REG - Dignity PLC - Interim Results <Origin Href="QuoteRef">DTY.L</Origin> - Part 3
29/07/2015 07:02
- Part 3: For the preceding part double click ID:nRSc3705Ub
Profit attributable to shareholders - Basic EPS 35.0 49.3 71.0
Profit attributable to shareholders - Diluted EPS 35.0 49.4 70.9
26 week period ended 27 June 2014
Underlying profit after taxation and EPS 25.0 53.5 46.7
Add: Loss on sale of fixed assets and external transaction costs
(net of taxation of £nil million) (0.8)
Profit attributable to shareholders - Basic EPS 24.2 53.5 45.2
Profit attributable to shareholders - Diluted EPS 24.2 53.7 45.1
52 week period ended 26 December 2014
Underlying profit after taxation and EPS 45.4 52.9 85.8
Add: Exceptional items, loss on sale of fixed assets and
external transaction costs (net of taxation of £25.8 million) (100.4)
Loss attributable to shareholders - Basic and diluted EPS (55.0) 52.9 (104.0)
6 Dividends
On 26 June 2015, the Group paid a final dividend, in respect of 2014, of 13.01
pence per share (2014: 11.83 pence per share) totalling £6.4 million (2014:
£6.3 million).
On 29 July 2015, the Directors declared an interim dividend, in respect of
2015, of 7.14 pence per share (2014: 6.49 pence per share) totalling £3.5
million (2014: £3.5 million), which will be paid on 30 October 2015 to those
shareholders on the register at the close of business on 25 September 2015.
7 Cash and cash equivalents
26 Jun 27 Jun 26 Dec
2015 2014 2014
Note £m £m £m
Operating cash as reported in the consolidated statement of
cash flows as cash and cash equivalents 106.2 65.7 76.9
Amounts set aside for debt service payments (a) 16.9 20.6 9.6
Collateralisation of Liquidity Facility (b) - 63.2 -
Cash and cash equivalents as reported in the balance sheet 123.1 149.5 86.5
86.5
(a) This amount was transferred to restricted bank accounts which could
only be used for the payment of the interest and principal on the Secured
Notes, the repayment of liabilities due on the Group's interest rate swaps and
commitment fees due on its undrawn borrowing facilities and for no other
purpose. Consequently, this amount does not meet the definition of cash and
cash equivalents in IAS 7, Statement of Cash Flows. In June 2015 this amount
was used to pay these respective parties on 30 June 2015 and in December 2014
this amount was used to pay these respective parties on 31 December 2014. Of
this amount £12.8 million (December 2014: £5.6 million) is shown within the
Statement of Cash Flows as 'Payments to restricted bank accounts for finance
costs' and £4.1 million (December 2014: £4.0 million) is shown within
'Financing activities' as 'Payments to restricted bank accounts for repayment
of borrowings'.
(b) As described in the 2014 Annual Report, this amount represents the
cash collateralisation of the Liquidity Facility which does not meet the
definition of cash and cash equivalents in IAS 7.
8 Net debt
26 Jun 27 Jun 26 Dec
2015 2014 2014
£m £m £m
Net amounts owing on Old Notes - (396.3) -
Net amounts owing on New Notes (590.6) - (594.6)
Add: unamortised issue costs - issued 2014 (0.7) (15.4) (0.7)
Gross amounts owing on Secured Notes per financial statements (591.3) (411.7) (595.3)
Net amounts owing on Crematoria Acquisition Facility
per financial statements (15.6) (15.6) (15.6)
Add: unamortised issue costs on Crematoria Acquisition Facility (0.2) (0.2) (0.2)
Gross amounts owing (607.1) (427.5) (611.1)
Accrued interest on Secured Notes (12.9) (14.4) (5.7)
Cash and cash equivalents(1) 123.1 86.3 86.5
Net debt (496.9) (355.6) (530.3)
(1) In June 2014, cash held as collateral for the Liquidity Facility was
excluded as it did not meet the definition of cash and cash equivalents in
IAS7.
In addition to the above, the consolidated balance sheet also includes finance
lease obligations and other financial liabilities which totalled £0.7 million
(June 2014: £5.0 million; December 2014: £0.7 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 New Notes requires
EBITDA to total debt service ('EBITDA DSCR') to be at least 1.5 times. At 26
June 2015, the actual ratio was 4.37 times (December 2014: 10.69 times). The
New Notes were issued on 17 October 2014. Consequently, Senior Interest only
accrues from this date for the Relevant Period. Debt Service, assuming a full
year Senior Interest would have been approximately £33.7 million. On this
basis, the EBITDA DSCR would have been 3.38 times (December 2014: 2.95 times)
and the Free Cashflow to total debt service would have been 3.11 times
(December 2014: 2.47 times). June 2014 comparatives are not provided as the
New Notes were not tested at that time.
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.
9 Reconciliation of cash generated from operations
52 week
26 week period ended period ended
26 Jun 2015 27 Jun 2014 26 Dec 2014
£m £m £m
Net profit/ (loss) for the period 35.0 24.2 (55.0)
Adjustments for:
Taxation 10.0 7.3 (12.7)
Net finance costs 13.2 13.3 26.4
Loss on disposal of fixed assets - 0.1 0.3
Depreciation charges 7.0 6.5 13.3
Amortisation of intangibles 0.1 0.1 0.2
Movement in inventories 0.3 - 0.2
Movement in trade receivables (1.6) 1.2 0.3
Movement in trade payables 0.9 (0.8) (0.6)
External transaction costs 1.5 0.7 1.7
Loss on extinguishment of Old Notes - exceptional - - 123.2
Elimination of swap - exceptional - - 1.0
Difference in pension charge and cash contribution 0.1 (0.2) -
Changes in other working capital (excluding acquisitions) 3.5 0.1 4.1
Employee share option charges 1.0 0.8 2.0
Cash generated from operations before external transaction costs
and exceptional pension contributions 71.0 53.3 104.4
10 Financial risk management and financial instruments
(a) Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk, interest rate risk and other price risk), credit
risk and liquidity risk.
The condensed interim financial statements do not include all financial risk
management information and disclosures required in the annual financial
statements; they should be read in conjunction with the Group's annual
financial statements as at 26 December 2014. There have been no changes in the
approach to risk management or in any risk management policies since the year
end.
(b) Liquidity risk
Compared to year end, there was no material change in the contractual
undiscounted cash out flows for financial liabilities.
(c) Fair value estimation
All financial assets and liabilities are carried at amortised cost. The fair
value and book value of the borrowings, which are level 1 (other than in
respect of the Crematoria Acquisition Facility which is level 2), are set out
below. With the exception of long-term and short-term borrowings (excluding
finance lease obligations) the fair value and the book value are the same.
26 Jun 2015£m 26 Dec 2014£m
Long-term borrowings (excluding finance lease obligations) 621.4 649.6
Long-term borrowings (excluding finance lease obligations) has a book value of
£598.0 million (December 2014: £602.2 million) and short-term borrowings
(excluding finance lease obligations) has a book value of £8.1 million
(December 2014: £8.0 million).
11 Acquisitions and disposals
(a) Acquisition of subsidiary and other businesses
Provisional
fair value
£m
Property, plant and equipment 1.2
Intangible assets: trade names 4.9
Cash acquired 1.0
Receivables 0.2
Provisions (0.1)
Deferred taxation (0.7)
Net assets acquired 6.5
Goodwill arising 2.7
9.2
Satisfied by:
Cash paid on completion 8.4
Accrued consideration 0.8
Total consideration 9.2
During 2015, the Group acquired the operational interest of 10 funeral
locations.
All assets and liabilities are recorded at their provisional fair values. The
residual excess of the consideration paid over the net assets acquired is
recognised as goodwill, of which £0.8 million is tax deductible. This goodwill
represents future benefits to the Group in terms of revenue, market share and
delivering the Group's strategy.
The fair value adjustments contain provisional amounts, which will be
finalised in the 2015 full year results. These adjustments reflect the
recognition of trade names and associated deferred taxation, and adjustments
to reflect the fair value of other working capital movements such as
receivables, inventories and accruals which are immaterial.
All acquisitions have been accounted for under the acquisition method. None
were individually material and consequently have been aggregated. The
aggregated impact of the acquisitions on the Income Statement for the period
is not material.
(b) Reconciliation to cash flow statement
£m
Cash paid on completion 8.4
Cash paid in respect of prior year acquisitions 2.7
Cash acquired on acquisition (1.0)
Acquisition of subsidiaries and businesses as reported in the Cash flow statement 10.1
(c) Acquisition and disposals of property, plant and equipment
In addition to the above, there were additions in relation to crematoria
developments totalling £0.1 million (June 2014: £1.2 million; December 2014:
£1.6 million) and £8.7 million (June 2014: £6.0 million; December 2014: £15.6
million) of other additions to property, plant and equipment in the period.
The Group also received proceeds of £0.5 million (June 2014: £0.3 million;
December 2014: £0.5 million) from disposals of property, plant and equipment,
which had a net book value of £0.5 million (June 2014: £0.4 million; December
2014: £0.7 million).
The Group had capital expenditure authorised by the Board and contracted for
at the balance sheet date of £13.7 million (June 2014: £10.0 million; December
2014: £2.0 million) in respect of property, plant and equipment.
12 Pre-arranged funeral plan trust
During the period, the Group entered into transactions with the Trusts
associated with the pre-arranged funeral plan businesses. The nature of the
relationship with the Trusts is set out in the accounting policies, which can
be found in the Group's 2014 Annual Report. 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; and
• Receipts from the Trusts in respect funerals provided.
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 within one year at the period end
26 week period ended 52 week period ended 26 week period ended 52 week period ended
26 Jun 2015 27 Jun 2014 26 Dec 2014 26 Jun 2015 27 Jun 2014 26 Dec 2014
£m £m £m £m £m £m
Dignity Limited Trust Fund 0.2 0.2 0.3 - - -
National Funeral Trust 20.9 16.7 34.8 2.0 1.6 2.4
Trust for Age UK Funeral Plans 19.9 16.8 35.1 1.7 1.8 2.8
Peace of Mind Trusts 1.1 0.6 1.5 - 0.2 0.3
0.3
A further £3.2 million (June 2014: £3.0 million; December 2014: £3.7 million)
is due after more than one year.
13 Post balance sheet events
On 13 July 2015, the Group completed the acquisition of 36 funeral locations
from Laurel Funerals for consideration of £38 million. The Group has not, at
the point of authorisation for issue of this interim report, completed its
assessment of the fair values of assets and liabilities acquired and the
intangible assets arising in respect of this acquisition and therefore no
further disclosure is provided.
There were no other significant post balance sheet events.
14 Interim Report
Copies of this Interim Report are available at the Group's website
www.dignityfuneralsplc.co.uk.
15 Securitisation
In accordance with the terms of the securitisation carried out in April 2003,
Dignity (2002) Limited (the holding company of those companies subject to the
securitisation) has today issued reports to the Rating Agencies (Fitch Ratings
and Standard & Poor's), the Security Trustee and the holders of the notes
issued in connection with the securitisation confirming compliance with the
covenants established under the securitisation.
16 Seasonality
The Group's financial results and cash flows have historically been subject to
seasonal trends between the first half and second half of the financial year.
Traditionally, the first half of the financial year sees slightly higher
revenue and profitability. There is no assurance that this trend will continue
in the future.
Statement of Directors' responsibilities
The Directors confirm to the best of their knowledge that:
(a) The interim condensed consolidated financial information has been
prepared in accordance with IAS 34 as adopted by the European Union; and
(b) The Interim Report includes a fair review of the information as required
by:
· DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first half of 2015 and their
impact on the interim condensed consolidated financial information; and a
description of the principal risks and uncertainties for the remaining second
half of the year; and
· DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first half of 2015 and any material
changes in the related party transactions described in the last annual
report.
The Directors of Dignity plc and their functions are listed below:
Peter Hindley - Non-Executive Chairman
Mike McCollum - Chief Executive
Steve Whittern - Finance Director
Andrew Davies - Operations Director
Richard Portman - Corporate Services Director
Alan McWalter - Senior Independent Director
Ishbel Macpherson - Non-Executive Director
Jane Ashcroft - Non-Executive Director
Martin Pexton - Non-Executive Director
By order of the Board
Steve Whittern
Finance Director
29 July 2015
Independent review report to Dignity plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the Interim Report for the 26 week period ended 26 June 2015
which comprises the consolidated income statement, the consolidated statement
of comprehensive income, the consolidated balance sheet, the consolidated
statement of changes in equity, the consolidated statement of cash flows and
notes 1 to 16. We have read the other information contained in the Interim
Report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK and
Ireland) "Review of Interim Financial Information Performed by the Independent
Auditor of the Entity" issued by the Auditing Practices Board. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company, for our work, for this report, or for the conclusions
we have formed.
Directors' Responsibilities
The Interim Report is the responsibility of, and has been approved by, the
Directors. The Directors are responsible for preparing the Interim Report in
accordance with the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this Interim Report has been
prepared in accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the Interim Report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Interim Report
for 26 week period ended 26 June 2015 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted
by the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Ernst & Young LLP
Birmingham
29 July 2015
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