for our clients and embed
ourselves in our local communities pushing forward our socially 
and environmentally friendly initiatives. We also want to work with
suppliers whose core beliefs are aligned to ours. Taking the Principles
into account when making decisions will ensure that as a company
we achieve all of these things.

Firstly, we reviewed our existing corporate values by hosting a series
of workshops with client-facing and operational colleagues from
across all areas of the business. Our focus groups enabled us to
establish the relevance of previously held corporate values and 
their place in our new structure.

On top of this we also sought to establish what qualities would be
desirable in a new hire to the business, what behaviours would help
them to succeed in our organisation and how could we guide all
colleagues to do better for our clients, colleagues and our sector.

We shared the insight from these focus groups with Dignity’s Team
Forum for feedback and then engaged the Senior Leadership Team
to develop the structure of the Principles.

We wanted to ensure the Principles were properly deﬁned, meaningful
and useful for everyday decision-making so we asked our colleagues
to consider diﬀerent aspects of their job and experiences. They
needed to be memorable, achievable and inspirational to truly
empower our colleagues and give them the conﬁdence to know 
they are doing the right thing.

How will they work in practice?
Colleagues should refer to the Principles every day when making
decisions. They oﬀer a guiding star for how we treat our clients, 
fellow colleagues, stakeholders and how Dignity behaves as a good
corporate citizen.

They will empower colleagues locally, reduce bureaucracy and enable
faster decision-making for a more responsive and eﬃcient client
service. We will be engaged in our local communities, forge positive
relationships with our stakeholders and we will collaborate more
eﬃciently in order to achieve our shared goals.

Outside of the cultural impact the Principles will help us deliver 
our business vision, helping us focus our investment, eﬀorts and
resources in protecting our business and ﬁnding diﬀerent ways of
working that will improve our business, our sector and the wider
environment.

The Principles deﬁne the culture we aspire to, and by applying and
embedding them we expect that they will eventually become the
culture. By following the Principles and ensuring our actions are 
in the best interests of colleagues, clients, communities and the
company then we can innovate, explore and be bold.

How did we develop the Principles?
We want our colleagues to feel proud to be aligned to our Principles
so they have been developed by the people who know our business
inside out and who interact with our clients every day – our people.

The Principles that we have created are human and authentic
because they come from real people who care about our clients.
They reﬂect Dignity as the unique, caring business we are now and
the ambitious Dignity we strive to be.

“Strategy is important in delivering business
growth, but having the right culture is the
catalyst to successful delivery. The Principles
will play an important part in the inversion 
of our organisation and culture change by
giving our colleagues guidance to base their
decision-making on.”

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Dignity plc Annual Report & Accounts 2021    

  
          We serve families
We exist to serve our clients, families
and communities for all of their end-of-
life needs. We strive to understand and
meet their needs, whilst acting with
sensitivity and empathy. We are focused
on delivering the highest quality service,
with choice and ﬂexibility for the best
value-for-money.

          We act with integrity
Integrity and openness underpin
everything we do. Our colleagues are
empowered to make ethical decisions
based on good judgement, and we trust
them to do the right thing for our clients.
We communicate internally and externally
with honesty candour. We treat others
how we would wish to be treated if the
roles were  reversed.

          We celebrate life
Whilst we deal with death, we have an
immense appreciation for the beauty 
of life, and we care deeply for our clients
and communities. We help the bereaved
celebrate the memory of lost loved
ones, and we support people in planning
ahead so their families can focus on
remembering. 

          We care for our 
          community
Our colleagues are from the places 
in which they serve and work and 
take pride in knowing the communities
around them. We are a federation 
of local businesses that aim to contribute
to local life, from education and support
on end-of-life matters, to community
initiatives and charity work.

          We aim to contribute 
          to society
We take our duty and responsibility 
as one of the UKs largest end-of-life
providers very seriously. We use our
experience to lead, inform and educate.
We aim to inspire others to raise
standards and to innovate to meet
changing consumer needs. We are fully
committed to the development and
enhancement of regulation in all 
aspects of our industry.

          We respect our planet
We must do the right thing for our
planet. That means prioritising
sustainable practices and continuing 
to research, evaluate and minimise 
our impact on the environment. 
We aim to become the world’s 
most sustainable end-of-life 
service provider.

“Our 12 Principles create a framework
for our colleagues to live by. They are
the foundations of everything we do.
These are much more than just a
mission statement or set of values, they
are our moral compass and the
essence of our culture.”

Family

People

Integrity

S
S

T
T

CLIE N
CLIE N

Innovation

C
C

O
O

L
L

L
L

E
E

A
A

G

G

U
U

E

E

S
S

Humility

S

E

C

I

O

T

I

M

N

M

U

U

strtt iirr vvevv tott
We strive to be 
the most trusted, 
osst tru
respected and valued 
c
v
end of life provider in the 
ofo
P
m
ITIES
CO
O

UK, and the most inspirational and rewarding employer for those 
N
who serve this goal

er
Y

M

N
N
C

A
O

oyo

M

COM
M PANY

Longevity

Life
Life

Care
Care

Society

Partners

Planet

Capital
Capital

          We are only as good as 
          our people
Great service comes from great people
who are aligned to a single purpose.
We work in teams, and just like a family,
we care for and protect our people
and those that we look after. We
embrace our diversity, celebrate our
diﬀerences, and help each other grow.

          We innovate and 

we learn

As a learning organisation, we are
curious and think outside of the 
box, always looking for new ways 
to delight our clients, improve our
services  and meet society’s evolving
needs. Our culture celebrates the
trying and the failing, as much as 
the successes. We test, we pilot, we
learn – starting with “yes”, ﬁnishing
with “what can we do better”?

          We value humility
We consider humility to be an 
essential ingredient for good decision-
making, great service and continuous
improvement. It is this modesty and
selﬂessness that lays at the heart of
the actions we take each day for each
other and our clients.

          We think and act 
          long-term
We aspire to build a great and
enduring business that we are proud
to be part of and that requires a 
long-term perspective. We organise
ourselves to be able to act in that way.
We set ourselves challenging targets
and hold ourselves accountable 
to them. 

          We treat our partners 
          and suppliers as family
We are focused on building long-term,
collaborative relationships that centre
on achieving shared goals. We are
respectful to our partners, we honour
contracts, and we treat them fairly.

          We are good stewards 
          of our owner’s capital
Our goal is to create excellent 
long-term value for our shareholders.
We will allocate capital wisely, organise
ourselves prudently, spend money
frugally and report openly and honestly. 

Dignity plc Annual Report & Accounts 2021    

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ORGANISATION 
RESTRUCTURE 
& LOCAL 
EMPOWERMENT
EXPLAINED

Going forward, we work as one Dignity,
harnessing the local insight and experience 
our front-line colleagues can provide to oﬀer 
our clients a tailored, more seamless service.

We concluded in 2021 that the previous organisational structure
would not give us the eﬀective means of delivering our new strategy.
Our focus is on inversion and to truly achieve this we need to put the
power back in the hands of colleagues who are at the hearts of their
local communities, serving our clients every day.

Going forward, we work as one Dignity, harnessing the local insight
and experience our front-line colleagues can provide to oﬀer our
clients a tailored, more seamless service. They are free to innovate
and operate their part of our business as if it was their own knowing
that they have the support of the national framework Dignity as a
group can provide.

The changes we are implementing puts the emphasis ﬁrmly on client
care and quality of service and empowers colleagues at a local level. 

It gives teams in each region more autonomy to make decisions 
that will create better businesses; ones that respond quickly to 
client needs and provide a comprehensive choice of great value 
end-of-life services.

The role of leadership is to tap into the knowledge, information and
ideas that come from those colleagues closest to our clients and
learn from it.

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Dignity plc Annual Report & Accounts 2021    

  
Regional structure and roles
Working with our regional teams, we carried out a review across the
organisation to understand if the way we are split into divisions and
regions still made sense at our size and scale. Following the ﬁrst
assessment it became clear that many resources and colleagues
were spread too thinly, across too large an area to be able to really
localise our service or empower teams. We also operated as separate
funeral services, crematoria and pre-arranged funeral plan divisions,
creating barriers to eﬃciency and collaboration.

We needed to breakdown these internal barriers and operate as one
company. Merging funeral services, crematoria and pre-arranged
funeral plans into the same structure and creating 12 regions across
our estate is a positive step towards sharing our knowledge and
resources more eﬀectively. The intention here is to encourage a
deeper connection across our teams in a way that delivers a better
service and greater operational eﬃciencies.

We are ﬂattening our structure, removed all management layers 
and replaced them with two new roles into our regional structure –
Heads of Region and Business Leaders. Colleagues working in the
regions will drive their own strategies, led and facilitated by a newly
appointed Head of Region and supported by a team of Business
Leaders who specialise in either funerals or crematoria.

These roles have been created with the purpose of inversion in 
mind and we have carefully recruited candidates into these roles who
understand the distinction between leadership and management,
and who are prepared to support their colleagues to make decisions
on a local level. 

In order for Dignity to oﬀer the best service in a competitive market,
we have had to make signiﬁcant changes to the way we operate. 
This new structure will maximise our strengths, while delivering 
more choice and better value for our clients.

Our focus now is on organic growth and investing in the brands
which are performing and have the potential to grow.

Our 12 Regions

Anglia

Home Counties

North Central

North East

North London

North West

Scotland & Northern Ireland

South Central

South East

South London

South West

West

Local Business & Brand Strategies

“Our ambition is to be the most trusted 
end-of-life service provider, and to do that 
we need to react appropriately to customer
needs on a local level.”

The new structure will empower colleagues to act like business
owners. They will need to analyse, review and meet the needs of 
their clients, communities and stakeholders. To succeed, we cannot
take a one-size-ﬁts all approach, but we must look at our local
demographics and provide a service unique to those communities.

The Heads of Regions are responsible for making a success of
businesses in their respective region. Each Business Leader will be
responsible for delivering their own community-focussed business
strategy and performance.

We want these colleagues to feel empowered to run their locations 
as if it were their own business; to grow the reputation and goodwill,
to provide excellent localised service to clients, and to deliver against
the regional strategy and KPIs for performance and market share.
Business Leaders will continue to have access to the expertise in 
our support functions such as Health and Safety, legal, property,
compliance and communications to help them make the right
decision for their clients.

We are moving to a matrix approach of working whilst central
support functions still playing a signiﬁcant role in the delivery of
regional strategies. 

Through our central support functions, Dignity has subject matter
experts that the new regions can use to help enhance their businesses.
They will have access to dedicated support from people, property,
ﬁnance, health and safety, marketing, compliance and IT resources
who will guide them in their respective ﬁelds. 

Dignity plc Annual Report & Accounts 2021    

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ORGANISATION RESTRUCTURE & LOCAL EMPOWERMENT EXPLAINED CONTINUED

Piloting Our Approach

We have been operating two pilot regions since 1 December 2021.
South Central and South London have been operating under the
new structure with the aim of gathering key insight and examples 
of best practice before we roll the structure out to the rest of 
our network.

Here, Emily Skelton, Head of 
Region for South London, and 
Tony Molyneux, Head of Region 
for South Central talk more 
about the pilots.

Emily: The pilot is going really well. We have had some challenges on
the ground, which you would expect in a pilot, but the new structure
means that we are working more cross functionally across funeral
services, crematoria and overall service delivery. 

Tony: The restructure has caused a domino eﬀect. There are things
that used to work in our old structure that are no longer logical or
beneﬁcial. We are ﬁnding new ways of working all the time, so it is
taking a little while to ﬁnd our feet, but it will make so much more
sense in the long run.

Emily: It is going to take colleagues a little while to get their heads
around it and feel like they have got the permission to think for
themselves and not wait for instruction. It is a huge culture shift, 
and I can see that starting to come out in the Business Leaders
within my team now.

We have promoted a lot of people from in house within my team
and it is so rewarding to see them stepping up into their new roles.
They are really pushing themselves and it is incredible.

Tony: It is hugely important to me that we promote from within, 
that our colleagues feel conﬁdent in their decision-making and are
rewarded for their eﬀorts.  

The biggest piece of advice I have given my team is to hold the hand
of the client all the way through the process. We are looking through
the lens of the client and what is in their best interest and guiding
them on every step of the journey.

Looking Towards the Future

“We have a lot of work to do when it comes 
to implementing our ambitious strategy and
truly localising our service to clients and
empowering our colleagues.”

To illustrate what Dignity businesses could look like in the future,
separate to our pilot regions, we are trialling a number of solutions 
in one small area to see just what is possible to achieve. We will test
and learn from this trial, sharing our learnings to help identify what
we can replicate, what hasn’t worked, and where we need to 
explore further.  

At the heart of everything is empowerment. Our ambition is to
empower every colleague in the business to say ‘yes’ to our clients
and we are focused on oﬀering them the best-quality service at 
great value prices. 

Every location will be diﬀerent when it comes to making this a reality,
but our experience in this single location has provided invaluable
insight into what we need to do to roll this out across the group.
There is a long way to go but we are already seeing positive results.

Rebranding
When we started work in our trial area, we had ten branches and
four diﬀerent brands. Our research showed us that we would be
more likely to beneﬁt from consolidating these and maximising 
our investment in a single strong brand. 

After reviewing the four brands, we made a considered choice to
move forward with two brands in the area. One brand being for a
single, very high performing branch. The remaining branches have
been consolidated under a single brand which we are investing in
with new branding, fascia, a new website, local print advertising 
and radio adverts. 

We have seen a strong initial impact from this local branding activity,
and we are winning new business from the new website and print
advertising within a month of them going live.

Empowering colleagues
The trial area has a Business Leader who oversees ten branches and
a care centre which they run as their own business with the support
of central functions. Weekly and monthly reporting is provided which
makes them accountable for their business’s performance and in
turn the individuals running the ten branches. 

The project in the area started in mid-2021 and since then members
of the business have been involved in all major decisions including
pricing, rebranding and marketing which gives them a sense of
ownership of the business. 

A major change in the area has been the introduction of pricing
made at the business level which enables it to be suited to the local
environment. The business has introduced a price oﬀering with a low
priced Unattended Service in the region and unlimited options to suit
any price point upwards. 

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Dignity plc Annual Report & Accounts 2021    

  
Growing capacity 
We want to grow volumes in the trial area and have taken steps 
to grow capacity both within our existing infrastructure and with
additional infrastructure. 

Within existing infrastructure, we have improved the way the care
centre works in conjunction with branches and where this has been
done well, we have seen capacity double. The local team also had
several contracts which were loss making and taking up capacity,
these are being worked through and repriced or exited. 

The best performing branch in the trial area is operating at 
capacity so we are investing in expanding the capacity of this branch
by 50 per cent and the economics of incremental volume in a well
performing branch are very good. We are looking at several other
options to expand capacity of this branch and more broadly across
the trial area.

Work for the future
The work done in the trial area so far has only scratched the surface
and during the year ahead there are several projects which will
advance this further. We will:

• Build out the marketing of the business and reﬁne ways to

measure performance;

• Relocate the Care Centre to give us more capacity to grow volumes.
We also can realise gains from planning changes on freehold land
here;

• Align compensation within the business to the performance of the

business; and

• Continue to do all that we can to learn from our clients and provide

the right service for their needs. 

Early results
We are in the early stages of our trial however initial results are
promising. We have used data and performance reviews to
illuminate local performance. This is far more granular than before,
with clear direction. Currently, volumes are approximately 20 per cent
above the wider business and revenue is already at the level we saw
prior to reducing our prices to become more competitive.  

The local team has developed a new client oﬀering which splits the
funeral service and the cremation provision. Experiences during the
pandemic (due to attendance restrictions and closure of venues)
have brought to light the potential of separating the actual cremation
or burial, from the celebration of life or memorial event. This oﬀers 
a hugely compelling and personalised proposition for clients.
Partnerships with 13 local venues (from country houses to social
clubs) have also been established enabling the team to oﬀer a truly
tailored service at a signiﬁcantly reduced price.

“The most important change that has proven
to be a success in the trial area has been
empowering colleagues to say ‘yes’. Historically,
colleagues have been restricted to what they
can oﬀer clients within the remits of packages
available. By removing these restrictions and
reducing the number of add-on charges, 
the local team now has ﬂexibility to oﬀer
customers a tailored service to suit their
individual needs.“

Properties
As part of the rebranding exercise all branches in the trial area 
have been given new fascia and work is in progress to renovate the
external and internal buildings to match the new branding. We want
every branch to look well-presented, inviting and be a pleasant
experience for customers to visit. 

The branch estate has been reviewed with the intention to grow
volume signiﬁcantly in the future. To do this we have scored each
branch on several factors:

• Demographics in the local area are an important driver 

of branch success; 

• Location should be in an area with high footfall and easily accessible;

• Suitability for a use as a funeral director branch;

• Utilisation and whether the branch is operating at its full capacity;

• Proﬁtability; and

• Return on Invested Capital.

Over time we will improve the scores of the branches by renovating,
relocating and, should no other option be viable, closing branches. 
So far, we have closed one branch where the demographic of the
location indicates that we are unlikely to see a good return on the
cost of our investments. However, we are in the process of expanding
capacity at another branch within the trial area and we are looking 
at options to relocate another two branches for increased capacity.

The branches in the trial area comprise a combination of leasehold
and freehold properties so we have been reviewing the freehold
properties to ascertain whether we are getting the best use from
them. We are also pursuing other opportunities in this area to
change use of some freeholds which will enable us to realise gains
and move to locations which are more suitable for our purposes. 

Dignity plc Annual Report & Accounts 2021    

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STANDARDS, 
REGULATION 
& COMPLIANCE

“We are proud of how we care for our clients
and families and aim to continuously improve
our approach to delivering high-quality
services and standards.”

Our mission is to drive forward positive change in the sector and
become a true market leader with an unrivalled focus on quality,
transparency and choice.

To achieve this, we recognise the importance of investing in our
people, digital platforms, and facilities; as well as empowering our
colleagues to make the right decisions that deliver a positive
experience and outcome for our clients.

As part of our wider strategic and organisational review, we have
considered how governance, compliance, and risk management 
is implemented across Dignity. This has identiﬁed an important
opportunity to design our framework in a way that not only meets
the expectations set by government but exceeds them, while also
raising the benchmark for all funeral businesses and crematoria
operators in our industry.

The Dignity Standard
Dignity’s aim is to develop a suite of sector-leading policies and
practices that will form our Standard Operating Procedures (‘SOP’).
This will be at the core of everything we do regarding our care for
clients and deceased persons. It includes a review of our guidelines
for security and identiﬁcation, access to premises and mortuaries,
care for the deceased and all other important policies for both
observed and unobserved procedures.

Each procedure will require a brief and research into best practice
across our business and the sector. The procedure will then be
shaped and reviewed through the collaboration of colleagues and
shared across the business. Due to the scale of what this will cover,
we’re seeking to launch the SOP in phases to ensure each element 
is given the right degree of focus and priority. 

A steering group has been tasked with developing the guidelines and
includes a cross-section of colleagues from funeral and crematoria
operations, property, health and safety, and learning & development.
We are also addressing vital health, safety and property compliance
requirements, which has been given the full support for prioritisation
and investment by the Board. 

Delivering the Dignity Standard will be reliant upon our Heads of
Region and Business Leaders who have been empowered to identify
areas where we can improve our services and premises, with the
ability to implement policy, invest, or procure a solution.

Long-term the Dignity Standard will be more than a policy or set of
processes. It will become a kitemark for sector leading excellence.

16

Dignity plc Annual Report & Accounts 2021    

  
Embracing and Preparing 
for Regulation 

This year a signiﬁcant programme of work has been implemented 
to deliver compliance with the CMA statutory requirements for the
sector, whilst also navigating the authorisation process for the FCA
forthcoming regulation of the pre-paid funeral plan market.

CMA implementation and compliance
The CMA launched a market investigation into the funeral sector in
March 2019 and published their Final Decision Report in December
2020. It identiﬁed a need for change and set out a range of price
transparency and service information requirements that all funeral
directors are obliged to follow.

The remedies set out by the regulator include requirements for
standardised price information for a core set of products oﬀered 
by funeral and crematoria providers across the UK. Through a
collaborative approach and the dedication of colleagues, we were
committed to complying with the obligations, delivering this in
advance of the CMA’s statutory deadline in September 2021. 

Furthermore, Dignity’s new pricing strategy (set out on page 4), 
which seeks to deliver genuine value-for-money, complements the
CMA’s aims rather than have them imposed on us. We are proud 
to say we now oﬀer some of the most competitively priced funeral
services in the UK.

We will continue to constructively engage with the CMA, in addition 
to our commitment to ongoing compliance with the formal
regulatory orders.

Regulation of quality and standards
The CMA also set out clear recommendations to the Government 
for quality and standards regulation, which has been under
consideration by the Ministry of Justice. 

Dignity has supported calls for stronger oversight of the standards
delivered by the funeral and crematoria profession for some time,
but we recognise there is still work to be done to ensure that we
ourselves are delivering truly market leading best practice. 

In 2018 we initiated and sponsored a cross-industry working group –
the Funeral Service Consumer Standards Review – which focussed 
on improving how information about quality, pricing and choice is
communicated with consumers, and the development of a Code 
of Practice for Funeral Directors. 

The initiative was handed to an independent secretariat to maintain
impartiality from any one funeral provider, and has resulted in the
formation of the Independent Funeral Standards Organisation (‘IFSO’).
We strongly support the progress IFSO has made and look forward 
to working with the body should it transition into a government
endorsed self-supervisory body for the sector.

More widely, we have also worked closely with the Scottish
Government to develop its approach to regulation of the sector 
and provision of services, including the anticipated implementation
of a new Code of Practice for Funeral Directors that will sit under 
a legal framework in Scotland.

“Through a collaborative approach and the
dedication of colleagues, we were committed 
to complying with the obligations, delivering
this in advance of the CMA’s statutory deadline
in September 2021.”

Dignity plc Annual Report & Accounts 2021    

17

STRATEGIC REPORT

STRATEGIC REVIEW CONTINUED

STANDARDS, REGULATION & COMPLIANCE CONTINUED

FCA Regulation

The pre-paid funeral plan market is about to change. From 29 July
2022, all funeral plan providers in the UK will be regulated by the
FCA. The statutory oversight follows several years of campaigns,
Government calls for evidence, and formal consultation with the
funeral industry. Dignity has welcomed the onset of regulation 
for the industry.

The regulations set out by the FCA are designed to make products
work better for consumers, to create competition, and enable a
stable marketplace. It means that once the regulations come into
force, companies that want to continue to sell or carry out funeral
plans will need to be authorised by the FCA and conform to their
rules, or risk committing a criminal oﬀence.

We have engaged with the FCA throughout its process and support
the regulatory framework to be implemented across the market. We
are pleased to conﬁrm that Dignity submitted its formal application
for authorisation at the end of 2021.

Regulation Timeline

2019
JUNE HM Treasury consult
on statutory regulation
through the FCA.

2021
MARCH consultation paper issued.
APRIL responses to consultation 
submitted. 
Q3 Policy Statement with Final 
Rules published. 
SEPTEMBER FCA application opened.

2026
FCA to evaluate the eﬀectiveness 
of their measures.

2020
MARCH HM Treasury conﬁrmation.
NOVEMBER HM Treasury lay 
required legislation.

2022
JULY FCA to regulation of Funeral
Plans begins.

The regulations set out by the FCA are
designed to make products work better 
for consumers, to create competition, 
and enable a stable marketplace.  

18

Dignity plc Annual Report & Accounts 2021    

  
Regulation of Funeral
Plans Explained 

Q&A

Why is regulation of funeral plans
being introduced?
In March 2020 HM Treasury announced 
that pre-paid funeral plans would be subject
to regulation by the FCA. This decision
followed several years of campaigning by
Dignity, and we believe that regulation will
prevent the small number of unscrupulous
ﬁrms undermining what is otherwise an
important market.

Funeral plans are valuable products that
enable people to plan and pay for their
funeral in advance. Around 170,000 are sold
in the UK each year and for many people
they are the best way to fund their funeral,
helping them to prevent the cost falling 
onto their loved ones.

Research we commissioned, working
alongside independent consumer
organisation Fairer Finance, identiﬁed
evidence of high-pressure sales tactics and
other poor practices in the sector. Critically,
because regulation in the funeral plan
market has historically been voluntary, there
has been a lack of consumer protection and
no ombudsman service.  

Consumers need to have the same
protection buying a funeral plan as they do
with other ﬁnancial products and Dignity is
proud to have supported the calls for this 
to happen. 

What do the new rules mean? 
In addition to ﬁrms being required to 
have formal FCA authorisation, a range of
measures are being introduced to tackle
evidence of poor practice and mis-selling,
whilst introducing greater protections for
consumers should a plan provider fail. 
The process is to ensure:

• Firms sell products which oﬀer fair value,
meet consumer needs and are sold fairly.
• Firms are well run, adhere to high conduct
standards and have suﬃcient resources
and risk transfer arrangements so they 
can deliver funeral services.

• Consumers have time and all the

information they need to make better
informed decisions when choosing
between diﬀerent products and whether 
a funeral plan is right for them at all.

How will consumers be protected?
To gain approval to operate in the regulated
market, ﬁrms will be subject to rigorous
assessment against the FCA’s standards. 
If providers do not receive authorisation,
they will no longer be able to oﬀer their
products to consumers. This will result in a
more reputable and trusted product that
better serves the need of those looking to
arrange and pay for their funeral in advance. 

FCA regulation will provide continuity for
customers where their plan provider fails, 
by allowing their plan to be transferred to 
a new company on the same terms as the
original contract. The rules will also ensure
that consumers can receive compensation
from their ﬁrm if a transfer to another
provider is not possible. 

The regulator will ban cold calling and set
new standards on advertising to ensure
funeral plans are marketed and sold fairly.
They will also carry out thorough checks 
on providers to improve governance and to
ensure the owners of the business reach 
the high standards required to operate in 
a ﬁnancial services market. 

Customers will have access to redress
options, including FSCS and the Financial
Ombudsman. 

The FCA will also introduce other
mechanisms to safeguard consumers, 
such as introduction of a guarantee to
receive a full refund if a plan is cancelled
within 30 days of purchase, or only pay 
a reasonable charge thereafter.

Dignity plc Annual Report & Accounts 2021    

19

STRATEGIC REPORT

STRATEGIC REVIEW CONTINUED

STANDARDS, REGULATION & COMPLIANCE CONTINUED

Q&A

Our new strategic vision 
seeks to maximise scale and
breadth of Dignity as a group,
with the FCA rules acting as 
a catalyst for us to consider
how we sell our funeral 
plans direct and through our
branch network. The beneﬁt
for the consumer being 
one trusted, respected and
regulated funeral plan
provider that will also deliver
the funeral to the highest 
of standards at the point 
of need.

How has Dignity prepared for 
FCA regulation?
A signiﬁcant programme of work has been
underway to provide the comprehensive
evidence and analysis required by the FCA
for Dignity to seek authorisation. We are
pleased to conﬁrm this was submitted in
December 2021.

Taking a collaborative approach across the
entire Group, our programme has been
managed by a team of project managers and
specialists to ensure regulatory readiness. 

FCA regulation impacts almost every 
corner of our business. The new policies 
and procedures we are developing will 
need to be adopted by Dignity colleagues
and FCA training will be mandatory for those
participating in the development, marketing
and sale of funeral plans. 

A new governance structure overseen by 
a dedicated Board has been introduced to
address the FCA guidelines on responsibility
and operations. Designed to increase focus
on accountability and raise standards of
professional behaviour, the Senior Managers
& Certiﬁcation Regime is one of the most
signiﬁcant aspects of regulation for the
funeral plan sector. We are in the process 
of appointing suitable people to required
positions, all of whom will go through the
FCA’s rigorous checks.

Our terms and conditions will all need to 
be compliant, and we are ensuring all plan
paperwork is updated. We are creating a
new online sales system for funeral plans
and are training our people on how to use it.
We are updating our websites and policies
and processes. And we are taking the new
regime as an opportunity to consider how
we develop a new and exciting proposition
for our clients.

What does FCA regulation mean
for the sale of funeral plans through
corporate partnerships?
The FCA has banned commission payments
to intermediaries or corporate partners, such
as those Dignity had with building societies.
As a result, Dignity has begun to exit the
majority of our partnerships and will have 
no commission-based relationships once
FCA regulation begins.

Our new strategic vision seeks to maximise
scale and breadth of Dignity as a group, with
the FCA rules acting as a catalyst for us to
consider how we sell our funeral plans 
direct and through our branch network. 
The beneﬁt for the consumer being one
trusted, respected and regulated funeral
plan provider that will also deliver the 
funeral to the highest of standards at the
point of need.

Does Dignity have an FCA
compliant trust under the 
new rules?
Dignity funeral plans are backed by
independent trusts that at 24 September
2021 held actuarial assets that are 136 per
cent of the actuarial liabilities. This is well 
in excess of the 110 per cent minimum
required in the new FCA rules. We are in the
process of establishing a new trust designed
for the FCA framework and it is our intention
to merge the existing trusts into that one.
The new trust being created will provide 
even greater protections for funeral plan
customers because from 29 July they will 
be covered by the FCSC (Financial Services
Compensation Scheme).

20

Dignity plc Annual Report & Accounts 2021    

  
STAKEHOLDER ENGAGEMENT
& DECISION-MAKING

SECTION 172(1) STATEMENT

Section 172(1) of the Companies Act 2006 imposes a general duty on every company director to act in a way that promotes the success 
of the Company for the beneﬁt of shareholders as a whole. In so doing, the Company must have regard to wider expectations of responsible
business behaviour, such as having due regard to the interests of, and actively engaging with, its employees; the need to engage and foster
business relationships with suppliers, customers and others; the need to act fairly as between members of the Company; the likely
consequences of any decision in the long-term; the desirability of maintaining a reputation for high standards of business conduct; and 
the impact of the Company’s operations on the community and the wider environment.

The Directors continue to have regard to the interests of the Company’s stakeholders, in accordance with s172 of the Companies Act. 
This statement explains how the Board complies with its obligations, reviews the principal decisions made by the Board and how the 
Directors have engaged with stakeholders.

Our approach to stakeholder engagement
The Board recognises the importance of our stakeholders’ views and seek to do the right thing and deliver on our strategy in a way that
beneﬁts all of our stakeholders. Engaging with a range of stakeholders informs the Board’s decision-making, builds trust and is key to
delivering Dignity’s strategy in the long-term. Underpinning our stakeholder management and engagement processes are our Guiding
Principles, which deﬁne the principles and values that shape our culture.

Stakeholder engagement takes place both directly and indirectly. Shareholder engagement activities are overseen by the Board and are led 
by the Chief Executive and Interim Chief Financial Oﬃcer. The Dignity Team Forum has continued to meet regularly during the year, debating
issues from business performance and operational initiatives, Board remuneration policy to future strategy and vision. Minutes of forum
meetings are made available to members of the Board. Further information on the Forum’s role and meetings can be found on pages 67 and 68.

In addition, Board visits to crematoria, funeral homes and branch sites are also arranged as part of a new Directors’ induction and have
continued throughout the year to provide the Directors with ﬁrst-hand insight into our culture.

OUR STAKEHOLDERS 

Stakeholder

Key priorities

How we engage

Our clients 
We exist to serve our clients, families, and
communities for all of their end-of-life needs. We
strive to understand and meet their needs, whilst
acting with sensitivity and empathy.

• Customer service and satisfaction.

• Choice and ﬂexibility of products and services.
• Value-for-money.

Our colleagues
Great service comes from great people who 
are drawn to our purpose and care about the
families we look after, as well as each other. We
work in teams and act like a family. We embrace
our diversity, celebrate our differences, and help
each other grow.

• Employee engagement.

• Empowerment in decision-making.

• Health, safety and wellbeing.

• Ethics, culture and transparency.

• Access to learning and development
opportunities.

• Talent management.

• Fair rewards and beneﬁts.
• Inclusion and diversity.

• Sustainability and climate resilience.

• Carbon reduction plans.

• Greener energy sources.

• Recyclable waste.

• Education and support on end-of-life matters.

• Serving local communities. 

Our communities and the
environment
Our colleagues are from the places in which they
serve and work and take pride in knowing the
communities around them. We are a federation
of local businesses that aim to contribute to local
life, from education and support on end-of-life
matters, to community initiatives and charity
work. We aim to become the world’s most
sustainable end-of-life service provider.

We engage and interact with our clients directly
through our branches, telephone and online.  

We closely monitor the results of client surveys in
order to focus on areas in which we can improve
our service and add value for our clients. Satisﬁed
clients are essential for a sustainable and
successful business.

We engage with our employees and gather
feedback through meetings, employee surveys,
our internal magazine and newsletter, company
wide emails, and The Dignity Team Forum.

In June 2021, the Slack communication platform
was introduced to encourage greater collaboration
and communication amongst our colleagues.

We engage with local communities through
helping out with special events, hosting open 
days, volunteering, communal celebrations 
and supporting locally focussed charities. Our
colleagues continue to build strong links through
engagement with local initiatives and fundraising
for charities and support many events each year.

We work pro-actively with local authorities and the
community at large to progress environmental
initiatives and ensure we operate in accordance
with environmental legislation and best practice. 

For further information, please see: 
p.26 to p.39.

Dignity plc Annual Report & Accounts 2021    

21

STRATEGIC REPORT

STAKEHOLDER ENGAGEMENT 
& DECISION-MAKING CONTINUED

OUR STAKEHOLDERS CONTINUED

Stakeholder

Key priorities

How we engage

Our partners and suppliers 
We are focussed on building long-term,
collaborative relationships that are focussed 
on achieving shared goals.

• Innovation and technology.

• Quality of service.

• Sustainable materials and sourcing.

• Collaborative relationships.

Our investors and bondholders
Our goal is to create excellent long-term value
for our shareholders. We will allocate capital
wisely, organise ourselves prudently, spend
money frugally and report openly and honestly.

• Financial performance.

• Business model and strategy.

• Environmental, Social and Governance issues.

• Inclusion and diversity.

• Risk management.

• Remuneration policies.

Regulators
We are fully committed to the development 
and enhancement of regulation in all aspects 
of our industry.

• Consumer protection.

• Risk management.

• Governance.

• Product service and delivery.

Our Supplier Management Policy sets out the
processes that Dignity colleagues should follow
when procuring and managing suppliers who
provide Dignity with goods and services. We
engage with our suppliers primarily through
regular supplier management meetings and
annual reviews to ensure that relationships are
working well, and goods and services provided 
to Dignity are in accordance with the contract,
Dignity’s policies, and providing value-for-money.

We engage with investors throughout the year 
via our regulatory reporting including the Annual
Report and Accounts, our full year results, half 
year results, trading updates and our Annual
General Meeting.

The Group’s principal source of long-term debt
ﬁnancing is the Secured A Notes and the Secured
B Notes. We met with our bondholders in February
2022 to seek support for a temporary waiver of
the Financial Covenant on a precautionary basis in
relation to the Group’s debt obligations under the
Group’s Secured Notes.

For further information, please see: 
p.56 and p.104.

We have worked closely with the CMA and the 
FCA in implementing changes to our pricing and
launching competitively priced products and
preparing for regulation of the funeral industry.

For further information, please see: 
p.16 to p.20.

Decision-making and considering the long-term interests of stakeholders
We recognise the importance of engaging with stakeholders to inform our strategy and Board decision-making. Relevant stakeholder interests
are taken into account by the Board when it takes decisions. In making its decisions, the Board considers the outcomes of relevant stakeholder
engagement, as well as the need to maintain a reputation for high standards of business conduct, the need to act fairly and the long-term
consequences of its decisions. We believe that principal decisions are both those that are material to the Group and/or those that are
signiﬁcant to any of our key stakeholder groups.

The following principal decisions and activities demonstrate how the Board has assessed and addressed diﬀerent stakeholder interests in
making decisions that support the implementation of the Group’s long-term strategy. 

22

Dignity plc Annual Report & Accounts 2021    

ORGANISATIONAL RESTRUCTURE AND STRATEGY

Overview
During 2021, Dignity set a new vision and strategy to achieving growth through commercial competitiveness, empowering client-facing
employees, investing in our infrastructure, introducing a co-operative structure, and making greater use of digitalisation and improved
processes to ensure the business can operate more eﬃciently long-term. An organisational review and restructuring exercise
commenced and that organises our businesses into smaller groups where autonomy is devolved, and each region has opportunity 
for decision-making and local developments. 

Decision-making factors
The Board carefully considered the following factors:

• The competitive environment.

• Our Operating Model and opportunities to digitise and enhance services at local level.

• Capital structure and funding requirements.

• Regulatory requirements.

Stakeholder engagement
We reviewed the structure across the organisation to assess whether it remained appropriate in relation to the strategic goals for the
company. The assessments identiﬁed that we needed to organise our business diﬀerently to provide a truly localised service and
empower our teams. To deliver the restructure and introduce the new Head of Region and Business Leader roles, we have followed
the required consultation process with those colleagues aﬀected by the changes, as well as engaging our Dignity Team Forum
members at the appropriate point.

The Board considered the interests of stakeholders, and believes that implementing these signiﬁcant changes to our business model
and structure will be beneﬁcial to the following stakeholders for the following reasons:

• Clients and communities: it provides our clients and communities with greater choice of services and better value-for-money.

• Colleagues: it empowers our colleagues to make the right decisions that deliver a positive experience and outcome for our clients.

• Partners and suppliers: fosters better working relationships with our partners and suppliers and oﬀers our clients a truly tailored

service at a signiﬁcantly reduced price.

• Investors: it supports sustainable future growth of our business and delivers enhanced long-term value to our investors.

• Regulators: it facilitates collaboration with regulators to deliver funerals to the highest of standards at the point of need.

Outcome
• A new regional structure was announced to investors in September 2021, merging funeral services, crematoria and pre-arranged

funeral plans into the same structure and creating 12 regions across our estate.

• Greater focus on organic growth and investing in brands that are performing well and have potential to grow.

• Increased communication and engagement with our colleagues.

• Empower our colleagues working in the regions to drive their own strategies.

• Introduction of the Real Living Wage in September 2021. 

• Control framework to include impending FCA regulations.

Dignity plc Annual Report & Accounts 2021    

23

STRATEGIC REPORT

STAKEHOLDER ENGAGEMENT 
& DECISION-MAKING CONTINUED

FCA REGULATION PREPAREDNESS AND PRICING REVIEW

Overview
The FCA opened its application window in September 2021 for funeral service providers who want to sell funeral plans. In addition, 
the CMA launched a market investigation into the funeral sector in March 2019 and published their Final Decision Report in December
2020 which set out a range of price transparency and service information requirements that all funeral directors are obliged to follow.

Stakeholder engagement
The Board carried out extensive stakeholder engagement including the establishment of a project team with appropriate steering and
working groups in operation, allocated project resource and received regular updates on the project’s progress.

The Board considered the following factors:

• Pricing strategies and how best to meet the needs of our clients and achieve the quality and standards required by the CMA.  

• New policies and procedures to be developed to ensure Dignity colleagues can fulﬁl FCA requirements in developing, marketing and

sale of funeral plans. 

• The appropriate governance structure to ensure Dignity is able to comply with the new regulatory regime. 

Constructive engagement took place with both the FCA and CMA and a major programme of work was overseen by the Board to
ensure that Dignity has the right governance, processes, products and infrastructure to meet our regulatory requirements and provide
a pricing strategy which seeks to deliver genuine value-for-money for our clients. 

Outcome
• FCA Application was submitted successfully in December 2021.

• Launched competitively priced funeral products in September 2021 to truly lower the cost of dying for families.

• We ended our relationship with those third-party telephony partners who sold plans on our behalf and focussed on prioritising 

the sale of funeral plans through our branches.

• Designed new guidelines and standards around how we operate to increase focus on accountability and raise standards of

professional behaviour.

• Created a new online sales system for funeral plans and provided training for our people on how to use it.

PROPERTY REVIEW, COMPLIANCE AND INVESTMENT

Overview
As part of the organisational review, the Board oversaw a signiﬁcant programme of investment in our property portfolio focussing 
on providing high standards of care for our colleagues and the deceased. 

Stakeholder engagement
The Executive Committee, with the support of a working group comprising of a cross-section of colleagues from funeral and
crematoria operations, property, health and safety, and learning & development reviewed our approach to compliance and health 
and safety and established and prioritised remedial actions to be undertaken in the branches. The Board allocated project resource
and received monthly updates from the Chief Operating Oﬃcer on the project’s progress.  

The Board considered the interests of stakeholders and in particular, our clients, colleagues and investors’ interests. The Board
believes that having well-presented and inviting premises is important in providing a positive and pleasant experience for our clients
who visit our premises. Also, greater investment in our premises assures a safe work environment for our colleagues so that they 
may continue to provide high-quality services to our clients, and increased asset value of the property estate.

Outcome
• Recruitment of a Head of Property to strengthen the capability and resources of the Property team and manage the long-term

development, investment and refurbishment of our property estate.

• Prioritisation of eﬀorts around larger scale projects such as refurbishments of mortuary facilities, renovations and redecoration.

• Development of a framework for local colleagues to be empowered to take action on health and safety across the business,

compliance and mortuary care of the deceased.

• Launch of new Standard Operating Procedures (‘SOP’) across the business, focussing heavily on health and safety, property

compliance and the care of deceased and mortuary facilities.

• Enhanced management information reporting on property compliance by region.

24

Dignity plc Annual Report & Accounts 2021    

  
CULTURE AND LAUNCH OF GUIDING PRINCIPLES

Overview
As part of the broader strategic review in 2021, the Board considered the Group’s vision and Principles and how they deﬁne the
principles and values that shape our culture, our ambitions for the future and our relationship with our stakeholders. Further
information on how the Guiding Principles were developed can be found on pages 10 and 11.

Stakeholder engagement
The Board recognised the collaborative eﬀorts of our client-facing and operational colleagues in developing the Guiding Principles 
and received monthly updates from the Chief Executive and Chief Operating Oﬃcer in relation to their progress.

The Board considered the interests of the following stakeholders in turn and what is important to each of them:

• Clients.

• Colleagues.

• Communities.

• Partners and suppliers.

• Shareholders.

• Regulators.

Outcome
• Successful launch of the Guiding Principles in early 2022.

• During 2022, the Board will continue to embed these Principles and apply them consistently in decision-making, which will beneﬁt 

all of our stakeholders.

Dignity plc Annual Report & Accounts 2021    

25

STRATEGIC REPORT

ENVIRONMENTAL,SOCIAL 
AND GOVERNANCE (‘ESG’)  

Family

People

SOCIETY AND
SUSTAINABILITY

Life
Life

Care
Care

Integrity

S
S

T
T

CLIE N
CLIE N

Innovation

C
C

O
O

L
L

L
L

E
E

A
A

G

G

U
U

E

E

S
S

Humility

S

E

C

I

O

T

I

M

N

M

U

U

strtt iirr vvevv tott
We strive to be 
the most trusted, 
osst tru
respected and valued 
v
c
end of life provider in the 
ofo
P
m
ITIES
O
CO

UK, and the most inspirational and rewarding employer for those 
N
who serve this goal

er
Y

M

N
N
C

A
O

oyo

M

COM
M PANY

Longevity

Society

Partners

Planet

Capital
Capital

Positive social impact

We deliver vital services to support people at one of the most
diﬃcult times of their lives and we do this in a manner that is both
socially and environmentally aware.

The decisions we make will always be inﬂuenced by the needs 
of our stakeholders, including clients, colleagues, policymakers 
and investors. 

However, there is also a commitment which underpins the Dignity
Group – to do business ethically and without negatively impacting
the environment, local communities or society as a whole. 

It is a responsibility we take extremely seriously as we work towards
our goal of becoming the UK’s most trusted, respected and valued
end-of-life provider.

Why it matters
Social and environmental factors are ﬁrmly integrated into our
business operations and interactions with stakeholders. We take 
a long-term view in favour of seeking quick ﬁxes so that our
operational approach remains sustainable.

Being socially accountable matters to us because it matters to other
people. It drives consumers to make choices when looking for a
service provider; it aﬀects investment decisions among shareholders;
it helps attract and retain great talent who feel proud of who they
work for. 

“Positive actions will enhance business
reputation, so it is important for us to not 
only embed responsible practices, but to 
share and sometimes even celebrate our
achievements too.“

26

Dignity plc Annual Report & Accounts 2021    

Environment

Introduction
Dignity is the largest provider of end-of-life services in the UK, and we
must face into the responsibility we have to set the bar high for best
sustainable practices and operations in our industry. 

The funeral and crematoria sector has an important role to play in
minimising our impact on our environment as a provider of a key
public service. There is an immediate need for signiﬁcant action by
the leaders in our sector to understand how we can both individually
and collectively create a greener approach to the service we provide
in communities.

We have considered the importance in taking a practical approach to
setting a sustainability target, that secures our role in delivering the
Government’s target of net-zero. 

Dignity’s Climate-Pledge:

“We aim to be ‘net-zero’ across the Dignity
network by 2038.”

We know this is ambitious, but we are committed to leading the 
way and setting the standard in our sector. We can only achieve this
through a strong organisational culture and excellent operations, that
are underpinned by our new Guiding Principles. Dignity’s commitment
will be embedded at our core, with our new Principles including one
speciﬁcally dedicated to protecting our environment and planet.

Our ambition covers the reduction of carbon emissions from all of
our owned operations, from our funeral branches, crematoria, care
centres, to our ﬂeet and a view to mitigate our impact through our
supply chain.

There must be transparent, measured, and achievable targets set 
by us that truly make a diﬀerence to our planet. We are therefore
ﬁrstly seeking to deliver on quick and actionable changes where we
can make a measurable impact on our environmental performance
immediately, such as reducing waste generation across the group, 
a network-wide recycling programme and a policy on single-use
materials. Greater analysis and examination into our operations, 
and how the sector can innovate, is needed to better understand our
longer-term strategy and investment plan. We will begin this process
in 2022, including a detailed climate scenarios analysis and interim
target setting through academic and specialist guidance.

“Dignity’s commitment will be embedded at
our core, with our new Principles including
one speciﬁcally dedicated to protecting our
environment and planet.”

Analysis and strategy development
We are proud to support the introduction of formal climate
disclosures mandated for listed ﬁrms, through the Taskforce on
Climate-related Financial Disclosures (‘TCFD’). Whilst Dignity is exempt
from this requirement for 2021’s reporting, we have elected to take 
a pragmatic step and complete a voluntary disclosure as we believe
TCFD provides a strong framework for our climate pledge and strategy
to develop. We will use the ﬁndings of this year’s TCFD voluntary
submission as the baseline of our Scope 1 and 2 reporting, and 
a platform to understand our Scope 3 emissions in more detail. 

Dignity plc Annual Report & Accounts 2021    

27

STRATEGIC REPORT

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) CONTINUED

Taskforce on Climate-related Financial Disclosures
(‘TCFD’) Report 2021 – Summary Report 
Following the introduction of LR 9.8.6R, Dignity has assessed its
current position regarding the TCFD recommendations, and that 
is summarised in this report. We intend to further embed the
recommendations of the guidance in 2022, i.e., climate-related 
risk analysis using climate scenarios will be conducted to build on 
the physical and transition risks previously identiﬁed in the CDP
disclosure. We will set interim targets to develop our pathway 
to net-zero by 2038.

At Dignity, we want to set the standard for sustainable business
practice in our industry. This means taking action to mitigate our
impact on climate change, being aware of how our business is at 
risk from a changing climate and being transparent about what we
are doing in both of these areas. As such, we welcome the TCFD
disclosure requirements as they provide a framework for reporting
on climate-related risks and opportunities, covering governance,
strategy, risk management and metrics & targets. 

Our journey so far:

2010
• First CDP report submitted.
• Ongoing focus on reducing emissions.

2022
• Board adopts net-zero pledge.
• Standalone TCFD report, climate scenarios
analysis and interim target setting.

2021
• Environmental and Sustainability

Committee established.

• TCFD disclosure included in 

Annual Report.

2038
• Net-zero target date.

Climate change and the funeral and 
crematoria sector
Climate change is causing long-term shifts in global weather patterns
and average temperatures. Carbon emissions need to be reduced
substantially in the coming decades to mitigate the impact. This
means climate change poses both physical and transitional risks 
as we move to a low carbon economy.

The funeral and crematoria sector has a part to play in reducing our
environmental impact. Furthermore, we see increasing customer
demand for eco-friendly options when planning a funeral. These
changes pose risks, challenges and opportunities. At Dignity, we are
keen to minimise our impact and act as a leader for positive action 
in the sector.

Overview – Where do we stand with TCFD?
We support the TCFD recommendations because they provide
transparency and a strong foundation for our roadmap to achieving
net-zero emissions. It describes our present situation, communicates
our expectations for the coming years, and, crucially, identiﬁes where
further work is needed to disclose against all TCFD recommendations
next year. 

We will produce a full, separate disclosure in 2022, including climate
scenarios analysis to allow in-depth risk assessment. This is part of
our ambition to lead the way in environmental sustainability for the
funeral and crematoria sector.

Governance – Ensuring accountability and responsibility
for climate-related risks
Our Board has overall responsibility for climate-related issues,
including risk management. On a day-to-day basis, climate change 
is managed by the Chief Operating Oﬃcer as an operational issue.

The Audit Committee and the Risk Committee works on behalf 
of the Board to monitor the eﬀectiveness of risk management and
internal controls, including for climate-related risks. It performs
comprehensive reviews of principal risks and uncertainties to the
business and updates the Board on the risk register every six months. 

In 2021, in response to the need for an environmental and social
strategy and increasing stakeholder interest in sustainability matters,
we established an Environmental and Sustainability Committee. 
One of its primary purposes is to deﬁne a three year Environmental
and Sustainability Strategy for the Group. It consists of operational
experts and central service colleagues from across the business,
including members of the Senior Leadership Team. This ensures that
sustainability is embedded throughout our organisation. It supports
the Board by setting and monitoring environmental targets, scoping
out and executing new initiatives and supporting employees on
environmental matters.

“The funeral and crematoria sector has a
part to play in reducing our environmental
impact. Furthermore, we see increasing
customer demand for eco-friendly options
when planning a funeral.”

28

Dignity plc Annual Report & Accounts 2021    

Strategy – Building climate resilience into our 
business strategy
Dignity aims to be net-zero by 2038, and this ambition is supported
by our Board, who are passionate about reducing our organisations
environmental impact across the Group. We are committed to
developing a detailed sustainability strategy underpinned by Science-
Based Targets. We want to be a leader in our sector, setting the bar
for best practices in sustainability and being transparent in our
progress towards our targets. 

This year we have been assessing our current position. We have 
been collecting data on our carbon emissions and energy use and
reporting to the CDP since 2010. Our core emissions reduced 27 per
cent from 2014 to 2019, an achievement which saw us recognised in
the FT/Statista’s Top 200 for Europe’s Climate Leaders in 2021. We are
calculating our ﬁrst full carbon balance sheet for 2021, which will
include an assessment of our Scope 3 emissions. This goes beyond
the legal minimum set by ESOS and SECR, which require only Scope1
and 2 emissions. As up to 90 per cent of a company’s emissions
occur within the supply chain, this will give us a more robust
understanding of how we can reduce our impact.

In recent years, we have introduced a number of measures to 
make our facilities more eﬃcient and our products and services 
more environmentally sustainable. For example, 100 per cent of our
electricity now comes from renewable sources, all new crematoria
are ﬁtted with NOx abatement measures, and we are rolling out
reusable coﬃn covers. 

In 2022, we will be laying the groundwork for a successful path to 
net-zero. This will include improving our data collection processes,
particularly within our supply chain for Scope 3 emissions, and 
setting short, medium and long-term targets that will form our path
to net-zero.

Our CDP disclosures have outlined some physical and transitional
risks as the UK shifts to a low carbon economy. We have identiﬁed
emerging regulations, changes in the market and extreme weather
events as risks to our business and supply chain. Our next step in 2022
is to carry out a complete climate scenario analysis to understand
these better and potentially identify further risks, quantify their
likelihood and impacts, and determine mitigation actions.

Risk Management – Embedding climate risk into our 
risk management framework
The Group has a well-established risk management process,
including a risk register which is reviewed by the Audit Committee
every six months. New risks are identiﬁed through discussion with
senior management. In 2022, we will collaborate with a third party 
to identify climate-related risks in our UK business operations and
integrate them into our general risk management process.

We will examine how transitioning to a low carbon economy may entail
extensive policy, legal, technology and market changes to address
mitigation and adaptation requirements related to climate change. 
In addition, we will also explore how physical risks resulting from
climate change can lead to ﬁnancial implications for our operations.
This will consider three potential future scenarios based on the
degree of warming by 2100 (<2oC, 2-3oC and >3oC) and the actions
that would lead to that. It will use climate modelling for each region
we conduct business from to look into various climate indicators 
and their interactions over the short, medium and long-term.

Through a series of engagement workshops, we will take a detailed
look at mitigating climate-related ﬁnancial impacts to support long-
term business resilience. We will also consider further opportunities,
such as increasing eﬃciency and developing green oﬀerings for 
eco-conscious consumers. The results will be discussed in our 2022
TCFD report.

Metrics & Targets – What are we committing to?
Our ambition to be net-zero covers reducing Scope 1 and 2 
emissions from all of our owned operations, from our funeral
branches, crematoria, care centres to our ﬂeet and a view to
mitigating our impact through our supply chain.

In 2022 we aim to:

• Extend the categories covered in our Scope 3 assessment to provide

a more comprehensive review of our emissions.

• Prepare our pathway to net-zero.

• Set net-zero targets and have them approved by the Science-Based

Targets Initiative (‘SBTi’).

Our Scope 1 and 2 emissions are reported within the SECR report below.

We support the TCFD recommendations
because they provide transparency and 
a strong foundation for our roadmap to
achieving net-zero emissions.

Dignity plc Annual Report & Accounts 2021    

29

STRATEGIC REPORT

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) CONTINUED

Energy Eﬃciency Improvements 
We are committed to year-on-year improvements in our operational
energy eﬃciency. As such, a register of energy eﬃciency measures
available to us has been compiled, with a view to implementing these
measures in the next 5 years.

Measures ongoing and undertaken through 2021:

• Electric Vehicles 
A project to investigate the installation of EV charge points at Crematory
and Depot sites commenced during Q1, 2021. This will form part of the
strategy to change upon replacement ﬂeet and company vehicles from
petrol / diesel to hybrid / electric.

• Scope 3 Emissions 
During 2021 a full Scope 3 Inventory was undertaken to establish the 
key Scope 3 emissions sources across our business.  From this we will be
able to determine which emissions sources are material and within our
reasonable operational control. This will enable us to set a Scope 3 target
as part of a Science-Based Target commitment and include Scope 3 in
future carbon footprint reporting.

• Burner Replacement
The manufacturing facility uses waste wood generated from our process
which is burnt to produce heat for the site. The burners have been
replaced providing a more eﬃcient generation of heat.

• Upgrade to Lighting
A total of ﬁve locations have had an upgrade to lighting during 2021 
in terms of installing both motion sensors and LED ﬁttings within 
the properties.  

Streamlined Energy and Carbon Reporting (‘SECR’)
The following ﬁgures show the consumption and associated emissions
for this reporting year for our operations, with ﬁgures from the previous
reporting period included for comparison.

Scope 1 consumption and emissions relate to direct combustion of
natural gas, and fuels utilised for transportation operations, such as
company vehicle ﬂeets. 

Scope 2 consumption and emissions relate to indirect emissions relating
to the consumption of purchased electricity in day-to-day business
operations.

Scope 3 consumption and emissions relate to emissions resulting from
sources not directly owned by us. This relates to grey ﬂeet (business
travel undertaken in employee-owned vehicles) only.

Totals
The total consumption (MWh) ﬁgures for reportable energy supplies are
as follows:

Utility and Scope                                            2021 Consumption               2020 Consumption 
                                                                                                             (MWh)                                          (MWh)

Grid-Supplied Electricity, 
Transportation, gaseous 
and other fuels
(Scope 1 and 2)                                                         99,270                                 94,175

The total emission (tCO2e) ﬁgures for reportable energy supplies are 
as follows:

Utility and Scope                                            2021 Consumption               2020 Consumption 
                                                                         (tCO2e) (Market Based)      (tCO2e) (Market Based)

Grid-Supplied 
Electricity 
(Scope 2)                                                                                 –                                          53

Transportation, 
gaseous and 
other fuels
(Scope 1)                                                                     15,401                                 15,710

Total                                                                              15,401                                 15,763

Intensity Metric
An intensity metric of tCO2e per FTE has been applied for our annual
total emissions. The methodology of the intensity metric calculations are
detailed in the appendix, and results of this analysis is as follows:

Intensity                                                                         2021 Intensity                           2020 Intensity 
Metric                                                                                               Metric                                           Metric

tCO2e / FTE                                                                        5.0                                         5.3

30

Dignity plc Annual Report & Accounts 2021    

  
• Electricity Smart Meters
There is a 92 per cent coverage of smart meters across our estate
compared with an industry standard of 49 per cent. Smart meters will
result in electricity invoices being accurate and allows us to target
locations with high energy use.

• Gas Smart Loggers
There is a 94 per cent coverage of smart loggers across our estate
compared with an industry standard of 33 per cent. Smart loggers will
result in gas invoices being accurate and allows us to target locations
with high energy use.

Measures prioritised for implementation in 2022: 

All of the measures detailed above as undertaken during 2021 will form
part of a continuous programme of replacements, upgrades and rollouts
during 2022. 

Additional Metric
An additional metric, number of cremations will be collected and
reported on within the SECR 2022 submission. This additional metric 
(no. of cremations) is to benchmark and review performance of 
a speciﬁc element of high energy consuming equipment as we
implement more advanced cremator technology.

Improved Cremator Technology 
All new sites will beneﬁt from a range of carbon emissions reduction
projects tested over a number of years. These include the following: 

• A modular space saving design which includes cremator and integrated
ﬁltration systems.

• Mercury abatement ﬁltration plant which will meet Government
directive of 50 per cent reduction of mercury emissions from crematoria.

• Advanced refractory lining materials reducing gas consumption
signiﬁcantly.

• Pilot valve gas burner ﬁring controls and software which will give 
20 per cent+ reduction in gas consumption.

• Super insulation coupled with pilot valve technology and advanced
oxygen control features to reduce gas consumption further.

Reporting Methodology
Scope 1 and 2 consumption and CO2e emission data has been calculated
in line with the 2019 UK Government environmental reporting guidance.
The following Emission Factor Databases consistent with the 2019 UK
Government environmental reporting guidance have been used, utilising
the current published kWh gross caloriﬁc value (CV) and kgCO2e emissions
factors relevant for reporting year 01/01/2021 – 31/12/2021: 

• Database 2021, Version 1.0.

• Estimations undertaken to cover missing billing periods for properties
directly invoiced to Dignity plc were calculated on a kWh/day pro rata
basis at meter level. These estimations equated to 0.62 per cent of
reported consumption.

• Intensity metrics have been calculated utilising the 2021 reportable
ﬁgures for the following metrics, and tCO2e for both individual sources
and total emissions were then divided by this ﬁgure to determine the
tCO2e per metric. 

• Full time equivalents (‘FTE’) at 31 December 2021 3,062 (2020: 2,974).

Dignity plc Annual Report & Accounts 2021    

31

  
STRATEGIC REPORT

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) CONTINUED

Clients

“We listen to feedback that could help improve
our proposition or achieve better outcomes
for bereaved families.”

Alternative, aﬀordable funerals  
No two people are the same and so the more choice we can oﬀer our
clients when planning for or arranging a funeral, the more likely we are 
to fully satisfy their needs. 

This is why we took the opportunity to extend the availability of direct
cremation services to nearly all branches as part of our strategy.

Called the Unattended Funeral, it makes an ideal accompaniment to the
established services we oﬀer through Simplicity Cremations. One caters
for clients who prefer face to face interaction with an arranger, while the
other conveniently services people online and over the phone.

We are pleased to be increasing access to alternative types of funeral
and having conducted extensive branch trials of direct cremation
services earlier in the year, it is clearly something our clients appreciate.

Easy to compare
For some, the Unattended Funeral appeals because of its fuss-free
approach to arranging and conducting a funeral, while others favour 
the lower price point.

However, value-for-money also extends to our core at need services too.
The Attended Funeral is competitively priced and highly ﬂexible so
families get exactly what they and their loved ones want.  

Charges for all our additional services have also been reviewed to 
ensure they are reasonable and more representative of the actual 
costs involved.

In a post-CMA market, it is now easier for consumers to access pricing
information and make comparisons between diﬀerent providers. We
welcome this approach and worked hard to achieve compliance across
our network of funeral homes and crematoria in advance of the CMA’s
statutory deadline.

A better client experience
We listen to client feedback and suggestions from colleagues that 
could help improve our proposition or achieve better outcomes for
bereaved families.

Even small changes make a notable diﬀerence, as we found when an
idea to use quick response (‘QR’) codes on our order of service sheets
was trialled locally and then made accessible to the rest of our funeral
service arrangers.

The code provides mourners with an instant link to donate to a family’s
nominated charity via JustGiving. Previously they had to manually type 
in a long URL to reach the appropriate Funeral Notice. 

Easy access means a person could make an online donation there and
then, plus the printed codes look much neater on the page. 

More recently, we looked at the online experience for those seeking
more information on arranging a funeral via our website.

Under the banner of ‘what to do when someone dies’, users can now
take a virtual tour of one of our care centres – mortuaries we operate 
to care for the deceased which are not attached to a branch. 

This is important because clients often expect their loved one to rest 
at the funeral home itself, but in certain locations this is not possible
therefore we utilise our high-quality care centres. Seeing the quality of
our facilities ﬁrst-hand oﬀers reassurance and helps to dispel the myths
about what happens to a person after death. 

The three-dimensional walkthrough takes in the centre’s reception,
chapel of rest, garage, mortuary and embalming suite. There are video
clips and interactive icons to provide additional insight. 

Creating the best
We are partway through delivery of an extensive Property Compliance
Programme as a solution to improving the quality of our premises and
facilities across local communities. 

It spans actions relating to health and safety, improving facilities for
caring for the deceased, renovation and refurbishment work, and visual
enhancements in client-facing areas.

In raising the overall standards of our premises, we can create great
places to work and consistently present ourselves to clients in a way that
matches the high-quality of our care, customer service and products.  

32

Dignity plc Annual Report & Accounts 2021    

  
Colleagues

“In a business which is all about aﬀording
respect and dignity to the deceased and their
loved ones, we also have a responsibility to
treat each other with care.” 

Reward and recognition
What we do can be tough. Sometimes physically demanding, 
frequently emotionally draining as we oﬀer comfort and support 
to families in distress. 

This is why we made a commitment during the year to review how
colleagues are remunerated to ensure it is fair and competitive. We 
have started with those carrying out client-facing roles and gone on 
to introduce the Real Living Wage. Over time, we will work our way
through the entire organisation.

We also want to recognise exemplary behaviours, hence the creation 
of a new awards scheme using the hundreds of entries posted on our
internal Good Deeds news feed.

Colleagues voted for the most deserving winners across seven categories,
with prizes given to each nominee. We also celebrate and tell the story 
of our many long serving colleagues, ranging up to 40 years with 
the company.

Showcasing a unique industry
Alongside the great people already working for Dignity, we need to
continually attract new talent and give them compelling reasons to 
build a career in our industry. 

Over the summer, we ran a national recruitment advertising campaign
fronted by Sonika Saddi. Originally intent on becoming a Chartered
Accountant, Sonika took on a part time role as a Funeral Service Arranger
to help pay the bills while studying for her qualiﬁcation. 

She soon realised it was supporting the bereaved that provided true job
satisfaction and opted for a full-time position with Dignity. Twenty years
later, she is proud to hold the position of Funeral Director operating in
Southall, West London. 

Around the same time, we signed up to the Circle Back Initiative, an
internationally recognised set of standards for the treatment of job
applicants. 

Under Circle Back, we pledge that every candidate who applies for a 
role with us will be responded to. In our responses, we also signpost 
the charity MIND as a source of help in case anyone is struggling to 
cope with the pressures of job hunting.

This was later followed by the introduction of Referral Reward
Programme that provides colleagues with a thank you payment if they
successfully introduce someone they know to ﬁll a job vacancy.

Dignity plc Annual Report & Accounts 2021    

33

STRATEGIC REPORT

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) CONTINUED

Learning for all
To support professional development, we opened the doors this year to
the Dignity Academy Portal, an online learning management system that
is the main hub for all our learning activities.

Everyone has access, either through their work computer, personal
device or one of more than 100 shared laptops placed in our branches
and crematoria.

The portal does not replace traditional classroom learning, but it reduces
our reliance on it and minimises the amount of time colleagues need to
spend away from the business. Moreover, it promotes self-study for
those who want to progress in their careers and gain new skills. 

New content is added every month and we now run most of our
mandatory learning for colleagues through the same system.

Speciﬁcally for colleagues in operational roles, we are currently enrolling
around 70 candidates for a funeral apprenticeship programme with the
opportunity to gain a recognised qualiﬁcation as either a Funeral Team
Member or a Funeral Director. 

We have a specialist training partner in place, Connect2Care, and much
of the learning will take place via the Dignity Academy Portal. 

Hiring more inclusively; we ensure that all of our job descriptions 
and job adverts use gender neutral language and use accessible
language.  We’ve started to introduce more robust selection processes
for leadership positions (Business Leaders). Assessment centres are a
fairer process which complements our diversity and inclusion agenda 
by ensuring that people are selected on the basis of merit alone. With an
assessment centre measurement evidence and evaluation is thorough
and normalised against a broad curve of candidates and recorded.  

Our new Transitioning at Work policy includes information on the 
legal context and protections that relate to transgender employees, 
as well as key considerations and responsibilities for employees and 
line managers. The policy oﬀers practical guidance, clariﬁcation 
and education.

We also launched our wellbeing trial; this programme is looking at 
ways that three diﬀerent roles; Wellbeing Ambassadors, Wellbeing
Champions and Mental Health First Aiders can work together to 
support our colleagues maintain wellness and access the support 
that they need.

An inclusive culture isn’t the work of leadership alone, a key focus for
2022 is to engage our colleagues in Dignity’s Vision and Principles and
enable them to bring their true selves to work.

Family

People

Integrity

S
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CLIE N
CLIE N

Innovation

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Humility

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Longevity

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Partners

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Capital
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An inclusive culture
The introduction of Dignity’s Principles have allowed to us place extra
focus on diversity and inclusion at Dignity. Combined with our focus on
culture, we are starting to unlock our ability to innovate, to be creative, to
solve problems. Previous years saw us start this journey by educating
managers on matters of Equality and Diversity. This year we’ve taken
steps to embed actions into working practices to champion equity of
experience for all of our colleagues. This is an ongoing journey that will
impact all aspects of a colleagues’ lifecycle with us and for those looking
to work with us in the future.

“An inclusive culture isn’t the work of
leadership alone, a key focus for 2022 is 
to engage our colleagues in Dignity’s Vision
and Principles and enable them to bring 
their true selves to work.”

34

Dignity plc Annual Report & Accounts 2021    

Employees and service
At 31 December 2021

Employee service 
(% & number)

Less than 1 year: 19% (625 employees)
1–4 years: 31% (1,045 employees)
5–9 years: 21% (720 employees)
10 –19 years: 19% (639 employees)
Over 20 years: 10% (346 employees)

Employee diversity
At 31 December 2021

Safe in every sense
During the pandemic we have done everything reasonably practicable 
to ensure the health and safety of our colleagues and those that visit our
premises. Ensuring the health, safety and welfare of our colleagues, our
clients and our communities has been our utmost priority, but this has
also enabled us to continue serving the bereaved by providing respectful
and digniﬁed funerals.

Our approach to health and safety included providing colleagues 
with the appropriate protective clothing; observing social distancing
guidelines in our funeral branches and crematoria by introducing one-
way systems and installing protective screens; regularly sanitising our
premises and ensuring that guidelines on the number of attendees were
understood and implemented. We also installed notices with advice to
visitors about how to keep safe and minimise the spread of the virus. 

Total employees/ratio 
(% & number)

Senior and middle managers (1)
(% & number)

COVID-19 has put health and safety in the spotlight like never before, but
we felt it prudent to devote a month to raising awareness of the basics too.  

3,375

Male: 46% (1,824 employees)
Female: 54% (1,551 employees) 

Male: 66% (99 employees)
Female: 34% (51 employees) 

Senior managers and Executive
managers(1) (% & number)

Directors 
(% & number)

Male: 66% (27 employees)
Female: 34% (14 employees) 

Male: 100% (5)
Female: 0%  

(1) In addition, one male employee was a director of subsidiary companies not included 

in these totals. 

In our ‘Safety Starts with You’ campaign, we covered ﬁre safety, manual
handling, hazard perception and accident reporting.  

It was driven by our team of Regional Health and Safety Oﬃcers and
included interactive elements as well as articles, videos and factsheets.

The year has also seen Dignity step up its promotion of positive mental
health and wellbeing. We unveiled a new Be Supported service provided
by AXA where colleagues can access online and professional telephone
support in conﬁdence for any issues troubling them. 

We have created a wellbeing hub on our internal news platform Dignity
Inside and run regular feature articles and webinars in our Wellbeing
Wednesday series.  

Recruitment got underway for a new Wellbeing Champions 
programme, including ambassador and mental health ﬁrst aider roles.
This will commence in 2022 once all training and a pilot scheme has
been completed.

Dignity plc Annual Report & Accounts 2021    

35

STRATEGIC REPORT

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) CONTINUED

Keeping clients and colleagues safe

There was little respite from COVID-19 during the year, with continued
demand for our services from bereaved families. 

Like many businesses, we also had to cope with operational challenges
such as higher than normal absence rates where colleagues needed 
to self-isolate due to illness or being identiﬁed as a close contact of a
positive case.

As ever, the response from our people when faced with adversity instils
us with pride.  

Teams recognise the importance of their roles, particularly those who 
are client-facing, and throughout the pandemic have sought to uphold
the highest standards of compassion and client care, even in the face 
of tightening restrictions.

We have had to adapt many of our processes, but every decision is
driven by the need to keep clients and colleagues safe. 

Our approach is governed by a business-wide Safe Working Framework
that deﬁnes the steps we need to take in order to remain COVID-secure.
It operates across ﬁve diﬀerent levels of severity and we choose the most
appropriate one according to factors such as government guidelines,
case numbers and the emergence of new variants.

Linked to this is our detailed Operational Guidance for frontline
colleagues, including those directly responsible for taking care of the
deceased. The guidance also captures any variations in rules across 
the devolved nations.

Towards the end of the year, we established an operational taskforce to
relieve pressure in our busiest areas or locations where vacancies still
needed to be ﬁlled. Taskforce members travelled from other parts of the
country to lend a hand, with accommodation provided for those working
away for a period of time.

A welcome change was the decision in July to lift the limit on the number
of mourners who could attend a funeral in person.  

This enabled us to provide families with a more normalised service 
across our funeral homes, chapels and crematoria, although we retained
appropriate health and safety measures including regular sanitising and
encouraging the wearing of face coverings while indoors or travelling in
our limousines.  

Some clients still felt the need to control attendance numbers for their
own peace of mind and we supported this by oﬀering the addition of 
live streaming a funeral where possible.

The pandemic has instigated lots of changes at Dignity, some of which
have opened our eyes to more ﬂexible and agile ways of working.  

This is very much reﬂected in our head oﬃce based central support roles.
Having successfully implemented remote working during each of the
national lockdowns, we are now trialling the diﬀerent approaches of
oﬃce, home and hybrid working in line with colleagues’ preferences. 

While not suitable for every job type, it provides an excellent work life
balance in many cases and teams have demonstrated they can be just 
as productive. Physical oﬃce space still has its place, but oﬀering choice
will help us build loyalty with existing colleagues and attract new talent 
in the future.

We have had to adapt many of our processes,
but every decision is driven by the need to
keep clients and colleagues safe.

A welcome change was the decision in July to
lift the limit on the number of mourners who
could attend a funeral in person.

36

Dignity plc Annual Report & Accounts 2021    

Communities

“Our people are active in the community.  
Their enthusiasm and willingness to put 
others ﬁrst remains strong.”

For the good of others 
Our people are active in the community, supporting special events,
communal celebrations and getting behind local charities. Their
enthusiasm and willingness to put others ﬁrst remains strong and 
is one of the hallmarks of Dignity’s new Guiding Principles.

We have seen teams hosting open days, organising raﬄes, completing
sponsored challenges and giving up their free time to volunteer. 

Many branches have acted as collection points for community appeals,
including clothing, Easter treats and Christmas gifts for children. 

At Ernest Brigham Funeral Directors in Bridlington, colleagues donated
their wedding dresses to the charity Dresses for Angels so they could be
made into gowns for babies who have sadly passed too soon.

Remembering lost loved ones
We make use of our prominent locations on local High Streets to
recognise key calendar events and enable clients to leave messages 
of remembrance. 

They help to create striking and poignant window displays for Father’s
Day, Mothering Sunday and Remembrance Day, while at Christmas we
put trees in our branches and crematoria with space to hang
personalised memorial tags. 

Our traditional Christmas memorial services were also well received 
this year, bringing bereaved members of the community together to
light a candle in honour of someone special. Those unable to attend in
person could watch live streams and recordings via secure sections of
our website. 

Funding specialist cancer care 
Dignity’s partnership with the charity Teenage Cancer Trust has 
entered its second year.  We have contributed more than £256,000 to
help ensure young people with cancer receive the specialist practical,
emotional and social support they need. 

Our contribution has been part funded by the CMG metal recycling
scheme and a wide selection of fundraising activities organised by 
our colleagues. 

The Client Service Centre team staged a 24-hour cycle challenge,
peddling in shifts on a static exercise bike set up in their oﬃce. Numerous
runs, walks and raﬄes have also helped keep the donations rolling in. 

As well as fundraising, we have used established events such as World
Cancer Day and International Nurses Day to raise awareness of the
charity’s vital work and share real life stories from the young people 
our contributions are supporting.

Dignity plc Annual Report & Accounts 2021    

37

STRATEGIC REPORT

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) CONTINUED

Funding a range of good causes 
Many families choose to invite charitable donations when arranging a
funeral, which we can support through our free Funeral Notices service. 

Crematorium metal recycling scheme 
& COVID-19 relief fund

By working together, our crematoria also raise substantial amounts 
of money every year by participating in an industry metal recycling
scheme. With a client’s consent, we separate any metals that remain
after cremation so they can be sorted and recycled by a third-party
specialist. We then use all of the revenues from recycling to donate 
to charities of our choosing. 

From bereavement care to county air ambulances, we’ve been able to
support a range of businesses through our participation in the scheme.

“In 2021, we have donated almost one 
million pounds to good causes as part of our
COVID-19 fund and participation in the metal
recycling scheme.”

Dignity participates in a funeral sector initiative which recycles metal that
survives the cremation process to ﬁnancially support good causes. The
scheme is administered by the Association of Private Crematoria and
Cemeteries (‘APCC’) and under its rules the proﬁt from recycled metal is
donated to a registered charity of the crematorium operator’s choice.

In April 2020, the Executive Committee approved the proposal to ring-
fence a fund of £75k from our participation in the metal recycling scheme
for use by small, regional charities that had been impacted by COVID-19.
It was agreed that larger donations to national charities fulﬁlling the same
criteria could be granted if a recommendation was approved by the
Executive Committee. 

We were approached for ﬁnancial support by hospices, homeless
centres, food banks, over 60’s community groups and bereavement
counselling charities, all of whom received a donation to help maintain
the provision of their services or comply with new safety guidelines.

In addition, the following examples demonstrate how our participation 
in the metal recycling scheme has beneﬁted the local community:

• Molly Olly’s Wishes in Warwickshire used a donation of £9k to
manufacture therapeutic toys that explain chemotherapy to seriously 
ill children.

• With a donation of £5k, Oxford Hospitals Charity sourced phone
chargers, games, puzzles, toys, and crafts for NHS patients that couldn’t
have visitors due to lockdown restrictions.

• A donation of £10k to Croydon Health Services Charity helped fund 
a tranquil garden space for patients and parents at the Children’s
Cancer Unit.

• By providing funding for fuel, the Children’s Air Ambulance in the
Midlands was kept airborne for a month when the charity’s own
fundraising activities were cancelled due to the pandemic.

• The London Stroke Group used our donation to fund online support 
for surviving patients at their 20 centres when face-to-face sessions
could not be provided.

• A donation of £10k will help Funeral Link combat funeral poverty 
in Dundee.

A total of £250k from the metal recycling fund has been donated to our
charity partner, Teenage Cancer Trust, during the past 12 months.

We were also approached by Cruse Bereavement Care, whose revenue
streams have been impacted by COVID-19 during a period that saw a
signiﬁcant increase in demand for their services. Our donation of £75k
helped the charity to adapt their service delivery model from face-to-face
to phone or online.

Due to a surplus of funds, and following a vote amongst Dignity’s
crematoria colleagues’, £100k was donated to mental health charity
MIND and £50k to children’s hospice network, Together for Short Lives.
£25k was donated to both Macmillan and British Heart Foundation,
providing 800 hours of care for cancer patients and funding a university
research programme for one year.

38

Dignity plc Annual Report & Accounts 2021    

Company & Corporate Governance

Building ethical partnerships 

Finding supply partners who place the same level of importance on 
ethics and responsible conduct as we do is an essential part of Dignity’s
approach to procurement.

A good example is workwear and in particular the provision of uniforms
for our Funeral Directors and other client-facing colleagues.  

Direct Corporate Clothing has a number of formal suit ranges featuring
recycled polyester in the fabric blend. Each individual suit uses up to 45
recycled plastic bottles, which are melted down and spun into ﬁbres. 

Lyn Oakes is a family-owned tailoring business. Its fabrics come mainly
from the UK and only ever from trademarked suppliers where everything
has to meet strict eco-friendly requirements.

The most widely used material in our uniform range is the Herringbone
100 per cent natural woollen fabric for jackets, frockcoats, Morning Tails
and waistcoats. This fabric is fully recyclable and sustainable and certiﬁed
as non-mulesed, a process that ensures better welfare standards for
animals.

An exciting new Venture

As a market leader, we not only want to promote growth and success
within our own organisation; we want to see the sector thrive in order 
to achieve better consumer outcomes.

This is thinking behind Dignity Ventures, a bold example of how we 
value and foster good relationships within the business community.  

As a new division of the Dignity Group, Dignity Ventures aims to support
innovation and entrepreneurship by providing expertise and ﬁnancial
resources.

There are a diverse range of organisations in the end-of-life sector 
ranging from consumer comparison and information platforms, to 
green and sustainability focused initiatives, unique manufacturers, as 
well as digital and technology advancement specialists. Dignity Ventures
aims to accelerate innovation and customer choice by supporting
entrepreneurism and helping some of these smaller organisations
succeed in delivering a positive experience for consumers.

The investment and support from Dignity will provide a much-needed
resource and ﬁnancial boost, in addition to access to our market leading
knowledge and experience. Firms may receive support in the form of
acquisition, investment or partnering.

Importantly, these companies will maintain their independence, strategic
focus and culture.

Our ﬁrst venture is with Funeral Choice, an online funeral information
platform. Our acquisition and ongoing partnership will accelerate the
ﬁrm’s ambition to become a go-to destination for consumers seeking
information and advice related to funerals, whilst maintaining their full
editorial independence.

“We are committed to the highest standards of
governance as an essential constituent of the
way we operate and behave based on trust,
transparency and accountability.”

Doing the right thing 
We believe that operating ably and responsibly is fundamental to
creating long-term value. Our objective is not only to strengthen the
reputation of our organisation, but also to promote and embed a culture
of responsibility and performance that adds value for our stakeholders. 

Business integrity 
A number of procedures and policies are in place to further ensure
responsible practice is embedded in the way we do business. These are:  

Dignity Code of Conduct
Our Code of Conduct underpins the behaviours of everyone engaged by
us when conducting business on our behalf.  It is a statement of how we
maintain good corporate citizenship in relation to all those who have an
interest in our reputation.

Anti-Bribery & Corruption
We insist on honesty, integrity and fairness in all aspects of our business
and expect the highest standards of professionalism and ethical
conduct. We will not engage in bribery or corruption in any form and
have a zero-tolerance approach to breach.

Equality, Diversity & Inclusion
There shall be no discrimination or less favourable treatment of people
in respect of age, race, religion or belief, gender, sex, sexual orientation,
pregnancy, disability or marital status. We engage, promote and train 
our colleagues on the basis of their capabilities, qualiﬁcations and
experience, without discrimination.

Modern Slavery Act
We are committed to implementing and enforcing eﬀective systems and
controls to ensure slavery and human traﬃcking is not taking place
anywhere in our supply chains or in any part of our business.

Supplier Code of Conduct 
We rely on our suppliers to provide important services that help us care
for our clients and expect them to support and promote our core values
of professionalism, compassion and respect.

“Strong and eﬀective governance and ethical
practice are essential considerations for
Dignity as we develop our sustainability
commitments.”

Dignity plc Annual Report & Accounts 2021    

39

STRATEGIC REPORT

PRINCIPAL RISKS AND
UNCERTAINTIES

Our principal Group risks
Outlined here is our assessment of the principal risks facing the
Group. In assessing which risks should be classiﬁed as principal, we
assess the probability of the risk materialising and the ﬁnancial or
strategic impact. 

Risk appetite
Risk appetite is the level of risk the Group is willing to take to achieve
its strategic objectives and is set by the Board. The Board looks at the
Group’s appetite to risk across a number of areas including market,
ﬁnancing, operations, strategy and execution, developments,
cybersecurity and technology and brand.

The Board operates a low-level risk appetite in order to ensure as
much as is possible that the services provided by the Group are
consistently of a high standard and that regulatory requirements 
are adhered to.

Risk appetites for speciﬁc key risks have been reviewed during the
course of the year and, where appropriate, the Group’s risk appetite
has been adjusted accordingly.

Our approach to risk management
The Group has a well-established governance structure with 
internal control and risk management systems. The risk
management process:

• Provides a framework to identify, assess and manage risks, both

positive and negative, to the Group’s overall strategy and the
contribution of its individual operations.

• Allows the Board to review a balanced and understandable

assessment of the operation of the risk management process 
and inputs.

The Board has established a new Risk Committee to enhance the
oversight it has over its management of risks. The Risk Committee
will be chaired by Kartina Tahir Thomson.

Responsibilities and actions

The Board
The Board is responsible for monitoring the Group’s risk and
associated mitigating factors and has carried out a robust assessment
of both emerging and principal risks. This assessment process is
supported by in-house risk management professionals.

Following the General Meeting on 22 April 2021, Clive Whiley 
ceased to be a Director and two independent Non-Executive
Directors resigned from the Board. Gary Channon became Executive
Chairman at this time. Subsequently, John Castagno was appointed
to the Board as independent Non-Executive Chairman in July 2021 
at which time Gary Channon became Chief Executive. Graham
Ferguson was appointed to the Board in September 2021 as an
independent Non-Executive Director and Chair of the Audit and
Remuneration Committees. In 2022, Kate Davidson has been
appointed as Chief Operating Oﬃcer and Kartina Tahir Thomson 
has recently been appointed as an independent Non-Executive
Director and Chair of the Risk Committee.

The Company continues to work towards meeting its corporate
governance responsibilities in respect of the composition of the
Board and is currently in the recruitment process for a Chief
Financial Oﬃcer.

Risk process
Every six months the Audit Committee formally considers the
Group’s Principal Risks and Uncertainties for subsequent adoption
by the Board.

Risk assessment
Executive Directors and senior management are primarily responsible
for identifying and assessing business risks.

Identify
Risks are identiﬁed through discussion with senior management 
and incorporated in the risk system as appropriate.

Assess
The potential impact and likelihood of occurrence of each risk 
is considered.

Mitigating activities
Mitigating factors are identiﬁed against each risk where possible.

Review and internal audit
The link between each risk and the Group’s policies and procedures
is identiﬁed. Where relevant, appropriate work is performed by the
Group’s internal audit function, across a 3-year audit plan cycle, to
assist in ensuring the related key controls, procedures and policies
are understood and operated eﬀectively where they serve to
mitigate risks.

Risk governance
The Board has overall responsibility for the Group’s internal control
systems and for reviewing their effectiveness. This has been designed to
assist the Board in making more risk-informed, strategic decisions with 
a view to creating and protecting shareholder value.

The risk management framework

Governance

Accountability and ownership

Communication

IDENTIFY & ANALYSE

Risks and impact identiﬁed
• Risks mapped to controls currently in place
• Residual risks prioritised for mitigation
• Conﬁrmed with the Board

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IMPLEMENT

Existing control enforced and tested
• Remedial action plans implemented
• Board member accountable

Controls identiﬁed
• Suggested action plans agreed
• Options for controls identiﬁed and costed
• Plans approved by the Board

Review

Assess

Report

Respond

40

Dignity plc Annual Report & Accounts 2021    

Links

See Chairman’s statement: p.2
See KPIs: p.49 to p.51
See Governance: p.64 to p.104

Risk Committee
With the establishment of the Risk Committee, a number of matters
currently the responsibility of and reviewed by the Audit Committee
will transfer to the Risk Committee. The Risk Committee will advise
the Board on risk management issues, recommend the framework
of risk limits and risk appetite to the Board for approval and to
oversee the risk management arrangements of the Company,
including the embedding and maintenance of a supportive risk
management culture. 

The Risk Committee will also ensure that the material risks facing the
Company have been identiﬁed and that appropriate arrangements
are in place to manage and mitigate those risks eﬀectively within the
Company’s agreed risk appetite.

Risk status summary
The ongoing review of the Group’s principal risks focuses on how
these risks may evolve.

Regulation of Pre-arranged funeral plans
In order to carry out regulated funeral plan activities, ﬁrms must 
be authorised by the FCA from July 2022. Continuing with regulated
activity without authorisation will be a criminal oﬀence. 

Dignity believes that this regulation is necessary and welcomes its
introduction. Dignity is working with the FCA to be registered as a
regulated provider of pre-arranged funeral plans.

COVID-19 
Although hopefully the worst is behind the country, COVID-19
created risks both to our ability to deliver our services in the context
of restrictions imposed by the pandemic and the health and safety
implications for our colleagues. We continue to regularly assess the
potential risks. 

The Group has business continuity and pandemic plans that are
invoked, reviewed and adapted as necessary.

Accordingly, the ability to maintain average revenue is inﬂuenced by
changes in the competitive landscape and the impact of COVID-19.

Emerging Risks
Focus on the environment and businesses operating sustainably 
is now an imperative. We have started down the road to achieve 
net-zero by 2038. Further details on page 46.

Funeral Directors’ Codes of Practice
A number of compliance requirements are currently recommended
by the Scottish Government Funeral Directors’ Code of Practice. 
In addition, the introduction of the Independent Funeral Standards
Organisation will necessitate compliance with a UK co-regulatory 
Code of Practice as described by the Ministry of Justice. Further 
details on page 46.

Our principal risks and uncertainties 

Financial risk management
• Signiﬁcant movements in the death rate
• Nationwide adverse publicity
• Fall in average revenue per funeral or cremation resulting 

from market changes 

• Direct cremations
• Financial Covenant under the Secured Notes

Strategic risk management
• Disruptive new business models leading to a signiﬁcant

reduction in market share

• Demographic shifts in population
• Competition in the funeral market

Operational risk management
• Cyber risk

Regulatory risk management
• Regulation of pre-arranged funeral plans

• Changes in the funding of the pre-arranged funeral 

plan business

Emerging risks 
As part of the July 2018 update to the UK Corporate Governance
Code, publicly listed companies are required to identify the
procedures they have in place to identify emerging risks faced 
by the business and an explanation of how these are managed 
or mitigated. This year we have conducted a formal exercise to
identify and assess emerging risks facing the business and these
are outlined on page 46.

Emerging risk and horizon scanning are integrated as part of
regular risk discussions and we will continue to embed this
further going forward.

The principal risks we have identiﬁed
We maintain a detailed register of principal risks and
uncertainties covering strategic, operational, ﬁnancial and
compliance risks. We rate them according to likelihood of
occurrence and their potential impact.

In the tables on pages 42 to 46 we provide a summary of 
each risk, a description of the potential impact and a summary 
of mitigating actions.

Key: Risk trend measures

Risk exposure increased

Risk exposure decreased

No signiﬁcant change 

New emerging risk

Dignity plc Annual Report & Accounts 2021    

41

STRATEGIC REPORT

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

FINANCIAL RISK MANAGEMENT

Risk description and impact

Mitigating activities and commentary

Change

Signiﬁcant movements in the death rate
There is a risk that the number of deaths in any year
signiﬁcantly reduces or increases. This would have
a direct result on the ﬁnancial and operational
performance of both the funeral and crematoria
divisions.

Nationwide adverse publicity
Nationwide adverse publicity for Dignity could result 
in a signiﬁcant reduction in the number of funerals 
or cremations performed in any ﬁnancial period. 
For pre-arranged funeral plans, adverse publicity 
for the Group or one of its partners could result in 
a reduction in the number of plans sold or an
increase in the number of plans cancelled.

Fall in average revenue per funeral or
cremation resulting from market changes
There has been increasing price competition in the
funeral market, resulting in material price reductions by
the Group in recent years. It is highly likely that pricing
pressure will remain for the foreseeable future and it
may not therefore be possible to maintain average
revenue per funeral or cremations at the current level.

The recent and signiﬁcant increase in wholesale gas
prices will also contribute to the pressure on average
revenue per cremation.

The proﬁle of deaths has historically seen intra year changes of +/- one per cent giving
the Group the ability to plan its business accordingly. The ONS long-term projection is
for deaths to increase.
The risk is mitigated by the ability to control costs and the price structure although this
would not mitigate a short-term signiﬁcant reduction in the number of deaths.
The number of deaths in 2021 was 664,000 which was 0.2 per cent above the prior year.
It remains unknown over what time frame the death rate will normalise. Our planning
continues to be based on the long-term expectations provided by the Oﬃce for
National Statistics.
Operationally, we have spent time understanding lessons from the dramatic increase
in deaths due to COVID-19 to ensure we continue to respond professionally and safely.
The pandemic has been a period of signiﬁcant disruption to the funeral market as the
elevated death rate has driven a higher number of funerals and cremations in 2021
compared to the ﬁve-year average. It is anticipated that this volatility in the death rate
will continue as this excess death rate may well reverse.

See Performance and Financial Results: p.52 to p.63 

The Group’s strategy is to focus on increasing funeral and crematoria market share
together with prioritising the sale of funeral plans through branches rather than telephony
partners. We ended our relationship with telephony partners who sold plans on our behalf
and are now focused on the development and execution of a vision to excel in the new 
FCA regulated environment using all potential channels to ﬁnd and delight new clients.
The Group maintains a system of internal control to ensure the business is managed in
line with its strategic objectives.

Staff training and the work of the Quality and Standards Team assist in mitigating this risk.

Dignity’s aim is to develop a suite of sector-leading policies and practices that will form 
our Standard Operating Procedures (‘SOP’). This will be at the core of everything we do
regarding our care for clients and deceased persons. It includes a review of our guidelines
for security and identiﬁcation, access to premises and mortuaries, care for the deceased
and all other important policies for both observed and unobserved procedures.

In terms of quality of care for clients and their loved ones, the introduction of the SOP 
will assist in mitigating reputational risk and the possibility of consequential adverse 
press coverage.

See The Client Survey performance: p.50 and p.51

The Group’s strategic review has resulted in a more eﬃcient business that can
accommodate more competitive pricing, but which continues to provide clients 
with a greater range of choice, underpinned by exceptional client service. This will 
be supported by strong reputational management. The Group is aspiring to achieve 
20 per cent funeral market share in 10 years time (including both pre and at-need
funerals) by offering the best service for the best prices.

The Group will continue to adapt to serve evolving client needs. This will be through
investment in digital capabilities including an enhanced reporting capability of business
intelligence and management information which will enable risks and trends to be
identiﬁed promptly and accurately.
This risk has increased due to COVID-19 as the Group has experienced lower average
revenues than originally expected. In addition, awareness of Simple Funerals and
Simplicity Cremations has increased during the pandemic.

The Group has, for some time, conducted low-price trials in a signiﬁcant number of
branches. Our trials and experience since we changed prices has been that market
share loss stops and then reverses, and so in time we expect that revenue loss to be
more than compensated by volume growth especially when combined with all the
other elements of our strategy. 

We will monitor fuel markets and prices but accept that this market faces diﬃculties
from external factors.

See Divisional performance: p.58 to p.63

42

Dignity plc Annual Report & Accounts 2021    

  
FINANCIAL RISK MANAGEMENT CONTINUED

Risk description and impact

Mitigating activities and commentary

Change

Direct cremations
Growth in the direct cremation market could reduce
average revenue in the funeral business and adversely
affect the volume mix and average revenue in the
crematoria business.

The Group has addressed this with Simplicity Cremations which offers low-cost direct
cremations without any initial funeral service that are both respectful and digniﬁed.
They are an affordable alternative to a full funeral or for those who wish to have a simple
cremation. The Group also now offers a Simplicity pre-arranged funeral plan option.

See Divisional performance: p.60

Financial Covenant under the 
Secured Notes
The Group’s Secured Notes requires EBITDA to total debt
service to be above 1.5 times. If this ﬁnancial covenant
(which is applicable to the securitised subgroup of Dignity)
is not achieved, then this may lead to an Event of Default
under the terms of the Secured Notes, which could result
in the Security Trustee taking control of the Securitisation
Group on behalf of the Secured Note holders. 

In addition, the Group is required to achieve a more
stringent ratio of 1.85 times for the same test in order 
to be permitted to transfer excess cash from the
Securitisation Group to Dignity plc.

The nature of the Group’s debt means that the denominator is now ﬁxed unless
further Secured Notes are issued in the future. This means that the covenant
headroom will change proportionately with changes in EBITDA generated by the
securitised subgroup.
Current trading continues to support the Group’s ﬁnancial obligations, however lower
reported proﬁtability increases the risk of breaching covenants.
Whilst the Group’s ﬁnancial performance has delivered headroom in relation to
ﬁnancial covenants throughout 2021, given the distorting impact of the pandemic 
on the timing of deaths, there remains signiﬁcant uncertainty around the UK death
rate in the near term. Therefore, the Board has taken the prudent decision to seek 
a temporary waiver of the abovementioned ﬁnancial covenant on a precautionary
basis in relation to Dignity Finance plc’s debt obligations. In March 2022 the Group 
was granted a waiver on the application of the covenants on the bonds for 12 months.
This course of action accounted for post- pandemic uncertainty over the death rate
which, together with the challenge of restructuring, risked a potential covenant breach.

See Financial review: p.53 to p.57

STRATEGIC RISK MANAGEMENT 

Risk description and impact

Mitigating activities and commentary

Change

Disruptive new business models leading 
to a signiﬁcant reduction in market share 
It is possible that external factors such as new 
competitors and the increased impact of the internet 
on the sector, could result in a signiﬁcant reduction in
market share within funeral and crematoria operations.
This would have a direct result on the ﬁnancial
performance of those divisions.

The Group believes that this risk is mitigated by its reputation as a high-quality provider 
and with recommendation being a key driver to the choice of funeral director being used.
In addition, the Group’s actions on pricing and promotion seek to protect the Group’s
funeral market share by offering more affordable options. This focus on affordability has
allowed our market share to begin to stabilise.

The Group is prioritising investment into standards of care, facilities and our estate,
alongside a combination of a competitive pricing and product mix, cultural change and
stronger branding, to grow local market share.

For crematoria operations this is mitigated by the Group’s experience and ability in
managing the development of new crematoria.

The Group will focus on:

• increasing both volume and revenue per crematoria by increasing throughput and
growing ancillary sales;

• continuing to build out the pipeline of crematoria and build additional capacity into
existing facilities; and

• embracing direct cremation and become price leaders for the location-agnostic value
segment of the market.

Additionally, the combination of the development of strong national brands and signiﬁcant
investment in digital capability together with a range of product and price offerings to
clients is expected to strengthen the Group’s competitiveness.

See Divisional performance: p.58 to p.63

Demographic shifts in population 
There can be no assurance that demographic shifts in
population will not lead to a reduced demand for funeral
services in areas where Dignity operates.

In such situations, Dignity would seek to follow the population shift by rebalancing the
funeral location network together with meeting the developing cultural requirements.

See Divisional performance: p.58 to p.63

Dignity plc Annual Report & Accounts 2021    

43

STRATEGIC REPORT

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

STRATEGIC RISK MANAGEMENT CONTINUED

Risk description and impact

Mitigating activities and commentary

Change

Competition in the Funeral Market 
The UK funeral services, crematoria and pre-need markets
are currently fragmented.

There could be further consolidation or increased
competition in the industry, whether in the form of
intensiﬁed price competition, service competition, over
capacity facilitated by the internet or otherwise, which
could lead to an erosion of the Group’s market share,
average revenues or an increase in costs and 
consequently a reduction in its proﬁtability.
Failure to replenish or increase the bank of pre-arranged
funeral plans could affect market share of the funeral
division in the longer-term.

Competition continues to intensify, with additional funeral
directors opening at varying price points, alongside an
increase in the popularity of direct cremations.

The vision is for Dignity to be the UK’s leading end-of-life business, renowned for its
excellence and high standards, represented and embedded in the community with strong
local brands, whilst offering the best service for the best prices. Central to our strategy is a
focus on improving the culture of our business, empowering our colleagues and working
openly together to be our best through teamwork. 

Our appetite to develop new products and trials has expanded through the greater
collaboration and open debate. Several trials are up and running with the objective of
achieving the right combination of price product and promotion to not only grow our local
market share but to sustain and grow our revenues. The Branch Direct Cremation trial has
introduced new competitively priced products that can ﬁt within our existing price and
product architecture.

We continue to develop a new tiered funeral pricing proposition, that will provide greater
ﬂexibility to meet individual client needs.
By unbundling our prices and services to provide our clients with greater ﬂexibility to create
the right funeral, we will be able to provide greater consistency and competitiveness on
price, while reﬂecting Dignity's premium service levels.
A signiﬁcant online presence and visibility leverages our scale and addresses the needs 
of increasingly digitally focused clients. Through the Dignity and Simplicity names, we are
leveraging scale advantages in the digital age. We also recognise that our established local
funeral trading names continue to have signiﬁcant value in the communities they serve.
Through better allocation of our resources, the resultant eﬃciencies will allow us to 
reduce the number of funeral locations and their associated cost. Support functions are
being centralised where appropriate to ensure a cost effective and consistent high
standard of service. 

There are challenges to opening new crematoria due to the need to obtain planning
approval and the costs of development. Dignity has extensive experience in managing 
the development of new crematoria.

The Group offers a quality pre-need product, the marketing of which will beneﬁt from the
current and future signiﬁcant investment in marketing and enhanced digital presence. 
Dignity supports full FCA regulation of the sector which presents an opportunity to gain
competitive margin through both pricing and good quality service provision.

See Chairman’s statement: p.2

OPERATIONAL RISK MANAGEMENT 

Risk description and impact

Mitigating activities and commentary

Change

Cyber risk
Our business is at risk of ﬁnancial loss, disruption 
or damage to reputation resulting from the failure 
of its information technology systems. This could
materialise in a variety of ways including deliberate 
and unauthorised breaches of security to gain 
access to information systems.

The Group has, in recent years, invested signiﬁcantly in this area with the objective of
both upgrading all aspects of our systems and our internal resources and also using
external consultants to drive a continuous improvement programme.  

The chance of an organisation falling victim to a cyber-attack is growing. Threats are
more pervasive and sophisticated than ever.

In addition, however, to maintaining appropriate levels of Cyber Insurance we continue
our investment in ﬁt for purpose security controls, processes, and technology to allow
us to maintain pace with the current threat landscape whilst proactively monitoring for
breaches and improving internal understanding and communication of initial risks,
mitigations and residual risks.  

The Group is working with external advisers at an operational level providing a broad
view of our current maturity level of controls over multiple domains associated with
cyber security. Additionally, this external assessment will include a deep dive review 
of Dignity’s Security Architecture to conﬁrm that our information systems are in
alignment with required cyber security objectives addressing where possible potential
risks to the technology environment.

The Group has its security controls, processes and technology independently audited
to ensure it remains effective or requires additional investment.

See Chairman’s statement: p.2

44

Dignity plc Annual Report & Accounts 2021    

  
REGULATORY RISK MANAGEMENT

Risk description and impact

Mitigating activities and commentary

Change

Regulation of pre-arranged funeral plans 
FCA Regulation has resulted in changes to processes,
systems, pricing, funding, capital requirements and 
terms and conditions of plans.

Regulation affects the Group’s opportunity to sell 
pre-arranged funeral plans in the future and could result
in the Trading Group not being able to draw down the
current level of marketing allowances.

The minimum solvency levels (110 per cent) for Trust
funds set by the FCA means that levels below this
minimum will require Dignity Funerals Limited to 
address shortfall within a 12 month period. 

Changes in the funding of the 
pre-arranged funeral plan business 
In the current regulatory environment, the Group 
has given commitments to pre-arranged funeral plan
members to provide certain funeral services in the future.

Funding for these plans is reliant on either insurance
companies paying the amounts owed or the pre-
arranged funeral plan Trusts having suﬃcient assets.
If this is not the case, then the Group may receive 
a lower amount per funeral.

Changes apply to the industry as a whole and not just the Group. 

The FCA rules address:

• Commission. 

• Customer documentation.

• Trust structures.

• Product value and features.

• Minimum solvency requirements for Trust Funds.

• Compliant sales of Pre-Paid plans.

Our strong market presence in the Whole of Life Funeral Beneﬁt market remains
unchanged. 

The changes affect the whole industry, whilst we will experience a material drop in
volumes, Dignity will be in a strong market position as a vertically integrated provider
to grow its controlled channels that remain open post FCA regulation.

As detailed on page 18, we very much welcome FCA regulation which is conﬁrmed for
29 July 2022 and expect it to serve as a catalyst for our growth ambitions (see pages18
to 20 for more on the forthcoming regulation). It will lead to a better product. One in
which British consumers have greater conﬁdence and are more likely to purchase. 
It is also likely to cause unscrupulous ﬁrms in the sector to exit the industry as they
struggle to attain authorisation with the regulator. We have already begun to see 
signs of this happening. 

Internally we are working to improve the product by bringing more choice, ﬂexibility,
and simplicity to our offering. We are also working hard to improve our own channels
of distribution. FCA regulation prevents us from paying commissions to third parties
and so we have ceased business with many of our previous distribution partners.
Instead, we will focus on developing our proposition and sales strategy delivered
through our website and via our well-trained community-based colleagues. Our
ambition is to signiﬁcantly increase the number of funeral plans sold through our
branch network.  

As well as top line growth we aim to reduce the cost per plan sale.

Minimum Solvency levels of 120 per cent of assets/liabilities have been agreed by 
the Dignity Funerals Limited Board. This represents a 10 per cent buffer over the
regulatory minimum of 110 per cent.  

Board oversight of product development, pricing and distribution of Pre-Paid 
funeral plans.

See Chairman’s statement: p.2
See Strategic review: p.18 to p.20

There is considerable regulation around insurance companies which is designed,
amongst other things, to ensure that the insurance companies meet their obligations.

The Trusts hold assets of circa £1 billion with an average duration of circa 10+ years: 
we will seek to generate a surplus above funeral cost inﬂation.

See note 29

Dignity plc Annual Report & Accounts 2021    

45

STRATEGIC REPORT

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

EMERGING RISKS
The Group continues to scan for emerging risks through the processes noted above. The key areas where additional risk is appearing, 
all of which are extensions of risk already identified above, are as follows:

Change

New

Risk description and impact

Mitigating activities and commentary

Sustainability and climate resilience 
The need to operate businesses sustainability and with a
focus on the environment is now an imperative in order
to achieve the Government’s target of net-zero. 

The vision is for Dignity to achieve net-zero by 2038.

Dignity is ranked in the Top 200 in the FT/Statista’s Europe’s Climate Leaders Report
2021 due to a 27 per cent reduction in core emissions between 2014 and 2019.

Dignity are voluntarily submitting a message of intent with regards to TCFD for the 
year 2021 prior to this becoming mandatory for 2022. Dignity have partnered with
Inspired Energy for the reporting of the TCFD and will assist in growing our reporting
requirements in line with Science-Based Targets. To assist with this an extensive
programme of smart meters and water meters are being rolled out both to allow us 
to have concise data to report against and to identify quickly any wastage/leakage.

Our ESG report can be seen on pages 26 to 39, but key focuses for 2022 include:

• Climate scenarios analysis and interim target setting to 2038;

• Develop a standalone TCFD report – full disclosure;

• Improve data collection and metrics across Scopes 1,2&3; and

• Improved cremator technology.

We will review the Environmental and Sustainability Committee Terms of reference to
drive change and will develop a 3-year plan to mitigate risks against emerging HM
Government led initiatives.

See Environmental, Social and Governance: p.26 to p.39

Funeral Directors’ Codes of Practice  
A number of compliance requirements currently
recommended by the Scottish Government Funeral
Directors’ Code of Practice can reasonably be expected 
to become law. For example, one draft requirement for
funeral directors is to have a ratio of 1 refrigerated space
per 50 funerals performed. Additionally, the need to
respond to registration and inspection requirements
which will be enacted in law. 

The introduction of the Independent Funeral Standards
Organisation in late 2021/22 will necessitate compliance
with a UK co-regulatory Code of Practice as described 
by the Ministry of Justice. Intended obligations include
transparency, quality and standards measures with risk
ratings and public reporting in subsequent phases. 

The relationship between and requirements of the two
Codes of Practice have yet to be ﬁnally determined. 

The Group is undertaking an assessment of compliance guidelines and works 
required to achieve compliance across the UK legislative networks. 

New

Consideration for the resource proﬁle and methodology for responding to legal
registration in Scotland and a statutory inspection response is being initiated as 
a pre-emptive measure in advance of a published Scottish government position. 

Relationship management with the National Association of Funeral Directors (‘NAFD’)
and the Independent Funeral Standards Organisation (‘IFSO’) is underway. 

As stated on page 17, we strongly support the progress IFSO has made and look
forward to working with the body should it transition into a government endorsed 
self-supervisory body for the sector.

We have also worked closely with Scottish Government to develop its approach 
to regulation of the sector and provision of services, including the anticipated
implementation of a new Code of Practice for Funeral Directors that will sit under 
a legal framework in Scotland.

See Strategic review: p.17

46

Dignity plc Annual Report & Accounts 2021    

  
VIABILITY STATEMENT

In accordance with Provision 31 of the UK Corporate Governance Code, the Board has assessed the Group's viability taking into account its
current position, the Boards assessment of its business prospects, and its principal and emerging risks.

Consistent with the prior period, three years has been selected as the appropriate period of review for the following reasons:

• This period aligns with our current medium-term strategic plan and forecasting; and
• Performance is significantly impacted by deaths which are increasingly difficult to forecast beyond 2024 due to the uncertainty the 

COVID-19 pandemic has had on the medium-term death forecast.

As the Group has been granted a waiver for the covenants for 2022, the key consideration of viability for 2022 is profitability. The key
consideration of viability for 2023 and 2024 remains the Group’s ability to service its Secured Notes as and when those obligations fall due,
twice a year, totalling approximately £34 million per annum (see Going Concern review for further details on the related covenants which
are tested quarterly). In making this statement the Directors have fully considered the principal and emerging risks facing the Group and
have stress tested the impact of a combination of these risks with severe but plausible scenarios, and the effectiveness of any mitigating
actions. These scenarios were then reviewed in the context of the Group’s ability to generate funds to meet those obligations and comply
with the debt service cover ratio (‘DSCR’) covenant. 

The scenarios build on the sensitised base case used for the Going Concern review which assumes that the new strategy of reduced pricing
and increased funeral market share delivers growth in 2023 and 2024 at higher rates than previously seen. The scenarios have then
specifically considered the following:

• the possibility of 50,000 lower deaths in all three years compared to the current ONS forecast caused by the excess level of deaths seen

recently due to COVID-19;

• the mix remains at the Q4 2021 mix, so assumes the funeral market share growth results in the same mix of funeral types rather than an

increase in full adult funerals; 

• a 50 per cent reduction to the forecast market share growth 2022 and beyond; 

• overhead costs £10 million higher than budgeted in 2022 and beyond;

• £100 reduction in funeral average revenue compared to the budgeted rate in 2022 and beyond; and

• £100 reduction in cremation average revenue compared to the budgeted rate in 2022 and beyond.

The Group has also specifically considered:

• the Group’s current position and trading prospects;

• the current and ongoing strategy; 

• the Board’s appetite for risk; and

• a robust assessment of the principal and emerging risks facing the Group, including those that would threaten its business model, future

performance, solvency or liquidity, and how they are managed, as explained in this Strategic Report (pages 40 to 46).

Notwithstanding the above, the Directors confirm that they have a reasonable expectation that the Group will continue in operation and
meet its liabilities as they fall due over the period to December 2024. It is recognised that future assessments are subject to a level of
uncertainty and, therefore, future outcomes cannot be predicted with certainty.

Dignity plc Annual Report & Accounts 2021    

47

STRATEGIC REPORT

NON-FINANCIAL 
INFORMATION STATEMENT  

Our objective is not only to provide and enhance the reputation of our Group but also to promote and embed and build the culture of caring,
responsibility and performance that adds value to our clients, our people, our shareholders and the local communities we serve.

Our corporate responsibility activities are an important way for us to deliver upon our strategic objectives. We believe that the best way 
to support a sustainable business is to act in the long-term interests of all our stakeholders, in addition to making a positive contribution 
to the communities in which we operate.

The table sets out where the information required in the non-financial information statement by section 414CB of the Companies Act 2006 
can be found in this Annual Report.

Reporting 
requirement

Employees

Environment

Waste disposal

Crematoria 
emissions

Impacts

We are truly a people business because we help people at an
extremely diﬃcult time in their lives. Meeting their needs means that
our employees must be caring, thoughtful and truly engaged with
those they serve, which they are. Dignity staﬀ show clients care and
commitment. Our culture and way of working means delivering the
highest standards of service and going the extra mile. In the COVID-19
pandemic, we have had many staﬀ who have isolated from their
families in order to continue their jobs and serve their communities.

We believe that the quality of our people is a strong enabler of
business growth. We value our people as they are a great asset. 
We support them by recognising and rewarding performance and 
long service plays a key part in this. 

We aim to provide a safe working environment, encourage personal
development, responsibility and respect, and attract a diverse and
inclusive workforce.

We are committed to maintaining the quality of the environment in
which we all live and we aim to reduce the impact of our operations 
so that we act in an environmentally friendly manner.

We believe that operating sustainably and responsibly is fundamental
to creating long-term value. Our objective is not only to strengthen 
the reputation of our organisation, but also to promote and embed 
a culture of responsibility and performance that adds value for our
stakeholders. 

A number of procedures and policies are in place to further ensure
responsible practice is embedded in the way we do business.

Dignity produces waste that is hazardous. Speciﬁcally, these are – items
such as gloves used for handling the deceased, PPE, waste arising from
embalming and mercury from cremator abatement, which are placed
in dedicated containers and are collected by contractors and incinerated.
All sites where this happens have been registered as required under
the legislation. All other waste is disposed of in accordance with local
authority regulations. The Regional Health and Safety Managers also
monitor this area. A waste disposal mission statement has been 
issued to all sites.

Crematoria are subject to emission controls from the local authority
areas in which they are sited. They are licensed on an annual basis 
with quarterly emissions testing information being submitted to the
local authority. All cremators are subject to rigorous maintenance
schedules completed by an external contractor.  

Air Pollution Control is a risk for all crematoria. The Group’s nominated
service provider completes a planned test programme on all cremators
which includes emissions testing. This mitigates the risk of any air
pollution control issues.  

Ethical Sourcing

There is a risk that Dignity could use a supplier that manufactures or
purchases goods that are made using slave, forced or child labour. 

This risk is mitigated ﬁrst by purchasing via a reputable agent and
secondly by ethical audits. Factories that supply Dignity are inspected
by the General Manager of Dignity Manufacturing on a three yearly
cycle and audit of ethical production and processes undertaken in
conjunction with the owners of those factories. An E-Learning Module
addressing the Modern Slavery Act is required to be completed 
by colleagues.

We are committed to ensuring that there is no modern slavery or
human traﬃcking in our supply chains or in any part of our business.
Our stated commitment is to act ethically and with integrity in all our
business relationships and to implement and enforce eﬀective systems
and controls to ensure slavery and human traﬃcking is not taking
place anywhere in our supply chains or in any part of the business.

Human Rights

Some of our relevant 
policies and statements

Where to ﬁnd more
in this Annual Report

Page

• Code of Conduct (1) 
• Equality and Diversity Policy
Statement (1)
• Health and Safety Policy
• Our CSR commitments(1)

• Chairman’s statement
• Stakeholder engagement 

& decision-making

• Environmental, Social and

Governance report

• Directors’ report

2

21 to 25

26 to 39

101to 104

• Environmental, Social and

Governance report

26 to 39

• Our CSR commitments(1) 
• Code of Conduct (1) 
• Anti-Bribery and Corruption Policy (1) 
• Equality and Diversity Policy
Statement(1) 
• Modern Slavery Act Statement (1) 
• Supplier Code of Conduct

• Safe Handling and Use of 

Substances Policy

• Waste Disposal Mission Statement

• Environmental, Social and

Governance report

26 to 39

• Our CSR commitments(1) 

• Environmental, Social and

Governance report 

31

• Modern Slavery Act Statement (1) and 
related E-Learning Module
• Our CSR commitments(1)

• Environmental, Social and

Governance report 

39

• Modern Slavery Act Statement (1) and 

related E-Learning Module
• Our CSR commitments(1) 
• Whistleblowing Policy(1)

• Stakeholder engagement 

& decision-making

• Environmental, Social and

Governance report

21 to 25

26 to 39

1. These can be found on the Group’s website www.dignityplc.co.uk.

The Strategic Report on pages 2 to 51 was approved by the Board on 22 March 2022 and signed on its behalf by:

G A Channon, Chief Executive
22 March 2022

48

Dignity plc Annual Report & Accounts 2021    

KEY PERFORMANCE 
INDICATORS  

The link between our 
strategy and our KPIs

These historical KPIs remain relevant
The Group has had a consistent set of
ﬁnancial and non-ﬁnancial KPIs used to
monitor the performance of the business
against its strategy for many years. These
KPIs have continued to remain relevant
during this period. Financial KPIs are
measured by reference to underlying
operating performance and are therefore
unaﬀected by the accounting policy
changes made in either period with the
exception of IFRS 16, which has now been
adjusted in both periods.

How we measure performance
• We monitor our performance by

measuring and tracking KPIs that we
believe are important to our longer-term
success.

• The Group uses both ﬁnancial and non-
ﬁnancial KPIs to manage the business
and ensure the Group's strategy and
objectives are being delivered.

• Each KPI reﬂects a quantiﬁable measure

of diﬀerent aspects of the Group’s
strategy. They act as headlines for the
Board, allowing them to use more
detailed management information to
consider the Group’s strategy and
ﬁnancial performance in greater depth
where appropriate.

• Our KPIs and goals are set to measure
our progress in improving our ﬁnancial
performance and in embedding
sustainable long-term growth.

Environmental performance metrics 
can be found in our ESG report on pages
29 and 30.

Alignment of new strategy and our KPIs
These KPIs were aligned with our previous
strategic objectives and are still valid for
the new strategy however, new KPIs are
being introduced as discussed in the
Strategic review and will be fully reported
on going forward.

All KPIs are focused on ensuring that the
Group delivers on strategic objectives. 
No particular KPI is solely relevant to one
aspect of the Group’s strategy.

Financial

Delivering 
Exceptional 
Client Service

Strategic &
Operational

Financial KPIs

Underlying earnings per share (pence)

Underlying cash generated from
operations (£m)

42.8p

46.4p

Deﬁnition
This is underlying proﬁt
after tax divided by 
the weighted average
number of Ordinary
Shares in issue in 
the period.

Developments in 2021
The reduction follows the
decrease in underlying
operating proﬁt
explained below.

£88.3m

£88.9m

Deﬁnition
This is the statutory 
cash generated from
operations excluding
non-underlying items
and the impact of
consolidating the 
Trusts and IFRS 15.

Developments in 2021
The Group continues to
convert operating proﬁt
into cash eﬃciently. 

2021

2020
restated

2021

2020
restated

Underlying operating proﬁt (£m)

Underlying average revenue per
funeral (£)

£2,548

£55.8m

£60.3m

2021

2020
restated

Deﬁnition
This is the statutory
operating proﬁt of the
Group excluding non-
underlying items and the
impact of consolidating 
the Trusts and IFRS15.

Developments in 2021
Underlying operating 
proﬁt declined year-on-year,
despite higher deaths. This
is primarily due to lower
market share and higher
costs. 

£2,522

2021

2020

Deﬁnition
Underlying funeral
revenue divided by the
number of funerals
performed in the 
relevant period.

Developments in 2021
Restrictions in client
choices due to COVID-19
continued to adversely
impact average revenue 
as clients opted for simpler
funerals during the ﬁrst
half of 2021. Quarter 4 has
been adversely impacted 
by the change in pricing
strategy in September 2021. 

Dignity plc Annual Report & Accounts 2021    

49

STRATEGIC REPORT

KEY PERFORMANCE INDICATORS CONTINUED

NON-FINANCIAL KPIs

Total estimated number of deaths 
in Britain (number)

Cremation market share
(per cent)

Customer Service and
Satisfaction

11.3%

11.2%

664,000

663,000

Deﬁnition
This is as reported by 
the Oﬃce for National
Statistics.

Developments in 2021
Deaths were materially
higher than originally
anticipated due to the
pandemic.

Deﬁnition
This is the number of
cremations performed
by the Group divided by
the total estimated
number of deaths in
Britain.

Developments in 2021
Market share is broadly
stable.  

2021

2020

2021

2020

Funeral market share excluding
Northern Ireland (per cent)

Number of cremations performed
(number)

74,800

74,500

11.8%

12.0%

Deﬁnition
This is the number of
funerals performed by
the Group in Britain
divided by the total
estimated number 
of deaths in Britain.

Developments in 2021
Market share has
declined slightly.

Deﬁnition
This is the number of
cremations performed
according to our
operational data.

Developments in 2021
Changes are a
consequence of the 
total number of deaths
and the Group’s 
market share. 

2021

2020

2021

2020

Number of funerals performed
(number)

Active pre-arranged funerals
(number)

581,000

558,000

79,200

80,300

Deﬁnition
This is the number of
funerals performed by
the Group according to
our operational data.

Developments in 2021
Changes are a
consequence of the 
total number of deaths
and the Group’s 
market share.  

2021

2020

2021

2020

Deﬁnition
This is the number of
pre-arranged funerals
(both trust funeral plans
and insurance backed)
where the Group has an
obligation to provide a
funeral in the future.

Developments in 2021
This increase reﬂects
continued sales activity
(both trust funeral plans
and insurance backed)
offset by plans cancelled
and the crystallisation of
plans sold in previous
periods.

50

Dignity plc Annual Report & Accounts 2021    

“We are proud of how we care
for our clients and families and
aim to continuously improve
our approach to delivering high-
quality services and standards.”

Our mission is to drive forward positive
change in the sector and become a true
market leader with an unrivalled focus on
quality, transparency and choice.

To achieve this, we recognise the importance
of investing in our people, digital platforms,
and facilities; as well as empowering our
colleagues to make the right decisions that
deliver a positive experience and outcome 
for our clients and in turn we become more
competitive.

Approximately one in eight of all funerals is
handled by one of our funeral directors, and
if we include cremations in our crematorium
then we were involved in approximately one
in ﬁve of all funerals in the UK in 2021. Doing
our best for those clients is our best source 
of future business.

Digital engagement 
As digital adoption trends evolve, we continue
to invest in technology and expertise to ensure
we can make it easy for people to ﬁnd us
online. We continue to develop our digital
communication channels which enhances
customer engagement and offers an additional
channel to hear from our clients. Having an
effective digital strategy aligned with our local
propositions is an essential part of our effort
to grow our share of funerals and cremations
in all areas.

“We engage and interact with 
our clients directly through 
our branches, telephone 
and online.”

Maintaining high-quality
and standards

We closely monitor the results of our client
surveys which are conducted by our funeral
services division. In the last ﬁve years, we
have received approximately 155,000
responses. This is our measure of how these
services meet or exceed client expectations.
Our consistently high satisfaction scores
reﬂect the strength of our relationships with
our clients. We listen to our clients and use
our survey responses to focus on areas in
which we can improve and add value.

  
THE DIGNITY CLIENT SURVEY 2021

Reputation and
recommendation
99.0% (2020: 98.9%)

Quality of service 
and care
99.9% (2020: 99.9%)

99.0 per cent of respondents said that we
met or exceeded their expectations.

99.9 per cent thought our staff 
were respectful.

98.0% (2020: 97.9%)

99.7% (2020: 99.6%)

98.0 per cent of respondents would
recommend us.

99.7 per cent thought our staff
listened to their needs and wishes.

99.2% (2020: 99.1%)

99.2 per cent agreed that 
our staff were compassionate 
and caring.

In the detail
99.2% (2020: 98.9%)

99.2 per cent of clients agreed that
our staff had fully explained what
would happen before and during
the funeral.

99.1%(2020: 99.2%)

99.1per cent said that the funeral
service took place on time.

98.3% (2020: 98.0%)

98.3 per cent said that the 
ﬁnal invoice matched the 
estimate provided.

High standards of facilities
and ﬂeet
99.8% (2020: 99.7%)

99.8 per cent thought our premises were
clean and tidy.

99.6% (2020: 99.2%)

99.6 per cent thought our vehicles were
clean and comfortable.

Meeting and exceeding expectations (% of clients)

Recommending our services (% of clients)

100%

99%

98%

97%

96%

95%

66%

64%

62%

60%

58%

56%

54%

100%

99%

98%

97%

96%

95%

Met and exceeded
expectations (left hand axis)

Exceeded expectations
(right hand axis)

(12 month rolling average)

Percentage of clients willing 
to recommend Dignity’s services 

(12 month rolling average)

6
0
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7
0
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D

8
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9
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1
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2
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3
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4
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5
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7
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2
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6
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7
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9
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3
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4
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e
D

Dignity plc Annual Report & Accounts 2021    

51

PERFORMANCE AND FINANCIAL RESULTS

SUMMARY GROUP RESULTS   

Summary Group Financial Performance 2021 

REVENUE  

£353.7m 

(2020: £357.5m)

UNDERLYING REVENUE  

£312.0m 

(2020: £314.1m)

OPERATING PROFIT 

£17.8m 

(2020: £15.9m)

CASH GENERATED FROM OPERATIONS 

£68.3m 

(2020: £62.7m)

UNDERLYING OPERATING PROFIT 

£55.8m 

(2020: £60.3m) (1)

UNDERLYING CASH GENERATED  
FROM OPERATIONS 

£88.3m 

(2020: £88.9m) (1)

BASIC EARNINGS/(LOSS) PER SHARE 

UNDERLYING EARNINGS PER SHARE 

DIVIDENDS PAID IN THE PERIOD 

24.2p 

(2020: (51.0)p)

42.8p 

(2020: 46.4p) (1)

£nil 

(2020: £nil)

(1) A number of prior year underlying measures have been restated to include the application of IFRS 16 which were previously excluded from underlying performance 

measures. See note 1 for further details. 

Alternative performance measures (‘APMs’) 

The Board believes that whilst statutory reporting measures provide ﬁnancial performance of the Group under IFRS, APMs are necessary to 
enable users of the ﬁnancial statements to fully understand the trading performance and ﬁnancial position of the business. The APMs provided 
are aligned with those used in the day-to-day management of the business and allow for greater comparability across periods. For this reason, 
the APMs provided exclude the impact of consolidating the Trusts and the changes which relate to the application of IFRS 15, as well as  
non-underlying items comprising certain non-recurring and non-trading transactions. Further detail may be found on pages 179 to 185. 

This year we are reporting statutory results on the 53 week period to 31 December 2021 in comparison with last year's 52 week period to  
25 December 2020.

Deaths in Great Britain 

Number of Deaths 

800,000 

700,000 

600,000 

500,000 

400,000 

300,000 

200,000 

100,000 

0

220,000

200,000

180,000

160,000

140,000

120,000

100,000

Source: Oﬃce For National Statistics

1950

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

Q1

Q2

Q3

52

Dignity plc Annual Report & Accounts 2021    

2018

2019

2020

2021

52%

Q4

 
 
 
 
FINANCIAL REVIEW  

DEAN MOORE, INTERIM 
CHIEF FINANCIAL OFFICER

Our performance in 2021 reﬂects the
continued impact of COVID-19 and the
implementation of the new strategy in
quarter four. As a result, underlying operating
proﬁt decreased by seven per cent to £55.8
million. Allowing for the fact that 2021
represents a 53 week period for the Group
means that, on a 52 week comparable basis,
deaths were 14,000 lower in the period.
Therefore, although 2021 has an additional
week of underlying revenue compared to
2020, total deaths including week 53 were
broadly comparable. 

Our market share slightly decreased on
funeral services and there was a strong
market share performance by our 
crematoria business.

Cash generation remained strong in the 
year and will enable us to continue to invest
in our strategic objectives in the future.

Introduction
These results have been prepared in accordance with International
Financial Reporting Standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union and in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006.

Statutory operating proﬁt was £17.8 million (2020: £15.9 million), an
increase of £1.9 million. Gross margin was broadly in line with prior
year. Administrative expenses were £2.5 million lower, largely driven
by a decreased impairment charge of £4.8 million on goodwill and
trade names compared to last year, a further trade name write-oﬀ
of £2.5 million and after incurring additional central overheads of
£3.1 million relating to digital expenditure and other costs. This 
was partially oﬀset by a reduction in other non-underlying items,
primarily in respect of £4.7 million less spent on the Transformation
Plan which has been abrogated, £2.9 million less spent on the
Operating and competition review and £1.6 million less spent on
Directors’ severance pay. See table on page 54 for further details 
on the impacts to statutory and underlying operating proﬁt. 

A total impairment of £39.2 million has been charged in the period
(2020: £44.0 million), of which £2.8 million (2020: £15.3 million)
relates to trades names and £36.4 million (2020: £28.7 million) to
goodwill. The impairment has arisen within the funeral services
division primarily due to the reduced average revenues following 
the new pricing strategy for the Group. Whilst the Group expects
long-term market share growth from the new strategy, the accounting
standard (IAS 36) for impairment assessments does not allow
forecasts to be used where assumptions cannot be evidenced 
or have not yet been implemented (e.g. cost savings). As a result, 
whilst the Group is focussed on committing to delivering its market
share growth ambitions, given the infancy of the strategic plan
implementation and the available evidence to demonstrate this
growth as at the year end when the impairment assessment is
made, the full extent of potential longer-term gains are not reﬂected
in the impairment modelling. Note 8 in the accounts provides
sensitivity analysis based on the calculated impairment.

In addition to the impairment described above, a further trade name
write-oﬀ of £2.5 million (2020: £nil) has been charged in the period
following the withdrawal of seven trading names from use following
part of the Group’s strategic review.

The Group’s net ﬁnance income was £14.2 million (2020: net ﬁnance
costs £35.5 million), a £49.7 million movement primarily due to the
increase in fair value movements of the ﬁnancial assets held by the
Trusts of £43.7 million. 

The above has resulted in proﬁt before tax for the Group of £32.0
million (2020 loss: £19.6 million).

Dignity plc Annual Report & Accounts 2021    

53

PERFORMANCE AND FINANCIAL RESULTS

FINANCIAL REVIEW CONTINUED

Financial highlights
The Group’s ﬁnancial performance is summarised below:

Accordingly, the following information is presented to aid
understanding of the performance of the Group:

                                                                                                            53 week             52 week                       
                                                                                                 period ended    period ended                       
                                                                                                     31 Dec 2021      25 Dec 2020      Increase/
                                                                                                                                       restated(b)    (decrease)
                                                                                                                      £m                       £m                    %

Underlying revenue(a) (£million)                            312.0            314.1             (1)

Underlying operating proﬁt (a) (£million)                   55.8                60.3              (7)
Underlying proﬁt before tax(a) (£million)                  26.8                30.6            (12)
Underlying earnings per share (a)  (pence)                 42.8                46.4              (8)

Underlying cash generated 
from operations(a)  (£million)                                         88.3                88.9              (1)

Revenue (£million)                                                       353.7             357.5              (1)
Operating proﬁt (£million)                                           17.8                15.9              12
Proﬁt/(loss) before tax (£million)                                32.0             (19.6)                   
Basic earnings/(loss) per share (pence)                    24.2             (51.0)                   
Cash generated from operations (£million)             68.3                62.7                9

Dividends paid in the period:
Final dividend (pence)                                                         –                      –                   

(a) Further details of alternative performance measures can be found on pages 179 to 185.
(b) Underlying reporting measures for the 52 week period ended 25 December 2020 have

been restated to include the application of IFRS 16 which were previously included within
other adjustments. See page 119 for further details.

Alternative performance measures
The alternative performance measures are stated before non-
underlying items and the eﬀect of consolidation of the Trusts and
applying IFRS 15 as deﬁned on page 179. These items have been
adjusted for in determining underlying measures of proﬁtability 
as these underlying measures are those used in the day-to-day
management of the business and allow for greater comparability
across periods.

Detailed information on non-underlying items is set out on pages
179 to 183 and a reconciliation of statutory revenue to underlying
revenue is detailed in note 3.

                                                                                                                    53 week                   52 week
                                                                                                                    period ended         period ended 
                                                                                                                      31 Dec 2021           25 Dec 2020
                                                                                                                                                restated(c)
                                                                                                                           £m                          £m

Operating profit for the period as reported                    17.8                    15.9
Add the effects of:
Acquisition related amortisation                                                 4.2                      4.6
External transaction costs in respect of 
   completed and aborted transactions                                     2.6                      0.2
Marketing costs in relation to trials                                            0.9                      0.6
Profit on sale of fixed assets                                                      (1.1)                    (0.2)
Transformation Plan costs(a)                                                             –                      4.7
Directors’ severance pay                                                                   –                      1.6
Operating and competition review costs                                      –                      2.9
Trade name write-off                                                                     2.5                          –
Trade name impairment                                                               2.8                    15.3
Goodwill impairment                                                                  36.4                    28.7
Impact of Trust consolidation and IFRS 15                          (10.3)                 (14.0)

Underlying operating profit (b)                                               55.8                    60.3
Underlying net ﬁnance costs                                                  (29.0)                 (29.7)
Underlying proﬁt before tax(b)                                              26.8                    30.6
Tax charge on underlying proﬁt before tax                            (5.4)                    (7.4)

Underlying proﬁt after tax(b)                                                  21.4                    23.2

Weighted average number of Ordinary
   Shares in issue during the period (million)                         50.0                    50.0
Underlying EPS (pence)(b)                                                            42.8                    46.4
Decrease in underlying EPS (per cent)                                           8                       23

(a) The £4.7 million costs incurred in 2020 reﬂects expenditure up to the point of the

Transformation Plan being abrogated. 

(b) Further details of alternative performance measures can be found on pages 179 to 185.
(a) The 52 week period ended 25 December 2020 has been restated to include the application 
of IFRS 16 within underlying operating proﬁt which were previously included within other 
adjustments. See page 119 for further details. A presentation adjustment has also been 
made to separately pull out the marketing costs in relation to trials. 

Earnings per share 
Statutory proﬁt after tax was £12.1 million (2020: loss of £25.5
million). Basic earnings per share were 24.2 pence per share (2020
loss: 51.0 pence per share). Underlying proﬁt after tax was £21.4
million (2020: restated £23.2 million), giving underlying earnings per
share of 42.8 pence per share (2020: restated 46.4 pence per share),
a reduction of eight per cent. 

Items excluded from underlying operating proﬁt
Amortisation of acquisition related intangibles
Amortisation of acquisition related intangibles reﬂects the write-off
of acquired intangibles over the term of their useful life. 

External transaction costs
External transaction costs primarily reﬂect amounts paid to external
parties for legal, tax and other advice in respect of the Group’s
acquisitions and unsuccessful crematoria planning developments.

Proﬁt on sale of ﬁxed assets
Proﬁts or losses arising from the sale of ﬁxed assets (net of any
insurance proceeds received) are excluded as they are unconnected
with the trading performance in the period.

54

Dignity plc Annual Report & Accounts 2021    

  
The Group will continue to invest in the maintenance of its existing
portfolio of vehicles and funeral and crematoria locations.

Cash ﬂow and cash balances for the Trading Group
Underlying cash generated from operations was £88.3 million (2020:
restated £88.9 million).

Other working capital changes were consistent with the Group’s
experience of converting proﬁts into cash, subject to timing
differences and cash incurred in respect of commission payments.

Cash balances of the Trading Group at the end of the period were
£55.9 million (2020: £56.7 million excluding £16.9 million set aside 
for debt service: total Trading Group cash balances of £73.6 million). 
Further details and analysis of the Group’s cash balances are included
in note 16 to the consolidated ﬁnancial statements.

Pensions
The balance sheet shows a deﬁcit of £19.7 million before deferred 
tax (2020: deﬁcit of £36.6 million). Following the triennial valuation
performed in April 2020, the scheme will receive future annual cash
obligations from the Group from 2022 onwards of £4.5 million. 
See note 28 for further details.

Taxation
The Group’s effective tax rate on underlying proﬁts in the period 
was 20.2 per cent (2020: restated 24.2 per cent). The current period
underlying effective tax rate is higher than the standard rate of
corporation tax due to the effects of permanent disallowables and
prior year items with a tax impact totalling £0.3 million. The underlying
effective tax rate is lower than originally anticipated due to the effects
of prior year credits and a lower level of permanent disallowables. 

In 2022, the Group expects its underlying effective tax rate to be
approximately two to three per cent above the headline rate of
corporation tax. This translates to an underlying effective rate of
between 21.0 per cent and 22.0 per cent.

The Group’s effective tax rate on proﬁts is 62 per cent (2020: charge 
on losses of 30.0 per cent) which is higher than the underlying
effective tax rate primarily due to the £1.5 million corporate interest
restriction disallowance, £6.9 million arising on the corporation tax
rate change and £6.1 million of disallowable taxation on the goodwill
and trade name impairments and write-off.

Transformation Plan costs
Cost incurred in relation to the Group’s now abrogated
Transformation Plan has resulted in signiﬁcant, directly attributable
non-recurring costs. 

Directors’ severance pay
Following the departure of Mike McCollum, Steve Whittern and
Richard Portman in 2020, severance packages were agreed and paid
and are considered to be a non-recurring cost.  

Operating and competition review costs
The Group has incurred costs with external advisers to support 
the Group’s response to the CMA’s funerals market investigation 
and HM Treasury‘s consultation on the funeral plan sector. Costs
were also incurred in 2020 with external advisers to support its
operational review.

Trade name write-off
During 2021, the Group withdrew seven trading names from use
following part of the Group’s strategic review. As the trading names
had speciﬁc intangible assets related to them, they were required 
to be written-off.

Trade name impairment
The Group assessed the carrying value of its trade names. In light 
of the lower level of proﬁtability and lower anticipated average
revenue per funeral, an impairment of £2.8 million (2020: £15.3
million) has been recognised.

Goodwill impairment
The Group assessed the carrying value of its goodwill. In light of the
lower level of proﬁtability and lower anticipated average revenue per
funeral, an impairment of £36.4 million (2020: £28.7 million) has
been recognised.

Trust consolidation/IFRS 15
In the prior period the Group changed its accounting policy to
consolidate the Trusts and to implement IFRS 15. This adjustment
reverses the impact of these policy changes in order to maintain
underlying performance measures with those used in the day-to-day
management of the business.  

Capital expenditure
Capital expenditure on property, plant and equipment and
intangible assets was £21.0 million (2020: £11.1 million).

                                                                                                                         31 Dec                     25 Dec
                                                                                                                                       2021                        2020
This is analysed as:                                                                                              £m                           £m

Maintenance capital expenditure:                                                     
Funeral services                                                                              10.5                     5.0
Crematoria                                                                                         5.4                     2.7
Other                                                                                                   1.7                     1.4

Total maintenance capital expenditure (a)                                17.6                     9.1
Branch relocations                                                                           0.1                     0.5
Transformation capital expenditure                                                –                     0.2
Development of new crematoria and cemeteries                    3.3                     1.3

Total property, plant and equipment                                        21.0                   11.1
Partly funded by:                                                                                    
Disposal proceeds – properties (b)                                              (1.2)                   (1.1)

Net capital expenditure                                                                19.8                   10.0

(a)  Maintenance capital expenditure includes vehicle replacement programme, improvements 

to locations and purchases of other tangible and intangible assets.

(a)  Property disposals in 2021 includes £0.8 million of insurance proceeds received. Property

disposals in 2020 were the result of the now abrogated Transformation Plan.

Dignity plc Annual Report & Accounts 2021    

55

PERFORMANCE AND FINANCIAL RESULTS

FINANCIAL REVIEW CONTINUED

Prior year restatements
Following a review of the Group’s accounting policy for insurance
plans in relation to the prepaid balances held on the consolidated
balance sheet it has been amended to include a provision for
expected future cancellations. It was further noted that a liability was
not held for active plans where a known commission is payable in
future years. The total impact has been booked into opening reserves
at 28 December 2019 and is a reduction to reserves of £3.5 million.
Further details of the prior year restatement are set out in note 34 
to the ﬁnancial statements. 

Comparatives for the 52 week period ended 25 December 2020 
have been restated due to a prior year adjustment in relation to the
application of IFRS 16. This has impacted the consolidated statement
of cash ﬂows and the revenue and segmental analysis. Furthermore,
underlying operating proﬁt within divisional results have also been
restated. See note 1 for further details.

Capital structure and ﬁnancing for the Trading Group
Secured Notes
The Group’s principal source of long-term debt ﬁnancing is the
Secured A Notes and the Secured B Notes. The principal is repaid
completely over the life of the Secured Notes and is therefore
scheduled to be repaid by 2049. The interest rate is ﬁxed for the life 
of the Secured Notes and interest is calculated on the principal.  

The key terms of the Secured Notes are summarised in the 
table below:

                                                                                             Secured A Notes                       Secured B Notes

Total new issuance at par                          £238.9 million                 £356.4 million

EBITDA for this calculation can be reconciled to the Group’s statutory
operating proﬁt as follows:

                                                                                                                                                        31 Dec
                                                                                                                                                                       2021
                                                                                                                                                                          £m

EBITDA per covenant calculation – Securitisation Group                               72.4
Add: EBITDA of entities outside Securitisation Group                                       1.3
Add: Impact of IFRS 16                                                                                            12.5
Less: Non-cash items(a)                                                                                           (1.3)

Underlying operating proﬁt before depreciation 
    and amortisation – Group                                                                                 84.9
Underlying depreciation and amortisation                                                     (29.1)
Non-underlying items                                                                                           (48.3)
Impact of Trust consolidation and IFRS 15                                                         10.3

Operating proﬁt                                                                                                       17.8

(a)  The terms of the securitisation require certain items (such as pensions, Save As You
Earn Scheme and Long-Term Incentive Plan Scheme costs) to be adjusted from an
accounting basis to a cash basis.

In addition, in order for the Group to transfer excess from the
Securitisation Group to Dignity plc, it must achieve both a higher
EBITDA to total debt service ratio of 1.85 times and achieve a Free
Cash Flow to total debt service (a deﬁned term in the securitisation
documentation) of at least 1.4 times. This latter ratio at December 
was 1.76 times (December 2020: 1.57 times). These combined
requirements are known as the Restricted Payment Condition (‘RPC’)
which have been met in 2021. Failure to pass the RPC would not be 
a covenant breach and would not cause an acceleration of any debt
repayments. Any cash not permitted to be transferred whilst the RPC
is not achieved will be available to be transferred at a later date once
the RPC requirement is achieved. 

Legal maturity                                     31 December 2034        31 December 2049

Coupon                                                                     3.5456%                           4.6956%
Rating by Fitch                                                                     A-                                    BB+
Rating by Standard & Poor’s                                            A-                                      B+

Net debt
The Trading Group has underlying net debt of £471.2 million 
(2020: £480.6 million) at the balance sheet date. See note 25 for
further details.

The Secured Notes have an annual debt service obligation (principal
and interest) of circa £33.2 million. Net amounts owing on the Secured
Notes is £526.6 million (2020: £541.7 million).

It is not currently possible to issue further Secured Notes, as such an
issue would require the rating of the Secured B Notes to raise to BBB
by both rating agencies.

Financial Covenant
The Group’s primary ﬁnancial covenant under the Secured Notes
requires EBITDA to total debt service to be above 1.5 times. The ratio
at 31 December 2021 was 2.13 times (2020: 1.99 times). The Group
therefore had EBITDA headroom of approximately £21.4 million
(2020: approximately £16.0 million) against its ﬁnancial covenants at
the end of December. This covenant calculation uses a prescribed
deﬁnition of EBITDA detailed in the loan documentation and only
represents the proﬁt of a sub-group of the Group which is party to the
loans (the ‘Securitisation Group’). Furthermore, the calculations are
unaffected by the consolidation of the Trusts or the application of IFRS
15 and IFRS 16 described elsewhere, as the Group was able to elect to
disregard those changes when making the calculations. 

Should the Group wish to repay all amounts due under the 
Secured Notes, the cost to do so at the year end would have been
approximately £757.4 million, (Class A Notes: £202.8 million; Class B
Notes: £554.6 million) (2020: £822.7 million, (Class A Notes: £226.0
million; Class B Notes: £596.7 million)). 

Net ﬁnance costs
The Group’s underlying ﬁnance costs substantially consist of the
interest on the Secured Notes and ancillary instruments. The net
ﬁnance cost in the period relating to these instruments was £23.7
million (2020: £24.1 million).

Other ongoing underlying ﬁnance costs incurred in the period
amounted to £0.8 million (2020: £1.0 million), covering the unwinding
of discounts on the Group’s provisions and other ﬁnancial liabilities.

Interest receivable on bank deposits was £nil (2020: £0.1 million).

The Group also incurred £4.5 million (2020: £4.7 million) lease liability
interest, under IFRS 16, giving a total underlying net ﬁnance cost of
£29.0 million (2020: restated £29.7 million).

56

Dignity plc Annual Report & Accounts 2021    

  
Shareholders’ deﬁcit 
Consolidating the Trusts and applying IFRS 15, has a signiﬁcant impact
on our reported results. The recognition of contract liabilities (the
majority of which are expected to fall due after one year) in excess of
the Trusts’ ﬁnancial assets has caused the Group’s balance sheet to
show an overall deﬁcit in shareholders’ funds.

On consolidation of the Trusts, all funds received from the plan
members are deferred until recognised on satisfaction of a funeral
obligation or when a plan is cancelled and refunded (subject to an
administrative fee). These deferred funds increase under IFRS 15 
by a material non-cash signiﬁcant ﬁnancing charge (see note 1 for
accounting policy). The assets of the Trusts, initially representing the
same funds received from plan members less an amount paid to the
Trading Group to cover marketing costs, are invested by the Trusts
and are subject to market movements. Over time, investments are
also realised to fund funeral payments or refund obligations. The net
impact of the above gives rise to a signiﬁcant reduction in the net
asset value of the Group to a position where the Group has reported 
a net deﬁcit of £151.1 million (2020: restated £177.5 million). Whilst
this position appropriately reﬂects the application of IFRS 15 to the
underlying contract with the plan member, based on the current 
cost of delivery of a funeral service, delivery of pre-need funerals is
expected to result in the future recognition of proﬁts under IFRS,
which, over time, the Directors consider would more than eliminate
the deﬁcit noted above.

This deﬁcit, which only arises on consolidation, has no impact on the
Group’s future ability to pay dividends to shareholders, which relies on
the reserves in the Company and not the Group.

The Trusts
At the balance sheet date, the Trusts had £1,043.1 million (2020:
£967.1 million) of ﬁnancial assets and £19.8 million (2020: £21.6
million) of cash, which was recognised in the consolidated balance
sheet. This has resulted in average net Trust asset per plan increasing
six per cent to £3,650 (2020: £3,400). The movement in ﬁnancial assets
is primarily attributable to remeasurement gains recognised in the
consolidated income statement of £85.0 million (2020: £41.3 million),
reﬂecting changes in asset values and net disposals of ﬁnancial assets
of £12.2 million (2020 net disposals of ﬁnancial assets: £18.7 million).

Aggregated contract liabilities totalled £1,337.5 million (2020: 
£1,317.5 million) with the primary movements being sales of new
plans of £86.3 million (2020: £82.0 million), increases due to signiﬁcant
ﬁnancing of £51.6 million (2020: £53.1 million) and releases due to
death or cancellation totalling £117.9 million (2020: £122.2 million).

Outlook 
The successful delivery of our strategy will deliver long-term growth
and value. 

Dignity plc Annual Report & Accounts 2021    

57

PERFORMANCE AND FINANCIAL RESULTS

DIVISIONAL PERFORMANCE  

Introduction

Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision
maker who is responsible for allocating resources and assessing performance of the operating segments. The chief 
operating decision maker of the Group has been identiﬁed as the three Executive Directors. 

For statutory purposes the Group has two reporting segments, funeral services and crematoria, as under IFRS 15 only 
a single performance obligation exists when a pre-arranged funeral plan is sold, being the performance of a funeral. 
The Group also reports central overheads, which comprise unallocated central expenses.

For the purpose of alternative performance measures the Group has three reporting segments, funeral services, 
crematoria and pre-arranged funeral plans as the chief operating decision maker reviews segmental performance 
before applying the eﬀect of IFRS 15.

Funeral services relate to the provision of funerals and ancillary items, such as memorials and ﬂoral tributes.

Crematoria services relate to cremation services and the sale of memorials and burial plots at the Dignity crematoria 
and cemeteries.

Pre-arranged funeral plans represent the sale of funerals in advance to clients wishing to make their own funeral
arrangements and the marketing and administration costs associated with making such sales.

Divisional Summary 2021

FUNERAL SERVICES
• Group operating proﬁt share (before
central overheads) 22% (2020: 30%) (3)

• Group underlying operating proﬁt 

share (before central overheads) 51%
(2020: 55%) (2) (3)

CREMATORIA
• Group operating proﬁt share (before
central overheads) 78% (2020: 70%) (3)

• Group underlying operating proﬁt 

share (before central overheads) 49%
(2020: 45%) (2) (3)

PRE-ARRANGED FUNERAL PLANS

UNDERLYING REVENUE (1)

UNDERLYING REVENUE (2)

UNDERLYING REVENUE (4)

£201.9m
(2020: £202.6m)

OPERATING PROFIT

£13.0m
(2020: £18.7m) (3)

£85.5m
(2020: £82.7m)

OPERATING PROFIT

£46.5m
(2020: £44.0m) (3)

UNDERLYING OPERATING PROFIT

UNDERLYING OPERATING PROFIT

£48.2m
(2020: £53.1m) (3)

776

Number of funeral locations 
we operate in the UK.

79,200

Number of funerals
conducted during 2021.

£47.0m
(2020: £44.2m) (3)

46

Number crematoria we
operate in England and
Scotland.

74,800

Number of cremations
conducted during 2021.

£24.6m
(2020: £28.8m)

OPERATING PROFIT (4)

£nil
(2020: £nil)

581,000

Number of active plans
as at 31 December 2021
(2020: 558,000).

(1) Total underlying revenue was £201.9 million (2020: £202.6 million). On a statutory basis the Group recognised funeral services revenue of £268.2 million (2020: £274.8 million). 

See note 3 for further details.

(2) There is no diﬀerence between underlying revenue and statutory revenue for the Crematoria division.
(3) Restatements relate to the correction of the application of IFRS 16 in 2020. See note 1 for further details.
(4) Pre-arranged funeral plans are not a separate division in statutory terms, as a result statutory revenue and operating proﬁt are £nil (2020: £nil). Please see note 3 for further details.

58

Dignity plc Annual Report & Accounts 2021    

Funeral services

Overview
As at 31 December 2021, we operated from a network of 776
(2020: 795) funeral locations throughout the UK, generally
operating under established local trading names. The change to
the portfolio reﬂects ﬁve branch openings and 24 closures in the
year. Most closures represent funeral locations where leases have
naturally come to an end and have not been renewed and also
include seven freehold closures.

Performance
We conducted 79,200 funerals (2020: 80,300) during the period
under review. Underlying operating proﬁt was £48.2 million (2020:
restated £53.1 million) a reduction of nine per cent, this can be
explained by the ﬁnancial summary table below.

Financial summary 2021                                                        H1                       H2                      FY
                                                                                                                    £m                      £m                    £m
Underlying operating proﬁt – 2020 restated (1)       36.0              17.1             53.1
Impact of:                                                                              
Number of deaths (2)                                                    (8.2)                 8.5               0.3
Market share(2)                                                               (2.9)               (0.1)             (3.0)
Average revenues (2)                                                       6.2               (4.4)               1.8
Net cost base changes                                                  0.5               (4.5)             (4.0)

Underlying operating proﬁt – 2021                      31.6              16.6             48.2

(1) Restatement relates to the correction of the application of IFRS 16 in 2020. See note 1 

for further details.

(2) Represents revenue impact. 

Items totalling £35.2 million (2020: restated £34.4 million) excluded
from underlying operating proﬁt resulted in statutory operating
proﬁt of £13.0 million (2020: restated £18.7 million). These items are
discussed on pages 179 to 183 but relate to non-underlying items
and the impact of consolidating the Trusts and IFRS 15.

Progress and Developments
Market share
Approximately one per cent of all funerals were conducted in
Northern Ireland. Excluding Northern Ireland, these funerals
represented approximately 11.8 per cent (2020: 12.0 per cent) 
of total estimated deaths in Britain. Whilst funerals divided by
estimated deaths is a reasonable measure of Dignity’s market 
share, the Group does not have a complete national presence and
consequently, this calculation can only ever be an estimate. 

On a comparable basis, excluding any funerals from locations not
contributing to the whole of 2020 and 2021, market share was 11.8
per cent, compared to 11.9 per cent in 2020. Both 2021and 2020 are
a signiﬁcant improvement on the dramatic market share declines
witnessed in 2016 and 2017, however, the Group’s new strategy is
expected to grow market share signiﬁcantly.

Market share is calculated based on a ﬁxed assumption of one 
week between the registration of the death and the date of the
funeral. Therefore, due to COVID-19 and longer delays between 
the date of registering the death and the date of the funeral being
performed, calculations of market share in 2020 and 2021 may 
not be comparable.

Dignity plc Annual Report & Accounts 2021    

59

PERFORMANCE AND FINANCIAL RESULTS

DIVISIONAL PERFORMANCE CONTINUED

Funeral mix and Average revenue
In September 2021, funeral services introduced an Attended Funeral at prices from £1,595 to £2,495 (excludes extras)  across the network
and implemented the Unattended Funeral (direct cremation), and the simple funeral was removed (apart from our location in Jersey). 
As such, the historical full service average and the simple and direct cremation average are no longer comparable. In order to have
comparability the full service and the simple averages have been blended to give a new Attended average and the direct cremation,
previously included as simple and direct cremation, has been restated to Unattended to make both comparable. The previous averages 
and the restated averages can be seen in the two tables below. 

The new pricing strategy was introduced in early September and as expected it has caused a decline in our underlying average revenue. 
It is too early to judge the precise eﬀects of this however, as demonstrated in the second table, the underlying Attended average in quarter
four 2021 is £788 lower than 2019 and £356 lower than 2020, which was impacted by COVID-19. Sales of ancillary items such as ﬂowers
and memorials have also improved compared to 2020 at £154. 

Funeral mix and average revenue                                                                                                                        FY                   FY                 Q1                  Q2                 H1                  Q3                 Q4                  H2                  FY
                                                                                                                                                                                                                                2019              2020             2021              2021             2021              2021              2021              2021             2021
                                                           Funeral type                                                                                                                                      Actual           Actual         Actual          Actual         Actual           Actual          Actual          Actual         Actual

Underlying average       Full service                                                                                                               3,578        3,337        3,354         3,441        3,393         3,284        2,462        2,780        3,062
revenue (£)                         Simple, limited and direct cremation(1)                                                          2,047        1,941        1,929         1,921        1,926         1,876        1,081        1,589        1,818  
                                                Pre-need                                                                                                                   1,846        1,911        1,943         1,955        1,948         1,980        1,965        1,959        1,959
                                                Other (including Simplicity)                                                                                   770            940        1,004            982           982            873            790            943           904

Volume mix (%)               Full service                                                                                                                     52              39              41              46             43               49              61              55              49
                                                Simple, limited and direct cremation(1)                                                                14              25              21              17             20               14                 6              10              15
                                                Pre-need                                                                                                                         27              28              29              28             28               28              27              28              28
                                                Other (including Simplicity)                                                                                        7                 8                9                 9                9                 9                 6                 7                8

Underlying weighted average (£)                                                                                                                      2,699        2,397        2,434         2,545        2,478         2,505        2,145        2,306        2,394
Ancillary revenue (£)                                                                                                                                                 231            125           131            168           150            187            135            154           154

Underlying average revenue (£)                                                                                                                  2,930        2,522        2,565         2,713        2,628         2,692        2,280        2,460        2,548

Full service volume as a percentage of full, simple and limited (%)                                                79              61              66              73             68               78            n/a            n/a            n/a

Funeral mix and average revenue – restated                                                                                                    FY                   FY                 Q1                  Q2                 H1                  Q3                 Q4                  H2                  FY
                                                                                                                                                                                                                                2019              2020             2021              2021             2021              2021              2021              2021             2021
                                                           Funeral type                                                                                                                                      Actual           Actual         Actual          Actual         Actual           Actual          Actual          Actual         Actual

Underlying average           Attended                                                                                                                  3,253        2,821        2,903         3,064        2,959         3,000        2,465        2,696        2,855
revenue (£)                          Unattended                                                                                                                 n/a            996        1,010            944           980         1,178        1,060        1,085        1,063
                                                Pre-need                                                                                                                   1,846        1,911        1,943         1,955        1,948         1,980        1,965        1,959        1,959
                                                Other (including Simplicity)                                                                                   770            940        1,004            982           982            873            790            943           904

Volume mix (%)                  Attended                                                                                                                        66              63              61              62             62               61              61              61              61
                                                Unattended                                                                                                                 n/a                 1                1                 1                1                 2                 6                 4                3
                                                Pre-need                                                                                                                         27              28              29              28             28               28              27              28              28
                                                Other (including Simplicity)                                                                                        7                 8                9                 9                9                 9                 6                 7                8

Underlying weighted average (£)                                                                                                                      2,699        2,397        2,434         2,545        2,478         2,505        2,145        2,306        2,394
Ancillary revenue (£)                                                                                                                                                 231            125           131            168           150            187            135            154           154

Underlying average revenue (£)                                                                                                                       2,930        2,522        2,565         2,713        2,628         2,692        2,280        2,460        2,548

Investment
Investment in the Group’s locations and ﬂeet have continued. In 2021, £10.5 million (2020: £5.0 million) was invested in maintenance capital
expenditure. Whilst 2021 expenditure was considerably higher than 2020 the Group anticipates higher spend in 2022.  

Outlook
The Group is focusing on its restructure which will allow it to put the power back in the hands of the colleagues who are at the heart
of their local communities, with this will come growth.

60

Dignity plc Annual Report & Accounts 2021    

  
Crematoria

Overview
The Group remains the largest single independent operator of
crematoria in Britain, operating 46 (2020: 46) crematoria as at 
31 December 2021.  

Performance
The Group performed 74,800 cremations (2020: 74,500) in the
period, representing 11.3 per cent (2020: 11.2 per cent) of total
estimated deaths in Britain.

Underlying operating proﬁt was £47.0 million (2020: restated 
£44.2 million), an increase of six per cent. This can be explained 
by the ﬁnancial summary table below:

Financial summary 2021                                                        H1                       H2                      FY
                                                                                                                    £m                      £m                    £m

Underlying operating proﬁt – 2020 restated (1)        24.4              19.8             44.2
Impact of:                                                                              
Number of deaths (2)                                                    (3.2)                 3.3               0.1
Market share(2)                                                               (0.4)                 0.5               0.1
Average revenues(2)                                                        4.6               (2.0)               2.6
Cost base changes                                                       (0.2)                 0.2                   –

Underlying operating proﬁt – 2021                      25.2              21.8             47.0

(1) Restatement relates to the correction of the application of IFRS 16 in 2020. See note 1 

for further details.

(2) Represents revenue impact. 

The primary reason for the increase in underlying operating proﬁt 
is average revenues. Crematoria grounds have been fully open for 
all of 2021 compared to being closed in quarter two of 2020, and
consequently total memorial and cemetery revenue was £19.2
million (2020: £16.7 million), approximately 15 per cent higher
despite cremation volume being in line with 2020. The average
cremation revenue is in line with the prior year at £887 (2020: £885).  

Non-underlying costs of £0.5 million (2020: £0.2 million) are excluded
from underlying operating proﬁt resulting in statutory operating
proﬁt of £46.5 million (2020: restated £44.0 million).

Progress and Developments
The Group has invested £5.4 million (2020: £2.7 million) maintaining
and improving its locations in the period. 

The Group now has planning permission for six new crematoria. 
The total capital commitment for these six projects is expected to 
be approximately £55 million, with £11.5 million of this amount
having already been invested. Each of the locations with planning
permission will take ﬁve to seven years to reach maturity,
performing 800 to 1,000 cremations per year. 

In addition, the Group also has one location where it is appealing the
planning decisions and another one that is currently in the planning
process. Furthermore, the Group withdrew its interest in one
location following an unsuccessful planning appeal.

Outlook
Crematoria remains a stable and cash generative aspect of the
Group’s operations.

Dignity plc Annual Report & Accounts 2021    

61

PERFORMANCE AND FINANCIAL RESULTS

DIVISIONAL PERFORMANCE CONTINUED

Pre-arranged funeral plans

Underlying Performance
The Group continues to have a strong market presence in 
pre-arranged funeral plans and insurance policies charged to it 
for the provision of a funeral. The plans represent potential future
incremental business for the funeral division, providing high-levels
of certainty of cash ﬂows as existing plans mature. 

The Trading Group claims a marketing allowance from the trust
that covers the costs incurred in the selling of Funeral Plans. As a
result, the pre-arrangement division does not contribute any proﬁt
at the time of sale therefore underlying operating proﬁt was £nil in
both periods. 

Approximately 50,000 (2020: 60,000) new plan sales were made
and the number of active pre-arranged plans (including insurance
backed arrangements) increased to 581,000 (2020: 558,000). All
plan sales are stated net of cancellations of 33,000 (2020:32,000).
The majority of commissions are clawed back from distribution
partners on cancellation in the ﬁrst two years (the majority of
expected cancellations take place in this period).

Of the sales in the period 26,000 plans were trust based funeral
plans (2020: 30,000). In addition, 24,000 (2020: 30,000) plans were
linked to life assurance plans with third parties. Not all of these
insurance backed plans include an obligation to provide a
guaranteed funeral and we anticipate the cancellation experience
to be signiﬁcantly higher than is witnessed on trust based sales.

Historically, as with all the Group’s divisions, pre-arranged funeral
plans underlying proﬁts broadly reﬂect the cash generated by 
that activity. This position has started to shift as more long-term
instalment plans are written, where marketing costs are incurred
when a plan is sold, but, marketing recoveries are claimed from the
trust in line with instalment payments. This shift has changed the
proﬁle of the early years cashﬂow position. 

Progress and Developments
Dignity remains focused on selling high-quality business, in ways
that support the strong reputation of the Group. We ended our
relationship with those third-party telephony partners who sold
plans on our behalf and are now focussing on prioritising the sale
of funeral plans through our branches.

The ﬁnancial position of the Trusts holding members’ monies is
crucial, given the Group ultimately guarantees the promises made
to members. At the end of 2021, the Trusts had average assets 
per plan of £3,650 (2020: £3,400) in respect of 323,000 trust based
funeral plans.  Average assets per plan are greater than the amount
currently received by the Trading Group for performing a funeral.

The latest actuarial valuations of the Trusts (at 24 September 2021)
showed them to have a surplus of £147.3 million (25 September
2020: surplus £4 million), based on assumptions by the Trust’s
actuary. This valuation is based on the amounts the Trusts are
expected to pay when a funeral is performed rather than the 
actual cost of performance (being a lower amount) to the Group.

62

Dignity plc Annual Report & Accounts 2021    

  
During the ﬁrst half year the new investment strategy 
announced last year was largely executed as the previous
investment allocations were unwound and the Trusts’ assets
placed in a combination of high-grade bonds (open-ended
investment funds) and low cost index funds (equities). This will
reduce the ongoing fund management cost and more rationally
align the investments with the liabilities with the intention of
seeking in the long run to outperform the cost of carrying out 
the funerals the trusts support.

The Trusts have assets, including cash, under the management
of the Trustees of £1,062.9 million (2020: £988.7 million) with
investments split as follows:

                                                        Example investment types                              Actual
                                                                                                                                                                          (%) 

Defensive investments          Index linked gilts and corporate bonds       11-14

Illiquid investments                Private investments                                              5-6

Core growth investments     Equities                                                                74-78

Liquid investments                 Cash                                                                              6

The current allocation is subject to annual review by the Trustees
with support from their investment advisers. See pages 142 and 143
for additional discussion of Trust balances.

Outlook
The Group remains optimistic on its ability to continue to be a market
leader in pre-arranged funerals and has successfully submitted its
FCA application in December 2021 and is planning for regulation to
be eﬀective by the middle of 2022.

The Group intends to continue to sell as many plans as is commercially
possible and economically sensible primarily through its branches.
The Group expects plan sales in H1 2022 to be lower than previous
years whilst it transitions from plans being sold by third party
providers to selling the majority of plans through its branches.

Central overheads

Overview
Central overheads relate to central services that are not speciﬁcally
attributed to a particular operating division. These include the
provision of IT, ﬁnance, personnel and Directors’ emoluments. 
In addition, and consistent with previous periods, the Group 
records centrally the costs of incentive bonus arrangements,such 
as Long-Term Incentive Plans (‘LTIPs’) and annual performance
bonuses, which are provided to over 100 managers working 
across the business.

Developments
Underlying costs in the period were £39.4 million (2020: 
restated £37.0 million). This reﬂects continued investment in
digital activities and central capabilities. The table below
summarises the key movements:

                                                                                                                     H1                       H2                      FY
                                                                                                                    £m                      £m                    £m
Central overheads –2020 restated (1)                         18.5              18.5             37.0
Impact of:                                                                              
Digital activities                                                               0.6                 0.7               1.3
Salaries                                                                            (1.1)                 0.4             (0.7)
Other                                                                                 0.6                 1.2               1.8
IT support fees                                                                0.4               (0.4)                   –

Central overheads – 2021                                        19.0              20.4             39.4

(1) Restatement relates to the correction of the application of IFRS 16 in 2020. See note 1 

for further details.

The increase in digital activities primarily relates to promotional
spend. Salaries have reduced year on year partly due to £0.7 million
savings in temporary staﬀ costs that were high in 2020 due to the
increase in cover required in the call centre during the pandemic.
Other costs include legal and professional fees of £2.3 million (2020:
£1.5 million), recruitment fees £0.8 million (2020: £0.3 million) and
insurance costs of £0.5 million (2020: £0.2 million). 

Non-underlying items of £2.3 million (2020: £9.8 million) are excluded
from underlying costs resulting in total central costs of £41.7 million
(2020: £46.8 million).

In addition to the above costs, maintenance capital expenditure of
£1.7 million (2020: £1.4 million) has been incurred on central projects
predominantly relating to IT that will help the business as a whole
operate more eﬃciently.

Outlook
As previously stated, Central overheads are expected to reduce as
part of the strategic review. In January 2022 the Group made the
decision to make some colleagues redundant as well as suspending
some of its marketing and digital activities.

Dignity plc Annual Report & Accounts 2021    

63

In this section

65       Chairman’s introduction to governance
72       Governance structure
73       Board of Directors
74       Directors’ statement on corporate governance
79       Audit Committee report
83       Nomination Committee report
85       Report on Directors’ remuneration
101     Directors’report

64

Dignity plc Annual Report & Accounts 2021    

GOVERNANCE

CHAIRMAN’S INTRODUCTION
TO GOVERNANCE  

“The Board is collectively responsible for setting the long-term
business strategy and establishing the Company’s purpose,
vision and principles which together inspire the day-to-day
culture of the business to promote the long-term sustainable
success of the Company, while generating value for
shareholders and contributing to wider society.” 

Dear Shareholder,

I am pleased to be able to present on behalf of the Board the Group’s Corporate Governance Report for 2021. This
report provides shareholders with a clear and comprehensive explanation of what governance means within Dignity,
what it means to us, the Board of Directors, how it is applied and how it guides our decision-making. The report sets
out our governance framework, the Board’s approach to alignment of purpose, principles, culture and strategy and
our engagement with stakeholders.

We are reporting in line with the UK Corporate Governance Code July 2018 (the ‘Code’). Following what has been a
challenging year for the Group both in terms of the impact of COVID-19 and the extent of changes to the Board, there
are a number of areas where the Group are either currently or have been for part of the year unable to comply with
the Code which are explained later in this report. These matters of non-compliance are temporary, and the Board’s
continued objective remains to manage the Group for the beneﬁt of all stakeholders for which the application of good
corporate governance is essential and ultimately to comply with the Code in all respects.

I am committed to the highest standards of governance. Good governance is crucial at all levels within the Group and 
it is the responsibility of the Board both to lead by example and to set the tone from the top. It means ensuring that an
effective internal framework of systems and controls exists which includes clearly deﬁned authorities accountability,
which promote success, whilst allowing risks to be managed to appropriate levels. To do this, the Board must make
sound judgements whilst giving consideration to the views of our shareholders and other stakeholders.

I would encourage you to participate in our Annual General Meeting on 9 June 2022 and take the opportunity to meet 
the Board. We will take questions at that meeting.

John Castagno
Non-Executive Chairman

22 March 2022

Dignity plc Annual Report & Accounts 2021    

65

GOVERNANCE

CHAIRMAN’S INTRODUCTION TO GOVERNANCE CONTINUED

Transparent reporting 

The Group has a clear purpose, and integral to delivering it is being 
a socially responsible company which demonstrates strong ethical
behaviour within a framework of transparent and robust governance. 

Section 172 Statement 
In line with the reporting requirements of the 2018 UK Corporate
Governance Code, we describe how our stakeholders and the
matters set out in Section 172 of the Companies Act 2006, have 
been considered in Board discussions and decision-making. The
Board actively engages with our clients, shareholders, employees 
and wider stakeholder Groups when making decisions, and 
considers the impact of Group activities on the community,
environment and its reputation. 

Principles of the UK Corporate Governance Code 2018 
The Principles set out in the UK Corporate Governance Code 2018 
(the ‘Code’) emphasise the value of good corporate governance for
long-term sustainable success. Whilst we are reporting a number 
of areas where we have not been able to comply with speciﬁc Code
provisions, we do not consider this extends to any of the Principles set
out within the Code. Further information on how we have complied
and applied the Principles set out in the Code can be found on 
pages 70 and 71.

The Code is publicly available on the website of the UK Financial
Reporting Council at www.frc.org.uk.

SECTION 1: BOARD LEADERSHIP AND COMPANY PURPOSE
• Chairman's Introduction to governance
• Strategic Report
• Section 172 Statement
• Leadership, Purpose, Principles and Culture
• Board engagement with key stakeholders
• Board key activities

SECTION 2: DIVISION OF RESPONSIBILITIES
• Board Composition
• Roles and Responsibilities 
• Committee Composition
• Independence of Non-Executive Directors
• Time Commitment and External Appointments
• Conﬂicts of Interest

SECTION 3: COMPOSITION, SUCCESSION AND EVALUATION
• Board Composition and Succession
• Diversity and Inclusion
• Appointment, Tenure and Re-election 
• Nomination Committee Report
• Board Eﬀectiveness and Evaluation

SECTION 4: AUDIT, RISK AND INTERNAL CONTROL
• Audit Committee Report
• Signiﬁcant Reporting and Accounting Matters
• Fair, Balanced and Understandable Assessment
• Viability Statement and Going Concern
• Risk Management and Internal Controls
• Internal Audit
• External Auditor

SECTION 5: REMUNERATION
• Directors’ Remuneration Report
• Remuneration Principles 
• Remuneration Policy
• Pension and beneﬁts
• Directors’ shareholdings and share interests
• External advisors

Compliance with the UK Corporate Governance Code
In the 2021 reporting period, Dignity plc was subject to the Code
issued by the Financial Reporting Council (available at frc.org.uk). As
a publicly listed company, Dignity is required to report on how it has
applied the Principles of the Code and this is set out in the following
pages. Other than as detailed in the paragraphs below, Dignity has
complied with the provisions of the Code throughout the period
ended 31 December 2021. 

As stakeholders will appreciate, 2021 was again a difficult and
challenging year for all of us. Those of us in the funeral sector had 
to continue to ensure that both our colleagues and the bereaved
families we serve across the UK have been protected and supported
during this time. 

As previously reported, I became the independent Chairman of the
Board in July 2021. 

There has been further reorganisation at Board level which has and
continues to be managed for the long-term benefit of stakeholders.

Board Changes
In 2021, the following Board changes occurred:

• February: Paul Humphreys was appointed to the Board on 
23 February 2021 and chaired the Audit Committee and was 
a member of the Remuneration and Nomination Committees.

• April: Following the General Meeting held on 22 April 2021 and
with immediate effect, Clive Whiley who had been Executive
Chairman since April 2020, ceased to be a Director and Gary
Channon was appointed as Executive Chairman. In addition, Gillian
Kent and Paul Humphreys resigned as independent Non-Executive
Directors on 22 April 2021.

• James Wilson, Non-Executive Director stepped down from the

Board on 26 April 2021 in line with commitments made by Phoenix
UK Fund Limited regarding the future composition of the Board.

• July: On 23 July 2021, John Castagno was appointed to the Board 
as Independent Non-Executive Chair and Chair of the Nomination
Committee. On John’s appointment, Gary Channon stood down 
as Executive Chairman to become Chief Executive.

• September: On 1 September 2021, Graham Ferguson was

appointed as an Independent Non-Executive Director and Chair 
of both the Audit and Remuneration Committees.

• Since year-end: On 7 January 2022, Kate Davidson was appointed
to the Board as Chief Operating Officer and on 7 February 2022,
Kartina Tahir Thomson was appointed as an Independent 
Non-Executive Director and Chair of the recently established 
Risk Committee.

As a result, the Company has been unable to comply with the
following Code Provisions throughout the periods noted:

• 9. In respect of the separation of the roles of chair and chief
executive (non-compliant from April 2020 until July 2021).

• 11. In respect of the proportion of the Board, excluding the

Chairman, who are considered to be independent (non-compliant
from April 2020 to February 2021 and then from April 2021 to date).

• 12. In respect of the appointment of a Senior Independent Director.
The Board has not appointed a Senior Independent Director since
David Blackwood left the Board in June 2020. 

66

Dignity plc Annual Report & Accounts 2021    

  
• 17 and 32. In respect of the composition of the Board’s key

committees (non-compliant from December 2020 to February
2021 and from April 2021 to February 2022). Mr Ferguson,
Chairman of the Remuneration Committee, has not served on 
a Remuneration Committee prior to his appointment to the 
Dignity Board.

• 24. In respect of the membership of the Audit Committee 

(non-compliant from December 2020 to date).

• 21. An annual Board and Committee evaluation was conducted 
in respect of 2020. Given the Board restructuring in 2021, the
evaluation in respect of 2021 will be held in the first half of 2022 
to enable directors appointed since the second half of 2021 to
provide a more informed contribution.

Following the General Meeting in April 2021, the Board comprised
Gary Channon, Executive Chairman, Andrew Judd, Executive 
Director of Funeral Operations and Dean Moore, Interim Chief
Financial Officer. A consequence of there being no independent
Non-Executive Director representation on the Board at this time was
that Audit, Remuneration and Nomination Committees could not 
be constituted. This situation was corrected on the appointment of
John Castagno in July 2021 as Independent Non-Executive Chairman
and Graham Ferguson in September 2021 as an Independent 
Non-Executive Director.

As stated in the Company’s 2021 Interim Statement, the Chairman
continues to work on strengthening the governance further with the
objective for the business to be Code compliant in the near future.

Board induction
Following appointment, an induction programme is provided to 
new directors so that they become as effective as soon as possible 
in their role. 

The induction programme includes:

• Briefings with fellow directors, senior leadership members and

advisers.

• A briefing on the role of a public company director and the

framework in which the Board operates.

• Provision of Board and Committee papers and governance

documents such as the Schedule of Matters Reserved for the
Board and Committee terms of reference.

• Provision of corporate policies.

• Analysts’ reports.

Corporate Governance
The Group is committed to high standards of corporate governance,
details of which are given in this report and the separate reports
from the Chairs of:

• The Audit Committee;

• The Nomination Committee; and

• The Remuneration Committee.

At the current time and, in addition to the Independent Non-
Executive Chairman, the Board comprises four Executive Directors,
Gary Channon, Dean Moore, Andrew Judd and Kate Davidson, and
two Independent Non-Executive Directors, Graham Ferguson and
Kartina Tahir Thomson. 

The various sections of this report contain summarised information
from Dignity plc’s Articles of Association (the ‘Articles’) and the
Companies Act 2006 which is the applicable English law concerning
companies. The relevant provisions of the Articles or the  Companies
Act should be consulted if more detailed information is needed.

The Company is in the process of searching for a Chief Financial
Officer, which will enable Dean Moore to relinquish his executive
role. Following this appointment, the Board will comprise four
Executive Directors and, excluding the Chairman, three Non-
Executive Directors. Graham and Kartina are considered by the
Board to be independent. Dean’s independence is subject to
appropriate review and approval by the Board.

The direct and indirect consequences of changing roles and 
Board restructuring during 2021 has demanded additional time
commitment to Dignity from a number of Board members. 
Whilst the Chief Executive, Interim Chief Financial Officer and our
Independent Non-Executive Directors have various roles with other
companies, the Nomination Committee formally confirms annually
that at all times each individual Board member has the capacity to
perform their roles on the Dignity Board.

Workforce engagement 
We rely on our colleagues to provide our services in a caring,
thoughtful and truly engaged way with the clients and communities
we serve. We believe that the quality of our people is a strong
enabler of business growth and is central to delivering our purpose,
principles and strategy. 

The Board seeks to maintain good channels of communication with
all its employees. For a business that prides itself on communicating
sensitively with clients, we have to ensure the same care and
consideration is shown towards our colleagues too. That means
regular dialogue, which is accessible through a variety of channels,
with the opportunity for colleagues to interact and easily share their
feedback. 

Adopting a multi-channel approach has seen us develop digital
communications solutions that sit alongside our established
company newsletter. ‘Dignity Inside’ is a dedicated website housing,
amongst many things, news, blogs and opinion polls.

More frequent and accessible communication is complemented 
by an increase in the face-to-face support available to colleagues,
particularly those in operational roles across funerals, crematoria
and manufacturing.

Dignity plc Annual Report & Accounts 2021    

67

GOVERNANCE

CHAIRMAN’S INTRODUCTION TO GOVERNANCE CONTINUED

The Dignity Team Forum (see below) provides a key opportunity 
for the Board to assess and monitor the culture of the business.

We consider that the mechanisms noted above represent an
effective mechanism for the Board to engage with the workforce,
however due to the importance of our workforce to the business,
the Board will continue to review the situation and consider if
incremental benefits can be obtained through the appointment 
of a designated non-executive director to lead in this area.
Consideration will also be given to the appointment of an 
employee director.

Our HR department includes a team of eight regional and one head
office Business Partners. The role is very much a consultative one, so
the Partners provide guidance in areas such as recruitment, learning
and development and improving business results. 

Across the organisation, the Board has looked carefully at people
support. We care deeply about the wellbeing of our people and
continue to offer access to an Employee Assistance Programme. 
This free and confidential advice service is available 24/7 and enables
colleagues to discuss any issues that may be causing them concern,
be they related to work, home life, or their physical and mental health. 

The Board established the Dignity Team Forum, a formal workforce
advisory panel with representatives elected by their peers, to
facilitate regular and constructive engagement between colleagues
and senior leaders, including the Board. 

The purpose of the Dignity Team Forum is to share information 
on a broad range of topics, everything from business performance,
operational initiatives and Board remuneration policy to future
strategy and vision. It also creates a platform for relaying colleagues’
opinions and ideas, helping to ensure that the business decisions 
we make are fully informed with insight from all major stakeholders.

The minutes of the Dignity Team Forum which has a schedule of
four meetings annually, are considered by the Board which, inter
alia, facilitates knowledge of issues of importance to employees 
and the assessment and monitoring of culture. We are a people-
orientated and principles driven business and strive to create a
culture where everybody feels valued, included and motivated 
to perform at their best. 

The Dignity Team Forum has been consulted collectively on 
a regular basis (often weekly) to consider matters relating to
restructuring matters discussed in the Chairman’s Statement 
and the Strategic Review.

Promoting an inclusive and diverse workforce
Dignity is dedicated to building a workforce which is representative
of the communities we serve, in all aspects of diversity. 

In line with the Equality Act 2010, it is the policy of the Company 
that there shall be no discrimination or less favourable treatment 
of employees or job applicants in respect of age, race, religion 
or belief, gender, sex, sexual orientation, pregnancy, disability or
martial status. The Company is fully committed to ensuring there 
is no unfair and unlawful discrimination in relation to employees, 
job applicants, clients, suppliers and members of the public. It is
Company policy to engage, promote and train employees on the
basis of their capabilities, qualifications and experience, without
discrimination, and all employees will receive equal opportunity 
to progress within the Company.

In order to put this policy into practice in the day-to-day management
and operations of the Company, we:

• Monitor decisions on recruitment, selection, training and

promotion to ensure they are based solely on objective and job
related criteria;

• Provide training for managers to ensure that they understand the

nature of discrimination and are fully aware of their responsibilities
in implementing our Equality and Diversity policy;

• Provide awareness for employees to ensure that they have a

greater understanding of Equality and Diversity in the workplace;

• Provide information and advice on the implications of the relevant
legislation and on assistance available to help in the employment 
of people with disabilities;

• Ensure that all policies are applied thoroughly and fairly 

particularly those relating to any complaint involving discrimination
or harassment;

• Communicate this policy to employees, suppliers and third parties,
where applicable, through induction, training and communications;
and

• Encourage our suppliers and third parties to adopt policies and
working practices, which reflect our own views and values on
Equality and Diversity and that of our Clients.

All employees are also responsible for the promotion and
advancement of this policy and the Company will support its
implementation and communication through its Equality and
Diversity Programme of Action.

Board leadership, purpose, principles and culture
Our purpose is to help people at one of the most difficult times 
in their lives and to create a responsible business that focuses on
meeting the needs of our clients and delivering long-term success
and value for all our stakeholders. 

As a business, serving clients is at the heart of everything we do. 
Our Principles underpin our purpose and are recognised across the
Group as the basis of our culture. 

The Board sets the strategy for the Group to align with our purpose.
Our Principles and leadership behaviours are a vital part of our
culture to ensure that through our conduct and decision-making 
we do the right thing for the business and our stakeholders. 

The Board has overall responsibility for establishing the Company’s
purpose, Principles and strategy to deliver the long-term sustainable
success of the Company and generate value for all our stakeholders.

68

Dignity plc Annual Report & Accounts 2021    

  
Ensuring eﬀective decision-making
The parameters within which decisions are taken across the Group
are ultimately directed by our core purpose, which is designed to
drive alignment between why it exists, what it aims to achieve in the
future, who it exists for, and how it generates sustainable financial
and non-financial value for its stakeholders. This is discussed further
in the Strategic Report. 

The Board-agreed matters of purpose, principles, vision and strategy
are not developed in isolation and are influenced by stakeholder
views, our sustainable business goals and our risk environment. In
turn, it is the combination of all of these matters that set the context
and expectations in relation to decision-making outcomes, attitudes
and behaviours, forming the baseline for management accountability;
and in combination with our Principles, contribute to the overall
cultural tone across the Group.

Our Guiding Principles    

Family

People

Integrity

S
S

T
T

CLIE N
CLIE N

Innovation

C
C

O
O

L
L

L
L

E
E

A
A

G

G

U
U

E

E

S
S

Humility

S

E

C

I

O

T

I

M

N

M

U

U

strtt iirr vvevv tott
We strive to be 
the most trusted, 
osst tru
respected and valued 
c
v
end of life provider in the 
ofo
P
m
ITIES
CO
O

UK, and the most inspirational and rewarding employer for those 
N
who serve this goal

er
Y

M

N
N
C

A
O

oyo

M

COM
M PANY

Longevity

Life
Life

Care
Care

Governance and stakeholders
The Board takes the view of, and effects on, key stakeholders into
consideration in Board discussions and when making decisions,
including shareholders with whom it engages at appropriate times
on appropriate subject matters during the year. 

Fair, balanced and understandable
The Board as a whole is responsible for the preparation of the
Annual Report and Accounts and ensuring that they are fair,
balanced and understandable. Drafts of this document have been
reviewed by the Committee Chairs and the Board as a whole. The
Audit Committee recommended to the Board, following its in-depth
review, that this Annual Report and Accounts is, in its opinion, fair,
balanced and understandable. The Board has reviewed the Annual
Report and Accounts, drawing on its collective knowledge of the
business and updates from management during the year, and in the
opinion of the Audit Committee, and I can confirm that the Board
believe this Annual Report and Accounts provides shareholders with
information necessary to assess the Company’s position,
performance, business model and strategy. 

The Board’s involvement in setting the business
strategy and future outlook
In 2021, we supported and encourage the Executive team to evolve
the long-term business strategy, explained on pages 4 to 7 and we
remain confident in its approach.

The Board believes in our strategy and in the coming year, will focus
on the Company’s progression and the implementation and
articulation of the business strategy. 

Society

Partners

Planet

Capital
Capital

Section 172 and stakeholder engagement
This is the second year we have set out our Section 172 Statement,
which can be found on pages 21 and 22. As part of our compliance
with Section 172, the Board is required to consider a number 
of factors in its decision-making, including the interests of its
stakeholders. Further details on how the Company and the Board
engage with stakeholders can be found on pages 21 to 25.

The Board and the business has continued to focus on employee
engagement during this period of significant change to create a
culture that everyone can be proud of, where people come first, and
everyone is committed to delivering Dignity’s long-term goals.

Dignity plc Annual Report & Accounts 2021    

69

GOVERNANCE

CHAIRMAN’S INTRODUCTION TO GOVERNANCE CONTINUED

HOW WE COMPLY WITH THE 2018 UK CORPORATE GOVERNANCE CODE
THROUGHOUT THE YEAR, THE BOARD HAS APPLIED THE PRINCIPLES AND COMPLIED WITH THE MAJORITY 
OF THE PROVISIONS OF THE 2018 UK CORPORATE GOVERNANCE CODE AS SET OUT BELOW:

PRINCIPLE                                                                                    HOW WE APPLY THE PRINCIPLES                                                                                                                                                       FURTHER INFORMATION

1. BOARD LEADERSHIP AND COMPANY PURPOSE

A. THE BOARD’S ROLE
A successful company is led by an eﬀective
and entrepreneurial Board, whose role 
is to promote the long-term sustainable
success of the company, generating value
for shareholders and contributing to 
wider society.

B. SETTING PURPOSE, VALUES 

AND STRATEGY

The Board should establish the company’s
purpose, values and strategy, and satisfy
itself that these and its culture are aligned.
All directors must act with integrity, lead by
example and promote the desired culture.

C. RISK MANAGEMENT
The Board should ensure that the
necessary resources are in place for 
the company to meet its objectives and
measure performance against them. The
Board should also establish a framework 
of prudent and eﬀective controls, which
enable risk to be assessed and managed.

D. STAKEHOLDER ENGAGEMENT
In order for the company to meet its
responsibilities to shareholders and
stakeholders, the Board should ensure
eﬀective engagement with, and encourage
participation from, these parties.

E. WORKFORCE POLICIES
The Board should ensure that workforce
policies and practices are consistent with
the company’s values and support its long-
term sustainable success. The workforce
should be able to raise any matters 
of concern.

2. DIVISION OF RESPONSIBILITIES

F. CHAIR LEADERSHIP
The Chair leads the Board and is responsible
for its overall eﬀectiveness in directing the
company. They should demonstrate
objective judgement throughout their tenure
and promote a culture of openness and
debate. In addition, the Chair facilitates
constructive board relations and the
eﬀective contribution of all non-executive
directors, and ensures that directors receive
accurate, timely and clear information.

G. BALANCE OF THE BOARD
The Board should include an appropriate
combination of executive and non-executive
(and in particular, independent non-
executive) directors, such that no one
individual or small group of individuals
dominates the Board’s decision-making.
There should be a clear division of
responsibilities between the leadership 
of the Board and the executive leadership 
of the company’s business.

The Board is collectively responsible for the long-term success of the Company, including its
relationships and engagement with all shareholders, and operates via a formal schedule of matters
reserved for its decision.

See the Governance structure on
page 72 for further information
and details of the responsibilities
of the Board.

The schedule of matters reserved for the Board provide that the Board is responsible for the 
overall leadership of the Group and setting its values and standards and for approving the Group’s
strategic aims and objectives. 
In addition, the role of The Dignity Team Forum is a key element in the Board’s oversight of culture.
Our Code of Conduct also deﬁnes the behaviours we expect of our people and the ethical
standards to which we adhere.
Culture is central to ensuring that Dignity has a clear business vision and an understanding of our
social purpose that people can align to.
In 2021, the Group set a clear direction for Dignity’s future. The vision is to be the most trusted
provider in the UK, but also the most inspirational and rewarding employer.

See the Chairman’s statement
for further information.

The Group has mature risk management and governance processes in place to identify, report and
manage risk. The Audit Committee is provided with a twice- yearly review of the principal risks,
including emerging risks, together with updates from Internal Audit on matters for review.

See page 72 for further
information on the Governance
structure and pages 40 to 46 for
our Principal and Emerging risks.

The Board reviews and oversees relationships with the business’s key stakeholders. 
At each meeting, the Board, inter alia, receives (i) a report on the performance and operational
issues of each business (ii) an update from the Chief Executive on amongst a number of matters,
investor relations, (iii) supplier management and (iv) in 2021, regular updates on matters relating 
to the FCA regulation of pre-need funeral plans. The Board committees also address such matters
as the performance development framework and whistleblowing. Workforce engagement is
achieved as described on pages 67 and 68.

The Board ﬁrmly believes that good ethics and good business combine to produce the best 
results in the long-term. We take our responsibility and reputation as a good corporate citizen very
seriously and we are committed to ethical business practices which reﬂect and enhance our core
values of quality, integrity, courtesy and respect. Our Code of Conduct sets out our policy on the
standards to be followed to promote legal, honest, ethical and safe business practices. There are
Group policies and supporting e-learning modules that deﬁne our approach to managing health,
safety, environmental and social matters aﬀecting our employees. In addition, there is also an
independent and anonymous whistleblowing procedure allowing any employee to conﬁdentially
raise any concerns.

See the Strategic Report on
pages 21 to 25 for further details
and workforce engagement
pages 67 and 68.

See our website at
www.dignityplc.co.uk.

The Chairman, in conjunction with the Company Secretary, ensures that quality information is
provided to the Board in advance of each Board meeting. The performance of the Chairman is
monitored through the annual Board evaluation process and through separate meetings of the
Non-Executive Directors without the Chairman present.

See our Governance section on
page 72 for further information.
Full Code compliance impacted
by Board restructuring in 2021.

The Board currently comprises the independent Non-Executive Chairman, the Chief Executive, the
Interim Chief Financial Oﬃcer (who was independent on appointment), the Chief Operating Oﬃcer,
the Executive Director of Funeral Operations and two independent Non-Executive Directors. 
The Chief Executive is responsible for the day-to-day leadership and management of the business
through deﬁned delegated authority limits. The Chairman and two Non-Executive Directors provide
an independent view on the running of our business, governance and boardroom best practice.
They oversee and constructively challenge management in its implementation of strategy and
performance of the Group.

See the Governance structure
and how the Board functions on
page 74 for further information.
Full Code compliance impacted
by Board restructuring in 2021.

H. NED’S ROLE AND TIME COMMITMENT 
Non-executive directors should have suﬃcient
time to meet their board responsibilities. 
They should provide constructive challenge,
strategic guidance, oﬀer specialist advice and
hold management to account.

Prior to taking up a Non-Executive Director position, the Board considers whether the Non-
Executive Director has suﬃcient time to devote to their role with the Group and in light of any
changes to a Non-Executive Director’s external commitments during the year. At the Nomination
Committee meeting in December 2021, each of the Non-Executive Directors conﬁrmed that they
were able to devote suﬃcient time to their role as a Director of Dignity plc. This conﬁrmation is
sought annually.

I. THE COMPANY SECRETARY
The Board, supported by the Company
Secretary, should ensure that it has the 
policies, processes, information, time and
resources it needs in order to function
eﬀectively and eﬃciently.

All Directors have access to the advice and services of the Company Secretary. 
The Company Secretary ensures that the Board receive papers of a high-quality in a timely
manner. He advises the Board on all governance matters, including compliance with the Code.
He works with the Chairman and Committee Chairs to ensure that the right matters are escalated
to the Board and Committees at the appropriate time and that suﬃcient time is devoted to
strategic matters. He arranges Directors’ induction and Board evaluation exercises and supports
succession planning and recruitment of new Non-Executive Directors.

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Dignity plc Annual Report & Accounts 2021    

                                                                                                          
PRINCIPLE                                                                                    HOW WE APPLY THE PRINCIPLES                                                                                                                                                       FURTHER INFORMATION

3. COMPOSITION, SUCCESSION AND EVALUATION

J. BOARD APPOINTMENTS
Appointments to the Board should be
subject to a formal, rigorous and transparent
procedure, and an eﬀective succession plan
should be maintained for Board and senior
management. Both appointments and
succession plans should be based on merit
and objective criteria and, within this context,
should promote diversity of gender, social
and ethnic backgrounds, cognitive and
personal strengths.

K. SKILLS,EXPERIENCE AND 

KNOWLEDGE

The Board and its committees should have 
a combination of skills, experience and
knowledge. Consideration should be given 
to the length of service of the Board as a
whole and membership regularly refreshed.

The Board appointments post the General Meeting on 26 April 2021, were subject to a rigorous 
and transparent procedure. 
There are regular succession planning reviews at the Nomination Committee regarding Executive
and Non-Executive succession and below Board level. In 2022, a key priority is for the Nomination
Committee to have more direct interaction with employees which can be more valuable in building
understanding of talent issues than consideration of metrics. To achieve this a programme for
individuals to present/ contribute at meetings of the Board/ Committees, where appropriate, is
being developed.

The Nomination Committee reviews the balance, composition and structure of the Board, as well
as the length of service of each Board member and where considered appropriate recommends
the re-appointment of the Non-Executive Director and any extensions to their term.
John Castagno, Graham Ferguson, Kate Davidson and Kartina Tahir Thomson were appointed for
the skills, experience and knowledge they can contribute to the Board and its Committees.
The Board has been restructured since the General Meeting in 2021 such that Dean Moore is the
longest serving Board member having been appointed on 11 March 2020. 
All Directors will stand for election or re-election at the AGM on 9 June 2022.

L. BOARD EVALUATIONS
Annual evaluation of the Board should
consider its composition, diversity and how
eﬀectively members work together to
achieve objectives. Individual evaluation
should demonstrate whether each director
continues to contribute eﬀectively.

In line with the requirement of the Code, the Board conducts an annual evaluation of the 
performance of the Board and Committees and each Director. Given the signiﬁcant Board
restructuring in 2021 (which meant that there were no Independent Non-Executive Directors 
on the Board until the appointment of John Castagno in July followed by Graham Ferguson in
September 2021), the evaluation will be conducted in the ﬁrst half of 2022 by which time the
Directors appointed in the second half of 2021 and in early 2022 will have more experience 
of the Company, the Board and Committees.
These evaluations are externally facilitated annually.

See the Board appraisal on page
75 and pages 82 and 84 of the
Committee Reports.

4. AUDIT, RISK AND INTERNAL CONTROL

M. FINANCIAL REPORTING INTEGRITY
The Board should establish formal and
transparent policies and procedures to 
ensure the independence and eﬀectiveness
of internal and external audit functions and
satisfy itself on the integrity of ﬁnancial and
narrative statements.

N. FAIR, BALANCED AND

UNDERSTANDABLE ASSESSMENT
The Board should present a fair, balanced 
and understandable assessment of the
company’s position and prospects.

O. RISK MANAGEMENT AND INTERNAL

CONTROL FRAMEWORK

The Board should establish procedures to
manage risk, oversee the internal control
framework, and determine the nature and
extent of the principal risks the company is
willing to take in order to achieve its long-term
strategic objectives.

5. REMUNERATION

P. SUPPORTING STRATEGY AND LONG-

TERM SUSTAINABLE SUCCESS

Remuneration policies and practices should
be designed to support strategy and promote
long-term sustainable success. Executive
remuneration should be aligned to company
purpose and values and be clearly linked to
the successful delivery of the company’s 
long-term strategy.

Q. REMUNERATION POLICY
A formal and transparent procedure 
for developing policy on Executive
remuneration and determining director 
and senior management remuneration
should be established. No director should 
be involved in deciding their own
remuneration outcome.

R. INDEPENDENCE OF REMUNERATION 

OUTCOME DECISIONS

Directors should exercise independent
judgement and discretion when authorising
remuneration outcomes, taking account of
company and individual performance, and
wider circumstances.

The Board delegates detailed oversight of the Group’s system of internal controls to the Audit
Committee, to ensure the integrity of the Group’s full year and half year results and the Annual
Report and Accounts. The Audit Committee ensured it complies with this requirement as detailed
on pages 79 to 82.
On the recommendation of the Audit Committee, the Board reviewed and approved the 2021
half year and full year results and this 2021 Annual Report.

See our Governance section on
page 76 for further information.
See the Audit Committee report
on pages 79 to 82.

As described in the Audit Committee Report on pages 79 to 82, the Audit Committee reviewed the
2021 Annual Report and Accounts in March 2022 and was satisﬁed that it presents a fair, balanced
and understandable assessment of the Group’s position and prospects. The Audit Committee
reported its ﬁndings to the Board.

The Audit Committee monitors the Group’s risk management and internal control systems on behalf
of the Board. The Committee reviews the Group’s principal risks and recommends any changes to risk
appetite to the Board. The Group Risk Register is reviewed twice yearly by the Audit Committee.
The Board has also established a Risk Committee which will be chaired by the Independent Non-
Executive Director, Kartina Tahir Thomson. The Risk Committee has a schedule of meetings in 2022
and will advise the Board on risk management issues, recommend the framework of risk limits and
risk appetite to the Board for approval and will oversee the risk management arrangements of the
Company, including the embedding and maintenance of a supportive risk management culture. 
The Committee will ensure that the material risks facing the Company have been identiﬁed and
that appropriate arrangements are in place to manage and mitigate those risks eﬀectively within
the Company’s agreed risk appetite. 

Please see the section on
Principal risks and uncertainties
on pages 40 to 46.

The Remuneration Committee gives considerable consideration to aligning remuneration policy
and packages to strategy and to supporting long-term sustainable success.
The Remuneration Committee reviews and proposes the Group’s remuneration policy to the Board
for approval and the Directors’ remuneration report is put to an advisory vote at the AGM, in line
with statutory requirements.
In accordance with section 439A of the Companies Act 2006, a new three-year Remuneration Policy
will be put to a binding vote at the 2022 AGM.

Please see the Remuneration
Committee report on pages 85
to100.

In accordance with its terms of reference, the Remuneration Committee reviewed the current
Remuneration Policy (2019 to 2021) against corporate governance requirements, institutional
investor views and market practice. A new three-year Remuneration Policy will be put to a binding
vote at the 2022 AGM; no increase to quantum proposed.
The remuneration of Non-Executive Directors is a matter for the Board. No Director, committee
attendee, Executive, senior manager or other person can be involved in any discussion or decision
as to their own remuneration.

The Remuneration Policy can 
be found on pages 87 to 91
within the Remuneration report.
The terms of reference for the
Remuneration Committee can
be found on our website at
www.dignityplc.co.uk.

The Committee takes advice from an external consultant (Korn Ferry) and ensures that
remuneration for Board and senior management is suitably structured so as to attract, retain and
motivate Executives, and to link reward to corporate and individual performance and all relevant
internal and external factors.

Dignity plc Annual Report & Accounts 2021    

71

                                                                                                          
GOVERNANCE

GOVERNANCE STRUCTURE 

THE BOARD PROVIDES STRATEGIC LEADERSHIP TO THE  
GROUP WITHIN A FRAMEWORK OF SOUND CORPORATE 

GOVERNANCE AND INTERNAL CONTROL.   

THE DIGNITY PLC BOARD 
(Chairman, Executive Directors and Independent Non–Executive Directors)

BOARD LEVEL COMMITTEES

AUDIT COMMITTEE 
(Chairman and Independent  
Non–Executive Directors)

REMUNERATION COMMITTEE 
(Chairman and Independent  
Non–Executive Directors)

NOMINATION COMMITTEE 
(Chairman and Independent  
Non–Executive Directors)

RISK COMMITTEE 
(Chairman and Independent  
Non–Executive Directors)

THE EXECUTIVE COMMITTEE

The Board 
The Board is responsible for the long-term success of the Group  
which includes: 

• Overall management of the Group; 
• Setting and reviewing the strategy of the Group; 
• Approval of major capital expenditure and acquisition projects, and 

consideration of signiﬁcant ﬁnancial matters; 
• Monitoring the exposure to key business risks; 
• Approval of major ﬁnancing and capital structure changes to the Group; 
• Setting annual budgets and reviewing progress towards achievement of these 

budgets; and 

• Proposing dividend payments to shareholders.

The Chairman 
The Chairman is responsible for: 
• The leadership of the Board; 
• Ensuring the Board functions effectively in all aspects of its role; 
• Facilitating the effective contribution of the Non-Executive Directors and 
ensuring a constructive working relationship between Executive and  
Non-Executive Directors; 

• Making sure all Directors receive accurate, timely and clear information; 
• Setting the agenda so all strategic and other important issues are discussed, 

ensuring suﬃcient time is devoted to discussing such issues; and 

• Making sure there is effective communication with stakeholders and acting  

as the public face of the Group. 

Non-Executive Directors 
The Non-Executive Directors scrutinise, measure and review the performance of 
management; constructively challenge and assist in the development of strategy; 
review the Group’s ﬁnancial information and monitor the effectiveness of internal 
risk management systems. 

Committees of the Board 
There are four standing committees of the Board: the Audit Committee,  
the Remuneration Committee, the Nomination Committee and the recently 
established Risk Committee. The Terms of Reference of these Committees are set 
by the Board and are available on the Dignity plc corporate website. Membership 
is reserved for the Independent Non-Executive Directors save for the Nomination 
and Risk Committees. Whilst the Risk Committee has a schedule of meetings in 
2022, it has not met as of the date of this Annual Report. 
The Audit, Nominations and Remuneration Committee Reports are on pages  
79 to 100.

Commentary on the Board in 2021 
As detailed on page 66 the structure of the Board is currently going through  
a period of change. As a result, the Company has not been compliant 
throughout the year with the following Code Provisions:  
• 9. The roles of chair and chief executive should not be exercised by the  

same individual. With the appointment of John Castagno as Chairman, the 
Company is now compliant in this respect. 

• 11. At least half of the Board excluding the chair, should be non-executive 

directors whom the board considers to be independent.  

• 12. The board should appoint one of the independent directors to be the  

senior independent director.  

• 17. The Nomination Committee should comprise a majority of independent 
non-executive directors. With the appointment of Graham Ferguson and 
Kartina Tahir Thomson, compliance has been achieved. The Company was  
non-compliant until the appointment of Kartina on 7 February 2022. 
• 24. The Audit Committee should comprise independent non-executive 

directors and the Chair should not be a member. With the appointment  
of Graham Ferguson and Kartina Tahir Thomson, the Committee has the 
required Non-Executive Directors but as the Chair is a member, compliance  
has not been achieved.  

• 32. The Remuneration Committee should comprise independent  

non-executive directors. With the appointment of Graham Ferguson and 
Kartina Tahir Thomson, compliance has been achieved. The Company was 
non-compliant until the appointment of Kartina on 7 February 2022. Mr 
Ferguson, Chairman of the Remuneration Committee, has not served on 
a Remuneration Committee prior to his appointment to the Dignity Board. 

The Chief Executive and Executive Directors 
The Chief Executive and Executive Directors together with the Executive 
Committee are responsible for: 
• Operational management and control of the Group on a day-to-day basis.  

Local operational decisions are the responsibility of the local managers, who  
are accountable to the Executive Directors; 

• Formulating and proposing strategy to the Board; and 
• Implementing the strategy and policies adopted by the Board.

The Executive Committee 
The Executive Committee currently consists of the following Executive Directors 
and Senior Managers: 
• Chief Executive: Gary Channon; 
• Executive Director Funeral Operations: Andrew Judd; 
• Chief Operating Oﬃcer: Kate Davidson; 
• Interim Chief Financial Oﬃcer: Dean Moore; 
• People Director: Tracey Rose; and 
• Head of Compliance: Carl Higgins. 
The Executive Committee is responsible for determining and setting the detailed 
day-to-day tasks required to implement the strategy set by the Board.

The objective is to return to compliance with the relevant requirements  
of the current UK Corporate Governance Code. 
At the current time and, in addition to the Independent Non-Executive  
Chairman, the Board comprises four Executive and two Independent Non-
Executive Directors. As advised in the Chairman’s Statement on page 2, once 
the Board has appointed a new Chief Financial Oﬃcer, the intention is for  
Dean Moore to resume his position as an Independent Non-Executive Director. 
This is subject to appropriate review and approval by the Board. 

The role of the Executive Chairman in 2021 
Following the departure in April 2020 of our former Chief Executive, Mike 
McCollum, Clive Whiley took on temporarily, the role of Executive Chairman.  
In that role, Clive had the responsibilities of both Chairman and Chief Executive.  
Following the results of the General Meeting in April 2021, Clive Whiley left the 
Board with Gary Channon becoming Executive Chairman until the appointment 
in July 2021 of John Castagno as Independent Non-Executive Chairman.

72

Dignity plc Annual Report & Accounts 2021    

 
BOARD OF DIRECTORS 

THE RESTRUCTURING OF THE BOARD HAS ALREADY PROVIDED A STRONG  
AND COMPLEMENTARY MIX OF SKILLS AND EXPERIENCE WHICH WILL CONTRIBUTE  
TO THE LONG-TERM SUCCESS OF THE GROUP. 
John Castagno, Independent Non-Executive Chairman 

John Castagno 
Independent Non-Executive Chairman 

Appointed to the Board: 2021 

A N R Ri

Dean Moore 
Interim Chief Financial Oﬃcer 
Appointed to the Board: 2020 

Background and experience: 
John is an experienced Non-Executive Director  
with a background in ﬁnancial services and 
support companies, having held senior positions 
at British Gas Insurance, Tesco Bank, and a 
variety of insurance providers. 
John brings extensive business planning  
and development capabilities in regulated 
environments, including those under the 
Financial Conduct Authority. This experience  
is of beneﬁt to the Board and the Dignity 
Executive team in navigating the changes being 
instigated by the Financial Conduct Authority 
regarding the pre-need sector. 
John is Chair of the Nomination Committee  
and a member of the Audit, Remuneration  
and Risk Committees. 

Gary Channon 
Chief Executive 

Appointed to the Board: 2021 

Background and experience: 
Gary Channon is the Chief Investment Oﬃcer  
of Phoenix Asset Management Partners Limited,  
the ﬁrm he co-founded in 1998. Gary brings  
over 30 years of business and ﬁnancial services 
experience. Gary’s investment approach at 
Phoenix is strongly inﬂuenced by Warren Buffett 
and Phil Fisher: long-term, value-based and 
focused, looking for great businesses run  
by competent, honest, shareholder-aligned 
managers, companies with strong pricing power, 
generating an enduring high return on capital, 
and waiting for the opportunity to invest in them 
at attractive prices. Gary began his career in 1987 
at Nikko Securities Europe within Fixed Income 
Trading, before joining Goldman Sachs in 1989 
within Global Equity Derivative Products Trading. 
He then joined Nomura International Plc in 1992 
as their Head of Equity Derivative Trading before 
ultimately becoming Nomura International’s  
Co-Head of Equity and Equity Derivatives Trading, 
a position he held until he left Nomura to  
co-found Phoenix. 

Board composition, balance and tenure 
The Board comprises six Directors and the 
Independent Non-Executive Chairman. In addition  
to the Chairman, there are currently two Independent 
Non-Executive Directors and four Executive Directors. 

As at 22 March 2022

Executive and Non-Executive Directors

Executive Directors: 4

Non-Executive Directors: 2 
Non-Executive Chairman: 1 

2

4

1

Non-Executive Tenure

Directors ratio

5

3

2

0 – 3 years: 3
3+ years: 0

Male: 5
Female: 2

Background and experience: 
Dean is a chartered accountant with extensive 
public company experience having previously 
been Chief Financial Oﬃcer at Cineworld plc,  
N Brown Group plc, T&S Stores plc and Graham 
Group plc and formerly non-executive Chairman 
of Tuxedo Money Solutions Limited. He is 
currently an independent non-executive director 
and Chairman of the Audit Committee at 
Cineworld plc and Audit Committee Chairman 
and Senior Independent Director of Volex plc. 
Dean was an Independent Non-Executive 
Director before stepping into the role of Interim 
Chief Financial Oﬃcer. Dean does not  
participate in any incentive plans. 

Kate Davidson 
Chief Operating Oﬃcer 

Appointed to the Board: 2022 

Background and experience: 
With over 15 years funeral and crematoria 
industry experience, Kate began her career in 
the crematoria sector within Local Government, 
later joining Dignity plc in management and 
strategic roles spanning eight years. 
Kate Davidson re-joined Dignity plc as Chief 
Operating Oﬃcer, from Westerleigh in June 2021. 
She has since sat on the Group’s Executive 
Committee; focused on organisational change, 
operational eﬃciencies, and delivery of Dignity’s 
future development projects. 
Kate is well respected in the end-of-life sector 
and has been involved with a number of 
industry-wide funeral and crematoria policy 
initiatives. 

Andrew Judd 
Executive Director of Funeral Operations 

Appointed to the Board: 2020 

Background and experience: 
Andrew joined what is now Dignity in 1996.  
He is responsible for all aspects of the Group’s 
day-to-day provision of funeral services through 
a national network of employees, funeral 
locations and associated facilities.  
Andrew has progressed through a variety of 
roles within both the Co-operative Group and 
independent sectors. He holds a degree from 
Wolverhampton University in Economics and 
Business and holds additional professional 
qualiﬁcations in both Funeral Service Management 
and Funeral Directing. He has held oﬃce in the 
British Institute of Funeral Directors and various 
positions within the National Association of 
Funeral Directors most recently Past President  
of the Western Counties Area Federation and 
Committee for Professional Standards. In 2018, 
Andrew was the driving force behind the 
establishment of the Funeral Service Consumer 
Standards Review (‘FSCSR’) creating for the ﬁrst 
time in the sector an independently chaired 
project that brings together the skills and 
knowledge of industry experts and key 
stakeholders with a view to improving quality, 
standards and outcomes for funeral service 
consumers. 

Graham Ferguson   
Independent Non-Executive Director 

Appointed to the Board: 2021 

A N R Ri

Background and experience: 
Graham joined the Board of First Derivatives plc 
(now FD Technologies plc) in September 2008 
and had responsibility for its ﬁnancial operations. 
Graham stepped down as Chief Financial Oﬃcer 
and from the Board of FD Technologies plc on  
1 January 2021 to devote more time supporting 
the development of SMEs based in Northern 
Ireland.  

During his career, Graham has worked  
on numerous corporate acquisitions and 
restructuring projects and has experience in 
business and acquisition ﬁnance. He formerly 
held senior roles with KPMG, Bank of Ireland  
and Silverwood Property Developments Limited 
and is a qualiﬁed Chartered Accountant. 

Graham is Chair of both the Audit and 
Remuneration Committees and is a member  
of the Nomination and Risk Committee. 

Kartina Tahir Thomson    
Independent Non-Executive Director 

Appointed to the Board: 2022 

A N R Ri

Background and experience: 
Prior to this, Kartina spent six years at the Bank 
of England, leading the general insurance risk 
specialists and supervisors, responsible for 
ensuring ﬁnancial stability of the UK ﬁnancial 
market through sound supervision of risk 
management, capital and solvency. 
Kartina is chair of the Risk Committee and is  
a member of the Audit, Remuneration and 
Nomination Committees. 

Tim George 
Company Secretary 

Tim was appointed Company Secretary in 
December 2018 and is a Fellow of the Institute 
of Chartered Secretaries & Administrators. 

The Board records its thanks to Clive Whiley, 
James Wilson, Gillian Kent and Paul Humphreys 
all of whom left the Board in 2021.

Key to Committee membership

A
N
R
Ri

Audit Committee 
Nomination Committee 
Remuneration Committee 
Risk Committee 
Green background denotes Committee Chair.

Links

See Audit Committee report: p.79 to p.82 
See Nomination Committee report: p.83 and p.84 
See Report on Directors’ remuneration: p.85 to p.100

Dignity plc Annual Report & Accounts 2021    

73

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GOVERNANCE

DIRECTORS’ STATEMENT 
ON CORPORATE GOVERNANCE

How the Board Functions
The Group is controlled through the Board of Directors that meets regularly throughout the year. The structure of the Board,
together with explanations of responsibilities, is shown on page 72. Informal meetings are held between individual Directors 
as required.

The day-to-day management of the Group is delegated to the Executive Directors and the Executive Committee (see page 73)
supported by an experienced and generally long serving senior and middle management team, the size and structure of which 
is commensurate with the complexity of the Group’s activities. Managers have the necessary skills and knowledge relevant to 
their areas of responsibility. The remainder of the responsibilities rest with the Board however, certain capital expenditures and
acquisition projects are delegated under a formally adopted Schedule of Matters Reserved for the Board and Expenditure
Authorisation Policy.

All Directors are provided with the necessary papers in advance of the meetings to permit them to make informed decisions 
at those meetings. The Board also considers employee issues and key management appointments, including the role of 
Company Secretary.

The Board now comprises six Directors and the Independent Non-Executive Chairman. During 2021 the total number of 
directors who served was nine. Clive Whiley the former Chairman, stood down from the Board following the General Meeting 
on 22 April 2021 as did Gillian Kent and Paul Humphries, former Independent Non-Executive Directors. James Wilson, a non-
independent Non-Executive Director, retired from the Board on 26 April 2021. John Castagno was appointed Independent Non-
Executive Chairman on 23 July 2021 and Graham Ferguson was appointed as an Independent Non-Executive Director and Chair 
of the Audit and Remuneration Committees on 1 September 2021. Since year-end, Kate Davidson was appointed to the Board 
on 7 January 2022 as Chief Operating Officer and Kartina Tahir Thomson on 7 February 2022 as an Independent Non-Executive
Director and Chair of the Risk Committee.

There are currently three Independent Non-Executive Directors including the Chairman and four Executive Directors. 

The Board considers that four Executive Directors, supported by the wider Executive Committee details of which are on page 72,
are sufficient to manage a Group of this size, complexity and organisational structure.

Biographical details for the serving Non-Executive Directors appear on page 73. Their role is to challenge constructively the
management of the Group and to assist in the development of strategy. The Non-Executive Directors are chosen for their 
diversity of skills and experience. Each Non-Executive Director is appointed for a fixed term of up to three years, subject to annual
re-election by shareholders. This term may then be renewed by mutual consent up to a maximum of nine years in accordance
with the Code. Appointments beyond six years are also subject to rigorous review prior to approval. The Non-Executive letters 
of appointment are available, upon request, from the Company Secretary.

The Chairman and the Non-Executive Directors are required to, and have, confirmed formally to the Board that, mindful of their
other commitments they have and will have sufficient time to devote to their responsibilities as Directors of the Company.

John Castagno, Graham Ferguson and Kartina Tahir Thomson are independent of management as defined by the Code. 

Dean Moore became Interim Chief Financial Officer on 14 December 2020. This interim position means that Dean Moore does not
currently qualify as independent as defined in the July 2018 UK Corporate Governance Code. 

All Directors are able to take independent professional advice on the furtherance of their duties as necessary at the Group’s
expense. They also have access to the advice and services of the Company Secretary and, where it is considered appropriate 
and necessary, training is made available to Directors. All Directors receive training and updates on the duties and responsibilities
of being a Director of a listed company. This covers legal, accounting, security and tax matters as required or as requested by
any Director. In addition, any newly appointed Director receives appropriate induction training.

The Company maintains appropriate insurance cover in respect of any legal action against its Directors. The level of cover is
currently £60 million.

The Directors have, during the period, formally reminded themselves of their duties as Directors under the Companies Act 2006
(Section 171-177). These duties include the need to avoid conflicts of interest (Section 175). Gary Channon is both CEO of Dignity
and a Partner of Phoenix Asset Management Partners Limited (‘Phoenix’) which is the Company’s largest shareholder managing
29.43 per cent of the shares. At each Board meeting, Directors are required to declare any conflicts of interest in matters to be
considered. To date, any such conflicts declared have been managed to ensure that no undue influence exists in discussions and
resultant resolutions. An agreement in respect of share dealing exists between the Company and Phoenix.

In accordance with the Code, all Directors will submit themselves for election or re-election as appropriate at the 2022 Annual
General Meeting. 

74

Dignity plc Annual Report & Accounts 2021    

Board Appraisal
In accordance with the requirements of the Code, a formal evaluation of the Board, its Committees, the Chair and individual
directors was undertaken in respect of 2020 with the results reviewed at the Board meeting on 21 January 2021. The evaluation
was conducted by Linstock (see below). Evaluations will be undertaken in respect of 2021. Given the significant Board restructuring
in 2021 (which meant that there were no Independent Non-Executive Directors on the Board from 22 April 2021 until the
appointment of John Castagno in July 2021 and Graham Ferguson in September 2021), the evaluation will be conducted in the
first half of 2022 by which time the directors appointed in the second half of 2021 and in early 2022 will have more experience
of the Group, the Board and Committees.

The evaluation will be conducted by Lintstock a corporate advisory firm, entirely independent of the Group. This evaluation is
undertaken annually by Lintstock and will continue annually. This meets the requirements of the Code.

The evaluation is managed by way of the issue of detailed online questionnaires to all Directors followed by a detailed review by
Lintstock and the Board of the responses and the identification of any actions arising.

Specific matters which will be reviewed by the Board include:

• Board composition;
• Stakeholder oversight;
• Strategic oversight;
• Board dynamics;
• Board support;
• Board Committees;
• Management and Focus of meetings;
• Risk oversight;
• Succession planning and people oversight; and
• Priorities for change.

Issues arising from the evaluation will be reviewed and addressed.

The Non-Executive Directors are responsible for the performance evaluation of the Chairman taking into account the views of the
Executive Directors.

Board and Board Committee Attendance
Those attending and the frequency of Board and Committee meetings held during the period was as follows:

                                                                                                                                                                                                                                                                                      Audit             Remuneration               Nomination
                                                                                                                                                                                                                              Main Board(i)                    Committee                 Committee(ii)                 Committee

Number of meetings                                                                                                                      9                         3                         4                      2
Clive Whiley (iv)                                                                                                                                      2                         1                         2(ii)                   1
James Wilson(iv)                                                                                                                                   3                         1                         1(ii)                   1
Dean Moore                                                                                                                                        9                         3                         2(ii)                   2
Gillian Kent (iv)                                                                                                                                       2                         1                         2                      1
Andrew Judd                                                                                                                                       9                         3                         –                      1
Paul Humphreys(iii) (iv)                                                                                                                          1                         1                         1                      –
Gary Channon(iii)                                                                                                                                 7                         2(iii)                      –                      1(iii)
John Castagno(iii)                                                                                                                                  3                         2                         2                      1
Graham Ferguson(iii)                                                                                                                          3                         2                         2                      1

(i)     Only scheduled Board meetings, of which there were nine in the period, have been included in the attendance analysis. A further thirteen meetings were held to consider

announcements, documents or the issue of shares pursuant to share awards.

(ii)    In attendance by invitation of the respective Committee. 
(iii)   Paul Humphreys was appointed to the Board on 23 February 2021, Gary Channon on 22 April 2021, John Castagno on 23 July 2021 and Graham Ferguson on 1 September 2021.
(iv)   Clive Whiley, Gillian Kent and Paul Humphreys stood down from the Board on 22 April 2021. James Wilson stood down on 26 April 2021.

The Board had nine full Board meetings spread broadly equally across the year. The Board considers that nine is the appropriate
number required to exercise effective governance and control although this is kept under review. Further meetings are arranged
as required.

If Directors are unable to attend a meeting, they are advised of the matters to be discussed and given an opportunity to make
their views known to the Chairman prior to the meeting. Such views will be included in the minutes of the meeting if necessary.

The Chairman and the Non-Executive Directors met during 2021 without the Executive Directors present. The Non-Executive
Directors also met during 2021 without the Chairman present. 

Dignity plc Annual Report & Accounts 2021    

75

GOVERNANCE

DIRECTORS’ STATEMENT ON CORPORATE GOVERNANCE CONTINUED

The Company Secretary
The Company Secretary, Tim George, is responsible for overseeing the preparation and distribution of all agendas, minutes and
related Board and Committee papers. He attends the Board meetings in his capacity as Company Secretary and provides
corporate governance advice if required. 

The appointment and removal of the Company Secretary is a matter for the Board as a whole. 

Internal Control and Risk Management
The Board has responsibility for the Group’s system of internal control and risk management, which is designed to manage
rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable, and not absolute,
assurance against material misstatement or loss. A formal and ongoing process of identifying, evaluating and managing the
significant risks faced by the Group was in place throughout the period and in place up to the date this Corporate Governance
Report was signed and approved for the Annual Report and Accounts 2021.

The Executive Directors and the wider management group are responsible for designing, implementing, maintaining and
evaluating the necessary systems of internal controls. Such controls are reviewed on an ongoing basis and formally reviewed 
on an annual basis in accordance with the requirements of the Code. This annual review confirmed that the Group’s risk
management and internal control systems were appropriate and suitable for a Group of this size and complexity. 

Internal Audit completes a programme of work each year that provides assurance that the internal controls have been operated
as designed and also proposes improvements where appropriate and necessary. Coupled with this, the six-monthly review of 
the risk system provides a further mechanism for considering and reviewing internal controls. All such work is reported to and
monitored by the Audit Committee which recommends approval to the full Board. Please also see the Audit Committee Report
on pages 79 to 82.

The Audit Committee on behalf of the Board, as part of an ongoing process, formally reviews and continues to keep under 
review the effectiveness of the Group’s systems of internal control, including financial, operational and compliance controls 
and risk management systems. The Audit Committee also formally reviews risk management annually and receives reports 
from management and Internal Audit regarding any weaknesses in internal control, any losses arising out of weaknesses in
internal control and progress in implementing revised procedures to improve and enhance internal control. It also identifies the
significant controls upon which reliance will be placed. Any significant control weaknesses would be reported to the full Board
at the next meeting. There have been no reports of weaknesses that have resulted or would have resulted in a material
misstatement or loss in the period, nor in the period up to the date this Annual Report was published.

The key procedures, which operated throughout the period, are as follows:

• Financial Reporting – The Group has a comprehensive system of financial performance review, internal budgeting and

forecasting. The Group’s monthly actual results analysed by operating division are reported to the Board and significant
variances to budget are investigated with revised forecasts prepared as necessary. The Audit Committee has delegated
responsibility from the Board for financial reporting; monitoring external audit, internal audit, risk and controls and reviewing
instances of whistleblowing and the Group’s procedures for detecting fraud; 

• Financial Controls – The Group has defined appropriate and necessary financial controls and procedures to be employed by

operational management. Key controls over major business risks include reviews against budgets and forecasts, review against
key performance indicators and exception reporting;

• Quality and Integrity of Personnel – One of the Group’s core Principles is integrity. This is regarded as vital to the maintenance 
of the Group’s system of internal financial control. The Board has in place an organisation structure appropriate to the size and
complexity of the Group with defined lines of responsibility and delegation of authority where the Board considers it necessary
and appropriate. There is also a Code of Conduct applicable to all employees of the Group, as well as specific policies such as
Anti-Bribery and Corruption, Modern Slavery, Prevention of Fraud, Whistleblowing, Anti-Tax Evasion and Anti-Money
Laundering;

• Internal Audit – The Group has a dedicated Internal Audit team, which reports to the Interim Chief Financial Officer, Chairman
and the Audit Committee. The latter reviews and approves the annual work plan of the Internal Audit function which tests the
design and operating effectiveness of key controls across the business. Any significant weaknesses are reported to management
and the Audit Committee on a timely basis. It also coordinates the completion of self-assessment reports by operational
management that assists in highlighting areas of control weakness or exposure. Internal audit reviews are completed on such
areas, together with selected areas of the head office function and any area where a Director requests a review;

• During 2021 (as in previous years), there were quarterly meetings between the Head of Internal Audit and the Executive

Directors to formally review and discuss Internal Audit’s work programme and findings. In addition, regular meetings between
the Head of Internal Audit and the external auditors, Ernst & Young LLP (‘EY’), were held during the year to discuss and plan
audit work and to ensure a complementary approach. The Head of Internal Audit formally reports to the Audit Committee at
every meeting and also held private meetings with the Chair of the Audit Committee during 2021 and the Audit Committee
members;

76

Dignity plc Annual Report & Accounts 2021    

  
• Procedures – The Group has established and documented processes and procedures covering most parts of its operations, both
client-facing and in support departments. These provide clear guidance on the correct or most appropriate course of action in
various circumstances. Procedures are supplemented by training where needs have been identified. Both Internal Audit and the
comprehensive management structure monitor the adherence to such processes and procedures; and

• Risk assessment – The Executive Directors and the Executive Committee have responsibility for the identification and evaluation
of significant risks that might arise in their areas of responsibility, together with the design of suitable internal controls. This was
in place throughout the accounting period and at the date of approval of the Annual Report. They also regularly assess the risks
facing the Group. A Risk Register is maintained which is presented to and reviewed by the Audit Committee twice a year and then
formally adopted by the Board of Dignity plc. Risks and any changes to those risks are discussed at every Board meeting. The
principal risks and uncertainties facing the Group, which are documented in the Risk Register, are discussed on pages 40 to 46 
of the Annual Report. These risks have also been formally considered when the Directors prepared their Viability Statement on
page 47 of this Annual Report in accordance with provision 31 of the Code.

These procedures are designed to, amongst other things, help to provide assurance regarding the process of preparing
consolidated financial statements and the financial reporting system.

An explanation of how the Group aims to create and preserve value and the strategy for delivering its objectives is included in the
Strategic Review.

Relationship with Shareholders
The Group recognises the importance of good communication with shareholders.

Regular contact with institutional investors, fund managers and analysts is undertaken by the Chairman, Chief Executive and the
Interim Chief Financial Officer to discuss information made public by the Group. The Board receives reports of these meetings 
and any significant issues raised are discussed by the Board and the Non-Executive Directors are also available to meet separately 
with shareholders if necessary, to discuss any issues that they may have. The Chair of the Remuneration Committee in early 2022
consulted major shareholders on the changes proposed to the remuneration policy to ensure the proposals can be supported.
The Chief Executive is also available to discuss governance and strategy matters with the major shareholders. The Company
Secretary deals with queries or enquiries from private shareholders. The Board is interested in the views and concerns of all
shareholders whether private, institutional or corporate. 

The AGM which was a virtual meeting in 2021 but will be a physical meeting in 2022 subject, of course to the latest Government
guidelines relating to COVID-19, provides an opportunity to meet the Board. All shareholders are free to attend and put questions
to any Director and the Chair of each of the Board Committees at the AGM on 9 June 2022. At least 20 days’ notice will be given
ahead of that meeting. Questions asked in person at the AGM will receive a verbal response whenever possible, otherwise a
written response will be provided as soon as practicable after the AGM. Questions raised at any other time will normally receive 
a written response. Shareholders attending the AGM will also have the opportunity to meet informally with all the Directors after
the meeting has concluded subject to current COVID-19 guideline and/or social distancing measures.

The Directors consider that this Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s performance, business model, risks and strategy. In order to
assess whether the Annual Report and Accounts were fair, balanced and understandable, the Board received an early draft to
enable time for review and comment. The Audit Committee then met to consider the criteria for a fair, balanced and understandable
Annual Report and to review the process underpinning the compilation and assurance of the report, in relation to financial and
non-financial management information. At that meeting they considered the Annual Report and Accounts as a whole and
discussed the tone, balance and language of the document, being mindful of the UK reporting requirements and consistency
between narrative sections and the financial statements.  As part of this process, the Board considered the Group’s reporting
governance framework and the views of the external auditor as reported to the Audit Committee. Pages 79 to 82 provide an
assessment of the Group’s affairs.

The Annual Report and Accounts is made available to all shareholders at least 20 working days before the AGM. Registered
shareholders receive a Notice of Meeting and Form of Proxy, the latter document allowing a shareholder to vote in favour, or
against or indicate a vote withheld on each separate resolution tabled at the AGM. Particulars of aggregate proxies lodged are also
announced to the London Stock Exchange (‘LSE’) and placed on the Group’s investor website, www.dignityplc.co.uk, as soon as
practicable after the conclusion of the AGM.

The Interim Report is no longer published as a paper document but is available on the Group’s investor website upon which users
can also access the latest financial and corporate news. All information reported to the market via regulatory information services
also appears as soon as practicable on that website.

The Group is happy to arrange visits to its funeral locations and crematoria, if requested by a shareholder, at a time suitable to 
all parties.

Dignity plc Annual Report & Accounts 2021    

77

GOVERNANCE

DIRECTORS’ STATEMENT ON CORPORATE GOVERNANCE CONTINUED

Our approach to diversity
The Board is committed to and takes responsibility for equality and diversity throughout the Dignity Group.

It is the policy of the Company that there shall be no discrimination or less favourable treatment of employees or job applicants 
in respect of age, race, religion or belief, gender, sex, sexual orientation, pregnancy, disability or marital status. The Company 
is fully committed to ensuring there is no unfair and unlawful discrimination in relation to employees, job applicants, clients,
suppliers and members of the public. It is Company policy to engage, promote and train employees on the basis of their
capabilities, qualifications and experience, without discrimination, and all employees will receive equal opportunity to progress
within the Company. 

In order to put this policy into practice in the day-to-day management and operations of the Company, we: 

• Monitor decisions on recruitment, selection, training and promotion to ensure they are based solely on objective and job-related

criteria; 

• Provide training for managers to ensure that they understand the nature of discrimination and are fully aware of their

responsibilities in implementing our Equality and Diversity policy; 

• Provide awareness for employees to ensure that they have a greater understanding of equality and diversity in the workplace; 

• Provide information and advice on the implications of the relevant legislation and on assistance available to help in the

employment of people with disabilities; 

• Ensure that all policies are applied thoroughly and fairly particularly those relating to any complaint involving discrimination or

harassment; 

• Communicate this policy to employees, suppliers and third parties, where applicable, through induction, training and

communications; and

• Encourage our suppliers and third parties to adopt policies and working practices, which reflect our own views and values on

equality and diversity and that of our clients.

All employees are also responsible for the promotion and advancement of this policy and the Group supports its implementation
and communication through its Equality and Diversity Programme which covers a number of matters including induction, learning
and development.

For further details on Employee diversity, see above and also page 35 of the Environmental, Social and Governance report and
page 68 of the Chairman’s introduction to Governance.

Substantial shareholdings 
The Group has been formally notified (In accordance with Chapter 5 of the Disclosure and Transparency Rules) of the following
interests of three per cent or more in the issued share capital of the Company:

                                                                                                                                                                                                                                       As at 14 March 2022                                               As at 31 December 2021

                                                                                                                                                                                                                                 Number of                    Percentage                    Number of                    Percentage
                                                                                                                                                                                                                                     Ordinary                         of issued                        Ordinary                        of issued
   Holder                                                                                                                                                                                                                          Shares                 share capital                            Shares                 share capital

  Phoenix Asset Management Partners Limited                                                         14,718,468                 29.42      14,718,468                29.42
  Granular Capital Limited                                                                                                  6,104,861                   12.2         6,104,861                   12.2
  Artemis Investment Management LLP                                                                         4,955,451                   9.90         4,955,451                   9.90
  John Stewart Jakes                                                                                                              3,669,612                   7.33         3,669,612                   7.33
  Indian Creek B.V.                                                                                                                 2,508,194                   5.01         2,508,194                   5.01
  Prudential plc group of companies                                                                               2,469,210                   4.94         2,469,210                   4.94
  Pictet Asset Management Limited                                                                                 2,394,069                   4.79         2,394,069                   4.79
  Standard Life Aberdeen plc                                                                                             1,841,495                   3.68         1,841,495                   3.68

It should be noted that these holdings may have changed since the Company was notified.

By order of the Board

Tim George
Company Secretary

22 March 2022

78

Dignity plc Annual Report & Accounts 2021    

     
  
AUDIT COMMITTEE REPORT

THE AUDIT COMMITTEE MONITORS THE INTEGRITY OF FINANCIAL STATEMENTS, THE EFFECTIVENESS OF 
RISK MANAGEMENT AND INTERNAL CONTROLS AND THE IMPLEMENTATION OF NEW ACCOUNTING 
STANDARDS IN ORDER TO GIVE ASSURANCE TO STAKEHOLDERS.

Graham Ferguson, Chair of the Audit Committee

Dear Shareholder,
I am pleased to present my ﬁrst report as the Chair of the Audit
Committee (the ‘Committee’) since my appointment to the Board
and to this Committee on 1 September 2021.

I joined the Board of First Derivatives plc (now FD Technologies
plc) in September 2008 and had responsibility for its ﬁnancial
operations. I stepped down as Chief Financial Oﬃcer and from
the Board of FD Technologies plc on 1 January 2021 to devote
more time supporting the development of SMEs based in
Northern Ireland.

During my career, I have worked on numerous corporate
acquisitions and restructuring projects and have experience in
business and acquisition ﬁnance. In my career, I have also held
senior roles with KPMG, Bank of Ireland and Silverwood Property
Developments Limited. I am a qualiﬁed Chartered Accountant.

In order to inform myself both before and following my
appointment, I held a number of conversations with the
Chairman, Chief Executive, Interim Chief Financial Oﬃcer, the
Group Financial Controller, key members of the Executive
Committee and other senior leaders as well as with senior audit
personnel from EY.

Membership and Process
The following Directors served on the Audit Committee during
2021: Gillian Kent, Paul Humphreys, John Castagno and myself.
John is an Independent Non-Executive Director as I am, Gillian
and Paul were Independent Non-Executive Directors but stood
down as Directors following the General Meeting on 22 April
2021. Kartina Tahir Thomson was appointed to the Board and
this Committee on 7 February 2022 and is an Independent 
Non-Executive Director.

The Board is satisﬁed that, as Chair of the Committee, I have recent
and relevant ﬁnancial experience together with competence in
accounting and auditing that can be appropriately and successfully
applied at Dignity. In addition, the Committee is satisﬁed that it
has a broad range of experience across a number of sectors that
are relevant to Dignity. The Company Secretary acts as Secretary
to the Committee. I report the Committee’s deliberations at the
next Board meeting and the minutes of each meeting are made
available to all members of the Board.

The Committee met three times during 2021; in March prior 
to the release of the 2020 Preliminary Announcement; in
September prior to the release of the 2021 Interim Announcement
and again in December 2021 immediately prior to the end of the
ﬁnancial period. The attendance records of the members are
shown on page 75. All Committee members at the time were
present at the relevant meetings. The external auditors, EY, the
Chairman at the time, the Chief Executive at the time, the Interim
Chief Financial Oﬃcer, the Head of Internal Audit, the Financial
Controller, the Executive Director of Funeral Operations, the Chief
Operating Oﬃcer and James Wilson, the former Non-Executive
Director, have all attended meetings by invitation.

The Committee holds a private session with the audit team from
our external auditors, EY, without management present at least
once a year. In addition, the Chair of the Audit Committee, has
discussions with the Lead Partner on a number of occasions plus
additional interactions in the year which provide the opportunity
for open communication and the free ﬂow of any concerns
relating both to the openness, transparency and general
engagement of management with the audit process as well as 
to understand EY’s assessment of key judgements as they arise.

Member

Since

Experience

Dean Moore

March 2020-
December 2020

Former Chair of the 
Audit Committee until
December 2020.

Gillian Kent 

June 2020 – 
April 2021

Paul Humphreys

February 2021–
April 2021

John Castagno

July 2021

Graham Ferguson

September 2021

Kartina Tahir
Thomson

February 2022

Previously Managing
Director of MSN UK. 
Non-Executive Director
roles at Mothercare plc
where Gillian is Chair 
of the Remuneration
Committee, SIG plc, NAHL
Group plc, Ascential Plc,
and at three private
companies.

A broad executive career
spanning both quoted 
and unquoted companies,
including having been
Group Financial Director 
at Care UK. Currently holds
advisory roles at a small
number of unlisted
companies.

An experienced Non-
Executive Director with 
a background in support
industries and ﬁnancial
services, having held
senior positions at British
Gas Insurance, Tesco Bank
and a variety of insurance
providers.

Former CFO of FD
Technologies plc and a
chartered accountant who
previously held senior
roles in KPMG and Bank 
of Ireland.

A Fellow of the Institute
and Faculty of Actuaries,
with over twenty years of
actuarial, risk, governance
and regulatory experience.

Dignity plc Annual Report & Accounts 2021    

79

GOVERNANCE

AUDIT COMMITTEE REPORT CONTINUED

Key Responsibilities
The Committee both reports to and works with the Board to fulﬁl
its oversight responsibilities. Its primary functions are to:

• Monitor the integrity of the ﬁnancial statements and other

information provided to shareholders and other stakeholders
to ensure they represent a clear and accurate assessment of
the Group’s position, performance, strategy and prospects;

• Consider the ﬁnancial statements and recommend to the

Board as to whether the Annual Report and Accounts, taken
as a whole, are fair, balanced, understandable and provide
information necessary for shareholders and stakeholders to
assess the performance, business model and strategy of the
Group, recognising the changes to the strategy of the
business;

• Review signiﬁcant ﬁnancial reporting issues and judgements

contained in the ﬁnancial statements;

• Review the systems of accounting, internal control and risk

management;

• Monitor and review the signiﬁcant risks identiﬁed by the

Group as well as the management and mitigation of those
risks; 

• Oversee and maintain an appropriate relationship with the

Group’s external auditors and review the effectiveness,
independence and objectivity of the external audit process;

• Monitor the integrity of the ﬁnancial statements and other

information provided to shareholders and other stakeholders
to ensure they represent a clear and accurate assessment of
the Group’s position, performance, strategy and prospects;
and

• Consider the ﬁnancial statements and recommend to the

Board as to whether the Annual Report and Accounts, taken
as a whole, are fair, balanced, understandable and provide
information necessary for shareholders and stakeholders to
assess the performance of the business.

The terms of reference of the Committee are available on the
Group’s corporate website at www.dignityplc.co.uk.

Activities in the period
The key activities of the Committee during the period and up 
to the date of this report were:

• Review and agreement of the 2021 Internal Audit Plan and

budget;

• At all meetings, the review of Internal Audit progress 

against the Internal Audit plan for the period, the results of
principal audits and other signiﬁcant ﬁndings, adequacy of
management’s responses and the timeliness of the resolution
of actions arising;

• Review Dignity’s risk control framework and its linkage to the
Risk Register and Viability Statement included in the Strategic
Report on page 47; 

• Review of the Going Concern and Viability Statements in

relation to the Annual Report and the former to the Interim
Results;

• A six-monthly review of the Group’s Principal Risks and

recommendation of adoption by the Board. This is part of an
ongoing process of identifying, evaluating and managing the
signiﬁcant risks faced by the Group. A review of the Risk
Register was also completed in December 2021. The principal
risks facing the Group are considered on pages 40 to 46 of this
Annual Report;

• In advance of the ﬁnancial period end, the review with the

external auditors, EY, of the annual external audit plan, which
addressed the planned audit approach to key audit matters;  

• Consideration of the external auditor’s views on key

judgement areas and audit ﬁndings relating to key accounting
matters at the conclusion of the audit; 

• An assessment of the effectiveness of the external auditors;

• A comprehensive review of the 2020 and 2021 Annual Report
and Accounts and the 2021 Interim Report. This review was to
ensure that the Committee was completely satisﬁed that the
information was fair, balanced and understandable. As part of
this review the Committee received reports from the external
auditors on their audit of that Annual Report and Accounts
and their review of the interim results. The Committee also
reviewed the Preliminary and Interim Announcements made
to the London Stock Exchange; and

• The formal review of the going concern assumptions adopted
in the preparation of the 2020 and 2021 ﬁnancial statements.

Areas that have been discussed and considered by the
Committee to be appropriate in relation to the 2021 Annual
Report and Accounts are:

• Impairment – the Committee considered the results and
disclosures of the impairment tests performed, ensuring 
that the assessment made and conclusions reached were
consistent with the analysis and reﬂected the changes in the
funeral and crematoria industries which include the decline 
in underlying proﬁtability due to a challenging year which
lowered average funeral incomes, the impact of COVID-19,
increased consumer price awareness and competition;

• Pre-Need Trust accounting – valuation of Level-3 Trust assets –
the Committee considered the basis of valuation of private
(illiquid) investment funds which are classiﬁed as Level-3
assets for the purpose of fair value disclosures, including the
adequacy of the disclosures made in the Financial Statements;

• Deferred Insurance Commission – the Committee considered

the ongoing cancellation rate per annum of life assurance
products sold by third party insurance companies but where
the Group is the named beneﬁciary in consideration for which
the Group has committed to perform the funeral of a plan
holder at a discount to its rate prevailing at the time of death.
A detailed analysis on the cancellation rate for these life
assurance products resulted in a prior year restatement to
opening reserves as at 28 December 2019 of £3.5 million
reﬂecting the adjustment to the commission asset, the
recognition of a commission liability and considered net of tax;

• Pensions – the Committee examined the assumptions used in
the actuarial valuation for the deﬁned beneﬁt pension scheme
considering the consistency of approach with the prior year
and compliance with the requirements of IAS 19;

80

Dignity plc Annual Report & Accounts 2021    

  
• Alternative Performance Measures – the Committee reviewed

growing emphasis on ensuring the appropriate, and not
disproportionate, use of Alternative Performance Measures
(‘APMs’). In this regard, the Committee noted guidance that
one of the key underlying principles of APMs is that they
should not be given greater prominence than measures
calculated based upon IFRS;

• Risk – the Committee performed a comprehensive review 

of the principal risks and uncertainties disclosed in the 2021
Annual Report based on the changing and competitive
environment in which the Group operates;

• Going Concern and Viability – the Committee performed an

assessment and ratiﬁcation of the Going Concern and Viability
Statements, including giving due consideration to severe but
plausible downside risks;

• Corporate Governance – the Committee reviewed the

Statement on Corporate Governance and the adequacy of the
explanation set out in respect of those provisions with which
the Company is currently not compliant; and

• Section 172 Statement – reviewed by the Committee.

Fair, balanced and understandable assessment
At the request of the Board, the Committee considered whether
the 2021 Annual Report and Accounts, taken as a whole, are fair,
balanced and understandable and provide the information
necessary for shareholders to assess the Company’s position
and performance, business model and strategy. To enable the
Board to have conﬁdence in making this statement, the
Committee considered the elements in the table below:

Fair
• Is the whole story being presented?
• Are the key messages in the narrative reﬂected in the

ﬁnancial reporting?

• Are the KPIs disclosed at an appropriate level based on the

ﬁnancial reporting?

Balanced
• Is there a good level of consistency between the narrative 
in the front section and the ﬁnancial reporting in the back
section of the report?

• Are statutory and adjusted measures explained clearly with

appropriate prominence?

• Are the key judgements referred to in the narrative reporting
and the signiﬁcant issues reported in the Audit Committee
Report consistent with the disclosures of key estimation
uncertainties and critical judgements set out in the ﬁnancial
statements?

Understandable
• Is there a clear framework to the report?

• Are the important messages highlighted appropriately

throughout the document?

• Is the layout clear with good linkage throughout in a manner

which reﬂects the whole story?

As a result of this review, the Committee made a recommendation
to the Board that it could make the statement that the Annual
Report and Accounts were fair, balanced and understandable.

External audit
The Audit Committee is responsible for the development,
implementation and monitoring of the Group’s policy on 
external audit. This policy assigns responsibility for monitoring
objectivity, independence and compliance with ethical and
regulatory requirements to the Audit Committee with day-to-day
responsibility assigned to the Interim Chief Financial Oﬃcer,
Dean Moore. The Committee also retains responsibility for the
appointment and removal of the external auditors, who are
currently EY. 

The Audit Committee, on an annual basis, formally considers 
the performance and independence of the external auditors. 
The formal annual review was completed in the ﬁrst quarter 
of 2022. This review took the form of a detailed questionnaire
that was sent to all Committee members and attendees at the
Committee meetings. The Committee was, based on that review
which indicated a strong level of conﬁdence in the external
auditors, fully satisﬁed with EY’s performance in 2021 and a
resolution to re-appoint them as external auditors will be tabled
at the AGM on 9 June 2022.

Policy on non-audit fees
The Group has a rigorous and comprehensive policy on the use
of the external auditors for non-audit work. The policy states that
non-audit fees are limited to no more than 50 per cent of the
annual audit fee unless there are exceptional circumstances,
which are deﬁned as:

• The work necessitates the use of the auditor for regulatory

reasons; and

• Their use represents a material time/cost beneﬁt to the Group

in conducting a transaction. 

The policy also precludes the use of the external auditors for
certain types of work. All such work is fully analysed in the Annual
Report. Audit Committee approval is required prior to the work
being commenced and further disclosure of the works and the
reasons for it being performed by the external auditors will be
disclosed in the following Annual Report. The Audit Committee
does not envisage that non-audit fees payable to the external
auditors will exceed 50 per cent other than in exceptional
circumstances.

In the period, EY undertook non-audit work on behalf of the
Group including an assurance related non-audit review of the
Interim Report for 2021, a ﬁnancial covenants compliance
certiﬁcate and certiﬁcations required as part of the Group’s
membership renewal of the Funeral Planning Authority. Total
fees of £134,000 were charged for non-audit services. The EY 
fee for audit services was £631,000.

The Audit Committee has kept under review the independence
of EY and has been satisﬁed at all times that any threats arising
to their independence have been subject to appropriate
safeguards. 

The Committee is, therefore, conﬁdent that the objectivity and
independence of the external auditors is not compromised 
by reason of non-audit work, not least because such work will
generally be undertaken by other professional ﬁrms. A formal
statement of independence from EY has been received in 
respect of 2021.

Dignity plc Annual Report & Accounts 2021    

81

GOVERNANCE

AUDIT COMMITTEE REPORT CONTINUED

Audit partner and ﬁrm rotation
Consistent with the requirements of the Financial Reporting
Council’s Ethical Standard, EY audit partners serve for a maximum
of ﬁve years on listed clients. Adrian Roberts is Dignity’s audit
partner having been appointed to the role in 2020. 

Annual Evaluation
The Board completed 2020 performance evaluations of itself 
and its Committees. Speciﬁc matters reviewed in respect of the
Committee included:

As stated in the ‘External Audit’ section, the Audit Committee
conducts an annual evaluation of the performance and
relationship with EY. The Committee considers that the
relationship with the auditors is working well and is satisﬁed 
with their effectiveness and there are no current plans to put 
the external audit out to tender. The Company last carried out 
a competitive tender for audit services in 2014 which resulted in 
EY being appointed for the December 2014 period end. In line
with the statutory requirements, the position of Group auditor
will be re-tendered in advance of the 2024 period end.

Internal Audit
The Group has a dedicated Internal Audit team, which reports 
to the Chief Executive and the Audit Committee. The Head of
Internal Audit coordinates a risk-assessed programme of work
across all departments and operations of the Company with 
the aim of ensuring full coverage over a three-year cycle. Where
appropriate, Internal Audit utilise support from professional
services ﬁrms to provide subject matter expertise on 
specialist areas.

During 2021, there were monthly meetings between the Head 
of Internal Audit and the Executive Chairman/Chief Executive
formally to review and discuss Internal Audit’s work programme
and ﬁndings. In addition, regular meetings between the Head 
of Internal Audit and the external auditors, EY, were held during
the year to discuss and plan audit work and to ensure a
complementary approach. The Head of Internal Audit provides
reports to the Audit Committee at every full meeting and met 
on a one-to-one basis with the Chair of the Audit Committee, on
four occasions in the period. In addition, a private meeting is held
annually between the Audit Committee members and the Head
of Internal Audit, without any Executive Directors present. This
process allows the Committee to have appropriate discussion
and debate with the Head of Internal Audit as well as to monitor
the effectiveness of the Internal Audit function, including
comprehensive review of all reports and their conclusions.

Whistleblowing 
We have a policy and procedure by which employees of 
the Group may, in conﬁdence, raise concerns about possible
improprieties in ﬁnancial reporting or any other matter. This
ensures arrangements are in place for the proportionate and
independent investigation of such matters and appropriate
follow-up action. A whistleblowing report is formally reviewed 
on an annual basis by the Committee or more frequently 
should the need arise.

• Time management;

• Committee processes and support;

• The relationship between the Committee and the Chief

Financial Oﬃcer, the External Audit Partner and the Head 
of Internal Audit;

• Assessment of the work of Internal Audit;

• Assessment of the work of the External Auditors;

• The quality of the Group’s ﬁnancial reporting;

• Assessment of the system of internal controls;

• The effectiveness of monitoring the management of risk; and

• How the Committee can improve its performance over the

coming year.

Issues arising from the evaluation are reviewed and addressed.

Given the signiﬁcant Board restructuring in 2021 (which meant
that there were no Independent Non-Executive Directors on 
the Board until the appointment of John Castagno in July 2021
followed by Graham Ferguson in September 2021), the evaluation
will be conducted in the ﬁrst half of 2022 by which time the
directors appointed in the second half of 2021 and in early 2022
will have more experience of the Company, the Board and
Committees. Issues arising from the evaluation will be reviewed
and addressed.

With the establishment of the Risk Committee, a number 
of matters currently the responsibility of and reviewed by the
Audit Committee will transfer to the Risk Committee. The Risk
Committee will advise the Board on risk management issues,
recommend the framework of risk limits and risk appetite to 
the Board for approval and to oversee the risk management
arrangements of the Company, including the embedding and
maintenance of a supportive risk management culture. 

The Risk Committee will also ensure that the material risks 
facing the Company have been identiﬁed and that appropriate
arrangements are in place to manage and mitigate those risks
effectively within the Company’s agreed risk appetite. 

I will be available to answer any questions about the work of the
Committee at the AGM on 9 June 2022.

This Audit Committee report was reviewed and approved by 
the Board on 16 March 2022.

Graham Ferguson
Chair of the Audit Committee

22 March 2022

82

Dignity plc Annual Report & Accounts 2021    

NOMINATION COMMITTEE REPORT

THE COMMITTEE HAS OVERSEEN THE APPOINTMENT OF BOTH A NEW CHAIR OF THE BOARD, CHAIR OF THE 
AUDIT AND THE REMUNERATION COMMITTEES AND A CHAIR OF THE NEWLY ESTABLISHED RISK COMMITTEE. 
THE COMMITTEE’S OBJECTIVE IS TO ENSURE WE HAVE AND WILL HAVE THE RIGHT BLEND OF SKILLS AND 
EXPERIENCE ON THE BOARD TO DELIVER OUR GROWTH STRATEGY.

John Castagno, Chair of the Nomination Committee

Dear Shareholder,
On behalf of the Board, it is my pleasure to present the 2021
Nomination Committee report as both Chairman of the
Company and the Nomination Committee.

During 2021, the membership of the Nomination Committee
(the ‘Committee’) comprised Clive Whiley (previously chair of the
committee), Gillian Kent, Paul Humphreys and James Wilson all 
of whom left the Board following the General Meeting on 22 April
2021. Following my appointment on 23 July 2021 and Graham
Ferguson on 1 September 2021 we currently constitute the
Committee membership. Kartina Tahir Thomson joined the
Board on 7 February 2022 and also serves on this Committee.

During 2021, three external search consultancies were engaged
for Board appointments – Ridgeway Partners, Warren Partners
and Nurole. These consultancies provide no other services 
to the Group. 

Both myself, Graham and Kartina are Independent Non-Executive
Directors. The Company Secretary is Secretary to the Committee. 

Currently, the Committee is looking to appoint a Chief 
Financial Oﬃcer. The objective is to maintain an appropriate
balance of Independent Non-Executive Directors and suitable
representation for the Board committees including throughout
the period where Dean Moore is Interim Chief Financial Oﬃcer. 

The authorities delegated to the Committee by the Board
comprise, among other matters:

• The review of the structure, size, and composition of the Board;

• The evaluation of the balance of skills, knowledge,

independence, diversity and experience of the Board including
the impact of new appointments;

• Overseeing and recommending the recruitment of new

directors;

• Ensuring appointments are made against objective criteria;

and

• Succession planning to ensure processes and plans are in
place with regard to both Board and senior appointments;
keeping under review the leadership needs of the Group; and
ensuring that the Non-Executive Directors can meet the time
requirements of the role.

The principal duties of the Committee in 2021 were overseeing
the appointment of Paul Humphreys to succeed Dean Moore as
Chair of the Audit Committee and, subsequent to the General
Meeting in April, to appoint an Independent Non-Executive Chair
of the Board which resulted in my appointment and Graham
Ferguson as Chair of the Audit and Remuneration Committees.
The Committee also reviewed the monitoring and oversight of
succession planning processes together with ongoing succession
planning and talent mapping within the Group, identifying
individuals and any development requirements necessary to
ensure effective succession.

Succession planning, development and leadership requirements
will continue to be reviewed in 2022. 

The Committee is committed to embedding inclusion and
diversity throughout the Group.  It is the policy of the Company
that there shall be no discrimination or less favourable treatment
of employees or job applicants in respect of age, race, religion or
belief, gender, sex, sexual orientation, pregnancy, disability or
marital status. The Company is fully committed to ensuring there
is no unfair and unlawful discrimination in relation to employees,
job applicants, clients, suppliers and members of the public. It is
Company policy to engage, promote and train employees on the
basis of their capabilities, qualiﬁcations and experience, without
discrimination, and all employees will receive equal opportunity
to progress within the Company. See also ‘Our approach to
diversity’ on page 78.

The Company provides a balanced, supportive, caring and
ﬂexible culture and environment with working practices to
accommodate peoples’ needs. In so doing, it aims to continue 
to attract and retain the best candidates and ensure the
development of all Group employees.

The members of the Committee’s attendance record is set out on
page 75. The Committee’s proceedings are reported at the next
Board meeting and the Committee’s minutes are made available
to all members of the Board.

All the Non-Executive Directors are appointed for up to three-
year terms which may then be renewed up to a maximum of
nine years service in accordance with the independence
guidelines in the 2018 UK Corporate Governance Code.

Tenure (years)

Name                                                                                                                                          1                          2  

James Wilson (stood down 26 April 2021)                                                    
Clive Whiley (stood down 22 April 2021)                                                       
Gillian Kent (stood down 22 April 2021)                                                        
Paul Humphreys (stood down 22 April 2021)
John Castagno (appointed 23 July 2021)                                                
Graham Ferguson (appointed 1September 2021)                                
Kartina Tahir Thomson (appointed 7 February 2022)

As at 31 December 2021, I had been on the Board for ﬁve
months and Graham Ferguson four months.

The terms of reference of the Committee are available on the
Group’s corporate website at www.dignityplc.co.uk.

Dignity plc Annual Report & Accounts 2021    

83

GOVERNANCE

NOMINATION COMMITTEE REPORT CONTINUED

As stated in Board Evaluations on page 75 of the Chairman’s
introduction to governance, in light of the signiﬁcant Board
restructuring in 2021 (which meant that there were no
independent Non-Executive Directors on the Board from 
22 April 2021 until the appointment of myself in July 2021
followed by Graham Ferguson in September 2021), the
evaluation will be conducted in the ﬁrst half of 2022 by which
time the directors appointed in the second half of 2021 and in
early 2022 will have more experience of the Group, the Board
and Committees.

Finally, all Directors offer themselves for election or re-election 
at the AGM on 9 June 2022 and I will be available at the AGM 
to answer questions on the work of the Committee.

This Nomination Committee report was reviewed and approved
by the Board on 16 March 2022.

John Castagno
Chair of the Nomination Committee

22 March 2022

The Committee is committed to ensuring inclusion and diversity
at Board and all levels throughout the Group. Employee diversity
of those in senior and middle management roles is shown on
page 35.

We acknowledge that we have much to do to fulﬁl our diversity
ambitions and it will take time but it is very much an objective 
of ours: we will work towards making progress on this matter.

It is the policy of the Company that there shall be no discrimination
or less favourable treatment of employees or job applicants 
in respect of age, race, religion or belief, gender, sex, sexual
orientation, pregnancy, disability or marital status. The Company
is fully committed to ensuring there is no unfair and unlawful
discrimination in relation to employees, job applicants, clients,
suppliers and members of the public. It is Company policy to
engage, promote and train employees on the basis of their
capabilities, qualiﬁcations and experience, without discrimination,
and all employees will receive equal opportunity to progress
within the Company. See also ‘Our approach to diversity’ 
on page 78.

The appointment to the Board in the ﬁrst quarter of 2022 of 
Kate Davidson and Kartina Tahir Thomson, means that, women
make up 29 per cent of the Board of seven Directors. While the
Committee will continue to pursue a policy of ensuring that the
best people are appointed for the relevant roles, the beneﬁts 
of greater diversity are recognised and will continue to be taken
into account when considering a particular appointment.

I am also pleased to conﬁrm that the Group will continue to
publish the details on corporate diversity and report on our
compliance and appointment process in this Annual Report.

Details of the gender balance for Directors and those in 
senior management and their direct reports can be found in
Environmental, Social and Governance on page 35. Subsequent
to the period end Kate Davidson and Kartina Tahir Thomson
have joined the Board of Directors.

The Board completed 2020 performance evaluations of itself 
and its Committees. Speciﬁc matters reviewed in respect of the
Committee included:

• Time management;

• Committee processes and support;

• Performance in reviewing the composition of the Board;

• The processes by which Board appointments are made;

• Plans for Executive and Non-Executive succession; and

• How the Committee can improve its performance over the

coming year.

Issues arising from the evaluation were reviewed and addressed.

84

Dignity plc Annual Report & Accounts 2021    

REPORT ON DIRECTORS’ 
REMUNERATION

for the 53 week period ended 31 December 2021

ALIGNING REMUNERATION, REWARD AND PERFORMANCE TO SHAREHOLDERS’ INTERESTS AND OUR STRATEGY.
Graham Ferguson, Chair of the Remuneration Committee

Dear Shareholder,
On behalf of the Board, I am pleased to present this Directors’
Remuneration Report for the period ended 31 December 2021,
my ﬁrst since being appointed Chair on 1 September 2021. 

Activities in the period
The key activities of the Committee during the period up to 
the date of this report were:

As the 2022 AGM will be the third anniversary of shareholders
approving our remuneration policy, we are required to seek
shareholder approval for a new policy for the next three-year
period, 2022 to 2024. The new Directors’ Remuneration Policy
is set out on pages 87 to 93, together with details of the
changes compared to the current policy we propose to make.
The Annual Report on Remuneration together with this
Statement, will be subject to a separate advisory vote.

Board changes 
Following the General Meeting on 22 April 2021, Gary Channon
was appointed Executive Chairman subsequently becoming
Chief Executive on the appointment of John Castagno as
Independent Non-Executive Chairman on 23 July 2021. 

Gary Channon elects not to be paid as an Executive Director 
of the Company. However, in order to comply with the 
National Minimum Wage regulations, his service contract
requires that he is paid £18,500 per annum which is donated
to the Company’s selected charity, the Teenage Cancer Trust.
Gary receives no other remuneration for his role as CEO.

John Castagno as Board Chairman receives an annual fee 
of £175,000.

Clive Whiley, Gillian Kent and Paul Humphreys left the
Company following the General Meeting. There was no
compensation for loss of oﬃce.

I was appointed an Independent Non-Executive Director and
Chairman of the Audit and Remuneration Committees on 
1 September 2021 with an annual fee of £60,000.

Kate Davidson, Chief Operating Oﬃcer, was appointed an
Executive Director on 7 January 2022. Kate’s package comprises
a salary of £225,000, pension contribution of four per cent 
(in line with the rate for the majority of the workforce), bonus
opportunity of 100 per cent of salary and an LTIP award for
FY22 of 100 per cent of base salary.

Kartina Tahir Thomson was appointed an Independent 
Non-Executive Director and Chair of the Risk Committee on 
7 February 2022 again with an annual fee of £60,000.

• Reviewing base salaries for Executive Directors and senior

management;

• Andrew Judd was appointed to the Board on 14 December

2020. Following benchmarking to ensure market
competitiveness, Andrew Judd’s salary was increased 
from that previously reported for 2021 by 12.5 per cent to
£225,000. His 2020 remuneration disclosed is for the 14 day
period as a Director that year and has been restated from
what was included in the 2020 Annual Report which
incorrectly included his remuneration for the whole year,
which included 353 days not as a Director; 

• Determining there was no annual bonus scheme for

Executive Directors and approving the 2021 bonus outturn
for senior management and wider group;

• Setting the 2022 bonus targets for the Executive Directors;

• Approving awards and setting performance measures

under the Company’s share plan;

• Assessment of the 2019 to 2021 Long-Term Incentive 

Plan performance;

• Reviewing the Remuneration Policy and its application 

for 2022;

• Reviewing Executive Director share ownership levels;

• Reviewing trends in market practice and investor guidelines;

• Reviewing the Gender Pay Gap and plans for diversity 

and inclusion;

• Reviewing the Company Performance Management

framework; and

• Approving the 2021 Directors’ Remuneration Report.

Remuneration outturns for 2021
There was no annual bonus plan operated in FY21 for
Executive Directors.

Andrew Judd was granted a LTIP award in 2019 which was
subject to performance against a relative TSR target, measured
over the three year period to the end of 2021. Dignity's TSR
performance was compared to the companies comprising the
FTSE SmallCap Index (excluding Investment trusts) over this
period and failed to achieve the minimum performance
threshold and so this award will lapse with no shares vesting.

Andrew was also granted LTIP awards in 2020 and 2021 both of
which are subject to performance measures of growth in funeral
market share and TSR over three-year performance periods.

The Committee considers that there has been an appropriate
link between reward and performance, and the remuneration
policy operated as intended for 2021. However, the Committee
acknowledges going forward the need for minor changes to
the policy and implementation such that remuneration will
have a stronger alignment to shareholder interests and our
strategy. Further details of these changes are set out in this
letter. In determining that remuneration was appropriate for
2021 the Committee took into account external factors and
internal relativities between the pay levels of executives 
and employees.

Dignity plc Annual Report & Accounts 2021    

85

GOVERNANCE

REPORT ON DIRECTORS’ REMUNERATION CONTINUED
for the 53 week period ended 31 December 2021

Remuneration Policy review
During the year, the Committee reviewed the Remuneration
Policy taking into account investor guidelines, market best
practice and the alignment to strategy and shareholder
interests. As a result of the review, the following changes 
are proposed which do not result in a signiﬁcant change 
to Policy structure:

In relation to the FY22 LTIP award, having considered the
performance measures carefully for the FY21 award, the same
Market Share and Relative TSR performance measures will
again apply. The Committee will consider carefully the grant
level in light of the prevailing share price at the time of grant
but intends to apply a grant level of 150 per cent of base salary
for the award to both of the Executive Directors. 

Concluding remarks
On behalf of the Remuneration Committee, I would like to thank
shareholders for their ongoing support, and I look forward to
this continuing at the forthcoming Annual General Meeting.

Graham Ferguson
Chair of the Remuneration Committee

22 March 2022

REMUNERATION AT A GLANCE

Our remuneration principles

• Competitive Market positioning and opportunity.

• Pay aligned with sustainable long-term performance.

• Incentive metrics aligned with our strategy and key 

performance indicators.

• Alignment of Executive and shareholder interests.

• Mindful of our wider stakeholder responsibilities.

1) Annual bonus deferral – the level of deferral will be

increased from 20 per cent of any bonus earned for 2 years
to one third of any bonus earned for 3 years. Furthermore,
the bonus deferral mechanism will be changed such that the
Executive will be required to purchase shares outright which
are then subject to a holding period during which time they
cannot be sold. 

2) Target pay out for annual bonus will reduce from 60 per cent

to 50 per cent of maximum to align with market best
practice and investor expectations.

3) The post-employment shareholding requirement will be
increased to 200 per cent of salary for two years post-
cessation to align with the IA’s recommendation.

4) In addition, policy wording has been reﬁned in relation to
pension alignment with the workforce and the provision 
of payments made in relation to a notice period or PILON
payments to align with market best practice.

Further details on the rationale for these proposed changes
can be found in the Policy section of this report.

How we will apply the new policy in 2022
There is no change to the Chief Executive’s salary for FY22 
and he will not participate in the incentive plans for 2022. 
The Interim Chief Financial Oﬃcer receives only basic salary
and also will not participate in the incentive plans for 2022.  
His salary is unchanged for FY22 at £316,000. 

Both the Chief Operating Oﬃcer and the Executive Director 
of Funeral Operations receive a salary of £225,000. The
Committee determined it was appropriate to award an
increase taking into account the experience gained in the 
PLC Director role, his performance, relativity of pay to 
other executive colleagues and market rates for directors’
remuneration, which remain signiﬁcantly higher. We see 
scope for further salary increases as both executives grow
further into their roles.  

Both Executive Directors will participate in the annual bonus
plan, with a maximum opportunity of 125 per cent of salary. 
It is presently intended that 70 per cent of the bonus will be
based on a mix of stretching underlying EBITDA and 30 per
cent on strategic objectives. Underlying EBITDA will provide 
a measure of underlying proﬁtability and the Strategic
objectives will support our business.

86

Dignity plc Annual Report & Accounts 2021    

REMUNERATION POLICY REPORT

This section of the Directors' Remuneration Report has been prepared in accordance with The Large and Medium-sized Companies
and Groups (Accounts and Reports) (Amendment) Regulations 2008 (as amended). This Directors’ Remuneration Policy will be put
to a binding shareholder vote at the Company’s AGM on 9 June 2022. Once approved, the Policy will apply for a period of three
years from the AGM, unless shareholder approval is sought for earlier changes.

Overview of Remuneration Policy
The objective of the Remuneration Policy is to provide remuneration packages to each Executive Director that will:

• Align rewards with the interests of shareholders;

• Motivate and encourage superior performance;

• Allow the Group to retain the talent needed to execute its business strategy; 

• Enable the Group to be competitive when recruiting appropriately skilled and experienced management; and

• Ensure that the overall package for each Director is linked to strategic objectives of the Group.

The table below describes how the factors of Provision 40 listed in the Code are addressed:

Clarity

Simplicity

Risk

In line with our commitment to ensuring an open dialogue with our shareholders, the Remuneration Committee
Chair consults with shareholders when changes are being made to the Remuneration Policy or where there is a
material change in the way in which we operate our policy. 

Our Team Forum facilitates two-way communication between employees, management and the Board of
Directors where, amongst other topics, remuneration policy is discussed, and employees’ opinions and
suggestions are welcomed.

Our remuneration policies and practices are simple, clear and well understood by employees and externally. 
We set metrics that are aligned to our business strategy and the operation of our policy demonstrates pay for
performance.

The design of our Remuneration Policy ensures that risks are identiﬁed and will not be rewarded by:

• the weighting of equity in our incentive plans (alongside shareholding guidelines in service and post service);

• discretion to override formulaic outturns of incentives; and

• malus/clawback provisions.

Predictability

The incentive plans are subject to individual caps, and the scenario charts on page 91 illustrate the potential
rewards receivable by our Executive Directors and how they vary based on performance and share price growth.
The Remuneration Committee also has the discretion to adjust any vesting outcomes if they are not considered
appropriate and malus and clawback provisions are in place.

Proportionality

The performance conditions are aligned to strategy and performance targets are stretching, and ranges calibrated
such that poor performance is not rewarded.

The link between individual awards, the delivery of strategy and the long-term performance of the Company is
explained in the policy table and demonstrated in the scenario charts on page 91.

Alignment to culture

The Remuneration Committee is mindful of the Company culture in designing and implementing the policy,
ensuring remuneration policies and practices are appropriate, fair and aligned and support the culture of the
business. The alignment of performance metrics and strategy drives behaviours consistent with our purpose
values as a business.

Dignity plc Annual Report & Accounts 2021    

87

GOVERNANCE

REPORT ON DIRECTORS’ REMUNERATION CONTINUED
for the 53 week period ended 31 December 2021

Decision-making process for determination, review and implementation of the Policy 
The Committee reviews the Policy and its operation to ensure it continues to motivate and reward the Executive Directors to
execute the business strategy and aligns with the interests of shareholders. The UK Corporate Governance Code, institutional
investor and investor representative body views and market practice is taken into account during the review process. Where
changes are being made to the remuneration policy or where there is a material change in which we operate our policy, major
shareholders will be consulted in advance and their views taken into account. In addition, the Committee also takes into account
views from Management and its independent remuneration consultants who provide the Committee with updates on corporate
governance developments and market best practice guidance. To manage any potential conflicts of interest, the Committee ensures
that no individual is involved in discussions regarding their own remuneration arrangements and that remuneration is fully aligned
to and supports our strategy, culture and values. When reviewing the policy, the Committee also carefully considers the remuneration
arrangements, policies and practices of the workforce and the cascade of remuneration throughout the business. 

Implementation of the Policy is considered annually for the year ahead in light of the strategy and incentive targets are also
reviewed to check if they remain appropriate or need to be recalibrated. 

Changes to the Remuneration Policy 

Three material policy changes are proposed:

1. Annual bonus deferral – currently 20 per cent of any bonus earned is deferred into a share award, which vests and the shares

are delivered after 2 years, subject to continued employment.

The level of deferral will be increased to one third of any bonus earned and the deferral period extended from 2 to 3 years, to
provide a stronger incentive to build shareholdings quickly, subject to performance.

The bonus deferral mechanism will be changed from a share award, with the shares delivered at the end of the deferral period
subject to continued service, to a requirement for the Executive to purchase shares outright with one third of the cash bonus,
with the shares then subject to a three year holding period during which time they cannot be sold. This mechanism provides a
stronger alignment with shareholders through the direct holding of shares from the outset and provides further long-term
alignment post cessation of employment, as the shares are not forfeited on any cessation (good or bad leaver). 

2. Target bonus level pay out – the current pay out level for achieving a target level of performance is 60 per cent of the maximum. 

This is being reduced from 60 per cent of the maximum to 50 per cent, to increase the level of stretch in the bonus targets and
to bring the target bonus pay out level more into line with market best practice.

3. Post-employment shareholding requirement – the current post-employment shareholding requirement is the retention of

shares worth 100 per cent of salary (or, if lower, the actual shareholding) to be held for one-year post-cessation of employment.

This is being brought into line with the Investment Association’s recommended approach, of 200 per cent of salary (or, if lower,
the actual shareholding) for two years post-cessation of employment. This requirement to hold a higher number of shares for
longer will provide a longer-term alignment of interest with shareholders after an executive director leaves. 

Further minor refinements to the policy wording will also (i) make it clear that pension provisions must be in line with workforce and
(ii) tightening the wording to make it clear that payments in relation to a notice period or payment in lieu of notice payments will be
paid monthly and will be subject to mitigation, including offset against employment earnings elsewhere, in line with best practice.

The table on pages 89 and 90 sets out the components of Dignity's Remuneration Policy. Details of how the Committee will
implement the policy are provided in the Annual Report on Remuneration on page 93.

88

Dignity plc Annual Report & Accounts 2021    

Element                            Purpose and link                       Operation                                                                                                                               Maximum opportunity                              Framework used to
                                              to strategy                                                                                                                                                                                                                                                                         assess performance

Base salary

Essential to recruit 
and retain executives 
of a high calibre.
Reﬂects an individual's
experience, role and
performance.
To provide a fair 
ﬁxed level of pay
commensurate for 
the role, ensuring 
no over reliance on
variable pay.

Salaries are paid monthly. They are normally reviewed annually
and ﬁxed for 12 months commencing 1 January.   
In deciding appropriate salary levels, the Committee takes 
into account:
• the role, experience, responsibility and performance (individual

and Group);

• salary levels and increases applied to the broader workforce;
• relevant market information for similar roles in broadly similar

companies of a similar size; and 

• the current Chief Executive has voluntarily chosen not to receive 
a base salary for his services, which the policy permits. However,
in order to comply with the National Minimum Wage regulations,
he is required to be paid a salary which is donated to charity.

Beneﬁts

To provide competitive
beneﬁts to help recruit
and retain executives
and to ensure the well-
being of the executives. 

Beneﬁts include but are not limited to provision of a company car
(or cash allowance in lieu), fuel, landline telephone and broadband
at each Executive Director’s home residence, mobile phone, family
private medical cover and a pre-arranged funeral plan for the
individual and spouse.
Relocation or other related expenses may be oﬀered, as required.
Executive Directors are also eligible to participate in the all-employee
HMRC approved share schemes on the same basis as other
employees.
Any business expenses incurred in carrying out an executive’s
duties which are deemed to be taxable will be reimbursed by the
Company together with any personal tax due.

Pension

To provide retirement
beneﬁts in line with the
overall Company policy.

The Company may contribute to selected individuals' personal
pension schemes or is able to make salary supplements in lieu 
of pension contributions. 

Annual
bonus

To motivate executives
and incentivise the
achievement of annual
ﬁnancial and/or
strategic business
targets. To ensure
further alignment with
shareholders through 
a deferred share-based
element.

One third of any annual bonus earned will be invested in shares,
which must be held for three years, with the remainder being
payable in cash. 
The holding period continues post cessation of employment.
Bonus payments, including the shares element, are subject to
recovery and withholding provisions as set out in note 1.

There is no prescribed maximum.
Salary levels are determined
based on the relevant reference
points noted under the heading
‘Operation’ and for increases,
generally the Committee is guided
by average increases across the
workforce. However, higher
increases may be awarded on
occasion, for example, where 
an individual is promoted or 
has been recruited on a below
market rate, where there have
been changes to individual
responsibilities or in the size 
or complexity of the business 
or where salaries have 
fallen signiﬁcantly below 
mid-market levels.

There is no prescribed maximum
as costs may vary in accordance
with market conditions.
Relocation expenses must be
reasonable and necessary.
HMRC tax-approved limits will
apply to all employee share
schemes.

Company contributions to
deﬁned contribution plans or
salary supplements in lieu of
pension will be in line with 
the pension provision of the
workforce, currently a pension
contribution of 4 per cent 
of salary.

Up to 135 per cent of salary for
the Chief Executive and up to 
125 per cent of salary for the
other Directors.
The current Chief Executive and
Interim Chief Financial Oﬃcer do
not currently participate in the
annual bonus plan.

The Committee reviews 
the salaries of Executive
Directors each year taking
due account of Company
and individual performance
and positioning relative 
to other employees and 
the market.

Not applicable.

Not applicable.

Performance metrics are
selected annually based on the
Group's strategic objectives.
The bonus may be based 
on the achievement of an
appropriate mix of challenging
ﬁnancial, strategic or personal
targets with ﬁnancial measures
accounting for the majority of
the bonus. Measures and
weightings may change each
year to reﬂect any year-on-year
changes to business priorities.
• For ﬁnancial metrics, a range

of targets may be set by 
the Committee, taking into
account the business outlook
for the year. For ﬁnancial
metrics up to 20 per cent 
of the maximum potential
bonus is payable for threshold
performance and up to 
50 per cent of maximum
potential bonus is payable 
for target performance.

• In relation to strategic targets
the structure of the target will
vary based on the nature of
the target set and it will not
always be practicable to set
targets using a graduated
scale. Vesting may therefore
take place in full if speciﬁc
criteria are met in full.

The Committee may adjust 
the bonus that is payable if 
it considers the formulaic
outcome is not representative
of the underlying performance
of the Company, investor
experience or employee
reward outcome.
See note 2.

Dignity plc Annual Report & Accounts 2021    

89

GOVERNANCE

REPORT ON DIRECTORS’ REMUNERATION CONTINUED
for the 53 week period ended 31 December 2021

Element                            Purpose and link                        Operation                                                                                                        Maximum opportunity            Framework used to 
                                              to strategy                                                                                                                                                                                                                                 assess performance

Awards under the LTIP vest subject to the
satisfaction of challenging performance targets
set at the time of award. 
Awards may be subject to the achievement 
of total shareholder return performance, or
measures linked to the strategy such as market
share, ﬁnancial or ESG/strategic measures.
Speciﬁc measures and weightings will be set by
the Remuneration Committee each year prior 
to grant and may change each year to reﬂect 
any year-on-year changes to business priorities
and strategy.
25 per cent of the award vests for threshold
performance.
Performance periods will normally start from 
the beginning of the ﬁnancial year in which the
award is made.
The Committee may scale back the LTIP vesting
amount if it considers the formulaic outcome is
not representative of the underlying performance
of the Company, investor experience or employee
reward outcome.
See note 2 for additional detail. 

Neither the Non-Executive Chairman nor the
Non-Executive Directors are eligible for any
performance related remuneration.

Up to 150 per cent 
of salary.
The current Chief
Executive and Interim
Chief Financial Oﬃcer
do not currently
participate in LTIP.

There is no prescribed
maximum, however, 
any increase to fees 
will be considered in
light of the expected
time commitment 
in performing the 
role, scope and
responsibility, increases
received by the wider
workforce and market
rates in comparable
companies.

Not applicable.

Not applicable.

Long–Term
Incentive
Plan

Incentivises selected
employees and
Executive Directors 
to achieve successful
execution of business
strategy over the 
longer-term.
Provides long-term
retention.
Aligns the interests 
of the Executives and
shareholders through
the requirement to
build up a substantial
shareholding.

Non–Executive
Chairman and
Directors’ fees

To attract and retain a
high-quality Chairman
and experienced Non-
Executive Directors.

Share
ownership
requirement

To align the interests 
of management and
shareholders and
promote a long-term
approach to
performance.

Awards are normally granted annually in the form 
of nil cost options or conditional share awards. 
Participation and individual award levels will be
reviewed annually (subject to the individual limit) taking
into account matters such as market practice, overall
remuneration, the performance of the Group and the
Executive being granted the award. 
Awards normally vest after three years subject to the
achievement of stretching performance conditions 
and continued employment.  
Following vesting, the net of tax vested shares must be
retained for two years. The post vesting holding period
continues post cessation of employment.
Awards are subject to recovery and withholding
provisions as set out in note 1.
A dividend equivalent provision allows the Committee
to pay an additional amount equal to the value of the
dividends that would have been payable on the vested
shares over the vesting period (and holding period 
in relation to an unvested nil cost option) normally
payable in shares (but may be in cash in exceptional
circumstances) and may assume the reinvestment 
of dividends on a cumulative basis.

The Board determines the fees of the Non-Executive
Directors. They are based upon recommendations
from the Chairman and Chief Executive (or, in the case
of the Chairman, based on recommendations from
the Remuneration Committee and the Chief Executive). 
Both the Chairman and the Non-Executive Directors
are paid annual fees and do not participate in any
incentive plans or receive pension or other beneﬁts. 
The Chairman receives a single fee covering all his
duties. The Non-Executive Directors receive a basic fee
and additional fees payable for chairing the Audit and
Remuneration Committees and for performing the
Senior Independent Director role. Supplemental fees
may be paid for additional responsibilities and
activities and additional fees for chairing new board
committees or for other additional roles requiring
additional time commitment.
The Chairman and Non-Executive Directors shall be
entitled to have reimbursed all expenses that they
reasonably incur in the performance of their duties,
including those expenses that have been deemed 
to be taxable beneﬁts by HMRC. This includes any
personal tax that may become due.
The level of fees of the Non-Executive Directors 
reﬂects the time commitment and responsibility of
their respective roles. Their fees are reviewed from
time to time against broadly similar UK listed
companies and companies of a similar size. 
In exceptional circumstances, additional fees may 
be payable to reﬂect a substantial increase in time
commitment of the Non-Executive Chairman and
Directors.

Executive Directors are required to build and maintain
a holding of shares to the value of at least 200 per cent
of base salary. We will value shareholdings using the
value of beneﬁcially owned shares plus the net of tax
value of deferred bonus shares and vested but
unexercised LTIP awards. The calculation of the
shareholding level will be based on the average price
for the last month of the ﬁnancial year and the salary
at the end of the ﬁnancial year. 
Until the guideline is met, the executive is required 
to retain 50 per cent of shares acquired under the
Company’s share plans (after allowing for tax and
national insurance liabilities).
In addition, a post-employment shareholding
requirement of the lower of the 200 per cent of salary
in-service requirement or the actual shareholding on
cessation of employment is required to be held for
two-years post cessation of employment, applying to
share awards granted from 2020. 

Notes 
1. Recovery and withholding provisions apply to variable pay, to enable the Company to recover amounts paid under the annual bonus, legacy deferred annual bonus share plan and LTIP in the event of a restatement of the
accounts, an error in calculation leading to an over-payment, corporate failure or failure in risk management or if the participant has been guilty of gross misconduct or has brought the Company or any member of the
Group into disrepute. Payments may be recovered for up to two years after payment/vesting or two external audit cycles. The amount to be recovered would generally be the excess payment over the amount which would
otherwise be paid, and recovery may be satisfied in a variety of ways, including through the reduction of outstanding legacy deferred annual bonus awards, clawback of deferred bonus shares, reduction of the next bonus
or LTIP vesting and seeking a cash repayment.

2. The Committee assesses annually at the beginning of the relevant performance period which performance measures, or combination and weighting of performance measures, are most appropriate for both annual bonus
and any LTIP awarded to reflect the Company’s strategic initiatives for the performance period. The Committee has the discretion to change the performance measures for awards granted in future years based upon the
strategic plans of the Company. In determining the target range for any financial measures that may apply, the Committee ensures they are challenging by taking into account current and anticipated trading conditions,
budget, the long-term business plan and external expectations. 

3. The Committee considers the general basic salary increase for the broader employee population when determining the annual salary review for the Executive Directors. The performance measures and targets for annual
bonus and LTIP awards for Senior Managers are normally aligned to those of the Executive Directors to ensure that everyone is focusing and working together on the same critical measures of performance. All permanent
employees are invited to participate in the SAYE scheme which provides a mechanism for everyone to share in the overall success of the Group through sustained longer-term share price growth. Overall, the remuneration
policy for the Executive Directors and more senior management is more heavily weighted towards variable pay than for other employees. This ensures that there is a clear link between the performance and value created
for shareholders and the remuneration received by those individuals who are considered to have the greatest potential to influence Group performance and value creation.

90

Dignity plc Annual Report & Accounts 2021    

Bonus Plan and LTIP use of discretion
The Committee will operate the annual bonus plan and LTIP according to their respective rules and in accordance with the Listing
Rules and HMRC rules where relevant. A copy of the LTIP rules is available on request from the Company Secretary. The Committee,
consistent with market practice, retains discretion over a number of areas relating to the operation and administration of these plans.
These include (but are not limited to) the following (albeit with the level of award restricted as set out in the policy table on page 90):

• Who participates in the plans;

• The timing of grant of award and/or payment;

• The size of an award and/or a payment;

• Discretion relating to the measurement of performance in the event of a change of control or reconstruction;

• Determination of a good leaver (in addition to any specified categories) for incentive plan purposes based on the rules of each plan

and the appropriate treatment chosen;

• Adjustments required in certain circumstances (e.g. rights issues, corporate restructuring, on a change of control and special

dividends); and 

• The ability to adjust existing performance conditions for exceptional events so that they can still fulfil their original purpose whilst

being no less stretching.

Legacy arrangements
Any commitments entered into with current or former Directors that have been disclosed previously to shareholders will be honoured.

Remuneration scenarios for Executive Directors
The Company's policy results in a significant proportion of remuneration received by Executive Directors being dependent on
Company performance. The graph below illustrates how the total pay opportunities for the Executive Directors for 2022 vary under
three performance scenarios: minimum, target and maximum. 

Remuneration (£000s)

£1,000

£750

£500

£250

£-

Fixed Pay
Annual Bonus
LTIP
LTIP with 50% Share Price Growth

£1,036

39%

32%

£867

£557

30%

25%

£316

£316

£316

£248

£18.5

£18.5

£18.5

100%

100%

100%

100%

45%

29%

Below
target

Target Maximum

Below
target

Target Maximum

Below
target

Target Maximum

Chief Executive 

Interim Chief Financial Oﬃcer

COO and Executive Director 
of Funeral Operations

Notes 
• Fixed pay, comprises 2022 basic salary or fee and, for the Chief Operating Officer and the Executive Director of Funeral Operations, the value of benefits in 2021, and for the Chief Operating

Officer, an estimate of the value of benefits, and a four per cent company pension contribution.

• Target comprises fixed pay and for the Executive Director of Funeral Operations, and Chief Operating Officer, assumes a bonus of 50 per cent of maximum is paid and 50 per cent of the 

LTIP award vests.

• Maximum comprises fixed pay and for the Executive Director of Funeral Operations, and Chief Operating Officer, assumes full bonus payment of 125 per cent of salary and full LTIP vesting of
150 per cent of salary. A 50 per cent increase in the value of the LTIP is also to show the impact of the share price growth. The 50 per cent increase is calculated using the maximum LTIP value.

Recruitment and Promotion policy
The remuneration package for a new Director will be established in accordance with the Company's approved policy subject to such
modifications as are set out below.

Salary levels for Executive Directors will be set in accordance with the Company's Remuneration Policy, taking into account the
experience and calibre of the individual and their existing remuneration package. Where it is appropriate to offer a lower salary
initially, a series of increases to the desired salary positioning may be made over subsequent years subject to individual performance
and development in the role. Benefits will generally be provided in line with the approved policy, with relocation or other expenses
provided for if necessary. Pension contribution will be in line with that applying to the majority of the workforce at the time of
appointment, in line with policy.

Dignity plc Annual Report & Accounts 2021    

91

GOVERNANCE

REPORT ON DIRECTORS’ REMUNERATION CONTINUED
for the 53 week period ended 31 December 2021

The structure of variable pay elements will be in accordance with the Company's approved policy detailed above. The maximum
variable pay opportunity will be as set out in the remuneration policy table. Different performance measures may be set initially for
the annual bonus in the year of joining, taking into account the responsibilities of the individual, and the point in the financial year
that he or she joined the Board. 

In the case of external recruitment, if it is necessary to buy out incentive pay or benefit arrangements (which would be forfeited on
leaving the previous employer), this may be provided, with the new awards taking into account the form (cash or shares), timing left
to vesting, the extent to which performance conditions apply and expected value (i.e. likelihood of meeting any existing performance
criteria) of the remuneration being forfeited. Replacement share awards, if used, may be granted using the Company's existing share
plans to the extent possible, although awards may also be granted outside of these schemes. The aim of any such award would be to
ensure that as far as possible, the expected value and structure of the award will be no more generous than the amount forfeited.

In the case of an internal recruitment, any outstanding variable pay awarded in relation to the previous role will be allowed to pay out
according to its terms of grant or adjusted as considered desirable to reflect the new role.

Fees for a new Chairman or Non-Executive Director will be set in line with the approved policy.

Service contracts and payments for loss of office
The Service contracts for Executive Directors will continue indefinitely and are subject to a notice period from the Company or
Executive Director of up to six months. Gary Channon elects not to be paid as an Executive Director of the Company. In order to
comply with the National Minimum Wage regulations, however, his service contract requires that he is paid £18,500 per annum
which is donated to the Company’s selected charity, the Teenage Cancer Trust.

The Company may in its absolute discretion at any time after notice is served by either party, terminate a Director’s contract with
immediate effect by paying an amount equal to base salary for the then unexpired period of notice plus the fair value of contractual
benefits subject to the deduction of tax. Payments in relation to a notice period, whether actively employed, or on ‘garden leave’, or 
a payment in lieu of notice if the contract is terminated by the Company, will continue to be paid monthly and will be subject to
mitigation, including offset against employment earnings elsewhere.

An Executive Director's service contract may be terminated without notice for certain events such as gross misconduct or a serious
breach of contract. No payment or compensation beyond salary (and the value of holiday entitlement) accrued up to the date of
termination will be made if such an event occurs.

All Non-Executive Directors have letters of appointment with the Company for an initial period of two years, subject to annual re-
appointment at the AGM. Appointments may be terminated with three months' notice. The appointment letters for the Chairman
and Non-Executive Directors provide that no compensation is payable on termination, other than accrued fees and expenses.

All Directors submit themselves for election or re-election at the Annual General Meeting each year. Service contracts and letters 
of appointment are available for inspection at the Company's registered office. 

There are no special provisions relating to change of control. The policy on termination is that the Group does not make payments
beyond its contractual obligations and the Committee ensures that there are no unjustified payments for failure.

Any statutory payments required by law may be made. The Company may also pay outplacement, legal and other reasonable
relevant costs associated with termination and may settle any claim or potential claim relating to the termination.

Treatment of outstanding incentive awards
At the discretion of the Committee, for certain good leaver circumstances (such as death, illness, injury, disability, redundancy,
retirement, their employing company ceasing to be a Group company or the undertaking business or division for which he or she
works being sold out of the Company's group, or any other circumstances at the discretion of the Committee), a pro rata bonus may
become payable at the normal payment date for the period of active employment and based on performance. 

The treatment of share-based incentives previously granted to an Executive Director will be determined based on the plan rules.
The default treatment will be for outstanding awards to lapse on cessation of employment. However, an executive will be treated as a
'good leaver' under certain circumstances such as death, illness, injury, disability, redundancy, retirement, their employing company
ceasing to be a Group company or the undertaking business or division for which he or she works being sold out of the Company's
group, or any other circumstances at the discretion of the Committee. Under the Deferred Share Bonus Plan, if treated as a good
leaver, awards will normally vest on the original vesting date. Under the new deferral structure, where Executives are required to
purchase shares which are then subject to a holding period, these shares will not be forfeit on cessation of employment for a good or
bad leaver. The holding period will continue post-cessation of employment. Under the LTIP, if treated as a good leaver, awards will
vest at the normal vesting date subject to the extent to which performance targets have been achieved. The number of LTIP awards
that would vest will normally be reduced pro rata to reflect the proportion of the three-year period actually served. A post vest
holding period would continue to apply post-cessation of employment.

92

Dignity plc Annual Report & Accounts 2021    

External directorships
The Group allows Executive Directors to hold a Non-Executive position with one other company or organisation, with the Board’s
permission, for which they can retain the fees earned.

How shareholder views are taken into account 
The Remuneration Committee is committed to ensuring an open dialogue with our shareholders and therefore, where changes are
being made to the remuneration policy or where there is a material change in which we operate our policy, we will consult with major
shareholders in advance. The Remuneration Committee adopted such an approach in putting together this policy by consulting the
Company's largest shareholders and shareholder advisory bodies beforehand. Broad views on our approach to remuneration were
invited and those that responded confirmed that they were comfortable with the current approach. 

In addition, the Committee considers shareholder feedback received in relation to the AGM each year and guidance from
shareholder representative bodies more generally in reviewing and implementing the policy.

Consideration of employment conditions elsewhere in the Group
As part of the Committee’s wider remit and as part of the Directors’ Remuneration Policy review process, the Committee reviewed
with management the pay structures across the wider Group and certain changes were made to the wider Group policy as a result 
of the review to ensure an appropriate and clear cascade of the Executive Directors’ policy to the wider Group. The Committee will
continue within its Terms of Reference to monitor pay policies and practices within the wider Group and to provide input and
challenge in respect of current policies and practices as well as any proposed future review and changes to ensure that they are
appropriate, fair, aligned to the Executive Directors’ Remuneration Policy and support the culture and growth of the business.

A Dignity Team Forum was established in 2019 following an election of Employee Representatives. The Forum provides the opportunity
for the appointed Employee Representatives to discuss business objectives, facilitate change and continuous improvement through
a pro-active dialogue. It’s also a place in where they can share suggestions, ideas and feedback from the colleagues they represent, to
help shape our future. The Company Secretary has engaged with the Forum to explain the alignment of the Directors’ Remuneration
Policy to the wider Group pay policy.

ANNUAL REPORT ON REMUNERATION

The Annual Report on Remuneration set out below (together with the Remuneration Committee Chair’s Annual Statement) will be
put to an advisory shareholder vote at the 2022 AGM. The information below includes how we intend to operate our policy in 2022
and the pay outcomes in respect of the 2021 financial year. The information from the single total remuneration figures for Directors
on page 95 to the end of the section on loss of office payments on page 97 has been audited. The remainder is unaudited.

Implementation of Remuneration Policy in 2022

Salaries
The Committee has determined that the other Executive Directors will not receive a base salary / fee increase for 2022. Therefore, the
salaries as at 1 January 2022 are:

                                                                                                                                                                                                                                                      2022                                 2021                           Increase
                                                                                                                                                                                                                                                            £                                        £                                       %

Gary Channon (Chief Executive)                                                                                                                               18,500                18,500(a)                       –
Dean Moore (Interim Chief Financial Officer)                                                                                                    316,200             316,200                          –
Andrew Judd (Executive Director of Funeral Operations)                                                                              225,000             225,000                          –
Kate Davidson (Chief Operating Officer)                                                                                                             225,000                      n/a                     n/a

(a) Since being appointed Executive Chairman on 22 April 2021. 

Non-Executive Directors' fees
The current fee levels for Non-Executive Directors, are as detailed below. There is no increase to fee levels for 2022:

                                                                                                                                                                                                                                                      2022                                 2021                           Increase
                                                                                                                                                                                                                                                            £                                        £                                       %

Fee for Chairman                                                                                                                                                       175,000             175,000                          –
Basic fee for Non-Executive Directors                                                                                                                    50,000               50,000                          –
Supplementary Senior Independent Director fee                                                                                              10,000               10,000                          –
Supplementary Audit Committee Chair fee                                                                                                         10,000               10,000                          –
Supplementary Remuneration Committee Chair fee                                                                                       10,000               10,000                          –
Supplementary Risk Committee Chair fee                                                                                                           10,000               10,000                          –

Dignity plc Annual Report & Accounts 2021    

93

GOVERNANCE

REPORT ON DIRECTORS’ REMUNERATION CONTINUED
for the 53 week period ended 31 December 2021

Pension and Benefits
Gary Channon and Dean Moore do not receive pension and benefits. Kate Davidson and Andrew Judd will receive a salary supplement
in lieu of pension of four per cent of basic salary. Benefits will be provided in line with the approved remuneration policy. 

Annual bonus
The maximum bonus potential will be 125 per cent of salary for the Chief Operating Officer and Executive Director of Funeral
Operations. The Chief Executive and Interim Chief Financial Officer (the latter being a temporary appointment) will not participate in
the annual bonus plan.

It is presently intended that 70 per cent of the bonus will be based on a mix of stretching underlying EBITDA and 30 per cent on
strategic objectives. Underlying EBITDA will provide a measure of underlying profitability and the Strategic objectives will support 
our business.

For the underlying EBITDA element, 20 per cent of the maximum will become payable for achieving a threshold level of performance,
rising incrementally so that 50 per cent of the maximum will be payable for achieving a target level of performance and there will be 
a full pay out for significant over-achievement of target.

There will be Committee discretion to adjust the formula driven outturn to ensure that the bonus payments also reflect performance
more broadly and the experience of other stakeholders in the business. 

The underlying EBITDA element target range and the strategic objective targets are deemed to be commercially sensitive and have not
been disclosed prospectively. However, full retrospective disclosure of the targets and performance against them will be provided in
next year's Remuneration Report.

Subject to approval of the new Remuneration Policy at our 2022 AGM, Executive Directors will be required to purchase shares with one
third of their cash bonus earned for 2022. These shares will be subject to a three-year holding period.

Long-Term Incentive Plan
Both the Chief Operating Officer and Executive Director of Funeral Operations will receive an LTIP award at 150 per cent of base salary.
The Chief Executive and Interim Chief Financial officer will not participate in the LTIP.

The awards will be based 50 per cent on Funeral Market Share with a requirement to achieve an improved level of Market Share. As
with the FY21 grant, there will again be an underpinning performance condition whereby the Committee must be satisfied that our
underlying profitability must be in line with the business plan over the performance period. The remaining 50 per cent will be based on
the Company’s Total Shareholder Return compared to the FTSE SmallCap Index of companies (excluding Investment Trusts) over the
three year period to 31 December 2024. In each case 25 per cent of each element of the award will vest for threshold performance.

The targets relating to the FY22 award are set out in the table below. The Market Share performance conditions will be published later
in the corporate governance section of the website and disclosed fully in the next Annual Report. 

                                                                                                                                                                                                                                    Weighting                       Threshold                                  Maximum
                                                                                                                                                                                                                                                                          (25% vests)                              (100% vests)

Funeral Market Share                                                                                                                                               50%                    14%                            16%

TSR relative to the FTSE SmallCap Index 
(excluding investment trusts)                                                                                                                                 50%              Median        Upper quartile

Executive Directors are required to hold the net of tax vested shares for two years following vesting.

94

Dignity plc Annual Report & Accounts 2021    

Total remuneration payable to Directors in 2021
                                                                                                                                                                    Fixed Pay                                                                                                   Pay for Performance

                                                                                                                                                                                                                                                         Total                   Annual                                                      Total                      Total
                                                                                                                                                     Salary/fee              Benefits(a)          Pension             fixed pay                    bonus(b)                     LTIP        variable pay    remuneration
                                                                                                                                                              £000                    £000                   £000                     £000                        £000                      £000                      £000                      £000

Executive Directors
Gary Channon(c)

Clive Whiley(d)

Andrew Judd(e)

Dean Moore(f)

Non–Executive Directors
Dean Moore(f)

John Castagno(g)

Gillian Kent(h)

James Wilson(i)

Paul Humphreys(j)

Graham Ferguson(k)

2021
2020

2021
2020

2021
2020

2021
2020

2021
2020

2021
2020

2021
2020

2021
2020

2021
2020

2021
2020

–                 –                13                    –                   –                   –                13
13
n/a              n/a             n/a              n/a                n/a               n/a               n/a               n/a

140
400

225
8

316
5

n/a
59

77
n/a

17
30

n/a
n/a

9
n/a

20
n/a

–                 –             140                    –                   –                   –              140
–                 –             400                    –                   –                   –              400

14                9             248                    –                   –                   –              248
0.4             0.6                  9                0.8                   –                0.8                9.8

–                 –             316                    –                   –                   –              316
–                 –                  5                    –                   –                   –                   5

n/a            n/a              n/a               n/a              n/a               n/a               n/a
–                 –                59                    –                   –                   –                 59

–                 –                77                    –                   –                   –                77
n/a             n/a              n/a                n/a               n/a               n/a               n/a

–                 –                17                    –                   –                   –                17
–                 –                30                    –                   –                   –                 30

n/a            n/a              n/a               n/a              n/a               n/a               n/a
n/a             n/a              n/a                n/a               n/a               n/a               n/a

–                 –                  9                    –                   –                   –                   9
n/a             n/a              n/a                n/a               n/a               n/a               n/a

–                 –                20                    –                   –                   –                20
n/a             n/a              n/a                n/a               n/a               n/a               n/a

(a) Taxable benefits for the year included: provision of a company car or allowance, family private medical cover and a mobile telephone together with a pre-arranged funeral plan in

accordance with any scheme established by the Group in respect of the funeral of the Executive Director or his spouse.

(b) A bonus scheme was not operated for Executive Directors in respect of FY21.
(c) Gary Channon was appointed to the Board on 22 April 2021 as Executive Chairman and then Chief Executive from 23 July 2021. He has chosen not to receive any remuneration in
relation to his role as an Executive Director of the Company. However, in order to comply with the National Minimum Wage regulations, he receives £18,500 per annum which is
donated to the Company’s selected charity, the Teenage Cancer Trust.

(d) Clive Whiley was appointed to the Board as Non-Executive Chairman on 26 September 2019. The fee for 2020 is the Non-Executive Chairman’s fee to 3 April 2020 and the Executive

Chairman’s fee for the remainder of the year. Clive stood down from the Board on 22 April 2021.

(e) Andrew Judd was appointed to the Board on 14 December 2020. Following benchmarking to ensure market competitiveness, Andrew Judd’s salary was increased from that

previously reported for 2021 by 12.5 per cent to £225,000. His 2020 remuneration disclosed is for the 14 day period as a Director that year and has been restated from what was
included in the 2020 Annual Report which incorrectly included his remuneration for the whole year, which included 353 days not as a Director.  

(f) Dean Moore was appointed to the Board on 11 March 2020 and the remuneration payable represents his standard Non-Executive-Director fees from that time to 14 December

and then an enhanced fee for 15 December to 31 December for his role as Interim Chief Financial Officer.

(g) John Castagno was appointed to the Board on 23 July 2021. The fee for 2021 is for the period from date of appointment to 31 December 2021.
(h) Gillian Kent was appointed to the Board on 11 June 2020 and the fee is the pro rata payment of the base Non-Executive Director fee and the supplement for Chairing the

Remuneration Committee. Gillian stood down from the Board on 22 April 2021.

(i) James Wilson who stepped down from the Board on 26 April 2021 elected not to receive a Non-Executive Director’s fee.
(j) Paul Humphreys was appointed to the Board on 23 February 2021 and stepped down following the General Meeting on 22 April 2021.
(k) Graham Ferguson was appointed to the Board on 1 September 2021. The fee for 2021 is for the period from date of appointment to 31 December 2021.
(l) The following directors served on the Board during 2020. Their total remuneration in 2020 is shown as are the dates they stood down from the Board: 

– Mike McCollum former Chief Executive  £238,000 (comprising Salary: £171,000, Benefits: £10,000, Pension: £26,000, Annual Bonus: £31,000) until 3 April 2020;
– Richard Portman former Chief Operating Officer £360,000 (comprising Salary: £248,000, Benefits: £19,000, Pension: £37,000, Annual Bonus: £56,000) until 14 December 2020;
– Steve Whittern former Finance Director £454,000 (comprising Salary: £316,000, Benefits: £20,000, Pension: £47,000, Annual Bonus: £71,000) until 14 December 2020;
– Jane Ashcroft Non-Executive Director  £12,000 until 3 April 2020; and
– David Blackwood Non-Executive £27,000 until 11 June 2020.

No LTIP awards were made to the former Executive Directors in 2020.

Dignity plc Annual Report & Accounts 2021    

95

     
     
     
     
     
     
     
     
     
     
GOVERNANCE

REPORT ON DIRECTORS’ REMUNERATION CONTINUED
for the 53 week period ended 31 December 2021

Determination of 2021 annual bonus
No bonus scheme was operated for Executive Directors in FY21.

Determination of LTIP awards with performance periods ending in the year
The LTIP awards made in 2019 were subject to a range of relative total shareholder return performance targets against the
companies comprising the FTSE SmallCap Index (excluding investment trusts). As the threshold target was not met, these awards
lapsed in full, as shown below.  

                                                                                                                                                                                                                                                                                   Relative TSR performance                        % vesting

                                                                                                                                   Below threshold                              Below median                         –
                                                                                                                                              Threshold                                           Median                       25
                                                                                                                                              Maximum            Upper quartile or above                    100
                                                                                                                         Actual Performance                      99/131 companies                         –

                                                                                                                                                                                                                                                                             2019 LTIP award                                                              Award value
Director                                                                                                                                                                                                                                                          number of shares                   Vesting level                                 £000

Andrew Judd                                                                                                                                                                  22,494                          –                          –

LTIP awards granted in the year 
The terms of the LTIP award granted to the Executive Director of Funeral Operations on 17 December 2021 were as follows:

                                                                                                                                                                                                                     Face/maximum                                             
                                                                                             Number of LTIP                                                                                          value of awards          % of award vesting
Executive                                                                                           awards                                   Type of award                             at grant date*£                      at threshold                                           Performance period

Andrew Judd                                             39,659            Nil-cost options                       241,920                         25                 01.01.21 – 31.12.23

*  Based on a share price on the date of grant on 17 December 2021 of 610 pence.

50 per cent of the 2021 award will vest subject to a range of relative total shareholder return performance against the companies
comprising the FTSE SmallCap Index (excluding investment trusts) over the three-year performance period commencing 1 January 2021.
The vesting of this award is dependent on the following:

                                                                                                                                                                                                                                    TSR relative to FTSE SmallCap
                                                                                                                                                                                                                                                         (excl.IT) companies                                                                                                                 
                                                                                                                                                                                                                                                        Performance required                                                                                          % vesting

Below threshold
Threshold
Stretch or above

Below median
Median
Upper quartile or above

–
25
100

The remaining 50 per cent of the award will be based on our Funeral Market Share in the final year of the performance period, 2023.

                                                                                                                                                                                                                                                   Funeral market share                                                                                                                 
                                                                                                                                                                                                                                          performance required in 2023                                                                                          % vesting

Below threshold                                                                                                     
Threshold                                                                                                                 
Stretch or above                                                                                                     

Below 12.5%
12.5%
15% or above

–
25
100

The Funeral Market Share measure will be subject to a performance underpin which requires the Remuneration Committee to be
satisfied that our underlying profitability is in line with our business plan over the performance period.  

The Market Share will be calculated using the average of the 12 monthly Market Share figures for 2023 and independently verifiable
using ONS external market figures. The Committee is satisfied that the target range is sufficiently stretching, particularly as this requires
growth following several years of decline and the fact that the starting period for the average is based on monthly figures over the final
year, and not just the final month or few months of the year (which would give longer to achieve the target but would not be
independently verifiable). 

The award will vest on the third anniversary of grant. Clawback and malus provisions apply and there is a holding period requiring the
net of tax value of shares to be held for two years after the awards vest.

96

Dignity plc Annual Report & Accounts 2021    

                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                                                       
Outstanding Long-Term Incentive Plan awards
Details of the nil cost option awards, not yet vested and exercised, made under the LTIP are disclosed in the table below:

                                                                                                         Share price                                                    Granted                     Lapsed            Vested and                                              Earliest date                Latest date
                                                                            Award         at date of grant                        As at                      during                      during               exercised                        As at           shares can be           shares can be
Director                                                      grant date                         (pence)                 25.12.20                           year                           year           during year                 31.12.21                    acquired                    acquired

Andrew Judd

23.03.18(i)
13.06.19(ii)
22.12.20(iii)
17.12.21(iv)

890
633.5
584
610

7,486
22,494
31,509
–

–
–
–
39,659

7,486
–
–
–

–
–
–
–

–
22,494
31,509
39,659

23.03.21
13.06.22
22.12.23
17.12.24

23.03.28
13.06.29
22.12.30
17.12.31

(i)    These awards were subject to a range of share price targets from 1,550p to 1,950p for 25 per cent to 100 per cent vesting and a financial performance underpin. These awards

lapsed in full. 

(ii)   The 2019 award is based on relative TSR compared to the FTSE SmallCap Index (excluding investment trusts) as set out on page 99 of this report. Based on performance against

targets these awards will lapse in full. 

(iii) Subject to TSR and Funeral Market Shares performance conditions. TSR performance is assessed relative to the FTSE SmallCap Index (excluding investment trusts) and the target
range is median to upper quartile performance for 25 per cent to 100 per cent vesting. Funeral market share targets are based on performance required in 2022 of 12.5 per cent
to 15 per cent  for 25 per cent to 100 per cent vesting.

(iv) Subject to TSR and Funeral Market Shares performance conditions as set out on page 96 of this report.

The aggregate gain on the exercise of Long-Term Incentive Plan options by the continuing Directors in the period was £nil (2020: £nil).

Directors’ interest in shares
The interests of the Directors (including those of their connected persons) in the share capital of Dignity plc at 31 December 2021 
are set out below:
                                                                                                                                                               Number of Ordinary Shares

                                                                                                                                                                                        At 31 December 2021 (or date of cessation of employment if earlier)

                                                                                                                                         At 31 December                                                                                                                                                                                                          
                                                                                                                                                               2021                                                                                                                                                                                                        
                                                                                                                                             Legally owned                                                                                                                                      Value of shares                                     
                                                                                                                                                    (or date of                                                                        Subject to                                        counting towards                                     
                                                                                                      At 25 December       stepping down                                       Deferred          performance             Vested but                     proposed           Percentage of
                                                                                                                            2020      from the Board         Subject      Annual Bonus               conditions           unexercised               shareholding            salary held as
                                                                                                          Legally owned                  if earlier)         to SAYE               Options(2)     under the LTIP(2)      under the LTIP                   guideline(1)                      shares(1)

Andrew Judd                                                             3,460              3,460      1,192             2,089            93,662                      –             £26,490                      12
Clive Whiley                                                            25,000            25,000               –                      –                       –                      –                           –                         –   
Dean Moore                                                                      –                       –               –                      –                       –                      –                           –                         –   
Gillian Kent                                                                         –                       –               –                      –                       –                      –                           –                         –
Paul Humphreys                                                              –                       –               –                      –                       –                      –                           –                         –   
James Wilson                                                            1,000              1,000               –                      –                       –                      –                           –                         –   
John Castagno                                                              n/a                       –               –                      –                       –                      –                           –                         –   
Graham Ferguson                                                      n/a                       –               –                      –                       –                      –                           –                         –
Gary Channon(3)                                                          n/a                       –               –                      –                       –                      –                           –                         –

(1)     Based on the average share price of the last financial month of the year of 580 pence and includes legally owned shares plus the net of tax value (i.e. tax and national insurance

at 47 per cent) of deferred bonus options and vested but unexercised LTIP awards. 

(2)     20 per cent of any annual bonus earned is deferred in shares (the Deferred Annual Bonus) which vest after two years subject to continued employment but no further
performance targets. LITP awards normally vest after three years subject to the achievement of stretching performance conditions and continued employment.

(3)     Gary Channon is partner of Phoenix Asset Management Partners Ltd which holds 14,718,468 shares in Dignity plc.

There has been no change in the interests set out above between 31 December 2021 and 22 March 2022.

Shareholding guideline
The current shareholding guideline for the Executive Directors is 200 per cent of salary. At 31 December 2021, the shareholding
guideline has not been met by the Executive Directors. The Committee note Andrew Judd’s recent appointment to the Board and that
the Chief Executive and Interim Chief Financial officer do not currently participate in the incentive schemes. The Executive Directors are
required to retain at least 50 per cent of the net of tax value of shares of future awards vesting until the required guideline of 200 per
cent of salary is achieved.

Payment for loss of office
In 2021, Clive Whiley, Paul Humphries, Gillian Kent and James Wilson all stood down from the Board. None received payment for 
loss of office. Full details are available in Section 430 statements available on the Company’s website at www.dignityplc.co.uk.

Mike McCollum, Steve Whittern and Richard Portman hold 2019 LTIP awards over 33,642, 49,913 and 39,139 shares respectively 
which are subject to a pro-rata reduction for the proportion of the performance period served. These awards, however, lapse in full 
as the performance targets have not been met. See ‘Determination of LTIP awards with performance periods ending in the year’ 
on page 96. As detailed in the 2020 Directors’ Remuneration Report, their 2018 LTIP awards also lapsed in full as a result of the
performance condition not being met. Full details of payments made to these former directors are included in the 2020 Report 
on Directors’ Remuneration.

Dignity plc Annual Report & Accounts 2021    

97

GOVERNANCE

REPORT ON DIRECTORS’ REMUNERATION CONTINUED
for the 53 week period ended 31 December 2021

Relative importance of spend on pay between employee pay and distributions to shareholders
The following table sets out the percentage change in dividends and overall spend on employee pay in the 2021 financial year
compared with the prior year:
                                                                                                                                                                                                                                                                                       2021                                  2020                             Change 
                                                                                                                                                                                                                                                                                                                    £m                                      £m                                         % 

Dividends                                                                                                                                                                           –                      –                            –

Employee remuneration costs                                                                                                                             116.6                 116.4                      (1)

Percentage change in Directors’ pay
The table below shows the percentage change between 2020 vs 2021 and 2019 vs 2020 in the value of salary, benefits and annual
bonus for each Director compared to that of the average employee on a full-time equivalent basis.

                                                                                                                                                                                     2020 vs 2021                                                                                                   2019 vs 2020                                         

                                                                                                                                                 %  change                   % change in                                                                %  change                   % change in                                         
                                                                                                                                                   in salary/                            taxable                       % change                         in salary/                           taxable                       % change
                                                                                                                                                                           fees                            benefits                           in bonus                                     fees                            benefits                           in bonus 

John Castagno                                                                            n/a                     n/a                     n/a                     n/a                     n/a                     n/a
Gary Channon                                                                            n/a                     n/a                     n/a                     n/a                     n/a                     n/a
Dean Moore                                                                                    –                         –                         –                     n/a                     n/a                     n/a
Andrew Judd                                                                             12.5                       17                   (100)                    n/a                     n/a                     n/a
Clive Whiley                                                                                     –                         –                         –                          –                         –                         –
Paul Humphreys                                                                       n/a                     n/a                     n/a                     n/a                     n/a                     n/a
Gillian Kent                                                                                      –                         –                         –                     n/a                     n/a                     n/a
James Wilson                                                                              n/a                     n/a                     n/a                     n/a                     n/a                     n/a
All Group employees                                                                    2                         –                         –                         2                         –                         –

Andrew Judd received a pay rise in 2021 following a benchmarking exercise.

CEO pay ratios
The Committee has decided to use Option A in the relevant regulations to calculate the Chief Executive pay ratio. 

This methodology was selected as the Committee believes this provides a more accurate and consistent calculation based on the
information available at this time.

The following table sets out the CEO pay ratio at the median, 25th and 75th percentile.

                                                                                                                                                                                                                                                                    25th percentile                                                    75th percentile
                                                                                                                                                                                      Financial year                          Method                        pay ratio                           Median                       pay ratio

                                                                                                                                 2021          Option A               8.18:1                6.32:1               5.00:1
                                                                                                                                2020(a)        Option A             32.66:1              27.52:1            22.01:1

(a) 2020 median, 25th and 75th percentile have been restated to reflect the correction of Clive Whiley’s CEO remuneration which incorrectly included his Non-Executive Director fee.

The three employees used for comparison are shown below:
                                                                                                                                                                                                                                                        2021                                                                      2020                                

                                                                                                                                                                                                                                          Employee’s salary       Total remuneration         Employee’s salary      Total remuneration 
                                                                                                                                                                                                                                                                         (£)                                        (£)                                       (£)                                        (£) 

                                                                                                                        CEO pay            152,874             152,874            519,767            586,767
                                                                                                                        Q 25 pay               18,501               18,651              17,380               17,965
                                                                                                                        Q 50 pay               20,806               24,155              21,190               21,325   
                                                                                                                        Q 75 pay               28,726               30,536              26,337               26,662

The full-time equivalent remuneration for FY21 was calculated for employees of Dignity as at 31 December 2021. Employees that
joined the company prior to this date have been grossed up to full time equivalent pay and any employee that left the company 
prior to this date has been excluded. Part time employees have been grossed up to full time equivalents based on full time
equivalent hours for the role. Casual workers have been included based on the actual hours worked for the year due to the
significant variations in working hours. Total pay for employees includes salary, pensions, casual pay, allowances, overtime and
variable pay. The management bonus has been included based on amounts paid in FY21 as the amounts earned in FY21 for this
bonus have not yet been determined.

The CEO pay has been included based on the previous Executive Chair’s single figure remuneration for 2021 until his departure in
April 2021 of £140,000. The current CEO receives a salary of £18,500 per annum which he donates to charity. His pro-rated salary 
of £12,874 from his appointment in April 2021 has been included in the ratio calculations.

98

Dignity plc Annual Report & Accounts 2021    

The ratio is significantly lower this year due to the departure of the Executive Chair and the fact the current CEO receives a significantly
lower salary which has been set in order to comply with National Minimum Wage regulations. The Directors included for the CEO pay
for 2021 also did not receive incentive pay. There has been no material change in our approach to remuneration during the period. 

The reward policies and practices for our employees, which the Remuneration Committee reviews, are appropriately cascaded from
the Executive Directors’ remuneration policy and furthermore the Committee continues to monitor Group policies and practices to
ensure they are appropriate, fair and aligned and support the culture of the business. Therefore, the Remuneration Committee is
satisfied the median pay ratio is consistent with the Company’s pay, reward and progression policies for all employees. 

Long-Term Total Shareholder Return Performance and CEO pay over this period
The following graph shows the Company's TSR performance over the last ten financial years against the FTSE 350 Index and the FTSE
SmallCap Index. The FTSE 350 Index has been chosen as the Company has been a member of that Index for much of this period and
the FTSE SmallCap Index has been chosen as it is now a member of that Index.

Ten Year Total Shareholder Return

)

d
e
s
a
b
e
R

(

)
£
(
e
u
a
V

l

400

300

200

100

0

1
1
c
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Dignity plc  

FTSE 350 Index   

FTSE SmallCap Index   

Source: Eikon Datastream (Reﬁnitiv)

This graph shows the value, by 31 December 2021, of £100 invested in Dignity plc on 31 December 2011, compared with the value 
of £100 invested in the FTSE 350 Index and FTSE SmallCap Index on the same date.

The table below shows the total remuneration figure for the CEO over the same ten year period. 

                                                                            2011            2012            2013            2014           2015            2016          2017         2018         2019                            2020                     2020                      2021                         2021    
                                                                                                                                                                                                                                                                Mike McCollum(a)     Clive Whiley(a)     Clive Whiley(a)    Gary Channon(a)

CEO single total figure 
of remuneration (£000)           917    2,081    2,217    2,426    2,440    2,372      966   1,010      733                   238           349(b)              140                   13

Annual bonus pay-out 
relative to maximum (%)         100       100       100       100       100        100           –        58        18                     18               n/a               n/a                  n/a

LTIP vesting (%)                              –       100       100       100       100        100         50           –           –                        –               n/a               n/a                  n/a

(a) This represents the pro rata total remuneration for Mike McCollum to 3 April 2020 and Clive Whiley for the remainder of 2020 and 2021 in his role as Executive Chairman until 

22 April 2021. Gary Channon receives £18,500 per annum for his role as Chief Executive, which he donates to charity.

(b) 2020 median, 25th and 75th percentile have been restated to reflect the correction of Clive Whiley’s CEO remuneration which incorrectly included his Non-Executive Director fee.

Details of Directors' service contracts and letters of appointment
Details of the service contracts of the Executive Directors and letters of appointment of the Non-Executive Directors are as follows:

Name

Andrew Judd 
Gary Channon
Kate Davidson
John Castagno
Dean Moore
Graham Ferguson
Kartina Tahir Thomson

Contract date

14 December 2020
22 April 2021
7 January 2022
23 July 2021
11 March 2020
1 September 2021
7 February 2022

Notice period

6 months
6 months
6 months
3 months
3 months
3 months
3 months

Non-Executive Directors will normally serve for two terms of three years which may be extended to three terms. 

Dignity plc Annual Report & Accounts 2021    

99

 
 
 
 
 
 
 
 
 
 
 
 
 
GOVERNANCE

REPORT ON DIRECTORS’ REMUNERATION CONTINUED
for the 53 week period ended 31 December 2021

External directorships
John Castagno and Kartina Tahir Thomson do not currently have any external directorships. Graham Ferguson is a director of Iona
Star Capital Limited, Bertnet Residential Limited and Bertnet Investments Limited.

Membership of the Remuneration Committee
The Remuneration Committee currently comprises three Independent Non-Executive Directors, Graham Ferguson, Kartina Tahir
Thomson and John Castagno. During 2021, the Committee was chaired by Gillian Kent until the General Meeting in April 2021 when
she and Paul Humphreys stepped down from the Board. Graham Ferguson became Chair of the Remuneration Committee from the
date of his appointment on 1 September 2021. Dean Moore was a member of the Committee until 1 January 2021.

The Remuneration Committee members have no personal financial interest in matters to be decided, no potential conflicts of
interests arising from cross directorships and no day-to-day involvement in running the business. 

The Remuneration Committee determines and agrees with the Board, within formal terms of reference, the framework and policy 
of Directors’ and senior management’s remuneration. The Committee met four times during the year. At the start of the year the
Committee determined the incentive payments for 2020 and the application of the Remuneration Policy for 2021. During the year 
the Committee considered the remuneration package for the Executive Director of Funeral Operations and Chief Operating Officer.

The Committee receives advice from several sources, namely:

• The Chairman, Chief Executive and Interim Chief Finance Officer and People Director, who attend the Remuneration Committee 

by invitation, and the Company Secretary, who attends meetings as Secretary to the Committee. No individual takes part in
discussions relating to their own remuneration and benefits. 

• Korn Ferry, who were appointed by the Committee as its independent advisers on 3 August 2018 following a tendering process.
Korn Ferry report directly to the Committee Chair and are signatories of the Code of Conduct for Remuneration Consultants 
(which can be found at www.remunerationconsultantsgroup.com). Korn Ferry provides other consulting services on leadership
development, but this is an entirely separate team independent from the team advising the Committee and the advice to the
Committee is therefore considered independent. During 2021, total fees charged in the period by Korn Ferry in relation to advice 
to the committee were £50,809 +VAT (2020: £31,079.25 +VAT) and were charged on a time spent basis.

Statement of shareholder voting at the AGM (Unaudited) 
Votes cast by proxy at the Annual General Meeting held on 23 June 2021 in respect of the Remuneration Report and on 13 June 2019
in respect of the Remuneration Policy, are as shown below:

                                                                                                                                                                                                                                                       Remuneration Report                                                        Remuneration Policy
                                                                                                                                                                                                                                                                           (2021 AGM)                                                                          (2019 AGM)

                                                                                                                                                                                                                        Total number                    Percentage of                           Total number                 Percentage of
                                                                                                                                                                                                                                   of votes                           votes cast                                      of votes                        votes cast

For                                                                                                                                       32,569,687                    99.92              17,956,750                  98.14
Against                                                                                                                                       26,731                      0.08                    340,926                    1.86
Total votes cast                                                                                                            32,596,418                       100              18,297,676                     100

Abstentions                                                                                                                            221,534                        n/a              13,416,745                      n/a

The Report on Directors’ Remuneration on pages 85 to 100 was approved by the Board on 22 March 2022.

On behalf of the Board

Graham Ferguson
Chair of the Remuneration Committee

22 March 2022

100

Dignity plc Annual Report & Accounts 2021    

        
DIRECTORS’ REPORT

for the 53 week period ended 31 December 2021

Directors’ report
The Directors present their report for Dignity plc for the 
53 week period ending 31 December 2021. As permitted by
legislation, some of the matters required to be included in the
Directors’ report have instead been included in the Strategic
Report on pages 2 to 51, as the Board considers them to 
be of strategic importance. Specifically, these are:

• In respect of the consolidated financial statements, state

whether international accounting standards in conformity
with the requirements of the Companies Act 2006 and IFRSs
adopted pursuant to Regulation EC No 1606/2002 as it applied
in the European Union have been followed, subject to any
material departures disclosed and explained in the
consolidated financial statements;

• Future business developments (throughout the Strategic

Report).

• Total greenhouse gas emissions and carbon reporting 

(see pages 27 to 31).

• In respect of the Parent Company financial statements, state

whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in Parent Company financial statements
respectively; and

• Information on stakeholder engagement and how the

• Prepare the financial statements on the going concern 

Directors have had regard for the Company’s stakeholders,
and the effect of that regard, on pages 21 to 25.

basis unless it is inappropriate to presume that the Company
and/or the Group will continue in business.

The company registration number of Dignity plc is 04569346.

Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report,
the Report on Directors’ remuneration and the financial
statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial
statements for each financial year. Under that law the 
Directors have prepared the consolidated financial statements
in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006
and International Financial Reporting Standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in 
the European Union, and have elected to prepare the Parent
Company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice including
Financial Reporting Standard 101, Reduced Disclosure
Framework (‘FRS 101’) (United Kingdom Accounting Standards
and applicable law). Under company law, the Directors must
not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of 
the Group and the Company and of the profit or loss of 
the Group for that period. In preparing these financial
statements, the Directors are required to:

• Select suitable accounting policies and then apply them

consistently;

• Make judgements and accounting estimates that are

reasonable and prudent;

• Present information, including accounting policies, in a

manner that provides relevant, reliable, comparable and
understandable information;

• Provide additional disclosures when compliance with the

specific requirements in IFRSs and in respect of the Parent
Company financial statements, FRS 101, is insufficient to
enable users to understand the impact of particular
transactions, other events and conditions on the Group 
and Company financial position and financial performance;

The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and the Group and enable
them to ensure that the financial statements and the Report on
Directors’ Remuneration comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable 
steps for the prevention and detection of fraud and other
irregularities.

The Directors are responsible for the maintenance and integrity
of the Group’s websites. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions. 

Responsibility statement of the Directors in respect of the
Annual Report
Each of the Directors, whose names and functions are listed 
on page 73 of this Annual Report, confirm that, to the best 
of their knowledge and belief:

• The consolidated financial statements prepared in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006 and IFRSs adopted
pursuant to Regulation EC No 1606/2002 as it applied in the
European Union give a true and fair view of the assets,
liabilities, financial position and profit of the Company and
undertakings included in the consolidation as a whole; 

• This Annual Report, including the Strategic Report, includes 
a fair review of the development and performance of the
business and the position of the Company and undertakings
included in the consolidation as a whole, together with a
description of the principal risks and uncertainties that they
face; and

• Having taken into account all matters considered by the Board
and brought to the attention of the Board during the year, the
Directors consider that the Annual Report, taken as a whole, 
is fair, balanced and understandable. The Directors believe
that the disclosures set out in this Annual Report provide the
information necessary for shareholders to assess the
Company’s performance, business model and strategy.

Dignity plc Annual Report & Accounts 2021    

101

        
GOVERNANCE

DIRECTORS’ REPORT CONTINUED
for the 53 week period ended 31 December 2021

Principal risks and uncertainties 
Principal risks are considered on pages 40 to 46.

An assessment of the Group’s exposure to financial risks and 
a description of how these risks are managed are included in
note 2 to the consolidated financial statements.

Share capital, authorities and restrictions
During the period, 10,525 Ordinary Shares of 12 48/143 pence
each were issued to satisfy share incentives which became
exercisable in the period. 

The issued share capital of Dignity plc at 31 December 2021
consisted of 50,031,008 Ordinary Shares of 12 48/143 pence
each. All the Ordinary Shares carry the same rights and
obligations. There are no other class or type of share in issue.

The Company has one class of voting share capital, Ordinary
Shares. All of the shares rank pari passu. There are no special
control rights in relation to the Company’s shares. The rules
governing the appointment and replacement of Board
members and changes to the Articles of Association accord 
with usual English company law provisions. The Board has
authority to purchase its own shares and is seeking renewal of
that power at the forthcoming AGM within the limits set out in
the notice of that meeting. There are no significant agreements
to which the Group is party which take effect, alter or terminate
in the event of change of control of the Group. 

There are no restrictions on the transfer of the Company’s
shares, with the exception that Directors are periodically
restricted in dealing in the Company’s shares under the Group’s
share dealing policy, which reflects the requirements of the UK
Market Abuse Regulations. In certain specific circumstances, 
the Directors are permitted to decline to register a transfer in
accordance with the Company’s Articles of Association. There
are no other limitations on holdings of securities, and no
requirements to obtain the approval of the Company, or other
holders of shares in the Company, prior to the share transfer.
The Company is not aware of any agreements between holders
of shares that may result in restrictions on the transfer of
shares or voting rights, or of agreements between holders 
that might restrict voting rights.

The Employee Benefit Trust (‘EBT’) holds shares in the Company
in connection with Group share incentive plans. The Trust
generally abstains from voting at shareholder general meetings
in respect of shares held by them.

A special resolution passed at the last AGM on 23 June 2021
gives Dignity plc the authority to purchase up to 5,002,521
Ordinary Shares of 12 48/143 pence each at not less than
nominal value and not more than five per cent above the
average middle market quotation for the preceding five
business days. At the same meeting the Company was also
given authority to allot Ordinary Shares up to an aggregate
nominal value of £4,113,549 of which up to £308,547 may be
for cash. These authorities will expire at the conclusion of the
next AGM on 9 June 2022. It is the intention of the Directors to
seek renewal of these authorities at that AGM. There are no
restrictions at the period end on the transfer of securities.

Results
The results for the period are set out in the Consolidated
Income Statement on page 114. The Group’s Profit before tax
amounted to £32.0 million (2020: loss of £19.6 million).

Dividends
The Group has not paid a dividend since June 2019 and the
Directors do not expect to do so until the business has returned
to a more sustainable financial footing. We continue to work on
our plans to improve our capital structure so that the pursuit of
the best long-term value for shareholders is not compromised
by the covenants attached to our bonds. We retain significant
cash resources, continue to be cash generative and understand
the importance of optimising total shareholder return whilst
maintaining a balance between different stakeholders, and it is
the Directors’ intention to pay a dividend as soon as we believe
it is financially prudent to do so.  

Financial instruments
The Group’s financial risk management objectives and policies
and exposure to risks in relation to financial instruments are
disclosed in note 22 to the financial statements. 

Employment engagement
During the period, the Group has maintained its obligations 
to effectively communicate and involve employees in its affairs.
Methods of communication used include a Team Forum, an 
in-house magazine, team talks, regular bulletins both national
and regional, and management briefings. This is discussed in
more detail in Environmental, Social and Governance report 
on pages 33 to 35.

Details of how the Directors have considered the interests of
the Company’s employees in principal decisions can be found
in the s172(1) Statement on pages 21 to 25.

Employment policies
Employment policies are designed to provide equal
opportunities irrespective of age, sexuality, race, ethnic or
national origin, religion, nationality, sex or marital status. 
Full consideration is given to the employment, training and
career development of disabled persons, subject only to their
aptitudes and abilities. The Group endeavours, as far as is
practicable, to treat disabled persons equally with others and
will also endeavour to help and accommodate persons who
become disabled whilst working for Dignity.

The Directors published gender pay data on the corporate
website www.dignityplc.co.uk during 2021 in accordance with
the Equality Act 2010 (Gender Pay Gap) Regulations 2017. 

Employee share ownership
The Company offers a regular SAYE scheme to all employees.
Employees who held share options through the SAYE scheme
for the period ended 31 December 2021 was 377,767 (2020:
435,664).

102

Dignity plc Annual Report & Accounts 2021    

Directors and their interests 
The Directors of the Company who were in office during the period and up to the date of signing the financial statements,
including changes to the Directors during the year and up to the date of this report are set out in the table below.

Name                                                                                              Role                                                                                                                            Effective date of change

Andrew Judd                                                          Executive Director of Funeral Operations                          
Dean Moore                                                          Interim Chief Financial Officer                                               

Resignations                                                                                                                                                                 
Paul Humphreys                                                  Independent Non-Executive Director                                 Appointed 23 February 2021
                                                                                                                                                                                         Resigned 22 April 2021
Gillian Kent                                                             Independent Non-Executive Director                                 Resigned 22 April 2021
Clive Whiley                                                            Chairman                                                                                    Resigned 22 April 2021
James Wilson                                                         Independent Non-Executive Director                                 Resigned 26 April 2021

Appointments
Gary Channon                                                       Chief Executive                                                                          Appointed 22 April 2021
John Castagno                                                       Independent Non-Executive Chairman                              Appointed 23 July 2021
Graham Ferguson                                                Independent Non-Executive Director                                 Appointed 1 September 2021
Kate Davidson                                                       Chief Operating Officer                                                           Appointed 7 January 2022
Kartina Tahir Thomson                                       Independent Non-Executive Director                                 Appointed 7 February 2022

The interests of the Directors in the share capital of the Company are set out in the Report on Directors’ remuneration on page 97.

In accordance with the UK Corporate Governance Code, at the AGM, all Directors will retire as Directors of the Company and,
being eligible, offer themselves for election or re-election at the AGM on 9 June 2022. 

Directors’ and Officers Liability Insurance and indemnities
During the period, the Company maintained liability insurance
for its Directors and Officers to a value of £60 million. In addition,
the Directors of the Company and each of the Company’s
subsidiaries have the benefit of an indemnity provision in the
Company’s Articles of Association. The indemnity provision,
which is a qualifying third party indemnity provision as defined
by Section 234 of the Companies Act 2006, was in force
throughout the period and is currently in force.

Health and Safety policy 
The Group’s operations are designed at all times in such a 
way as to ensure, so far as reasonably practicable, the health,
safety and welfare of all of our employees and all other 
persons who may attend our premises. This is discussed in the
Environmental, Social and Governance section of the Strategic
Report on page 35.

Corporate Social Responsibility 
Maintaining the quality of the environment in which we all live 
is an important concern for the Group. This is discussed in the
Environmental, Social and Governance report on pages 26 to 39
alongside other social and ethical considerations. Details of the
Group’s greenhouse gas and carbon dioxide emissions can be
found on pages 29 to 31 of the Strategic Report.

Political donations
It is not the Group's policy to make donations to political parties,
and the Directors have no intention of changing that policy.
Accordingly, none were made during the financial year. 

Going concern 
In order to assess the appropriateness of the application of the
going concern principle in this Annual Report, the Directors have
considered the principal risks and uncertainties and financial
position of the Dignity Group.

The Group has carried out a detailed going concern analysis and
considered the ongoing impact of the COVID-19 pandemic, on
these financial statements. Full details of this analysis are set out
in Note 1 to the financial statements.

Following consideration of the base case forecasts, and the
range of downside stress test scenarios, the Directors have a
reasonable expectation that the Group has adequate resources
to continue in operational existence for a period through to 
31 March 2023 and have also considered events beyond the
assessment period. The Directors formally considered this
matter at the Board meeting held on 16 March 2022. For these
reasons, they continue to adopt the going concern basis for
preparing the Annual Report.

Dignity plc Annual Report & Accounts 2021    

103

GOVERNANCE

DIRECTORS’ REPORT CONTINUED
for the 53 week period ended 31 December 2021

Independent Auditors and disclosure of information 
to Auditors
A resolution for the re-appointment of Ernst & Young LLP as
auditors will be proposed at the forthcoming AGM.

In the case of each of the persons who are Directors at the time
when the report is approved, the following applies:

• So far as the Director is aware, there is no relevant audit

information of which the Company’s auditors are unaware; and

• The Directors have taken appropriate steps to make themselves
aware of any relevant audit information and to establish that
the Company’s auditor is aware of that information.

Corporate Governance Statement
The information that fulfils the requirements of a corporate
governance statement in accordance with rule 7.2 of the
Disclosure and Transparency Rules can be found in this Directors’
report and in the Directors’ Statement on Corporate Governance
on pages 74 to 78, which is incorporated by reference.

Directors’ Report
This Directors’ report and Statement of Directors’ responsibilities
was approved by the Board on 22 March 2022.

By order of the Board

Tim George
Company Secretary

22 March 2022

Disclosures required under Listing Rule 9.8.4R
The information to be included under LR 9.8.4R, where
applicable, can be located as set out below:

Information                                                                                                              Page reference

Directors’ emoluments waiver                                                               94

Post balance sheet events

Consent solicitation with bondholders
On 17 February 2022, Dignity Finance plc (‘Dignity Finance’), a
Group subsidiary, announced the launch of a consent solicitation
period with its Class A Bondholders in relation to a proposed
temporary covenant waiver (as described in note 1 of the
consolidated financial statements). As stated in the Group's
interim results on 21 September 2021, the Board continues 
to work on its plans to improve the Group's capital structure 
in the pursuit of the best long-term value for shareholders. 

Whilst the Group's financial performance has delivered
headroom in relation to financial covenants throughout the last
12 months, given the distorting impact of the pandemic on the
timing of deaths, there remains significant uncertainty around
the UK death rate in the near term. Therefore, the Board has
taken the prudent decision to seek a temporary waiver of the
abovementioned financial covenant on a precautionary basis 
in relation to Dignity Finance's debt obligations.

Following a meeting of the Class A Bondholders on 11 March
2022, the necessary quorum was achieved (with 99.58 per cent
of the aggregate principal amount of the Notes for the time
being outstanding being represented) and the Extraordinary
Resolution was duly passed (with 95.19 per cent of the votes
being cast in favour). 

Trust financial assets
The Trust has over £1 billion in assets that are invested in
various equities, bonds, funds and private investments. Such
investments can be subject to volatility due to movements 
in underlying markets and assets and can go up and down. 
This can be seen in movements post year end following the
situation in Ukraine. The Group monitors this closely and this
forms part of its considerations for its long-term investment
strategy, noting that the purpose of the Trust is to provide asset
coverage (and a surplus) to fund the pre-need funerals return
which are forecast to have an average maturity of 10 plus years.

Acquisition activity
The Group has acquired the trade and assets of one business
since the balance sheet date through the Dignity Ventures
division.

104

Dignity plc Annual Report & Accounts 2021    

FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DIGNITY PLC 
for the 53 week period ended 31 December 2021

Opinion

In our opinion:

• Dignity plc’s group ﬁnancial statements and parent company ﬁnancial statements (the ‘ﬁnancial statements’) give a true and 
fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2021 and of the group’s proﬁt for
the 53 week period then ended;

• the group ﬁnancial statements have been properly prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted
pursuant to Regulation (EC) No.1606/2002 as it applies in the European Union;

• the parent company ﬁnancial statements have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice; and

• the ﬁnancial statements have been prepared in accordance with the requirements of the Companies Act 2006. 

We have audited the ﬁnancial statements of Dignity plc (the ‘parent company’) and its subsidiaries (the ‘group’) which comprise:

Group

Parent company

• Consolidated balance sheet as at 31 December 2021
• Consolidated income statement for the 53 week period then ended
• Consolidated statement of comprehensive income for the 53 week 

period then ended

• Consolidated statement of changes in equity for the 53 week period 

then ended

• Consolidated statement of cash ﬂows for the 53 week period then ended
• Related notes 1 to 34 to the ﬁnancial statements, including a summary 

of signiﬁcant accounting policies

• Company balance sheet as at 31 December 2021
• Company statement of changes in equity for the 53 week period then ended
• Related notes C1 to C9 to the ﬁnancial statements including a summary 

of signiﬁcant accounting policies

The ﬁnancial reporting framework that has been applied in their preparation is applicable law and International Accounting
Standards in conformity with the requirements of the Companies Act 2006 and, as regards to the group ﬁnancial statements,
International Financial Reporting Standards adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the European 
Union. The ﬁnancial reporting framework that has been applied in the preparation of the parent company ﬁnancial statements is
applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom
Generally Accepted Accounting Practice). 

Basis for opinion 
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the ﬁnancial statements section of our
report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the ﬁnancial
statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulﬁlled our other
ethical responsibilities in accordance with these requirements. 

We believe that the audit evidence we have obtained is suﬃcient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern 
In auditing the ﬁnancial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the ﬁnancial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent
company’s ability to continue to adopt the going concern basis of accounting included the following procedures:

• Understanding and walking through management’s process for and controls related to assessing going concern including

discussion with management to assess whether all key factors were taken into account. 

• Read and considered the directors’ going concern assessment covering the period through to 31 March 2023, including their

assessment of the risks and impact of COVID-19, to understand the key assumptions upon which it was based and testing the
model integrity for clerical accuracy. 

• As described in notes 1 and 17 to the ﬁnancial statements, the company has in issue Class A Notes with an outstanding principal
of £170.7 million and Class B Notes with an outstanding principal of £356.4 million that are listed on the Irish Stock Exchange. 
The terms and conditions for these Notes are covered by an Issuer/Borrower Loan Agreement (‘IBLA’). We inspected the debt
service cash requirement (‘DSCR’) and earnings before interest, tax, depreciation and amortisation (‘EBITDA’) deﬁnition as per 
the IBLA to conﬁrm the basis of the DSCR covenant calculation, which is a minimum of 1.5x the annual debt service payments
(c.£51 million), tested each quarter on a last 12 months basis.

Dignity plc Annual Report & Accounts 2021    

105

FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DIGNITY PLC CONTINUED
for the 53 week period ended 31 December 2021

• Inspected the documentation in relation to the modiﬁcation to the DSCR terms under the IBLA for the period to 31 December
2022 agreed with bondholders after the period end, and conﬁrmed this included the permissibility of Dignity plc to contribute
liquidity into the Securitised Group in order to remediate any EBITDA shortfall below the contracted DSCR position and that any
such liquidity contributed (up to a maximum of £15 million) can be included in the last 12 months calculation in future quarters
until it no longer is included in the lookback 12 months period. Further, we conﬁrmed that management’s going concern
assessment accurately reﬂected the impact of the modiﬁcation of the DSCR terms. We further understood the reasons for
obtaining the waiver and the impact on the going concern assessment.

• Tested compliance with the EBITDA:DSCR covenant in the ﬁnancial reporting period as follows:

– Recalculated the EBITDA for the Securitisation Group and assessed whether it has been correctly calculated in accordance

with the deﬁnition of EBITDA provided in the IBLA;

– Agreed the DSCR to the underlying interest and principal repayment schedules that had been subjected to audit procedures;

and

– Recalculated the EBITDA:DSCR ratio to conﬁrm the company is compliant with this ratio during the period and at the period

end date.

• Tested the forecast compliance with the EBITDA: DSCR covenant ratio as follows:

– Agreed the DSCR to the interest and principal repayment schedules;

– Obtained management’s forecast through 31 March 2023 which was prepared using the 2022 budget as a basis and the 2023

plan, which was presented to and approved by the Board, having given due consideration to changes in ﬁnancial
performance in respect of expected number of deaths, market share and pricing; 

– Tested the underlying assumptions and data upon which the budget and forecast were based to ensure their

reasonableness, by;

• assessing the accuracy of management’s historical budgeting (pre COVID-19);

• comparing forecast deaths to independent information from the Oﬃce for National Statistics (‘ONS’);

• assessing cost saving initiatives against management plans, considering the achievability of both the timing and quantum;

• assessing current trading performance by inspecting the January 2022 period end management accounts and further
ﬁnancial information available for February 2022 in addition to making inquiries of management to identify any issues
with current trading, average incomes, funeral mix and debtor recoverability; 

– Obtained the sensitivity analysis performed in the director’s going concern assessment. We checked the calculations for

accuracy and evaluated the underlying assumptions related to average price, market share and death rate by comparison to
the trend in actual deaths, funeral numbers performed and revenues achieved since the COVID-19 outbreak and, where
relevant, statistics published by the ONS; 

– Performed additional stress testing to model the impact of further severe, but plausible scenarios to assess their impact

upon the EBITDA:DSCR covenant ratio;

– Performed a reverse stress test to evaluate the level of downturn in performance that would result in a breach of the

EBITDA:DSCR covenant and evaluated whether the likelihood of such a scenario was remote; and

– For mitigations modelled we assessed whether management had the ability to affect these in the time period involved.

• Assessed the forecast liquidity of the group, including both its current cash resources and the availability of further facilities,
should they be required, in order to meet the debt service payments falling due over a period through to 31 March 2023 and
the ability of Dignity plc (the company) to provide a liquidity injection into the Securitised Group to remediate an EBITDA
shortfall should this be needed.

• Inquired of management as to their knowledge of events or conditions beyond the period of their assessment that may cast

signiﬁcant doubt on the entity's ability to continue as a going concern and compared their response to forecast market
conditions by the ONS, the proﬁle of payments and covenant requirements of the IBLA and other information that could
impact the funeral and crematoria sectors, notably the regulation of pre-need sector by Financial Conduct Authority (FCA).

• Assessed the going concern disclosures in the ﬁnancial statements to ensure they are in accordance with relevant standards. 

106

Dignity plc Annual Report & Accounts 2021    

The group is forecast to be proﬁtable and generate positive cashﬂows in the going concern period. Under the stress case the
DSCR covenant falls below 1.5x which requires a liquidity injection into the Securitised Group to remediate the shortfall. Under all
scenarios modelled, Dignity plc has suﬃcient liquidity to contribute cash into the Securitised Group in order to remediate any
DSCR shortfall.

Based on the work we have performed, we have not identiﬁed any material uncertainties relating to events or conditions that,
individually or collectively, may cast signiﬁcant doubt on the group and parent company’s ability to continue as a going concern
from when the ﬁnancial statements are authorised for issue through 31 March 2023. Going concern has also been determined
to be a key audit matter.

In relation to the group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the directors’ statement in the ﬁnancial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
group’s ability to continue as a going concern.

Overview of our audit approach

Audit scope

• We performed an audit on the consolidated ﬁnancial statements of the group to the materiality and performance

materiality described below. The audit of all the companies within the group is undertaken by one audit team.

Key audit matters

Group
• Revenue recognition - risk of management override
• Valuation of pre-need Trusts level 3 (illiquid) investments
• Impairment of funerals goodwill, trade names and related assets
Company
• Impairment of parent company investments

Materiality

• Overall group materiality of £1.0 million which represents 4.6% of adjusted proﬁt before tax 

(see Materiality section below for calculation)

An overview of the scope of the group and parent company audits 

Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit
scope for each company within the group. Taken together, this enables us to form an opinion on the consolidated ﬁnancial
statements. We take into account size, risk proﬁle, the organisation of the group and effectiveness of group-wide controls,
changes in the business environment and other factors when assessing the level of work to be performed for the group.

In assessing the risk of material misstatement to the group audit, we considered that all signiﬁcant elements of the group’s
ﬁnance and accounting function are situated and managed centrally in Sutton Coldﬁeld, UK, and operate under one common
internal control environment; and all operations of the group are also managed from this location together with the UK
headquarters. All audit work performed for the purposes of the audit was undertaken by the group audit team.

Key audit matters 
Key audit matters are those matters that, in our professional judgement, were of most signiﬁcance in our audit of the ﬁnancial
statements of the current period and include the most signiﬁcant assessed risks of material misstatement (whether or not 
due to fraud) that we identiﬁed. These matters included those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the
context of our audit of the ﬁnancial statements as a whole, and in our opinion thereon, and we do not provide a separate
opinion on these matters. 

Dignity plc Annual Report & Accounts 2021    

107

FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DIGNITY PLC CONTINUED
for the 53 week period ended 31 December 2021

Key observations
communicated to the 
Audit Committee

We have not identiﬁed any
evidence of management
override through inappropriate
journal entries in respect of
the amount of revenue
recorded in the period.

The carrying value of the Level
3 Trust assets is fairly stated.

The related disclosures are in
accordance with IFRS except
for the omission of certain
IFRS 13 disclosures related to
valuation sensitivity as this
information was not available
to management (as explained
in note 22).

Risk

Our response to the risk

Revenue recognition – risk of
management override (Revenue 2021:
£353.7 million, 2020: £357.5 million)

Given investor focus on the Group’s
underlying revenue (2021: £312.0
million, 2020: £314.1 million) we
consider there to be a risk in relation to
the manipulation by group management
of the amount of revenue recorded.
Management reward and incentive
schemes based on achieving proﬁt
targets may also place pressure on
management to manipulate revenue
recognition.

Therefore, there is a risk that group
management may override controls 
to intentionally misstate revenue
transactions through inappropriate
manual journal entries, including those
arising from consolidation of the Trusts.

Refer to the Accounting policies, note 1
and note 3 of the Consolidated Financial
Statements and the Audit Committee
report (pages 79 to 82).

Valuation of pre-need Trusts level 3
(illiquid) investments (2021: £66.9
million out of total Trust ﬁnancial
assets of £1,043.1 million, 2020: 
£49.9 million out of £967.1 million)

Certain assets held by the pre-need
Trusts require a level of estimation in
assessing their valuation, speciﬁcally 
the private (illiquid) investment fund
which are classed as Level 3 assets. 

Refer to the Accounting policies, note1
and note 13 of the Consolidated
Financial Statements and the Audit
Committee report (pages 79 to 82).

• We understood the group’s revenue recognition policies and how they are

applied, including the relevant controls. We performed walkthrough of each
signiﬁcant class of revenue transactions and assessed the design eﬀectiveness
of key controls;

• In respect of the funerals and crematoria segments, which together form 92%
of the group’s underlying revenue. We used data analytical tools to correlate
revenue transactions through to receivables and cash settlement. Where the
postings did not follow our expectation, we investigated and understood the
characteristics of these entries and tested a sample to assess their validity by
agreeing the transactions back to source documentation;

• We reconciled the aggregate underlying revenue amounts extracted from the
sales invoicing systems to revenue recorded in the general ledger and traced
material reconciling items to supporting documentation; 

• We tested journal entries posted to revenue accounts, applying parameters

designed to identify entries that were not in accordance with our expectations.
This included analysing and selecting journals for testing which appeared
unusual in nature either due to size, preparer or being manually posted. To
assess their validity, we veriﬁed the journals to originating documentation; 

• We performed detailed testing over the manual adjustments to revenue made

as a result of the consolidation of the Trusts and the IFRS 15 adjustment to
recognise revenue in respect of pre-need disbursements and those services
performed by non-Dignity funeral directors in the period, where the group is
acting as principal in the arrangement. This testing compared the outputs of
management’s deferred income liability model to the journals posted; and

• We performed analytical procedures to compare revenue recognised with

expectations based on past experience, management’s forecasts and, where
possible, external market data in respect of the numbers of deaths in the
period, assessed any contrary information and obtained corroborative
evidence to support divergences from our expectations.

• We understood the group policy in relation to ﬁnancial assets held by the

Trusts, obtained the breakdown of investments and performed the following
procedures: 

Existence
• For the investments held at the balance sheet date we validated the existence
of these assets by directly obtaining conﬁrmation from the custodians of the
number of units held. We reconciled these to the statements that we obtained
directly from the fund manager. 

Valuation
• We obtained and reviewed the ISAE 3402 SOC-1Type II report for the 

third party investment management services for the year to 31 December
2021. This report concluded on the suitability of the design and operating
eﬀectiveness of controls over the valuation of assets held by the fund. 
Controls over valuation were assessed as eﬀective. 

• We independently built an expectation of the valuation as at 31 December 2021
having considered the fund monthly management accounts (directly obtained
from the fund manager) for December 2021 and the level of investment units
held by the Trusts as obtained directly from the asset custodian. 

• Our assessment involved independently calculating an expectation of the price
at 31 December 21, derived using an appropriate publicly available benchmark
(considering the nature and geography of the investments in the fund) and 
by performing a variance analysis between the December 2018, 2019 and 
2020 management accounts with audited ﬁnancial statements of the funds 
for the same years. We then compared this expectation with the actual price 
at 31 December 2021, as conﬁrmed by the fund manager. 

• We reviewed the ﬁnancial instruments and fair value disclosures in the group’s
ﬁnancial statements and assessed whether they met the requirements of IFRS
7 and IFRS 13. 

108

Dignity plc Annual Report & Accounts 2021    

Key observations
communicated to the 
Audit Committee

We consider the group’s
conclusions in respect of
impairment of intangible and
tangible assets are appropriate,
and that the £36.4 million
impairment of funeral
segment goodwill and £2.8
million impairment of trade
names are fairly stated.

The impairment is sensitive 
to movements in key
assumptions, notably in
respect of market share and
the discount rate applied 
to the cash ﬂows.

The impairment disclosures
are in accordance with IAS 36.

Risk
Risk

Our response to the risk
Our response to the risk

Carrying value of goodwill, trade
names and related assets (2021:
£609.8 million, 2020: £660.5 million),
net of a £39.2 million (2020: £44.0
million) impairment of funeral
segment goodwill and trade names 

The group has signiﬁcant balances 
of goodwill, other intangible assets,
including trade names, property plant
and equipment and right-of-use assets
recognised on the balance sheet. 

As outlined in the strategic report the
group has faced a challenging year
arising from continued changes in the
funeral market and the implementation
of new strategy and re-pricing in
response to Competition and Market
Authority (‘CMA’) transparency
requirements which has lowered
average incomes. 

Despite having no material reduction 
in the number of funerals performed
compared to prior year, the group has
experienced an overall decline in
underlying operating proﬁt from £60.3
million in 2020 to £55.8 million in 2021. 

Therefore, there is a risk that goodwill
and the group’s cash generating units
(‘CGUs’), in particular the funeral services
segment and the related trade name
CGUs, may not achieve the anticipated
business performance to support their
respective carrying values.

Judgement is required in forecasting 
the future cash ﬂows of each CGU,
determination of the long-term growth
rates applied to these cash ﬂows,
together with the rate at which they 
are discounted. 

Refer to the Accounting policies, note 1
and note 8 of the Consolidated Financial
Statements and the Audit Committee
report (pages 79 to 82).

• We understood the group’s process for preparing impairment review

calculations and assessed the design eﬀectiveness of key controls and how
they are applied;

• We assessed whether management’s identiﬁcation of cash generating units
was in accordance with IAS 36 by comparing the identiﬁed CGUs to internal
management reporting demonstrating how the cash ﬂows are monitored;

• We examined management’s methodology together with their models for

assessing the valuation of goodwill, other intangible assets, right-of-use assets
and property, plant and equipment balances to understand the composition
of management’s future cash ﬂow forecasts and the process undertaken 
to prepare them. This included conﬁrming the underlying cash ﬂows were
derived from the board approved budgets and assessing the appropriateness
of the identiﬁed CGUs. We also re-performed the calculations in the model 
to test the mathematical integrity;

• We tested the key inputs to management’s impairment model by:

– analysing the historical accuracy of budgets (pre COVID-19) to actual results

to determine whether forecast cash ﬂows are reliable based on past
experience;

– checking the consistency of the forecast used in the CGU impairment

models for 2022 and beyond to the scenario analysis prepared for use
elsewhere in the group, e.g. the going concern review; 

– assessing the discount rate used by obtaining the underlying data used 
in the calculation and benchmarking it against an EY range derived from
comparable organisations and market data, involving EY valuation specialists
to assist us with this assessment; and

– challenging whether the forecast growth rates have been appropriately

adjusted to reﬂect the group’s strategy and the changes experienced in the
funeral market, together with comparing them to observable market data;

• We examined the sensitivities performed by management on the group’s

forecasts by incorporating reasonably possible changes in key assumptions
including EBITDA growth rates (including as driven by market share gains) and
the discount rate and assessed the decline in headroom/change in
impairment; 

• Where CGUs were not impaired, we calculated the degree to which the key

inputs and assumptions would need to ﬂuctuate before an impairment was
triggered and considered the likelihood of this occurring;

• We challenged management to reassess the useful economic life of trade

names, considering the existence of both corroborative and contra evidence;
and 

• We audited the disclosures in note 8 against the requirements of IAS 36

Impairment of Assets. 

Dignity plc Annual Report & Accounts 2021    

109

FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DIGNITY PLC CONTINUED
for the 53 week period ended 31 December 2021

Key observations
communicated to the 
Audit Committee

We consider the group’s
conclusions in respect of
impairment of investment 
is appropriate, and that the
£11.8 million impairment of
investment in subsidiaries is
fairly stated.

The impairment disclosures
are in accordance with IAS 36.

Risk
Risk

Our response to the risk
Our response to the risk

• Management tested the parent company investment in subsidiaries for

potential impairment using a model which adjusts the value in use established
as part of the goodwill, other intangible assets and property, plant and
equipment impairment assessment (see audit response above) for net debt,
pensions and cashﬂows and assets associated with the Trusts; 

• We tested the mathematical integrity of the calculation performed;

• We examined management’s methodology and model for assessing the

valuation of investments to understand the composition of management’s
future cash ﬂow forecasts and the process undertaken to prepare them. In
addition to the steps noted above in respect of the value in use established 
for goodwill, other intangible assets and property, plant and equipment
impairment assessment purposes, we vouched each of the adjustments
made, primarily driven by pre-need Trusts consolidation, to amounts 
recorded elsewhere in the ﬁnancial statements or underlying accounting
records which were subject to our audit procedures; 

• We examined the sensitivities performed by the management on the group’s
forecasts by incorporating reasonable possible changes in key assumptions
including EBITDA growth rates and the discount rate, as mentioned above 
and assessed the change in impairment; and

• We audited the related disclosures with reference to the requirements 

of IAS 36.

Impairment of parent company
investments (2021: £153.2 million,
2020: £151.3 million) 

The parent company holds investments
in subsidiaries with a signiﬁcant 
carrying value. 

As at 31 December 2021, the market
capitalisation of Dignity plc was lower
than the net assets of the company, 
this is an indicator of impairment. 

As set out above, the Group’s
performance continues to be impacted
from changes in the funeral market
driven by COVID-19 and the
implementation of the new strategy.  

Therefore, there is a risk that the
subsidiaries may not achieve the
anticipated business performance to
support their respective carrying values.

Judgement is required in forecasting 
the future cash ﬂows of the subsidiary
investments and the Trusts,
determination of the long-term growth
rates applied to these cash ﬂows,
together with the rate at which they 
are discounted. 

Refer to the Accounting policies, note C1
and note C3 of the Parent Company
Financial Statements and the Audit
Committee report (pages 79 to 82).

Our application of materiality 
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identiﬁed misstatements on the
audit and in forming our audit opinion.   

Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to inﬂuence the economic
decisions of the users of the ﬁnancial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Group to be £1.0 million (2020: £1.2 million), which is 4.6% (2020: 4.6%) of adjusted proﬁt before
tax (IFRS proﬁt before tax, adding back net non-underlying costs (excluding the add back for amortisation of acquisition related
intangibles and marketing costs for low priced funeral trials)).  

We believe that this measure of adjusted proﬁt before tax is the most appropriate measure of the ﬁnancial performance of the group
on which to base the audit materiality. In evaluating management’s adjustment to derive underlying operating proﬁt, we excluded
the add back of the £4.2 million amortisation of acquisition related intangibles as this is a recurring item and £0.9 million marketing
costs in relation to low priced funeral trials given any related change to the revenue is included in the underlying results. Further, 
we have excluded from our materiality calculation the additional net proﬁt of £53.5 million achieved by the group as a result of the
consolidation of the pre-need trusts. We set materiality on a basis that is comparable with that determined in previous years and in
line with how the trading business is operated. The exclusion of the impact of the consolidation of the pre-need trusts is consistent
with how management prepare their underlying results and communicate ﬁnancial performance to investors. 

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Dignity plc Annual Report & Accounts 2021    

Starting basis

• Proﬁt before tax as reported in the ﬁnancial statements – £32.0 million

• Add back non-underlying items (excluding acquisition related amortisation of £4.2 million and marketing costs for low

Adjustments

priced funeral trials of £0.9 million) – £43.2 million

• Exclude the proﬁt impact of consolidation of the Trusts – £53.5 million

Materiality

• Adjusted proﬁt before tax – £21.7 million
• Materiality calculated at 4.6% – £1.0 million

We determined materiality for the Parent Company to be £4.8 million (2020: £4.7 million), which is 1% (2020: 1%) of equity. Equity 
is the most appropriate measure given the parent company is an investment holding company with no revenue. The materiality
determined for the standalone parent company ﬁnancial statements exceeds the group materiality as it is determined on a different
basis given the nature of the operations. For the purposes of the audit of the group ﬁnancial statements, our procedures, including
those on balances in the parent company, are undertaken with reference to the group materiality and performance materiality set
out in this report.

Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was
that performance materiality be retained at 50% (2020: 50%) of our planning materiality, being £0.5 million (2020: £0.6 million). 

Reporting threshold
An amount below which identiﬁed misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.1 million (2020:
£0.1 million), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.  

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.

Other information 
The other information comprises the information included in the annual report set out on pages 1 to 104 and 179 to 188, including
the Overview set out on page 1, the Strategic Report set out on pages 2 to 51, Governance set out pages 64 to 104 and Other
Information set out on pages 179 to 188, other than the ﬁnancial statements and our auditor’s report thereon. The directors are
responsible for the other information contained within the annual report. 

Our opinion on the ﬁnancial statements does not cover the other information and, except to the extent otherwise explicitly stated
in this report, we do not express any form of assurance conclusion thereon. 

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the ﬁnancial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the ﬁnancial statements themselves. If, based on the work we have performed, we conclude that there 
is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

Dignity plc Annual Report & Accounts 2021    

111

FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DIGNITY PLC CONTINUED
for the 53 week period ended 31 December 2021

Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors’ report for the ﬁnancial year for which the ﬁnancial statements are

prepared is consistent with the ﬁnancial statements; and 

• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course
of the audit, we have not identiﬁed material misstatements in the strategic report or the directors’ report. 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been

received from branches not visited by us; or

• the parent company ﬁnancial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement

with the accounting records and returns; or

• certain disclosures of directors’ remuneration speciﬁed by law are not made; or

• we have not received all the information and explanations we require for our audit.

Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of 
the Corporate Governance Statement relating to the group and company’s compliance with the provisions of the UK Corporate
Governance Code speciﬁed for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the ﬁnancial statements or our knowledge obtained during the audit:

• Directors’ statement with regards to compliance with the UK Corporate Governance Code and instances of non-compliance with

the code provisions as set out on pages 66 and 67;

• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material

uncertainties identiﬁed set out on page 103;

• Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period is

appropriate set out on page 47;

• Directors’ statement on fair, balanced and understandable set out on page 101;

• Board’s conﬁrmation that it has carried out a robust assessment of the emerging and principal risks set out on page 102;

• The section of the annual report that describes the review of effectiveness of risk management and internal control systems set

out on pages 76 and 77; and

• The section describing the work of the audit committee set out on pages 79 to 82.

Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 101, the directors are responsible for the
preparation of the ﬁnancial statements and for being satisﬁed that they give a true and fair view, and for such internal control as 
the directors determine is necessary to enable the preparation of ﬁnancial statements that are free from material misstatement,
whether due to fraud or error. 

In preparing the ﬁnancial statements, the directors are responsible for assessing the group and parent company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.

Auditor’s responsibilities for the audit of the ﬁnancial statements 
Our objectives are to obtain reasonable assurance about whether the ﬁnancial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is 
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial
statements.  

112

Dignity plc Annual Report & Accounts 2021    

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud 
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example,
forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.

However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the
company and management. 

• We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and determined that the
most signiﬁcant frameworks which are directly relevant to speciﬁc assertions in the ﬁnancial statements are those that relate to
the reporting framework (IFRS, FRS 101, the Companies Act 2006 and UK Corporate Governance Code 2018) and the relevant tax
compliance regulations in the UK. In addition, we concluded that there are certain signiﬁcant laws and regulations which may have
an effect on the determination of the amounts and disclosures in the ﬁnancial statements being the Disclosure Guidance and
Transparency Rules and the Listing Rules of the Financial Conduct Authority, and those laws and regulations relating to
occupational health and safety and data protection.

• We understood how the group is complying with those frameworks by making enquiries of management, internal audit and those
responsible for legal and compliance procedures. We corroborated our enquiries through our review of board minutes, papers
provided to the Audit Committee and any correspondence received from regulatory bodies. 

• We assessed the susceptibility of the group’s ﬁnancial statements to material misstatement, including how fraud might occur by

meeting with management to understand where it considered there was susceptibility to fraud. We also considered performance
targets and their inﬂuence on efforts made by management to manage earnings or inﬂuence the perceptions of analysts. We
considered the programmes and controls that the group has established to address risks identiﬁed, or that otherwise prevent,
deter and detect fraud; and how senior management monitors those programmes and controls. Where the risk was considered
to be higher, we performed audit procedures to address each identiﬁed fraud risk. These procedures included testing manual
journals and were designed to provide reasonable assurance that the ﬁnancial statements were free from material misstatements
arising from fraud.

• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our
procedures involved: journal entry testing, with a focus on manual journals and journals indicating large or unusual transactions
based on our understanding of the business; enquiries of group management, internal audit; and focused testing, as referred to in
the key audit matters section above. 

A further description of our responsibilities for the audit of the ﬁnancial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Other matters we are required to address 
• Following the recommendation from the audit committee, we were appointed by the company on 23 June 2021 to audit the

ﬁnancial statements for the 53-week ended 31 December 2021 and subsequent ﬁnancial periods.  

• The period of total uninterrupted engagement including previous renewals and reappointments is eight years, covering the years

ending 26 December 2014 to 31 December 2021.

• The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we

remain independent of the group and the parent company in conducting the audit.  

• The audit opinion is consistent with the additional report to the audit committee.

Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.

Adrian Roberts (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Birmingham

22 March 2022

Notes:
1. The maintenance and integrity of the Dignity plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters

and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the ﬁnancial statements since they were initially presented on the website.

2. Legislation in the United Kingdom governing the preparation and dissemination of ﬁnancial statements may differ from legislation in other jurisdictions.

Dignity plc Annual Report & Accounts 2021    

113

Consolidated inCome statement 
for the 53 week period ended 31 December 2021

Revenue
Cost of sales

Gross profit
Administrative expenses

Operating profit
Finance costs
Finance income
Deferred revenue significant financing
Remeasurement of financial assets held by the Trusts and related income

Profit/(loss) before tax
Taxation

Profit/(loss) for the period attributable to equity shareholders

Earnings/(loss) per share for profit attributable to equity shareholders 
– Basic (pence)
– Diluted (pence)

53 week period
ended
31 december
2021
£m

52 week period
ended
25 December
2020
£m

Note

3

3

4

4

4

4

5

6

3

7

7

353.7
(174.1)  

179.6
(161.8)  

17.8
(29.0)  
–
(51.6)  
94.8

32.0
(19.9)  

12.1

357.5
(177.3)  

180.2
(164.3)  

15.9
(29.8)  
0.1
(53.1)  
47.3

(19.6)  
(5.9)  

(25.5)  

24.2p
24.2p

(51.0)p
(51.0)p

The alternative performance measures included within the Annual Report present information on a comparable basis with that 
presented in prior periods.  

Consolidated statement oF ComPReHensiVe inCome
for the 53 week period ended 31 December 2021

Profit/(loss) for the period
Items that will not be reclassified to profit or loss
Remeasurement gain/(loss) on retirement benefit obligations
Tax (charge)/credit on remeasurement on retirement benefit obligations 
Tax charge on pension contributions
Restatement of deferred tax for the change in UK tax rate

Other comprehensive income/(loss)

Comprehensive income/(loss) for the period

Attributable to:
Equity shareholders of the parent

Note

28

6

6

6

53 week period
ended
31 december
2021
£m

52 week period
ended
25 December
2020
£m

12.1

15.6
(3.9)  
(0.2)  
1.9

13.4

25.5

(25.5)  

(11.7)  
2.2
–
0.5

(9.0)  

(34.5)  

25.5

(34.5)  

 114

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated balanCe sHeet 
as at 31 December 2021

Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Right-of-use asset
Deferred insurance commissions
Financial assets held by the Trusts
Deferred commissions
Deferred tax asset

Current assets
Inventories
Trade and other receivables
Current tax receivables
Deferred commissions

Cash and cash equivalents – Trading Group
Cash and cash equivalents – held by the Trusts

Cash and cash equivalents

Total assets

Liabilities
Current liabilities
Financial liabilities 
Trade and other payables
Lease liabilities 
Current tax liabilities
Contract liabilities
Provisions for liabilities 

Non-current liabilities
Financial liabilities
Other non-current liabilities
Lease liabilities
Contract liabilities
Provisions for liabilities 
Retirement benefit obligation

Total liabilities

Shareholders’ deficit
Ordinary share capital
Share premium account
Capital redemption reserve
Other reserves 
Retained earnings 

Total deficit

Total deficit and liabilities

31 december
2021

Note

£m

25 December
2020
restated
£m

8

8

9

10

12

13

19

21

14

15

19

16

17

18

17

19

20

17

18

17

19

20

28

23

167.9
110.7
242.1
89.1
8.4
1,043.1
100.9
5.5

1,767.7

8.6
30.0
2.4
7.6

55.9
19.8

75.7

203.9
120.5
240.9
95.2
9.4
967.1
101.3
20.3

1,758.6

9.0
30.0
–
7.6

73.6
21.6

95.2

124.3

1,892.0

141.8

1,900.4

11.5
59.5
7.1
–
99.6
2.1

15.7
68.2
7.3
7.9
95.5
2.4

179.8

197.0

518.3
2.2
75.8
1,237.9
9.4
19.7

1,863.3

2,043.1

6.2
12.9
141.7
(2.3)  
(309.6)  

(151.1)  

529.5
2.1
81.2
1,222.0
9.5
36.6

1,880.9

2,077.9

6.2
12.7
141.7
(3.0)  
(335.1)  

(177.5)  

1,892.0

1,900.4

Prior year comparatives have been restated due to a prior year adjustment in relation to insurance plans. See note 1 for further details.

The alternative performance measures included within the Group’s consolidated financial statements present information on a comparable basis.

The financial statements on pages 114 to 166 were approved by the Board of Directors on 22 March 2022 and were signed on its behalf by:

G A Channon 
Chief Executive 

D R Moore 
Interim Chief Financial Officer

 115

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated statement oF CHanges in equity 
for the 53 week period ended 31 December 2021

Ordinary
share
capital
£m

Share
premium
account
£m

Capital
redemption
reserve
£m

Other
reserves
£m

Retained 
earnings
£m

Total
equity
£m

Shareholders’ equity as at 27 December 2019 –  

6.2

12.5

141.7

(4.0)    

(297.9)    

(141.5)    

as previously stated

Impact of insurance plans on 28 December 2019 – 

prior year adjustment (note 1)

Adjustment on initial application of IFRS 16 on  

28 December 2019

–

–

–

–

–

–

–

–

(3.5)  

0.8

(3.5)  

0.8

Shareholders’ equity as at 28 December 2019 – 

6.2

12.5

141.7

(4.0)  

(300.6)  

(144.2)  

restated

Loss for the 52 weeks ended 25 December 2020

Remeasurement loss on retirement benefit 

obligations

Tax on retirement benefit obligations
Restatement of deferred tax for the change in UK 

tax rate

Other comprehensive loss

Total comprehensive loss
Effects of employee share options 
Proceeds from share issue(1)
Gift to Employee Benefit Trust

–

–

–
–

–

–
–
–
–

–

–

–
–

–

–
–
0.2
–

–

–

–
–

–

–
–
–
–

Shareholders’ equity as at 25 December 2020 – 

6.2

12.7

141.7

restated

Profit for the 53 weeks ended 31 December 2021

Remeasurement gain on retirement benefit 

obligations

Tax on retirement benefit obligations
Tax on pension contributions
Restatement of deferred tax for the change in UK 

tax rate

Other comprehensive income

Total comprehensive income
Effects of employee share options 
Proceeds from share issue(2)
Gift to Employee Benefit Trust

–

–

–
–
–

–

–
–
–
–

–

–

–
–
–

–

–
–
0.2
–

–

–

–
–
–

–

–
–
–
–

Shareholders’ equity as at 31 December 2021

6.2

12.9

141.7

(1)  Relating to issue of 7,745 shares under 2017 DAB scheme and 344 shares issued under the 2019 SAYE scheme.  
(2)  Relating to issue of 5,963 shares under 2016 DAB scheme and 4,562 shares under the 2019 SAYE scheme. 

–

–

–
–

–

–
1.2
–
(0.2)  

(3.0)  

–

–

–
–
–

–

–
0.8
–
(0.1)  

(2.3)  

(25.5)  

(11.7)  

2.2
0.5

(9.0)  

(34.5)  
–
–
–

(25.5)  

(11.7)  

2.2
0.5

(9.0)  

(34.5)  
1.2
0.2
(0.2)  

(335.1)  

(177.5)  

12.1

15.6

(3.9)  
(0.2)  
1.9

13.4

25.5
–
–
–

12.1

15.6

(3.9)  
(0.2)  
1.9

13.4

25.5
0.8
0.2
(0.1)  

(309.6)  

(151.1)  

Comparatives for the 52 weeks ended 25 December 2020 have been restated due to a prior year adjustment in relation to 
insurance plans. See note 1 for further details.

The above amounts relate to transactions with owners of the Company except for the items reported within total comprehensive 
income.

Capital redemption reserve
The capital redemption reserve represents £80,002,465 B Shares that were issued on 2 August 2006 and redeemed for cash 
on the same day, £19,274,610 B Shares that were issued on 10 October 2010 and redeemed for cash on 11 October 2010, 
£22,263,112 B Shares that were issued on 12 August 2013 and redeemed for cash on 20 August 2013 and £20,154,070 B Shares 
that were issued and redeemed for cash in November 2014. 

Other reserves
Other reserves include movements relating to the Group’s SAYE and LTIP schemes and associated deferred tax, together with 
a £12.3 million merger reserve.

 116

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
Consolidated statement oF CasH Flows 
for the 53 week period ended 31 December 2021

Cash flows from operating activities
Cash generated from operations
Finance income received

Finance costs paid
Transfer from restricted bank accounts for finance costs
Payments to restricted bank accounts for finance costs

Total payments in respect of finance costs
Tax paid

Net cash generated from operating activities

Cash flows from investing activities
Acquisition of subsidiaries and businesses (net of cash acquired)
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment and intangible assets
Purchase of financial assets (by the Trusts)
Disposals of financial assets (by the Trusts)
Realised return on financial assets

Net cash (used)/generated in investing activities

Cash flows from financing activities

Payments due under Secured Notes
Transfer from restricted bank accounts for repayment of borrowings
Payments to restricted bank accounts for repayment of borrowings

Total payments in respect of borrowings
Principal elements of lease payments

Net cash used in financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period 
Restricted cash – amounts set aside for debt service payments

Cash and cash equivalents at the end of the period as reported in the 

consolidated balance sheet

53 week period
 ended 
31 december
2021
£m

52 week period
 ended 
25 December
2020
restated
£m

68.3
–

(40.2)  
12.0
–

(28.2)  
(17.7)  

22.4

(0.2)  
1.2
(21.0)  
(948.7)  
960.9
2.1

(5.7)  

(15.1)  
4.9
–

(10.2)  
(9.1)  

(19.3)  

(2.6)  

78.3

75.7
–

75.7

62.7
0.1

 (29.2)    
12.1
(12.0)    

(29.1)    
(6.9)    

26.8

–
1.1
(11.1)  
(778.1)  
796.8
3.8

12.5

(9.6)  
4.8
(4.9)  

(9.7)  
(7.8)  

(17.5)  

21.8

56.5

78.3
16.9

95.2

Note

26

16

13

13

16

16

16

16

Comparatives for the 52 weeks ended 25 December 2020 have been restated due to a prior year adjustment in relation to the 
application of IFRS 16. See note 1 for further details.

 117

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
 
notes to tHe FinanCial statements 
for the 53 week period ended 31 December 2021

1 Accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have 
been consistently applied to all periods presented, unless otherwise stated.

Basis of preparation
These financial statements have been prepared in accordance with international accounting standards in conformity with the 
requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) 
No 1606/2002 as it applied in the European Union.

In the current period, the Group’s consolidated financial statements have been prepared for the 53 week period ended 31 
December 2021. For the comparative period, the Group’s consolidated financial statements have been prepared for the 52 week 
period ended 25 December 2020.

The Group’s consolidated financial statements are prepared on a going concern basis and have been prepared under the 
historical cost convention.

Preparation of financial statements
The preparation of financial statements in conformity with International Financial Reporting Standards requires management to 
make estimates and assumptions that affect the reported amounts of assets and liabilities. This will also affect the disclosure of 
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses 
during the reported period. Actual results may differ from those estimates.

Terminology:
Trusts refers to The National Funeral Trust and the Trust for Age UK Funeral Plans considered for accounting purposes to be 
controlled and therefore included in the consolidated financial statements of Dignity plc.

Small Trusts refers to pre-arranged funeral plans from which the Group receives funeral cover in the event that they deliver a 
funeral service. Dignity is unable to influence variable returns, such that the Group is not considered to control these trusts and 
therefore these trusts are not consolidated. 

Trading Group refers to Dignity plc and its subsidiaries excluding the Trusts. Trading Group therefore represents what would 
have been described as the ‘Dignity plc Group’ or ‘Group’ in previous Annual Reports.

Group or Dignity plc Group refers to Dignity plc, including its subsidiaries and the Trusts.

Securitisation Group or Securitised Group refers to Dignity (2002) Limited, including its subsidiaries, but excluding the Trusts. 
It represents those entities over which security has been granted in respect of the Secured Notes. 

Basis of consolidation
The financial statements are presented in the form of Group financial statements. The Group financial statements consolidate 
the accounts of the Company and the entities controlled by the Company (including all of its subsidiary entities) after eliminating 
internal transactions. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with 
the investee and has the ability to affect those returns through its power over the investee. 

Results of subsidiary undertakings acquired during a period are included from the effective date of control using the acquisition 
method of accounting. The separable net assets, both tangible and intangible, of newly acquired subsidiary undertakings are 
incorporated into the financial statements on the basis of the fair value to the Group as at the effective date of control.

Prior year restatements
Insurance plans 
The Group is the named beneficiary on a number of life assurance products sold by third party insurance companies on which 
the Group pays commission. The Group is entitled to recover commission paid if plans are cancelled within two years of being 
sold. However, if plans are cancelled outside this two year period, commissions paid are not refundable. The majority of plans 
with these features ceased to be written in October 2019 and the remainder in February 2020. 

Following a review of the Group’s accounting policy for insurance plans in relation to the prepaid balance held on the 
consolidated balance sheet within ‘deferred insurance commissions’ it has been amended to include a provision for expected 
future cancellations. A detailed analysis has been performed on the cancellation rates for insurance products and a prior year 
restatement has been required to reflect the expected level of future cancellations. 

It was further noted that a liability was not held for the active plans where a known commission is payable in future years. The 
calculation for the liability includes an estimate of the level of cancellations before the commission is payable and is discounted 
using a risk free rate of return. Furthermore, an assessment has been performed to determine the level of future expected 
funerals and this element of the liability has been held as a corresponding asset.

Prior year comparatives have been restated to reflect the above changes. There is no impact on statutory earnings, underlying 
earnings or earnings per share for the 52 week period ended 25 December 2020. A reconciliation from the reported prior period 
comparatives has been provided in note 34 together with the third balance sheet required to be disclosed in support of the prior 
year adjustments. 

 118

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS1 Accounting policies (continued)

IFRS 16 
Following the finalisation of adopting IFRS 16 for the first time and as presented in the consolidated financial statements as at 
and for the 52 week period ended 25 December 2020 a number of restatements have been made to the consolidated financial 
information as follows:

•  The operating profit impact of IFRS 16 in December 2020 was reported within the funeral services segment within ‘other 

adjustments’ totalling £4.6 million, however this has now been split between the funeral services (£3.1 million), crematoria 
(£1.4 million) and central overheads (£0.1 million) segments to better reflect where the leasing arrangements are held; 

•  The December 2020 restated split reported in the 2021 Interim Report was £1.9 million to funeral services, £2.6 million to 
crematoria and £0.1 million to central overheads. Following further analysis of the leasing arrangements these have been 
restated within this Annual Report as above. Operating profit for December 2020 has therefore been restated from £17.5 
million to £18.7 million in the funerals segment and from £45.2 million to £44.0 million in the crematoria segment. 
All remaining analysis of the restatement is based on this revised split; and 

•   The impact of IFRS 16 has now been moved into underlying performance measures to reflect the application of IFRS 16. 

On adoption in 2020 the modified retrospective approach was applied which meant 2019 comparatives were not restated. 
As a result, the Group choose to exclude it from its underlying performance measures reported in 2020 in order to retain 
comparability.

The following restatements have been made within the segmental analysis as a result of the above: 

•  Funeral services – Underlying operating profit before depreciation and amortisation has been increased by £10.9 million to 

£73.0 million, underlying depreciation and amortisation has increased by £7.8 million to £19.9 million giving an overall increase 
in underlying operating profit of £3.1 million to £53.1 million. Accordingly, ‘other adjustments’ has decreased by £1.9 million to 
£13.9 million. Statutory operating profit has increased by £1.2 million to £18.7 million; 

•   Crematoria – Underlying operating profit before depreciation and amortisation has been increased by £2.5 million to £51.2 
million, underlying depreciation and amortisation has increased by £1.1 million to £7.0 million giving an overall increase in 
underlying operating profit of £1.4 million to £44.2 million. Accordingly, ‘other adjustments’ has decreased by £2.6 million to 
£nil. Statutory operating profit has decreased by £1.2 million to £44.0 million; and 

•   Central overheads – Underlying operating loss before depreciation and amortisation has been reduced by £0.4 million to £34.9 

million, underlying depreciation and amortisation has increased by £0.3 million to £2.1 million giving an overall decrease in 
underlying operating loss of £0.1 million to £37.0 million. Accordingly, ‘other adjustments’ has decreased by £0.1 million to £nil. 
There is no impact to statutory operating profit.

Accordingly, the following restatements have also been made within the segmental analysis: 

•   IFRS 16 finance costs of £4.7 million have been transferred out of other adjustments into underlying profit before tax. The total 

underlying finance costs has been restated to £29.8 million;

•   Accordingly, the total impact of the above on underlying profit before tax is a decrease of £0.1 million to £30.6 million;
•  There is no impact on the underlying taxation charge;
•   Underlying earnings for the 52 week period ended 25 December 2020 have been restated by £0.1 million to £23.2 million. 

Therefore, underlying earnings per share has decreased by 0.2 pence to 46.4 pence; and

•   There is no impact to statutory loss after taxation or statutory earnings per share.

Consolidated statement of cashflows 
The consolidated statement of cash flows has also been restated as at and for the 52 week period ended 25 December 2020 
as follows:

•  The ‘principal and interest elements of lease payments’ was previously classified within cashflows from financing activities. 

The interest element of IFRS 16 amounting to £4.7 million has been reclassified into finance costs paid under cash flow from 
operating activities. Total finance costs paid now totals £29.2 million, leading to a net cash generated from operating activities 
of £26.8 million. Principal elements of lease payments has been restated to £7.8 million leading to a net cash used in financing 
activities of £17.5 million.

Going concern 
The key factors which impact the Group’s financial performance are death rate, market share, funeral mix (Attended Funeral vs 
Unattended Funeral) and average revenue per funeral.

The financial performance of the Group and the Securitisation Group has been forecast for a period through 31 March 2023 
(the going concern period) and those forecasts have been subjected to a number of sensitivities. These forecasts reflect an 
assessment of current and future market conditions and their impact on the future profitability of the Group and the 
Securitised Group. 

 119

Dignity plc Annual Report & Accounts 2021notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

1 Accounting policies (continued)

Going concern (continued)
As at 31 December 2021, the Group had cash (excluding cash in the Trusts) of £55.9 million and its operations are also funded 
by Class A Notes with an outstanding principal of £170.7 million (matures 2034) and Class B Notes with an outstanding principal 
of £356.4 million (matures 2049) that are listed on the Irish Stock Exchange. As part of the conditions of these notes, the 
Securitisation Group is required to comply with an EBITDA: Debt Service Charge Ratio (DSCR) covenant, tested quarterly on a last 
12 month basis. At each point of testing, EBITDA must exceed c.£51 million (i.e. 1.5x the annual debt service cost of £34 million).

Due to the uncertainty around the forecasted deaths for 2022 and 2023 (due to the impact of COVID-19 on deaths in 2020 
and 2021), as a precautionary measure, the Group sought and was granted a waiver of the DSCR and related covenants within 
the debt. 

This waiver allows for an equity cure by Dignity plc should there be a shortfall in EBITDA of the Securitisation Group at any 
covenant measurement point up to and including 31 December 2022. Any cash transferred into the Securitisation Group during 
this period (up to an allowed maximum of £15 million) is included within the EBITDA for the purpose of the DSCR for the 
following 12 months and therefore the waiver covers the entire going concern period, i.e. cash (required to be) injected into the 
Securitisation Group prior to 31 December 2022 will be included in the calculation of EBITDA for the following 12 months. The 
Group has forecast its liquidity position and has sufficient liquidity in Dignity plc (the company), under all severe but plausible 
scenarios modelled, should it need to inject cash into the Securitised Group.

The Group accelerated its new strategy in September 2021 and introduced an Attended Funeral at prices from £1,595 to £2,495 
(excludes extras, e.g. limousines, etc., which are charged in addition to this rate) across the majority of the network, implemented 
the Unattended Funeral (direct cremation) across the whole network and the simple funeral was removed (apart from our 
location in Jersey). Whilst 2021 funeral market share is slightly lower than the prior year that started to change after the price 
changes and the Group expects the new strategy to generate growth in its funeral market share and growth in profits.

When considering the going concern assumption, the Directors of the Group have reviewed the principal risks within the 
environment in which it operates and have prepared relevant sensitised scenarios, these include: 

•  Deaths being 10,000 less than budgeted (noting for going concern purposes, the Directors considered a budget for 610,000 

deaths which is less than the ONS projections of 631,000 deaths in 2022);

•  Funeral market share growth being one per cent less than budgeted; 
•  Average revenue per funeral being two per cent lower than budgeted; and
•  A higher proportion of Unattended Funerals than budgeted.

This scenario modelling confirmed that, after considering the potential use of the equity cure, there was no plausible scenario 
in which the Group would not meet its debt service payments or related covenants in the going concern period. The Group is 
forecast to have sufficient liquidity to meet its liabilities as they fall due in the period assessed through to 31 March 2023.

Having considered all the above the Directors remain confident in the long-term future prospects for the Group and its ability to 
continue as a going concern for the foreseeable future and for a period through to 31 March 2023 and therefore continue to 
adopt the going concern basis in preparing the Annual Report.

Alternative performance measures (‘APMs’) 
The Board believes that whilst statutory reporting measures provide financial performance of the Group under IFRS, APMs are 
necessary to enable users of the financial statements to fully understand the trading performance and financial position of the 
Group. The APMs provided are aligned with those used in the day-to-day management of the Group and allow for greater 
comparability across periods. For this reason, the APMs provided exclude the impact of consolidating the Trusts and the changes 
which relate to the application of IFRS 15, as well as non-underlying items comprising certain non-recurring and non-trading 
transactions. See Financial review on pages 54 and 55 and alternative performance measures on pages 179 and 180 for further 
information. 

Investments in associates
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the 
financial and operating policy decisions of the investee, but it is not control or joint control over those policies. 

The Group’s investment in an associate is accounted for using the equity method. The investment is initially recorded at cost and 
the carrying amount is adjusted to recognise changes in the Group’s share of net assets of the associate since the acquisition 
date. Goodwill relating to the associate is included in the carrying amount of the investment. The consolidated income statement 
reflects the Group’s share of the results of the associate. 

The financial statements of the associate are prepared for the same reporting period as the Group. The Group aligns accounting 
policies and makes adjustments where necessary prior to recognising their share in the financial statements.

At each reporting date the Group performs a review to assess whether there is any objective evidence that the investment in 
the associate is impaired. Where such evidence exists the recoverable amount of the investment is determined by calculating 
its value-in-use. This recoverable amount is compared to the carrying amount of the investment and to the extent that the 
recoverable amount exceeds the carrying value of the investment, an impairment is recognised accordingly. Any impairment 
is recognised within ‘Share of loss and impairment in respect of associate’ in the consolidated income statement. 

 120

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS1 Accounting policies (continued)

Revenue
At-need funerals and cremations
Revenue from funeral services related to at-need funerals comprises the amount recoverable from clients for the provision 
of funerals, income from crematoria and other services, once those services have been performed or the goods supplied. 

Income from memorial sales is recognised at the point of sale, to the extent that the goods have been supplied. Costs of 
maintaining memorials are recognised as incurred.

The Group pays certain disbursements (such as crematoria fees, burial plots, ministers’ fees and doctors’ fees) on behalf of its 
clients. These amounts are recovered as part of the invoicing process. However, these amounts are not included within net 
revenues as they are simply passed on to the clients (plan holder) at cost and not controlled by Dignity.

All amounts are exclusive of VAT.

Pre-arranged funeral plans 
Trust for Age UK Plans and National Funeral Trust 
The Group markets and sells pre-arranged funeral plans, with monies received from selling funeral plans being held, invested 
and controlled by the Trusts. The responsibility for the ultimate performance of funerals is allocated to funeral directors, who 
are selected by the beneficiary of the plan, some of whom are not owned by the Group. The sale of a pre-arranged plan is 
considered to have a single performance obligation, fulfilled by the delivery of the funeral service. 

Amounts received from plan holders are deferred on the balance sheet within contract liabilities until the related funeral is 
performed or the plan cancelled. Where, based on historic experience, the Group expects that a proportion of plans will be 
cancelled, the deferral takes the form of a refund liability which, under the terms of the plan, is held based on the fixed amount 
received on inception of the plan if a single payment or on each individual instalment received. For the majority of plans where 
the service as per the funeral plan is expected to be performed, the deferred amount is subject to adjustment to reflect a 
significant financing component. 

This significant financing component, which has been calculated based on the expected discount rate that would be reflected 
in a separate financing transaction between the Group and the plan holder at contract inception, is charged to the income 
statement as a finance cost each period until the performance obligation is satisfied. The discount rate applied is fixed for the 
duration of each plan at inception and is based on the estimated incremental borrowing rate of the Group at the time of each 
cash flow. 

The amount deferred on the balance sheet includes amounts paid by the plan holder, which, in addition to the plan 
consideration includes amounts in respect of disbursements (such as crematoria fees, burial plots, ministers’ fees and doctors’ 
fees). When the service prescribed by the plan is delivered, revenue is recognised equal to the deferred revenue balance related 
to the specific plan. When a plan is cancelled, revenue is recognised equal to the deferred revenue balance related to the specific 
plan, less the fixed refund due to the plan holder. 

As the only directly attributable costs in respect of the marketing of the pre-arranged funeral plans are commission payments, 
these are held as deferred commissions in the consolidated balance sheet and recognised in the Group’s consolidated income 
statement, within administration expenses, on the performance of a funeral (single performance obligation) or cancellation of 
the plan (if outside of a clawback period). 

Contract liabilities and deferred commissions balances are split between current and non-current based on historical 
experience. 

All costs in respect of the administration of the pre-arranged funeral plans are expensed in the Group’s consolidated income 
statement as incurred, within the funeral services segment.

Dignity, through its marketing subsidiary companies, contractually guarantees with the holder of a pre-arranged funeral plan 
that (i) if the plan holder chooses to cancel their selected funeral plan, a full refund will be made to them of all monies paid in 
respect thereof (less in certain cases an administration fee payable to the relevant Dignity marketing company); (ii) the funeral 
director’s services (as selected by the plan holder) will be provided regardless of price rises in the future; and (iii) for the majority 
of plans sold, specific disbursements (such as crematoria fees, ministers’ fees and doctors’ fees) will be provided regardless of 
price rises in the future.

Other trust plans
Revenue in respect of funeral services subject to pre-need plan arrangements associated with the other trusts is recognised on 
delivery of the underlying service at the amount paid from the other trusts to the Group.

 121

Dignity plc Annual Report & Accounts 2021notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

1 Accounting policies (continued)

Insurance plans
The Group is the named beneficiary on a number of life assurance products sold by third party insurance companies, in 
consideration for which the Group has committed to performing the funeral (including some disbursements) of the plan holder 
at a discount to its rates prevailing at the time of death. 

Where a commission is paid to the insurers, these costs are carried as a prepayment and charged to the consolidated income 
statement as a funeral is performed. A provision for impairment is also made to cover future expected cancellations and is 
assessed at each period end.

Where a commission is payable only on delivery of the funeral no amounts are recorded until the funeral is performed. 

Where a commission is payable in the future, before the delivery of the funeral, a discounted liability is recognised on the 
consolidated balance sheet. To the extent a funeral is expected to be delivered a corresponding asset is recognised.

In the event of the death of the policyholder, if the Group performs the funeral, it receives an agreed amount from the insurers 
which is recognised as revenue within the funeral services division. On occasions a third party will perform the funeral and the 
Group will pass on all monies received to that party and in this situation the Group is deemed to be acting as an agent and 
revenue is treated as pass through revenue and not grossed up within the consolidated income statement.

Share-based payments
The Group issues equity settled share-based payments to certain employees. A fair value for the equity settled share awards 
is measured at the date of grant. Management measures the fair value using the valuation technique that they consider to 
be the most appropriate to value each class of award, which include Black-Scholes calculations and Monte Carlo simulations. 
The valuations take into account factors such as non-transferability, exercise restrictions and behavioural considerations.

An expense is recognised to spread the fair value of each award over the vesting period on a straight line basis, after allowing for 
an estimate of the share awards that will eventually not vest. The estimate of the level of vesting is reviewed at least annually, 
with any impact on the cumulative charge being recognised immediately. When the options are exercised the Company issues 
new shares.

Earnings per Ordinary Share
Basic Earnings per Ordinary Share (‘EPS’) is calculated by dividing the profit after taxation by the weighted average number of 
shares in issue during the period. Diluted EPS is calculated by dividing profit after taxation by the weighted average number 
of shares in issue during the period increased by the effects of all dilutive potential Ordinary Shares (primarily share options). 
Underlying Earnings per Ordinary Share is calculated by dividing the underlying profit after taxation by the weighted average 
number of shares in issue during the period.

Fair value measurement
The Group measures financial assets held by the Trusts at fair value and discloses fair values for all other financial assets and 
liabilities at each balance sheet date which are held at amortised cost. 

Fair value related disclosures are set out in note 22 in respect of financial instruments.

Fair value is the price that would be received to sell an asset or paid to transfer a liability measured using the assumptions that 
market participants would use. 

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to 
measure fair value, maximising the use of relevant observable inputs and where required the use of unobservable inputs. 

Intangible assets – business combinations and goodwill
Goodwill, which represents the excess of the fair value of the consideration paid for subsidiaries and other businesses over the 
fair values of the net assets acquired and liabilities assumed, is capitalised and stated at historical cost less provisions for 
impairment.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. Businesses and subsidiaries that are 
acquired and subsequently combined with existing operations in the year of acquisition, or the year thereafter are only 
considered to be separate cash-generating units during this time.

Intangible assets – trade names 
Intangible trade names are recognised as assets at the estimated fair value of the consideration paid to acquire them and are 
carried at historical cost less amortisation and provisions for impairment. When acquired as part of a business combination the 
fair value is calculated by reference to the estimated incremental cash flows expected to arise by virtue of the trade name being 
well-established.

Amortisation is provided from the date of acquisition so as to write-off the asset on a straight line basis over the term of its 
useful life. The useful life for trade names is 35 years. 

 122

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS1 Accounting policies (continued)

Intangible assets – software
Where computer software is not an integral part of a related item of computer hardware, the software is treated as an intangible 
asset. Acquired computer software licences are capitalised on the basis of costs incurred to acquire and bring into use the 
specific software.

An internally generated intangible asset arising from the Group’s development of computer systems (including websites) is 
recognised if, and only if, the costs are directly associated with the production of identifiable and unique software products, 
controlled by the Group and it is probable that future economic benefits will flow to the Group. 

Costs recognised as assets are amortised over their estimated useful lives (three to eight years) using the straight line method.

Intangible assets – use of third party brand name
The Group has a marketing agreement with Age UK Enterprises Limited, giving rights to market pre-arranged funeral plans 
under the Age UK brand. The value of this right has been recognised as a separate intangible asset.

This asset is being amortised over 20 years on a straight line basis, recognising that each year’s additional marketing activity 
generates incremental revenues and profits to the Group for at least the following 20 years.

Intangible assets – other
The Group previously acquired interests in two crematoria subject to finite periods of operation (by way of lease and/or service 
concession). The fair value of these interests has been identified and recognised as a separate intangible asset. The value of each 
interest is being amortised over the remaining period of operation.

Property, plant and equipment 
Assets are recorded in the balance sheet at cost less accumulated depreciation and any recognised impairment loss. Cost 
includes, where appropriate, directly attributable costs incurred in bringing each asset to its present location and condition.

Depreciation is charged so as to write-off the cost of assets to their residual value (excluding freehold land and assets in the 
course of construction), over their expected useful lives using the straight line method. The bases and annual depreciation rates 
in use for the various classes of assets are as follows:

Freehold and long leasehold buildings
Short leasehold buildings
Motor vehicles
Computers
Other plant and equipment
Fixtures and fittings

 2% – 10% 
Over term of lease
7% – 20%
20% 
5% – 33% 
15%

Freehold land is not depreciated on the basis that land has an indefinite life. Where the historical cost of land and buildings 
cannot be split, the Directors have estimated that the historical cost attributable to land is one third (based on historical data) of 
the original cost of acquiring the land and buildings. This estimate is regularly reviewed.

Major renovations of the Group’s trading premises and cremator re-linings are depreciated over the remaining life of the related 
asset or to the estimated date of the next major renovation or cremator re-lining, whichever is sooner. Asset lives and residual 
values for each class of asset are reviewed annually and adjusted if appropriate at each balance sheet date.

Assets in the course of construction are shown as work in progress at a value equal to costs incurred to date. Once completed, 
they are reclassified and depreciated using the Group’s depreciation policy above.

Borrowing costs
If the construction phase of property, plant or equipment extends over a long period, the interest incurred on borrowed capital 
up to the date of completion is capitalised as part of cost of construction as permitted by IAS 23 (Borrowing Costs).

Repairs and renewals
All repairs and renewals are charged to the income statement unless they represent an enhancement to the original asset.

Profit (or loss) on sale of fixed assets
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within 
profit (or loss) on sale of fixed assets in the income statement.

 123

Dignity plc Annual Report & Accounts 2021 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

1 Accounting policies (continued)

Right-of-use assets and lease liabilities 
At inception of a contract the Group assesses whether the contract is or contains a lease. A lease is present where the contract 
conveys, over a period of time, the right to control the use of an identified asset in exchange for consideration.

Where a lease is identified the Group recognises a right-of-use asset and a corresponding lease liability, except for short-term 
leases (defined as leases with a lease term of 12 months or less), leases of low-value assets (defined as leases with rentals below 
£1,000 per annum) and leases with contingent rentals. 

Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease and comprise the initial measurement of the 
corresponding lease liability and any initial direct costs. They are subsequently measured at cost less accumulated depreciation 
and impairment losses.

The right-of-use asset is presented as a separate line in the consolidated balance sheet. 

Right-of-use assets are depreciated on a straight line basis over the shorter of its estimated useful life and the lease term. 
Right-of-use assets are subject to impairment under IAS 36. 

Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments 
to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any 
lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under 
residual value guarantees. The variable lease payments that do not depend on an index or a rate are recognised as expense in 
the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement 
date. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced 
for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a 
change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the 
underlying asset. On transition to IFRS 16 on 28 December 2019 the weighted average lessee’s IBR applied to the lease liabilities 
was 4.9 per cent, with a minimum rate of 3.6 per cent and a maximum rate of 6.8 per cent. 

On transition to IFRS 16 the right-of-use asset equalled the lease liability being recognised, with the exception of a £0.9 million 
difference relating to prepaid and accrued lease payments and £7.2 million representing amounts paid to acquire the long 
leasehold interest in land at certain of the Group’s properties. 

The lease liability is presented as a separate line in the consolidated balance sheet, split between current and non-current 
liabilities. 

Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (defined as leases with a lease term of 
12 months or less). It also applies the lease of low-value assets recognition exemption to leases that are considered of low-value 
(defined as leases with rentals below £1,000 per annum). Lease payments on short-term leases and leases of low-value assets 
are recognised as an operating expense on a straight line basis over the lease term.

Impairment of assets
The carrying values of intangible assets and property, plant and equipment are reviewed for impairment in periods where 
events or changes in circumstances indicate that the carrying value may not be recoverable. Assets that have an indefinite useful 
life (e.g. goodwill) which are not subject to amortisation are tested annually for impairment. 

Where an asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable 
amount of the cash-generating unit to which the asset belongs. For goodwill this is considered at a business segment level as 
that is the level at which the return on assets acquired is monitored. Recoverable amount is the higher of fair value less costs of 
disposal and value-in-use. In assessing value-in-use, the estimated future discounted cash flows of the cash-generating unit are 
estimated, based on latest management expectations for the following year and an annual growth rate in subsequent years. 
These cash flows are discounted at rates that management estimate to be the risk affected average cost of capital for the 
particular segment and compared to the carrying value of the relevant asset. Any impairment in the value of an asset below its 
carrying value is charged to the income statement within operating profit. A reversal of an impairment loss is recognised in the 
income statement to the extent that the original loss was recognised, net of the amortisation or depreciation that would have 
been charged. Any impairment loss recognised for goodwill will not be reversed. 

Inventories
Inventories, which comprise funeral supplies and monumental masonry, are stated at the lower of cost and net realisable value. 
Cost includes all directly attributable costs incurred in bringing each product to its present location and condition. Net realisable 
value is based on estimated selling price less any further costs expected to be incurred in completion and sale. The cost of PPE 
inventory is calculated using average costing. 

 124

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS1 Accounting policies (continued)

Taxation
The tax charge for the period includes the charge for tax currently payable and deferred tax. The current tax charge represents 
the estimated amount due that arises from the operations of the Group in the period and after making adjustments to 
estimates in respect of prior years. Tax is recognised in the consolidated income statement, except that a charge attributable to 
an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also 
recognised in other comprehensive income or directly in equity respectively. 

Deferred tax is recognised in respect of all differences between the carrying amount of assets and liabilities in the financial 
statements and the corresponding tax bases used in the computation of taxable profit, except where the temporary difference 
arises from goodwill (taxable temporary differences only), or from the initial recognition (other than in a business combination) 
of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax assets 
and liabilities are offset to generate a net asset or liability if the conditions of IAS 12 are met.

A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can 
be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the deductible 
temporary difference can be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the periods in which the temporary differences are 
expected to reverse, based on tax rates and laws that have been enacted or substantively enacted, by the balance sheet date. 

Pensions 
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined 
benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated 
annually by independent actuaries. 

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using 
interest rates of high-quality corporate bonds that have terms to maturity approximating to the terms of the related pension 
obligation. The net interest arising on applying the opening discount rate to the plan assets and defined benefit obligations is 
recognised in the consolidated income statement as a net finance charge or income. 

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or 
credited to retained earnings in other comprehensive income in the period in which they arise. Past and current service costs 
are recognised in the consolidated income statement. 

Changes in the present value of the defined benefit obligation resulting from plan amendments, curtailments or one off 
adjustments such as GMP equalisation are recognised immediately in the consolidated income statement as a past service cost. 

Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, where it is 
probable that a transfer of economic benefits will be required to settle the obligation and where a reliable estimate can be made 
of the amount of the obligation.

Provisions (other than deferred tax) are discounted where the present value of the provision is materially different to the 
undiscounted value. The unwinding of discounts is included within finance costs.

Employee share trust 
The assets of the employee share trust are held by a separate limited company, of which the Directors consider that Dignity plc 
has de facto control. At the balance sheet date, the trust’s assets and liabilities recognised in the Group’s balance sheet within 
share capital and reserves were nil (2020: nil).

dividends
Dividend distributions to the Company’s shareholders are recognised as a liability in the financial statements in the period in 
which they are approved by the Company’s shareholders. Interim dividends are recorded in the financial statements when paid.

Financial instruments: 

Financial liabilities 
Borrowings
All borrowings are stated at the fair value of consideration received after deduction of transaction costs and subsequently at 
amortised cost. The transaction costs, interest payable and premium on debt finance are charged/credited to the consolidated 
income statement, as finance costs/income, on a constant-yield basis over the term of the borrowings, or over a shorter period 
where it is more likely than not that the lender will require earlier repayment, using the effective interest method.

Trade payables
Trade payables are not interest bearing and are initially recognised at fair value and subsequently measured at amortised cost.

 125

Dignity plc Annual Report & Accounts 2021notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

1 Accounting policies (continued)

Financial assets
Financial assets are classified at initial recognition and subsequently measured at amortised cost, at fair value through other 
comprehensive income or fair value through profit and loss.

Initial recognition & measurement 
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics 
and the Group’s business model for managing them. 

All investments held by the Trusts are held at fair value with movements reflected through profit and loss to ensure clarity for a 
user of the financial statements. This is because the objective of the Trusts of holding these investments is not to collect 
contractual cash flows or to sell financial assets but to focus on the fair value information to assess performance and make 
investment decisions. 

All other financial assets (including trade receivables) are held at amortised cost as these assets give rise to cash flows that are 
solely payments of principal and, where applicable, interest on the principal amount and it is the Group’s business model to 
collect the contractual cash flows. 

The majority of the Group’s trade receivables do not contain a significant financing component and are measured at the 
transaction price determined under IFRS 15.

Subsequent measurement
Financial assets held at fair value through profit and loss are carried in the consolidated balance sheet at fair value with net 
changes in fair value recognised in the income statement.

Financial assets held at amortised cost are subsequently measured using the effective interest (‘EIR’) method and are subject to 
impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

Derecognition
A financial asset is derecognised when the rights to receive cash flows from the asset have expired or the Group has transferred 
its rights to receive cash flows from the asset and has either transferred substantially all the risks and rewards of the asset or has 
neither transferred nor retained substantially all the risk and rewards of the asset but has transferred control of the asset.

Impairment
The Group recognises an allowance for expected credit losses (‘ECLs’) for all debt instruments not held at fair value through 
profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all 
the cash flows that the Group expects to receive. 

For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes 
in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a 
provision matrix that is based on its historical credit loss experience, adjusted for identifiable forward-looking factors specific to 
the debtors and the economic environment.

Cash and cash equivalents
Cash and cash equivalents within the statement of financial position comprise cash in hand and on demand deposits and 
amounts included in accounts restricted for specific uses. Cash and cash equivalents have an original maturity of three months 
or less, are subject to insignificant changes in value and are readily convertible into known amounts. Cash held in accounts 
restricted for specific uses is excluded from cash for the purpose of the cash flow statement in accordance with IAS 7. 

Trade receivables 
Trade and other receivables (not subject to significant financing component) are initially recognised at transaction price under 
IFRS 15 and subsequently measured at amortised cost. A provision for impairment is established based on historical experience. 
When a trade receivable is not collectable it is written-off against the allowance account. Subsequent recovery of amounts 
previously written-off are credited against administrative expenses in the income statement.

Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its 
liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct transaction costs. 

Critical accounting judgements 
The preparation of financial statements in accordance with IFRS requires management to make estimates, assumptions and 
judgements in certain circumstances that affect reported amounts. The key judgements affecting the financial statements are 
detailed below:

 126

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS1 Accounting policies (continued)

Consolidation of pre-need trusts
The Group markets and sells pre-arranged funeral plans, with monies received from selling funeral plans being held and 
invested by pre-arranged funeral plan trusts. These financial statements reflect the consolidation of the two principal pre-
arranged funeral plan trusts being the Trust for Age UK Plans and the National Funeral Trust (together the ‘Trusts’). 

IFRS 10 is built on existing principles by identifying the concept of control as the determining factor on whether an entity should 
be included in the consolidated financial statements of the parent company. In order to have control, IFRS 10 requires a parent 
company to have power over the investee, an exposure to variable returns because of its involvement in the investee and the 
ability to use its power over the investee to affect the amount of the variable returns.

The decision as to whether to consolidate these trusts is a matter of significant judgement in respect of which the Group believes 
that informed individuals could reach alternative conclusions. The Group concluded that more weight should be attributed to its 
ability to appoint and remove trustees and less to the legislative requirement for a majority of trustees to be unconnected with 
Dignity. As a result, the Group reached a judgement, the basis of which is summarised below, that it does have control as 
defined by IFRS 10 and therefore those pre-arranged funeral plan trusts where it has the ability to appoint and remove trustees 
are consolidated.

Whether to consolidate the Trusts or not remains a key judgement and the basis of this judgement reflected in these financial 
statements is summarised in the table below. The table relates solely to the two principal trusts which are consolidated and for 
the purpose of the table, ‘Dignity’ refers to the Group excluding the Trusts.

IFRS 10 consideration
Power over the investee. Power arises when 
the investor has existing rights that give them 
the ability to direct the relevant activities of the 
investee, being those activities which influence 
the returns achieved by the investee.

Analysis
Whilst Dignity has no voting rights over the Trusts or any rights to direct 
the activities of the Trusts, it does have the power to appoint and remove 
a majority of trustees. Whilst legislation requires the majority of trustees to 
be unconnected with Dignity this right does not prevent Dignity removing a 
majority of the Trustees from office such that on balance it is considered that 
Dignity is able to control the actions of the Trustees who in turn control the 
investment decisions of the Trusts and negotiate with Dignity the marketing 
allowance paid to Dignity on behalf of the Trust. Also, Dignity controls the 
charge levied to the Trusts for the provision of funeral services (‘funeral cover’).

The investor is exposed, or has rights, to 
variable returns from its involvement with the 
investee.

Dignity receives an allowance for the marketing of the plans and for the 
performance of a funeral. From time to time Dignity may receive a surplus 
from the Trusts.

The investor has the ability to use its power 
over the investee to affect the amount of the 
investor’s returns.

The extent of the marketing allowance establishes the amount to be held in 
Trust on which investment returns can be made.

Ultimately Dignity’s return is wholly dependent on the amounts held for 
investment in the Trusts and the investment performance of the Trusts.

Dignity establishes the level of funeral cover and negotiates the level of 
marketing allowance with the Trustees on an annual basis. 

The investment strategy is set, implemented and monitored by the Trustees. 
Consequently, as Dignity is on balance considered to control the actions of the 
Trustees, Dignity has the power to affect the amount of its returns.

For other, smaller trusts from which Dignity receives funeral cover in the event that they deliver a funeral service, the judgement 
is that the Group has no power over the actions of the investee as Dignity does not have the ability to appoint or remove 
trustees. Further, as these trusts do not accept new plans and the level of funeral cover paid by these trusts is derived based on 
the value of trust assets and the number of remaining open funeral plans alone, Dignity has no wider ability to affect its variable 
returns from these trusts. Consequently, Dignity is unable to use its power to influence its variable returns, such that the Group 
is not considered to control these trusts and therefore these trusts are not consolidated.

Deferred revenue and associated significant financing
The significant financing component is based on estimates made in respect of the enlarged Group’s (to include the Trusts) 
incremental borrowing rate at the time of inception of each funeral plan. Once established the rate applied to a plan is fixed for 
the duration of the plan. Given the rates are fixed at inception, there is no further estimation uncertainty on these cash flows, 
and therefore no further sensitivity disclosures are applied as for more recent cash flows in respect of 2020 and 2021, the 
estimate of the Group’s (including the Trusts) incremental borrowing rate contains less estimation uncertainty.

 127

Dignity plc Annual Report & Accounts 2021 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

1 Accounting policies (continued)

Critical accounting estimates 
The preparation of financial statements in accordance with IFRS requires management to make estimates, assumptions and 
judgements in certain circumstances that affect reported amounts. The most sensitive estimates affecting the financial 
statements are detailed below:

Pensions 
The Group operates a defined benefit pension scheme that is accounted for using methods that rely on actuarial assumptions 
to estimate costs and liabilities for inclusion in the financial statements. These actuarial assumptions include discount rates, 
assumed rates of return, salary increases and mortality rates. 

While management believes that the actuarial assumptions are appropriate, any significant changes to those used would affect 
the consolidated balance sheet and consolidated statement of comprehensive income. The Group considers that the most 
significant assumptions are the discount rate and the inflation rate. See note 28 for further details.

Funeral services goodwill impairment assessment
Performing the annual impairment assessment for goodwill requires an estimation of the value-in-use of the cash-generating 
units to which the goodwill has been allocated. The value-in-use calculation requires the use of estimates including those in 
respect of future cash flows, growth rates and an appropriate discount rate. See note 8 for further details. 

Trade name intangible assets impairment assessment
An impairment assessment has been required on trade name intangible assets given the changes in the funeral market. The 
value-in-use calculation also requires the use of other estimates including those in respect of future cash flows, discount rate 
and growth rates. See note 8 for further details. The current rebranding strategy will inevitably see further trade name writes 
offs in 2022 and 2023. Given these are unknown they cannot be factored into the current period impairment assessment. 

Fair value of financial assets
As set out in note 22 some of the Group’s financial assets held by the Trusts are valued using inputs that are not based on 
observable data and therefore contain some estimates. This fair value information is provided by the investment manager 
engaged by the Trusts. The Group has no input to, or influence over, the valuation methodologies applied by the investment 
manager. See also note 22 on market risk. 

Contract liabilities
Deferred revenue is split between current and non-current to reflect the expected number of plans to be utilised within the next 
12 months. This is based on historical experience. Actual experience may differ due to factors such as death rate. 

The refund liability is split between current and non-current based on historical experience to reflect the expected number of 
plans to be cancelled within the next 12 months. Actual cancellation rates may differ. 

IFRS 16 Incremental Borrowing Rate (‘IBRs’)
On transition to IFRS 16 the Group’s IBR was applied to the lease liabilities that were in scope as at 28 December 2019. The 
weighted average IBR applied was 4.9 per cent, with a minimum rate of 3.6 per cent and a maximum rate of 6.8 per cent. These 
rates were based on corporate bond yields to maturity reflecting the Group’s indicative credit rating. In order to assess the 
Group’s IBRs we considered yield curves at 28 December 2019 for similarly rated listed corporate bonds for durations aligned 
with the adjusted unexpired lease durations. 

This is not considered to be a critical accounting estimate post transition due to the small number of new leases entered into 
each reporting period and therefore the IBR does not create any material sensitivities. 

Insurance plan cancellation rates
The key judgement used within the calculation of the deferred insurance plan assets and corresponding liabilities is the future 
expected cancellation rate per annum for the remaining life of active plans held. A current rate of 1.6 per cent is being used 
which is based on historical data of cancellation rates on similar insurance plans sold by third parties in the past for which the 
Group is the beneficiary. This estimate therefore is subject to sensitivity. 

If this expected future rate of cancellation was to reduce/increase by 0.2 per cent to 1.4 per cent/1.8 per cent, respectively, the 
impairment charged in the current period of £0.8 million would reduce/increase by £0.4 million. If this rate reduced/increased by 
0.4 per cent to 1.2 per cent/2.0 per cent, respectively, the impairment charged in the current period of £0.8 million would reduce/
increase by £0.8 million.

Standards, amendments and interpretations effective in 2021
There are no new accounting standards, interpretations or amendments that have been adopted by the Group for the period 
ended 31 December 2021. 

 128

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS1 Accounting policies (continued)

Standards, amendments and interpretations to existing standards that are not yet effective and have not been  
early adopted 
The following standards, amendments and interpretations to existing standards have been published that are mandatory for 
accounting periods beginning on or after 1 January 2022 or later periods but which the Group has not early adopted:

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform Phase 2. The standard is effective 
1 January 2021 and will therefore impact on the Group’s 2022 Annual Report. The amendments address the effects of the 
reform on financial statements that arise when an interest rate benchmark used to calculate interest on a financial asset is 
replaced with an alternative benchmark rate. The Group are currently engaged with relevant parties to move banking 
agreements over to a new benchmark. Given the only agreement impacted is the liquidity facility that is undrawn, this is not 
expected to have a material impact on the Group.

IFRS 9, Financial instruments. The amendment to the standard is expected to be effective from 1 January 2022 and will therefore 
impact on the Group’s 2022 Annual Report. The amendment clarifies the fees to include when assessing the terms of a new or 
modified financial liability. This is not expected to have a material impact on the Group. 

IFRS 17, Insurance Contacts. The standard is expected to be effective 1 January 2023 and will therefore impact on the Group’s 
2024 Annual Report. The new standard establishes principles for the recognition, measurement, presentation and disclosure of 
insurance contracts within the scope of the standard. The Group is in the early stages of assessing whether the standard will 
have an impact in relation to its pre-need funeral plans.

IAS 1, Presentation of financial statements. The amendment to the standard is expected to be effective 1 January 2023 and will 
therefore impact on the Group’s 2024 Annual Report. The amendment specifies the requirements for classifying liabilities as 
current or non-current. This is not expected to have a material impact on the Group.

IAS 12, Income Taxes. The amendment to the standard is expected to be effective 1 January 2023 and will therefore impact on 
the Group’s 2024 Annual Report. The amendment relates to initial recognition of deferred tax arising from single transactions. 
This is not expected to have a material impact on the Group. 

All other new accounting standards and interpretations that have been published are not effective for 31 December 2021 and 
have not been early adopted by the Group. These standards are not expected to have a material impact on the Group in the 
current or future reporting periods or on foreseeable future transactions. 

The Group’s securitisation documents contemplate accounting policy changes and provide a mechanism that ensure covenant 
calculations are not materially impacted to the detriment of either the Group or Noteholders.

2 Financial risk management 

The Group finances its operations by a mixture of shareholders’ funds, Secured Notes and bank borrowings. This approach 
seeks to minimise financing costs and generate optimum shareholder value through efficient leveraging of the Group’s balance 
sheet, which is made possible by the stable and predictable cash-generative nature of the business.

It is not the Group’s policy to actively trade in derivatives.

Market risk 
Interest rate risk and other price risk 
The Group’s main borrowings consist of Secured Notes, which are at fixed interest rates, resulting in a predetermined 
repayment profile. The fair value of these financial instruments is based on underlying gilt prices and yield spreads based on the 
market’s current view of the risk profile of the Secured Notes. Consequently, the fair value of these instruments will fluctuate. 
Fair values are not relevant to the Group unless it was to change its funding strategy and repay the Secured Notes early. 

The Trading Group has significant cash balances that are held by institutions with a long-term rating of at least BBB by Standard 
& Poor’s and BBB- by Fitch. These balances earn interest by reference to the Bank of England base rate. If interest rates reduced 
by one per cent at the beginning of 2022 then the Group would receive no interest income due to the rates all currently being 
below one per cent. If interest rates were to increase by one per cent at the beginning of 2022 then the Group would receive 
£0.1 million additional interest on an annualised basis for each £10.0 million held.

The Trusts also hold significant cash balances which are also subject to interest rate fluctuations, as well as holding equity and 
bond investments which see fluctuations due to market conditions. The Trusts have trustees, the majority of whom are required 
by law to be unconnected to the Trading Group. The Trusts have separate professional advisers, meet regularly and operate an 
investment policy by reference to a statement of investment principles. The Trustees target a return that seeks to generate a 
surplus above funeral cost inflation, subject to defined acceptable levels of absolute loss and risk of loss to the actuarial 
valuation. 

None of the Group’s other financial liabilities or financial assets carry any significant interest rate risk.

 129

Dignity plc Annual Report & Accounts 2021notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

2 Financial risk management (continued)

Credit risk
Trade receivables are the main source of credit risk to the Group. However, this risk is minimised as much as possible through 
well-established credit control procedures. Quantitative disclosures regarding the ageing of these receivables are included in 
note 22(c).

Liquidity risk
The Group manages its liquidity risk by maintaining sufficient cash reserves, committed undrawn borrowing facilities and 
regular monitoring and forecasting of cash balances. In addition, the Group is required under the terms of its secured 
borrowings to maintain a precisely defined EBITDA to total debt service ratio of at least 1.5 times in respect of the securitisation 
group, excluding the pre-need trusts. This ratio was determined when raising the debt as being sufficient to ensure all 
borrowings could be repaid. This covenant test has been satisfied on each quarterly testing date in the period. At 31 December 
2021 the actual ratio was 2.13 times (2020: 1.99 times). 

Capital risk management 
The Group’s objective under managing capital is to safeguard the Group’s ability to continue as a going concern in order to 
provide returns for shareholders and repay holders of Secured Notes. It also aims to reduce its cost of capital by maintaining an 
optimal capital structure. The Group’s capital comprises equity and net debt as set out in note 25. The Group’s principal source 
of long-term debt financing are the Secured A Notes, rated A- by both Fitch and Standard & Poor’s and the Secured B Notes 
rated BB+ and B+ respectively by Fitch and Standard & Poor’s.

The Group monitors its capital structure based on the ratio of the Trading Group gross debt service, as summarised in note 25, 
to underlying earnings before interest, taxation, depreciation and amortisation. 

In order to achieve these objectives, the Group may adjust the amount of dividends paid to shareholders, return capital to 
shareholders, issue new shares or issue further Class A and B Secured Notes.

During the period, the Group achieved its covenants for the Secured Notes under the terms of the Group’s secured borrowings 
(see ‘Liquidity risk’ above).

Following the period end, Dignity Finance plc (‘Dignity Finance’), a Group subsidiary, announced the launch of a consent 
solicitation period with its Class A Bondholders in relation to a proposed temporary covenant waiver. See note 1 for details. 
As stated in the Group’s interim results on 21 September 2021, the Board continues to work on its plans to improve the Group’s 
capital structure in the pursuit of the best long-term value for shareholders. 

Whilst the Group’s financial performance has delivered headroom in relation to financial covenants throughout the last 12 
months, given the distorting impact of the pandemic on the timing of deaths, there remains significant uncertainty around the 
UK death rate in the near term. Therefore, the Board has taken the prudent decision to seek a temporary waiver of the 
abovementioned financial covenant on a precautionary basis in relation to Dignity Finance’s debt obligations.

Following a meeting of the Class A Bondholders on 11 March 2022, the necessary quorum was achieved (with 99.58 per cent of 
the aggregate principal amount of the Notes for the time being outstanding being represented) and the Extraordinary 
Resolution was duly passed (with 95.19 per cent of the votes being cast in favour).

Climate risk
In preparing the consolidated financial statements the Group has considered the impact of climate change, particularly in the 
context of the disclosures included in the Environmental, Social and Governance report on pages 26 to 39 and the new pledge 
aiming to be net-zero by 2038. Due to the early stages of development of a pathway, these considerations did not have an 
impact on the current period financial reporting judgements and estimates, consistent with the assessment that climate change 
is not expected to have a significant impact on the Group’s going concern assessment to March 2023 nor the viability of the 
Group over the next three years. 

3 Revenue and segmental analysis

Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision maker 
who is responsible for allocating resources and assessing performance of the operating segments. The chief operating decision 
maker of the Group has been identified as the three Executive Directors. 

For statutory purposes the Group has two reporting segments, funeral services and crematoria, as under IFRS 15 only a single 
performance obligation exists when a pre-arranged funeral plan is sold, being the performance of a funeral. The Group also 
reports central overheads, which comprise unallocated central expenses.

 130

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS3 Revenue and segmental analysis (continued)

Revenue
Funeral services relate to two primary sources of revenue: 

•  Funerals arranged and funded by the client at the time of need, in addition to ancillary items, such as memorials and floral 

tributes; and

•  Funerals arranged and funded by a pre-arranged Trust funeral plan, for which amounts recognised as revenue arise from the 

de-recognition of deferred revenue on completion of the related performance obligation. 

Crematoria services relate to cremation services and the sale of memorials and burial plots at the Dignity operated crematoria 
and cemeteries.

Underlying revenue and operating profit
For the purpose of alternative performance measures the Group has three reporting segments, funeral services, crematoria 
and pre-arranged funeral plans as the chief operating decision maker reviews segmental performance before applying the effect 
of IFRS 15.

Funeral services relate to the provision of funerals and ancillary items, such as memorials and floral tributes.

Crematoria services relate to cremation services and the sale of memorials and burial plots at the Dignity crematoria and 
cemeteries.

Pre-arranged funeral plans represent the sale of funerals in advance to clients wishing to make their own funeral arrangements 
and the marketing and administration costs associated with making such sales.

Substantially all Trading Group revenue is derived from, and substantially all of the Trading Group’s net assets and liabilities are 
located in, the United Kingdom and Channel Islands and relates to services provided. Overseas transactions are not material.

Underlying revenue and underlying operating profit are stated before non-underlying items and the effect of consolidation of 
the Trusts and applying IFRS 15 as defined on pages 179 and 180. 

Underlying performance measures have been restated to reflect the application of IFRS 16, Leases. This standard was adopted 
in 2020 using the modified retrospective adoption which meant 2019 comparatives were not restated. As a result, the Group 
choose to exclude it from its underlying performance measures reported in 2020 in order to retain comparability. Therefore, 
the underlying performance measures reported below for all periods includes the impact of IFRS 16.

Reconciliations to statutory amounts
Non-underlying items represent certain non-recurring or non-trading transactions. See alternative performance measures on 
pages 179 and 180 for further details.

Other adjustments reflect the consolidation of the Trusts and applying IFRS 15. Underlying revenue substitutes revenue arising 
from the de-recognition of deferred revenue on completion of the related performance obligation, which includes the impact 
of significant financing, with the payments received from the Trusts on the death of a plan member, and recognises marketing 
allowances at the inception of a plan, net of an allowance for cancellations. Underlying revenue also excludes amounts relating 
to disbursements and external payments made when the performance of the plan funeral is delivered by third parties. 

Disaggregated revenue
The disaggregated revenue and operating profit/(loss), by segment, is shown in the following tables:

53 week period ended 31 december 2021

Funeral services
Crematoria 
Pre-arranged funeral plans

Group

Underlying 
revenue
£m

Other  
adjustments (1)
£m

201.9
85.5
24.6

312.0

66.3
–
(24.6)  

41.7

Revenue
£m

268.2
85.5
–

353.7

(1)  See alternative performance measures on page 182 for a reconciliation of other adjustments.

Within funeral services revenue £108.1 million relates to the release of deferred revenue arising on the completion of 
performance obligations or on cancellation under pre-need Trust plans. 

In addition to the adjustments noted above relating to revenue, in arriving at underlying operating profit further ‘other 
adjustments’, reflecting the impact of consolidating the Trusts and applying IFRS 15, have been recorded. This includes 
corresponding entries relating to the exclusion of disbursements and external payments made when the performance of the 
funeral is delivered by third parties, adjustments are also made to exclude the administration costs of the Trusts and to 
recognise commissions payable at the inception of a plan rather than on delivery of the funeral or cancellation. 

 131

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

13.0
46.5
–
(41.7)  

17.8
(29.0)  
(51.6)  

94.8

32.0
(13.0)  
(6.9)  

(19.9)  

12.1

24.2p 
24.2p

Revenue
£m

274.8
82.7
–

357.5

3 Revenue and segmental analysis (continued)

53 week period ended 31 december 2021

Funeral services
Crematoria
Pre-arranged funeral plans
Central overheads

Group 
Finance costs
Deferred revenue significant financing
Remeasurement of financial assets held by the 

Trusts and related income

Profit before tax
Taxation – continuing activities
Taxation – rate change

Taxation – total

Underlying earnings for the period
Non-underlying items
Other adjustments

Profit after taxation

Underlying 
operating profit/
(loss) before 
depreciation and 
amortisation
£m

Underlying 
depreciation  
and  
amortisation 
£m

Underlying
operating  
profit/
(loss)
£m

Non-underlying 
items(1)
£m

Other
 adjustments(1)
£m

Operating 
profit/(loss)
£m

67.6
54.5
–
(37.2)  

84.9

(19.4)  
(7.5)  
–
(2.2)  

(29.1)  

(45.4)  
(0.5)  
(0.1)  
(2.3)  

(48.3)  
–

(48.3)  
2.5
(8.3)  

(5.8)  

(54.1)  

10.2
–
0.1
–

10.3
–
(51.6)  

94.8

53.5
(10.1)  
1.4

(8.7)  

44.8

48.2
47.0
–
(39.4)  

55.8
(29.0)  

26.8
(5.4)  
–

(5.4)  

21.4

42.8p

Earnings per share for profit attributable to equity shareholders
– Basic (pence) 
– Diluted (pence)

(1)  See alternative performance measures on pages 180 and 182 for a reconciliation of non-underlying items and other adjustments. 

52 week period ended 25 December 2020

Funeral services
Crematoria 
Pre-arranged funeral plans

Group

Underlying  
revenue
£m

Other  
adjustments (1)
£m

202.6
82.7
28.8

314.1

72.2
–
(28.8)  

43.4

(1) 

 See alternative performance measures on page 183 for a reconciliation of other adjustments.

Within funeral services revenue £113.2 million relates to the release of deferred revenue arising on the completion of 
performance obligations or on cancellation under pre-need Trust plans. 

 132

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 Revenue and segmental analysis (continued)

52 week period ended 25 December 2020 – restated(2)

Funeral services
Crematoria
Pre-arranged funeral plans
Central overheads

Group 
Finance costs
Finance income
Deferred revenue significant financing
Remeasurement of financial assets held by the 

Trusts and related income

(Loss)/profit before taxation
Taxation – continuing activities
Taxation – rate change

Taxation – total

Underlying earnings for the period
Non-underlying items
Other adjustments

Loss after taxation

Earnings/(loss) per share for profit attributable 

to equity shareholders – restated(2)

– Basic (pence) 
– Diluted (pence)

Underlying 
operating profit/
(loss) before 
depreciation and 
amortisation
£m

Underlying 
depreciation and 
amortisation 
£m

Underlying
operating profit/
(loss)
£m

Non-underlying 
items(1)
£m

Other
 adjustments(1)
restated 
£m

Operating 
profit/(loss)
restated 
£m

73.0
51.2
–
(34.9)  

89.3

(19.9)  
(7.0)  
–
(2.1)  

(29.0)  

53.1
44.2
–
(37.0)  

60.3
(29.8)  
0.1

30.6
(7.4)  
–

(7.4)  

23.2

46.4p

(48.3)  
(0.2)  
(0.1)  
(9.8)  

(58.4)  
–
–

(58.4)  
6.1
(3.6)  

2.5

(55.9)  

13.9
–
0.1
–

14.0
–
–
(53.1)  

47.3

8.2
(5.7)  
4.7

(1.0)  

7.2

18.7
44.0
–
(46.8)  

15.9
(29.8)  
0.1
(53.1)  

47.3

(19.6)  
(7.0)  
1.1

(5.9)  

(25.5)  

(51.0)p
(51.0)p

(1) 

 See alternative performance measures on pages 180 and 183 for a reconciliation of non-underlying items and other adjustments.

(2)  

 Underlying reporting measures have been restated to include the application of IFRS 16 which were previously included within other adjustments. See page 119 for 
further details. 

 133

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

4 Net finance costs

Finance costs
Secured Notes
Other loans
Finance costs on IFRS 16 lease liability
Net finance cost on retirement benefit obligations (note 28)
Unwinding of discounts

Finance costs

Finance income
Bank deposits

Finance income

Deferred revenue significant financing (note 19)

Remeasurement of financial assets held by the Trusts and related income
Realised investment income
Changes in fair value of financial assets held by the Trusts (note 13)

Remeasurement of financial assets held by the Trusts and related income

Underlying net finance costs
Underlying finance costs
Finance income

Underlying net finance costs

(1) Underlying performance measures have been restated to include the application of IFRS 16. See page 119 for further details.

53 week period
 ended 
31 december
2021

£m

23.1
0.9
4.5
0.5
–

29.0

–

–

51.6

(9.8)  
(85.0)  

(94.8)  

29.0
–

29.0

52 week period
ended 
25 December
2020
restated(1)
£m

23.4
1.1
4.7
0.5
0.1

29.8

(0.1)  

(0.1)  

53.1

(6.0)  
(41.3)  

(47.3)  

29.8
(0.1)  

29.7

 134

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
5 Profit before tax 

Analysis by nature

The following items have been included in arriving at profit before tax:
Staff costs (note 27)
Cost of inventories recognised as an expense (included in cost of sales) 
Depreciation of property, plant and equipment – owned assets (note 9)
Deprecation of right-of-use asset (note 10)
Amortisation of intangible assets (included in administrative expenses) (note 8)
Expense related to practical expedients applied under IFRS 16 (note 10)
Foreign currency losses – arising on Trust assets
Inventory provisions (note 14)
Trade receivables impairment (included in administrative expenses) (note 22(c))
Transformation Plan costs(1)
Directors’ severance pay(1)
External transaction costs (included in administrative expenses)(1)
Operational review and competition review costs(1)
Trade name impairment (note 8)(1)
Trade name write-off (note 8) (1)
Marketing costs in relation to trials (1)
Goodwill impairment (note 8)(1)
Profit on sale of fixed assets(1)

Services provided by the Group’s auditors and its associates:
Fees payable to the Company’s auditors for the audit of parent company and consolidated 

financial statements

Fees payable to the Company’s auditors and its associates for other services:
– The audit of Company’s subsidiaries 
– Audit related assurance services

53 week period
 ended 
31 december
2021

£m

116.6
19.1
19.9
9.2
4.5
0.5
1.7
1.1
3.7
–
–
2.6
–
2.8
2.5
0.9
36.4
(1.1)  

0.5

0.2
0.1

0.8

52 week period
ended 
25 December
2020
restated(2)
£m

116.4
17.4
19.6
9.2
4.9
0.2
–
1.3
1.9
4.7
1.6
0.2
2.9
15.3
–
0.6
28.7
(0.2)  

0.4

0.2
0.1

0.7

(1) 

Items are excluded in arriving at underlying performance measures. Please see the alternative performance measures on pages 179 and 180 for further details.

(2)  A presentation adjustment has been made in December 2020 to separately pull out the marketing costs in relation to trials from external transaction costs.

During 2021, the Group received £2.5 million (2020: £4.1 million) of business rates relief. 

During 2021, the Group paid £0.1 million (2020: £0.1 million) of fees to the Group’s auditor in connection with non-audit services, 
which are included within audit related assurance services in the table above. See the Audit Committee Report for further details. 

 135

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

6 Taxation

Analysis of charge in the period

Current tax – current period
Adjustments for prior period

Total corporation tax

Deferred tax – current period
Adjustments for prior period 
Restatement of deferred tax for the change in UK tax rate 

Total deferred tax

Taxation

Tax on items credited to other comprehensive income 

Deferred tax charge/(credit) on remeasurement gains/(losses) on retirement benefit obligations 
Deferred tax charge on pension contributions
Current tax credit on pension contributions
Restatement of deferred tax for the change in UK tax rate

Total tax charged/(credited) to other comprehensive income

53 week period
 ended 
31 december
2021
£m

52 week period
 ended 
25 December
2020
£m

7.7
(0.2)  

7.5

5.4
0.1
6.9

12.4

19.9

9.4
0.1

9.5

(2.9)  
0.4
(1.1)  

(3.6)  

5.9

53 week period
 ended 
31 december
2021
£m

52 week period
 ended 
25 December
2020
£m

3.9
0.4
(0.2)  
(1.9)  

2.2

(2.2)  
–
–
(0.5)  

(2.7)  

The taxation charge in the period is higher (2020: higher) than the standard rate of corporation tax in the UK of 19.0 per cent 
(2020: 19.0 per cent). The differences are explained below:

Profit/(loss) before taxation

Profit/(loss) before taxation multiplied by the standard rate of corporation  

tax in the UK of 19.0% (2020: 19.0%)

Effects of:
Adjustments in respect of prior period
Corporate interest restriction disallowance
Restatement of deferred tax for the change in UK tax rate
Expenses not deductible for tax purposes

Total taxation charge

53 week period
 ended 
31 december
2021
£m

52 week period
 ended 
25 December
2020
£m

32.0

(19.6)

6.1

(0.1)
1.5
6.9
5.5

19.9

(3.7)

0.5
4.3
(1.1)
5.9

5.9

Under IFRS the effective tax rate is higher (2020: higher) than the standard UK tax rate of 19.0 per cent (2020: 19.0 per cent) 
principally due to the non-deductible expenses, prior period adjustments and corporate interest restriction disallowance. The 
Group’s effective tax rate on underlying profits in the period was 20.2 per cent (2020: restated 24.2 per cent). The current period 
underlying effective tax rate is higher due to the effects of permanent disallowables and adjustments in respect of the prior 
period with a tax impact totalling £0.3 million (2020: £1.5 million). The Group expects its future underlying effective tax rate to be 
approximately two to three per cent above the headline rate of corporation tax. This translates to an underlying effective rate for 
2022 of between 21.0 per cent and 22.0 per cent. Due to the change in corporation tax rates the underlying effective rate for 
2023 translates to between 25.5 per cent and 26.5 per cent and from 2024 thereafter of between 27.0 per cent and 28.0 per 
cent. The Group does not have any provisions for uncertain tax positions. 

In the March 2021 budget, legislation to increase the main rate of corporation tax from 19 per cent to 25 per cent from 1 April 
2023 was announced. The change was substantively enacted at the balance sheet date and is therefore recognised in these 
financial statements. As a result, the Group recognised a non-underlying taxation charge of £6.9 million through its income 
statement and a credit of £1.9 million through other comprehensive income to reflect the one off increase in the period of the 
Group’s deferred tax position.

 136

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7 Earnings per share

The calculation of basic earnings per Ordinary Share has been based on the profit attributable to equity shareholders for the 
relevant period. 

For diluted earnings per Ordinary Share, the weighted average number of Ordinary Shares in issue is adjusted to assume 
conversion of any dilutive potential Ordinary Shares.

The Group has two classes of potentially dilutive Ordinary Shares being those share options granted to employees under the 
Group’s SAYE Scheme and the contingently issuable shares under the Group’s LTIP Schemes. At the balance sheet date, the 
performance criteria for the vesting of the awards under the LTIP Schemes, including any deferred annual bonus, are assessed, 
as required by IAS 33, and to the extent that the performance criteria have been met those contingently issuable shares are 
included within the diluted EPS calculations. As the impact of these shares is dilutive for the 53 week period ended 31 December 
2021, an adjustment has been made in respect of arriving at diluted earnings per share measures for that period (2020: anti-
dilutive so no adjustment). 

The Group’s underlying measures of profitability exclude non-underlying items, the effects of IFRS 15 and consolidation of the 
Trusts as set out on pages 179 and 180. These items have been adjusted for in determining underlying measures of profitability 
as these underlying measures are those used in the day-to-day management of the business and allow for greater comparability 
across periods. 

Accordingly, the Board believes that earnings per share calculated by reference to this underlying performance measure helps 
users of the financial statements to fully understand the trading performance and financial position of the Group.

Reconciliations of the earnings and the weighted average number of shares used in the calculations are set out below:

53 week period ended 31 december 2021

Underlying profit after taxation and EPS
Add: Non-underlying items (net of taxation charge of £5.8 million)
Add: Other adjustments (net of taxation charge of £8.7 million)(1)

Profit attributable to shareholders – Basic EPS 

Profit attributable to shareholders – Diluted EPS

52 week period ended 25 December 2020 – restated(2)

Underlying profit after taxation and EPS
Add: Non-underlying items (net of taxation credit of £2.5 million)
Add: Other adjustments (net of taxation charge of £1.0 million)(1)

Loss attributable to shareholders – Basic EPS 

Loss attributable to shareholders – Diluted EPS 

(1)  See note 3 for further details.

Weighted
average
number of 
shares
millions

Per share
amount
pence

Earnings
£m

21.4
(54.1)  
44.8

12.1

12.1

23.2
(55.9)  
7.2

(25.5)  

(25.5)  

50.0

42.8

50.0

50.1

24.2

24.2

50.0

46.4

50.0

50.0

(51.0)  

(51.0)  

(2) 

 Underlying performance measures have been restated to include the application of IFRS 16 which were previously included within other adjustments. See page 119 for 
further details.

 137

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

8 Goodwill and other intangible assets

Cost

At 27 December 2019
Additions

At 25 December 2020
Additions

At 31 December 2021

Accumulated amortisation and impairment

At 27 December 2019
Amortisation charge
Impairment

At 25 December 2020
Amortisation charge
Trade name write-off(3) 
Impairment

At 31 December 2021 

Use of third
trade party brand
name
£m

names(1)
£m

non–
compete
Software agreements
£m

£m

Other(2)
£m

Sub–total
£m

Goodwill
£m

Total
£m

150.4
–

150.4
–

150.4

(16.4)  
(4.1)  
(15.3)  

(35.8)  
(3.6)  
(2.5)  
(2.8)  

3.2
–

3.2
–

3.2

(1.8)  
(0.2)  
–

(2.0)  
(0.2)  
–
–

4.7
–

4.7
–

4.7

(1.4)  
(0.4)  
–

(1.8)  
(0.4)  
–
–

2.5
0.2

2.7
–

2.7

(0.7)  
(0.2)  
–

(0.9)  
(0.3)  
–
–

0.2
–

0.2
–

0.2

(0.2)  
–
–

(0.2)  
–
–
–

161.0
0.2

161.2
–

232.6
–

232.6
0.4

393.6
0.2

393.8
0.4

161.2

233.0

394.2

(20.5)  
(4.9)  
(15.3)  

(40.7)  
(4.5)  
(2.5)  
(2.8)  

–
–
(28.7)  

(28.7)  
–
–
(36.4)  

(20.5)  
(4.9)  
(44.0)  

(69.4)  
(4.5)  
(2.5)  
(39.2)  

(44.7)  

(2.2)  

(2.2)  

(1.2)  

(0.2)  

(50.5)  

(65.1)  

(115.6)  

Net book amount at 31 December 2021

Net book amount at 25 December 2020 

Net book amount at 27 December 2019 

105.7

114.6

134.0

1.0

1.2

1.4

2.5

2.9

3.3

1.5

1.8

1.8

–

–

–

110.7

120.5

140.5

167.9

203.9

232.6

278.6

324.4

373.1

(1) 

(2) 

(3) 

 Trade names arise on the acquisitions of funeral businesses and their fair value is calculated by reference to the estimated incremental cash flows expected to arise by virtue 
of the trade name being well-established. There are no individually material trade names that amount to 6 per cent or more of the total net book value.

 The Group previously acquired interests in two crematoria subject to finite periods of operation (by way of lease and/or service concession). The fair value of these interests 
has been identified and recognised as a separate intangible asset. The value of each interest will be amortised over the remaining period of operation.

 During the period, the Group identified seven specific trade names that are no longer being used within the Group under the new regional structure and those intangible 
items were required to be written off.

Goodwill acquisitions in 2021
On 16 September 2021, the Group acquired the entire share capital of Funeral Advisor Limited, a non-listed company based 
in the UK that offers a free online resource to support individuals and families to research and organise a funeral online. The 
Group acquired Funeral Advisor Limited because the online offering is seen as an enhancement to the services it provides.

Net assets acquired
Goodwill arising 

Satisfied by:
Cash paid on completion (funded from internally generated cash flows)
Deferred consideration 
Contingent consideration

Total consideration

              Total 
provisional fair 
value
£m

–
0.4

0.4

0.2
0.1
0.1

0.4

The fair values of the identifiable assets and liabilities of Funeral Advisor Limited as at the date of acquisition was negligible 
and consequently, the consideration relates to goodwill arising on acquisition, none of which is tax deductible. The expected 
purchase consideration is £0.4 million. This goodwill comprises the value of expected access to customers and making available 
information and support to a wider customer base. Goodwill is allocated entirely to the funeral segment. 

The results of the business from the start of the accounting period would not have been material to the Group had the 
acquisition been as of the beginning of the annual reporting period. From the date of acquisition, Funeral Advisor Limited is not 
expected to contribute significantly to revenue or profit in the short term until the Group provides investment in the business’ 
operations to increase awareness of the service within the industry.

 138

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8 Goodwill and other intangible assets (continued)

As part of the purchase agreement, contingent consideration has been agreed. The fair value of the contingent consideration at 
the acquisition date is estimated to be £0.1 million. The fair value is determined using a DCF method. Future developments may 
require further revisions to the estimate. The maximum contingent consideration to be paid is £0.7 million. 

Impairment tests for goodwill and trade names
As described in note 1, goodwill is subject to an annual impairment test in accordance with IAS 36, Impairment of Assets. For the 
purpose of this impairment test goodwill is tested at a business segment level as this is the level at which the return on assets 
acquired, including goodwill, is monitored.

The segmental allocation of goodwill and the recoverable amount is shown below:

Funeral services
Crematoria

book  
value
31 december
2021
£m

Recoverable  
amount 
31 december  
2021
£m

112.1
55.8

167.9

371.3
391.5

762.8

25 December
2020

£m

148.1
55.8

203.9

Recoverable  
amount 
25 December  
2020
£m

433.2
346.5 

779.7 

The recoverable amount of each goodwill CGU is based on a value-in-use calculation. The impairment assessment then 
compares this value-in-use calculation to the carrying value of the CGU. Any impairment is then recognised in administrative 
expenses in the consolidated income statement. 

The value-in-use calculations use cash flow projections derived from the latest annual budget. Key assumptions used to produce 
the annual budget are the estimated UK death rates (based on forecast death rates supplied by ONS), anticipated market share 
and Attended Funeral price ranges from £1,595 to £2,495 (excluding extras). The value-in-use calculations for the 2021 model 
include the approved annual budget for 2022 and a forecast for 2023 and 2024. Forecasts are based on death rates announced 
by ONS and market share growth assumptions reflecting budgeted increases as benchmarked to the results of recent pricing 
trials, and then stabilised at the projected 2022 year end market share position over the remaining forecast period. Cash flows 
for all segments beyond the initial 36 month period (2020: 24 month period) are extrapolated using a growth rate of 2.25 per 
cent (2020: 2.25 per cent), being an estimate of long-term growth rates for impairment review purposes only, which reflects the 
expectations of long-term inflation and death rates. The cash flows for each segment are discounted at a pre-tax rate of 10.3 per 
cent (2020: 10.3 per cent).

Goodwill assessment
The impairment calculation indicated no impairment in the crematoria division with headroom under the current assumptions 
used of £170.3 million (2020: £99.1 million). The discount rate would need to increase to 17.7 per cent (2020: increase to 14.1 per 
cent) or the long-term growth rate would need to fall to minus 7.7 per cent (2020: minus 1.4 per cent) for the impairment test to 
result in £nil headroom for this segment. The likelihood of such movements in the discount rate and growth rate is deemed 
unlikely based on current market conditions. 

The impairment calculation has also been performed on the funeral services division and an impairment of £36.4 million (2020: 
£28.7 million) has been recognised within administrative expenses in the consolidated income statement. The impairment has 
arisen within the funeral services division primarily due to the reduced average revenues following the new pricing strategy for 
the Group. Whilst the Group expects long-term market share growth from the new strategy, the accounting standard (IAS 36) 
for impairment assessments does not allow forecasts to be used where assumptions cannot be evidenced or have not yet been 
implemented (e.g. cost savings). As a result, whilst the Group is focussed on committing to delivering its market share growth 
ambitions, given the infancy of the strategic plan implementation and the available evidence to demonstrate this growth as at 
the year end when the impairment assessment is made, the full extent of potential longer-term gains are not reflected in the 
impairment modelling. 

Trade name assessment
In addition to the Group’s annual goodwill impairment test, given the changes in the funeral market noted above, an impairment 
test was performed in respect of the Group’s trade name intangible assets in accordance with the requirements of IAS 36. 
A value-in-use calculation has been performed against each recognisable trade name. The trade name specific cashflows are 
based on the individual CGU projections for the next 12 months and then adjusted in years two and three onwards using the 
same assumptions as used within the goodwill impairment assessment described above. The performance of this impairment 
assessment indicated that an impairment within the funerals segment of £2.8 million (2020: £15.3 million) arose and has been 
recognised within administrative expenses in the consolidated income statement. This is due to lower levels of profitability and 
lower anticipated average revenue per funeral. The recoverable amount of trade names that have been impaired is £3.4 million 
which is based on a value-in-use calculation. 

The trade name impairment and the subsequent reduction in net book value has been reflected within the above goodwill 
impairment calculations to reflect the lower asset base. 

 139

Dignity plc Annual Report & Accounts 2021 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

8 Goodwill and other intangible assets (continued)

Goodwill and trade name sensitivities
The following table demonstrates the impact on the above impairment charges in the funerals segment based on a number of 
reasonably possible sensitivities:

Decrease/(increase)  
in impairment charge

Sensitivity applied:

Decrease in funeral services market share growth in 2022 and beyond of 0.5 per cent
Decrease in number of deaths in 2022 by 20,000
Increase in discount rate of 0.5 per cent (to 10.8 per cent)
Increase in 2022 funeral services EBITDA and beyond of £1.0 million
Decrease in 2022 funeral services EBITDA and beyond of £1.0 million
Decrease in 2022 funeral services EBITDA and beyond of £5.0 million
Decrease in long-term growth rate of 0.25 per cent (to 2.0 per cent)
Delay in funeral services market share growth by 1 per cent from 2022 to 2023

Trade name
£m

(1.7)  
–
(0.1)  
–
(0.1)  
(0.4)  
–
(0.3)  

Goodwill
£m

(103.4)  
(4.6)  
(20.3)  
12.6
(11.6)  
(62.2)  
(8.4)  
(51.0)  

Total
£m

(105.1)  
(4.6)  
(20.4)  
12.6
(11.7)  
(62.6)  
(8.4)  
(51.3)  

Total

£m

388.1
(0.7)  
10.7
(3.1)  
–

395.0

21.3
(2.5)  
–

Freehold 
land and 
buildings

Leasehold
buildings

Plant,
machinery,
fixtures and
fittings

Motor
vehicles

work
in progress

£m

£m

£m

£m

£m

182.0
–
0.7
(0.8)  
1.2

183.1

5.6
(0.3)  
6.0

64.2
(0.7)  
0.6
(0.7)  
1.7

65.1

0.3
(0.6)  
0.8

58.3
–
3.2
(0.3)  
1.5

62.7

3.0
(1.3)  
3.4

79.8
–
0.1
(1.3)  
–

78.6

0.7
(0.3)  
–

      3.8       
–
6.1
–
(4.4)  

      5.5       

11.7
–
(10.2)  

194.4

65.6

67.8

79.0

7.0

413.8

(37.3)  
–
(5.3)  
0.1

(42.5)  

(5.8)  
0.1

(22.0)  
0.2
(3.8)  
0.5

(25.1)  

(3.6)  
0.5

(33.7)  
–
(4.9)  
0.3

(43.8)  
–
(5.6)  
1.2

(38.3)  

(48.2)  

(5.5)  
1.4

(5.0)  
0.3

(48.2)  

(28.2)  

(42.4)  

(52.9)  

146.2

140.6

144.7

37.4

40.0

42.2

25.4

24.4

24.6

 26.1

 30.4

36.0

–
–
–
–

–

–
–

–

7.0

5.5

3.8

(136.8)  
0.2
(19.6)  
2.1

(154.1)  

(19.9)  
2.3

(171.7)  

242.1

240.9

251.3

9 Property, plant and equipment

Cost

At 27 December 2019
Transferred to right-of-use asset
Additions
Disposals
Reclassification

At 25 December 2020

Additions
Disposals
Reclassification

At 31 December 2021

Accumulated depreciation 

At 27 December 2019
Transferred to right-of-use asset
Depreciation charge
Disposals

At 25 December 2020

Depreciation charge
Disposals

At 31 December 2021

Net book amount at 31 December 2021

Net book amount at 25 December 2020

Net book amount at 27 December 2019

Depreciation expense of £9.4 million (2020: £9.1 million) is included within cost of sales and £10.5 million (2020: £10.5 million) is 
included within administrative expenses.

Details of any security over assets are disclosed in note 30.

The Group had capital expenditure authorised by the Board and contracted for at the balance sheet date of £6.3 million (2020: 
£9.6 million) in respect of property, plant and equipment.

 140

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10 leases

Right-of-use asset

At beginning of period
Additions
Depreciation charge
Impact of changes in lease payments

At end of period

Lease liability

At beginning of period
Additions
Impact of changes in lease payments
Interest expense
Payments

At end of period

Current
Non-current

31 december  
2021
£m

25 December  
2020
£m

95.2
2.4
(9.2)  
0.7

89.1

101.7
1.4
(9.2)  
1.3

95.2

31 december  
2021
£m

25 December  
2020
£m

88.5
2.7
0.8
4.5
(13.6)  

82.9

7.1
75.8

93.6
1.4
1.3
4.7
(12.5)  

88.5

7.3
81.2

See note 22 (e) for maturity analysis of lease liabilities. 

All right-of-use assets and lease liabilities are related to leasehold properties. Some lease contracts contain rent review periods, 
break clauses and options to extend, all of which are assessed and negotiated by the Group, taking into account any changes in 
business need, throughout the contract term. In accordance with IFRS 16, the Group has calculated the full lease term on the 
majority of its leases, beyond break, to represent the reasonably certain lease term within the total £82.9 million of lease 
liabilities held on the consolidated balance sheet. 

The following are the amounts recognised in the consolidated income statement: 

Depreciation expense of the right-of-use asset
Interest expense on lease liabilities
Expense related to practical expedients applied

Total amount recognised in the consolidated income statement

31 december  
2021
£m

25 December  
2020
£m

9.2
4.5
0.5

14.2

9.2
4.7
0.2

14.1

In addition, £1.3 million (2020: £1.4 million) has been recognised in the consolidated income statement in respect of contingent 
rentals and other charges on leases and is recognised within cash flows from operating activities within the consolidated 
statement of cash flows. Contingent rentals depend upon the level of turnover achieved, in accordance with the related lease 
contracts.

The Group had total cash outflows for leases classified under IFRS 16 of £13.6 million (2020: £12.5 million). The Group also had 
non-cash additions to right-of-use assets of £2.4 million (2020: £1.4 million) and lease liabilities of £2.7 million (2020: £1.4 million).

Sublease payments received in the period amount to £0.3 million (2020: £0.3 million). Total future sublease payments receivable 
relating to leases amount to £0.2 million (2020: £0.3 million).

 141

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

11 Investments in associates

At 31 December 2021 and 25 December 2020 the Group has a 23.8 per cent investment in Funeral Zone Limited (‘Funeral Zone’). 
Funeral Zone is a UK online funeral resource for funeral directors and clients and has been invested in for its intellectual 
property opportunities. Funeral Zone is a private entity that is not listed on any public exchange. The registered office of Funeral 
Zone is Michael House, Castle Street, Exeter, Devon, EX4 3LQ.

The Group holds less than two per cent of the voting rights of Funeral Zone but is deemed to have significant influence 
principally due to having an appointed board member who represents 25 per cent of the Board of Directors and therefore has 
the power to participate in the financial and operating policy decisions. The Group also hold a call option over a further 44.4 per 
cent of shares. These potential voting rights are not currently taken into consideration when assessing control as the call option 
is not considered to be substantive in nature at this time, due to the exercise price of the option. The option is considered to 
have a £nil fair value at 31 December 2021 for the same reason. 

In the previous periods the Group performed a review to assess whether there was objective evidence that the carrying value of 
the investment was impaired. Given ongoing losses recorded by Funeral Zone coupled with the going concern risk of the 
business, as noted in their most recent financial statements, the Group fully provided against its investment. At 31 December 
2021, the company continues to make losses and the investment is still fully provided against.

12 Deferred insurance commissions 

Non-current
Deferred insurance commissions 

31 december  
2021

£m

8.4

25 December  
2020 
restated(1)
£m

9.4

(1)  Prior year comparatives have been restated due to a prior year adjustment in relation to insurance plans. See note 1 for further details.

Deferred insurance commissions
The Group is the named beneficiary on a number of life assurance products sold by third party insurance companies, in 
consideration for which the Group has committed to performing the funeral (including some disbursements) of the plan holder 
at a discount to its rates prevailing at the time of death. The asset reflects the level of expected future funerals on commissions 
paid and payable in the future and is offset with a provision for expected future cancellations. 

13 Financial assets – held by the Trusts

Financial assets – held by the Trusts

31 december
2021
£m

25 December
 2020
£m

1,043.1

967.1

The Trusts continue to take independent advice regarding the investment strategy and have changed investment manager during 
the period with the intention of growing the assets of the Trust over time. As a result, the investment portfolio has been simplified 
during 2022 and it is anticipated that the investment allocation by class will develop further during 2023 and beyond. The current 
portfolio profile is as follows:

Defensive investments 
Illiquid investments 
Core growth investments 
Liquid investments

Example investment types

Index linked gilts and corporate bonds
Private equity investments
Equities
Cash

Actual (%)

11-14
5-6
74-78
6

The revised investment strategies are expected to provide returns that create a 10 per cent capital buffer over the regulatory 
minimum of 110 per cent. Any surpluses above this level are expected to be invested in fluctuating assets that have a potential 
for greater returns.

Given the high percentage of investments held within equities, this does impose an inherent risk of exposure to downward falls 
in equity markets. Such investments can be subject to volatility due to movements in underlying markets and assets and can go 
up and down. This can be seen in movements post year end following the situation in Ukraine. The Group monitors this closely 
and this forms part of its considerations for its long-term investment strategy, noting that the purpose of the Trust is to provide 
asset coverage (and a surplus) to fund the pre-need funerals return which are forecast to have an average maturity of 10 
plus years.

See Strategic Review for further details. 

 142

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
13 Financial assets – held by the Trusts (continued)

Analysis of the movements in financial assets held by the Trusts:

Fair value at the start of the period
Remeasurement recognised in the consolidated income statement
Investment income
Purchases
Disposals
Foreign exchange rate difference
Investment administrative expenses deducted at source

Fair value at the end of the period

31 december
2021
£m

25 December
2020
£m

967.1  
85.0
7.7
948.7
(960.9)  
(1.7)  
(2.8)  

1,043.1  

947.5
41.3
2.2
778.1   
(796.8)  
–
(5.2)  

967.1   

Interest and dividend income received is included within remeasurements recognised in the consolidated income statement. 

14 Inventories 

Materials
Finished goods

31 december
2021
£m

25 December
 2020
£m

0.7
7.9

8.6

0.6
8.4

9.0

During the period £0.2 million (2020: £1.3 million charge) has been credited to the consolidated income statement relating to the 
provision against obsolete PPE. 

15 Trade and other receivables 

Trade receivables: Trusts
Trade receivables: at-need
Less: provision for impairment (note 22(c))

Net trade receivables
Prepayments and accrued income
Other receivables

31 december
2021
£m

25 December
 2020
£m

9.4
24.0
(8.8)  

24.6
4.2
1.2

30.0

10.0
21.3
(7.2)  

24.1   
3.2
2.7

30.0

Trust trade receivables represent amounts due to the Group’s Trusts in respect of plans sold, where the Group’s performance 
obligation has yet to be satisfied. Instalments due to the Trusts after the balance sheet date are excluded as they are not 
contractually due.

At-need trade receivables represent all other trade receivables due to the Group.

Concentrations of credit risk with respect to trade receivables are limited due to the Group’s customer base being large and 
unrelated. Due to this, management believes there is no further credit risk provision required in excess of normal provision for 
doubtful receivables. For further details of the trade receivables past due and impaired refer to note 22(c).

Due to the short-term nature of these balances, the carrying value is considered to be their fair value. 

 143

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

16 Cash and cash equivalents

Trading Group 
Trusts

Operating cash as reported in the consolidated statement of cash flows as 

cash and cash equivalents

Amounts set aside for debt service payments

Cash and cash equivalents as reported in the consolidated balance sheet

Note

(a)

(b)

31 december
2021
£m

25 December
 2020
£m

55.9
19.8

75.7

–

75.7

56.7
21.6

78.3

16.9

     95.2

(a) Trusts cash balances
All assets of the Trusts can, by definition, only be used for certain prescribed purposes such as, but not limited to, the payment 
for a funeral or a refund on cancellation of a plan. They cannot be used for day-to-day operational activities of the wider Trading 
Group and could not, for example, be used to fund a capital expenditure project. The cash is held in Trust bank accounts but is 
accessible without restriction and can be used within the Trusts for any allowable purpose, such as payment following the 
performance of a funeral. As Dignity is considered to control the activities of the Trusts, this cash balance meets the 
requirements to be included in cash and cash equivalents for the purposes of IAS 7.

(b) Amounts set aside for debt service payments
Amounts are transferred to these restricted bank accounts shortly in advance of making the bi-annual payments to the holders 
of the Secured Notes, which include the payment of the interest and principal on the Secured Notes, the repayment of liabilities 
due on the Group’s commitment fees due on its undrawn borrowing facilities and for no other purpose. The Statement of Cash 
Flows shows the gross amounts of payments to the restricted bank accounts as ‘finance costs paid’ and ‘payments due under 
Secured Notes’, in accordance with their nature. Supplementary information is provided to show the actual payments to the 
noteholders and the movement in the restricted bank accounts in the period. The amounts shown as ‘transfer from restricted 
bank accounts for finance costs’ and ‘payments to the restricted bank accounts for repayment of borrowings’ relate to the 
opening and closing balances of the account respectively, and hence the figures exclude the mid-year transfers and payments. 
No amounts were included in December 2021 as the payments to these respective parties were made on 31 December 2021. 

The note trustees have charge over this restricted bank account.

17 Financial liabilities

Current
Secured A Notes
Lease liabilities
Insurance commissions payable

Non-current
Secured Notes
Lease liabilities
Insurance commissions payable

31 december  
2021 
£m

Note

25 December  
2020
restated(1)
£m

(a)

(c)

(d)

(b)

(a)

(c)

(d)

10.5
7.1
1.0

18.6

516.1
75.8
2.2

594.1

15.1
7.3
0.6

23.0

526.6
81.2
2.9

610.7

(1)  Prior year comparatives have been restated due to a prior year adjustment in relation to insurance plans. See note 1 for further details.

(a) Secured Notes 
On 17 October 2014, Dignity Finance PLC issued the Secured Notes. Interest is payable on the Secured Notes on 30 June and 25 
December of each year.

Transaction costs of £0.3 million and £0.4 million were incurred directly relating to the issue of the Secured A Notes and the 
Secured B Notes respectively. At 31 December 2021, £0.2 million (2020: £0.2 million) and £0.3 million (2020: £0.3 million) of the 
transaction costs in respect of the Secured A Notes and the Secured B Notes respectively remain unamortised.

For further details of security over the Secured Notes see note 30.

 144

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
17 Financial liabilities (continued)

The amortisation profile of the Secured Notes is as follows:

Secured A Notes 

June
December

Total

June
December

Total

Secured B Notes

June
December

Total

June
December

Total

 2022
£m

5.2
5.3

10.5

2023
£m

5.4
5.5

2024
£m

5.6
5.7

2025
£m

5.8
5.9

2026
£m

6.0
6.1

2027
£m

6.2
6.4

2028
£m

6.4
6.6

2029
£m

6.7
6.8

2030
£m

6.9
7.1

2031
£m

7.2
7.3

2032
£m

7.4
7.6

10.9

11.3

 11.7

 12.1

12.6

13.0

13.5

14.0

14.5

15.0

2035
£m

8.4
8.5

2036
£m

8.7
9.0

2037
£m

9.1
9.4

2038
£m

9.6
9.8

16.9

17.7

18.5

19.4

2039
£m

10.0
10.3

20.3

2040
£m

10.5
10.8

21.3

2033
£m

7.7
7.8

2034
£m

7.9
8.1

Total
£m

84.4
86.2

15.5

16.0

170.6

2041
£m

11.0
11.3

22.3

2046
£m

13.8
14.2

28.0

2042
£m

11.5
11.8

23.3

2047
£m

14.5
14.8

29.3

2043
£m

12.1
12.3

24.4

2048
£m

15.2
15.5

30.7

2044
£m

12.6
12.9

25.5

2049
£m

15.9
16.2

32.1

2045
£m

13.2
13.5

26.7

Total
£m

176.1
180.3

356.4

(b) Current financial liabilities
The current financial liabilities represent the amounts falling due within one year of the Group’s balance sheet date. 

(c) Lease liabilities
See note 10 for more details on the Group’s lease liabilities under IFRS 16. 

See note 22 (e) for maturity analysis of the Group’s lease liabilities. 

(d) Insurance commissions payable
A liability is recognised representing active insurance plans where a known commission is payable in future years, which includes 
an estimate of the level of cancellations before the commission is payable and is discounted using the risk free rate of return. 

(e) Changes in liabilities arising from financing activities 

Current
Secured Notes
Lease liabilities(1)

Non-current
Secured Notes
Lease liabilities(1) 

Total liabilities from financing activities(3)

25 December  
2020
 £m

Cash flow
 £m

15.1
7.3

526.6
81.2

630.2

(15.1)  
(13.6)  

–
–

(28.7)  

Other
£m(2)

10.5
13.4

(10.5)  
(5.4)  

8.0

31 december
2021
£m

10.5
7.1

516.1
75.8

609.5

(1)  See note 10 for more information on the Group’s lease liabilities under IFRS 16. 

(2)  Other includes reclassification from non-current to current, unwinding of discounts and movement in the lease portfolio in the period.

(3) 

Insurance commissions payable are paid out of operating cashflow and therefore have not been included in the table above.

 145

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

17 Financial liabilities (continued)

Current
Secured Notes
Lease liabilities(1)

Non-current
Secured Notes
Lease liabilities(1) 

Total liabilities from financing activities(3)

27 December  
2019
 £m

IFRS 16 
 transition
£m

9.6
–

541.7
0.6

551.9

–
5.9

–
87.1

93.0

Cash flow
 £m

(9.6)
(12.5)

–
–

(22.1)  

Other
£m(2)

15.1
13.9

(15.1)
(6.5)

7.4

25 December
2020
£m

15.1
7.3

526.6
81.2

630.2

(1)  See note 10 for more information on the Group’s lease liabilities under IFRS 16. 

(2)  Other includes reclassification from non-current to current, unwinding of discounts and movement in the lease portfolio in the period.

(3) 

Insurance commissions payable are paid out of operating cashflow and therefore have not been included in the table above. 

18 Trade and other payables

Current
Trade payables
Tax and social security
Other current liabilities
Accruals
Deferred income relating to at-need deposits

Non-current
Other non-current liabilities
Deferred income relating to at-need deposits
Deferred consideration for acquisitions

31 december  
2021
£m

25 December  
2020 
restated(1)
£m

9.3
2.9
2.3
40.3
4.7

59.5

1.6
0.2
0.4

2.2

5.5
3.2
2.9
51.8
4.8

68.2

1.6
0.4
0.1

2.1

(1)  Prior year comparatives have been restated due to a prior year adjustment in relation to insurance plans. See pages 164 to 166 for further details.

Accruals includes interest, payroll and trade accruals. 

Deferred income relating to at-need deposits represents cash amounts received in advance for services such as a funeral 
arranged at the time of need. 

19 Deferred commissions and contract liabilities 

Deferred commissions

Deferred commissions – current
Deferred commissions – non-current

31 december  
2021
£m

25 December  
2020
£m

7.6
100.9

7.6
101.3

Deferred commissions represent directly attributable costs in respect of the marketing of the pre-arranged funeral plans where 
the plan has yet to be used or cancelled. An amount of £7.4 million (2020: £7.8 million) has been amortised to the consolidated 
income statement within administrative expenses. 

 146

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
19 Deferred commissions and contract liabilities (continued)

Contract liabilities

Current
Contract liabilities – deferred revenue
Contract liabilities – refund liability

Non-current
Contract liabilities – deferred revenue
Contract liabilities – refund liability

Movement in total contract liabilities

Balance at the beginning of the year
Sale of new Trust plans
Increase due to significant financing
Recognition of revenue following delivery or cancellation of a Trust plan

Balance at the end of the year

31 december  
2021
£m

25 December  
2020
£m

Note

(a)

(b)

(a)

(b)

98.6
1.0

99.6

1,224.0
13.9

1,237.9

94.4
1.1

95.5

1,208.1
13.9

1,222.0

31 december  
2021
£m

25 December  
2020
£m

1,317.5
86.3
51.6
(117.9)  

1,337.5

1,304.6
82.0
53.1
(122.2)  

1,317.5

(a) Contract liabilities – deferred revenue
Deferred revenue represents amounts received from pre-arranged funeral plan holders adjusted to reflect a significant financing 
component, and for which the Group has not completed its performance obligations at the balance sheet date. The balance is 
split between current and non-current based on historical experience to reflect the expected number of plans to be utilised 
within the next 12 months. 

(b) Contract liabilities – refund liability
Refund liabilities represent amounts received from pre-arranged funeral plan holders for which it is expected that the respective 
plans will be cancelled based on historical experience. The balance is split between current and non-current based on historical 
experience to reflect the expected number of plans to be cancelled within the next 12 months.

20 Provisions for liabilities

At beginning of period
Charged to income statement
Released to income statement
Utilised in period

At end of period

Provisions have been analysed between current and non-current as follows:

Current
Non-current

Dilapidations
£m

11.9
0.8
(0.7)  
(0.5)  

11.5

31 december
 2021
£m

25 December
2020
£m

2.1
9.4

11.5

2.4
9.5

11.9

Dilapidations
The provision for dilapidations covers the costs of repair to leased premises occupied by the Group in respect of which a 
dilapidations notification has been received, and properties where a dilapidation obligation exists but for which no notification 
has been received. 

It is anticipated that the element of provision relating to dilapidation notices served, £2.1 million (2020: £2.4 million), will be 
utilised in the following financial year, and the element relating to dilapidation obligations where no notice has been served will 
be utilised over the terms of the relevant property leases, the majority of which is expected to be by 31 December 2031.

 147

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

21 Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 19.0 per cent on balances 
expected to unwind before 5 April 2023 and 25.0 per cent on the remaining balance (2020: 19 per cent).

The movement on the deferred tax net asset is as shown below:

At beginning of period
Charged/(credited) to income statement (note 6)
Taken to other comprehensive income (note 6)
Restatement of deferred tax for the change in UK tax rate 

At end of period

31 december  
2021
£m

25 December  
2020
£m

(20.3)  
5.5
4.3
5.0

(5.5)  

(14.0)  
(2.5)  
(2.2)  
(1.6)  

(20.3)  

The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction as permitted 
by IAS 12) during the period are shown below:

Deferred tax liabilities

Accelerated tax 
depreciation
£m

trade names
£m

Deferred 
commissions  
and Trust  
assets
£m

At 28 December 2019
Charged/(credited) to income statement (note 6)
Restatement of deferred tax for the change in UK tax 

rate taken to the income statement (note 6)

At 25 December 2020
Charged/(credited) to income statement (note 6)
Restatement of deferred tax for the change in UK tax 

rate taken to the income statement (note 6)

At 31 December 2021

Deferred tax assets

At 28 December 2019
Charged/(credited) to income statement (note 6)
Restatement of deferred tax for the change in UK tax 

rate taken to the income statement (note 6)

Restatement of deferred tax for the change in UK tax 

rate taken to other comprehensive income 
Taken to other comprehensive income/to equity

At 25 December 2020
Charged/(credited) to income statement (note 6)
Restatement of deferred tax for the change in UK tax 

rate taken to the income statement (note 6)

Restatement of deferred tax for the change in UK tax 

rate taken to other comprehensive income 
Taken to other comprehensive income/to equity

At 31 December 2021

11.8
(2.1)  

1.4

11.1
(1.4)

2.5

12.2

17.1
(2.1)  

2.0

17.0
(1.4)

5.0

20.6

Pensions
£m

(4.5)  
0.2

–

(0.5)  
(2.2)  

(7.0)  
–

–

(1.9)  
4.3

(4.6)  

183.9
5.7

21.6

211.2
19.5

65.0

295.7

Contract  
liabilities
£m

(224.3)  
(4.3)  

(26.3)  

–
–

(254.9)  
(10.9)  

(66.4)  

–
–

Other
£m

2.7
0.3

0.3

3.3
(0.2)

0.9

4.0

Other
£m

(0.7)  
(0.2)  

(0.1)  

–
–

(1.0)  
(0.1)  

(0.1)  

–
–

Total
£m

215.5
1.8

25.3

242.6
16.5

73.4

332.5

Total
£m

(229.5)  
(4.3)  

(26.4)  

(0.5)  
(2.2)  

(262.9)  
(11.0)  

(66.5)  

(1.9)  
4.3

(332.2)  

(1.2)  

(338.0)  

All of the deferred tax assets were available for offset against deferred tax liabilities and hence the net deferred tax asset at 31 
December 2021 was £5.5 million (2020: £20.3 million). The Group has recognised the net deferred tax asset as this is expected to 
be recovered against future taxable profits. The Group has no unrecognised deferred tax assets.

Other deferred tax liabilities includes capital gains rolled forward and deferred tax on software and leasehold land. Other 
deferred tax assets includes option schemes, long service awards and leases.

 148

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
21 Deferred tax (continued)

Elements of these deferred tax balances may be payable or recoverable within one year. However, the Directors consider that it 
is not possible to quantify the amount because the level of uncertainty in the timing of events and have therefore classified the 
whole balance as due after more than one year. 

No deferred tax asset has been recognised in relation to £10.1 million (2020: £8.6 million) disallowed interest expense calculated 
in the annual corporate interest restriction returns due to insufficient evidence to support recognition. 

The deferred income tax credited to other comprehensive income or charged to equity during the period was as follows:

Deferred tax charge/(credit) on remeasurement losses on retirement benefit obligations
Deferred tax charge on pension contributions
Restatement of deferred tax for the change in UK tax rate

Total charged/(credited) to other comprehensive income

Deferred tax charge/(credit) relating to maturity of option schemes

Total charged/(credited) to equity

22 Financial instruments 

53 week period
 ended 
31 december
2021
£m

52 week period
ended 
25 December
2020
£m

3.9
0.4
(1.9)  

2.4

–

–

(2.2)  
–
(0.5)  

(2.7)  

–

–

Fair values of non-derivative financial assets and financial liabilities
IFRS 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

•  Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

•  Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as 

prices) or indirectly (that is, derived from prices) (level 2).

•  Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

Financial assets held by the Trusts are held at fair value. All other financial assets and liabilities are held at amortised cost.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, 
characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

(a) Fair value of Trust financial assets

Financial assets at fair value through consolidated income statement
Index linked gilts and corporate bonds
Core growth investments – Equities
Growth fixed income and alternative investments – Property funds and emerging market debt
Liquid investments – Open-ended investment funds
Illiquid investments – Private equity investments

Total financial assets at fair value

31 december
2021
£m

25 December
2020
£m

–
669.8
–
306.4
66.9

1,043.1

174.3
262.9
417.0
63.0
49.9

967.1

All other financial assets are held at amortised cost and there is no difference between the book value and the fair value of these 
assets, due to the short-term maturities of these instruments. 

 149

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

22 Financial instruments (continued)

The following table provides the fair value measurement hierarchy of the Trusts’ financial assets. 

31 december 2021

Core growth investments – Equities
Liquid investments – Open-ended investment funds
Illiquid investments – Private investments

Fair value measurement using

Quoted prices  
in active  
markets  
(Level 1)
£m

Significant 
observable  
inputs  
(Level 2)
£m

Significant 
unobservable 
inputs  
(Level 3)
£m

669.5
114.8
–

0.3
191.6
–

–
–
66.9

Total
£m

669.8
306.4
66.9

During the 53 week period ending 31 December 2021 a number of investments which were previously classed as a level 2 
investment were divested and then reinvested into different instruments which are classified as level 1. 

25 December 2020

Index linked gilts and corporate bonds
Core growth investments – Equities
Growth fixed income and alternative investments – Property funds and 

emerging market debt

Liquid investments – Open-ended investment funds
Illiquid investments – Private investments

Fair value measurement using

Quoted prices  
in active  
markets  
(Level 1)
£m

Significant 
observable 
 inputs  
(Level 2)
£m

Significant 
unobservable  
inputs  
(Level 3)
£m

–
–
–

–
–

174.3
262.9
401.4

63.0
–

–
–
15.6

–
49.9

Total
£m

174.3
262.9
417.0

63.0
49.9

During the 52 week period ending 25 December 2020 £64.6 million which was previously classed as a level 3 investment was 
divested and the reinvested into different instruments which are classified as level 2. 

The following methods and assumptions were used to estimate the fair values: 

Core growth investments and liquid investments – level 1 
The fair values of equities are based on active market prices or price quotations at the reporting date.

Index linked gilts and corporate bonds – level 2 
The fair values of index linked gilts and corporate bonds are based on active market prices or price quotations at the reporting 
date. Whilst these assets have a quoted price on a recognised exchange adjustments are required in respect of related inflation 
factors, thereby making these measurements level 2 rather than level 1. 

Growth fixed income and alternative investments & liquid investments – level 2
These represent pooled investment funds that do not have a quoted price on a recognised exchange. The underlying assets of 
the pooled fund have been valued using active market prices or price quotations at the balance sheet date. 

Growth fixed income and alternative investments & illiquid investments – level 3
These investments hold some underlying investment that rely on significant unobservable inputs to price or a premium or 
discount may apply on exit. 

In all cases, fair value information is provided by the investment manager engaged by the Trusts. The Group has no input to, or 
influence over the valuation methodologies applied by the investment manager.

Within the above reconciliation of financial assets through the consolidated income statement the following movements relate 
to level 3 assets: 

Fair value at the start of the period
Remeasurement recognised in the consolidated income statement
Purchases
Sales
Investment administrative expenses

Fair value at the end of the period 

 150

31 december
2021
£m

25 December
2020
£m

65.5
10.7
7.5
(15.6)  
(1.2)  

66.9

239.4
(2.9)  
–
(168.9)  
(2.1)  

65.5

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22 Financial instruments (continued)

At 31 December 2021, the Trust financial assets (all level 2 or 3, fair value of £258.8 million (2020: £967.1 million)) are exposed 
to market sensitivity and changes in valuation over time due to factors including currency, interest rate and commodity prices. 
As the fair value information is provided by the investment manager who has not been able to provide sensitivity analysis on the 
inputs to the fair values, the Group is unable to disclose this information. However, a five per cent movement in the fair value 
of these assets would result in a £12.9 million (2020: £48.4 million) increase/decrease to the carrying value, with a corresponding 
movement in an unrealised gain/loss in the income statement. A 10 per cent movement would increase this movement to 
£25.9 million (2020: £96.7 million).

(b) Fair value of current and non-current financial liabilities

Secured A Notes – 3.5456% maturing 

31 December 2034

Secured B Notes – 4.6956% maturing 

31 December 2049

31 december 2021

25 December 2020

Nominal value
 £m

Book value
 £m

Fair value  
£m

Nominal value  
£m

Book value
 £m

170.7

356.4

170.5

356.1

189.9

385.0

185.8

356.4

185.6

356.0

Fair value  
£m

199.2

289.2

Total

527.1

526.6

574.9

542.2

541.6

488.4

The Secured Notes are held at amortised cost. Other categories of financial liabilities include trade payables and other liabilities, 
however there is no difference between the book value and fair value of these items.

The fair values of the Secured Notes are their market value at the balance sheet date and are considered to be level 1. 

In addition to the above financial liabilities include lease payables of £82.9 million (2020: £88.5 million), which represent the 
present value of future minimum lease payments. At 31 December 2021 there is no difference between the book value and fair 
value of this liability.

(c) Trade receivables 
Credit risk
Credit risk is the risk that the counterparty will not meet its obligations under a financial instrument or customer contract, 
leading to a financial loss. The Group is exposed to credit risk from its operating activities (at-need trade receivables). The Group 
has various at-need payment terms depending on the service being provided. Funerals are payable on receipt of the invoice 
which is sent out approx. 10 days after the funeral. Cremation fees are due either on receipt of invoice or seven days after date 
of the invoice if the third party funeral director has an account with Dignity and is invoiced monthly. Crematoria memorials are 
due 30 days from the point of sale.

Trade receivables 
Due to the nature of the Group’s customer base credit risk is managed by obtaining cash payments and/or deposits upfront 
where possible, setting up direct debt instalment payments from pre-need plan sales, together with staff training and internal 
control procedures to understand the customers’ ability to pay for services. Outstanding trade receivables are regularly 
monitored with an established credit control policy in place. 

At-need trade receivables are held net of provision for impairment. As at 31 December 2021, £13.4 million of the individual gross 
at-need trade receivables (2020: £10.2 million) were past due and partially impaired. Receivables are written off to the income 
statement when credit control procedures have been enforced. An impairment analysis is performed at each reporting date 
using a provision matrix to measure expected credit losses. The provision rates are based on past experience together with any 
expected changes. The amount of the provision, as at 31 December 2021, was £8.8 million (2020: £7.2 million). The individually 
impaired receivables principally relate to monies owing for funerals performed by the funeral services division. The ageing of 
at-need receivables is as follows:

One to six months
Over six months

31 december
2021
£m

25 December
2020
£m

6.2
7.2

13.4

3.6
6.6

10.2

The amount of gross at-need trade receivables past due that were not impaired was not significant.

There is no expected credit loss on trade receivables held by the Trusts on the basis that a separate refund liability is recorded 
for expected plan cancellations. All amounts outstanding to be paid under a member’s pre-need plan must be paid in full prior 
to the performance of the services under the plan. In the event of default any write-off would be offset by an equivalent or 
greater release of the related refund liability. See note 19. 

 151

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

22 Financial instruments (continued)

Movements on the Group’s loss allowance for trade receivables are as follows:

At beginning of period
Charged to income statement
Utilised in period

At end of period

31 december
2021
£m

25 December
2020
£m

(7.2)  
(3.7)  
2.1

(8.8)  

(6.7)  
(1.9)  
1.4

(7.2)  

The maximum exposure to credit risk is the carrying value of each class of financial assets. The Group does not hold collateral 
as security. 

Set out below is the information about credit risk exposure on at-need trade receivables using a provision matrix. £9.4 million 
(2020: £10.0 million) is excluded from the analysis as it relates to trade receivables held by the Trust.

31 december 2021

Days past due

Expected credit loss rate
Estimated total gross carrying amount at default
Expected credit loss

2.5%
10.5
0.3

8.8%
3.0
0.3

21.9%
1.4
0.3

55.9%
1.9
1.0

95.9%
7.2
6.9

24.0
8.8

Current

30–60 days

61–90 days

91–180 days

>181 days

Total 

25 December 2020

Days past due

Expected credit loss rate
Estimated total gross carrying amount at default
Expected credit loss

4.3%
11.1
0.5

10.1%
1.5
0.1

24.5%
0.8
0.2

41.5%
1.4
0.6

88.3%
6.5
5.8

21.3
7.2

Current

30–60 days

61–90 days

91–180 days

>181 days

Total 

(d) Borrowing facilities 
The Group has the following undrawn committed borrowing facilities available at 31 December 2021, all of which were at 
floating interest rates, in respect of which all conditions precedent had been met at that date:

Expiring within one year 
Expiring between one and two years
Expiring in more than two years

31 december
2021
 £m

25 December
2020
£m

–
–
55.0

55.0

10.0
–
55.0

65.0

£55.0 million (2020: £55.0 million) of the undrawn facilities available to the Group is a liquidity facility relating to the Class A and B 
Secured Notes. This facility may only be used to repay interest and principal on the Secured Notes in the event of insufficient 
cash to service these instruments. The facility is subject to annual renewal. However, if the bank providing the facility does not 
renew it, then the provider is required to place £55.0 million (2020: £55.0 million) in a bank account, which the Group may access 
as if it represented a borrowing facility on the same terms. The facility is available on these terms until the Secured Notes have 
been repaid in full. 

The Group had a £10.0 million RCF facility at 25 December 2020. The RCF is provided by the Royal Bank of Scotland, which is 
secured against the remaining trade and assets held by legal entities outside of the Group’s securitisation structure. The facility 
expired in July 2021 and the Group decided not to renew this facility. 

 152

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
22 Financial instruments (continued)

(e) Maturity of financial liabilities 
The tables below analyse the Group’s financial liabilities, which will be settled on a net basis into relevant maturity groupings 
based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the tables 
are the contractual undiscounted cash flows, including interest costs yet to be incurred. The amounts disclosed for contract 
liabilities relate solely to the refund liability component which is considered to be a financial liability based on the expectation 
that cash will be returned to the plan holder on the cancellation of the plan. The deferred revenue component of contract 
liabilities is not considered to be a financial liability as there is no expected obligation to deliver cash. The maturity profile of the 
refund liability represents the Group’s assessment of the likely timing of such cash flows and the contractual undiscounted cash 
flow which would occur at that time.

Cash liabilities
Secured Notes (gross) 
Interest payable on Secured Notes
Lease liabilities
Insurance commissions payable

Debt repayments
Other financial liabilities

Refund liability

Total liabilities

Cash liabilities
Secured Notes (gross) 
Interest payable on Secured Notes
Lease liabilities
Insurance commissions payable

Debt repayments
Other financial liabilities

Refund liability

Total liabilities

31 december 2021

In less than 
 one year
£m

In more than  
one year but  
not more than  
two years
£m

In more than  
two years but  
not more than 
three years
£m

In more than  
three years but  
not more than  
five years
£m

In more than  
five years
£m

10.5
22.7
11.4
1.0

45.6

59.0

104.6
1.0

105.6

10.9
22.3
10.7
0.4

44.3

0.4

44.7
1.0

45.7

11.4
21.9
10.2
0.4

43.9

0.4

44.3
1.0

45.3

23.8
42.7
18.3
0.8

85.6

0.6

86.2
2.0

88.2

470.5
295.8
88.2
0.7

855.2

0.8

856.0
9.9

865.9

25 December 2020 – restated (1)

In less than 
 one year
£m

In more than  
one year but  
not more than  
two years
£m

In more than  
two years but  
not more than three 
years
£m

In more than  
three years but  
not more than  
five years
£m

In more than  
five years
£m

15.1
34.7
11.9
0.9

62.6

67.9

130.5
1.1

131.6

10.6
22.7
11.0
0.4

44.7

0.4

45.1
1.1

46.2

10.9
22.3
10.4
0.4

44.0

0.3

44.3
1.1

45.4

23.0
43.5
19.2
0.8

86.5

0.5

87.0
2.2

89.2

482.6
316.9
93.7
1.1

894.3

0.7

895.0
9.5

904.5

Total
£m

527.1
405.4
138.8
3.3

1,074.6

61.2

1,135.8
14.9

1,150.7

Total
£m

542.2
440.1
146.2
3.6

1,132.1

69.8

1,201.9
15.0

1,216.9

(1) 

 Other financial liabilities due in less than one year as at 25 December 2020 has been restated due to a prior year adjustment in relation to insurance plans. Insurance 
commissions payable has also been included within cash liabilities. See note 1 for further details.

An administrative fee may be payable by the customer in the event of cancellation and therefore the refund liability may be 
lower than the total amount detailed above for refund liabilities. The administrative fee payable is dependent upon when the 
pre-need plan is cancelled, and the type of pre-need plan originally sold. 

 153

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

22 Financial instruments (continued)

The amounts disclosed in the following tables represent the anticipated amortisation profile for the issue costs relating to the 
Group’s financial liabilities.

31 december 2021

In less than 
 one year
£m

In more than  
one year but  
not more than  
two years
£m

In more than  
two years but  
not more than 
three years
£m

In more than  
three years but  
not more than  
five years
£m

In more than  
five years
£m

–

–

–

–

–

–

–

–

0.5

0.5

25 December 2020

In less than 
 one year
£m

In more than  
one year but  
not more than  
two years
£m

In more than  
two years but  
not more than three 
years
£m

In more than  
three years but not 
more than  
five years
£m

In more than  
five years
£m

–

–

–

–

–

–

–

–

0.6

0.6

Total
£m

0.5

0.5

Total
£m

0.6

0.6

Non-cash liabilities
Issue costs on Secured Notes

Non-cash liabilities
Issue costs on Secured Notes

23 Ordinary share capital

31 december
2021
£m

25 December
2020
£m

6.2

6.2

Allotted and fully paid Equity shares
50,031,008 (2020: 50,020,483) Ordinary Shares of 12 48/143 pence (2020: 12 48/143 pence) each

Each Ordinary Share carries equal voting rights and there are no restrictions on any share.

During the period, the Group received £nil consideration in relation to the 5,963 shares issued under the 2016 DABS scheme. 
In addition, the Group received £17.5 thousand consideration in relation to the 4,562 shares issued under the 2019 SAYE 
scheme (614 shares of which relate to SAYE options exercised in the prior year). 

At the period end 9,729 shares were held by the Employee Benefit Trust (2020: 29,673).

Potential issues of Ordinary Shares 
Certain employees hold options to subscribe for shares in the Company under an approved Save As You Earn (‘SAYE’) Scheme. 
In addition, Executive Directors and senior management hold options to subscribe for shares in the Company under Long-Term 
Incentive Plans (‘LTIPs’), including deferred annual bonus, awarded in 2014, 2015, 2019, 2020 and 2021. 

 154

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
23 Ordinary share capital (continued)

The total number of outstanding shares subject to options (excluding lapses), the periods in which they were granted and the 
periods in which they may be exercised are given below:

Year of grant

2019 – SAYE

2014 – LTIP

2015 – LTIP

2018 – LTIP

2019 – LTIP

2020 – LTIP

2021 – LTIP

2021 – Restricted stock

24 Share-based payments

Exercise price 
(pence)

383.52

–

–

–

–

–

–

–

Exercise  
period

2021 
number

2020  
Number

2019  
Number

1 December 2022
to 31 May 2023

25 March 2017
 to 24 March 2024 

6 March 2018
 to 5 March 2025 

16 March 2020
 to 16 March 2027 

23 March 2021
to 23 March 2028

12 June 2022
to 12 June 2029

31 March 2024
to 16 December 2031

31 December 2023
to 30 June 2031

377,767

435,664

498,164

2,000

2,000

2,000

7,729

27,673

45,110

–

120,523

146,157

257,926

270,904

388,719

222,188

264,271

39,659

11,933

n/a

n/a

n/a

n/a

n/a

In respect of share-based payments, total charges to the income statement were £0.8 million (2020: £1.4 million). The Group has 
both LTIP and SAYE schemes, both of which are equity based settled. 

LTIP Schemes
The LTIP Scheme was introduced after the flotation of the Group in 2004. Under the LTIP Scheme, the remuneration committee 
can grant options over shares in the Company to employees of the Group. Awards under the LTIP Scheme are generally 
reserved for Executive Directors and senior management. The Company has made annual grants since April 2004. Options 
granted under the LTIP Scheme will normally become exercisable on the third anniversary of the date of grant, subject to the 
conditions described on pages 96 and 97. For the 2019, 2020 and 2021 schemes the vested shares must be retained for two 
years. Exercise of an option is subject to continued employment unless an individual ceases to be an employee by reason of 
death, illness, redundancy or other similar circumstances.

Options were valued using the Monte Carlo option pricing model. Market-related performance conditions were included in the 
fair value calculations. The fair value per option granted and the assumptions used in the calculation are as follows:

Grant date

Share price at grant date
Exercise price
Number of employees
Shares under option
Vesting period (years)
Expected volatility
Option life (years) 
Expected life (years)
Risk free rate
Expected dividends expressed as a dividend yield
Possibility of ceasing employment before vesting
Fair value per option

17 december
2021

22 December
2020

£6.10
–
1
39,659(1)
3
59.2%
10
3
0.51%
0%
0%
£4.59

£6.03
–
36
264,271(1)
3
60.2%
10
3
0.11%
0%
0%
£4.63

13 June
2019

£6.33
–
39
388,719
3
45.3%
10
3
0.78%
3.3%
0%
£3.85

(1) 

  50 per cent of these options relate to total shareholder return with the remaining relating to funeral market share. See Report on Directors’ remuneration on pages 96 and 
97 for further details. 

 155

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

24 Share-based payments (continued)

LTIP Schemes (continued)
The expected volatility is calculated by reference to historical volatility over the last three years. The expected life is the average 
expected period to exercise. The risk free rate of return is the yield on zero-coupon UK government bonds of a term consistent 
with the assumed option life.

Reconciliation of LTIP awards:

Award grant date 

(i)   24.03.14
(ii)  06.03.15
(iii)   23.03.18
(iv)   13.06.19
(v)   22.12.20
(vi)   17.12.21

Award grant date 

(i)   24.03.14
(ii)   06.03.15
(iii)   16.03.17
(iv)   23.03.18
(v)   13.06.19
(vi)   22.12.20

Outstanding as at 
25.12.20

 Granted  
during the period

lapsed  
during the period

Forfeited  
during the period

Vested and 
exercised 
during the period

Outstanding  
as at 
31.12.21

2,000
27,673
120,523
270,904
264,271
–

–
–
–
–
–
39,659

–
–
(120,523)  
–
–
–

–
–
–
(12,978)  
(42,083)  
–

–
(19,944)  
–
–
–
–

2,000
7,729
–
257,926
222,188
39,659

Outstanding as at 
27.12.19

 Granted  
during the period

lapsed  
during the period

Forfeited  
during the period

Vested and 
exercised 
during the period

Outstanding  
as at 
25.12.20

2,000
45,110
133,942
146,157
388,719
–

–
–
–
–
–
264,271

–
–
(133,942)  
–
–
–

–
–
–
(25,634)  
(117,815)  
–

–
(17,437)  
–
–
–
–

2,000
27,673
–
120,523
270,904
264,271

The options under the 2019, 2020 and 2021 LTIP Schemes have not yet vested. 

The charge to the income statement in the period in respect of the LTIP Schemes was £0.6 million (2020: £1.0 million), all of 
which are equity based settled. 

SAYE Scheme
One Inland Revenue approved SAYE Scheme was in place during the period. Options were valued using the Black-Scholes option 
pricing model. No performance conditions were included in the fair value calculations. The fair value per option granted and the 
assumptions used in the calculation are as follows:

Grant date

Share price at grant date
Exercise price
Number of employees
Shares under option
Vesting period (years)
Expected volatility
Option life (years) 
Expected life (years)
Risk free rate
Expected dividends expressed as a dividend yield
Possibility of failing to save
Fair value per option

2019 Scheme
10 October 2019

£5.33
£3.83
901
506,837
3
47.0%
3.5
3
0.70%
0%
20%
£2.40

During the period 53,949 options (2020: 61,542 options) under the 2019 SAYE Scheme were forfeited and 3,948 options (2020: 
958 options) were exercised with a weighted average share price of £6.48 (2020: £3.71) at exercise.

The charge to the income statement in the period in respect of the SAYE Schemes was £0.2 million (2020: £0.4 million) all of 
which are equity based settled. 

The expected volatility is calculated by reference to historical volatility over the last three years. The expected life is the average 
expected period to exercise. The risk free rate of return is the yield on zero-coupon UK government bonds of a term consistent 
with the assumed option life. The options under the 2019 SAYE Scheme have not yet vested.

 156

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
25 Net debt 

Net amounts owing on Secured Notes per financial statements
Add: unamortised issue costs (note 17(a)) 

Gross amounts owing

Accrued interest on Secured Notes
Cash and cash equivalents – Trading Group (note 16)

Net debt

31 december
2021
£m

25 December
2020
£m

(526.6)  
(0.5)  

(527.1)  

–
55.9

(471.2)  

(541.7)  
(0.5)  

(542.2)  

(12.0)  
73.6

(480.6)  

Net debt is an alternative performance measure calculated as shown in the table. Net debt excludes any liabilities recognised in 
accordance with IFRS 16.

The Group’s primary financial covenant in respect of the Secured Notes requires EBITDA to total debt service (‘EBITDA DSCR’), in 
the securitisation group, to be at least 1.5 times. At 31 December 2021, the actual ratio was 2.13 times (2020: 1.99 times). The 
calculations are unaffected by the consolidation of the Trusts or the application of IFRS 15 and IFRS 16 described elsewhere, as 
the Group was able to elect to disregard those changes when making the calculations. See Financial review on page 56. 

These ratios are calculated for EBITDA and total debt service on a 12 month rolling basis and reported quarterly. In addition, 
both terms are specifically defined in the legal agreement relating to the Secured Notes. As such, they cannot be accurately 
calculated from the contents of this report.

26 Reconciliation of cash generated from operations

Net profit/(loss) for the period
Adjustments for:
Taxation
Net finance costs
Profit on sale of fixed assets
Depreciation charges on property, plant and equipment
Depreciation charges on right-of-use asset
Amortisation of intangibles
Movement in inventories
Movement in trade receivables
Movement in trade payables
Movement in contract liabilities
Fair value movement on net assets
Net pension charges less contributions
Trade name write-off (note 8)
Trade name impairment (note 8)
Goodwill impairment (note 8)
Changes in other working capital
Trust investment administrative expenses deducted at source
Foreign exchange rate difference – Trust assets
Employee share option charges (note 24)

Cash flows from operating activities 

Other non-cash transactions
Non-cash charges comprise of amortisation of deferred debt issue costs, as discussed in note 17(a).

53 week period 
ended
31 december 
2021
£m

52 week period 
ended
25 December 
2020
£m

12.1

19.9
70.8
(1.1)
19.9
9.2
4.5
0.4
(2.5)
3.7
(31.6)
(85.0)
(1.3)
2.5
2.8
36.4
2.3
2.8
1.7
0.8

68.3

(25.5)

5.9
76.8
(0.1)
19.6
9.2
4.9
(1.1)
2.4
(2.0)
(40.2)
(41.3)
(1.6)
–
15.3
28.7
5.1
5.2
–
1.4

62.7

 157

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

27 Employees and Directors

Wages and salaries
Social security costs
Other pension costs (note 28)
Share option charges (note 24)

53 week period
 ended 
31 december
2021
£m

52 week period
ended 
25 December
2020
£m

103.0
8.7
4.1
0.8

116.6

101.9
9.0
4.2
1.3

116.4

For the period from 26 December 2020 to 22 April 2021, key management are considered to be the Board of Executive Directors 
plus the members of the Operating Board. For the remainder of the period ended 31 December 2021, key management are 
considered to be the Board of Executive Directors and Kate Davidson. For the period ended 25 December 2020, key management 
were considered to be the Board of Executive Directors plus the members of the Operating Board. Total key management 
remuneration in the period was £2.2 million (2020: £3.0 million), including £1.9 million (2020: £2.4 million) relating to short-term 
employee benefits, £0.1 million (2020: £0.2 million) relating to pensions and £0.2 million (2020: £0.4 million) related to share-
based payments. The comparative figures do not include Directors’ severance payment (as disclosed in note 5) of £1.6 million. 
The monthly average number of people, including Executive Directors, employed by the Group during the period was as follows: 

Management and administration
Funeral services staff
Crematoria staff
Pre-arranged funeral plan staff

2021
number

369
2,481
394
111

3,355

2020
Number

286
2,475
406
176

3,343

Directors’ emoluments
Details of Directors’ emoluments are disclosed in the Report on Directors’ Remuneration on pages 93 to 97 which form part of 
these consolidated financial statements.

28 Pension commitments 

Defined contribution plans
The Group contributes to certain individuals’ personal pension schemes. These contributions are accounted for as defined 
contribution schemes.

Auto enrolment
A defined contribution scheme is used to address the Group’s obligations for auto enrolment. Both the employee and the Group 
contribute four per cent of pensionable pay. 

The pension costs for defined contribution schemes are as follows: 

Defined contribution schemes

2021
£m

3.6

2020
£m

3.6

Defined benefit plan 
The Group operates a defined benefit scheme the Dignity Pension and Assurance Scheme. A full actuarial valuation was 
undertaken as at 6 April 2020 with a subsequent Actuarial Report as at 6 April 2021. This latest valuation has been updated to 31 
December 2021 by a qualified independent Actuary.

After consultation with members of the defined benefit plan, the Group closed the scheme to new entrants on 1 October 2013 
and employee contributions were increased to 10 per cent (from 7 per cent) of pensionable salaries, with the Group contributing 
the same amount (an increase from 9.2 per cent). The plan closed to future accrual on 28 February 2017, except for members 
of the LGPS sections who continue to accrue benefits. No curtailment charge arose on the scheme closure. Contributions for 
ongoing service paid by the employer for 2021 were £0.1 million (2020: £0.1 million of contributions). In addition, special 
contributions of £2.2 million (2020: £2.1 million) have been paid to make total contributions for the year of £2.3 million (2020: 
£2.2 million). 

 158

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
28 Pension commitments (continued)

The principal actuarial assumptions at the balance sheet date were:

Assumptions 

Discount rate
Rate of increase in salaries
Pensions increase assumption: RPI capped at 5% p.a.
Pensions increase assumption: RPI capped at 2 1/2% p.a.
RPI price inflation assumption
CPI price inflation assumption – Pre February 2030
CPI price inflation assumption – Post January 2030

2021
%

1.85
2.60
3.45
2.30
3.60
2.60
3.60

2020
%

1.35
2.20
3.10
2.20
3.20
2.20
3.20

The demographic assumptions used include rates for mortality which, for example, lead to an average projected life expectancy 
of 22.0 (2020: 22.0) years for male members and 24.4 (2020: 24.3) years for female members currently aged 65 and of 22.9 
(2020: 22.9) years from age 65 for male members and 25.5 (2020: 25.4) years from age 65 for female members currently aged 50.

Pensions and other post-retirement obligations 
The amounts recognised in the balance sheet are determined as follows:

Fair value of plan assets
Present value of funded obligations

Net obligation recognised in the balance sheet

Analysis of amount charged to income statement in respect of defined benefit schemes

Current service cost included within cost of sales (staff costs)

Administration expenses paid by the scheme

Interest costs less interest income included within net finance cost

2021
£m

129.8
(149.5)  

(19.7)

2021
£m

0.1

0.4

0.5

Analysis of fair value of plan assets

Equity and diversified growth funds
Debt
Cash

Fair value of plan assets

2021

2020

£m

60.4
66.7
2.7

%

46.5
51.4
2.1

£m

62.0
56.8
2.8

129.8

100.0

121.6

100.0

At 31 December 2021 and 25 December 2020 the Pension Trustees did not hold, on behalf of the scheme, any direct 
investments in the Group, nor did the Group occupy any property or other assets included with the fair value of plan assets.

 159

2020
£m

121.6
(158.2)  

(36.6)

2020
£m

0.1

0.4

0.5

%

51.0
46.7
2.3

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

28 Pension commitments (continued)

Changes in the present value of the defined benefit obligation are as follows:

Present value of obligation at beginning of period
Current service cost
Interest cost
Benefits paid
Remeasurement gains/(losses) – financial
Remeasurement gains/(losses) – demographics
Remeasurement gains/(losses) – experience

Present value of obligation at end of period

Changes in the fair value of plan assets are as follows:

Fair value of plan assets at beginning of period
Interest income on plan assets
Contributions by Group
Benefits paid
Administration expenses paid by the scheme(a)
Remeasurement gains

Fair value of plan assets at end of period 

(a)  Administration expenses paid by the scheme includes £0.1 million charged (2020: £0.2 million charged) to other comprehensive income.

Analysis of the movement in the balance sheet obligation

At beginning of period
Total expense as above charged to the income statement
Remeasurement gains/(losses) and administration expenses credited/(charged) to other 

comprehensive income

Contributions by Group 

At end of period

The actual return on plan assets was £10.3 million (2020: £10.5 million).

Change in assumptions

No change
0.25% rise in discount rate
0.25% fall in discount rate
0.25% rise in inflation
0.25% fall in inflation

Liabilities
£m

(149.5)  
(143.0)  
(156.3)  
(154.0)  
(145.1)  

Assets
£m

129.8
129.8
129.8
129.8
129.8

2021
£m

(158.2)  
(0.1)  
(2.1)  
3.8
5.7
0.3
1.1

(149.5)  

2021
£m

121.6
1.6
2.3
(3.8)  
(0.5)  
8.6

129.8

2021  
£m

(36.6)  
(1.0)  
15.6

2.3

(19.7)  

Deficit
£m

(19.7)  
(13.2)  
(26.5)  
(24.2)  
(15.3)  

2020
£m

(140.5)  
(0.1)  
(2.7)  
4.8
(17.4)  
(1.9)  
(0.4)  

(158.2)  

2020
£m

114.5
2.2
2.2
(4.8)  
(0.7)  
8.2

121.6

2020  
£m

(26.0)  
(1.1)  
(11.7)  

2.2

(36.6)  

(Increase)/ 
decrease in  
deficit
£m

–
6.5
(6.8)  
(4.5)  
4.4

The above sensitivity analysis has been determined by applying the results of a fully accurate sensitivity analysis as at 6 April 
2020 to the value placed on the Scheme liabilities as at 31 December 2021, assuming that the proportionate impact of the 
change in assumptions would be the same. It is therefore approximate as it does not allow for the impact of plan experience 
since 6 April 2020. 

Analysis of present value of scheme liabilities

Active members(a)
Deferred pensioners
Current pensioners
Average duration of liabilities 

(a)  Active members are members of the Scheme who are still employed by the Group.

2021

2020

31%
28%
41%
18 years

33%
27%
40%
18 years

 160

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
28 Pension commitments (continued)

Scheme characteristic
The Company currently operates a defined benefits plan, the Dignity Pension & Assurance Scheme. The benefits provided by the 
Plan are final salary defined benefits with the contributions paid by the Employer on a balance of cost basis. The Plan is run by 
the Trustees of the Plan who ensure that the Plan is run in accordance with the Trust Deed & Rules and complies with legislation. 
The Trustees are required by law to fund the Plan on prudent funding assumptions under the Trust Deed & Rules of the Plan. 
The contributions payable by the Employer to fund the Plan are set by the Trustees after consulting the Employer.

The assets of the Plan are invested in managed funds with Mercer. The managed funds are diversified by fund and by 
investment strategy.

The Plan closed to future accrual on 28 February 2017, except for members of the LGPS Sections who continue to accrue 
benefits. 

Funding arrangements 
The Trustees use the Projected Unit funding method. The latest full valuation was undertaken as at 6 April 2020 with a 
subsequent Actuarial Report as at 6 April 2021.

With effect from 1 January 2022 the Company will pay deficit funding contributions of £4 million per annum. Based on the 
results of the 2020 actuarial valuation, this rate of contributions is projected to eliminate the deficit disclosed by that valuation by 
9 November 2026. 

The employees of the LGPS Section currently contribute to the Plan in line with the rates set out in the Plan Rules. From 1 
January 2022 the Employer will contribute £37,200 per annum in order to fund future service accrual. 

The expenses of administering the Plan and levies required by the Pensions Protection Fund and the Pensions Regulator are 
currently met by the Scheme. The Group contributes an additional £450,000 per annum in order to fund these expenses.

Funding risks
The assets quoted are comprised as follows:

Assets held by investment managers
Balance of the Trustees’ bank account

Total

2021
£m

129.3
0.5

129.8

2020
£m

121.0
0.6

121.6

The following list is not exhaustive but covers the main risks for the Plan. Some of the risks can be reduced by adjusting the 
funding strategy with the help of the Trustees, for example investment matching risk. Other risks cannot easily be removed, 
for example longevity risk, and Employer must be aware of these risks and ask the Trustees to monitor them closely.

Investment return risk 
If the assets under-perform the returns assumed in setting the funding targets then additional contributions may be required at 
subsequent valuations.

Investment matching risk 
The Plan invests significantly in equity type assets, whereas the solvency target is closely related to the return on bonds. 
If equities type assets have fallen in value relative to the matching asset of bonds, additional contributions may be required.

Longevity risk 
If future improvements in mortality exceed the assumptions made then additional contributions may be required.

Legislative risk
The Government may introduce over-riding legislation which leads to an increase in the value of Plan benefits.

Solvency risk
As the funding target is not a solvency target, and the investment strategy does not follow that required for a solvency target, the 
assets of the Plan may not be sufficient to provide all members with the full value of their benefits on a plan wind-up. 

 161

Dignity plc Annual Report & Accounts 2021 
 
 
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

29 Pre-arranged funeral plans

(a) Commitments
The Trading Group has sold pre-arranged funeral plans to clients in the past, giving commitments to these clients to perform 
their funeral. All monies from the sale of these funeral plans are paid into and controlled by a number of trusts. These include 
the Trusts consolidated within the Group’s financial statements in addition to a number of other trusts (the ‘Small Trusts’). 
The Small Trusts are not consolidated in the Group’s results as the Group does not control these trusts.

The Group is obligated to perform these funerals in exchange for the assets of the respective trusts, whatever they may be. 
It is the view of the Directors that none of the commitments given to these clients are onerous to the Group. However ultimately, 
the Group is obligated to perform these funerals in exchange for the assets of the respective trusts, whatever they may be. 

The Small Trusts had approximately £15.6 million (2020: £16.9 million) of net assets as at the balance sheet date.

Only the Trusts consolidated within the Group’s financial statements receive funds relating to the sale of new plans.

(b) Actuarial valuation
The Trustees of the Trusts are required to have the Trusts’ liabilities actuarially valued once a year. This actuarial valuation is of 
liabilities of the Trusts to secure funerals through Dignity and other third party funeral directors and does not, in respect of those 
funerals delivered by the Group represent the cost of delivery of the funeral. Assets of the Trusts include instalment amounts 
due in the future from clients, as these amounts are payable on death and are therefore relevant to the actuarial valuation. 
However, this means that assets detailed in the actuarial valuations will not agree on a particular day to the assets recognised 
in the Group’s consolidated balance sheet because the Group does not include future receivable amounts in the consolidated 
balance sheet.

The Trustees have advised that the latest actuarial valuations of the Trusts were performed as at 24 September 2021 (2020: 25 
September) using assumptions determined by the Trustees. Actuarial liabilities in respect of the Trusts have decreased to £967.1 
million as at 24 September 2021 (2020: £995 million). The corresponding market value of the assets of the Trusts was £1,114.4 
million (2020: £999 million) as at the same date. Consequently the actuarial valuations recorded a total surplus of £147.3 million 
at 24 September 2021 (2020: surplus of £4 million). 

Active members and assets per plan 

Supported by:
The Trusts
The Small Trusts
Insurance Plans

31 december
2021
number

25 December
2020
Number

323,000
43,000
215,000

581,000

319,000
46,000
193,000

558,000

The Trusts have approximately £3,650 (2020: £3,400) average asset per active plan (see alternative performance measures on 
page 184 for further details). On average the Trading Group received approximately £3,000 (2020: £3,000) in the period for the 
performance of each funeral (including amounts to cover disbursements such as crematoria fees, ministers’ fees and doctors’ 
fees where applicable). 

Insurance Plans are those plans for which the Group is the named beneficiary on life assurance products sold by third party 
insurance companies.

(c) Transactions with the Group 
During the period, the Group entered into transactions with the Small Trusts. Amounts may only be paid out of the Trusts in 
accordance with the relevant Trust Deeds. Transactions (which were recognised as revenue in the funeral division) amounted to 
£0.9 million (2020: £0.9 million) in the period and principally comprised receipts from the Small Trusts in respect of funerals 
provided. No amounts were due to the Group on either balance sheet date.

 162

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
30 Contingent liabilities 

Securitisation 
BNY Mellon Corporate Trustee Services Limited in its capacity as Security Trustee of the Secured Notes has the following 
guarantees and charges: 

•  The Dignity (2002) Group have granted the Security Trustee fixed and floating charges over all assets and undertakings of the 

Dignity (2002) Group;(i)

•  Dignity plc has granted the Security Trustee, with full title guarantee a first fixed charge over the shares (and any monies 

receivable in respect of the shares) which it holds in Dignity (2004) Limited, Dignity (2008) Limited, Dignity (2011) Limited and 
Dignity Holdings No.3 Limited;

•  Dignity (2004) Limited has granted the Security Trustee, with full title guarantee a first fixed charge over the shares (and any 

monies receivable in respect of the shares) which it holds in Dignity Holdings No.2 Limited and Dignity (2002) Limited;

•  Dignity Holdings No.2 Limited has granted the Security Trustee, with full title guarantee a first fixed charge over the shares 

(and any monies receivable in respect of the shares) which it holds in Dignity Holdings Limited;

•  Dignity Holdings Limited has granted the Security Trustee, with full title guarantee a first fixed charge over the shares (and any 

monies receivable in respect of the shares) which it holds in Dignity Mezzco Limited;

•  Dignity Holdings Limited has also assigned to the Security Trustee by way of security with full title guarantee, its right title and 

interest in the loans (both interest and non-interest bearing) to Dignity (2002) Limited; 

•  Dignity Mezzco Limited has also assigned to the Security Trustee by way of security with full title guarantee, its right title and 

interest in the loan to Dignity (2002) Limited;

•  Dignity (2004) Limited has granted the Security Trustee, with full title guarantee a floating charge over the assets now or in the 

future owned by Dignity (2004) Limited (other than those assets validly and effectively charged by way of fixed security);

•  Dignity plc, Dignity Holdings No.2 Limited, Dignity Holdings Limited and Dignity Mezzco Limited have granted the Security 

Trustee, with full title guarantee a floating charge over the assets now or in the future owned by each of Dignity plc, Dignity 
Holdings No.2 Limited, Dignity Holdings Limited and Dignity Mezzco Limited (other than those assets validly and effectively 
charged by way of fixed security); 

•  The Guarantors(ii) each irrevocably and unconditionally jointly and severally guarantees to the Security Trustee punctual 

performance by each other Obligor of that Obligor’s obligations and agrees as a primary obligation to indemnify the Security 
Trustee immediately on demand against any cost, loss or liability suffered by it if any obligation guaranteed by the Guarantors 
is or becomes unenforceable, invalid or illegal;

•  Dignity Funerals Limited and Derriman & Haynes Funeral Services Limited have granted the Security Trustee with full title 

guarantee, a first legal mortgage over each of its rights, title and interest from time to time in properties situated in England 
and Wales;

•  Dignity Funerals Limited has granted the Security Trustee with full title guarantee(iii), a first legal mortgage over its rights, title 

and interest from time to time in properties situated in Northern Ireland; 

•  Dignity Finance PLC has granted BNY Mellon Corporate Trustee Services Limited (in its capacity as Note Trustee) with full title 

guarantee, an assignment by way of security of its benefit in each Issuer Transaction Document (other than the Trust 
Documents), the Security Trust Deed and each Obligor Security Document and charges by way of first fixed charge the benefit 
of its accounts; and

•  Dignity Funerals Limited has, in respect of any Scottish property which is capable of being so charged, granted ‘standard 

securities’ in favour of the Security Trustee(iv).

(i)  Means Dignity (2002) Limited and its subsidiaries.

(ii) 

 Means the Obligors (other than Dignity (2002) Limited (as Borrower)), Dignity (2004) Limited, Dignity plc, Dignity Holdings No.2 Limited, Dignity Holdings Limited and Dignity 
Mezzco Limited. 

(iii)  This mortgage is governed by the laws of Northern Ireland.

(iv)  The standard securities are governed by Scots Law.

 At 31 December 2021, the amount outstanding in relation to these borrowings was £527.1 million (2020: £542.2 million).

 163

Dignity plc Annual Report & Accounts 2021notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

31 Related party transactions 

During the period since 22 April 2021 Gary Channon and other members of Phoenix Asset Management Partners Limited, the 
Group’s significant shareholder, have held roles within the Group, such as Chief Executive, for which no remuneration has been 
paid to the individuals or Phoenix Asset Management Partners Limited.

There have been no other related party transactions in the current or previous period.

32 Investments 
A list of all entities included within the financial information are included in note C9 to the Company’s financial statements.

33 Post balance sheet events 

Consent solicitation with bondholders
On 17 February 2022, Dignity Finance plc (‘Dignity Finance’), a Group subsidiary, announced the launch of a consent solicitation 
period with its Class A Bondholders in relation to a proposed temporary covenant waiver (as described in note 1 of the 
consolidated financial statements). As stated in the Group’s interim results on 21 September 2021, the Board continues to work 
on its plans to improve the Group’s capital structure in the pursuit of the best long-term value for shareholders. 

Whilst the Group’s financial performance has delivered headroom in relation to financial covenants throughout the last 12 
months, given the distorting impact of the pandemic on the timing of deaths, there remains significant uncertainty around the 
UK death rate in the near term. Therefore, the Board has taken the prudent decision to seek a temporary waiver of the 
abovementioned financial covenant on a precautionary basis in relation to Dignity Finance’s debt obligations.

Following a meeting of the Class A Bondholders on 11 March 2022, the necessary quorum was achieved (with 99.58 per cent of 
the aggregate principal amount of the Notes for the time being outstanding being represented) and the Extraordinary 
Resolution was duly passed (with 95.19 per cent of the votes being cast in favour).  

Trust financial assets
The Trust has over £1 billion in assets that are invested in various equities, bonds, funds and private investments. Such 
investments can be subject to volatility due to movements in underlying markets and assets and can go up and down. This can 
be seen in movements post year end following the situation in Ukraine. The Group monitors this closely and this forms part of 
its considerations for its long-term investment strategy, noting that the purpose of the Trust is to provide asset coverage (and a 
surplus) to fund the pre-need funerals return which are forecast to have an average maturity of 10 plus years.

Acquisition activity
The Group has acquired the trade and assets of one business since the balance sheet date through the Dignity Ventures division.

34 Insurance plans 

The Group is the named beneficiary on a number of life assurance products sold by third party insurance companies on which 
the Group pays commission. The Group is entitled to recover commission paid if plans are cancelled within two years of being 
sold. However, if plans are cancelled outside this two year period, commissions paid are not refundable. The majority of plans 
with these features ceased to be written in October 2019 and the remainder in February 2020. 

Following a review of the Group’s accounting policy for insurance plans in relation to the prepaid balance held on the 
consolidated balance sheet within ‘deferred insurance commissions’ the Group has amended the accounting treatment to 
include a provision for expected future cancellations. A detailed analysis has been performed on the cancellation rates for 
insurance products and a prior year restatement has been required to reflect the expected level of future cancellations. 

It was further noted that a liability was not held for the active plans where a known commission is payable in future years. The 
calculation for the liability includes an estimate of the level of cancellations before the commission is payable and is discounted 
using a risk free rate of return. Furthermore, an assessment has been performed to determine the level of future expected 
funerals and this element of the liability has been held as a corresponding asset.

The change to the recognition and measurement of the plans has been reflected in these financial statements as a prior period 
restatement impacting opening reserves. 

 164

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS34 Insurance plans (continued)

27 December 2019 consolidated balance sheet (selected lines only):

27 Dec 2019
as originally 
presented
£m

Impairment 
of deferred 
commission 
prepayment
£m

Recognition 
of future 
commission 
payable liability
£m

Recognition of 
future expected 
funerals
£m

Tax impact
£m

28 dec 2019
restated
£m

11.0

9.6
6.0

542.3

(3.2)  

2.4

0.6

2.9

(0.8)  

10.2

10.2
5.2

545.2

(297.9)  

(3.2)  

(3.5)  

  2.4

0.8

(301.4)  

Non-current assets
Deferred insurance commissions

Current liabilities
Financial liabilities
Current tax liabilities

Non-current liabilities
Financial liabilities 

Shareholders’ deficit
Retained earnings

The impact of the above is as follows: 

•  At 28 December 2019 the deferred insurance commission prepayment of £11.0 million has been impaired by £3.2 million; 
•  A liability has been recognised representing the future commission payable of £3.5 million within financial liabilities. This is split 

between current and non-current liabilities at £0.6 million and £2.9 million respectively; 

•  The corresponding entry of the liability is the recognition of an asset of £2.4 million which represents the level of expected 

future funerals. The net impact of these adjustments of £1.2 million is a charge to the consolidated income statement which 
has been corrected through opening reserves as at 28 December 2019; 

•  The deferred commission prepayment of £11.0 million at 28 December 2019 has therefore overall reduced by £0.8 million to 

£10.2 million; 

•  The tax impact at 28 December 2019 is a credit of £0.8 million and has reduced the current tax liability to £5.2 million; and 
•  The total impact of this impairment on opening reserves at 28 December 2019 is a reduction of £3.5 million to £145.0 million. 

These adjustments have no impact on cash. 

The above adjustments have been recorded in the funerals segment.

When comparing the updated amortisation analysis and roll forward of the assets and liabilities at 25 December 2020 there is 
no material difference between the original amounts charged to the consolidated income statement. Therefore, no adjustments 
have been made to these accounting periods aside from the adjustments to the assets and liabilities referred above. The 
balance sheet at 25 December 2020 as presented in the annual report and accounts for that period included a £0.5 million 
accrual and a related £0.5 million deferred insurance commission asset. These balances should have been recorded as of 28 
December 2019 and have been corrected as part of the above adjustment. 

 165

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
notes to tHe FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

34 Insurance plans (continued)

25 December 2020 consolidated balance sheet (selected lines only):

Non-current assets
Deferred insurance 

commissions

Current liabilities
Financial liabilities
Trade and other payables
Current tax liabilities

Non-current liabilities
Financial liabilities 

Shareholders’ deficit
Retained earnings

25 Dec 2020
as originally 
presented
£m

Impairment 
of deferred 
commission 
prepayment
£m

Recognition 
of future 
commission 
payable liability
£m

Recognition of 
future expected 
funerals
£m

Removal of  
insurance 
commission  
accrual 
£m

25 dec 2020
restated
£m

Tax impact
£m

10.7

(3.2)  

2.4

(0.5)  

9.4

15.1
68.7
8.7

526.6

0.6

2.9

(0.5)  

(0.8)  

15.7
68.2
7.9

529.5

(331.6)  

(3.2)  

(3.5)  

  2.4

0.8

–

(335.1)  

A further impairment of £0.8 million has been charged to the consolidated income statement for the 53 week period ending 
31 December 2021 which reflects the changes in future expected cancellation rates.

The key judgement used within the calculation of the above assets and liabilities at 31 December 2021 is the future expected 
cancellation rate of 1.6 per cent per annum for the remaining life of active plans held. This is based on historical data of 
cancellation rates on similar insurance plans sold by third parties in the past for which the Group is the beneficiary. This estimate 
therefore is subject to sensitivity. 

If this expected future rate of cancellation was to reduce/increase by 0.2 per cent to 1.4 per cent/1.8 per cent, respectively, the 
impairment charged in the current period of £0.8 million would reduce/increase by £0.4 million. If this rate reduced/increased by 
0.4 per cent to 1.2 per cent/2.0 per cent, respectively, the impairment charged in the current period of £0.8 million would reduce/
increase by £0.8 million.

In the event of the death of the policyholder, if the Group performs the funeral, it receives an agreed amount from the insurers 
which is recognised as revenue within the funeral services division. On occasions a third party will perform the funeral and the 
Group will pass on all monies received to that party and in this situation the Group is deemed to be acting as an agent and 
revenue is treated as pass through revenue and not grossed up within the consolidated income statement. 

 166

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
dignity PlC ComPany balanCe sHeet
As at 31 December 2021

Fixed assets
Investments 

Current assets
Debtors
Cash at bank and in hand

Total current assets

Creditors: amounts falling due within one year 

Net current assets

Total assets less current liabilities

Net assets

Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Other reserves
Profit and loss account reserve

Total shareholders’ funds

31 december
2021
£m

25 December
2020
£m

Note

C3

C4

C5

C6

153.2

151.3

287.0
44.6

331.6

(14.9)

316.7

469.9

469.9

6.2
12.9
141.7
5.4
303.7

469.9

285.7
48.9

334.6

(14.2)

320.4

471.7

471.7

6.2
12.7
141.7
4.8
306.3

471.7

The Company has taken advantage of the exemption permitted by section 408 of the Companies Act 2006 not to publish its 
individual profit and loss account and related notes. The Company made a loss attributable to the equity shareholders of £2.6 
million in the period (2020: profit of £10.4 million). 

The financial statements on pages 167 to 176 were approved by the Board of Directors on 22 March 2022 and were signed on its 
behalf by:

G A Channon 
Chief Executive 

D R Moore 
Interim Chief Financial Officer

 167

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
dignity PlC ComPany statement oF CHanges in equity
for the 53 week period ended 31 December 2021

Ordinary 
share
capital
£m

Share 
premium
account
£m

Capital  
redemption
reserve
£m

Other 
 reserves
£m

Shareholders’ equity as at 27 December 2019 
Profit for the period
Effects of employee share options
Proceeds from share issue
Gift to Employee Benefit Trust

Total transactions with owners, recognised 

directly in equity

Shareholders’ equity as at 25 December 2020

Loss for the period
Effects of employee share options
Proceeds from share issue
Gift to Employee Benefit Trust

Total transactions with owners, recognised 

directly in equity

6.2
–
–
–
–

–

6.2

–
–
–
–

–

Shareholders’ equity as at 31 December 2021

6.2

12.5
–
–
0.2
–

0.2

12.7

–
–
0.2
–

0.2

12.9

141.7
–
–
–
–

–

141.7

–
–
–
–

–

141.7

3.7
–
1.3
–
(0.2)    

1.1

4.8

–
0.7
–
(0.1)  

0.6

5.4

Retained
earnings
£m

295.9
10.4
–
–
–

–

306.3

(2.6)  
–
–
–

–

303.7

Total
£m

460.0
10.4
1.3
0.2
(0.2)    

1.3

471.7

(2.6)  
0.7
0.2
(0.1)  

0.8

469.9

Capital redemption reserve
The capital redemption reserve represents £80,002,465 B Shares that were issued on 2 August 2006 and redeemed for cash 
on the same day, £19,274,610 B Shares that were issued on 10 October 2010 and redeemed for cash on 11 October 2010, 
£22,263,112 B Shares that were issued on 12 August 2013 and redeemed for cash on 20 August 2013 and £20,154,070 B Shares 
that were issued and redeemed for cash in November 2014.

Other reserves
Other reserves includes movements relating to the Group’s SAYE and LTIP schemes.

 168

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to tHe dignity PlC FinanCial statements
for the 53 week period ended 31 December 2021

C1 Principal accounting policies

Basis of preparation
The financial statements of the Company for the period ended 31 December 2021 were authorised for issue by the Board of 
Directors and the balance sheet was signed on the Board’s behalf by Mr G A Channon and Mr D R Moore. The Company is 
incorporated and domiciled in England and Wales. The Company’s registered address is 4 King Edwards Court, King Edwards 
Square, Sutton Coldfield, West Midlands, B73 6AP.

The financial statements of the Company have been prepared in accordance with the Companies Act 2006, as applicable to 
companies using Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (‘FRS 101’). The financial statements have 
been prepared on a going concern basis under the historical cost convention. The principal accounting policies are set out below 
and have been applied consistently throughout the year.

The Company’s financial statements are presented in Sterling and all values are stated in pound million rounded to one decimal 
place (£m) except where otherwise indicated.

In accordance with the concession granted under Section 408 of the Companies Act 2006, the income statement of the 
Company has not been separately presented in the financial statements. 

In the current period, the Company’s financial statements have been prepared for the 53 week period ended 31 December 
2021. For the comparative period, the Company’s financial statements have been prepared for the 52 week period ended 
25 December 2020.

Exemptions: 
As permitted by FRS 101 the following exemptions from the requirements of International Financial Reporting Standards (‘IFRS’) 
have been applied in the preparation of these financial statements:

•  The following paragraphs of IAS 1, ‘Presentation of financial statements’:

– 10(d) (statement of cash flows); 
– 16 (statement of compliance with all IFRS);
– 38A (requirement for minimum of two primary statements, including cash flow statements);
– 38B-D (additional comparative information);
– 111 (cash flow statement information); and
– 134-136 (capital management disclosures).

•  Paragraph 38 of IAS 1 ‘Presentation of financial statements’ comparative information requirements in respect of: 

Paragraph 79 (a) (iv) of IAS 1 ‘Presentation of financial statements’.

•  IAS 7, ‘Statement of cash flows’.
•  Paragraph 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement for the disclosure 

of information when an entity has not applied a new IFRS that has been issued but is not yet effective).

•  IFRS 7, ‘Financial instruments: Disclosures’.
•  Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation).
•  The requirements in IAS 24, ‘Related party disclosures’ to disclose related party transactions entered into between two or more 

members of a group.

The Company is eligible to apply the above exemptions as it is included in the consolidated financial statements of Dignity plc 
who prepare financial statements under IFRS and include the above disclosures. 

 169

Dignity plc Annual Report & Accounts 2021notes to tHe dignity PlC FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

C1 Principal accounting policies (continued)

New standards, amendments and IFRIC interpretations
No new accounting standards, or amendments to accounting standards, or IFRIC interpretations that are effective for the year 
ended 31 December 2021, have had a material impact on the Company. 

Critical accounting estimates and assumptions 
The preparation of the financial statements in conformity with FRS 101 requires management to make estimates, assumptions 
and judgements in certain circumstances that affect reported amounts. The key judgements affecting the financial statements 
are detailed below:

Investments in subsidiary undertakings impairment assessment
Performing the annual impairment assessment for investments in subsidiary undertakings requires the use of estimates 
including those in respect of future cash flows, growth rates and an appropriate discount rate as set out in note 8 to the Group’s 
consolidated financial statements. The assessment is also sensitive to movements in the fair value of the financial assets held 
within the Trusts and the fair value of the Group’s external debt, as set out in note 22 to the Group’s consolidated financial 
statements. The current period impairment test has resulted in an impairment charge of £11.8 million (2020: £nil). 

Fixed asset investments
Fixed asset investments are stated at historical cost, less any provision for impairment.

Impairment of fixed assets
The carrying values of fixed assets are reviewed for impairment in periods where events or changes in circumstances indicate 
that the carrying value may not be recoverable or at the end of the first full financial year following the recognition. Any 
impairment in the value of fixed assets below depreciated historical cost is charged to the income statement within operating 
profit. A reversal of an impairment loss is recognised in the income statement to the extent that the original loss was recognised.

Employee share schemes
The Company operates two employee share schemes: The Save As You Earn Scheme (‘SAYE’) and Long-Term Incentive Plan 
Scheme (‘LTIP’).

The Company applies IFRS 2 in respect of share option schemes resulting in the charge for such schemes being recognised in 
a subsidiary of the Company. The Company’s financial statements reflect the cost of the scheme as an increase in the cost of 
investment in the subsidiary with the corresponding credit included within other reserves.

Employee share trust 
The assets of the employee share trust are held by a separate limited company, of which the Directors consider that Dignity plc 
has de facto control. In accordance with IFRS, Accounting for ESOP Trusts and the substance of the transaction, the trust’s assets 
and liabilities are recognised in the Company’s balance sheet.

dividends
Dividend distributions to the Company’s shareholders are recognised as a liability in the financial statements in the period in 
which they are approved by the Company’s shareholders. Interim dividends are recorded in the financial statements when paid.

Financial instruments
Borrowings
All borrowings and loans are initially recognised at the fair value of consideration received or paid after deduction of issue costs 
and are subsequently measured at amortised cost. The issue costs and interest payable or receivable on debt finance are 
charged/credited to the Income statement, as interest payable and similar charges or interest receivable and similar income, on 
a constant-yield basis over the term of the borrowings, or over a shorter period where it is more likely than not that the lender 
will require earlier repayment using the effective interest method.

Trade and other receivables 
Initial recognition and measurement 
Financial assets are classified at initial recognition, and are subsequently measured, at amortised cost as the Company’s financial 
assets give rise to cash flows that are solely payments of principal and, where applicable, interest on the principal amount and it 
is the Company’s business model to collect the contractual cash flows. 

Impairment 
The Company recognises an allowance for expected credit losses (‘ECLs’) for all receivables held at amortised cost. ECLs are 
based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the 
Company expects to receive.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since 
initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months 
(a 12 month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, 
a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the 
default (a lifetime ECL).

Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its 
liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct transaction costs. 

 170

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTSC2 Operating result

The amounts for auditor remuneration for the company required by regulation 5(1)(b) of the Companies (Disclosure of Auditor 
Remuneration and Liability Limitation Agreements) Regulations 2008 are not disclosed as the consolidated financial statements 
comply with this regulation on a consolidated basis.

C3 Investments in subsidiary undertakings 

Cost 

At beginning of period 
Additions in respect of corporate interest restriction payments
Additions in respect of share-based payments 

At end of period

Impairment

At beginning of period 
Impairment charge

At end of period

Net book amount

At 31 December 2021

At 25 December 2020

£m

151.3
12.9
0.8

165.0

–
(11.8)  

(11.8)  

153.2

151.3

Additions in the period reflect the effect of capital contributions to subsidiaries as a result of share-based payment schemes 
operated in those company’s over the shares of Dignity plc and payments made on behalf of subsidiaries as a result of corporate 
interest restriction liabilities. 

A detailed listing of all subsidiary undertakings is included in note C9 below.

The market capitalisation of the Company was lower than the aggregate of the amount of the Company’s investment in 
subsidiaries and receivables from those entities and subsequently an impairment of £11.8 million has been charged. 
The Directors consider that the remaining carrying value of the investments is supported by their underlying net assets 
and value-in-use. This assessment is sensitive to assumptions in relation to value-in-use, as set out in note 8 to the Group’s 
consolidated financial statements and to movements in the fair value of the financial assets held within the Trusts and the fair 
value of the Group’s external debt, as set out in note 22 to the Group’s consolidated financial statements. 

Impairment sensitivities
The following table demonstrates the impact of changes to the Group’s value-in-use on the above impairment charge, based on 
a number of different sensitivities:

Sensitivity applied: 

Decrease in funeral services market share growth in 2022 and beyond of 0.5 per cent
Decrease in number of deaths in 2022 by 20,000
Increase in discount rate of 0.5 per cent (to 10.8 per cent)
Increase in 2022 funeral services EBITDA and beyond of £1.0 million
Decrease in 2022 funeral services EBITDA and beyond of £1.0 million
Decrease in 2022 funeral services EBITDA and beyond of £5.0 million
Decrease in long-term growth rate of 0.25 per cent (to 2.0 per cent)
Delay in funeral services market share growth by 1 per cent from 2022 to 2023

C4 Debtors: amounts falling due within one year

Amounts owed by subsidiary undertakings
Corporation tax

Decrease/
(increase) in
impairment  
charge
£m

(105.1)  
(6.1)  
(42.1)  
11.8
(11.7)  
(62.6)  
(17.7)  
(51.3)  

31 december
2021
£m

25 December
2020
£m

287.0
–

287.0

285.5
0.2

285.7

An ECL of £1.6 million (2020: £0.3 million) is held against amounts owed by subsidiary undertakings, based on a 12 month ECL. 
Amounts are unsecured, non-interest bearing and repayable on demand. 

 171

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to tHe dignity PlC FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

C5 Creditors: amounts falling due within one year 

Amounts owed to subsidiary undertakings
Accruals 

31 december
2021
£m

25 December
2020
£m

13.2
1.7

14.9

12.4
1.8

14.2

Amounts owed to subsidiary undertakings are unsecured, non-interest bearing and repayable on demand.

C6 Called up share capital

Allotted and fully paid Equity shares
50,031,008 (2020: 50,020,483) Ordinary Shares of 12 48/143p (2020: 12 48/143p) each

Each Ordinary Share carries equal voting rights and there are no restrictions on any share.

31 december
2021
£m

25 December
2020
£m

6.2

6.2

See note 23 of the Group’s consolidated accounts for further details. See also note 24 of the Group’s consolidated accounts for 
details on share-based payments. 

C7 Staff costs
There were no employees in either period.

Directors’ remuneration
Details of the Directors’ emoluments are included in pages 93 to 97. The emoluments were borne by a subsidiary undertaking 
and not recharged. 

C8 Related party transactions
There are no related party transactions for either period requiring disclosure.

 172

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
C9 Investments in subsidiary undertakings and associates

Principal subsidiaries

Company name

Advance Planning Limited
Dignity (2002) Limited
Dignity Crematoria Limited
Dignity Crematoria No.2 Limited
Dignity Finance PLC
Dignity Funerals Limited
Dignity Funerals No.3 Limited
Dignity Pre Arrangement Limited
Dignity Securities Limited
Pitcher & Le Quesne Limited***

Other subsidiaries

Company name

Birkbeck Securities Limited
Dignity (2004) Limited
Dignity (2008) Limited
Dignity Ventures Limited
Dignity (2014) Limited
Dignity Finance Holdings Limited
Dignity Holdings Limited
Dignity Holdings No.2 Limited
Dignity Holdings No.3 Limited
Dignity Mezzco Limited
Dignity Services
Dignity Funerals No.2 Limited
Valedictum Limited
Funeral Advisor Limited

Associates

Company name

Principal activity

Pre-arranged funeral plans
Intermediate holding company
Construction and leasing of crematoria
Construction and leasing of crematoria
Finance company
Funeral services
Funeral services
Pre-arranged funeral plans
Pre-arranged funeral plans
Funeral services

Principal activity

Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Finance company
Intermediate holding company
Intermediate holding company
Non-trading company 
Online funeral resource

Principal activity

Funeral Zone Limited – 23.8 per cent

Online funeral resource for funeral directors

 173

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
notes to tHe dignity PlC FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

C9 Investments in subsidiary undertakings and associates (continued)

Chichester Crematorium Limited 
Chosen Heritage (Scotland) Limited*
Chosen Heritage Limited
Chosen Heritage Services Limited 
Clegg Humphreys Limited
Cooksey & Son Limited
Cooksley & Son Limited
Coombes & Sons (Bovey Tracey) Limited
Counties Crematorium Limited
Coyne Brothers Limited 
Cumbernauld Funeral Services Ltd*
Cyril H. Lovegrove Limited 

E Hurton & Son Limited
E M Lander Limited
E Seymour & Son Limited
E. Brigham Funeral Directors Limited 
E.F.Edwards Limited 
E.Finch & Sons Limited 
Earl Of Plymouth Limited 
Eden Park Estate Limited 
Edmund & Lewis Limited
Edward Lewis Wicks & Sons Limited
Ely Funeral Service Limited
Exeter & Devon Crematorium Limited

D J Thomas (Funeral Directors) Limited 
D. J. Evans Forse & Co Limited
D. Walsh & Son Limited
Daly & Company Limited 
David B Hendry Limited 
David Silvey & Son Limited
Davis McMullan Funeral Directors Limited
Derriman & Haynes Funeral Services Limited
Dewi Reynolds & Sons Limited
Dignity (2009) Limited 
Dignity Caring Funeral Services Limited 
Dignity Funerals No.4 Limited
Dignity In Destiny Limited
Dignity Legal Services Limited
Dignity Manufacturing Limited
Dillistone Funeral Service Limited 
Docklands Funeral Services Limited 
Dottridge Brothers Limited 
Downer & White Limited 
Downs Crematorium Limited 
Dowsett & Jenkins Limited
Dundee Crematorium Limited*
Dunning (Undertaking) Limited
Dyson Richards Limited 

F L Mildred & Sons (Funeral Directors) Limited
F. Kneeshaw & Sons (Funeral Directors) 

Limited 

F.E.J. Green & Sons Limited 
F.G.Pymm (Funeral Directors) Limited
F.Harrison & Son (Funeral Directors) Limited
F. J. Gibb Limited
F.M. & J. Wait & Co Limited
F. Jennings & Sons Limited 
F.Smith & Son (Staines) Limited
Family Funeral Services Limited
Farebrother Funeral Services Limited
Fisher & Townsend (Funeral Directors) Limited
Flowers By Design Limited
Ford Ennals Funeral Services Limited
Forethought Limited
Francis Chappel & Sons Limited
Frank Stephenson & Son (Funeral Directors) 

Limited 

Frederick W Chitty & Co Limited
Fredk. W.Paine Limited
Funeral Arrangements Online Limited
Funeral Debt Collection Limited 
Funeral Services London Limited

Dormant companies 

A & N Duckworth Limited 
A Ashton & Sons Limited 
A Bennett & Sons Limited 
A F Townsend (Funeral Directors) Limited 
A Hazel & Sons Limited 
A Shepherd & Sons Limited 
A T Genders Limited 
A V Band Limited 
A. & G. Huteson Ltd
A Haxby & Sons (Filey) Limited 
Abbey Funeral Service Limited 
Adela Funeral Homes Limited 
Aberdeen Funeral Directors Limited*
Anglian Funeral Service Limited 
Armitage (Funeral Directors) Limited 
Arthur Denyer Limited 
Arthur G Whitehead (Westminster) Limited
Ashton & Ebbutt Limited
Ashton Ebbutt Holdings Limited
Ashton Memorials Limited
Ashtons (Brighton) Limited 
Associated Funeral Services Limited 
Astley Funerals Limited
Arthur J. Nash Limited 

B & B Funeral Directors Limited 
B. Bernard & Sons Limited 
Baguley Bros. Limited
Banks Funeral Service Limited
Bayley Brothers Hereford Limited
Birmingham Crematorium (1973) Limited
Boyce Anderson Motors Limited**
Bracher Brothers Limited
Brighton Stonemasons Limited
Broadwater Limousines Limited 

C Powell Funeral Service Limited 
Caledonian Funeral Services Limited*
Carrwood Funeral Supplies Limited 
Castle Court Funeral & Limousine Services 

Limited 

 174

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTSC9 Investments in subsidiary undertakings and associates (continued)

Dormant companies (continued)

G & L Evans Ltd
G. M. Charlesworth & Son Limited
G.F. Cook (Funerals) Limited
G.F.Hunt (Bath) Limited
G.Gamble & Son Limited
G.Smith (Wooburn) Limited
George Hall & Son Funeral Directors Limited
George S. Munn & Company, Limited*
George Stanton (1935) Limited
Ginns & Gutteridge Limited
Gornalls Funeral Services Limited
Graeme Buckle Funeral Services Limited
Graham Sullivan Funeral Directors Limited
Grave Design Limited 
Great Southern Group Limited 
Grimmett & Timms Limited

H & G Wilde Funeral Directors Limited 
H A Harrold & Son Limited
H Eaton & Sons Holdings Limited
H.Eaton & Sons Limited
H J Dawson Limited
H J Phillips & Son (Funeral Directors) Limited 
H Johnson & Sons Limited
H Leslie Humphreys Limited
H Tonkin Limited
H. J. Whalley & Sons Limited
H. Towell Ltd
H.Copeland & Son Limited
H.Dorricott & J.Bent Limited*
H.G.Brown & Sanders Limited
H.Hill Funeral Service Limited
H.R.H. Holdings Limited 
Hambrook & Johns Limited 
Hanningtons (Funeral Directors) Limited 
Hardacres Funeral Directors Limited 
Harry Williams & Sons (Cambridge) Limited 
Heighton & Son Limited 
Hemley Funeral Service Limited 
Henry Naylor (Funeral Directors) Limited 
Henry Paul Limited
Henry Smith (Wandsworth) Limited
Highfield Funeral Service Limited
Hindu Funeral Service Limited

Hodgson Holdings (Scotland) Limited
Hodgson Holdings Limited 
Holdfast (Funerals) Limited**
Howard Jenkins (Edge Hill) Limited
Hunters Funeral Directors Limited 

Ian Clarke Funeral Service Limited 
Ingall Services Limited
Inverclyde Funeral Directors Limited*
Invicta Memorials Limited

J H Kenyon Limited 
J H Raven Limited 
J Hylton & Sons Limited
J Kynaston Limited
J Steadman & Sons Limited
J.W.Tate & Son (Holdings) Limited 
J.W.Tate & Son Limited
Jack Lee & Sons Limited
James Allen & Son (Disley) Limited
James Crook Limited
John & William Shering Limited
John Bardgett & Sons Limited
John G Ashton & Co (Funeral Directors) 

Limited

Johnson Funeral Supplies Limited 
Johnson-Sears Limited
Jonathan Harvey Limited
Jonathan Walker Funeral Directors Limited 
Joseph Swift (Funeral Director) Limited 
Joseph Tomlinson & Sons Limited 
Joslin Memorials (1974) Limited

K.Y. Green Limited 
Kellaways (Funeral Service) Limited
Ken Gregory & Sons Limited
Kent Funeral Supplies Limited
Kenyon Air Transportation Limited 
Kenyon Emergency Services Limited 
Kenyon Repatriation Limited
Kenyon Securities Limited
Kenyons Funeral Directors Limited
Kirkwoods (Funeral Directors) Limited**

L Fulcher Limited 
L J Clegg Limited 
Lambeth & Brixton Community Funeral 

Services Limited

Lambeth Funeral Services Limited
Lea Valley Funeral Services Limited
Leeds Limousines Limited
Leehope Services Limited
London Necropolis Company Limited
Longhurst (Undertakers) Limited 
Lowden Wells Limited 

MacIntosh & Steven Limited*
Mahony & Ward Limited 
Malcolm J Presland Limited 
Mannerings Limited
Mason Funeral Service Limited 
Mathias’s of Putney Limited 
Maxwell Bros. Limited 
Meadow Pool Limited 
Mews & Yeatmans Limited
Mid Sussex Funeral Services Limited 
Middleton & Wood (1919) Limited 
Monumental Masons Limited 
Moodys Funeral Directors Limited 
Moray Crematorium Holdings Limited*
Moray Crematorium Limited*
Morecambe & Heysham Funeral Service 

Limited 

N A Medd Limited
National Funeral Trust Limited
Newport & Telford Funeral Service Ltd
Newport Hire (I.W.) Limited
Newsome’s Funeral Service (Royston) Limited
Nicholls Memorials Limited
Norfolk Crematorium Limited
Northampton Crematorium Limited
Norwich Crematorium Holdings Limited
Norwich Crematorium Limited
Nubian Funeral Directors Limited

 175

Dignity plc Annual Report & Accounts 2021 
notes to tHe dignity PlC FinanCial statements CONTINUED
for the 53 week period ended 31 December 2021

C9 Investments in subsidiary undertakings and associates (continued)

Dormant companies (continued)

Oxford Crematorium Limited

Patrick Stonemasons Limited
Personal Choice Funeral Plan Limited
Peter Johnson Funerals Ltd.
PFG Hodgson Kenyon (Services) Limited
PFG Hodgson Kenyon (UK) Limited
PFG Hodgson Kenyon Limited
Philip Ford & Son (Funeral Directors) Limited
Phillips Funeral Plans Limited
Phillips Funeral Services Limited
Phillips Holdings (Hertfordshire) Limited
Phillips Supplies Limited
Piccioni (Masonry) Limited
Plantsbrook Group Limited
Plantsbrook Limited
Preston Ireland Bowker Limited
Priestley & Cockett Limited

R Butler & Sons Limited
R C Holden & Son Limited
R Garner Son & Wood Limited
R.Davies & Son Limited
R.S. Johnson & Sons Limited
R.S.Scott (Funerals) Limited
Ravenhill Funeral Services Limited**
Remembrance Limited
Robemanor Limited
Robert Nicholls Funeral Directors Limited
Roberts & Brain Limited
Romney Marsh Funeral Services Limited
Rosspark Limited

S A Bates & Sons Limited
S Wellens & Sons Limited
Saftway Limited
Salenew Limited
Sanders Goodale & Co.Limited

SCI Pre Arrangement Limited
Seaford Funeral Service Limited
Seddons of Southport Limited
Selim Smith & Co. Limited
Serenity Limited
Sevenoaks District Crematorium Limited
Shankill Funeral Services Limited**
Silver Lady Funeral Service Limited
Simplicity Funerals Limited
Simpsons (Undertakers Requisites) Limited
Spotland Bridge Funeral Services Limited
Stanway & Garnett Funeral Service Limited
Swift & Mildred Limited

T & R O’Brien Limited*
T H Fenton Limited
T S Annison & Sons Limited
T. S. Horlock & Son Limited
T.H.Sanders & Higgs Limited
T.H.Sanders & Sons Limited
T J Brown & Sons Limited
T.J.Davies & Sons (Funeral Directors) Limited
Taylors Funerals (Wirral) Limited
The Crematorium Company Limited
The Dignity Plan Limited
The East Riding Crematorium Company 

Limited

The Haltemprice Crematorium Limited
The Lawrence Funeral Service Limited

The Leverton Funeral Service (Dartford) 

Limited

The South London & Southern Counties 

Cremation Society Limited 

The South London Crematorium Co Limited 
The Titford Funeral Service Limited
Thomas Brothers (Wellington and Taunton) 

Limited

Thompsons (Busbys) Limited
Thompsons (Funeral Furnishers) Limited
Thompsons (Maguires) Limited 
Thompsons (Rimmers) Limited 
Tovey & Morris Limited 

U.F.D. Limited 
UK Funerals Limited 
UKF Limited 

Valedictum Holdings Limited
Valedictum Group Limited
Valedictus Limited
Valedictus Holdings Limited
Valedictus Group Limited

W G Dixon Limited 
W G Rathbone Funeral Directors Limited 
W H Scott & Son Limited 
W S Bond Limited 
W S Harrison & Son Limited
W Thorp & Sons (Leigh-on-Sea) Limited
W.E.Turner (Funeral Furnishers) Limited 
W.Garstin & Sons Limited 
Walkers Funeral Directors Limited 
Walmsley Hammond (Rayleigh) Limited 
Warburton Funerals Limited 
Wetton Funeral Services Limited 
White Lady Funerals Limited 
Whyte Funeral Services Limited*
William Pearce & Son Limited 
Wilmshurst & Dickson Limited 
WM. Jordan & Son (Funeral Directors) Limited*
Woodfield Park Funeral Home Limited
Wrekin Funeral Service Limited

Yew Holdings Limited

The registered office for these subsidiaries is 280 Kinfauns Drive, Glasgow, G15 7AR

Registered office
* 
**  The registered office for these subsidiaries is 14 Scotch Quarter, Carrickfergus, County Antrim, BT38 7DP
***  The registered office for this subsidiary is 59 Kensington Place, St Helier, JE2 3PA, Jersey
All other subsidiary undertakings are registered at 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP.

Other information
All of the subsidiaries are incorporated in the United Kingdom except for Pitcher & Le Quesne Limited which is incorporated in Jersey. 
All subsidiaries are controlled by the Group. 
All of the above shareholdings are held indirectly, with the exception of Dignity (2004) Limited, Dignity (2008) Limited, Dignity (2011) Limited and 
Dignity Holdings No.3 Limited.
Dignity plc owns, either directly or indirectly, 100 per cent of the equity interest of all the subsidiaries.

 176

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTSSummarised consolidated income statement 

Underlying revenue

Funeral services
Crematoria
Pre-arranged funeral plans

Underlying operating profit

Funeral services
Crematoria
Pre-arranged funeral plans
Central overheads

Underlying finance costs
Underlying finance income

Underlying profit before tax
Underlying taxation
Underlying profit after tax
Underlying earnings per share (pence)
Revenue
Operating profit
Profit/(loss) after tax
Basic earnings/(loss) per share (pence)

Key performance indicators

Total estimated number of deaths in Britain (number)
Number of funerals performed (number)
Funeral market share(b) (per cent)
Number of cremations performed (number)
Cremation market share (per cent)
Active pre-arranged funerals (number)
Underlying cash generated from operations (£million)

Net debt 

2021
£m

201.9
85.5
24.6

312.0

48.2
47.0
–
(39.4)  

55.8

(29.0)  
–

26.8
(5.4)  
21.4
42.8p
353.7
17.8
12.1
24.2p

2020
restated(c)
£m

202.6
82.7
28.8

314.1

53.1
44.2
–
(37.0)  

60.3

(29.8)  
0.1

30.6
(7.4)  
23.2
46.4p
357.5
15.9
(25.5)  
(51.0)p  

2019
£m

2018
£m

2017(d)
£m

203.3
76.8
21.2

301.3

56.3
38.4
–
(31.4)  

63.3

(25.8)  
0.2

37.7
(7.4)  
30.3
60.6p
338.9
44.8
30.6
61.2p

214.9
78.0
22.7

315.6

62.2
40.3
2.8
(25.1)  

80.2

(26.0)  
0.2

54.4
(11.5)  
42.9
85.8p
353.7
75.9
(17.0)  
(34.0)p  

221.8
74.0
28.2

324.0

79.5
40.0
8.0
(22.9)  

104.6

(26.9)  
0.1

77.8
(13.8)  
64.0
128.3p
324.0
98.0
57.8
115.8p

2021

664,000
79,200
11.8%
74,800
11.3%
581,000
88.3

2020
restated(c)

663,000
80,300
12.0%
74,500
11.2%
558,000
88.9

2019

2018

2017

584,000
69,400
11.7%
64,800
11.1%
523,000
71.8

599,000
72,300
11.9%
65,200
10.9%
486,000
101.9

590,000
68,800
11.5%
63,400
10.7%
450,000
115.4

2021
£m

2020
£m

2019
£m

2018
£m

2017
£m

Net amounts owing on Secured Notes per  

(526.6)  

(541.7)  

(551.3)  

(560.6)  

(565.1)  

financial statements

Add: unamortised issue costs 

Gross amounts owing

Accrued interest on Secured Notes
Accrued interest on Crematoria Acquisition Facility and 

Revolving Credit Facility

Cash and cash equivalents – Trading Group

(0.5)  

(527.1)  

–

–
55.9

(0.5)  

(542.2)  

(12.0)  

–
73.6

(0.6)  

(551.9)  

(12.2)  

–
57.9

(0.6)  

(561.2)  

(12.3)  

(0.2)  
66.9

(0.6)  

(565.7)  

(0.3)  

(0.2)  
49.3

Net debt

(471.2)  

(480.6)  

(506.2)  

(506.8)  

(516.9)  

 177

Dignity plc Annual Report & Accounts 2021FINANCIAL RECORD(a) 
 
 
 
 
 
 
 
 
 
 
 
FinanCial ReCoRd(a) CONTINUED

Summarised consolidated balance sheet 

Non-current assets
Goodwill and intangible assets
Property, plant and equipment
Right-of-use asset
Investments in associated undertakings
Deferred insurance commissions 
Other financial assets
Financial assets – held by the Trusts
Deferred commissions
Deferred tax asset

Current assets

Cash and cash equivalents – Trading Group
Cash and cash equivalents – held by the Trusts

Cash and cash equivalents
Other current assets

Total assets

Current liabilities
Financial liabilities
Contract liabilities
Lease liabilities 
Other current liabilities

Non-current liabilities 
Financial liabilities
Contract liabilities
Lease liabilities
Other non-current liabilities 

Total liabilities

Total deficit

2021
£m

278.6
242.1
89.1
–
8.4
–
1,043.1
100.9
5.5

1,767.7

55.9
19.8

75.7
48.6

124.3

1,892.0

11.5
99.6
7.1
61.6

179.8

518.3
1,237.9
75.8
31.3

1,863.3

2,043.1

2020
restated(e)
£m

2019 
restated(e)
£m

324.4
240.9
95.2
–
9.4
–
967.1
101.3
20.3

373.1
251.3
–
–
10.2
7.2
947.5
96.8
14.0

2018
£m

384.9
254.1
–
6.0
8.4
7.3
862.4
94.5
17.9

2017(d)
£m

385.5
248.0
–
–
6.0
8.3
865.6
92.4
6.8

1,758.6

1,700.1

1,635.5

1,612.6

73.6
21.6

95.2
46.6

57.9
15.5

73.4
47.6

66.9
13.8

80.7
46.9

49.3
21.8

71.1
49.6

141.8

121.0

127.6

120.7

1,900.4

1,821.1

1,763.1

1,733.3

15.7
95.5
7.3
78.5

10.2
95.5
–
68.8

9.3
91.5
–
73.0

4.5
88.3
–
62.8

197.0

174.5

173.8

155.6

529.5
1,222.0
81.2
48.2

1,880.9

2,077.9

545.2
1,209.1
–
37.3

1,791.6

1,966.1

551.9
1,164.6
–
36.7

1,753.2

1,927.0

561.2
1,117.3
–
34.2

1,712.7

1,868.3

(151.1)  

(177.5)  

(145.0)  

(163.9)  

(135.0)  

Total deficit and liabilities

1,892.0

1,900.4

1,821.1

1,763.1

1,733.3

NOTES

(a)  This information has been extracted from the current and previous Annual Reports and accordingly does not constitute audited information.

(b)  Market share excluding funerals performed in Northern Ireland.

(c)  2020 underlying profit measures have been restated to include the impact of IFRS 16. Equivalent underlying measures in 2019, 2018 and 2017 have not been restated.

(d)  2017 income statement has not been restated for the impact of IFRS 15 or the consolidation of the Trusts. 

(e) 

 The consolidated balance sheet for the 52 weeks ended 25 December 2020 and for the 52 weeks ended 27 December 2019 have been restated due to a prior year 
adjustment in relation to insurance plans. No other accounting periods have been restated for insurance plans. See note 1 for further details. 

 178

Dignity plc Annual Report & Accounts 2021FINANCIAL STATEMENTS 
 
 
 
 
 
 
 
 
 
 
 
 
 
otHeR inFoRmation

alteRnatiVe PeRFoRmanCe measuRes

non-gaaP measures 

(a) Alternative performance measures
The Board believes that whilst statutory reporting measures provide financial performance of the Group under IFRS, alternative 
performance measures are necessary to enable users of the financial statements to fully understand the trading performance 
and financial position of the Group. 

The alternative performance measures provided are aligned with those used in the day-to-day management of the Group and 
allow for greater comparability across periods. 

For this reason, the alternative performance measures provided exclude the impact of consolidating the Trusts, the corporate 
interest restriction disallowance arising as a result of consolidating the Trusts and the changes which relate to the application of 
IFRS 15. In addition, the deferred tax impact relating to the corporation tax rate change in both 2021 and 2020 arising on the 
deferred tax balances on consolidating the Trusts and application of IFRS 15 have also been excluded, as well as non-underlying 
items comprising certain non-recurring and non-trading transactions. 

IFRS 16 has previously been included within the alternative performance measures for 2020 only. This was due to the modified 
retrospective adoption of the standard, meaning the 2019 comparatives had not been restated and therefore were not 
comparable. IFRS 16 is now included within underlying performance measures and all comparatives have been restated 
accordingly. As a result all references to IFRS 16 have been removed from the other adjustments reconciliation tables in 
comparative periods. Therefore, a prior year restatement has been made to December 2020 underlying performance measures 
to the magnitude of a £0.1 million charge to underlying profit. This is made up of an adjustment to remove the operating lease 
rentals of £13.8 million which is replaced with a depreciation charge of £9.2 million, a finance expense of £4.7 million and a tax 
charge of £nil. See note 1 for further details of the impact of this restatement on the consolidated financial statements.

The exclusion of the impact of consolidating the Trusts and the application of IFRS 15 will continue for the foreseeable future.  
We will also assess whether it is right to exclude any future new accounting standards from alternative performance measures 
based on whether they are included in the measures used in the day-to-day management of the business. 

All of these measures are highlighted as underlying throughout this Annual Report.

Calculation of underlying reporting measures
Underlying revenue and profit measures (including divisional measures) are calculated as revenue and/or profit before  
non-underlying items and other adjustments.

Underlying net finance costs are calculated before the application of IFRS 15 and the impact of consolidating the Trusts.  
See note 4. 

Underlying earnings per share is calculated as profit after taxation, before non-underlying items and other adjustments (both 
net of tax), divided by the weighted average number of Ordinary Shares in issue in the period. 

Underlying cash generated from operations excludes non-underlying items and other adjustments on a cash paid basis.

(b) Non-underlying items 
The Group’s underlying measures of profitability exclude:

•  amortisation of acquisition related intangibles;
•  external transaction costs;
•  profit or loss on sale of fixed assets (net of any insurance proceeds received);
•  Transformation Plan costs (see below);
•  marketing costs in relation to trials;
•  restructuring costs;
•  Directors’ severance pay;
•  operating and competition review costs;
•  trade name write-off’s and impairments; 
•  goodwill impairments; and
•  the taxation impact of the above items together with the impact of taxation rate changes.

Non-underlying items have been adjusted for in determining underlying measures of profitability as these underlying measures 
are those used in the day-to-day management of the Group and allow for greater comparability across periods.

 179

Dignity plc Annual Report & Accounts 2021alteRnatiVe PeRFoRmanCe measuRes CONTINUED

Non-GAAP measures (continued)

(b) Non-underlying items (continued)
In the tables below, non-underlying items are categorised as either non-trading or non-recurring. Non-trading items refers to 
expenditure which does not relate to the normal day-to-day transactions of the business, whereas non-recurring also does not 
relate to the day-to-day transactions of the business and is not expected to reoccur, however the same non-recurring item may 
straddle more than one accounting period. 

Transformation Plan costs
Cost incurred in relation to the Group’s now abrogated Transformation Plan resulted in significant, directly attributable non-
recurring costs in 2020 and these amounts are excluded from the Group’s underlying profit measures and treated as a non-
underlying item.

These costs include, but are not limited to:

•  external advisers’ fees;
•  directly attributable internal costs, including staff costs wholly related to the Transformation (such as the Transformation 

Director and project management office); 

•  costs relating to any property openings, closures or relocations;
•  rebranding costs;
•  speculative marketing costs; and
•  redundancy costs.

53 week period ended 31 december 2021

Non-trading
Amortisation of acquisition related intangibles
External transaction costs in respect of completed  

and aborted transactions

Profit on sale of fixed assets (net of insurance  

proceeds received) (1) 

Trade name write-off
Trade name impairment
Goodwill impairment

Non-recurring
Marketing costs in relation to trials

Taxation(2)
Taxation – rate change

Funeral  
services
 £m

Crematoria 
£m

Pre-arranged  
funeral plans  
£m

Central  
overheads  
£m

3.7
–

–

2.5
2.8
36.4

–

45.4

0.4
1.2

(1.1)  

–
–
–

–

0.1
–

–

–
–
–

–

0.5

0.1

Includes £1.1 million of insurance proceeds received in respect of a Crematoria fire which occurred in 2020. 

(1) 
(2)  All of the above items are subject to corporation tax, except for the trade name write-off, trade name impairment and goodwill impairment.

52 week period ended 25 December 2020 – restated(3)

Non-trading
Amortisation of acquisition related intangibles
External transaction costs in respect of completed  

and aborted transactions
Profit on sale of fixed assets
Trade name impairment 
Goodwill impairment

Non-recurring
Marketing costs in relation to trials 
Transformation Plan costs
Directors’ severance pay
Operating and competition review costs

Taxation
Taxation – rate change 

4.1
0.2

–
15.3
28.7

–
–
–
–

48.3

0.4
–

(0.2)
–
–

–
–
–
–

0.2

0.1
–

–
–
–

–
–
–
–

0.1

(3)  A presentation adjustment has been made in December 2020 to separately pull out the marketing costs in relation to trials.

 180

–
1.4

–

–
–
–

0.9

2.3

–
–

–
–
–

0.6
4.7
1.6
2.9

9.8

group
£m

4.2
2.6

(1.1)  

2.5
2.8
36.4

0.9 

48.3
(2.5)  
8.3

54.1

4.6
0.2

(0.2)
15.3
28.7

0.6
4.7
1.6
2.9

58.4
(6.1)
3.6

55.9

Dignity plc Annual Report & Accounts 2021OTHER INFORMATION 
 
 
 
 
 
 
 
Non-GAAP measures (continued)

(c) Other adjustments reconciliation 
Other adjustments enable a user of the financial statements to assess the financial performance of the Trading Group as it was 
historically reported prior to the consolidation of the Trusts and the impact of IFRS 15, Revenue from Contracts with Customers. 
This mirrors the financial reporting provided to management on a monthly basis to monitor the performance of the underlying 
Trading Group.

Adjustments to the Group’s consolidated financial statements are made to reflect the following:

•  Deferred revenue recognised on the delivery of a funeral is replaced with the payment received by the Trading Group from the 
Trust at the same time. Pre-need segment income, in the form of upfront payments received by the Trading Group from the 
Trusts in support of marketing are recognised when received at inception of a funeral plan rather than being deferred as part 
of the aforementioned deferred revenue.

•  Payments made by the Trusts on cancellation are recognised by the Trading Group.
•  Unlike disbursements on at-need funerals, disbursements on pre-need funerals under IFRS 15 are recognised on a principal 
basis within both revenue and cost of sales, but for consistency in the alternative performance measure both are reduced as 
these items are not included in either measure. Similarly, pre-need funerals delivered by subcontracted funeral directors, 
which form part of deferred income, are excluded within the alternative performance measure with a corresponding 
adjustment to cost of sales.

•   Commissions payable on securing new Trust plans are recognised at the inception of the plan rather than being deferred and 

recognised at the time the funeral service is delivered.

•   The amounts recorded in respect of the remeasurement of assets held in the Trust is removed as is the significant financing 

component that only arises when deferred revenue is recognised on consolidation of the Trusts.

•   The taxation impact of the above adjustments, including the impact of corporate interest restriction and changes in the rate of 

deferred tax associated with the items noted above are removed. 

 181

Dignity plc Annual Report & Accounts 2021alteRnatiVe PeRFoRmanCe measuRes CONTINUED

Funeral  
services
£m

Crematoria
£m

Pre–arranged  
funeral plans
£m

Central  
overheads
£m

117.9
(58.4)  
(9.8)  
–

16.6

66.3

(8.2)  
(16.6)  

(6.2)  
(24.7)  

(0.4)  

10.2

–
–
–
–

–

–

–
–

–
–

–

–

–
–
–
(24.6)  

–

(24.6)  

–
–

–
24.7

–

0.1

–
–
–
–

–

–

–
–

–
–

–

–

group
£m

117.9
(58.4)  
(9.8)  
(24.6)  

16.6

41.7

(8.2)  
(16.6)  

(6.2)  
–

(0.4)  

10.3

(51.6)  

94.8

43.2

  (8.1)  
(1.5)  
6.9

(0.5)  
(5.5)  

(8.7)  

44.8

Non-GAAP measures (continued)

(c) Other adjustments reconciliation (continued)

53 week period ended 31 december 2021

Revenue
Trust consolidation:

Release of deferred revenue on death or cancellation
Removal of payments received from the Trusts on death
Payments on cancellation
Derecognise pre-need segment income

IFRS 15:

Recognition of disbursement element of pre-need plans

Revenue – Total other adjustments

Cost of sales
IFRS 15:

Amounts paid on subcontracted funerals
Recognition of disbursement element of pre-need plans

Administrative expenses
Trust consolidation:

Recognition of the Trust costs
Transfer of pre-need costs into funeral segment

IFRS 15:

Net increase of deferred costs in respect of commissions

Operating profit – Total other adjustments

Finance income/(costs)
Trust consolidation: 

Deferred revenue significant financing
Remeasurement of financial assets held by the Trusts 

and related income

Finance costs – Total other adjustments

Taxation:
Trust consolidation:

Taxation impact on above adjustments
Corporate interest restriction disallowance
Deferred tax rate change

IFRS 15:

Taxation impact on above adjustments
Deferred tax rate change

Taxation – Total other adjustments

Profit after taxation – Total other adjustments

 182

Dignity plc Annual Report & Accounts 2021OTHER INFORMATION 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funeral  
services
£m

Crematoria
£m

Pre–arranged  
funeral plans
£m

Central  
overheads
£m

122.2
(59.8)  
(8.8)  
–

18.6

72.2

(8.8)  
(18.6)  

(6.9)  
(28.9)  

4.9

13.9

–
–
–
–

–

–

–
–

–
–

–

–

–
–
–
(28.8)  

–

(28.8)  

–
–

–
28.9

–

0.1

–
–
–
–

–

–

–
–

–
–

–

–

Non-GAAP measures (continued)

(c) Other adjustments reconciliation (continued)

52 week period ended 25 December 2020 – restated

Revenue
Trust consolidation:

Release of deferred revenue on death or cancellation
Removal of payments received from the Trusts on death
Payments on cancellation
Derecognise pre-need segment income

IFRS 15:

Recognition of disbursement element of pre-need plans

Revenue – Total other adjustments

Cost of sales
IFRS 15:

Amounts paid on subcontracted funerals
Recognition of disbursement element of pre-need plans

Administrative expenses
Trust consolidation:

Recognition of the Trust costs
Transfer of pre-need costs into funeral segment

IFRS 15:

Net release of deferred costs in respect of commissions

Operating profit – Total other adjustments

Finance income/(costs)
Trust consolidation: 

Deferred revenue significant financing
Remeasurement of financial assets held by the Trusts 

and related income

Finance income – Total other adjustments

Taxation:
Trust consolidation:

Taxation impact on above adjustments
Corporate interest restriction disallowance – prior year 

adjustment

Deferred tax rate change

IFRS 15:

Taxation impact on above adjustments
Deferred tax rate change

Taxation – Total other adjustments

Profit after taxation – Total other adjustments

group
£m

122.2
(59.8)  
(8.8)  
(28.8)  

18.6

43.4

(8.8)  
(18.6)  

(6.9)  
–

4.9

14.0

(53.1)  

47.3

(5.8)  

(0.5)  

 (4.3)  
 6.8

(0.9)  
(2.1)  

(1.0)  

7.2

 183

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
alteRnatiVe PeRFoRmanCe measuRes CONTINUED

Non-GAAP measures (continued)

(d) Non-underlying cash flow items

Cash flows from operating activities
Cash flows of other adjustments

Cash flows from operating activities – Trading Group
External transaction costs
Marketing costs in relation to trials
Directors’ severance pay
Transformation Plan costs
Operating and competition review costs

Underlying cash generated from operations

31 december
2021

£m

68.3
16.1

84.4
1.6
0.9
0.9
–
0.5

88.3

25 December
2020 
restated(1)
£m

62.7
16.3

79.0
0.6
0.2
0.7
5.4
3.0

88.9

(1)  December 2020 has been restated to separately pull out spend on marketing costs in relation to trials out of external transaction costs.

(e) Funeral market share
Comparable funeral market share excludes any volumes from locations not contributing for the whole of 2020 and 2021 to date 
and therefore excludes 26 locations closed and one location opened in 2020 and a further 24 locations closed and five locations 
opened in 2021. 

(f) Average assets per plan
Average assets per plan are calculated as the net assets of the Trusts divided by the number of active plans in the Trusts. Net 
assets in this calculation will not equal amounts in the consolidated balance sheet of the Group, as it includes instalment 
amounts due in future that become payable immediately on death.

Net assets in the Trusts
Number of active plans

Asset per plan

31 december
2021
£

1,179,000
323,000

25 December
2020
£

1,097,000
319,000

3,650

3,400

(g) Return on Trusts assets
Return on Trust assets are calculated as net investment return in the Trusts divided by the opening net assets within the 
consolidated balance sheet.

Remeasurement recognised in the consolidated income statement
Investment income
Foreign exchange rate difference
Investment administrative expenses deducted at source

Net investment return in the Trusts
Opening net assets as per the consolidated balance sheet

Return on the Trust assets (per cent)

31 december
2021
£m

25 December
2020
£m

85.0
7.7
(1.7)  
(2.8)  

88.2
967.1

9.1%

41.3
2.2
–
(5.2)  

38.3
947.5

4.0%

 184

Dignity plc Annual Report & Accounts 2021OTHER INFORMATION 
 
 
 
 
 
 
 
 
 
 
Non-GAAP measures (continued)

(h) Cash Return on Core Capital (‘CROCC’)
The Dignity CROCC is a measure of the return made on the productive capital in the business ignoring intangible assets and 
non-cash returns. This is a proprietary measure (‘APM’) and therefore not subject to accounting rules which you should bear 
in mind. 

We calculate it by taking the underlying cash generated from operations and subtracting the maintenance capital expenditure, 
net finance costs paid and tax paid; this gives the Cash Return (‘CR’). This is then divided by the sum of the property, plant and 
equipment, Trade receivables: at-need and Inventories less Trade payables which make up the Core Capital (‘CC’).

To illustrate what it measures imagine that a company built a crematorium costing say £8 million including the land which once 
mature makes a return after tax and capital expenditure of £1.2 million, then its CROCC would be 15 per cent (£1.2 million /£8.0 
million). Now if that crematorium were sold to another company for £20.0 million it would still be making £1.2 million but they 
might measure its return at 6 per cent (£1.2 million /£20.0 million). CROCC would still come out at 15 per cent because it is based 
upon the capital used to create the asset, not the goodwill reflected in its transfer. 6 per cent is the initial return on an 
investment in what is a 15 per cent asset purchased for 2.5 times the capital invested in it.

Core Capital is taken from a concept introduced by Warren Buffett about judging a business based upon the capital you would 
need to replicate it.

CROCC is useful because it gives a measure of the underlying returns of a business which are a guide to what the returns on 
retained capital might be. As we progress the CROCC will increasingly reflect the returns from the capital retained and allocated 
by the executive for organic growth. The CROCC calculation can be reconciled as follows:

Underlying cash generated from operations
Less:
Maintenance capital expenditure
Net finance costs paid
Tax paid

Cash Return

Property, plant and equipment
Trade receivables: at-need
Inventories
Less:
Trade payables

Core Capital

Cash Return on Core Capital (per cent)

31 december
2021
£m

25 December
2020
£m

88.3

(17.6)  
(28.2)  
(17.7)  

24.8

242.1
15.2
8.6

(9.3)  

256.6

9.7%

88.9

(9.1)  
(29.1)  
(6.9)  

43.8

240.9
14.1
9.0

(5.5)  

258.5

16.9%

 185

Dignity plc Annual Report & Accounts 2021 
 
 
 
 
 
OTHER INFORMATION

SHAREHOLDER INFORMATION

General enquiries may be addressed to the Company Secretary, Tim George, at the Company’s registered oﬃce.  

General information
The Company is a public limited company which is listed on the London Stock Exchange and is incorporated and domiciled in
England and Wales. 

Company Registrars
Enquiries concerning shareholdings, change of address or other particulars, should be directed in the ﬁrst instance to the
Company’s Registrars, Equiniti. They also provide a range of online shareholder information services at www.shareview.co.uk
where shareholders can check their holdings and ﬁnd practical help on transferring shares and updating personal details.
Alternatively, they can be contacted by telephone on 0371 384 2674 (textphone for shareholders with hearing diﬃculties 
0371 384 2255) if calling from within the UK, or +44 (0) 121 415 7047 if calling from outside the UK.  

Shareholder communications
The Company makes documents and information available to shareholders by electronic means and via our website. 
The Company’s website is www.dignityplc.co.uk.

Making documents and information available electronically:

• Enables the Company to reduce printing and postage costs;

• Allows faster access to information; and

• Reduces the amount of resource consumed and lessens the impact on the environment of printing and mailing.

The Company provides hard copy documentation to those shareholders who have requested this and is, of course, happy to
provide hard copies to any shareholder upon request.

Electronic communications
The Company encourages shareholders to elect to receive notiﬁcation of the availability of Company documentation by means
of an email. 

Shareholders who wish to receive e-mail notiﬁcation should register online at www.shareview.co.uk click on ‘Open a Portfolio
Account’ under the ‘Portfolio’ section. You will need your Shareholder Reference Number, which is shown on your share
certiﬁcate or dividend tax voucher. 

Choosing e-mail notiﬁcation will result in you joining the Equiniti Shareview Service in accordance with its terms and conditions.

Share price information
The latest Dignity plc share price can be obtained via the Company’s investor website www.dignityplc.co.uk.

Unsolicited approaches to shareholders
Share fraud includes scams where investors are called out of the blue and offered shares that often turn out to be worthless 
or non-existent, or an inﬂated price for shares they own. These calls come from fraudsters operating in ‘boiler rooms’ that are
mostly based abroad.

While high proﬁts are promised, those who buy or sell shares in this way usually lose their money. The Financial Conduct
Authority (‘FCA’) has found most share fraud victims are experienced investors who lose an average of £20,000, with around 
£200 million lost in the UK each year.

186

Dignity plc Annual Report & Accounts 2021    

PROTECT YOURSELF

If you are offered unsolicited investment advice, discounted shares, a premium price for shares you own, or free company 
or research reports, you should take these steps before handing over any money:

1. Get the name of the person and organisation contacting you.

2. Check the FCA Register at http://www.fca.gov.uk/register to ensure they are authorised.

3. Use the details on the FCA Register to contact the ﬁrm.

4. Call the FCA Consumer Helpline on 0800 111 6768 if there are no contact details on the Register or you are told they are 

out of date.

5. Search The FCA’s list of unauthorised ﬁrms and individuals to avoid doing business with.

6. If it sounds too good to be true, it probably is!

If you use an unauthorised ﬁrm to buy or sell shares or other investments, you will not have access to the Financial
Ombudsman Service or Financial Services Compensation Scheme (‘FSCS’) if things go wrong.

Annual General Meeting
The Company’s Annual General Meeting will be held on 9 June 2022 at 11.00 am at the oﬃces of DLA Piper UK LLP, Two
Chamberlain Square, Paradise, Birmingham, West Midlands, B3 3AX.

Dividends
The Group has not paid a dividend since June 2019 and the Directors do not expect to do so until the business has returned to 
a more sustainable ﬁnancial footing. We continue to work on our plans to improve our capital structure so that the pursuit of 
the best long-term value for shareholders is not compromised by the covenants attached to our bonds. We retain signiﬁcant
cash resources, continue to be cash generative and understand the importance of optimising total shareholder return whilst
maintaining a balance between different stakeholders, and it is the Directors’ intention to pay a dividend as soon as we believe 
it is ﬁnancially prudent to do so.

CONTACT DETAILS AND ADVISERS

Registered Office:
Dignity plc
4 King Edwards Court
King Edwards Square
Sutton Coldfield
West Midlands B73 6AP

Tel: +44 (0) 121 354 1557
E-mail: enquiries@dignityuk.co.uk

       www.dignityplc.co.uk

Company Secretary:
Tim George FCIS

Registered Number:
04569346

Registrars:
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA

Tel: +44 (0) 371 384 2674

       www.shareview.co.uk

Auditors:
Ernst & Young LLP
No.1 Colmore Square 
Birmingham B4 6HQ

Joint Brokers:
Investec
A division of Investec Bank plc
30 Gresham Street
London EC2V 7QP

Liberum
25 Ropemaker Street
London EC2 9LY

Principal Bankers:
Royal Bank of Scotland plc
West Midlands Corporate Office
2 St Philips Place
Birmingham B3 2RB

Legal Advisers:
DLA Piper UK LLP
Two Chamberlain Square
Paradise
Birmingham B3 3AX

Dignity plc Annual Report & Accounts 2021    

187

OTHER INFORMATION

FINANCIAL CALENDAR

9 June 2022

• Annual General Meeting

1 July 2022

• 2022 financial half year end

10 August 2022

• Announcement of 2022 interim results

30 December 2022 • Financial period end

Forward-looking statements

This Annual Report and the Dignity plc investor website may 
contain certain ‘forward-looking statements’ with respect to Dignity
plc (the ‘Company’) and the Group’s ﬁnancial condition, results of 
its operations and business, and certain plans, strategy, objectives,
goals and expectations with respect to these items and the
economies and markets in which the Group operates.

Forward-looking statements are sometimes, but not always,
identiﬁed by their use of a date in the future or such words as
‘anticipates’, ‘aims’, ‘due’, ‘could’, ‘may’, ‘should’, ‘will’, ‘would’, 
‘expects’, ‘believes’, ‘intends’, ‘plans’, ‘targets’, ‘goal’ or ‘estimates’ 
or, in each case, their negative or other variations or comparable
terminology. Forward-looking statements are not guarantees 
of future performance. By their very nature forward-looking
statements are inherently unpredictable, speculative and involve
risk and uncertainty because they relate to events and depend 
on circumstances that will occur in the future. Many of these
assumptions, risks and uncertainties relate to factors that are
beyond the Group’s ability to control or estimate precisely. There 
are a number of such factors that could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements. These factors include, but are
not limited to, changes in the economies and markets in which the
Group operates; changes in the legal, regulatory and competition
frameworks in which the Group operates; changes in the markets
from which the Group raises ﬁnance; the impact of legal or other
proceedings against or which affect the Group; changes in accounting
practices and interpretation of accounting standards under IFRS,
and changes in interest and exchange rates.

Any forward-looking statements made in this Annual Report or 
the Dignity plc investor website, or made subsequently, which are
attributable to the Company or any other member of the Group, 
or persons acting on their behalf, are expressly qualiﬁed in their
entirety by the factors referred to in this statement. Each forward-
looking statement speaks only as of the date it is made. Except as
required by its legal or statutory obligations, the Company does 
not intend to update any forward-looking statements.

Nothing in this Annual Report or on the Dignity plc investor website
should be construed as a proﬁt forecast or an invitation to deal in
the securities of the Company.

Consultancy, Design & Production by Bexon Woodhouse 

Printed by Pureprint, a CarbonNeutral® Company certiﬁed to ISO 14001
environmental management system. 100% of all dry waste associated  with
this production has been recycled. This publication is printed on an FSC®
certiﬁed paper produced from mixed sourced material and manufactured 
at a mill that has ISO 14001 environmental standard accreditation.

188

Dignity plc Annual Report & Accounts 2021    

Dignity plc 
4 King Edwards Court 
King Edwards Square 
Sutton Coldﬁeld 
West Midlands B73 6AP 

www.dignityplc.co.uk