Funeral provider Dignity swung to a £19.6m loss last year despite a surge in the number of deaths amid the coronavirus pandemic.

It said the total UK death toll of 663,000 in the year to 25 December, 14% up from 2019, was the highest since 1918.

Dignity carried out a record 80,300 funerals last year, 10,900 more than in the previous year.

It said its capacity had come under strain at times, with deaths at the height of the pandemic in the second quarter 47% higher than a year earlier.

The business, which operates from a network of 795 funeral locations, was also faced with higher costs and constrictions on the type of service it could offer.

It had to spend more money on personal protective equipment while at the same time facing reduced revenues per service as it withdrew the use of limousines and saw restrictions limiting the number of attendees and, for a time, stopping church services.

Dignity also reported a rise in demand for unattended direct cremations, with some families choosing to hold a memorial event at a later time.

Revenues increased by 5% to £357.5m but additional cost pressures and restrictions plus an one-off accounting charge reflecting the squeeze on the business pushed the company into the red for the year, compared to a £44.1m profit a year earlier.

Executive chairman Clive Whiley said it had been a “unique and challenging year” and thanked staff “for their significant contribution, resilience and commitment to service during what has been an exceptional time for society, bereaved families, our people and our business”.

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Dignity has also been forced to respond to the outcome of a competition authority review into the sector and is making cost-saving changes after throwing out a £50m transformation plan instituted under previous management in 2018.

Shares were 4% higher in early trading after the results were published on Wednesday.

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