Preliminary Results
Dignity PLC
13 March 2008
For immediate release 13 March 2008
Dignity plc
Preliminary results for the 52 week period ended 28 December 2007
Dignity plc, announces its preliminary results for the 52 week period ended 28
December 2007.
Financial highlights
Underlying earnings per share(a) Up 26% to 33.4p (2006: 26.6p)
Revenue Up 6% to £159.5 million (2006: £149.8 million)
Underlying operating profit(b) Up 8% to £47.6 million (2006: £44.1 million)
Underlying profit before tax(b) Up 8% to £30.1 million (2006: £27.9 million)
Cash generated from operations(c) Up 11% to £57.5 million (2006: £51.7 million)
Basic earnings per share Up 33% to 34.4p (2006: 25.9p)
Operating profit Up 10% to £47.7 million (2006: £43.4 million)
Profit before tax Up 11% to £30.2 million (2006: £27.2 million)
Dividend per share Interim dividend of 3.33p paid with a further 6.67p
final dividend proposed (2006: interim dividend 3.03p,
final dividend 6.06p)
(a) Underlying earnings per share is calculated as profit on ordinary
activities before exceptional items and profit on sale of fixed assets and after
taxation divided by the weighted average number of Ordinary Shares in issue in
the period.
(b) Before profit on sale of fixed assets and non-recurring costs
expensed relating to redemption of B shares in August 2006.
(c) Before lump sum payment to final salary pension scheme of £10
million in August 2006 and £0.7 million payment in respect of redemption of B
shares.
Highlights
• Outlook remains positive.
• Strong trading performance.
• Both funerals and crematoria divisions produced good
results and margins continued to expand.
• Continued high customer satisfaction results.
• 21 funeral locations acquired in 2007 (and a further 6
funeral locations acquired since December).
• Total unfulfilled pre-arranged funeral plans increased to
197,300 plans.
Peter Hindley, Chief Executive of Dignity plc:
'Dignity's stable and predictable business has once again delivered strong
growth in operating profits, increasing 8 per cent to £47.6 million. This
performance, combined with an efficient capital structure, resulted in earnings
per share increasing 26 per cent to 33.4 pence per share.
Trading in the first two months of 2008 has been strong and the Group is well
placed to deliver further growth in 2008.'
For more information
Peter Hindley, Chief Executive
Mike McCollum, Finance Director
Dignity plc +44 (0) 20 7466 5000
Richard Oldworth
Suzanne Brocks
Buchanan Communications +44 (0) 20 7466 5000
Chairman's Statement
Results
The Group's fourth year as a listed company has once again been successful. We
have delivered on all aspects of our strategy, which has been in place since
flotation.
Good performance from all divisions, supported by an efficient capital
structure, has resulted in a 26 per cent increase in underlying earnings per
share (which excludes profit on sale of fixed assets and non-recurring
exceptional items) to 33.4 pence per share (2006: 26.6 pence per share).
Basic earnings per share were 34.4 pence per share (2006: 25.9 pence per share),
an increase of 33 per cent.
The year finished on a high, with the Group entering the FTSE 250 in December
2007.
Dividends
In October, an interim dividend of 3.33 pence per Ordinary Share was paid in
respect of profits relating to 2007.
The Board has proposed that a final dividend of 6.67 pence per Ordinary Share
should be paid from profits generated in 2007. Subject to shareholder consent at
the Annual General Meeting, this will be paid on 27 June 2008 to members on the
register at close of business on 6 June 2008.
These dividends represent a 10 per cent increase year on year, continuing the
pattern of progressive dividends since flotation.
The Board, management and people
One of Dignity's key strengths is its people, who are all focused on providing
client service excellence in whatever role they perform. According to our
clients, our service continues to be excellent, which taken with these operating
results demonstrates that commitment.
There were no changes to the Board in 2007 and I thank my fellow Directors for
their continued support. I am delighted the Non-Executive Directors have agreed
to extend their commitment to work with the Group for a further two years.
Outlook for 2008
Given the success of our strategy so far, we plan that our approach for 2008
will remain unchanged.
Trading in the first eight weeks of 2008 has been strong and the Group is well
placed to deliver further growth in this coming year.
Richard Connell
Chairman
13 March 2008
Chief Executive's Overview
Strong performance
Dignity's stable and predictable business has once again delivered strong growth
in underlying operating profits, increasing 8 per cent to £47.6 million (2006:
£44.1 million). Operating profits increased 10 per cent to £47.7 million (2006:
£43.4 million). Combined with our funding strategy, this has delivered an
excellent return for our shareholders in the period.
Valuing our people
During the period, my fellow Executive Directors and I have increased the number
of visits to our funeral locations to see at first hand the quality of service
being provided by our staff. During each visit, we have spoken to colleagues who
are passionate about looking after each and every family to the best of their
ability. They truly are a credit to this business and we look forward to meeting
other colleagues in similar visits in 2008.
I am delighted that service excellence has been converted into strong operating
results. This enabled us to make a discretionary bonus payment of £1.2 million
to permanent members of staff not covered by any other bonus scheme. This
equates to £600 for each full time employee and is an increase of 20 per cent
over that paid in the previous period.
Furthermore, we continue to maintain our final salary pension scheme, keeping it
open to new employees. Following our £10.0 million lump sum contribution in
2006, the scheme shows a surplus within these financial statements of £6.8
million (2006: £0.6 million).
Investing in growth responsibly
Since flotation, the Group has invested £35.9 million in acquisitions of funeral
businesses, representing 43 funeral locations. This investment in quality
businesses delivers excellent returns for our shareholders and is a very
effective use of our excess operating cash.
Similarly, £20.9 million has been invested in 224 hearses and limousines and 436
other new vehicles in the last four years, whilst £14.6 million of other capital
expenditure has been spent to improve the facilities at 169 locations. This
substantial investment is helping to provide our staff with a better environment
for delivering excellent client service.
The marketing of pre-arranged funeral plans also serves as a significant
investment in the business, being a key driver of incremental revenues for
future periods. The Group expects to carry out the funeral for the majority of
these sales, which in turn, through client service excellence and
recommendations, will deliver further volumes going forward. At the same time,
these plans provide great peace of mind to people in our communities, who know
that their affairs will be dealt with as they wish.
Our focus
The Group's strategy is very clearly focused on growing profitability in a
responsible and sustainable manner. Underpinning this is a commitment to
excellent client service and recognition of the importance of balancing the
needs of our customers, our employees, our shareholders and the communities in
which we work.
We satisfy the needs of all our stakeholders by staying committed to both
helping people through one of the most difficult times of their lives and to our
strategy. These have remained consistent for many years.
Business Review
Introduction
The Group's operations are managed across three main areas, namely funeral
services, crematoria and pre-arranged funeral plans, which respectively
represent 79 per cent, 16 per cent and 5 per cent of the Group's revenues.
Funeral services revenues 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 marketing and administering the sale of plans.
Office for National Statistics data
Some of the Group's key performance indicators rely on the total number of
estimated deaths for each period. This information is obtained from the Office
for National Statistics (ONS).
In April 2007, the ONS suspended the provision of this information, pending the
implementation of a new computerised births, marriages and deaths system.
In October 2007, provision of the information recommenced. Historically, the
estimates were updated by the ONS from time to time, with such results typically
fluctuating by approximately one per cent. To maintain consistency of its key
performance indicators, the Group has not amended its reporting for these
changes in the past.
It is unclear at present whether the new computerised system will cause similar
or smaller differences between the initial and final published deaths in any
period and therefore it is unclear to what extent the 2007 estimates are
directly comparable to the 2006 estimates, which were reported under the old
system.
Nonetheless, the figures continue to give a good general background to the
Group's performance.
The initial publication recorded total estimated deaths for 2007 of 553,000
(2006: 548,100).
Funeral services
The Group operates a network of 540 (2006: 521) funeral locations throughout
Britain, trading under local established names. During the period, the Group
conducted 66,500 funerals (2006: 66,500) representing approximately 12.0 per
cent (2006: 12.1 per cent) of total estimated deaths in Britain.
Underlying operating profits were £42.1 million (2006: £39.3 million), an
increase of 7.1 per cent. This reflects the benefit from increased spend per
funeral and continued cost control. Reported operating profits were £42.2
million (2006: £39.3 million), an increase of 7.4 per cent.
2007 has been the busiest period for funeral acquisitions since flotation, with
a total of £16.6 million being invested in 21 funeral locations. All
acquisitions matched the Group's criteria for investment and have complemented
the existing core business well with their geographical locations and client
service ethic.
The Group closed two (2006: six) unprofitable locations in the period.
The division has continued to benefit from financial investment in the period to
help maintain and improve the network. £4.9 million has been spent in the period
to acquire 46 new hearses and limousines and 99 other vehicles. Furthermore, the
Group has spent £2.4 million on ongoing maintenance capital expenditure to
refurbish and improve 84 locations.
Client service
The Group has always been clear that client service excellence is at the heart
of our strategy for growth. Our quality of client service is borne out in the
responses to the surveys that are sent out to each family we care for.
These results continue to demonstrate exceptional levels of service, with 98 per
cent (2006: 98 per cent) of families responding saying that they would either
definitely or probably recommend our services.
Maintaining this level of service is of key importance, given that 75 per cent
of the Group's funeral business comes from reputation and recommendation.
As a result, close monitoring of local survey results, regular training and
detailed procedures are in place to ensure standards are maintained.
Crematoria
The Group operates 22 crematoria and performed 38,900 cremations (2006: 38,500)
in the period. This market share of 7.0 per cent (2006: 7.0 per cent) reflects
the Group's position as the largest single operator of crematoria in Britain.
The market share in 2007 includes approximately 500 additional cremations at two
locations following the temporary closure of a nearby local authority
crematorium.
Revenues of £25.7 million (2006: £23.2 million) have resulted in operating
profits of £14.0 million (2006: £12.1 million), an increase of 15.7 per cent.
This reflects an improved performance in memorial sales following detailed
training and focus in the period. This programme of training continues into
2008.
During the period, the Group opened new memorial areas at its locations in South
London and Crawley, at a cost of £0.5 million. These developments will in time
hold many commemorative memorials and provide space for quiet contemplation when
families visit in the following years to remember their loved ones.
In addition to this investment, the Group has spent £0.7 million improving the
facilities at its 22 locations.
Pre-arranged funeral plans
The Group continues to be the market leader in this area. Unfulfilled
pre-arranged funeral plans were 197,300 at the end of the period (2006:
188,800). These plans represent future incremental business for the funeral
division, as the Group expects to perform the majority of these funerals.
On 8 January 2007, the Group acquired the minority interest in Advance Planning
Limited from Age Concern Enterprises Limited (ACEnt). As part of this
arrangement, the Group has a 10-year marketing agreement in place with ACEnt to
provide pre-arranged funeral plans using the Age Concern brand during this time.
This is an excellent development, as this route to market has proved to be
successful in the past.
In order to grow this part of the business, our focus has been on two distinct
areas; developing the Dignity Funeral Plan endorsed by the actor Christopher
Timothy and developing marketing and distribution relationships with further
reputable affinity partners. In both cases successful tests lead us to expect
further progress in 2008.
Head office
Head office costs relate to central services that are not specifically
attributed to a particular operational division. These include the provision of
IT, finance, personnel and Directors' emoluments. In addition, the Group
records the costs of incentive bonus arrangements such as Long Term Incentive
Plans (LTIPs) and management incentives for 95 managers across all divisions
within this segment.
Costs in the period were £10.9 million (2006: £9.7 million), an increase of 12.4
per cent. This primarily reflects the increased pay-out of bonus arrangements
and a payment to a former director in lieu of notice.
Investment for the future
Acquisition activity in funeral services has continued in the first quarter of
2008, with a further six funeral locations being acquired for total
consideration of £4.4 million. Consistent application of our acquisition
criteria will continue, ensuring only well established, respected businesses are
acquired that will contribute to the future growth of the Group.
The Group continues to seek opportunities with local authorities to manage their
crematoria and cemeteries. We continue to be the preferred bidder for Rotherham
Metropolitan Borough Council's crematorium and cemeteries and anticipate legal
completion in the second quarter of 2008.
In the pre-arranged funeral plan division, testing of various opportunities
continues, each focused on the overall goal of increasing the number of
unfulfilled pre-arranged funeral plans.
Peter Hindley
Chief Executive
13 March 2008
Financial Review
The market conditions in which the Group operates and its trading performance
during the 52 week period ended 28 December 2007 are described in the Chairman's
Statement, the Chief Executive's Overview and the Business Review.
Financial highlights
2007 2006 % increase
Revenue (£ million) 159.5 149.8 6
Underlying operating profit* (£ million) 47.6 44.1 8
Underlying profit before tax* (£ million) 30.1 27.9 8
Underlying earnings per share* (pence) 33.4 26.6 26
Underlying cash generated from operations* (£ million) 57.5 51.7 11
Operating profit (£ million) 47.7 43.4 10
Profit before tax (£ million) 30.2 27.2 11
Basic earnings per share (pence) 34.4 25.9 33
Interim dividend (pence) 3.33 3.03 10
Final dividend (pence) 6.06 - n/a
* Underlying amounts exclude profit on sale of fixed assets and exceptional
items.
The Board has proposed a dividend of 6.67 pence per Ordinary Share as a final
distribution of profits relating to 2007. This brings the total dividend in
respect of 2007 to 10 pence per share, an increase of 10 per cent.
Capital structure and financing
The Group's only external long term debt financing is the Class A and B Secured
Notes, rated A and BBB respectively.
The Board considers that maintaining a leveraged balance sheet is appropriate
for the Group, given the highly stable and predictable nature of its cash flows.
This has the benefit of maximising shareholder returns, whilst leaving
sufficient flexibility to invest in the growth of the business.
The Board is of the opinion that the following provides additional indicative
information regarding the net debt position of the Group:
28 December 2007 29 December 2006
£m £m
Net amounts owing on Class A and B Secured Notes per (267.0) (268.4)
financial statements
Add: unamortised issue costs (17.2) (18.6)
Gross amounts owing (284.2) (287.0)
Accrued interest on Class A and B Secured Notes (paid (9.9) -
31 December 2007)
Cash and cash equivalents 52.6 41.4
Net debt (241.5) (245.6)
The Group's finance expense substantially consists of the interest on the Class
A and B Secured Notes and ancillary instruments. The principal and interest on
the Secured Notes amortise fully over their life and are completely repaid by
2031. The interest rate is fixed for the life of the Secured Notes and interest
is calculated on the outstanding principal. The net finance charge in the period
relating to these instruments was £20.1 million (2006: £19.4 million). This year
on year increase reflects the Secured Notes issued in February 2006 only
incurring interest since issue in 2006 and for a full 52 week period in 2007.
Other ongoing finance costs incurred in the period amounted to £0.8 million
(2006: £1.0 million), including the unwinding of discounts on the Group's
provisions and other financial liabilities.
Interest receivable on bank deposits was £2.7 million (2006: £4.0 million).
Interest receivable in 2006 was greater due to the £90.0 million proceeds of the
debt issue in 2006, which were retained in cash for approximately six months
before being returned to shareholders and used to pay a £10.0 million
contribution to the Group's pension scheme.
This contribution to the pension scheme has helped to improve its position,
demonstrated by the £0.7 million (2006: £nil) of net finance income. No
significant interest was earned on the debenture loan (2006: £0.2 million)
following its repayment during the period.
Underlying profit after tax
The Board believes that whilst statutory reporting measures provide a useful
indication of the financial performance of the Group, additional insight is
gained by excluding certain non-recurring or non-trading transactions.
Accordingly, the following information is presented to aid understanding of the
performance of the Group:
52 week period 52 week period
ended ended
28 December 29 December
2007 2006
£m £m
Operating profit for the 47.7 43.4
period as reported
Add/(deduct) the effects of:
Exceptional costs of redemption of B shares - 0.7
Profit on sale of fixed assets (0.1) -
Underlying operating profit 47.6 44.1
Net finance charges (17.5) (16.2)
Underlying profit before tax 30.1 27.9
Tax charge on underlying profit before tax (9.1) (8.6)
Underlying profit after tax 21.0 19.3
Weighted average number of Ordinary Shares in issue during 62.8 72.6
the period (million)
Underlying EPS (pence) 33.4p 26.6p
Increase in underlying EPS (per cent) 26
Earnings per share
The Group's earnings were £21.6 million (2006: £18.8 million). Basic earnings
per share were 34.4 pence per share (2006: 25.9 pence per share).
However, the Group's reported earnings include the £0.5 million one off benefit
for taxation described later in this review and £0.1 million profit on sale of
fixed assets. Consequently, the Group's underlying profit after tax was £21.0
million (2006: £19.3 million), giving underlying earnings per share of 33.4
pence per share (2006: 26.6 pence per share), an increase of 26 per cent.
This increase demonstrates the strong operating performance combined with a 13
per cent reduction in the weighted average number of shares in issue. This
reduction was a combination of two factors.
The principal factor is the result of what was effectively a share buy back
programme, made possible by the issue of Secured Notes and return of value of £1
per share (£80 million) in August 2006.
Secondly, the first Save As You Earn (SAYE) and Long Term Incentive Plan (LTIP)
Schemes introduced in 2004, the year of flotation, matured. This resulted in 1.0
million new Ordinary Shares being issued at various points during the period.
Consequently, the weighted average number of shares was 62.8 million in the
period, compared to 72.6 million in the previous period.
Cash flow and cash balances
Cash generated from operations before exceptional items was £57.5 million (2006:
£51.7 million). This increase in cash generation is more than the equivalent
increase in operating profits before depreciation. This demonstrates that the
Group's operations convert trading activities to cash efficiently, with
effective working capital management also positively impacting the position.
A busy year for acquisitions witnessed £16.6 million (2006: £7.3 million) being
spent on funeral acquisitions, with a further £2.0 million (2006: £nil million)
being incurred in the period to acquire the minority interest in Advance
Planning Limited.
Capital expenditure increased year on year, with £8.5 million (2006: £8.0
million) being spent principally on replacing older vehicles in the Group's
fleet in line with a planned replacement programme and improvements to the
Group's premises and plant.
During the period, the Group's £1.0 million debenture loan to KCH Repatriation
Limited was repaid. In addition, £1.5 million was received in exchange for new
Ordinary Shares following the completion of the Group's first SAYE scheme.
The Group also made a final dividend payment in the period totalling £3.8
million. No separate final dividend was paid in 2006, as a result of the £1 per
share return of value in August 2006.
Cash balances at the end of the period were £52.6 million. £12.4 million
represents amounts legally set aside to fund the Group's liabilities to Class A
and B Secured Noteholders. This payment was due on 31 December 2007, the first
day of the Group's 2008 trading period as it reports on a 52 week basis rather
than on a calendar year. These funds do not qualify as cash or cash equivalents
for the purposes of IAS 7, Cash Flow Statements. Accordingly, £10.2 million has
been reported within the cash flow statement as 'Payments to restricted bank
accounts for finance charges' and £2.2 million has been reported as 'Payments to
restricted bank accounts for repayment of borrowings'.
£21.5 million of the remainder has been set aside for acquisitions, of which
£4.4 million has been used since the balance sheet date. £10.6 million has also
been set aside for future corporation tax and dividend payments. However, these
funds could be used for further acquisitions if suitable opportunities arose,
with statutory payments being funded out of future operating cash flows.
Full details and analysis of the Group's cash balances are included in note 7.
Taxation
In June 2007, legislation was passed confirming that the rate of corporation tax
would reduce from 30 per cent to 28 per cent from 1 April 2008. As a result, the
Group recognised exceptional tax income of £0.5 million through its income
statement to reflect the one off reduction in the period of the Group's deferred
tax position.
This also had the effect of reducing the Group's effective tax rate (excluding
the non-recurring adjustment) to 30 per cent in 2007, compared to 31 per cent in
the previous period.
The Group anticipates its effective tax rate will transition to 29 per cent in
the 2009 financial period and beyond following these legislative changes.
The latest Budget Report was issued on 12 March 2008, the day before the release
of this preliminary announcement. Accordingly, it is too early to have completed
any detailed analysis on any new proposals announced by the Chancellor of the
Exchequer. The Group will make appropriate announcements in due course as
required by the Listing Rules if any aspect is considered to have a material
effect on the Group's earnings.
However, further legislation is anticipated in respect of Industrial Buildings
Allowances. If this is substantially enacted in the form expected in 2008, then
this will result in a one off charge to the income statement of £0.5 million.
Key performance indicators
The Group uses a number of performance indicators to both manage the business
and ensure that the Group's strategy and objectives are being delivered.
52 week period 52 week period
ended ended
28 December 29 December
2007 2006
Total estimated number of deaths (number) 553,000 548,100
Number of funerals performed (number) 66,500 66,500
Funeral market share (per cent) 12.0 12.1
Number of cremations performed (number) 38,900 38,500
Crematoria market share (per cent) 7.0 7.0
Unfulfilled pre-arranged funeral plans (number) 197,300 188,800
Underlying earnings per share (£ million) 33.4 26.6
Underlying operating profit (£ million) 47.6 44.1
Underlying cash generated from operations (£ million) 57.5 51.7
These key performance indicators are produced using information supplied by ONS
and company data.
Mike McCollum
Finance Director
13 March 2008
Consolidated income statement
For the 52 week period ended 28 December 2007
52 week 52 week
period period
ended ended
28 December 29 December
2007 2006
Note £m £m
Revenue 1 159.5 149.8
Cost of sales (77.0) (73.2)
Gross profit 82.5 76.6
Administrative expenses (36.3) (34.4)
Other operating income 1.5 1.2
Operating profit before exceptional charges 1 47.7 44.1
Exceptional charges 2 - (0.7)
Operating profit 1 47.7 43.4
Finance charges 3 (21.7) (22.1)
Finance income 3 4.2 5.9
Profit before tax 1 30.2 27.2
Taxation - before exceptional items 4 (9.1) (8.4)
Taxation - exceptional 4 0.5 -
Taxation 4 (8.6) (8.4)
Profit for the period attributable to equity shareholders 21.6 18.8
Earnings per share for profit attributable to equity
shareholders (pence)
- Basic and diluted 5 34.4p 25.9p
The results have been derived wholly from continuing activities throughout the
period.
Consolidated statement of recognised income and expense
For the 52 week period ended 28 December 2007
52 week 52 week
period period
ended ended
28 December 29 December
2007 2006
£m £m
Profit for the period 21.6 18.8
Actuarial gains on retirement benefit obligations 5.4 2.4
Deferred tax on actuarial gains on retirement benefit (1.5) (0.7)
obligations
Net income not recognised in income statement 3.9 1.7
Total recognised income for the period 25.5 20.5
Attributable to:
Equity shareholders of the parent 25.5 20.5
Consolidated balance sheet
As at 28 December 2007
28 29
December December
2007 2006
Note £m £m
Assets
Non-current assets
Goodwill 119.6 111.3
Intangible assets 24.7 12.1
Property, plant and 91.1 89.1
equipment
Financial and other assets 4.5 5.6
Retirement benefit asset 6.8 0.6
246.7 218.7
Current assets
Inventories 3.4 3.0
Trade and other 22.7 19.2
receivables
Cash and cash equivalents 7 52.6 41.4
78.7 63.6
Total assets 325.4 282.3
Liabilities
Current liabilities
Financial liabilities 7.1 4.6
Trade and other payables 33.0 19.2
Current tax liabilities 1.9 2.7
Provisions for liabilities 1.3 1.4
and charges
43.3 27.9
Non-current liabilities
Financial liabilities 267.1 271.0
Deferred tax liabilities 14.9 7.2
Other non-current 2.8 2.9
liabilities
Provisions for liabilities 1.9 1.6
and charges
286.7 282.7
Total liabilities 330.0 310.6
Shareholders' equity
Ordinary shares 8 5.7 5.6
Share premium account 8 33.8 31.6
Capital redemption reserve 8 80.0 80.0
Other reserves 8 (9.0) (9.5)
Retained earnings 8 (115.1) (134.8)
Equity attributable to (4.6) (27.1)
shareholders
Minority interest in 8 - (1.2)
equity
Total equity (4.6) (28.3)
Total equity and 325.4 282.3
liabilities
Consolidated cash flow statement
For the 52 week period ended 28 December 2007
52 week period 52 week period
ended ended
28 December 29 December
2007 2006
Note £m £m
Cash flows from operating activities
Cash generated from operations before exceptional payments 9 57.5 51.7
Exceptional costs in respect of redemption of B shares - (0.7)
Exceptional contribution to pension scheme - (10.0)
Cash generated from operations 9 57.5 41.0
Finance income received 2.1 4.2
Finance charges paid (10.3) (20.8)
Payments to restricted bank accounts for finance charges 7 (10.2) -
Tax paid (6.4) (6.1)
Net cash generated from operating activities 32.7 18.3
Cash flows from investing activities
Acquisition of subsidiaries and businesses (16.6) (7.3)
Acquisition of minority interest (2.0) -
Proceeds from sale of property, plant and equipment 0.9 0.6
Purchase of property, plant and equipment (8.5) (8.0)
Transfers to restricted bank accounts 7 (0.3) -
Net cash used in financing activities (26.5) (14.7)
Cash flows from financing activities
Proceeds from issue of Secured Notes - 90.2
Issue costs in respect of Secured Notes - (3.7)
Receipt of debenture loan 1.0 -
Repayment of borrowings (2.1) (4.1)
Payments to restricted bank accounts for repayment of 7 (2.2) -
borrowings
Interim dividends paid to shareholders 6 (2.1) (1.9)
Final dividends paid to shareholders* 6 (3.8) -
Proceeds from issue of shares under SAYE scheme 1.5 -
Redemption of B shares* - (80.0)
Net cash (used)/generated in financing activities (7.7) 0.5
Net (decrease) / increase in cash and cash equivalents (1.5) 4.1
Cash and cash equivalents at the beginning of the period 40.2 36.1
Cash and cash equivalents at the end of the period 7 38.7 40.2
*No final dividend was paid in 2006 because of the redemption of B shares made
in August 2006, which equated to £1 per Ordinary Share.
1 Revenue and segmental analysis
Funeral Crematoria Pre-arranged Head Group
services £m funeral office
plans £m
£m £m £m
52 week period ended 28 December 2007
Revenue 126.3 25.7 7.5 - 159.5
Segment result 42.2 14.0 2.4 (10.9) 47.7
Finance charges (21.7)
Finance income 4.2
Profit before tax 30.2
Taxation (8.6)
Profit for the period 21.6
Attributable to:
Equity shareholders of the parent 21.6
The segment assets and liabilities were as follows:
Funeral Crematoria Pre-arranged Head Group
services funeral office
plans
As at 28 December 2007 £m £m £m £m £m
Segment assets 201.4 56.8 12.7 1.8 272.7
Unallocated assets:
Financial assets - loans and 0.1
receivables
Cash and cash equivalents 52.6
Total assets 325.4
Segment liabilities (19.9) (2.7) (2.1) (5.2) (29.9)
Unallocated liabilities:
Borrowings (273.4)
Accrued interest (9.9)
Corporation tax (1.9)
Deferred tax (14.9)
Total liabilities (330.0)
Other segment items:
Capital expenditure (including 23.9 0.7 - 0.4 25.0
acquisitions)
Depreciation 5.8 1.2 - 0.3 7.3
Amortisation 0.1 - - 0.6 0.7
Impairment of trade receivables 1.0 - - - 1.0
Other non cash expenses - - - 0.8 0.8
Profit on sale of fixed assets 0.1 - - - 0.1
1 Revenue and segmental analysis (continued)
Funeral Crematoria Pre-arranged Head Group
services funeral plans office
52 week period ended 29 December 2006 £m £m £m £m £m
Revenue 120.0 23.2 6.6 - 149.8
Segment result before exceptional charges 39.3 12.1 2.4 (9.7) 44.1
Exceptional charges - - - (0.7) (0.7)
Segment result 39.3 12.1 2.4 (10.4) 43.4
Finance charges (22.1)
Finance income 5.9
Profit before tax 27.2
Taxation (8.4)
Profit for the period 18.8
Attributable to:
Equity shareholders of the parent 18.8
The segment assets and liabilities were as follows:
Funeral Crematoria Pre-arranged Head Group
services funeral plans office
As at 29 December 2006 £m £m £m £m £m
Segment assets 174.0 55.6 8.4 1.8 239.8
Unallocated assets:
Financial assets - loans and receivables 1.1
Cash and cash equivalents 41.4
Total assets 282.3
Segment liabilities (17.7) (2.4) (1.8) (4.0) (25.9)
Unallocated liabilities:
Borrowings (274.8)
Corporation tax (2.7)
Deferred tax (7.2)
Total liabilities (310.6)
Other segment items:
Capital expenditure (including acquisitions) 14.1 0.9 - 0.2 15.2
Depreciation 5.4 1.2 - 0.3 6.9
Amortisation 0.1 - - 0.5 0.6
Impairment of trade receivables 1.0 0.1 - - 1.1
Other non-cash expenses 0.2 - - 0.8 1.0
2 Exceptional items
52 week period 52 week period
ended ended
28 December 29 December
2007 2006
£m £m
Professional fees in relation to redemption of B Shares - 0.7
Total exceptional items - 0.7
3 Net finance charges
52 week period 52 week period
ended ended
28 December 29 December
2007 2006
£m £m
Finance charges
Class A and B Secured Notes - issued April 2003 14.4 14.6
Class A and B Secured Notes - issued February 2006 5.2 5.3
Amortisation of issue costs - issued April 2003 1.1 0.9
Amortisation of issue costs - issued February 2006 0.2 0.3
Other loans 0.1 0.1
Interest payable on finance leases 0.1 0.1
Unwinding of discounts 0.6 0.8
Finance charges 21.7 22.1
Finance income
Bank deposits (2.7) (4.0)
Release of premium on Secured Notes - issued February 2006 (0.8) (0.9)
Prepaid interest on issue of Class A and B Secured Notes - (0.8)
Net finance income on retirement benefit obligations (0.7) -
Debenture loan - (0.2)
Finance income (4.2) (5.9)
Net finance charges 17.5 16.2
4 Taxation
Analysis of charge in the period
52 week 52 week
period period
ended ended
28 29
December December
2007 2006
£m £m
Current tax - current period 7.0 6.6
Adjustment for prior period (0.2) (0.2)
6.8 6.4
Deferred tax - current period 2.3 1.8
Adjustment for prior period - 0.2
Exceptional adjustment for rate change - 30 (0.5) -
% to 28 %
1.8 2.0
Taxation 8.6 8.4
All tax relates to continuing operations.
5 Earnings per share
The calculation of basic earnings per Ordinary Share has been based on the
profit for the relevant period.
For diluted earnings per Ordinary Share, the weighted average number of Ordinary
Shares in issue is adjusted to assume conversion of all dilutive potential
Ordinary Shares.
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.
At the balance sheet date, the performance criteria for the vesting of the
awards under the LTIP Schemes had not been met and these contingently issueable
shares have been excluded from the diluted EPS calculations.
The Board believes that profit on ordinary activities before exceptional items,
profit on sale of fixed assets and after taxation is a useful indication of the
Group's performance, as it excludes significant non-recurring items. This
reporting measure is defined as 'Underlying profit after taxation' in the
Financial Review.
Accordingly, the Board believes that earnings per share calculated by reference
to this underlying profit after taxation is also a useful indicator of financial
performance.
Reconciliations of the earnings and the weighted average number of shares used
in the calculations are set out below.
Weighted
average
number of Per share
Earnings shares amount
£m millions Pence
52 week period ended 28 December 2007
Profit attributable to shareholders - Basic and diluted EPS 21.6 62.8 34.4
Deduct: Exceptional items and profit on sale of fixed assets (net of (0.6)
taxation)
Underlying profit after taxation - Basic EPS 21.0 62.8 33.4
52 week period ended 29 December 2006
Profit attributable to shareholders - Basic and diluted EPS 18.8 72.6 25.9
Add back: Exceptional items (net of taxation) 0.5
Underlying profit after taxation - Basic EPS 19.3 72.6 26.6
In 2007, the potential issue of new shares pursuant to the Group's share option
plans in the period would not affect the earnings per share (2006: would affect
earnings per share by less than 0.1 pence per share if exercised).
6. Dividends
52 week period 52 week period
ended ended
28 December 29 December
2007 2006
£m £m
Final dividend paid: 6.06p per Ordinary Share (2006: nil p) 3.8 -
Interim dividend paid: 3.33p (2006: 3.03p) per Ordinary Share 2.1 1.9
Total dividends recognised in the period 5.9 1.9
A final dividend of 6.67 pence per share, in respect of 2007, has been proposed
by the Board. This will be paid on 27 June 2008 provided approval is gained
from shareholders at the Annual General Meeting on 6 June 2008 and will be paid
to shareholders on the register at close of business on 6 June 2008.
7 Cash And Cash Equivalents
28 December 29 December
2007 2006
Note £m £m
Operating cash as reported in the cash flow statement as cash 38.7 40.2
and cash equivalents
Recoveries: pre-arranged funeral plans (a) 1.5 1.2
Amounts set aside for debt service payments (b) 12.4 -
Cash and cash equivalents as reported in the balance sheet 52.6 41.4
(a) Recoveries may not be used for one year following receipt and therefore
do not meet the definition of cash and cash equivalents in IAS 7, Cash Flow
Statements. Movements in theses amounts are shown as 'Transfers to restricted
bank accounts' in 'Investing activities'.
(b) This amount was transferred to restricted bank accounts which could only
be used for the payment of the interest and principal on the Secured Notes, the
repayment of liabilities due on the Group's interest rate swaps and commitment
fees due on its undrawn borrowing facilities and for no other purpose.
This amount does not meet the definition of cash and cash equivalents in IAS 7,
Cash Flow Statements. This amount was used to pay these respective parties on 31
December 2007. £10.2 million is shown within the cash flow statement as '
Payments to restricted bank accounts for finance charges'. £2.2 million is shown
within 'Financing activities' as 'Payments to restricted bank accounts for
repayment of borrowings'.
8 Statement of changes in shareholders' equity
Share Capital
Share premium redemption Other Retained Minority Total
capital account reserve reserves earnings Total interest equity
£m £m £m £m £m £m £m £m
Shareholders' equity as at 5.6 111.6 - (10.4) (74.2) 32.6 (1.2) 31.4
30 December 2005
Profit for the 52 weeks ended - - - - 18.8 18.8 - 18.8
29 December 2006
Reclassification of actuarial - - - (0.8) 0.8 - - -
gains and losses on defined
benefit plans (net of deferred
tax)*
Actuarial gains and losses on - - - - 2.4 2.4 - 2.4
defined benefit plans
Deferred tax on pensions - - - - (0.7) (0.7) - (0.7)
Effects of employee share - - - 0.7 - 0.7 - 0.7
options
Deferred tax on employee share - - - 1.0 - 1.0 - 1.0
options
Issue of B shares - (80.0) - - - (80.0) - (80.0)
Redemption of B shares - - 80.0 - (80.0) - - -
Dividends - - - - (1.9) (1.9) - (1.9)
Shareholders' equity as at 5.6 31.6 80.0 (9.5) (134.8) (27.1) (1.2) (28.3)
29 December 2006
Profit for the 52 weeks ended - - - - 21.6 21.6 - 21.6
28 December 2007
Actuarial gains and losses on - - - - 5.4 5.4 - 5.4
defined benefit plans
Deferred tax on pensions - - - - (1.5) (1.5) - (1.5)
Effects of employee share - - - 0.8 - 0.8 - 0.8
options
Tax on employee share options - - - 0.6 - 0.6 - 0.6
Adjustment for tax rate change (0.1) 0.1 - - -
30 per cent to 28 per cent
Share issue under 2004 SAYE 0.1 1.4 - - - 1.5 - 1.5
Scheme
Share issue under 2004 LTIP - 0.8 - - - 0.8 - 0.8
Scheme
Gift to Employee Benefit Trust - - - (0.8) - (0.8) - (0.8)
Acquisition of minority - - - - - - 1.2 1.2
interest
Dividends - - - - (5.9) (5.9) - (5.9)
Shareholders' equity as at 28 5.7 33.8 80.0 (9.0) (115.1) (4.6) - (4.6)
December 2007
* These amounts have been reclassified in accordance with IAS 19 (Revised).
Included within other reserves is the merger accounting consolidation difference
of £12.3 million, which arose on 20 December 2002 as part of the Group
reconstruction effected at that time.
The capital redemption reserve represents £80,002,465 B shares that were issued
on 2 August 2006 and redeemed for cash on the same day.
9 Reconciliation of cash generated from operations
2007 2006
£m £m
Net profit for the period 21.6 18.8
Adjustments for:
Taxation 8.6 8.4
Net finance charges 17.5 16.2
Profit on disposal of fixed assets (0.1) -
Depreciation charges 7.3 6.9
Amortisation of intangibles 0.7 0.6
Changes in working capital (excluding 1.1 0.1
acquisitions)
Employee share options 0.8 0.7
Cash generated from operations before 57.5 51.7
exceptional items
Exceptional costs in respect of - (0.7)
redemption of B shares
Exceptional contribution to pension - (10.0)
scheme
Cash generated from operations 57.5 41.0
10 Basis of preparation
European law requires that the Group's consolidated financial statements for the
52 week period ended 28 December 2007 are prepared in accordance with all
applicable International Financial Reporting Standards ('IFRSs'), as adopted by
the European Union. These financial statements have been prepared in accordance
with IFRS, International Financial Reporting Interpretations Committee ('IFRIC')
interpretations (as issued by the International Accounting Standards Board) and
those parts of the Companies Act 2006 applicable to companies reporting under
IFRS.
The consolidated financial statements have been prepared under the historic cost
convention, as modified by the revaluation of land and buildings and financial
assets and liabilities at fair value through the income statement.
11 Securitisation
In accordance with the terms of the securitisation carried out in April 2003 and
the subsequent further Secured Notes issue in February 2006, 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 &
Poors), the Security Trustee and the holders of the Secured 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
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Friday, 22nd November 2024
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