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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.
Consolidated income statement (unaudited)
for the 26 week period ended 26 June 2015
52 week
period ended
26 week period ended 26 Dec 2014
26 Jun 2015 27 Jun 2014 (audited)
Note £m £m £m
Revenue 2 158.7 133.1 268.9
Cost of sales (61.0) (53.6) (109.0)
Gross profit 97.7 79.5 159.9
Administrative expenses (39.5) (34.7) (77.0)
Operating profit 2 58.2 44.8 82.9
Analysed as:
Underlying operating profit 2 59.7 45.6 84.9
Loss on sale of fixed assets - (0.1) (0.3)
External transaction costs (1.5) (0.7) (1.7)
Operating profit 58.2 44.8 82.9
Finance costs 3 (13.4) (15.8) (154.8)
Analysed as:
Underlying finance costs (13.4) (15.8) (30.6)
Loss on extinguishment of Old Notes - exceptional - - (123.2)
Elimination of swap - exceptional - - (1.0)
Finance costs (13.4) (15.8) (154.8)
Finance income 3 0.2 2.5 4.2
Profit/ (loss) before tax 2 45.0 31.5 (67.7)
Taxation - before exceptional items 4 (10.0) (7.3) (13.1)
Taxation - exceptional 4 - - 25.8
Taxation 4 (10.0) (7.3) 12.7
Profit/ (loss) for the periodattributable to equity shareholders 35.0 24.2 (55.0)
Earnings per share for profit/ (loss) attributable to equity shareholders
- Basic (pence) 5 71.0p 45.2p (104.0)p
- Diluted (pence) 5 70.9p 45.1p (104.0)p
Underlying earnings per share (pence) 5 74.0p 46.7p 85.8p
Consolidated statement of comprehensive income (unaudited)
for the 26 week period ended 26 June 2015
52 week
period ended
26 week period ended 26 Dec 2014
26 Jun 2015 27 Jun 2014 (audited)
£m £m £m
Profit/ (loss) for the period 35.0 24.2 (55.0)
Items that will not be reclassified to profit or loss
Remeasurement gain/ (loss) on retirement benefit obligations 1.8 (2.4) (10.8)
Tax (charge)/ credit on remeasurement of retirement
benefit obligations (0.4) 0.5 2.2
Other comprehensive gain/ (loss) 1.4 (1.9) (8.6)
Comprehensive income/ (loss) for the period 36.4 22.3 (63.6)
Attributable to:
Equity shareholders of the parent 36.4 22.3 (63.6)
Consolidated balance sheet (unaudited)
as at 26 June 2015 26 Dec 2014
26 Jun 2015 27 Jun 2014 (audited)
Note £m £m £m
Assets
Non-current assets
Goodwill 185.0 175.1 182.3
Intangible assets 99.1 79.6 94.2
Property, plant and equipment 194.7 187.4 192.3
Financial and other assets 10.2 10.6 10.4
489.0 452.7 479.2
Current assets
Inventories 6.2 6.6 6.5
Trade and other receivables 32.0 26.5 30.0
Cash and cash equivalents - excluding collateralisation of Liquidity Facility 123.1 86.3 86.5
Cash and cash equivalents - collateralisation of Liquidity Facility(1) - 63.2 -
Cash and cash equivalents 7 123.1 149.5 86.5
161.3 182.6 123.0
Total assets 650.3 635.3 602.2
Liabilities
Current liabilities
Financial liabilities - excluding collateralisation of Liquidity Facility 8.1 21.4 8.0
Financial liabilities - collateralisation of Liquidity Facility(1) - 63.2 -
Financial liabilities 8.1 84.6 8.0
Trade and other payables 62.0 51.5 51.2
Current tax liabilities 7.3 6.8 -
Provisions for liabilities and charges 1.2 1.2 1.4
78.6 144.1 60.6
Non-current liabilities
Financial liabilities 598.7 395.5 602.9
Deferred tax liabilities 17.0 26.4 13.6
Other non-current liabilities 2.9 2.7 2.6
Provisions for liabilities and charges 5.1 3.8 4.5
Retirement benefit obligation 9.0 3.3 10.5
632.7 431.7 634.1
Total liabilities 711.3 575.8 694.7
Shareholders' equity
Ordinary share capital 6.1 6.0 6.1
Share premium account 4.8 22.9 2.8
Capital redemption reserve 141.7 121.6 141.7
Other reserves (6.0) (7.2) (5.5)
Retained earnings (207.6) (83.8) (237.6)
Total equity (61.0) 59.5 (92.5)
Total equity and liabilities 650.3 635.3 602.2
(1) In 2013, the Group forced the cash collateralisation of the Liquidity
Facility, which supports the repayment of Secured Notes in the event of
default. This followed the downgrade of RBS by S&P. Following the Group's
refinancing in October 2014 this collateralisation is no longer required.
Further information can be found in the 2014 Annual Report.
Consolidated statement of changes in equity (unaudited)
as at 26 June 2015
Ordinary Share Capital
share premium redemption Other Retained
capital account reserve reserves earnings Total
£m £m £m £m £m £m
Shareholders' equity as at 27 December 2013 6.0 20.8 121.6 (6.4) (99.8) 42.2
Profit for the 26 weeks ended 27 June 2014 - - - - 24.2 24.2
Remeasurement loss on defined benefit obligations - - - - (2.4) (2.4)
Tax on pensions - - - - 0.5 0.5
Total comprehensive income - - - - 22.3 22.3
Effects of employee share options - - - 0.8 - 0.8
Tax on employee share options - - - 0.4 - 0.4
Proceeds from share issue(1) - 2.1 - - - 2.1
Gift to Employee Benefit Trust - - - (2.0) - (2.0)
Dividends (note 6) - - - - (6.3) (6.3)
Shareholders' equity as at 27 June 2014 6.0 22.9 121.6 (7.2) (83.8) 59.5
Loss for the 26 weeks ended 26 December 2014 - - - - (79.2) (79.2)
Remeasurement loss on defined benefit obligations - - - - (8.4) (8.4)
Tax on pensions - - - - 1.7 1.7
Total comprehensive income - - - - (85.9) (85.9)
Effects of employee share options - - - 1.2 - 1.2
Tax on employee share options - - - 0.5 - 0.5
Proceeds from share issue(1) 0.1 - - - - 0.1
Issue and redemption of B Shares in respect of
Capital Option - (20.1) 20.1 - (20.1) (20.1)
Dividend in respect of Special Dividend Option - - - - (44.3) (44.3)
Dividends (note 6) - - - - (3.5) (3.5)
Shareholders' equity as at 26 December 2014 6.1 2.8 141.7 (5.5) (237.6) (92.5)
Profit for the 26 weeks ended 26 June 2015 - - - - 35.0 35.0
Remeasurement gain on defined benefit obligations - - - - 1.8 1.8
Tax on pensions - - - - (0.4) (0.4)
Total comprehensive income - - - - 36.4 36.4
Effects of employee share options - - - 1.0 - 1.0
Tax on employee share options - - - 0.5 - 0.5
Proceeds from share issue(2) - 2.0 - - - 2.0
Gift to Employee Benefit Trust - - - (2.0) - (2.0)
Dividends (note 6) - - - - (6.4) (6.4)
Shareholders' equity as at 26 June 2015 6.1 4.8 141.7 (6.0) (207.6) (61.0)
(1) Relating to issue of 281,430 shares under 2011 LTIP scheme and 14,896
shares under 2010 SAYE scheme.
(2) Relating to issue of 249,067 shares under 2012 LTIP scheme and 330 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 £80,002,465 B Shares that were
issued on 2 August 2006 and redeemed for cash on the same day and £19,274,610
B Shares that were issued on 10 October 2010 and redeemed for cash on 11
October 2010, £22,263,112 B Shares that were issued on 12 August 2013 and
redeemed for cash on 20 August 2013 and £20,154,070 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 deferred tax, together with a £12.3 million merger
reserve.
Consolidated statement of cash flows (unaudited)
for the 26 week period ended 26 June 2015 52 week
period ended
26 week period ended 26 Dec 2014
26 Jun 2015 27 Jun 2014 (audited)
Note £m £m £m
Cash flows from operating activities
Cash generated from operations before external transaction costs and exceptional pension contribution 9 71.0 53.3 104.4
Exceptional contribution to pension scheme - - (1.0)
External transaction costs in respect of acquisitions (0.6) (0.5) (1.1)
Cash generated from operations 70.4 52.8 102.3
Finance income received 0.3 0.3 0.6
Finance costs paid (5.9) (15.0) (38.0)
Transfer from restricted bank accounts for finance costs 5.6 14.6 14.6
Payments to restricted bank accounts for finance costs (12.8) (14.7) (5.6)
Total payments in respect of finance costs (13.1) (15.1) (29.0)
Tax refund/ (paid) 0.8 (6.9) (6.9)
Net cash generated from operating activities 58.4 31.1 67.0
Cash flows from investing activities
Acquisition of subsidiaries and businesses (net of cash acquired) 11 (10.1) (5.2) (24.7)
Proceeds from sale of property, plant and equipment 0.5 0.3 0.5
Vehicle replacement programme and improvements to locations (5.6) (5.5) (14.1)
Branch relocations (3.1) (0.5) (1.4)
Satellite locations - - (0.1)
Development of new crematoria and cemeteries (0.1) (1.2) (1.6)
Purchase of property, plant and equipment (8.8) (7.2) (17.2)
Net cash used in investing activities (18.4) (12.1) (41.4)
Cash flows from financing activities
Proceeds from issue of New Notes - - 94.0
Cash settlement of Old Notes - - (5.9)
External transaction costs relating to extinguishment of Old Notes - - (5.8)
Net Proceeds from issue of New Notes - - 82.3
Issue costs in respect of borrowings and Secured Notes (0.1) - (0.9)
Issue costs in respect of debt facility (0.1) - -
Proceeds from share issue - 0.1 0.1
Repayment of swaps - - (5.1)
Repayment of borrowings (4.0) (5.9) (11.6)
Transfer from restricted bank accounts for repayment of borrowings 4.0 5.7 5.7
Payments to restricted bank accounts for repayment of borrowings (4.1) (5.9) (4.0)
Total payments in respect of borrowings (4.1) (6.1) (9.9)
Dividends paid to shareholders on Ordinary Shares 6 (6.4) (6.3) (9.8)
Redemption of B Shares in respect of Capital Option - - (20.1)
Redemption of C Shares in respect of Special Dividend Option - - (44.3)
Net cash used in financing activities (10.7) (12.3) (7.7)
Net increase in cash and cash equivalents 29.3 6.7 17.9
Cash and cash equivalents at the beginning of the period 76.9 59.0 59.0
Cash and cash equivalents at the end of the period 7 106.2 65.7 76.9
Restricted cash 7 16.9 20.6 9.6
Collateralisation of Liquidity Facility (restricted) 7 - 63.2 -
Cash and cash equivalents at the end of the period as
reported in the consolidated balance sheet 7 123.1 149.5 86.5
Notes to the interim financial information 2015 (unaudited)
for the 26 week period ended 26 June 2015
1 Accounting policies
The principal accounting policies adopted in the preparation of this interim
condensed consolidated financial information are set out below. These policies
have been consistently applied to all periods presented, unless otherwise
stated.
Basis of preparation
The interim condensed consolidated financial information of Dignity plc (the
'Company') is for the
26 week period ended 26 June 2015 and comprises the results, assets and
liabilities of the Company and its subsidiaries (the 'Group').
The interim condensed consolidated financial information has been reviewed,
not audited and does not constitute statutory accounts within the meaning of
s434 of the Companies Act 2006. This interim condensed consolidated financial
information has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with IAS 34 'interim
financial reporting' as adopted by the European Union.
The interim condensed consolidated financial information has been prepared in
accordance with all applicable International Financial Reporting Standards
('IFRSs'), as adopted by the European Union, that are expected to apply to the
Group's Financial Report for the 52 week period ended 25 December 2015. This
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 26
December 2014. The Directors approved this interim condensed consolidated
financial information on 29 July 2015.
The accounting policies applied by the Group in this interim condensed
consolidated financial information are the same as those applied by the Group
in its audited consolidated financial statements as at and for the 52 week
period ended 26 December 2014, which are prepared in accordance with
International Financial Reporting Standards as adopted by the European Union.
The basis of consolidation is set out in the Group's accounting policies in
those financial statements.
The Group has applied IFRS 10, Consolidated financial statements, in preparing
the interim financial information. IFRS 10 builds on existing principles by
identifying the concept of control as the determining factor on whether an
entity should be included within the consolidated financial statements of the
parent company. In order to have control, IFRS 10 requires a parent company to
have power over the investee, an exposure to variable returns because of its
involvement in the investee and the ability to use its power over the investee
to affect the amount of the variable returns. The Group has specifically
considered IFRS 10 in light of the Group's non consolidation of its
pre-arranged funeral plan trusts.
IFRS 10 consideration Analysis
Power over the investee. Power arises when the investor has existing rights that gives them the ability to direct the relevant activities of the investee, being those activities which influence the returns achieved by the investee. Dignity has no voting rights over the Trusts or any rights to direct the activities of the Trusts. Whilst Dignity has the power to appoint or remove trustees, legislation requires the majority of trustees to be independent of Dignity.
The investor is exposed, or has rights, to variable returns from its involvement with the investee. Whilst Dignity controls the charge levied to the Trusts for the provision of funeral services, it does not have the power to direct the investment decisions of the Trusts. Dignity receives an allowance for the marketing of the plans and for the
performance of a funeral. From time to time Dignity may receive a surplus from the Trusts. Ultimately Dignity's return is wholly dependent on the investment performance of the Trusts.
The investor has the ability to use its power over the investee to affect the amount of the investor's returns. A majority of the Trustees are required, by legislation, to be independent of Dignity and therefore Dignity does not, and cannot, control the actions of the Trustees. The investment strategy is set, implemented and monitored by the Trustees. Consequently,
Dignity does not have the power to affect the amount of its returns.
The Group does not believe that, given the above conditions required for
consolidation in the new standard, a change in accounting policy is required.
1 Accounting policies (continued)
The preparation of interim condensed consolidated financial information
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 this interim condensed
consolidated financial information, the significant judgments made by the
management in applying the Group's accounting policies and key source of
estimation uncertainty were the same (except for the judgments applied in the
assessment of IFRS 10 as detailed above) as those applied to the audited
consolidated financial statements as at and for the 52 week period ended 26
December 2014.
Comparative information has been presented as at and for the 26 week period
ended 27 June 2014 and as at and for the 52 week period ended 26 December
2014.
The comparative figures for the 52 week period ended 26 December 2014 do not
constitute statutory accounts for the purposes of s434 of the Companies Act
2006. A copy of the Group's statutory accounts for the 52 week period ended 26
December 2014 have been delivered to the Registrar of Companies and contained
an unqualified auditors' report in accordance with s498 of the Companies Act
2006.
2 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 assets and liabilities are located in, the United Kingdom and Channel
Islands and relates to services provided. Overseas transactions are not
material.
Underlying 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/ (loss) for these
items provides a useful indication of the Group's performance.
The revenue and operating profit/ (loss), by segment, was as follows:
26 week period ended 26 June 2015
Revenue Underlying operating profit/ (loss) before depreciation and amortisation Depreciation and amortisation Underlying operating profit/ (loss) External transaction costs Operating profit/ (loss)
£m £m £m £m £m £m
Funeral services 112.5 51.7 (5.1) 46.6 (1.5) 45.1
Crematoria 33.7 21.1 (1.6) 19.5 - 19.5
Pre-arranged funeral plans 12.5 4.1 (0.1) 4.0 - 4.0
Central overheads - (10.1) (0.3) (10.4) - (10.4)
Group 158.7 66.8 (7.1) 59.7 (1.5) 58.2
Finance costs (13.4) - (13.4)
Finance income 0.2 - 0.2
Profit before tax 46.5 (1.5) 45.0
Taxation - continuing activities (10.0) - (10.0)
Underlying earnings for the period 36.5
Total other items (1.5)
Profit after taxation 35.0
Earnings per share for profit attributable to equity shareholders (pence)
- Basic 74.0p 71.0p
2 Revenue and segmental analysis (continued)
26 week period ended 27 June 2014
Revenue Underlying operating profit/ (loss) before depreciation and amortisation Depreciation and amortisation Underlying operating profit/ (loss) Loss on sale of fixed assets and external transaction costs Operating profit/ (loss)
£m £m £m £m £m £m
Funeral services 92.4 39.0 (4.7) 34.3 (0.4) 33.9
Crematoria 28.1 16.7 (1.5) 15.2 - 15.2
Pre-arranged funeral plans 12.6 4.1 (0.1) 4.0 - 4.0
Central overheads - (7.6) (0.3) (7.9) (0.4) (8.3)
Group 133.1 52.2 (6.6) 45.6 (0.8) 44.8
Finance costs (15.8) - (15.8)
Finance income 2.5 - 2.5
Profit before tax 32.3 (0.8) 31.5
Taxation - continuing activities (7.3) - (7.3)
Underlying earnings for the period 25.0
Total other items (0.8)
Profit after taxation 24.2
Earnings per share for profit attributable to equity shareholders (pence)
- Basic 46.7p 45.2p
52 week period ended 26 December 2014
Revenue Underlying operating profit/ (loss) before depreciation and amortisation Depreciation and amortisation Underlying operating profit/ (loss) Loss on sale of fixed assets, external transaction costs and exceptional items Operating profit/ (loss)
£m £m £m £m £m £m
Funeral services 184.4 75.9 (9.6) 66.3 (1.5) 64.8
Crematoria 55.2 32.3 (3.2) 29.1 (0.2) 28.9
Pre-arranged funeral plans 29.3 7.6 (0.2) 7.4 - 7.4
Central overheads - (17.4) (0.5) (17.9) (0.3) (18.2)
Group 268.9 98.4 (13.5) 84.9 (2.0) 82.9
Finance costs (30.6) (124.2) (154.8)
Finance income 4.2 - 4.2
(Loss)/ profit before tax 58.5 (126.2) (67.7)
Taxation - continuing activities (13.1) - (13.1)
Taxation - exceptional - 25.8 25.8
Taxation (13.1) 25.8 12.7
Underlying earnings for the period 45.4
Total other items (100.4)
Loss after taxation (55.0)
Earnings per share for (loss)/ profit attributable to equity shareholders (pence)
- Basic 85.8p (104.0)p
3 Net finance costs
52 week
26 week period ended period ended
26 Jun 2015 27 Jun 2014 26 Dec 2014
£m £m £m
Finance costs
Old Notes - 13.7 21.8
New Notes 12.5 - 5.1
Amortisation of issue costs - 0.9 1.5
Crematoria Acquisition Facility 0.3 0.3 0.6
Other loans 0.5 0.7 1.3
Unwinding of discounts 0.1 0.2 0.3
Underlying finance costs 13.4 15.8 30.6
Extinguishment of Old Notes - exceptional - - 123.2
Elimination of swap - exceptional - - 1.0
Finance costs 13.4 15.8 154.8
Finance income
Bank deposits (0.2) (0.5) (1.0)
Amortisation of premium on Old Notes - (2.0) (3.2)
Finance income (0.2) (2.5) (4.2)
Net finance costs 13.2 13.3 150.6
4 Taxation
The taxation charge on continuing operations in the period is based on a full
year estimated effective tax rate, before exceptional items, of 21.5 per cent
(2014: 22.5 per cent) on profit before tax for the 26 week period ended 26
June 2015.
52 week
26 week period ended period ended
26 Jun 2015 27 Jun 2014 26 Dec 2014
£m £m £m
Taxation 10.0 7.3 (12.7)
The main rate of Corporation Tax in the UK changed from 21 per cent to 20 per
cent from 1 April 2015. Further rate changes are anticipated, if these are
subsequently enacted in the form expected then the corporation tax rate will
reduce by 1 per cent in 2017 and then by a further 1 per cent in 2020. The
changes had not been substantively enacted at the balance sheet date and
therefore are not recognised in these financial statements.
Each percentage point reduction in Corporation Tax rate is expected to reduce
the deferred tax liability by approximately £0.8 million. These impacts will
be recognised in the period in which substantive enactment occurs.
5 Earnings per share (EPS)
The calculation of basic earnings per Ordinary Share has been based on the
profit attributable to equity share holders 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. In December 2014, the potential
issue of new shares pursuant to the Group's share option plans had no impact
on the calculation of earnings per share.
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:
Earnings Weighted average number of shares Per share amount
£m millions pence
26 week period ended 26 June 2015
Underlying profit after taxation and EPS 36.5 49.3 74.0
Add: External transaction costs (net of taxation of £nil million) (1.5)
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