Dignity, a provider of funeral services, has incurred a significant loss due to customers’ preference for cheaper services and intensifying competition, which has delayed market share expansion.

The Birmingham-based company incurred a loss of £275.3 million in 2022, compared to a profit of £12.1 million in 2021, after incurring total impairment charges of almost £200 million, whereby assets lose their entire value and are written off.

It said the unexpected rise in direct cremations hurt its funeral services company.

Due to cost-of-living pressures and a desire for heirs to inherit money, many Britons have become reluctant to spend large quantities on a funeral service and are opting for cheaper alternatives.

This has unavoidably impacted the group’s revenues, which fell by 9 percent to £323,1 million last year, with additional headwinds coming from the decline in UK mortality rates and the implementation of a new pricing strategy.

In response to a lengthy investigation of the funerals market by the Competition & Markets Authority. Also stiffer competition from competitors, Dignity significantly reduced funeral costs for customers in the second half of 2021.

As a consequence, the group’s average revenue per funeral service, excluding over 600 services delivered under its Safe Hands plan, decreased by approximately 12 percent to £2,116.

Although the company increased its market share in the UK cremation and funeral services sectors, it claimed that staff shortages had led to slower-than-expected growth.

It anticipates that the factors that affected its performance in 2022, including the capital expenditures for financing future expansion, will continue to impact its performance in 2023.

CEO Kate Davidson, however, expressed optimism that the company’s strategy “will deliver sustainable growth and the highest levels of care and service to our customers.”

She added, “We are committed to ongoing investment in our people, facilities, and infrastructure to unlock Dignity’s long-term success by focusing on expanding our market share across all of our businesses.”

A consortium led by one of the company’s former CEOs, Gary Channon, and insurance magnate Sir Peter Wood, the proprietor of Direct Line, Sheila’s Wheels, and Go Compare, have agreed to acquire the business.

Last year, Dignity received four takeover offers ranging from 475 to 525 pence per share but ultimately accepted a 550 pence offer that valued the company at approximately £281 million.

A shareholder referendum and the Financial Conduct Authority. Which became responsible for funeral industry regulation in the United Kingdom in June, must still approve the transaction.

Before the close of trading on Friday, Dignity shares were trading 0.75 percent lower at £5.30. Although their value has increased by roughly a quarter since the beginning of the year.