INVESTOR PRESENTATION For the 26 week period ended 29 June 2018 - PowerPoint PPT Presentation

INVESTOR PRESENTATION For the 26 week period ended 29 June 2018

Agenda • Interim results • Our transformation plan • Outlook • Q&A 2

INTERIM RESULTS

Financial highlights Dignity financial highlights 26 week period ended 26 week period ended Increase/ (decrease) 29 June 2018 30 June 2017 percent 174.7 169.8 3 Revenue (£million) Underlying operating profit (1),(2) (£million) 56.4 59.5 (5) Underlying profit before tax (1),(2) (£million) 43.4 46.1 (6) Underlying earnings per share (1),(3) (pence) 69.4 74.1 (6) Cash generated from operations before non- underlying items (4) (£million) 65.6 61.9 6 51.5 58.7 (12) Operating profit (£million) 38.5 45.3 (15) Profit before tax (£million) 61.4 72.5 (15) Basic earnings per share (pence) 324,000 308,000 5 Number of deaths 8.64 8.64 - Interim dividend (pence) Note 1, 2, 3, 4: see appendix for information regarding alternative performance measures 4

2018 highlights • • Strong financial performance ahead of market’s expectations Financial performance in line with market expectations • Deaths flat at 590,000 (2016: 590,000) • Number of deaths significantly higher than the prior period • Focus remains on customer service, which continues to be high, with 98 per cent of clients • Increased funeral market share saying they would recommend us • Portfolio expanded through acquisition of 24 funeral locations and one small crematorium • Three year transformation plan for funeral operations now determined in the period • • Total acquisition activity investment of £28.3 million (net of cash acquired) Solid performance from crematoria • Another good year of pre-arranged funeral plan sales, with active pre-arranged funeral • Acquisition activity continues plans increasing to 450,000 (2016: 404,000), helped by trust and insurance based sales • Pre-need business experiencing tougher market conditions • Strong cash generation continues to help fund the Group’s plans 5

CMA and HM Treasury • We support and welcome the Competition and Markets Authority (‘CMA’) market study of funeral and crematoria services and the HM Treasury consultation on the funeral plan sector • We believe there is a need for much higher standards, greater transparency on pricing and more consumer choice across the sector • Our commitment to putting prices online, to unbundle the price structure in our funeral business and our decision to request that a greater percentage of each funeral plan’s sales value remains in the Trust rather than being paid to us at the time of sale, demonstrates our desire to lead the industry in best practice • Given the CMA study is not due to issue preliminary findings until November 2018 and the HM Treasury consultation on pre-need closes on 1 August 2018, it is too early to report anything further at this stage. The Group will make further announcements as appropriate 6

Expected number of deaths Deaths in Great Britain 590k (1950-2050F) Thousands of deaths 2017 deaths Forecast 800 700 580k 600 ONS 2018 forecast deaths 500 400 600k 300 Possible 2018 deaths based on H1 2018 200 run rate 100 0 1950 60 70 80 90 2000 10 20F 30F 40F 50F Source: Office for National Statistics (ONS) 7

Funeral market share Funeral volume market share (H1 2017 – H1 2018) Percent 12.5 • 12.1 While still too early to be certain , this 12.0 leads the Group to conclude that a 11.8 future outlook of stable, comparable 0.7 Non-comparable* 0.3 11.5 market share should be achievable 11.5 through a combination of service, price 0.4 and promotion 11.0 • We will have a clearer picture at year 11.5 11.1 11.4 end Comparable 0.0 H1 17 FY 17 H1 18 Note: * Non-comparable includes volumes from locations not contributing for all of 2017 and 2018 year to date 8

Average revenue per funeral FY 2018* Q1 2018 Q2 2018 H1 2018 Funeral type (£) (£) (£) (£) Average Full service 3,800 3,875 3,700 3,800 • revenue (£) As anticipated, trials have Simple and Limited service 1,965 2,100 2,340 2,240 significantly impacted Pre-need 1,650 1,680 1,680 1,680 average incomes Other 500 580 535 560 • Original FY 2018 Volume mix Full service 44 55 48 52 (%) expectations are indicative Simple and Limited service 20 12 20 15 of average income Pre-need 30 28 26 27 anticipated for H2 2018 Other 6 5 6 6 and FY 2019 Weighted average 2,590 2,883 2,713 2,799 Ancillary revenue 280 212 225 224 Average revenue 2,870 3,095 2,938 3,023 Note: * As per January 2018 trading update 9

Crematoria • Unaffected by transformation review – but may benefit from technological advances Strong operating • New build crematorium in Derby opened July 2018 – total performance investment £5 million • Remaining two under construction and due to open late 2019 – Positive outlook for total investment £11 million crematoria continues • The Group’s remaining two planning applications have not been successful. We are appealing one of these decisions 10

Pre-arranged funeral plans Existing active plans represent a predictable incremental Market environment cash flow stream Pre-need plan deferred income (trust-based plans) • Adverse publicity about funeral plan market Millions of pounds • HM Treasury consultation 70 60 • Lower trust-based sales £1 billion of deferred cash flows 50 without any further sales • Reduction in marketing allowances provides 40 higher level of capital solvency to protect 30 consumers 20 • IFRS 15 applicable for 2019 10 0 2018 25 50 years years 11

Digital and marketing update Traffic to Dignity Funerals website • Dignity Funerals website still has highest UK domain authority Thousands of hits +33% • Significant increase in Pay Per Click advertising to ensure presence 800 when consumers search online for a funeral director 600 400 • 33% increase in traffic to our website as our online search strategy proves effective 200 0 • 38% of our clients now find us online, up from 27% in H1 2017, H1 2017 H1 2018 with over 60% of our site traffic now coming from mobile devices Simplicity Service Bookings Number of bookings • Funeral Notices digital service successfully trialled; potential to +291% 500 introduce two and a half million new consumers annually to our 400 brands 300 • Simplicity Direct Cremation service continues to grow with online 200 visits to our Simplicity site up over 650%, with traffic rising from 100 37,000 in H1 2017 to 280,000 in H1 2018 0 H1 2017 H1 2018 12

Financial performance Funeral Service financial performance 26 wks 26 wks Financial summary 29-Jun 30-Jun (H1 2017 – H1 2018) 2018 2017 Change Millions of pounds Revenue (£m) 60 Funeral services 120.1 116.7 2.9% Crematoria 42.1 38.4 9.6% 5.5 (1.5) (5.5) 50 Pre-arranged funeral plans 12.5 14.7 (15.0%) 45.1 (3.5) Revenue 174.7 169.8 2.9% 2.0 42.1 Underlying Operating Profit (£m) 40 Funeral services 42.1 45.1 (6.7%) Crematoria 23.4 20.9 12.0% 30 Pre-arranged funeral plans 2.8 4.9 (42.9%) Central overheads (11.9) (11.4) 4.4% 20 Underlying Operating Profit 56.4 59.5 (5.2%) Underlying net finance costs (£m) (13.0) (13.4) Underlying Profit before tax (£m) 43.4 46.1 (5.9%) 10 Taxation (£m) (8.7) (9.2) Underlying Earnings (£m) 34.7 36.9 (6.0%) 0 Weighted average number of ordinary shares in issue during the period (million) 50.0 49.8 H1 2017 Deaths Market Average Cost base Acquisitions H1 2018 Underlying EPS (pence) 69.4p 74.1p (6.3%) profit share income profit 13

Cash conversion Cash generation summary 26 wks 26 wks 26 wks 26 wks 29-Jun 29-Jun 30-Jun 30-Jun 2018 2018 2017 2017 £m (except for amounts per share) Profit Cash Profit Cash EBITDA 65.6 68.4 • Strong cash generation Cash generated from operations 65.6 61.9 Depreciation and amortisation (9.2) (8.9) Maintenance capital expenditure (6.8) (9.5) • Cash tax will gradually build to be broadly Underlying Operating Profit 56.4 59.5 equal to income statement Operating cash flow after capital expenditure 58.8 52.4 Underlying net finance costs (13.0) (13.4) Net finance payments (12.5) (12.8) • Cash flow continues to fund all planned Underlying Profit before Tax 43.4 46.1 investment Cash generated before tax 46.3 39.6 Tax on underlying earnings (8.7) (9.2) Tax paid (6.6) (5.4) Underlying earnings 34.7 36.9 Cash after tax 39. 7 34.2 Underlying earnings per share 69.4p 74.1p Cash per share 79.4p 68.7p 14