Interim Results

Dignity PLC 14 September 2006 For Immediate Release 14 September 2006 Dignity plc ('Dignity' or 'the Group') Interim Results for the 26 week period to 30 June 2006 Dignity plc, Britain's largest single provider of funeral-related services, namely funeral services, cremations and pre-arranged funeral plans, announces interim results for the period to 30 June 2006. Financial Highlights Underlying profit before tax* Up 12.4% to Â£17.2 million (2005: Â£15.3 million) Operating profit Up 5.6% to Â£24.7 million (2005: Â£23.4 million) Revenue Up 5.0% to Â£78.3 million (2005: Â£74.6 million) Interim dividend per share 3.03p per share (2005: 2.75p per share) * Before profit on sale of fixed assets Peter Hindley, Chief Executive of Dignity plc commented: 'The Group produced another strong result in the first half of 2006 slightly ahead of expectations.' 'The interim dividend has been increased by 10%.' 'During the period, we issued further securitised debt thus allowing the return of Â£1 per share to shareholders on 11th August. This is consistent with our objective of maximising shareholder returns through an efficient capital structure.' 'The Group continues to trade well and our expectations for 2006 remain positive.' Copies of the interim report are available at http://www.dignityfuneralsplc.co.uk For further information please contact: Dignity plc 0121 354 1557 Peter Hindley, Chief Executive Mike McCollum, Finance Director Buchanan Communications 0207 466 5000 Richard Oldworth Suzanne Brocks CHAIRMAN'S STATEMENT Results I am pleased to report a strong trading performance in the first 26 weeks of 2006. Operating profit reported has increased by 5.6 per cent to Â£24.7 million (2005: Â£23.4 million). Profit before tax in the first 26 weeks of the year was Â£17.2 million compared to Â£15.8 million in the previous period, an increase of 8.9 per cent. This is despite total estimated deaths being lower year on year. The Board has declared an interim dividend of 3.03 pence per share (2005: 2.75 pence per share) which will be paid on 27 October 2006 to shareholders on the register at 29 September 2006. Return of value In February 2006 the Group raised Â£86 million, net of fees, through a further issue of Secured Notes. In August, Â£80 million was returned to shareholders through the issue and redemption of Class B shares. This exercise was consistent with the Group's stated objective of employing an efficient capital structure and maximising shareholder returns. The remaining funds raised together with existing cash resources were used to make a Â£10 million payment into the Group's pension scheme thereby eliminating its deficit. Earnings per share The basic earnings per share were 14.9 pence per share for the period (2005: 13.8 pence per share). Underlying earnings per share (excluding profit on sale of fixed assets net of tax) were 14.9 pence per share for the period (2005: 13.3 pence per share). See note 5 for further information. Outlook The Board's expectations for the remainder of 2006 continue to be positive as the Group continues to trade well. I would like to thank all our staff for their continued hard work and dedication as the delivery of ever increasing levels of client service remain critical to the further development of the business. Richard Connell Chairman OPERATING & FINANCIAL REVIEW Introduction The Group's operations are managed across three main areas, namely funeral services, crematoria and pre-arranged funeral plans. Funeral services relate to the provision of funerals and ancillary items such as memorials and floral tributes. Crematoria revenues arise from cremation services and the sale of memorials and burial plots at the Group's crematoria and cemeteries. Pre-arranged funeral plan income represents amounts to cover the costs of administering the sale of plans. Financial highlights - Revenue has increased 5.0 per cent to Â£78.3 million (2005: Â£74.6 million). - Operating profit has increased 5.6 per cent to Â£24.7 million (2005: Â£23.4 million). - Cash generated from operations has increased 6.8 per cent to Â£28.3 million (2005: Â£26.5 million). - Underlying profit before tax (see page 1) has increased 12.4 per cent to Â£17.2 million (2005: Â£15.3 million). - Profit before tax has increased 8.9 per cent to Â£17.2 million (2005: Â£15.8 million). - Underlying earnings per share were 14.9 pence (2005: 13.3 pence). - Earnings per share were 14.9 pence (2005: 13.8 pence). - An interim dividend of 3.03 pence per share (2005: 2.75 pence per share). Trading overview 26 week period ended ---------------------------- ---------- ----------- 30 Jun 2006 1 Jul 2005 Â£m Â£m ---------------------------- ---------- ----------- Revenue Funeral services 62.8 60.0 Crematoria 12.0 11.7 Pre-arranged funeral plans 3.5 2.9 ---------------------------- ---------- ----------- 78.3 74.6 ---------------------------- ---------- ----------- Operating profit* Funeral services 21.9 20.2 Crematoria 6.3 6.4 Pre-arranged funeral plans 1.7 1.6 Central overheads (5.2) (4.8) ---------------------------- ---------- ----------- 24.7 23.4 ---------------------------- ---------- ----------- *Operating profit includes Recoveries within pre-arranged funeral plans of Â£1.2 million (2005: Â£1.2 million) and profit on sale of property, plant & equipment of Â£nil million (2005: Â£0.5 million) within funeral services. Market background Total estimated deaths for the 26 week period ended 30 June 2006 in Great Britain were 289,000 compared to 300,800 in the comparative 26 week period in 2005. The historic number of deaths quoted is based on the initial Office of National Statistics (ONS) estimates for each calendar year. These death rates are revised by the ONS from time to time but to maintain consistency of reporting, Dignity quotes the original reported numbers. Based on historical evidence Dignity estimates that final deaths reported might fluctuate by around 1 per cent. Funeral services The Group operates a network of 520 funeral homes throughout Britain, trading under local established names. In the period to 30 June 2006, the Group conducted 35,600 (2005: 36,000) funerals, representing 12.3 per cent (2005: 12.0 per cent) of estimated deaths in Britain. Revenue within funeral services was Â£62.8 million (2005: Â£60.0 million). Operating profits were Â£21.9 million (2005: Â£20.2 million), an increase of 8.4 per cent. During the period, the Group acquired a further 2 funeral home locations. Crematoria The Group operates 22 crematoria and carried out 20,500 (2005: 21,200) cremations in 2006 representing 7.1 per cent (2005: 7.0 per cent) of estimated deaths in Britain. The Group is the largest single operator of crematoria in Britain. Revenue within crematoria was Â£12.0 million (2005: Â£11.7 million). Operating profits were Â£6.3 million (2005: Â£6.4 million). This slight reduction was attributable to a combination of lower volumes, disappointing memorial sales and significant increases in certain costs such as utilities. Pre-arranged funeral plans Pre-arranged funeral plans allow people to plan and pay for their funeral in advance. The Group is the market leader in the provision of pre-arranged funeral plans. Unfulfilled pre-arranged funeral plans as at 30 June 2006 were 185,300 (2005: 171,500). The Group continues to explore developing further affinity relationships to add to those it already has with partners such as Age Concern, Axa and Royal London. As part of that process, the Group has performed successful test mailings with Liverpool Victoria and has agreed to carry out further mailing campaigns to Liverpool Victoria customers in the second half of 2006. The Group received Recoveries of Â£1.2 million (2005: Â£1.2 million) during the period. Operating profits were Â£1.7 million (2005: Â£1.6 million). Cash flow and cash balances The Group's operations continue to be significantly cash generative. Cash generated from operations was Â£28.3 million in the period (2005: Â£26.5 million). Expenditure on funeral home acquisitions amounted to Â£3.7 million (2005: Â£4.3 million). A further Â£3.6 million (2005: Â£3.4 million) was spent on capital expenditure, the majority of which was spent on replacing or enhancing existing assets such as vehicles. Cash balances at the end of the financial period amounted to Â£131.6 million. This included Â£86 million, being the net proceeds from the issue of further A and B Secured Notes in February 2006 (see page 5). Excluding this amount cash balances were Â£45.6 million. Under the terms of the Group's secured borrowing, there are certain restrictions on elements of this balance as described further in note 7 of this report. Capital structure and financing The Group produces a strong and stable cash flow, which has increased since the original securitisation in 2003. In February 2006, the Group issued a further Â£45.55 million Class A Secured 6.310% Notes due 2023 and Â£32.50 million Class B Secured 8.151% Notes due 2031. These Notes were issued at a premium and raised a total of Â£86 million after fees and expenses. The issue of the new Notes will increase the annual interest expense by approximately Â£5 million per annum. The Group's only material external debt financing are the Class A and B Secured Notes, rated A and BBB respectively, of which Â£289.4 million (2005: Â£204.0 million) was outstanding as at 30 June 2006. Both tranches of debt were issued at fixed rates of interest and will be progressively repaid over the next 25 years. The following table provides additional indicative information regarding the net debt position of the Group: ------------------------------ ---------- --------- 30 Jun 2006 1 Jul 2005 Â£m Â£m ------------------------------ ---------- --------- Class A and B Secured Notes - issued April 2003 (201.2) (204.0) Class A and B Secured Notes - issued February 2006 (88.2) - Loan Notes 2006 - (0.1) Cash balances 131.6 33.5 ------------------------------ ---------- --------- Economic Net Debt at period end (157.8) (170.6) ------------------------------ ---------- --------- Cash returned on 11 August 2006 to shareholders (80.0) - Cash paid on 18 August 2006 to pension scheme (10.0) - ------------------------------ ---------- --------- Pro forma Net Debt (247.8) (170.6) ------------------------------ ---------- --------- Following approval at an Extraordinary General Meeting on 28 July 2006, the Group returned Â£80 million (Â£1 per share) to shareholders on 11 August 2006 through the creation, issue and redemption of Class B shares. The listed Ordinary Shares were also consolidated on a seven for nine basis to maintain the comparability of financial indicators such as share price. The new consolidated shares were listed on 2 August 2006. Going forward, the Group's finance expense will substantially consist of the interest on the Class A and B Secured Notes and the related ancillary instruments that were issued in April 2003 and February 2006. Pensions The remaining Â£6 million raised from the issue of the Notes, together with Â£4 million of existing cash resources, was used to eliminate the Group's IAS 19 deficit by paying Â£10 million into the Group's pension scheme on 18 August 2006. The Group also recognised Â£2.3 million of unrealised gains on the scheme as a result of changes to underlying assumptions and increases in market values of assets. Taxation The overall effective tax rate on earnings is approximately 31.0 per cent (2005: 31.0 per cent). This tax rate is higher than the standard UK tax rate of 30 per cent due to the impact of disallowable trading expenses and expenditure on the Group's premises that does not attract any deductions for corporation tax purposes. The latter will also cause the effective tax rate to increase slightly in the future. Mike McCollum Finance Director CONSOLIDATED INCOME STATEMENT (UNAUDITED) for the 26 week period ended 30 June 2006 52 week 26 week period period ended ended 30 Jun 2006 1 Jul 2005 30 Dec 2005 Note Â£m Â£m Â£m --------------------- ------- ----------- ---------- ---------- Revenue 2 78.3 74.6 143.2 Cost of sales (37.5) (36.0) (70.0) --------------------- ------- ----------- ---------- ---------- Gross profit 40.8 38.6 73.2 Trading expenses (17.3) (16.4) (32.8) Other operating income 1.2 1.2 1.2 --------------------- ------- ----------- ---------- ---------- Operating profit 2 24.7 23.4 41.6 --------------------- ------- ----------- ---------- ---------- Interest payable and similar charges 3 (11.1) (8.5) (17.0) Interest receivable 3 3.6 0.9 1.9 --------------------- ------- ----------- ---------- ---------- Profit before tax 2 17.2 15.8 26.5 Taxation 4 (5.3) (4.8) (8.2) --------------------- ------- ----------- ---------- ---------- Profit for the period 11.9 11.0 18.3 --------------------- ------- ----------- ---------- ---------- Profit attributable to minority - - - interest Profit attributable to equity shareholders 8 11.9 11.0 18.3 --------------------- ------- ----------- ---------- ---------- 11.9 11.0 18.3 --------------------- ------- ----------- ---------- ---------- Earnings per share attributable 5 to equity shareholders (pence) - Basic 14.9p 13.8p 22.9p - Diluted 14.9p 13.7p 22.9p The results have been derived wholly from continuing activities throughout the period. CONSOLIDATED STATEMENT OF RECOGNISED INCOME & EXPENSE (UNAUDITED) for the 26 week period ended 30 June 2006 52 week 26 week period ended period ended -------------------------- 30 Jun 2006 1 Jul 2005 30 Dec 2005 Â£m Â£m Â£m -------------------------- ----------- ---------- ---------- Profit for the period 11.9 11.0 18.3 Actuarial gains on retirement benefit obligations 2.3 0.4 1.8 Deferred tax on actuarial gains on retirement benefit obligations (0.7) (0.2) (0.5) -------------------------- ----------- ---------- ---------- Net income not recognised in income statement 1.6 0.2 1.3 -------------------------- ----------- ---------- ---------- Total recognised income for the period 13.5 11.2 19.6 -------------------------- ----------- ---------- ---------- CONSOLIDATED BALANCE SHEET (UNAUDITED) as at 30 June 2006 30 Jun 2006 1 Jul 2005 30 Dec 2005 Note Â£m Â£m Â£m --------------------- ------ ----------- ---------- ---------- Non-current assets Goodwill 109.9 108.9 109.1 Intangible assets 10.5 7.8 9.0 Property, plant & equipment 87.4 84.0 86.3 Financial assets 5.5 5.5 5.5 --------------------- ------ ----------- ---------- ---------- 213.3 206.2 209.9 --------------------- ------ ----------- ---------- ---------- Current assets Inventories 3.0 3.3 3.3 Trade and other receivables 19.7 19.1 22.3 Assets held for sale 0.2 0.8 0.2 Cash and cash equivalents (a) 131.6 33.5 37.3 --------------------- ------ ----------- ---------- ---------- 154.5 56.7 63.1 --------------------- ------ ----------- ---------- ---------- Current liabilities Financial liabilities (4.0) (2.1) (2.2) Trade and other payables (18.6) (17.0) (21.9) Current tax liabilities (3.7) (3.4) (2.4) Provisions (1.1) (1.0) (1.0) --------------------- ------ ----------- ---------- ---------- (27.4) (23.5) (27.5) --------------------- ------ ----------- ---------- ---------- Net current assets 127.1 33.2 35.6 --------------------- ------ ----------- ---------- ---------- Non-current liabilities Financial liabilities (273.3) (193.0) (191.9) Deferred tax liabilities (7.3) (3.3) (5.2) Retirement benefit obligation (9.7) (13.5) (12.0) Other non-current liabilities (2.9) (2.7) (2.9) Provisions (1.9) (2.2) (2.1) --------------------- ------ ----------- ---------- ---------- (295.1) (214.7) (214.1) --------------------- ------ ----------- ---------- ---------- Net assets 45.3 24.7 31.4 --------------------- ------ ----------- ---------- ---------- Shareholders' equity Ordinary shares 8 5.6 5.6 5.6 Share premium account 8 111.6 111.6 111.6 Other reserves 8 (10.8) (12.0) (10.4) Retained earnings 8 (59.9) (79.3) (74.2) --------------------- ------ ----------- ---------- ---------- Total shareholders' equity 8 46.5 25.9 32.6 Minority interest in equity (1.2) (1.2) (1.2) --------------------- ------ ----------- ---------- ---------- Total equity 45.3 24.7 31.4 --------------------- ------ ----------- ---------- ---------- (a) Certain cash balances are subject to restrictions. See note 7. CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) for the 26 week period ended 30 June 2006 52 week 26 week period ended period ended ---------------------- 30 Jun 2006 1 Jul 2005 30 Dec 2005 Note Â£m Â£m Â£m ----------------------- ------ ---------- ---------- ---------- Cash flows from operating activities Cash generated from operations 9 28.3 26.5 49.5 Interest received 2.2 0.9 1.8 Interest paid (10.5) (7.8) (15.6) Tax paid (2.7) - (2.5) ----------------------- ------ ---------- ---------- ---------- Net cash from operating activities 17.3 19.6 33.2 ----------------------- ------ ---------- ---------- ---------- Cash flows from investing activities Acquisition of subsidiaries and businesses (3.7) (4.3) (6.7) Proceeds from sale of property, plant & equipment 0.3 0.9 1.2 Purchase of property, plant & equipment (3.6) (3.4) (7.6) ----------------------- ------ ---------- ---------- ---------- Net cash used in investing activities (7.0) (6.8) (13.1) ----------------------- ------ ---------- ---------- ---------- Cash flows from financing activities Proceeds from issue of secured notes 90.2 - - Issue costs on issue of secured notes (4.2) - - Repayment of borrowings (2.0) (1.2) (2.5) Dividends paid to shareholders - (3.0) (5.2) ----------------------- ------ ---------- ---------- ---------- Net cash from/(used in) financing activities 84.0 (4.2) (7.7) ----------------------- ------ ---------- ---------- ---------- Net increase in cash and cash equivalents 7 94.3 8.6 12.4 ----------------------- ------ ---------- ---------- ---------- Cash and cash equivalents at the beginning of the period 36.1 23.7 23.7 Cash and cash equivalents at the end of the period 7 130.4 32.3 36.1 NOTES TO THE INTERIM REPORT 2006 for the 26 week period ended 30 June 2006 1 Basis of preparation The interim consolidated financial statements of Dignity plc (the 'Company') are for the 26 weeks ended 30 June 2006 and comprise the results, assets and liabilities of the Company and its subsidiaries (the 'Group'). These interim consolidated financial statements have been prepared in accordance with the Listing Rules of the Financial Services Authority. The Group has chosen not to adopt the full disclosure requirements of IAS 34, 'Interim Financial Reporting'. Therefore this interim financial information is not fully in compliance with International Financial Reporting Standards. However, the consolidated financial statements have been prepared in accordance with all other applicable International Financial Reporting Standards that are expected to apply to the Group's Financial Report for the 52 week period ended 29 December 2006. The interim financial information is also consistent with the audited consolidated financial statements for the 52 weeks ended 30 December 2005. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the audited consolidated financial statements of the Group as at and for the 52 week period ended 30 December 2005. These consolidated interim financial statements were approved by the Directors on 13September 2006. The accounting policies applied by the Group in these interim consolidated financial statements are the same as those applied by the Group in its audited consolidated financial statements as at and for the 52 week period ended 30 December 2005. The basis of consolidation is set out in the Group's accounting policies in those financial statements. The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting polices and the reported amounts of assets and liabilities, and income and expenses. In preparing these consolidated interim financial statements, the significant judgements made by the management in applying the Group's accounting policies and key source of estimation uncertainty were the same as those applied to the audited consolidated financial statements as at and for the 52 week period ended 30 December 2005. Comparative information has been presented as at and for the 26 weeks ended 1 July 2005 and as at and for the 52 week period ended 30 December 2005. The comparative figures for the 52 week period ended 30 December 2005 do not constitute statutory accounts for the purposes of s240 of the Companies Act 1985. A copy of the Group's statutory accounts for the 52 week period ended 30 December 2005, has been delivered to the Registrar of Companies and contained an unqualified auditors' report in accordance with s235 of the Companies Act 1985. 2 Revenue and segmental analysis The revenue and operating profit*, by segment, were as follows: 26 week period ended 26 week period ended 52 week period ended 30 Jun 2006 1 Jul 2005 30 Dec 2005 ------------- ------------ ------------- Operating Operating Operating profit/ profit/ profit/ Revenue (loss) Revenue (loss) Revenue (loss) Â£m Â£m Â£m Â£m Â£m Â£m --------------- -------- -------- -------- -------- -------- ---------- Funeral services 62.8 21.9 60.0 20.2 113.8 37.1 Crematoria 12.0 6.3 11.7 6.4 22.5 11.9 Pre-arranged funeral plans 3.5 1.7 2.9 1.6 6.9 2.1 Central overheads - (5.2) - (4.8) - (9.5) --------------- -------- -------- -------- -------- -------- ---------- 78.3 24.7 74.6 23.4 143.2 41.6 Net interest expense (7.5) (7.6) (15.1) --------------- -------- -------- -------- -------- -------- ---------- Profit before tax 17.2 15.8 26.5 --------------- -------- -------- -------- -------- -------- ---------- *Operating profit includes Recoveries within pre-arranged funeral plans of Â£1.2 million (2005: Â£1.2 million; December 2005: Â£1.2 million) and profit on sale of property, plant & equipment of Â£nil million (2005: Â£0.5 million; December 2005: Â£0.6 million) in funeral services. 3 Net interest payable and similar charges 52 week 26 week period ended period ended 30 Jun 2006 1 Jul 2005 30 Dec 2005 Â£m Â£m Â£m --------------------------- ------------ --------- ---------- Interest payable and similar charges: Class A and B Secured Notes - issued April 2003 7.3 7.4 14.8 Class A and B Secured Notes - issued February 2006 2.7 - - Amortisation of issue costs - issued April 2003 0.5 0.5 0.9 Amortisation of issue costs - issued February 2006 0.1 - - Other loans 0.1 0.1 0.1 Interest payable on finance leases - - 0.1 Net finance expense on retirement obligations 0.1 0.2 0.4 Unwinding of discounts 0.3 0.3 0.7 --------------------------- ------------ --------- ---------- Interest payable and similar 11.1 8.5 17.0 --------------------------- ------------ --------- ---------- Interest receivable and similar income: Bank deposits (2.3) (0.8) (1.7) Debenture loan (0.1) (0.1) (0.2) Release of premium on issue of Secured Notes (0.4) - - Prepaid interest on issue of Class A and B Secured Notes (0.8) - - --------------------------- ------------ --------- ---------- Interest receivable and similar income (3.6) (0.9) (1.9) --------------------------- ------------ --------- ---------- Net interest payable and similar charges 7.5 7.6 15.1 --------------------------- ------------ --------- ---------- 4 Taxation The taxation charge in the period is based on an estimated effective tax rate of 31.0 per cent (2005: 31.0 per cent) on profit before tax for the 52 week period ending 29 December 2006. 5 Earnings per share The calculation of basic earnings per Ordinary Share has been based on the profit for the relevant period. The Group has two classes of potentially dilutive Ordinary Shares being those share options granted to employees under the Group's SAYE scheme and the contingently issueable shares under the Group's LTIP schemes. The performance criteria for the vesting of the awards under the LTIP schemes cannot be met until the third anniversary of their issue. Consequently these contingently issueable shares have been excluded from the diluted EPS calculations. Underlying earnings is calculated as profit for the period less profit on sale of fixed assets net of tax. Weighted average no. Per share Earnings of shares amount Â£m m pence ------------------------------- --------- --------- ---------- 26 week period ended 30 June 2006 - basic and diluted 11.9 80.1 14.9 ------------------------------- --------- --------- ---------- 26 week period ended 1 July 2005 - basic 11.0 80.0 13.8 ------------------------------- --------- --------- ---------- 26 week period ended 1 July 2005 - diluted 11.0 80.2 13.7 ------------------------------- --------- --------- ---------- 52 week period ended 30 December 2005 - basic and diluted 18.3 80.0 22.9 ------------------------------- --------- --------- ---------- Weighted Underlying average no. Per share earnings of shares amount Â£m m pence ------------------------------- --------- --------- ---------- 26 week period ended 30 June 2006 11.9 80.1 14.9 ------------------------------- --------- --------- ---------- 26 week period ended 1 July 2005 10.6 80.0 13.3 ------------------------------- --------- --------- ---------- 6 Dividends On 14 September 2006, the Directors approved an interim dividend of 3.03 pence per share (2005: 2.75 pence per share) totalling Â£1.9 million (2005: Â£2.2 million), which will be paid on 27 October 2006 to those shareholders on the register at the close of business on 29 September 2006. 7 Cash and cash equivalents 30 Jun 1 Jul 30 Dec 2006 2005 2005 Note Â£m Â£m Â£m -------------------------- -------- -------- -------- -------- Cash and cash equivalents 131.6 33.5 37.3 -------------------------- -------- -------- -------- -------- Represented by: Operating cash 28.5 10.2 24.6 Cash for acquisitions (a) 3.1 7.3 4.9 Amounts set aside for intercompany loan (b) 17.7 16.0 7.8 Amounts set aside until 31 July 2006 (c) 82.3 - - -------------------------- -------- -------- -------- -------- 131.6 33.5 37.3 -------------------------- -------- -------- -------- -------- (a ) Under the terms of the Group's secured borrowings, this amount is required to be retained in a separate bank account. This bank account may, in normal circumstances, only be used for acquiring tangible fixed assets and businesses (either trade and assets or share purchases). Included in this amount is Â£1.2 million (2005: Â£1.2 million; December 2005 Â£1.2 million) relating to Recoveries, which may not be used for one year following receipt and hence does not meet the definition of cash and cash equivalents in IAS 7, Cash Flow Statements. (b) This amount (save for circumstances where the Directors believe there may be a risk of defaulting on the Secured Notes) may only be used in paying the interest and principal due on a loan between Dignity (2002) Limited and Dignity Mezzco Limited, both of whom are wholly owned subsidiaries of the Company. (c) This amount (save for circumstances where the Directors believe there may be a risk of defaulting on the secured notes) may not be used for any purpose until 31 July 2006, when funds become available for any corporate purpose. Movements in the amounts described in note (a) as Recoveries have been treated as 'transfers from/(to) restricted bank accounts' in the cash flow statement and are reported within 'Cash flows from investing activities' as they do not meet the definition of cash and cash equivalents in IAS 7. Movements in the amounts described in note (b) have been treated as cash equivalents in the cash flow statement as they will become available for the Group's use once the intercompany payment has been made. Movements in the amounts described in note (c) have been treated as cash equivalents in the cash flow statement as they will become available for the Group's use on 31 July 2006. 8 Statement of changes in shareholders' equity Share Profit Share premium Other & loss capital account reserves account Total Â£m Â£m Â£m Â£m Â£m ------------------------ ------ ------- -------- -------- -------- Shareholders' equity as at 31 December 2004 5.6 111.6 (12.5) (87.3) 17.4 Profit for the 26 weeks ended 1 July 2005 - - - 11.0 11.0 Actuarial gains and losses on defined benefit plans (net of deferred tax) - - 0.2 - 0.2 Effects of employee share options (net of deferred tax) - - 0.3 - 0.3 Dividends - - - (3.0) (3.0) ----------------------- ------ ------- -------- -------- -------- Shareholders' equity as at 1 July 2005 5.6 111.6 (12.0) (79.3) 25.9 Profit for the 26 weeks ended 30 December 2005 - - - 7.3 7.3 Actuarial gains and losses on defined benefit plans (net of deferred tax) - - 1.1 - 1.1 Effects of employee share options (net of deferred tax) - - 0.5 - 0.5 Dividends - - - (2.2) (2.2) ----------------------- ------ ------- -------- -------- -------- Shareholders' equity as at 30 December 2005 5.6 111.6 (10.4) (74.2) 32.6 Profit for the 26 weeks ended 30 June 2006 - - - 11.9 11.9 Reclassification of actuarial gains and losses On defined benefit plans (net of deferred tax)* - - (0.8) 0.8 - Actuarial gains and losses on defined benefit plans (net of deferred tax) - - - 1.6 1.6 Effects of employee share options (net of deferred tax) - - 0.4 - 0.4 Dividends - - - - - ----------------------- ------ ------- -------- -------- -------- Shareholders' equity as at 30 June 2006 5.6 111.6 (10.8) (59.9) 46.5 ----------------------- ------ ------- -------- -------- -------- *These amounts have been reclassified in accordance with IAS 19 (Revised). 9 Cash flows from operating activities 52 week 26 week period ended period ended ---------------------- 30 Jun 2006 1 Jul 2005 30 Dec 2005 Â£m Â£m Â£m --------------------------- ----------- ---------- ---------- Net profit for the period 11.9 11.0 18.3 Adjustments for: Taxation 5.3 4.8 8.2 Net interest payable 7.4 7.6 15.1 Profit on disposal of fixed assets - (0.5) (0.6) Depreciation charges 3.4 3.4 6.6 Amortisation of intangibles 0.3 0.3 0.6 Changes in working capital (excluding acquisitions) (0.3) (0.3) 0.8 Employee share options 0.3 0.2 0.5 --------------------------- ----------- ---------- ---------- Cash generated from operations 28.3 26.5 49.5 --------------------------- ----------- ---------- ---------- 10 Interim report Copies of the Interim Report are available from the registered office, Plantsbrook House, 94 The Parade, Sutton Coldfield, West Midlands B72 1PH, and at the Group's website www.dignityfuneralsplc.co.uk. 11 Securitisation In accordance with the terms of the securitisation carried out in April 2003, Dignity (2002) Limited (the holding company of those companies subject to the securitisation) has today issued reports to the Rating Agencies (Fitch Ratings and Standard & Poor's), the Security Trustee and the holders of the notes issued in connection with the securitisation confirming compliance with the covenants established under the securitisation. Copies of these reports are available at www.dignityfuneralsplc.co.uk This information is provided by RNS The company news service from the London Stock Exchange

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