DTY.L Regulatory News (DTY)

For immediate release 16 June 2015

Dignity plc

Proposed acquisition of 36 funeral locations from Laurel Funerals

Introduction

Dignity plc (Dignity or the Group), the UK's only listed provider of funeral related services, is pleased to announce that it has signed a conditional sale and purchase agreement to acquire 36 of the 83 locations currently operated by Laurel Funerals (Laurel) for total consideration of £38 million (Acquisition), to be satisfied in cash at completion.

Completion of the Acquisition is conditional upon the transfer of trade and assets of the relevant locations to a new entity, LMF Management Services Limited. The Acquisition is expected to complete on or around 13 July 2015.

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

Overview of Laurel

Laurel is a funeral business which currently operates 83 locations across the UK. In order to avoid any potential competition concerns, the Group is only acquiring locations that complement its own geographic spread. They specifically do not breach any of the established tests that are used as preliminary filters by the Competition and Markets Authority to see whether a transaction might give rise to prima facie competition concerns in local markets in acquisitions of funeral businesses. Consequently, Dignity is not acquiring 47 funeral locations operated by Laurel, nor its head office function.

The locations being acquired generated earnings before deducting interest, taxation, depreciation and amortisation of £4.1 million in the year ended 31 December 2014. The unaudited gross assets of the locations being acquired as at 28 February 2015 were approximately £9.5 million. Four of the funeral locations being acquired are freehold properties.

Opportunity and Rationale

Since flotation, Dignity has successfully acquired and integrated many funeral locations into the Group, including the similar sized acquisition of Yew Holdings Limited in 2013. The Laurel locations being acquired trade under established local brand names and provide the opportunity to expand the Group's geographical footprint into new areas.

The Board believes that there is an opportunity to improve Laurel's services, facilities and financial performance. Dignity anticipates that the integration of Laurel will involve limited reorganisation costs and minimal increase in overheads. Capital expenditure of £2.0 million is expected to be required in the first two years of ownership to upgrade the acquired locations.

Allowing for the integration, the Group anticipates the EBITDA from the Acquisition in 2015 and 2016 to be broadly flat on the actual financial performance achieved in the 12 months to December 2014. No cost savings have been assumed.

Associated debt facility

The Group also announces that, whilst not required to fund the Acquisition, it has arranged a £26.25 million debt facility with the Royal Bank of Scotland plc (RBS), which will be secured against the assets being acquired, together with certain other funeral assets operated outside of the Group's securitisation structure. This facility is capable of being drawn in up to 6 tranches in the next twelve months, with interest payable at between 125 and 165 basis points above LIBOR (depending on the ratio of EBITDA to gross debt). The facility is repayable in four years' time, with an ability to extend by one year with RBS's agreement. Amounts drawn under the facility may be used by the entire Group as it sees fit. Whilst undrawn, the facility will command a non utilisation fee of circa £150,000 per annum. This facility therefore provides the Group with an efficient and flexible source of additional funding if required.

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

"This acquisition will allow us to extend our funeral network further into areas that we do not currently serve. It represents an excellent investment for Dignity, using cash already held by the Group, and supports our continued growth."

A conference call for analysts will be held at 8.00am BST on 16 June 2015. Please contact Buchanan if you have not received dial in details and wish to attend the call.

Further announcements will be made in due course.

For more information:

Disclaimer

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

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

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

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