REG - Dignity PLC - Preliminary results <Origin Href="QuoteRef">DTY.L</Origin> - Part 2
02/03/2016 07:14
- Part 2: For the preceding part double click ID:nRSB7032Qa
Capitalredemptionreserve£m Otherreserves£m Retainedearnings£m Totalequity£m
Shareholders' equity as at 27 December 2013 6.0 20.8 121.6 (6.4) (99.8) 42.2
Loss for the 52 weeks ended 26 December 2014 - - - - (55.0) (55.0)
Remeasurement loss on defined benefit obligations - - - - (10.8) (10.8)
Tax on pensions - - - - 2.2 2.2
Total comprehensive income - - - - (63.6) (63.6)
Effects of employee share options - - - 2.0 - 2.0
Tax on employee share options - - - 0.9 - 0.9
Proceeds from share issue(1) 0.1 2.1 - - - 2.2
Gift to Employee Benefit Trust - - - (2.0) - (2.0)
Issue and redemption of B Shares in respect of
Capital Option (see note 5) - (20.1) 20.1 - (20.1) (20.1)
Dividend in respect of Special Dividend
Option (see note 5) - - - - (44.3) (44.3)
Dividends (see note 5) - - - - (9.8) (9.8)
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(2) - 2.0 - - - 2.0
Gift to Employee Benefit Trust - - - (2.0) - (2.0)
Dividends (see 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)
(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 1,044
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, £19,274,610 B
Shares that were issued on 10 October 2010 and redeemed for cash on 11 October
2010, and £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
for the 52 week period ended 25 December 2015
52 week period 52 week period
ended ended
25 December 26 December
2015 2014
Note £m £m
Cash flows from operating activities
Cash generated from operations before external transaction costs and exceptional pension contributions 8 125.2 104.4
Exceptional contribution to pension scheme - (1.0)
External transaction costs in respect of acquisitions (3.2) (1.1)
Cash generated from operations 122.0 102.3
Finance income received 0.6 0.6
Finance costs paid (19.1) (38.0)
Transfer from restricted bank accounts for finance costs 5.6 14.6
Payments to restricted bank accounts for finance costs 6 (12.8) (5.6)
Total payments in respect of finance costs (26.3) (29.0)
Tax paid (3.7) (6.9)
Net cash generated from operating activities 92.6 67.0
Cash flows from investing activities
Acquisition of subsidiaries and businesses (net of cash
acquired) (50.0) (24.7)
Proceeds from sale of property, plant and equipment 0.8 0.5
Vehicle replacement programme and improvements to locations (15.6) (14.1)
Branch relocations (3.9) (1.4)
Satellite locations (0.3) (0.1)
Development of new crematoria and cemeteries (0.1) (1.6)
Purchase of property, plant and equipment (19.9) (17.2)
Net cash used in investing activities (69.1) (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 (0.2) -
Proceeds from share issue - 0.1
Repayment of swaps - (5.1)
Repayment of borrowings (8.1) (11.6)
Transfer from restricted bank accounts for repayment of borrowings 4.0 5.7
Payments to restricted bank accounts for repayment of borrowings 6 (4.1) (4.0)
Total payments in respect of borrowings (8.2) (9.9)
Dividends paid to shareholders on Ordinary Shares 5 (10.0) (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 (18.5) (7.7)
Net increase in cash and cash equivalents 5.0 17.9
Cash and cash equivalents at the beginning of the period 76.9 59.0
Cash and cash equivalents at the end of the period 81.9 76.9
Restricted cash 16.9 9.6
Cash and cash equivalents at the end of the period as reported in the consolidated balance sheet 6 98.8 86.5
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 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:
52 week period ended 25 December 2015
Revenue Underlying operating profit/ (loss) before depreciation and amortisation Depreciation and amortisation Underlying operating profit/ (loss) Profit on sale of fixed assets, external transaction costs and exceptional items Operating profit/ (loss)
£m £m £m £m £m £m
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 £4.3 million and underlying
operating profit of £1.4 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 £m £m £m £m £m
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
The revenue and operating profit, by segment, was as follows:
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
-Basic and diluted (pence) 85.8p (104.0)p
The segment assets and liabilities were as follows:
Pre-arranged
Funeral services Crematoria funeral plans Central overheads Group
As at 26 December 2014 £m £m £m £m £m
Segment assets 350.8 141.3 19.5 3.1 514.7
Unallocated assets:
Cash and cash equivalents 86.5
Corporation Tax 1.0
Total assets 602.2
Segment liabilities (39.7) (7.8) (8.1) (9.6) (65.2)
Unallocated liabilities:
Borrowings - excluding finance leases (610.2)
Accrued interest (5.7)
Deferred tax (13.6)
Total liabilities (694.7)
Other segment items:
Additions to non-current assets (other than financial instruments and deferred tax) 40.5 3.4 - 1.3 45.2
Depreciation 9.6 3.2 - 0.5 13.3
Amortisation - - 0.2 - 0.2
Impairment of trade receivables 1.6 - - - 1.6
Other non-cash expenses - - - 2.0 2.0
Loss on sale of fixed assets (0.3) - - - (0.3)
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
52 week period 52 week period
ended ended
25 December 26 December
2015 2014
£m £m
Finance costs
Old Notes - 21.8
New Notes 25.0 5.1
Amortisation of issue costs - 1.5
Crematoria Acquisition Facility 0.6 0.6
Other loans 0.9 1.3
Net finance cost on retirement benefit obligations 0.3 -
Unwinding of discounts 0.2 0.3
Underlying finance costs 27.0 30.6
Extinguishment of Old Notes - exceptional - 123.2
Elimination of swap - exceptional - 1.0
Finance costs 27.0 154.8
Finance income
Bank deposits (0.5) (1.0)
Amortisation of premium on Old Notes - (3.2)
Finance income (0.5) (4.2)
Net finance costs 26.5 150.6
3 Taxation
52 week period 52 week period
ended ended
25 December 26 December
2015 2014
Analysis of charge in the period £m £m
Current tax - current period 10.4 0.6
Adjustments for prior period - (0.7)
Total corporation tax 10.4 (0.1)
Deferred tax - current period 5.1 (1.2)
Non trade deficit recognised in the period - (11.6)
Adjustments for prior period - 0.2
Restatement of deferred tax for the change in UK tax rate (3.4) -
Total deferred tax 1.7 (12.6)
Taxation 12.1 (12.7)
4 Earnings per share
The calculation of basic earnings per Ordinary Share has been based on the
profit or loss 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. In prior periods, the potential
issue of new shares pursuant to the Group's share option plans had no impact
on the calculation of earnings per share.
For the period ended 26 December 2014, any potential ordinary shares to be
included when considering diluted earnings per share were anti-dilutive. As a
result there was no difference between basic earnings per share and basic
diluted 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.
In 2014, shareholders approved a share capital consolidation together with a
Special Dividend of £1.08 per Ordinary Share. The overall effect of this
transactions was that of a share repurchase at fair value. The reduction in
the number of Ordinary Shares is the result of a corresponding reduction in
resources and therefore no adjustment has been made to the earnings per share
calculation.
Reconciliations of the earnings and the weighted average number of shares used
in the calculations are set out below:
Weighted
average
number of Per share
Earnings shares amount
£m millions pence
52 week period ended 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 £nil 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
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)
5 Dividends
52 week period 52 week period
ended ended
25 December 26 December
2015 2014
£m £m
Final dividend paid: 13.01p per Ordinary Share (2014: 11.83p) 6.5 6.3
Interim dividend paid: 7.14p per Ordinary Share (2014: 6.49p) 3.5 3.5
Dividend on Ordinary Shares 10.0 9.8
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 £10.0 million,
20.15 pence per share (2014: £74.2 million, 138.32 pence per share).
A final dividend of 14.31 pence per share, in respect of 2015, 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 £7.1
million. This will be paid on 24 June 2016 provided that approval is gained
from shareholders at the Annual General Meeting on 9 June 2016 and will be
paid to shareholders on the register at close of business on 20 May 2016.
2014 Return of Cash
On 7 November 2014, the Group returned a total of £64.4 million to ordinary
shareholders equating to £1.20 for each Ordinary Share held following the
issue of the New Notes. Ordinary shareholders were able to elect to receive
this Return of Cash as either:
(a) A return of capital (the 'Capital Option').
(b) A special dividend (the 'Special Dividend Option').
Ordinary shareholders elected to receive £20.1 million as a return of capital
and £44.3 million as a special dividend.
6 Cash and cash equivalents
25 December 26 December
2015 2014
£m £m
Operating cash as reported in the consolidated statement of cash flows as cash and cash equivalents 81.9 76.9
Amounts set aside for debt service payments 16.9 9.6
Cash and cash equivalents as reported in the balance sheet 98.8 86.5
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 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. This amount was used to
pay these respective parties on 31 December 2015. Of this amount, £12.8
million (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
(2014: £4.0 million) is shown within 'Financing activities' as 'Payments to
restricted bank accounts for repayment of borrowings'.
7 Net debt
25 December 26 December
2015 2014
£m £m
Net amounts owing on New Notes (586.5) (594.6)
Add: unamortised issue costs (0.7) (0.7)
Gross amounts owing on Secured Notes per financial statements (587.2) (595.3)
Net amounts owing on Crematoria Acquisition Facility per financial statements (15.7) (15.6)
Add: unamortised issue costs on Crematoria Acquisition Facility (0.1) (0.2)
Gross amounts owing (603.0) (611.1)
Accrued interest on Secured Notes (12.8) (5.7)
Accrued interest on Crematoria Acquisition Facility (0.1) -
Cash and cash equivalents (note 6) 98.8 86.5
Net debt (517.1) (530.3)
In addition to the above, the consolidated balance sheet also includes finance
lease obligations and other financial liabilities which totalled £0.7 million
(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 to be at least 1.5 times. At 25 December 2015,
the actual ratio was 3.35 times (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 in 2014, assuming a full year Senior
Interest would have been approximately £33.7 million. On this basis, the
EBITDA DSCR would have been 2.95 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.
See the Group's 2014 Annual Report for further details of the replacement of
the Old Notes.
8 Reconciliation of cash generated from operations
52 week period 52 week period
ended ended
25 December 26 December
2015 2014
£m £m
Net profit/ (loss) for the period 56.9 (55.0)
Adjustments for:
Taxation 12.1 (12.7)
Net finance costs 26.5 26.4
Loss on disposal of fixed assets - 0.3
Depreciation charges 14.5 13.3
Amortisation of intangibles 0.1 0.2
Movement in inventories 0.1 0.2
Movement in trade receivables (1.6) 0.3
Movement in trade payables 3.2 (0.6)
External transaction costs 3.2 1.7
Loss on extinguishment of Old Notes - exceptional - 123.2
Elimination of swap - exceptional - 1.0
Changes in other working capital (excluding acquisitions) 7.8 4.1
Employee share option charges 2.4 2.0
Cash generated from operations before external transaction costs and exceptional pension contributions 125.2 104.4
9 Analysis of the movement in the retirement benefit
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