Interim Results
Dignity PLC
13 September 2007
For Immediate Release 13 September 2007
Dignity plc
('Dignity' or 'the Group')
Interim results for the 26 week period ended 29 June 2007
Dignity plc, Britain's largest single provider of funeral-related services,
namely funeral services, cremations and pre-arranged funeral plans, announces
its unaudited interim results for the 26 week period ended 29 June 2007.
Financial highlights
26 week period ended
29 June 30 June Increase
2007 2006 per cent
Underlying earnings per share (pence) 20.2 14.9 35.6
Revenue (£million) 81.1 78.3 3.6
Operating profit (£million) 27.0 24.7 9.3
Profit before tax (£million) 18.3 17.2 6.4
Cash generated from operations (£ million) 30.4 28.3 7.4
Basic earnings per share (pence) 21.1 14.9 41.6
Interim dividend (pence) 3.33 3.03 10.0
Peter Hindley, Chief Executive of Dignity plc commented:
'The Group continues to trade strongly and remains in line with expectations for
the full year.
Underlying earnings per share has increased by 36 per cent. This excellent
performance reflects the strong operating result this year and the value created
by the cash return and reduction in equity last year.
As of today the Group has been successful in acquiring 21 funeral locations.
Each of these opportunities was consistent with the Group's acquisition criteria
of buying good quality, long established businesses.
I am delighted that during the period, the Group was appointed as Rotherham
Metropolitan Borough Council's preferred bidder to operate and maintain their
crematorium and cemeteries from 2008.'
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
The Group has continued its strong trading performance into the first half of
2007. Operating profit was £27.0 million, an increase of 9.3 per cent (2006:
£24.7 million).
Underlying earnings per share has increased 35.6per cent to 20.2 pence per share
(2006: 14.9 pence per share). This demonstrates the strong operating performance
and the value created by the return of value and reduction in equity last year.
Basic earnings per share were 21.1 pence per share (2006: 14.9 pence per share),
an increase of 41.6 per cent.
The differences between basic earnings per share and underlying earnings per
share relate to tax and profit on sale of fixed assets and are explained further
in the business and financial review.
Dividends
During the period, the Group paid a final dividend of 6.06 pence per share
(2006: nil pence per share) in respect of 2006 operating performance. No final
dividend was paid in the previous year because of the issue of further Secured
Notes in February 2006 and subsequent Return of Value of £1 per share to
shareholders in August 2006.
The Board has declared an interim dividend of 3.33 pence per share (2006: 3.03
pence per share), an increase of 10.0 per cent. This dividend will be paid on 26
October 2007, to shareholders who are on the register at the close of business
on 21 September 2007.
Our staff
Our staff continue to be vital to the Group in delivering its strategy. I would
like to thank each of them for their cooperation and devotion to giving our
clients the best possible service. I am delighted that many of them are
investing in the Group's second save as you earn (SAYE) option scheme. This
scheme started this year following the successful conclusion of the first SAYE
scheme operated by the Group, which enabled approximately 600 staff members to
receive shares worth over £4.5 million.
Outlook
We have made progress in all aspects of our strategy. We have acquired a
further 21 funeral locations, been appointed as Rotherham Metropolitan Borough
Council's preferred bidder to operate their crematorium and cemeteries, the
first deal of its kind and pre-arranged funeral plans continue to add new
partners. Overall, the business continues to trade strongly. The Group's
performance remains consistent will full year expectations.
Business and financial review
Introduction
The Group's operations are managed across three main areas, namely funeral
services, crematoria and pre-arranged funeral plans. 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.
Financial highlights
• Underlying earnings per share have increased 35.6 per cent to 20.2 pence
per share (2006: 14.9 pence per share).
• Revenue has increased 3.6 per cent to £81.1 million (2006: £78.3 million).
• Operating profit has increased 9.3 per cent to £27.0 million (2006: £24.7
million).
• Profit before tax has increased 6.4 per cent to £18.3 million (2006: £17.2
million).
• Cash generated from operations has increased 7.4 per cent to £30.4 million
(2006: £28.3 million).
• Basic earnings per share have increased 41.6 per cent to 21.1 pence per
share (2006: 14.9 pence per share).
• The Group has paid a final dividend of 6.06 pence per share (2006:nil pence
per share) in respect of 2006 and declared an interim dividend in relation
to 2007 of 3.33 pence per share (2006: 3.03 pence per share), an increase
of 10.0 per cent.
Office for National Statistics data
As part of its results announcements since flotation, the Group has reported
total estimated deaths and market share based on the initial Office of National
Statistics (ONS) estimates for each calendar year.
However, in April this year, the ONS suspended the provision of this
information. We believe this to be pending the implementation of a new births,
marriages and deaths computer system. At the time of writing, the ONS have not
confirmed when this information will be provided again.
Whilst this information is useful to the Group, its absence has no impact on the
Group's operations, results or future prospects.
Funeral services
Revenue within the division was £64.5 million (2006: £ 62.8 million). Operating
profits were £22.8 million (2006: £ 21.9 million). These results were generated
by performing 34,700 funerals (2006: 35,600).
The first half of 2007 has also seen the acquisition of 10 funeral locations,
representing an investment of £8.5 million. Since the period end, the Group has
invested an additional £8.0 million to acquire 11 more funeral locations. This
reflects a greater number of opportunities being available this year, which are
consistent with the Group's acquisition criteria.
During the period, one funeral location was closed. As a result, the Group
operated 530 funeral locations at the balance sheet date and 541 as at 13
September 2007.
Crematoria
The Group continues to operate 22 crematoria and is Britain's largest single
operator. This portfolio performed 20,600 cremations (2006: 20,500) in the
period. Revenue within the division was £13.2 million (2006: £12.0 million),
whilst operating profits were £7.2 million (2006: £6.3 million). The improved
performance in the period reflects stronger memorial sales generally and
additional cremation volumes at two locations following the temporary closure of
a nearby local authority crematorium.
After a comprehensive tendering process, the Group was awarded preferred bidder
status by Rotherham Metropolitan Borough Council to operate and maintain its
crematorium and cemeteries, commencing in 2008. As part of this process,
approximately £3.5 million will be invested by the Group in improving the
crematorium's facilities. The Group continues to pursue similar opportunities
with five other local authorities.
Pre-arranged funeral plans
The Group continues to be the market leader in the provision of pre-arranged
funeral plans, which allow people to plan and pay for their funeral in advance.
The Group sells pre-arranged funeral plans through various affinity partners
such as Age Concern, AXA, Royal London and Liverpool Victoria. Pre-arranged
funeral plans are also sold through the Group's network of funeral locations.
Unfulfilled pre-arranged funeral plans at 29 June 2007 were 192,400 (2006:
185,300). These unfulfilled pre-arranged funeral plans help to support our
future market share. This is because the Group expects to perform the majority
of these funerals and the manner in which they are marketed means that the
majority of sales are likely to represent funerals that would not ordinarily
have been performed by the Group.
In the first half of 2007, the Group has continued to successfully test and
develop various propositions with other partners, most notably, News
International and Reader's Digest.
In January, the Group signed a new exclusive 10 year marketing agreement with
Age Concern, securing an important route to market. As part of this arrangement,
the Group paid £2 million to acquire the 25 per cent held by Age Concern in
Advance Planning Limited, one of the subsidiaries of the Group.
Cash flow and cash balances
Cash generated from operations was £30.4 million (2006: £28.3 million), an
increase consistent with the growth in operating profits.
During the period, the Group spent £3.6 million (2006: £3.6 million) on
maintenance capital expenditure.
Cash balances at the end of the period amounted to £42.4 million (2006: £131.6
million). £23.7 million was available for future acquisitions, of which £8.0
million has already been spent since the period end. A further £10.0 million has
been set aside for tax and dividend payments to be made in the period to June
2008.
Cash balances at June 2006 included the net proceeds of the issue of further
Secured Notes. £10 million was paid into the Group's pension scheme and £80
million (£1 per share) was returned to shareholders in the second half of 2006.
Capital structure and financing
The Group's capital structure is unchanged compared to December 2006, with the
only material external debt financing being the A and BBB rated Class A and B
Secured Notes. Further details of these Secured Notes may be found in the
Group's 2006 Annual Report.
The comparative net debt positions were as follows:
29 Jun 2007 29 Dec 2006 30 Jun 2006
£m £m £m
Class A and B Secured Notes*
- issued April 2003 (198.3) (199.7) (201.2)
- issued February 2006 (86.3) (87.3) (88.2)
Cash balances 42.4 41.4 131.6
Net debt (242.2) (245.6) (157.8)
* The amounts above exclude any costs incurred in issuing the Secured Notes,
which are netted off the gross amounts outstanding in the presentation of the
Group's balance sheet on page 8 in accordance with IAS 23.
The net finance cost in the period was £8.7 million (2006: £7.5 million), an
increase of 16.0 per cent. This increase is because the comparative period
includes net interest costs on the Notes issued in February 2006 for
approximately 19 weeks, compared to a full 26 weeks in 2007. Furthermore, as the
Group retained the proceeds of this issue in cash until July 2006, the Group's
bank deposit interest is significantly lower this period at £1.3 million (2006:
£2.3 million).
Pensions
The Group's pension scheme asset was £4.2 million (2006: deficit of £9.7
million) on an IAS 19 basis. The movement reflects the £10 million cash
injection in August 2006 as well as favourable movements in gilt yields. The
surplus of the scheme at the year end will depend on market factors at that
time.
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 a release of £0.5 million through its income statement to
reflect the one off reduction in the period of the Group's required deferred tax
provision.
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.
Further legislation is anticipated in respect of Industrial Buildings
Allowances. If this is substantially enacted in the form currently expected
prior to the end of December 2007, then this will result in a one off charge to
the income statement of £0.5 million in its full year results. Otherwise, this
charge will impact on the Group's results in 2008. This legislation is not
anticipated to affect the Group's future effective tax rate.
Earnings per share
The Group's earnings were £13.2 million (2006: £11.9 million). Basic earnings
per share were 21.1 pence per share (2006: 14.9 pence per share), an increase of
41.6 per cent.
However, the Group's reported earnings include the one off benefit of £0.5
million for taxation described above and £0.1 million (2006: £nil million) net
of tax in respect of profit on sale of fixed assets. Consequently, the Group's
underlying earnings were £12.6 million (2006: £11.9 million), giving an
underlying earnings per share of 20.2 pence per share (2006: 14.9 pence per
share), an increase of 35.6 per cent.
This increase demonstrates the strong operating performance combined with a 22
per cent reduction in the number of shares in issue. This reduction was a
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.
Underlying earnings increased less than operating profits because of the 16.0
per cent increase in net finance costs described above.
Overall, the result for the period represents an excellent performance for our
shareholders. It demonstrates the ongoing benefit of the changes to the capital
structure made last year, made possible by the predictable and stable nature of
the business.
Consolidated income statement (unaudited)
for the 26 week period ended 29 June 2007
52 week
26 week period ended period ended
29 Jun 2007 30 Jun 2006 29 Dec 2006
Note £m £m £m
Revenue 2 81.1 78.3 149.8
Cost of sales (37.9) (37.5) (73.2)
Gross profit 43.2 40.8 76.6
Administrative expenses (17.7) (17.3) (34.4)
Other operating income 1.5 1.2 1.2
Operating profit before exceptional charges 2 27.0 24.7 44.1
Exceptional charges 2 - - (0.7)
Operating profit 2 27.0 24.7 43.4
Finance charges 3 (10.8) (11.1) (22.1)
Finance income 3 2.1 3.6 5.9
Profit before tax 2 18.3 17.2 27.2
Taxation - continuing activities 4 (5.6) (5.3) (8.4)
Taxation - exceptional 4 0.5 - -
Taxation 4 (5.1) (5.3) (8.4)
Profit for the period 13.2 11.9 18.8
Profit attributable to minority interest - - -
Profit attributable to equity shareholders 8 13.2 11.9 18.8
13.2 11.9 18.8
Earnings per share attributable to 5
equity shareholders (pence)
- Basic and diluted 21.1p 14.9p 25.9p
Dividends per share attributable to 6
equity shareholders (pence)
- Dividend per share paid (2007: £3.8 million,
2006: £1.9 million) 6.06p - 3.03p
- Dividend per share proposed 3.33p 3.03p 6.06p
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 29 June 2007
52 week
26 week period ended period ended
29 Jun 2007 30 Jun 2006 29 Dec 2006
£m £m £m
Profit for the period 13.2 11.9 18.8
Actuarial gains on retirement benefit obligations 3.1 2.3 2.4
Deferred tax on actuarial gains
on retirement benefit obligations (0.9) (0.7) (0.7)
Net income not recognised in income statement 2.2 1.6 1.7
Total recognised income for the period 15.4 13.5 20.5
Attributable to:
Minority interest - - -
Equity shareholders of the parent 15.4 13.5 20.5
Consolidated balance sheet (unaudited)
as at 29 June 2007
29 Jun 2007 30 Jun 2006 29 Dec 2006
Note £m £m £m
Non-current assets
Goodwill 113.8 109.9 111.3
Other intangible assets 20.2 10.5 12.1
Property, plant and equipment 89.3 87.4 89.1
Financial assets 4.6 5.5 5.6
Retirement benefit asset 4.2 - 0.6
232.1 213.3 218.7
Current assets
Inventories 2.8 3.0 3.0
Trade and other receivables 20.7 19.7 19.2
Assets held for sale - 0.2 -
Cash and cash equivalents 7 42.4 131.6 41.4
65.9 154.5 63.6
Total assets 298.0 367.8 282.3
Liabilities
Current liabilities
Financial liabilities 4.8 4.0 4.6
Trade and other payables 19.5 18.6 19.2
Current tax liabilities 3.0 3.7 2.7
Provisions for liabilities and charges 1.4 1.1 1.4
28.7 27.4 27.9
Non-current liabilities
Financial liabilities 268.8 273.3 271.0
Deferred tax liabilities 10.9 7.3 7.2
Retirement benefit obligation - 9.7 -
Other non-current liabilities 2.8 2.9 2.9
Provisions for liabilities and charges 1.6 1.9 1.6
284.1 295.1 282.7
Total liabilities 312.8 322.5 310.6
Shareholders' equity
Ordinary shares 8 5.7 5.6 5.6
Share premium account 8 33.6 111.6 31.6
Capital redemption reserve 8 80.0 - 80.0
Other reserves 8 (10.9) (10.8) (9.5)
Retained earnings 8 (123.2) (59.9) (134.8)
Equity attributable to shareholders 8 (14.8) 46.5 (27.1)
Minority interest in equity 8 - (1.2) (1.2)
Total equity (14.8) 45.3 (28.3)
Total equity and liabilities 298.0 367.8 282.3
Consolidated cash flow statement (unaudited)
for the 26 week period ended 29 June 2007
52 week
26 week period ended period ended
29 Jun 2007 30 Jun 2006 29 Dec 2006
Note £m £m £m
Cash flows from operating activities
Cash generated from operations before 9 30.4 28.3 51.7
exceptional payments
Exceptional costs in respect of redemption of B - - (0.7)
shares
Exceptional contribution to pension scheme - - (10.0)
Cash generated from operations 30.4 28.3 41.0
Finance income received 1.4 2.2 4.2
Finance charges paid (10.3) (10.5) (20.8)
Tax paid (3.3) (2.7) (6.1)
Net cash generated from operating activities 18.2 17.3 18.3
Cash flows from investing activities
Acquisition of subsidiaries and businesses (8.5) (3.7) (7.3)
Acquisition of minority interest (2.0) - -
Proceeds from sale of property, plant and equipment 0.5 0.3 0.6
Purchase of property, plant and equipment (3.6) (3.6) (8.0)
Transfers to restricted bank accounts 7 (0.3) - -
Net cash used in investing activities (13.9) (7.0) (14.7)
Cash flows from financing activities
Proceeds from issue of Secured Notes - 90.2 90.2
Issue costs in respect of Secured Notes - (4.2) (3.7)
Receipt of debenture loan 1 - -
Repayment of borrowings (2.1) (2.0) (4.1)
Dividends paid to shareholders (3.8) - (1.9)
Proceeds from issue of shares under SAYE scheme 1.3 - -
Redemption of B shares - - (80.0)
Net cash (used in)/ generated from financing (3.6) 84.0 0.5
activities
Net increase in cash and cash equivalents 7 0.7 94.3 4.1
Cash and cash equivalents at the beginning of
the period 40.2 36.1 36.1
Cash and cash equivalents at the end of
the period 7 40.9 130.4 40.2
Notes to the interim report 2007 (unaudited) for the 26 week period ended 29
June 2007
1 Basis of preparation
The interim consolidated financial statements of Dignity plc (the 'Company') are
for the 26 weeks ended 29 June 2007 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 28
December 2007. The interim financial information is also consistent with the
audited consolidated financial statements for the 52 weeks ended 29 December
2006. It does 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 29 December 2006. The Directors approved these consolidated interim
financial statements on 12 September 2007.
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 29
December 2006. 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
judgments, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, and income and
expenses. In preparing these consolidated interim financial statements, the
significant judgments 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 29 December 2006.
Comparative information has been presented as at and for the 26 weeks ended 30
June 2006 and as at and for the 52 week period ended 29 December 2006.
The comparative figures for the 52 week period ended 29 December 2006 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 29
December 2006 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, was as follows:
26 week period ended 26 week period ended 52 week period ended
29 Jun 2007 30 Jun 2006 29 Dec 2006
Operating Operating Operating
profit/ profit/ profit/
Revenue (loss) Revenue (loss) Revenue (loss)
£m £m £m £m £m £m
Funeral services 64.5 22.8 62.8 21.9 120.0 39.3
Crematoria 13.2 7.2 12.0 6.3 23.2 12.1
Pre-arranged funeral plans 3.4 2.2 3.5 1.7 6.6 2.4
Head Office - (5.2) - (5.2) - (9.7)
Group before exceptional
items 81.1 27.0 78.3 24.7 149.8 44.1
Exceptional items - - (0.7)
Finance costs (10.8) (11.1) (22.1)
Finance income 2.1 3.6 5.9
Profit before tax 18.3 17.2 27.2
Taxation - continuing
activities (5.6) (5.3) (8.4)
Taxation - exceptional 0.5 - -
Taxation (5.1) (5.3) (8.4)
Profit for the period 13.2 11.9 18.8
*Operating profit includes Recoveries within pre-arranged funeral plans of £1.5
million (June 2006: £1.2 million; December 2006: £1.2 million) and profit on
sale of property, plant and equipment of £0.2 million (June 2006: £nil million;
December 2006: £nil million) within funeral services.
December 2006 exceptional items relate to £0.7 million professional fees
expensed within Head Office in relation to the redemption of B shares.
3 Net finance costs
52 week
26 week period ended period ended
29 Jun 2007 30 Jun 2006 29 Dec 2006
£m £m £m
Finance costs
Class A and B Secured Notes - issued April 2003 7.2 7.3 14.6
Class A and B Secured Notes - issued February 2006 2.6 2.7 5.3
Amortisation of issue costs - issued April 2003 0.5 0.5 0.9
Amortisation of issue costs - issued February 2006 0.1 0.1 0.3
Other loans 0.1 0.1 0.1
Interest payable on finance leases - - 0.1
Net finance expense on retirement benefit obligations - 0.1 -
Unwinding of discounts 0.3 0.3 0.8
Finance costs 10.8 11.1 22.1
Finance income
Bank deposits (1.3) (2.3) (4.0)
Net finance income on retirement benefit obligations (0.3) - -
Release of premium on issue of Secured Notes - issued
February 2006 (0.4) (0.4) (0.9)
Prepaid interest on issue of Class A and B Secured Notes - (0.8) (0.8)
Debenture loan (0.1) (0.1) (0.2)
Finance income (2.1) (3.6) (5.9)
Net finance costs 8.7 7.5 16.2
4 Taxation
The taxation charge on continuing operations in the period is based on an
estimated effective tax rate of 30 per cent (2006: 31 per cent) on profit before
tax for the 52 week period ending 28 December 2007.
In addition, the Group recognised a non-recurring credit of £0.5 million,
representing the step change in the Group's opening deferred taxation provision
following the Chancellor's change to the standard rate of Corporation Tax with
effect from 1 April 2008.
The Chancellor's proposals on Industrial Buildings Allowances were not
substantially enacted at the balance sheet date. If they are prior to 28
December 2007, then the Group would incur a non-recurring write off of deferred
taxation of approximately £0.5million, based on the Group's current
understanding of the proposed legislation. The Group's effective tax rate
(excluding the one off impacts) would not change.
5 Earnings per share (EPS)
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 long term incentive plan (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 after tax excluding the one off
credit of £0.5 million (June 2006: £nil million; December 2006: £nil million) in
respect of taxation adjustments described in note 4, £0.1 million (June 2006:
£nil million: December 2006: £nil million), net of tax, in respect of profit on
sale of fixed assets and £nil million (June 2006: £nil million; December 2006:
£0.5 million), net of tax, in respect of professional fees expensed in relation
to the redemption of B Shares.
Weighted
average no. Per share
Earnings of shares amount
£m m pence
26 week period ended 29 June 2007 - basic and diluted 13.2 62.5 21.1
26 week period ended 30 June 2006 - basic and diluted 11.9 80.1 14.9
52 week period ended 29 December 2006 - basic and 18.8 72.6 25.9
diluted
Weighted
Underlying average no. Per share
earnings of shares amount
£m m pence
26 week period ended 29 June 2007 12.6 62.5 20.2
26 week period ended 30 June 2006 11.9 80.1 14.9
52 week period ended 29 December 2006 19.3 72.6 26.6
6 Dividends
On 29 June 2007, the Group paid a final dividend of 6.06 pence per share (2006:
nil pence per share) totalling £3.8 million.
On 12 September 2007, the Directors approved an interim dividend of 3.33 pence
per share (2006: 3.03 pence per share) totalling £2.1 million (2006: £1.9
million), which will be paid on 26 October 2007 to those shareholders on the
register at the close of business on 21 September 2007.
7 Cash and cash equivalents
29 Jun 30 Jun 29 Dec
2007 2006 2006
Note £m £m £m
Operating cash 40.9 30.4 40.2
Amounts set aside for intercompany loan (a) - 17.7 -
Amounts set aside until 31 July 2006 (b) - 82.3 -
Cash and cash equivalents as reported
in the cash flow statement 40.9 130.4 40.2
Recoveries: pre-arranged funeral plans (c) 1.5 1.2 1.2
Cash and cash equivalents as reported
in the balance sheet 42.4 131.6 41.4
(a) This amount (save for circumstances where the Directors believed that there
may have been a risk of defaulting on the Secured Notes) may only have been
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. This loan was repaid in full using these
monies on 31 July 2006.
(b) This amount (save for circumstances where the Directors believed that there
may have been a risk of defaulting on the Secured Notes) could not be used
for any purpose until 31 July 2006, when funds became available for any
corporate purpose.
(c) Recoveries may not be used for one year following receipt.
Movements in the amounts described in note (a) have been treated as cash
equivalents in the cash flow statement as they became available for the Group's
use once the intercompany payment was made.
Movements in the amounts described in note (b) have been treated as cash
equivalents in the cash flow statement as they became available for the Group's
use on 31 July 2006.
Movements in the amounts described in note (c) have been treated as 'transfers
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.
8 Statement of changes in shareholders' equity
Share Capital
Share premium redemption Other Retained Minority
capital account reserve reserves earnings Total interest Total
£m £m £m £m £m £m £m £m
Shareholders' equity as at 30 December 5.6 111.6 - (10.4) (74.2) 32.6 (1.2) 31.4
2005
Profit for the 26 weeks ended 30 June - - - - 11.9 11.9 - 11.9
2006
Reclassification of actuarial gains and
losses
on defined benefit plans (net of - - - (0.8) 0.8 - - -
deferred tax)(1)
Actuarial gains and losses on defined - - - - 2.3 2.3 - 2.3
benefit plans
Deferred tax on pensions - - - - (0.7) (0.7) - (0.7)
Effects of employee share options - - - 0.3 - 0.3 - 0.3
Deferred tax on employee share options - - - 0.1 - 0.1 - 0.1
Shareholders' equity as at 30 June 2006 5.6 111.6 - (10.8) (59.9) 46.5 (1.2) 45.3
Profit for the 26 weeks ended 29 - - - - 6.9 6.9 - 6.9
December 2006
Actuarial gains and losses on defined - - - - 0.1 0.1 - 0.1
benefit plans
Effects of employee share options - - - 0.4 - 0.4 - 0.4
Deferred tax on employee share options - - - 0.9 - 0.9 - 0.9
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 29 December 5.6 31.6 80.0 (9.5) (134.8) (27.1) (1.2) (28.3)
2006
Profit for the 26 weeks ended 29 June - - - - 13.2 13.2 - 13.2
2007
Actuarial gains and losses on defined - - - - 3.1 3.1 - 3.1
benefit plans
Deferred tax on pensions - - - - (0.9) (0.9) - (0.9)
Effects of employee share options - - - 0.3 - 0.3 - 0.3
Tax on employee share options - - - (0.9) - (0.9) - (0.9)
Share issue under 2004 SAYE scheme 0.1 1.2 - - - 1.3 - 1.3
Share issue under 2004 LTIP scheme - 0.8 - - - 0.8 - 0.8
Gift to Employee Benefit Trust (2) - - - (0.8) - (0.8) - (0.8)
Acquisition of minority interest (3) - - - - - - 1.2 1.2
Dividends - - - - (3.8) (3.8) - (3.8)
Shareholders' equity as at 29 June 2007 5.7 33.6 80.0 (10.9) (123.2) (14.8) - (14.8)
(1) These amounts have been reclassified in accordance with IAS 19
(Revised).
(2) Relating to issue of shares under 2004 LTIP scheme.
(3) Resulting from acquisition of 25 per cent minority interest in Advance
Planning Limited in January 2007.
9 Reconciliation of cash generated from operations
52 week
26 week period ended period ended
29 Jun 2007 30 Jun 2006 29 Dec 2006
£m £m £m
Net profit for the period 13.2 11.9 18.8
Adjustments for:
Taxation 5.1 5.3 8.4
Net finance costs 8.7 7.5 16.2
Profit on disposal of fixed assets (0.2) - -
Depreciation charges 3.6 3.4 6.9
Amortisation of intangibles 0.3 0.3 0.6
Changes in working capital (excluding acquisitions) (0.6) (0.4) 0.1
Employee share options 0.3 0.3 0.7
Cash generated from operations before exceptional items 30.4 28.3 51.7
Exceptional costs in respect of redemption of B shares - - (0.7)
Exceptional contribution to pension scheme - - (10)
Cash generated from operations 30.4 28.3 41.0
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.
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