REG - Dignity PLC - Preliminary Results <Origin Href="QuoteRef">DTY.L</Origin> - Part 2
08/03/2017 07:06
- Part 2: For the preceding part double click ID:nRSH7964Ya
- - - - 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 £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 tax, together with a £12.3 million merger reserve.
Consolidated statement of cash flows
for the 53 week period ended 30 December 2016
53 week period 52 week period
ended ended
30 December 25 December
2016 2015
Note £m £m
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
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 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 £m £m £m £m £m
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
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
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 period 52 week period
ended ended
30 December 25 December
2016 2015
£m £m
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 £m £m
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 of Per share
Earnings shares amount
£m 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 £nil 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 £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
5 Dividends
53 week period 52 week period
ended ended
30 December 25 December
2016 2015
£m £m
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 £11.0 million,
22.16 pence per share (2015: £10.0 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 £7.9
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
£m £m
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, £0.3 million (2015: £12.8 million) is shown
within the Statement of Cash Flows as 'Payments to restricted bank accounts
for finance costs' and £nil million (2015: £4.1 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
£m £m
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)
(523.7)
(517.1)
In addition to the above, the consolidated balance sheet also includes finance
lease obligations and other financial liabilities which totalled £0.7 million
(2015: £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 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
£m £m
Net profit for the period 57.2 56.9
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