TIDMDTY
RNS Number : 7964Y
Dignity PLC
08 March 2017
For immediate release 8 March 2017
Dignity plc
Preliminary results for the 53 week period ended 30 December
2016
Dignity plc (Dignity or the Group), the UK's only listed
provider of funeral related services, announces its preliminary
results for the 53 week period ended 30 December 2016.
Financial highlights
53 week 52 week
Period ended Period ended Increase
/
30 December 25 December (decrease)
2016 2015 per
cent
Revenue (GBPmillion) 313.6 305.3 3
Underlying operating profit(a) (GBPmillion) 101.7 98.7 3
Underlying profit before tax(a)
(GBPmillion) 75.2 72.2 4
Underlying earnings per share(b)
(pence) 119.8 114.8 4
Cash generated from operations(c)
(GBPmillion) 121.1 125.2 (3)
Operating profit (GBPmillion) 97.7 95.5 2
Profit before tax (GBPmillion) 71.2 69.0 3
Basic earnings per share (pence) 115.3 115.2 -
Interim dividend paid in the period(d)
(pence) 7.85 7.14 10
Final dividend proposed in respect
of the period(e) (pence) 15.74 14.31 10
Deaths 590,000 588,000 -
--------------------------------------------- ------------------- ------------------- ------------
Non-GAAP measures
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. These measures are
defined as follows:
(a) Underlying profit is calculated as profit excluding profit
(or loss) on sale of fixed assets and external transaction
costs.
(b) Underlying earnings per share is calculated as profit on
ordinary activities after taxation, before profit (or loss) on sale
of fixed assets and external transaction costs and exceptional
items (all net of tax), divided by the weighted average number of
Ordinary Shares in issue in the period.
(c) Cash generated from operations excludes external transaction costs.
Other notes
(d) Interim dividend represents the interim dividend that was
declared and paid in the period out of earnings generated in the
same period.
(e) The 2016 final dividend is the proposed dividend expected to
be approved at the annual general meeting on 8 June 2017. The 2015
final dividend is the dividend approved for payment by shareholders
at the annual general meeting on 9 June 2016.
Key points
-- Financial performance better than expected at the start of
the year, as guided in November 2016;
-- Deaths broadly flat at 590,000 (2015: 588,000) and higher
than originally anticipated;
-- Funeral market share decline is larger than seen before,
which follows better market share than anticipated in 2015;
-- Focus remains on customer service, which continues to be
high, with 98 per cent of clients saying they would recommend
us;
-- Portfolio expanded through the acquisition of a total of 16
funeral locations and five crematoria in the period;
-- Total acquisition activity investment of GBP56 million (net
of cash acquired) funded from existing cash resources;
-- Satellite location programme ongoing with 11 locations opened in the year;
-- Since the last trading update, the Group has obtained
planning permission for a third new crematorium. They are all due
to open in 2018/ 2019;
-- Another good year of pre-arranged funeral plan sales, with
active pre-arranged funeral plans increasing to 404,000 (2015:
374,000), helped by trust and insurance based sales;
-- Starting to see potential opportunities from the use of digital technologies; and
-- The Group has acquired three funeral locations and one small
crematorium since the balance sheet date.
Outlook
The number of deaths has been higher in 2016 than the Group
originally anticipated following a significant increase in the
number of deaths in 2015. Historical data would suggest that deaths
in 2017 could be significantly lower than 2015 and 2016. Trading in
the first few weeks of 2017 has however continued to be strong. As
a result, the Board's expectations are unchanged for the year
ahead.
The Board remains positive about the future prospects for the
Group. However, given the increased size of the Group and
increasing competition in each of our markets, the Board has
revised its medium-term target underlying EPS growth rate to eight
per cent per annum from the current 10 per cent. As with the
previous target, this objective includes the benefit of the
reinvestment of cash generated by the business and the Group's
ability to releverage its balance sheet either to fund acquisitions
or return capital to shareholders.
Mike McCollum, Chief Executive of Dignity plc commented:
"I am pleased with our financial and operational performance in
the period. Our business has responded well to the needs of our
customers, maintaining the high standards we set ourselves.
Looking into the future, we anticipate further engagement with
the Scottish and Westminster parliaments, as we believe regulation
of the funeral and pre-arranged funeral markets is necessary to
ensure every family receives minimum standards of care from
appropriate facilities. We also expect to invest more in digital
technologies that will help our clients and also act as a source of
new business for the Group."
For further information please contact:
Mike McCollum, Chief Executive
Steve Whittern, Finance Director
Dignity plc +44 (0) 207 466 5000
Richard Oldworth
Catriona Flint
Buchanan +44 (0) 207 466 5000
www.buchanan.uk.com
From the Chairman
Overview
2016 has been another successful year for the Group, with good
financial performance and continued development of our network of
locations.
In the last couple of years, Dignity has witnessed some notable
changes. Firstly, the number of deaths increased significantly in
2015 and then continued to remain much higher than anticipated in
2016, helping us deliver stronger than expected financial
performance in the last two years. Secondly, competition has
continued to increase, particularly in funerals and pre-arranged
funeral plans. These industries are unregulated which has
encouraged new entrants. We are also seeing a number of businesses
offering digital services in the funeral market.
We are tackling these changes head on. We continue to seek
regulation of our markets, arguing that minimum standards of care
should apply in funeral locations and for better regulation of
pre-arranged plans. We are also seeking to develop our web presence
in ways to help market our services, but also to help the level of
service we provide our clients. Finally, we are introducing new,
more affordable services that will appeal to customers we would not
normally expect to be able to help. These efforts are the start of
a multi year journey for us and we will update our stakeholders on
how these efforts have helped the business, as all of these areas
represent opportunities for us given our scale and existing
standard of facilities.
Dividends
The Board is proposing a final dividend of 15.74 pence per
Ordinary Share, bringing the total dividend for the year to 23.59
pence; another increase of 10 per cent on the previous year.
If shareholders approve this payment at the Annual General
Meeting ('AGM') on 8 June 2017, then it will be paid on 30 June
2017 to members on the register at close of business on 19 May
2017.
Governance and the Board
As a board, we are committed to maintaining our high standards
of corporate governance. The Board continues to focus not only on
what we deliver as a business, but also how we deliver. Ensuring
that there is a high level of cultural integrity embedded within
the way we operate is a key part of what we deliver as a business
and how we deliver, as is our ability to drive sustainable
performance and meaningful stakeholder value.
The composition of the Board has been stable, with one planned
change to address succession planning. As already announced, Martin
Pexton has left the Board and been replaced by Mary McNamara. I
would like to thank Martin for his contribution to the Group and I
am delighted to welcome Mary to the Board.
Our people
As in previous years we have made a discretionary bonus payment
to our employees, this year equating to GBP1,200 per full time
employee. We have also decided to embed this amount in all
employees' future pay rather than continue to treat it as a
discretionary bonus. Therefore all employees have received a flat
GBP1,200 pay increase (pro rated for part time employees) in
January 2017. All other things being equal, the Group does not as a
consequence anticipate making a discretionary bonus payment to
staff in respect of 2017's performance. This salary increase
applied across the business, including managers and Executive
Directors alike.
Outlook for 2017 and beyond
The number of deaths has been higher in 2016 than the Group
originally anticipated following a significant increase in the
number of deaths in 2015. Historical data would suggest that deaths
in 2017 could be significantly lower than 2015 and 2016. Trading in
the first few weeks of 2017 has however continued to be strong. As
a result, the Board's financial expectations are unchanged for the
year ahead.
The Board remains positive about the future prospects for the
Group. However, given the increased size of the Group and
increasing competition in each of our markets the Board has revised
its medium-term target underlying EPS growth rate to eight per cent
per annum from the current 10 per cent. As with the previous
target, this objective includes the benefit of the reinvestment of
cash generated by the business and the Group's ability to
releverage its balance sheet either to fund acquisitions or return
capital to shareholders.
Peter Hindley
Chairman
8 March 2017
Chief Executive's Overview
Overview
A year ago, we described an extraordinary period in 2015, with
the number of deaths increasing by seven per cent to 588,000. We
noted that it was likely this sharp increase would normalise in
2016, but this has not been the case. Reported deaths were slightly
higher than 2015 at 590,000. Allowing for the fact that 2016
represents a 53 week period for the Group, means that even on a 52
week comparable basis, deaths were only approximately two per cent
lower in the period. This has enabled us to grow profits year on
year and outperform expectations despite some headwinds experienced
by the business.
The performance reflects a larger market share loss in our core
business than seen before, combined with additional costs incurred
to support the business. The market share decline follows stronger
market share than expected in 2015. 2017 has started well but we
continue to keep this under review.
We expect 2017 to be a year where we develop the business
further in response to the changing environment in which we
operate. For example, we have engaged with the reviews into funeral
services by the Scottish and Westminster parliaments, arguing for
regulation of funeral services and pre-arranged funeral plans. We
are also working hard on introducing new digital services. The
first such example is the launch of Simplicity Cremations, a
nationally available, online, affordable direct cremation service
(where there is no traditional funeral service, simply the
collection and unwitnessed cremation of the deceased and then
return of the ashes). This does not replace the full service,
traditional funeral that we provide, but rather provides families
with a lower cost simple option. The market for this service is
currently small but given our significant national networks of
funeral locations and crematoria we are able to offer this service
in a more comprehensive and cost effective way than other
operators.
Corporate activity
The business invested GBP56.3 million on acquisitions in the
period, including GBP41.1 million (excluding external transaction
costs) to acquire five crematoria locations from Funeral Services
Limited (trading as Co-op Funeralcare) (the 'Crematoria
Acquisition'). This was an unexpected opportunity for the Group and
one we were able to quickly respond to thanks to our strong balance
sheet and detailed understanding of the market. The Crematoria
Acquisition generated GBP1.0 million of operating profit in the
period, in line with expectations.
We have also seen further developments in our plan to build new
crematoria. An update on this is described in the Operating
Review.
Maintaining investment and development momentum in our core
business
We continue to set aside resources to invest in our existing
funeral and crematoria locations. We have increased the staffing of
our property team in the year to manage our estate and associated
capital expenditure more efficiently and to create additional
recourse for finding funeral satellite locations and crematorium
sites. This should help to free local management time so that they
can further focus on delivering excellent client service.
Long-term focus drives strong performance
The business has yet again demonstrated its robustness and is
well placed for the future. We hope to achieve our revised
medium-term target of eight per cent per annum increases in
earnings per share by staying focused on excellent service,
operating efficiently, selling pre-arranged funeral plans,
acquiring and developing quality businesses where possible and
keeping our capital structure appropriately leveraged.
We will also need to ensure the high standards Dignity operates
at are properly understood by all stakeholders; particularly given
continued political and media interest in the sector and our
ongoing support for better regulation of the industries in which we
operate.
Operating Review
Funeral services
Performance
As at 30 December 2016, the Group operated a network of 792
(2015: 767) funeral locations throughout the United Kingdom,
generally trading under local established names.
During the period, the Group conducted 70,700 funerals compared
to 73,500 in 2015.
Approximately one per cent of all funerals were conducted in
Northern Ireland. Excluding Northern Ireland, these funerals
represent approximately 11.8 per cent (2015: 12.3 per cent) of
total estimated deaths in Britain. Whilst funerals divided by
estimated deaths is a reasonable measure of our market share, the
Group does not have a complete national presence and consequently,
this calculation can only ever be an estimate.
Underlying operating profit was GBP79.0 million (2015: GBP76.8
million), an increase of three per cent.
This financial performance reflects the lower number of funerals
performed. Market share was lower than expected, offsetting a
better than expected performance in 2015. The Group continues to
keep this under review.
Progress and Developments
Investment in the core portfolio
Significant cash resources continue to be used to maintain the
Group's locations and fleet. In 2016, GBP13.6 million was invested
in maintenance capital expenditure.
Funeral location portfolio
The Group acquired 16 funeral locations for a total investment
of GBP14.7 million. These acquisitions performed in line with
expectations. GBP0.8 million was also invested in our satellite
location programme, with 11 opening in the period. Two locations
were closed, principally where it was considered commercially
appropriate not to renew leases.
Outlook
The funeral division has performed well and is well placed for
the future. Satellite locations opened in recent years continue to
be profitable and the Group continues to see this as an opportunity
to help grow the business. Consequently, the Group anticipates
opening approximately 20 satellites per year at a capital cost of
approximately GBP1 million.
Pre-arranged funerals continue to be a source of incremental
funerals, with approximately 25 per cent of all funerals performed
in the year (2015: 24 per cent) having previously been
pre-arranged. This proportion is anticipated to continue to
increase over time. Whilst these funerals represent substantially
lower average revenue per funeral, their incremental nature means
they are a positive contributor to the Group's performance.
CREMATORIA
Performance
The Group remains the largest single operator of crematoria in
Britain, operating 44 (2015: 39) crematoria as at 30 December 2016.
The Group performed 59,500 cremations (2015: 57,700) in the period,
representing 10.1 per cent (2015: 9.8 per cent) of total estimated
deaths in Britain.
Underlying operating profit was GBP37.6 million (2015: GBP34.6
million), an increase of nine per cent.
This operating performance is driven by increasing average
revenues per cremation, which has been assisted by the increase in
the number of cremations performed in the year. Acquisition of
crematoria has also assisted operating profit growth.
Sales of memorials and other items have been stable, equating to
approximately GBP273 per cremation compared to GBP276 in the
previous period.
Progress and Developments
GBP1.0 million of the operating profit in the period was
generated by the Crematoria Acquisition. This acquisition has
performed in line with expectations and is consistent with the
Group's guidance at acquisition of anticipated EBITDA of GBP2.9
million in 2017.
The Group has also invested GBP3.7 million maintaining its
locations in the period.
The Group now has planning permission on three locations for new
crematoria, with the third receiving planning permission in
December 2016. Finalisation of building plans and addressing local
planning requirements means that these locations are expected to
open in 2018 and 2019. The total capital commitment for these
locations is expected to be approximately GBP13 million to GBP14
million. Each of the locations with planning permission will take
five to seven years to reach maturity, performing 800 to 1,000
cremations per year.
The Group also has one live planning application for which it is
awaiting a decision and has options over a number of other pieces
of land where no capital commitment will arise unless planning
permission for a new crematorium is obtained in due course.
Outlook
The Group continues to identify further locations suitable for
new crematoria and is also continuing to seek partnerships with
local authorities. Progress on this is expected to be slow, albeit
this supports the relative robustness and value of the Group's
existing locations.
PRE-ARRANGED FUNERAL PLANS
Performance
The Group continues to have a strong market presence in
pre-arranged funeral plans. These plans represent potential future
incremental business for the funeral division, as the Group expects
to perform the majority of these funerals.
Underlying operating performance in the period has been solid,
with operating profit of GBP8.5 million (2015: GBP7.8 million), an
increase of nine per cent.
In overall terms, approximately 49,000 (2015: 38,000) new plan
sales were made and the number of active pre-arranged funeral plans
increased to 404,000 (2015: 374,000) as at 30 December 2016. 20,000
(2015: 4,000) of the sales represent plans linked to life assurance
plans with third parties rather than trust based plan sales.
Whilst the contribution to this year's operating profit from the
marketing activity is reported at the time of sale, it is important
to recognise that the sales made represent significant potential
future revenues for the funeral division. These amounts will be
recognised as and when the funerals are performed.
As with all the Group's divisions, pre-arranged funeral plan
profits broadly reflect the cash generated by that activity.
Progress and Developments
The increase in the number of active plans follows plans sold in
the year. The market has been particularly competitive, with the
internet and 'cold calling' featuring extensively in activity by
competitors. Dignity has remained focused on selling high quality
business, with low cancellation rates, selling in ways that support
the strong reputation of the Group.
The Group has continued to work hard at developing its portfolio
of affinity partners and has formed a number of new partnerships in
the period with organisations in the retail and financial services
arena with further trials expected in 2017.
The financial position of the independent trusts holding
members' monies is crucial, given the Group ultimately guarantees
the promises made to members. At the end of 2016, the Trusts held
over GBP860 million of assets. Average assets per plan are greater
than the amount currently received for performing a funeral.
However, the latest actuarial valuations of the pre-arranged
funeral plan trusts (at 23 September 2016) showed them to have a
small actuarial deficit, driven by the volatility in the markets
and low gilt yields.
Crucially, each plan sold creates additional headroom, since the
funds paid in are more at the point of sale than those received by
the Group if the member died immediately.
The Trustees continue to take external advice on their
investment strategy, with the overall objective of achieving a real
return over time.
The Trustees have informed the Group that they continue to take
independent advice regarding the Trust's investment strategy. As a
result, it is anticipated that the investment allocation by class
will develop further during 2017 and beyond, gradually resulting in
a portfolio in the following profile:
Example investment types Target
(%)
------------------------------------- ----------------------------- -------
Index linked gilts and
Defensive investments corporate bonds 22
Illiquid investments Private investments 16
Core growth investments Equities 22
Growth fixed income and alternative Property funds and emerging
investments market debt 40
------------------------------------- ----------------------------- -------
These developments in the Trust's investment strategy are
expected to enhance investment returns in the longer-term for a
broadly similar level of risk as that currently taken. The strategy
will, however, potentially result in greater volatility year on
year in the reported value of the Trust's assets.
Outlook
Opportunities for growth continue through the development of
existing relationships and the creation of new ones.
The Trustees have indicated that they will continue to work with
their advisers to keep the investment strategy under review and
amend it where appropriate.
Central overheads
Overview
Central overheads relate to central services that are not
specifically attributed to a particular operating division. These
include the provision of IT, finance, personnel and Directors'
emoluments. In addition and consistent with previous periods, the
Group records the costs of incentive bonus arrangements, such as
Long-Term Incentive Plans ('LTIPs') and annual performance bonuses,
which are provided to over 100 managers working across the business
centrally.
Developments
Costs in the period were GBP23.4 million (2015: GBP20.5
million), an increase of 14.1 per cent.
Investment in central overheads continues in order to respond to
the activities of the Group. Incentive costs, including LTIP costs
and cash bonuses, have increased from GBP6.3 million to GBP8.3
million. Excluding these bonus costs, central overheads represent
4.8 per cent (2015: 4.7 per cent) of revenues.
Capital expenditure of GBP2.3 million has been incurred on
central projects predominantly relating to IT that will help the
business as a whole operate more efficiently. This includes GBP1.3
million incurred to date on the update of the Group's accounting
software described last year. This new system went live in early
2017 as originally anticipated. The remainder of the anticipated
GBP3 million commitment is therefore expected to be incurred in
2017.
In addition, given the increase in headcount in central
overheads (and pre-need operations, which are based at the Group's
head office), the Group has taken additional leased office space in
Sutton Coldfield to support operations. This resulted in capital
spend of GBP0.2 million in the period, with a further GBP0.9
million to be spent in 2017 prior to it being able to be used in
early 2017.
Outlook
The Group will continue to respond to the needs of the business,
providing additional central resource where necessary to help
growth or manage compliance with appropriate laws and
regulations.
Mike McCollum
Chief Executive
8 March 2017
Financial Review
Introduction
These financial results have been prepared in accordance with
International Financial Reporting Standards ('IFRS') as adopted in
the EU.
Financial highlights
The Group's financial performance is summarised below:
53 week 52 week
period period
ended 30 ended 25 Increase/
December December (decrease)
2016 2015 %
Revenue (GBP million) 313.6 305.3 3
Underlying operating profit(a) (GBP
million) 101.7 98.7 3
Underlying profit before tax(a) (GBP
million) 75.2 72.2 4
Underlying earnings per share(a) (pence) 119.8 114.8 4
Cash generated from operations(b) (GBP
million) 121.1 125.2 (3)
Operating profit (GBP million) 97.7 95.5 2
Profit before tax (GBP million) 71.2 69.0 3
Basic earnings per share (pence) 115.3 115.2 -
Dividends paid in the period:
Interim dividend (pence) 7.85 7.14 10
Final dividend (pence) 14.31 13.01 10
(a) Underlying amounts exclude profit on sale of fixed assets,
external transaction costs and exceptional items, net of tax where
appropriate.
(b) Cash generated from operations excludes external transaction
costs.
The Board has proposed a dividend of 15.74 pence per Ordinary
Share as a final distribution of profits relating to 2016 to be
paid on 30 June 2017, subject to shareholder approval.
Exceptional items and underlying reporting measures
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:
53 week 52 week
period period
ended ended
30 December 25 December
2016 2015
GBPm GBPm
Operating profit for the period as reported 97.7 95.5
Add / (deduct) the effects of:
Profit on sale of fixed assets (0.1) -
External transaction costs 4.1 3.2
Underlying operating profit 101.7 98.7
Net finance costs (26.5) (26.5)
Underlying profit before tax 75.2 72.2
Tax charge on underlying profit before tax(c) (15.8) (15.5)
Underlying profit after tax 59.4 56.7
Weighted average number of Ordinary Shares
in issue during the period (million) 49.6 49.4
Underlying EPS (pence) 119.8p 114.8p
Increase in Underlying EPS (per cent) 4% 34%
(c) Excludes exceptional tax credit of GBP1.8 million (2015:
GBP3.4 million).
Earnings per share
The Group's statutory profit after tax was GBP57.2 million
(2015: GBP56.9 million). Basic earnings per share were 115.3 pence
per share (2015: 115.2 pence per share). The Group's measures of
underlying performance exclude the effect (after tax) of the profit
(or loss) on sale of fixed assets, external transaction costs and
exceptional items. Consequently, underlying profit after tax was
GBP59.4 million (2015: GBP56.7 million), giving underlying earnings
per share of 119.8 pence per share (2015: 114.8 pence per share),
an increase of four per cent.
The growth rate for underlying EPS exceeded the growth in
underlying operating profit, reflecting the leveraging effect of
the Group's capital structure.
External transaction costs reflects amounts paid to external
parties for legal, tax and other advice in respect of the Group's
acquisitions.
Capital expenditure on property, plant and equipment and
intangible assets was GBP22.8 million (2015: GBP19.9 million).
This is analysed as:
30 December 25 December
2016 2015
GBPm GBPm
Maintenance capital expenditure:
Funeral services 13.6 12.1
Crematoria 3.7 2.5
Other 2.3 1.0
Total maintenance capital expenditure(a) 19.6 15.6
Branch relocations 1.6 3.9
Satellite locations 0.8 0.3
Development of new crematoria and cemeteries 0.8 0.1
Total property, plant and equipment 22.8 19.9
Partly funded by:
Disposal proceeds (1.0) (0.8)
Net capital expenditure 21.8 19.1
(a) Maintenance capital expenditure includes vehicle replacement
programme, improvements to locations and purchases of other
tangible and intangible assets.
Cash flow and cash balances
Cash generated from operations was GBP121.1 million (2015:
GBP125.2 million) stated before external transaction costs of
GBP3.9 million (2015: GBP3.2 million). The reduction year on year
despite an increase in operating profit reflects timing differences
of working capital items year on year. The longer-term expectation
of profits converting efficiently to cash is unchanged.
As a result of the strong year, the Group was able to fund all
of its corporate activity from its cash reserves, spending GBP56.3
million (net of cash acquired and excluding external transaction
costs) on the acquisition of 16 funeral locations and five
crematoria locations and balancing payments in respect of prior
year acquisitions.
Cash balances at the end of the period were GBP67.1 million
(2015: GBP98.8 million). The remainder of the Group's cash reserves
are essentially free for use as it sees fit. However, in its
planning, the Group sets aside approximately GBP23.8 million for
future corporation tax and dividend payments expected to be spent
in 2017.
Further details and analysis of the Group's cash balances are
included in note 6.
Pensions
The balance sheet shows a deficit of GBP25.9 million before
deferred tax (2015: deficit of GBP12.5 million). The Group
concluded a consultation with employees in February 2017. Following
this consultation, the Group decided to close its defined benefit
pension to any further accrual. Affected employees will instead be
able to contribute between four and 10 per cent of salary into a
defined contribution scheme, which will be matched by the
Group.
The Group does not expect the actuarial position of the scheme
to change significantly prior to its triennial valuation in April
2017. Consequently, a schedule of contributions is expected to have
to be agreed with the Trustees of the scheme during 2017.
Taxation
The Group's effective tax rate on underlying profits in the
period was 21.0 per cent (2015: 21.5 per cent) excluding the
exceptional rate change. Changes to the UK corporation tax rates
were substantively enacted as part of Finance Bill 2016. This will
mean headline corporation tax rates will reduce to 19 per cent from
1 April 2017 and 17 per cent from 1 April 2020. The Group has
therefore recognised an exceptional credit in the income statement
of GBP1.8 million in order to state its deferred tax balances at
the new long-term rate.
The Group continues to expect its effective tax rate to be
approximately one per cent above the headline rate of corporation
tax. This translates to an effective rate for 2017, 2018 and 2019
of 20.0 per cent.
The Group's net cash tax payments were GBP10.6 million (2015:
GBP3.7 million) in the period. The Group expects corporation tax
payments to increase in 2017 and over time for cash taxes to be
broadly equivalent to its income statement charge. Legislative
changes requiring an acceleration of quarterly payments on account
have been delayed and will not now impact the Group until 2020 when
the Group will pay 18 months of cash tax, reverting to 12 months in
each year thereafter.
Capital structure and financing
Secured Notes
The Group's principal source of long-term debt financing is the
Secured A Notes and the Secured B Notes. They are rated A and BBB
respectively by Fitch and Standard & Poor's.
The Board considers that maintaining a leveraged balance sheet
is appropriate for the Group, given the stable and predictable
nature of its cash flows. This predictability is matched in the
Secured Notes. The principal is repaid completely over the life of
the Secured Notes and is therefore scheduled to be repaid by 2049.
The interest rate is fixed for the life of the Secured Notes and
interest is calculated on the principal.
The key terms of the Secured Notes are summarised in the table
below:
Secured A Notes Secured B
Notes
Total new issuance at par GBP238.9 million GBP356.4 million
Legal maturity 31 December 31 December
2034 2049
Coupon 3.5456% 4.6956%
Rating by Fitch and Standard & Poor's A BBB
The Secured Notes have an annual debt service obligation
(principal and interest) of circa GBP33.2 million.
Given the duration of the Secured Notes, this structure is
capable of being used to periodically issue further Secured Notes
when deemed appropriate and subject to market conditions. The
majority of such proceeds have historically been returned to
shareholders. This has the benefit of enhancing shareholder
returns, whilst leaving sufficient free cash to invest in the
growth of the business.
Financial Covenant
The Group's primary financial covenant under the Secured Notes
requires EBITDA to total debt service to be above 1.5 times. The
ratio at 30 December 2016 was 3.37 times (2015: 3.35 times).
Crematoria Acquisition Facility
The other external drawn source of debt funding is the Group's
GBP15.8 million Crematoria Acquisition Facility, which is fully
utilised. The facility is repayable in one amount in February 2018.
Interest is fixed at approximately 3.3 per cent.
Funeral Acquisition Facility
During the period, the Group had an undrawn Funeral Acquisition
Facility of GBP26.25 million which was originally created to help
fund the acquisition of a business in 2015. However, given the
strong trading in the period leading up to the acquisition, the
level of cash held by the Group meant that this facility was not
required. The facility remains undrawn, attracting a non
utilisation fee of approximately GBP150,000 per annum. If drawn,
the facility will charge interest at a rate between 125 and 165
basis points per annum above LIBOR (depending on the ratio of
EBITDA to gross debt). The availability of this facility has been
extended until the end of March 2017.
Discussions are currently underway with a view to replacing both
facilities with a new revolving credit facility for a similar level
of debt to give the Group more certainty in the medium-term over a
line of credit, should it be required.
Net debt
The Group's net debt is analysed as:
30 December 25 December
2016 2015
GBPm GBPm
Net amounts owing on Secured Notes (573.9) (586.5)
Add: unamortised issue costs (0.7) (0.7)
Gross amounts owing on Secured Notes (574.6) (587.2)
Net amounts owing on Crematoria Acquisition
Facility (15.7) (15.7)
Add: unamortised issue costs on Crematoria Acquisition
Facility (0.1) (0.1)
Gross amounts owing (590.4) (603.0)
Accrued interest on Secured Notes (0.3) (12.8)
Accrued interest on Crematoria Acquisition Facility (0.1) (0.1)
Cash and cash equivalents (note 6) 67.1 98.8
Net debt (523.7) (517.1)
The Group's gross debt outstanding was GBP590.4 million (2015:
GBP603.0 million). Net debt was GBP523.7 million (2015: GBP517.1
million).
The market value of the Secured Notes at the balance sheet date
was GBP678.0 million (2015: GBP615.5 million).
Net finance costs
The Group's underlying finance costs substantially consist of
the interest on the Secured Notes and ancillary instruments. The
net finance cost in the period relating to these instruments was
GBP25.4 million (2015: GBP25.6 million).
Finance costs of GBP0.6 million (2015: GBP0.6 million) were
incurred in respect of the Crematoria Acquisition Facility.
Other ongoing finance costs incurred in the period amounted to
GBP0.9 million (2015: GBP0.8 million), including the unwinding of
discounts on the Group's provisions and other financial
liabilities.
Interest receivable on bank deposits was GBP0.4 million (2015:
GBP0.5 million).
Forward-looking statements
Certain statements in this Preliminary Announcement are
forward-looking. Although the Board believes that the expectations
reflected in these forward-looking statements are reasonable, it
can give no assurance that these expectations will prove to have
been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those
expressed or implied by these forward-looking statements.
Steve Whittern
Finance Director
8 March 2017
Our key performance indicators
We track our performance against a number of consistent KPIs
which are aligned to our strategic vision.
KPI KPI definitions 53 week 52 week Developments
period ended period ended in 2016
30 December 25 December
2016 2015
--------------------- ------------------------ --------------------- -------------------- ------------------------
Deaths were
higher than
anticipated
in the period.
Historical data
would suggest
that deaths
Total estimated This is as reported in 2017 could
number of by the Office be significantly
deaths in for National lower than 2015
Britain (number) Statistics. 590,000 588,000 and 2016.
--------------------- ------------------------ --------------------- -------------------- ------------------------
This is the
number of funerals
performed by The reduction
the Group in in market share
Funeral market Britain divided is more than
share excluding by the total anticipated.
Northern estimated number The Board is
Ireland (per of deaths in keeping this
cent) Britain. 11.8% 12.3% under review.
--------------------- ------------------------ --------------------- -------------------- ------------------------
Changes are
This is the a consequence
Number of number of funerals of the total
funerals performed according number of deaths
performed to our operational and the Group's
(number) data. 70,700 73,500 market share.
--------------------- ------------------------ --------------------- -------------------- ------------------------
This is the
number of cremations
performed by Market share
the Group divided has increased,
by the total principally
Crematoria estimated number reflecting the
market share of deaths in effect of recent
(per cent) Britain. 10.1% 9.8% acquisitions.
--------------------- ------------------------ --------------------- -------------------- ------------------------
Changes are
This is the a consequence
Number of number of cremations of the total
cremations performed according number of deaths
performed to our operational and the Group's
(number) data. 59,500 57,700 market share.
--------------------- ------------------------ --------------------- -------------------- ------------------------
This is the This increase
number of pre-arranged reflects continued
funeral plans sales activity
where the Group offset by the
has an obligation crystallisation
Active pre-arranged to provide a of plans sold
funeral plans funeral in the in previous
(number) future. 404,000 374,000 periods.
--------------------- ------------------------ --------------------- -------------------- ------------------------
This is underlying
profit after
tax divided
by the weighted
Underlying average number This growth
earnings of Ordinary follows the
per share Shares in issue increase in
(pence) in the period. 119.8p 114.8p operating profit.
--------------------- ------------------------ --------------------- -------------------- ------------------------
Underlying This is the GBP101.7m GBP98.7m Good growth
operating statutory operating driven by higher
profit (GBP profit of the than expected
million) Group excluding deaths as well
profit (or loss) as acquisition
on sale of fixed activity.
assets and external
transaction
costs.
--------------------- ------------------------ --------------------- -------------------- ------------------------
Cash generated This is the GBP121.1m GBP125.2m The Group continues
from operations statutory cash to convert operating
(GBP million) generated from profit into
operations excluding cash efficiently.
external transaction
costs and (in
2013 and 2014)
exceptional
pension contributions.
--------------------- ------------------------ --------------------- -------------------- ------------------------
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'). The
initial publication of recorded total estimated deaths in Britain
for the 53 weeks in 2016 was 590,000 compared to 588,000 for the 52
week period in 2015. Historically, the ONS has updated these
estimates from time to time.
As in previous years, the Group does not restate any of its key
performance indicators when these figures are restated in the
following year.
The Dignity Client Survey 2016
Our funeral service survey results continue to demonstrate the
outstanding work being consistently done by our staff. They remain
focused on performing their roles to the best of their ability,
allowing the Group to help many families at a difficult time.
Reputation and recommendation
98.8% (2015: 99.2%)
98.8 per cent of respondents said that we met or exceeded their
expectations.
97.7% (2015: 98.0%)
97.7 per cent of respondents would recommend us.
Quality of service and care
99.9% (2015: 99.9%)
99.9 per cent thought our staff were respectful.
99.7% (2015: 99.7%)
99.7 per cent thought our staff listened to their needs and
wishes.
99.1% (2015: 99.3%)
99.1 per cent agreed that our staff were compassionate and
caring.
High Standards of facilities and fleet
99.8% (2015: 99.8%)
99.8 per cent thought our premises were clean and tidy.
99.8% (2015: 99.8%)
99.8 per cent thought our vehicles were clean and
comfortable.
In the detail
99.2% (2015: 99.3%)
99.2 per cent of clients agreed that our staff had fully
explained what would happen before and during the funeral.
99.1% (2015: 99.1%)
99.1 per cent said that the funeral service took place on
time.
98.5% (2015: 98.6%)
98.5 per cent said that the final invoice matched the estimate
provided.
Consolidated income statement
for the 53 week period ended 30 December 2016
53 week 52 week
period period
ended ended
30 December 25 December
2016 2015
Note GBPm GBPm
Revenue 1 313.6 305.3
Cost of sales (128.1) (123.3)
Gross profit 185.5 182.0
Administrative expenses (87.8) (86.5)
Operating profit 1 97.7 95.5
Analysed as:
Underlying operating profit 1 101.7 98.7
Profit on sale of fixed assets 0.1 -
External transaction costs (4.1) (3.2)
Operating profit 97.7 95.5
Finance costs 2 (26.9) (27.0)
Finance income 2 0.4 0.5
Profit before tax 1 71.2 69.0
Taxation - before exceptional
items (15.8) (15.5)
Taxation - exceptional 1.8 3.4
Taxation 3 (14.0) (12.1)
Profit for the period attributable
to equity shareholders 57.2 56.9
Earnings per share for profit attributable to equity shareholders
- Basic (pence) 4 115.3p 115.2p
- Diluted (pence) 4 114.6p 114.5p
Consolidated statement of comprehensive income
for the 53 week period ended 30 December 2016
53 week 52 week
period period
ended ended
30 December 25 December
2016 2015
Note GBPm GBPm
Profit for the period 57.2 56.9
Items that will not be reclassified
to profit or loss
Remeasurement loss on retirement
benefit obligations 9 (12.5) (1.4)
Tax credit on remeasurement on
retirement benefit obligations 2.3 0.3
Restatement of deferred tax for
the change in UK tax rate (0.3) (0.2)
Other comprehensive loss (10.5) (1.3)
Comprehensive income for the period 46.7 55.6
Attributable to:
Equity shareholders of the parent 46.7 55.6
Consolidated balance sheet
as at 30 December 2016
30 December 25 December
2016 2015
Note GBPm GBPm
Assets
Non-current assets
Goodwill 215.9 201.5
Intangible assets 142.2 126.7
Property, plant and equipment 235.4 200.6
Financial and other assets 11.3 10.3
604.8 539.1
Current assets
Inventories 6.1 6.4
Trade and other receivables 37.0 31.9
Cash and cash equivalents 6 67.1 98.8
110.2 137.1
Total assets 715.0 676.2
Liabilities
Current liabilities
Financial liabilities 8.8 8.3
Trade and other payables 59.3 67.5
Current tax liabilities 5.4 5.4
Provisions for liabilities 1.6 1.5
75.1 82.7
Non-current liabilities
Financial liabilities 581.5 594.6
Deferred tax liabilities 25.7 21.7
Other non-current liabilities 2.8 2.3
Provisions for liabilities 7.5 6.3
Retirement benefit obligation 9 25.9 12.5
643.4 637.4
Total liabilities 718.5 720.1
Shareholders' equity
Ordinary share capital 6.1 6.1
Share premium account 8.5 4.8
Capital redemption reserve 141.7 141.7
Other reserves (3.5) (4.5)
Retained earnings (156.3) (192.0)
Total equity (3.5) (43.9)
Total equity and liabilities 715.0 676.2
Consolidated statement of changes in equity
for the 53 week period ended 30 December 2016
Ordinary Share Capital
share premium redemption Other Retained Total
capital account reserve reserves earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm
Shareholders' equity as at
26 December 2014 6.1 2.8 141.7 (5.5) (237.6) (92.5)
Profit for the 52 weeks ended
25 December 2015 - - - - 56.9 56.9
Remeasurement loss on defined
benefit obligations - - - - (1.4) (1.4)
Tax on pensions - - - - 0.3 0.3
Restatement of deferred tax
for the change in UK tax rate - - - - (0.2) (0.2)
Total comprehensive income - - - - 55.6 55.6
Effects of employee share options - - - 2.4 - 2.4
Tax on employee share options - - - 0.7 - 0.7
Restatement of deferred tax
for the change in UK
tax rate - - - (0.1) - (0.1)
Proceeds from share issue(1) - 2.0 - - - 2.0
Gift to Employee Benefit Trust - - - (2.0) - (2.0)
Dividends (note 5) - - - - (10.0) (10.0)
Shareholders' equity as at
25 December 2015 6.1 4.8 141.7 (4.5) (192.0) (43.9)
Profit for the 53 weeks ended
30 December 2016 - - - - 57.2 57.2
Remeasurement loss on defined
benefit
obligations - - - - (12.5) (12.5)
Tax on pensions - - - - 2.3 2.3
Restatement of deferred tax
for the change in UK
tax rate - - - - (0.3) (0.3)
Total comprehensive income - - - - 46.7 46.7
Effects of employee share options - - - 3.0 - 3.0
Tax on employee share options - - - 0.2 - 0.2
Proceeds from share issue(2) - 3.7 - - - 3.7
Gift to Employee Benefit Trust - - - (2.2) - (2.2)
Dividends (note 5) - - - - (11.0) (11.0)
Shareholders' equity as at
30 December 2016 6.1 8.5 141.7 (3.5) (156.3) (3.5)
(1) Relating to issue of 249,067 shares under 2012 LTIP scheme
and 1,044 shares under 2013 SAYE scheme.
(2) Relating to issue of 213,851 shares under 2013 LTIP scheme
and 104,008 shares under 2013 SAYE scheme.
The above amounts relate to transactions with owners of the
Company except for the items reported within total comprehensive
income.
Capital redemption reserve
The capital redemption reserve represents GBP80,002,465 B Shares
that were issued on 2 August 2006 and redeemed for cash on the same
day, GBP19,274,610 B Shares that were issued on 10 October 2010 and
redeemed for cash on 11 October 2010, and GBP22,263,112 B Shares
that were issued on 12 August 2013 and redeemed for cash on 20
August 2013 and GBP20,154,070 B Shares that were issued and
redeemed for cash in November 2014.
Other reserves
Other reserves includes movements relating to the Group's SAYE
and LTIP schemes and associated tax, together with a GBP12.3
million merger reserve.
Consolidated statement of cash flows
for the 53 week period ended 30 December 2016
53 week 52 week
period period
ended ended
30 December 25 December
2016 2015
Note GBPm GBPm
Cash flows from operating activities
Cash generated from operations
before external transaction costs 8 121.1 125.2
External transaction costs paid
in respect of acquisitions (3.9) (3.2)
Cash generated from operations 117.2 122.0
Finance income received 0.5 0.6
Finance costs paid (38.5) (19.1)
Transfer from restricted bank accounts
for finance costs 12.8 5.6
Payments to restricted bank accounts
for finance costs 6 (0.3) (12.8)
Total payments in respect of finance
costs (26.0) (26.3)
Tax paid (10.6) (3.7)
Net cash generated from operating
activities 81.1 92.6
Cash flows from investing activities
Acquisition of subsidiaries and
businesses (net of cash
acquired) (56.3) (50.0)
Proceeds from sale of property,
plant and equipment 1.0 0.8
Maintenance capital expenditure(1) (19.6) (15.6)
Branch relocations (1.6) (3.9)
Satellite locations (0.8) (0.3)
Development of new crematoria and
cemeteries (0.8) (0.1)
Purchase of property, plant and
equipment and intangible assets (22.8) (19.9)
Net cash used in investing activities (78.1) (69.1)
Cash flows from financing activities
Issue costs in respect of borrowings
and Secured Notes - (0.1)
Issue costs in respect of debt
facility (0.1) (0.2)
Proceeds from share issue 1.5 -
Repayment of borrowings (12.6) (8.1)
Transfer from restricted bank accounts
for repayment of borrowings 4.1 4.0
Payments to restricted bank accounts
for repayment of borrowings 6 - (4.1)
Total payments in respect of borrowings (8.5) (8.2)
Dividends paid to shareholders
on Ordinary Shares 5 (11.0) (10.0)
Net cash used in financing activities (18.1) (18.5)
Net (decrease) / increase in cash
and cash equivalents (15.1) 5.0
Cash and cash equivalents at the
beginning of the period 81.9 76.9
Cash and cash equivalents at the
end of the period 66.8 81.9
Restricted cash 0.3 16.9
Cash and cash equivalents at the
end of the period as reported in
the consolidated balance sheet 6 67.1 98.8
(1) Maintenance capital expenditure includes vehicle replacement
programme, improvements to locations and purchases of other
tangible and intangible assets.
1 Revenue and segmental analysis
Operating segments are reported in a manner consistent with
internal reporting provided to the chief operating decision maker
who is responsible for allocating resources and assessing
performance of the operating segments. The chief operating decision
maker of the Group has been identified as the four Executive
Directors. The Group has three reporting segments, funeral
services, crematoria and pre-arranged funeral plans. The Group also
reports central overheads, which comprise unallocated central
expenses.
Funeral services relate to the provision of funerals and
ancillary items, such as memorials and floral tributes.
Crematoria services relate to cremation services and the sale of
memorials and burial plots at the Dignity operated crematoria and
cemeteries.
Pre-arranged funeral plans represent the sale of funerals in
advance to customers wishing to make their own funeral arrangements
and the marketing and administration costs associated with making
such sales.
Substantially all Group revenue is derived from, and
substantially all of the Group's net assets and liabilities are
located in, the United Kingdom and Channel Islands and relates to
services provided. Overseas transactions are not material.
Underlying operating profit is stated before profit or loss on
sale of fixed assets, external transaction costs and exceptional
items. Underlying operating profit is included as it is felt that
adjusting operating profit for these items provides a useful
indication of the Group's performance.
The revenue and operating profit/ (loss), by segment, was as
follows:
53 week period ended 30
December
2016
Profit
on sale
Underlying of fixed
operating assets,
profit external
/ (loss) transaction
before Underlying costs
depreciation Depreciation operating and Operating
and and profit exceptional profit
Revenue amortisation amortisation / (loss) items / (loss)
GBPm GBPm GBPm GBPm GBPm GBPm
Funeral services 217.8 90.6 (11.6) 79.0 (0.9) 78.1
Crematoria -
existing 65.1 40.0 (3.4) 36.6 0.1 36.7
Crematoria -
acquisitions 2.4 1.1 (0.1) 1.0 (3.0) (2.0)
Crematoria 67.5 41.1 (3.5) 37.6 (2.9) 34.7
Pre-arranged
funeral
plans 28.3 8.7 (0.2) 8.5 - 8.5
Central overheads - (22.6) (0.8) (23.4) (0.2) (23.6)
Group 313.6 117.8 (16.1) 101.7 (4.0) 97.7
Finance costs (26.9) - (26.9)
Finance income 0.4 - 0.4
Profit before tax 75.2 (4.0) 71.2
Taxation -
continuing
activities (15.8) - (15.8)
Taxation -
exceptional - 1.8 1.8
Taxation (15.8) 1.8 (14.0)
Underlying earnings for the
period 59.4
Total other items (2.2)
Profit after
taxation 57.2
Earnings per share for profit attributable to equity
shareholders
- Basic (pence) 119.8p 115.3p
- Diluted (pence) 119.0p 114.6p
The segment assets and liabilities were
as follows:
Pre-arranged
Funeral services Crematoria funeral plans Central overheads Group
As at 30 December 2016 GBPm GBPm GBPm GBPm GBPm
Segment assets 433.5 185.1 22.6 6.7 647.9
Unallocated assets:
Cash and cash equivalents 67.1
Total assets 715.0
Segment liabilities (60.8) (11.1) (8.5) (16.9) (97.3)
Unallocated liabilities:
Borrowings - excluding finance leases (589.6)
Accrued interest (0.5)
Corporation tax (5.4)
Deferred tax (25.7)
Total liabilities (718.5)
Other segment items:
Additions to non-current assets (other
than financial instruments and
deferred tax) 29.5 45.5 - 3.8 78.8
Depreciation 11.6 3.5 - 0.8 15.9
Amortisation - - 0.1 0.1 0.2
Impairment of trade receivables 1.6 0.1 - - 1.7
Other non-cash expenses - - - 3.6 3.6
Profit on sale of fixed assets 0.1 - - - 0.1
The revenue and operating profit/ (loss), by segment, was as
follows:
52 week period ended 25 December
2015
Profit
Underlying on sale
operating of fixed
profit/ assets,
(loss) external
before Underlying transaction
depreciation operating costs Operating
and Depreciation profit/ and exceptional profit/
Revenue amortisation and amortisation (loss) items (loss)
GBPm GBPm GBPm GBPm GBPm GBPm
Funeral services -
existing 206.2 85.0 (10.5) 74.5 - 74.5
Funeral services -
acquisitions(1) 6.4 2.4 (0.1) 2.3 (3.2) (0.9)
Funeral services 212.6 87.4 (10.6) 76.8 (3.2) 73.6
Crematoria 63.1 37.8 (3.2) 34.6 - 34.6
Pre-arranged
funeral
plans 29.6 8.0 (0.2) 7.8 - 7.8
Central overheads - (19.9) (0.6) (20.5) - (20.5)
Group 305.3 113.3 (14.6) 98.7 (3.2) 95.5
Finance costs (27.0) - (27.0)
Finance income 0.5 - 0.5
Profit before tax 72.2 (3.2) 69.0
Taxation -
continuing
activities (15.5) - (15.5)
Taxation -
exceptional - 3.4 3.4
Taxation (15.5) 3.4 (12.1)
Underlying earnings for
the period 56.7
Total other items 0.2
Profit after
taxation 56.9
Earnings per share for profit attributable to equity
shareholders
- Basic (pence) 114.8p 115.2p
- Diluted (pence) 114.1p 114.5p
(1) Included within acquisitions is revenue of GBP4.3 million
and underlying operating profit of GBP1.4 million in respect of the
Laurel Funeral acquisition.
The segment assets and liabilities were
as follows:
Pre-arranged
Funeral services Crematoria funeral plans Central overheads Group
As at 25 December 2015 GBPm GBPm GBPm GBPm GBPm
Segment assets 412.9 140.8 19.6 4.1 577.4
Unallocated assets:
Cash and cash equivalents 98.8
Total assets 676.2
Segment liabilities (48.2) (8.7) (8.3) (12.7) (77.9)
Unallocated liabilities:
Borrowings - excluding finance leases (602.2)
Accrued interest (12.9)
Corporation tax (5.4)
Deferred tax (21.7)
Total liabilities (720.1)
Other segment items:
Additions to non-current assets (other
than financial instruments and
deferred tax) 64.7 2.6 - 1.5 68.8
Depreciation 10.6 3.2 - 0.7 14.5
Amortisation - - 0.1 - 0.1
Impairment of trade receivables 2.0 0.2 - - 2.2
Other non-cash expenses - - - 2.4 2.4
Cash generated from operations, at a divisional level, is
considered to be broadly similar to the amount of underlying
operating profit by each division.
2 Net finance costs
53 week 52 week
period period
ended ended
30 December 25 December
2016 2015
GBPm GBPm
Finance costs
Secured Notes 24.7 25.0
Crematoria Acquisition Facility 0.6 0.6
Other loans 1.0 0.9
Net finance cost on retirement benefit obligations 0.4 0.3
Unwinding of discounts 0.2 0.2
Finance costs 26.9 27.0
Finance income
Bank deposits (0.4) (0.5)
Finance income (0.4) (0.5)
Net finance costs 26.5 26.5
3 Taxation
53 week period 52 week period
ended ended
30 December 25 December
2016 2015
Analysis of charge in the period GBPm GBPm
Current tax - current period 11.0 10.4
Adjustments for prior period 0.1 -
Total corporation tax 11.1 10.4
Deferred tax - current period 4.9 5.1
Adjustments for prior period (0.2) -
Restatement of deferred tax for the change in UK tax rate (1.8) (3.4)
Total deferred tax 2.9 1.7
Taxation 14.0 12.1
4 Earnings per share
The calculation of basic earnings per Ordinary Share has been
based on the profit attributable to equity shareholders 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 any 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 issuable 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 are
assessed, as required by IAS 33, and to the extent that the
performance criteria have been met those contingently issuable
shares are included within the diluted EPS calculations.
The Board believes that profit on ordinary activities before
profit (or loss) on sale of fixed assets, external transaction
costs, exceptional items 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'.
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 Per share
of
Earnings shares amount
GBPm millions pence
53 week period ended 30 December
2016
Underlying profit after taxation
and EPS 59.4 49.6 119.8
Add: Exceptional items, loss on sale
of fixed assets and external transaction
costs (net of taxation of GBPnil
million) (2.2)
Profit attributable to shareholders
- Basic EPS 57.2 49.6 115.3
Profit attributable to shareholders
- Diluted EPS 57.2 49.9 114.6
52 week period ended 25 December
2015
Underlying profit after taxation
and EPS 56.7 49.4 114.8
Add: Exceptional items, loss on sale
of fixed assets and external transaction
costs (net of taxation of GBPnil
million) 0.2
Profit attributable to shareholders
- Basic EPS 56.9 49.4 115.2
Profit attributable to shareholders
- Diluted EPS 56.9 49.7 114.5
5 Dividends
53 week 52 week
period period
ended ended
30 December 25 December
2016 2015
GBPm GBPm
Final dividend paid: 14.31p per Ordinary
Share (2015: 13.01p) 7.1 6.5
Interim dividend paid: 7.85p per Ordinary
Share (2015: 7.14p) 3.9 3.5
Dividend on Ordinary Shares 11.0 10.0
The interim dividend represents the interim dividend that was
approved and paid in the period out of earnings generated in the
same period.
The final dividend represents the final dividend that was
approved and paid in the period relating to the earnings generated
in the previous period.
Consequently, total dividends recognised in the period were
GBP11.0 million, 22.16 pence per share (2015: GBP10.0 million,
20.15 pence per share).
A final dividend of 15.74 pence per share, in respect of 2016,
has been proposed by the Board. Based on the number of shares in
issue at the date of signing this report the total final dividend
payment is approximately GBP7.9 million. This will be paid on 30
June 2017 provided that approval is gained from shareholders at the
Annual General Meeting on 8 June 2017 and will be paid to
shareholders on the register at close of business on 19 May
2017.
6 Cash and cash equivalents
30 December 25 December
2016 2015
GBPm GBPm
Operating cash as reported in the consolidated
statement of cash flows as cash and cash
equivalents 66.8 81.9
Amounts set aside for debt service payments 0.3 16.9
Cash and cash equivalents as reported
in the balance sheet 67.1 98.8
Amounts set aside for debt service payments
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
commitment fees due on its undrawn borrowing facilities (see note
21(d)) and for no other purpose. Consequently, this amount did not
meet the definition of cash and cash equivalents in IAS 7,
Statement of Cash Flows. This amount was used to pay these
respective parties on 3 January 2017. Of this amount, GBP0.3
million (2015: GBP12.8 million) is shown within the Statement of
Cash Flows as 'Payments to restricted bank accounts for finance
costs' and GBPnil million (2015: GBP4.1 million) is shown within
'Financing activities' as 'Payments to restricted bank accounts for
repayment of borrowings'.
7 Net debt
30 December 25 December
2016 2015
GBPm GBPm
Net amounts owing on Secured Notes per financial
statements (573.9) (586.5)
Add: unamortised issue costs (0.7) (0.7)
Gross amounts owing on Secured Notes (574.6) (587.2)
Net amounts owing on Crematoria Acquisition
Facility per financial statements (15.7) (15.7)
Add: unamortised issue costs on Crematoria Acquisition
Facility (0.1) (0.1)
Gross amounts owing (590.4) (603.0)
Accrued interest on Secured Notes (0.3) (12.8)
Accrued interest on Crematoria Acquisition Facility (0.1) (0.1)
Cash and cash equivalents (note 6) 67.1 98.8
Net debt (523.7) (517.1)
In addition to the above, the consolidated balance sheet also
includes finance lease obligations and other financial liabilities
which totalled GBP0.7 million (2015: GBP0.7 million). These amounts
do not represent sources of funding for the Group and are therefore
excluded from the calculation of net debt.
The Group's primary financial covenant in respect of the Secured
Notes requires EBITDA to total debt service ('EBITDA DSCR'), in the
securitisation group, to be at least 1.5 times. At 30 December
2016, the actual ratio was 3.37 times (2015: 3.35 times).
These ratios are calculated for EBITDA and total debt service on
a 12 month rolling basis and reported quarterly. In addition, both
terms are specifically defined in the legal agreement relating to
the Secured Notes. As such, they cannot be accurately calculated
from the contents of this report.
8 Reconciliation of cash generated from operations
53 week period 52 week period
ended ended
30 December 25 December
2016 2015
GBPm GBPm
Net profit for the period 57.2 56.9
Adjustments for:
Taxation 14.0 12.1
Net finance costs 26.5 26.5
Profit on disposal of fixed assets (0.1) -
Depreciation charges 15.9 14.5
Amortisation of intangibles 0.2 0.1
Movement in inventories 0.4 0.1
Movement in trade receivables (0.6) (1.6)
Movement in trade payables 1.3 3.2
External transaction costs 4.1 3.2
Changes in other working capital (excluding acquisitions) (1.4) 7.8
Employee share option charges 3.6 2.4
Cash generated from operations before external transaction costs 121.1 125.2
9 Analysis of the movement in the retirement benefit obligation
30 December 25 December
2016 2015
GBPm GBPm
At beginning of period (12.5) (10.5)
Total expense charged to the income statement (2.3) (2.0)
Remeasurement losses and administration expenses charged to other comprehensive income (12.5) (1.4)
Contributions by Group 1.4 1.4
At end of period (25.9) (12.5)
10 Basis of preparation
European law requires that the Group's consolidated financial
statements for the 53 week period ended 30 December 2016 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.
In the current period, the Group's consolidated financial
statements have been prepared for the 53 week period ended 30
December 2016. For the comparative period, the Group's consolidated
financial statements have been prepared for the 52 week period
ended 25 December 2015.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 30 December 2016
or 25 December 2015 but is derived from those accounts. Statutory
accounts for 2015 have been delivered to the registrar of
companies, and those for 2016 will be delivered in due course. The
auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
Section 498 (2) or (3) of the Companies Act 2006 in respect of the
accounts for 2015 and 2016.
There are no IFRSs or IFRIC interpretations that are effective
for the first time for the financial year that have a material
impact on the Group.
The consolidated financial statements are prepared on a going
concern basis and have been prepared under the historical cost
convention.
The principal accounting policies adopted in the preparation of
these financial statements have been consistently applied to all
periods presented.
11 Securitisation
In accordance with the terms of the Secured Notes issued October
2014, 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 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.
12 Principal risks and uncertainties
Risk management is embedded throughout the business with all
employees aware of the role they play.
Risk appetite
Our risk appetite remains broadly unchanged in 2016. Risk
appetite is the level of risk the Group is willing to take to
achieve its strategic objectives and is set by the Board. The Board
looks at the Group's appetite to risk across a number of areas
including market, financing, operations, strategy and execution,
developments, cybersecurity and technology and brand.
The Group's risk appetite is set in the context of our focus on
one sector - funeral services. As experts in this sector we are
able to mitigate the risk involved in growing the business by
acquisition, development and our active asset management strategy.
This focus on our core strengths is balanced by a more cautious
approach to risk in other areas.
Our approach to risk management
The Group has a well established governance structure with
internal control and risk management systems. The risk management
process:
-- Provides a framework to identify, assess and manage risks,
both positive and negative, to the Group's overall strategy and the
contribution of its individual operations.
-- Allows the Board to fulfil its governance responsibilities by
making a balanced and understandable assessment of the operation of
the risk management process and inputs.
Responsibilities and actions
The Board
The Board is responsible for monitoring the Group's risk and
their mitigants.
Risk process
Every six months the Audit Committee formally considers the risk
register and approves it for adoption by the Board.
Risk assessment
Executive Directors and senior management are responsible for
identifying and assessing business risks.
Identify
Risks are identified through discussion with senior management
and incorporated in the risk register as appropriate.
Assess
The potential impact and likelihood of occurrence of each risk
is considered.
Mitigating activities
Mitigants are identified against each risk where possible.
Review and internal audit
The link between each risk and the Group's policies and
procedures is identified. Where relevant, appropriate work is
performed by the Group's internal audit function to assist in
ensuring the related procedures and policies are appropriately
understood and operated where they serve to mitigate risks.
Risk status summary and new risks
The ongoing review of the Group's principal risks focuses on how
these risks may evolve. Since the publication of last year's Annual
Report, we consider the following key principal risks to have an
increased risk exposure.
Increasing and emerging risk trends
The focus of both the government and the media on the cost of
funerals has increased which may affect the ability to increase
average revenues per funeral or cremation. In addition, there
appears to be increased competition in both the funeral and
pre-arranged funeral plan markets.
Regulation
The increased focus on the whole sector may increase the
likelihood of regulation of funerals in the UK as a whole and not
just in Scotland. In addition, this could lead to regulation of the
funeral plan sector with the Funeral Planning Authorities being
re-constituted to be more of a regulatory body.
Reliance on technology/Data governance
The increasing prevalence of cyber attack across the world,
means that along with all large corporates, our business systems
are under increasing level of attack. Over the last two years we
have invested significantly in this area both in upgrading all
aspects of our systems and our internal resources and also using
external consultants to perform regular external and internal
penetration tests and using the results to drive a continuous
improvement programme.
Our principal risks and uncertainties
Outlined here are the principal risks facing the Group. In
assessing which risks should be classified as principal, we assess
the probability of the risk materialising and the financial or
strategic impact of the risk.
The principal risks we have identified
We maintain a detailed register of principal risks and
uncertainties covering strategic, operational, financial and
compliance risks. We rate them according to likelihood of
occurrence and their potential impact.
In the table below we provide a summary of each risk, a
description of the potential impact and a summary of mitigating
actions.
Operational risk management
Risk description and Mitigating activities 2016 Commentary Change
impact
-------------------------------- -------------------------- ------------------ ----------
Significant reduction The profile of deaths The number No change
in the death rate has historically of deaths
There is a risk that followed a similar in 2016 was
the number of deaths profile to that higher than
in any year significantly predicted by the expected.
reduces. This would have ONS, giving the
a direct result on the Group the ability
financial performance to plan its business
of both the funeral and accordingly. The
crematoria divisions. risk is mitigated
by the geographical
spread of locations,
the ability to control
costs and the ability
to acquire funerals.
-------------------------------- -------------------------- ------------------ ----------
Nationwide adverse publicity This risk is addressed There have No change
Nationwide adverse publicity by ensuring appropriate been no such
for Dignity could result policies and procedures events in
in a significant reduction are in place, which the period.
in the number of funerals are designed to
or cremations performed ensure excellent
in any financial period. client service and
For pre-arranged funeral careful selection
plans, adverse publicity of reputable partners.
for the Group or one
of its partners could
result in a reduction
in the number of plans
sold or an increase in
the number of plans cancelled.
This would have a direct
and significant impact
on the financial performance
of that division and
the Group as a whole.
-------------------------------- -------------------------- ------------------ ----------
Ability to increase average The Group believes Average revenues No change
revenues per funeral that its focus on increased
or cremation excellent client in line with
Operating profit growth service helps to the Board's
is in part attributable mitigate this risk. expectations.
to increases in the average
revenue per funeral or
cremation. There can
be no guarantee that
future average revenues
per funeral or cremation
will be maintained or
increased.
-------------------------------- -------------------------- ------------------ ----------
Significant reduction The Group believes Market share No change
in market share that this risk is was slightly
It is possible that other mitigated for funeral lower than
external factors, such operations by reputation the Board's
as new competitors, could and recommendation expectations.
result in a significant being a key driver However, this
reduction in market share to the choice of offsets 2015,
within funeral or crematoria funeral director where the
operations. This would being used. For closing position
have a direct result crematoria operations was slightly
on the financial performance this is mitigated higher than
of those divisions. by difficulties expected.
associated with
building new crematoria.
-------------------------------- -------------------------- ------------------ ----------
Demographic shifts in In such situations, There have No change
population Dignity would seek been no material
There can be no assurance to follow the population changes, with
that demographic shifts shift. This is mitigated satellites
in population will not by the geographical being opened
lead to a reduced demand spread of locations and businesses
for funeral services coupled with the acquired in
in areas where Dignity ability to acquire appropriate
operates. funeral locations areas.
in areas of higher
demand.
-------------------------------- -------------------------- ------------------ ----------
Operational risk management (continued)
Risk description and Mitigating activities 2016 Commentary Change
impact
---------------------------------- --------------------------------- -------------------- ----------
Competition There are barriers No major changes No change
The UK funeral services to entry in the noted. Denials
market and crematoria funeral services of planning
market is currently very market due to the applications
fragmented. importance of established for crematoria
There can be no assurance local reputation demonstrate
that there will not be and in the crematoria the barriers
further consolidation market due to the to entry.
in the industry or that need to obtain planning
increased competition approval for new
in the industry, whether crematoria and the
in the form of intensified cost of developing
price competition, service new crematoria.
competition, over capacity
or otherwise, would not
lead to an erosion of
the Group's market share, There are a number
average revenues or costs of potential affinity
and consequently a reduction partners who could
in its profitability. replace existing
The retention of affinity ones or add to existing
partners who sell the relationships.
Group's pre-arranged
funeral plans is essential
to the long-term development
of the pre-arranged funeral
plan division. The loss
of an affinity partner
could lead to a reduction
in the amount of profit
recognised in that division
at the time of sale.
Failure to replenish
or increase the bank
of pre-arranged funeral
plans could affect market
share of the funeral
division in the longer-term.
---------------------------------- --------------------------------- -------------------- ----------
Taxes There are currently No significant No change
There can be no assurance specific exemptions changes noted
that changes will not under European legislation in the period.
be made to UK taxes, for the UK on the
such as VAT. VAT is not VAT treatment of
currently chargeable funerals. Any change
on the majority of the would apply to the
Group's services. The industry as a whole
introduction of such and not just the
a tax could therefore Group.
significantly increase
the cost to clients of
the Group's services.
---------------------------------- --------------------------------- -------------------- ----------
Regulation of pre-arranged Any changes would No significant No change
funeral plans apply to the industry changes noted
Pre-arranged funeral as a whole and not in the period.
plans are not a regulated just the Group.
product, but are subject This risk is also
to a specific financial mitigated through
services exemption. Changes the high standards
to the basis of any regulation of selling and administration
could affect the Group's of pre-arranged
opportunity to sell pre-arranged funeral plans operated
funeral plans in the by the Group.
future or could result
in the Group not being
able to draw down the
current level of marketing
allowances, which would
have a direct impact
on the profitability
of the pre-arranged funeral
plan division.
---------------------------------- --------------------------------- -------------------- ----------
Regulation of the funeral The Group already We continue No change
industry operates at a very to seek regulation
Legislative changes by high standard, using of our markets.
the Scottish Government facilities appropriate
were enacted in 2016. for the dignified
This provides them with care of the deceased.
the powers to regulate
the funeral industry
and they are currently
recruiting an Inspector
of Funerals. Dignity
welcomes this progress.
Regulation could result
in increased compliance
costs for the industry
as a whole.
---------------------------------- --------------------------------- -------------------- ----------
Operational risk management (continued)
Risk description and Mitigating activities 2016 Commentary Change
impact
--------------------------------- ------------------------- --------------------- ----------
Changes in the funding There is considerable The latest No change
of the pre-arranged funeral regulation around actuarial
plan business insurance companies valuation
The Group has given commitments which is designed, of the pre-arranged
to pre-arranged funeral amongst other things, funeral plan
plan members to provide to ensure that the Trusts demonstrates
certain funeral services insurance companies a small actuarial
in the future. meet their obligations. deficit.
Funding for these plans The Trusts hold
is reliant on either assets with the However the
insurance companies paying objective of achieving average assets
the amounts owed or the returns slightly per plan are
pre-arranged funeral in excess of inflation. still robust.
plan Trusts having sufficient
assets.
If this is not the case,
then the Group may receive
a lower amount per funeral
than expected and thus
generate lower profits.
--------------------------------- ------------------------- --------------------- ----------
Financial risk management
Risk description and Mitigating activities 2016 Commentary Change
impact
------------------------------- ------------------------- ---------------- ----------
Financial Covenant under The nature of the No significant No change
the Secured Notes Group's debt means changes noted
The Group's Secured Notes that the denominator in the period.
requires EBITDA to total is now fixed unless
debt service to be above further Secured
1.5 times. If this financial Notes are issued
covenant (which is applicable in the future. This
to the securitised subgroup means that the covenant
of Dignity) is not achieved, headroom will change
then this may lead to proportionately
an Event of Default under with changes in
the terms of the Secured EBITDA generated
Notes, which could result by the securitised
in the Security Trustee subgroup.
taking control of the
securitisation group
on behalf of the Secured
Noteholders.
In addition, the Group
is required to achieve
a more stringent ratio
of 1.85 times for the
same test in order to
be permitted to transfer
excess cash from the
securitisation group
to Dignity plc. If this
stricter test is not
achieved, then the Group's
ability to pay dividends
would be impacted.
------------------------------- ------------------------- ---------------- ----------
13 Pre-arranged funeral plans
(a) Contingent liabilities and commitments
Dignity Pre-arrangement Limited, Dignity Securities Limited and
Advance Planning Limited are fellow members of the Dignity Group in
the United Kingdom. These companies have sold pre-arranged funeral
plans to their clients in the past. All monies from these sales are
held and controlled by three independent Trusts, being the National
Funeral Trust, the Dignity Limited Trust Fund and the Trust for Age
UK Funeral Plans respectively (the 'Principal Trusts'). Further
details of the transactions can be found in the financial
statements of these companies, which are available from 4 King
Edwards Court, King Edwards Square, Sutton Coldfield, West
Midlands, B73 6AP.
The Group has given commitments to these clients to perform
their funeral. The agreed amounts payable to either the Group or to
third party funeral directors will be paid out of the funds held in
the Trusts. The majority of the Trustees of each of the
pre-arranged funeral plan trusts are unconnected to the Group, as
required by current UK legislation. The investment strategy is set,
implemented and monitored by the Trustees.
It is the view of the Directors that none of the commitments
given to these clients, which are explained further below, are
onerous to the Group. However ultimately, the Group is obligated to
perform these funerals in exchange for the assets of the Trust,
whatever they may be.
Similar commitments have arisen following acquisitions of
businesses, since 2013, which have sold pre-arranged funeral plans
through similar trust based structures (the 'Recent Trusts'). Only
the National Funeral Trust and the Trust for Age UK Funeral Plans
receive funds relating to the sale of new plans (the 'Active
Trusts').
(b) Pre-arranged funeral plan trust assets
As noted above, the Group has given commitments to perform the
funerals covered by the pre-arranged plans, regardless of whether
or not the Trusts have available assets to fund the funeral. The
Group, therefore, has a potential exposure in the form of a reduced
fee should the Trusts investment strategy, over which it has no
control, fail to deliver an appropriate return or result in a fall
in underlying asset values, or if the cost of delivery for a
funeral increases at rates in excess of investment returns.
The Trustees have informed the Group that they continue to take
independent advice regarding the Trust's investment strategy. As a
result, it is anticipated that the investment allocation by class
will develop further during 2017 and beyond, gradually resulting in
a portfolio in the following profile:
Example investment types Target
(%)
------------------------------------- ----------------------------- -------
Index linked gilts and
Defensive investments corporate bonds 22
Illiquid investments Private investments 16
Core growth investments Equities 22
Growth fixed income and alternative Property funds and emerging
investments market debt 40
------------------------------------- ----------------------------- -------
These developments in the Trust's investment strategy are
expected to enhance investment returns in the longer-term for a
broadly similar level of risk as that currently taken. The strategy
will, however, potentially result in greater volatility year on
year in the reported value of the Trust's assets.
The Trustees have advised that the market value of the assets of
the pre-arranged funeral plan trusts was GBP863.9 million at 30
December 2016 (2015: GBP736.0 million) in respect of 299,000 (2015:
290,000) active pre-arranged funeral plans. 68,000 (2015: 49,000)
of the remaining active pre-arranged funeral plans related to those
backed by Insurance Plans, as described in note 1 in the Annual
Report, with the balance of 37,000 (2015: 35,000) being plans
arising from acquisitions.
The Trustees of the Principal Trusts are required to have the
Trusts' liabilities actuarially valued once a year (once every
three years in the case of the Recent Trusts). This actuarial
valuation is of liabilities of the Trusts to secure funerals
through Dignity and other third party funeral directors and does
not, in respect of those funerals delivered by the Group represent
the cost of delivery of the funeral. It is only in the event that
there are insufficient funds within the Trusts to cover the cost of
delivery to Dignity that the commitment would become onerous to
Dignity as described in (a) above.
The Trustees have advised that the latest actuarial valuations
of the Principal Trusts were performed as at 23 September 2016
(2015: 25 September 2015) using assumptions determined by the
Trustees. Given the significant reduction in bond yields, the
actuarial valuation of the liabilities in respect of the
pre-arranged funeral plan trusts have increased to GBP839.7 million
as at 23 September 2016 (2015: GBP692.1 million). The corresponding
market value of the assets of the pre-arranged funeral plan trusts
was GBP831.5 million (2015: GBP696.9 million) as at the same date.
Consequently the actuarial valuations recorded a total deficit of
GBP8.2 million at 23 September 2016 (2015: surplus of GBP4.8
million).
Nonetheless, the Trustees have advised that the Trusts hold
assets of approximately GBP2,900 (2015: GBP2,500) per active plan
at the balance sheet date. On average the Group received
approximately GBP2,500 (2015: GBP2,450) in the period for the
performance of each funeral (including amounts to cover
disbursements such as crematoria fees, ministers' fees and doctors'
fees).
The Trustees have advised that the Recent Trusts have
approximately GBP19 million of assets as at the balance sheet date
and no material actuarial surplus or deficit.
Transactions with the Group
During the period, the Group entered into transactions with the
National Funeral Trust, the Trust for Age UK Funeral Plans and the
Dignity Limited Trust Fund (the 'Principal Trusts') and the Trusts
related to businesses acquired since 2013 ('Recent Trusts') (and
collectively, the 'Trusts') associated with the pre-arranged
funeral plan businesses. The nature of the relationship with the
Trusts is set out above and in the accounting policies. Amounts may
only be paid out of the Trusts in accordance with the relevant
Trust Deeds.
Transactions principally comprise:
-- The recovery of marketing and administration allowances in
relation to plans sold net of cancellations (which are recognised
by the Group as revenue within the pre-arranged funeral plan
division at the time of the sale); and
-- Receipts from the Trusts in respect of funerals provided
(which are recognised by the Group as revenue within the funeral
division when the funeral is performed).
Transactions also include:
-- Receipts from the Trusts in respect of cancellations by
existing members;
-- Reimbursement by the Trusts of expenses paid by the Group on
behalf of the respective Trusts; and
-- The payment of realised surpluses generated by the Trust
funds as and when the Trustees sanction such payments.
Transactions are summarised below:
Transactions during the period Amounts due to the
Group at the period end
--------------------------------- ---------------------------
2016 2015 2016 2015
GBPm GBPm GBPm GBPm
Dignity Limited Trust Fund 0.3 0.3 - -
National Funeral Trust 44.4 41.5 6.8 4.7
Trust for Age UK Funeral Plans 36.5 38.5 4.2 4.6
Recent Trusts 2.1 2.0 0.2 0.4
Total 83.3 82.3 11.2 9.7
Amounts due to the Group from the Trusts are included in Trade
and other receivables.
The above transactions were included within revenue under the
following captions:
Transactions during the period
2016 2015
GBPm GBPm
Funeral services revenue 42.6 40.0
Pre-arranged funeral plans revenue 27.3 29.0
In addition to the transactions recognised within revenue in the
table above, there were GBP13.4 million (2015: GBP13.3 million) of
transactions between the Group and the Trusts which represented
amounts paid to the Group to reimburse them for trust expenses,
monies repaid to members on cancellation and monies paid to third
parties for the performance of some funeral services; all of which
have no impact on the income statement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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