(Reuters) -Dignity Plc warned of lower annual profit on Thursday and said it was seeking relief from lenders on rules governing some loans, as easing coronavirus pandemic creates uncertainties for the funeral services provider, sending its shares down 2.6%.
Britain saw an unprecedented rise in funerals in the past two years because of the pandemic, but mass vaccination campaigns since last year has helped curb the severity of new cases although the threat of new variants remained.
UK's average number of new infections reported each day has fallen by more than 35,800 over the last three weeks.
Dignity's main financial covenant requires its core profit to be above 1.5 times its total debt, the company said, while the ratio is 2.09 as of December-end.
The London-listed company said it will have to inject up to 15 million pounds in cash if the ratio falls below the threshold as a condition for the waiver, which it said was requested on a "precautionary basis".
The company expects underlying operating profit for the year ended Dec. 31 of around 54 million pounds ($73.48 million), compared with 60.3 million pounds in 2020.
Dignity has had to make some changes after UK's competition watchdog in June asked funeral companies to standardise prices. Britain's financial regulator will also regulate the funeral industry from July.
"Whilst it is still early days, we are confident that the ongoing strategic changes at Dignity will position the business to grow and to best serve families for their end-of-life needs," Chief Executive Gary Channon said.
Profits at the company, which owns around 800 funeral locations and 46 crematoria in Britain, had been held back by restrictions surrounding funeral services in Britain, including the number of attendees and the demand for simpler ceremonies.
($1 = 0.7349 pounds)