DTY.L Regulatory News (DTY)

13 Mar 2008 07:00

Dignity PLC13 March 2008 For immediate release 13 March 2008 Dignity plc Preliminary results for the 52 week period ended 28 December 2007 Dignity plc, announces its preliminary results for the 52 week period ended 28December 2007. Financial highlightsUnderlying earnings per share(a) Up 26% to 33.4p (2006: 26.6p)Revenue Up 6% to £159.5 million (2006: £149.8 million)Underlying operating profit(b) Up 8% to £47.6 million (2006: £44.1 million)Underlying profit before tax(b) Up 8% to £30.1 million (2006: £27.9 million)Cash generated from operations(c) Up 11% to £57.5 million (2006: £51.7 million)Basic earnings per share Up 33% to 34.4p (2006: 25.9p)Operating profit Up 10% to £47.7 million (2006: £43.4 million)Profit before tax Up 11% to £30.2 million (2006: £27.2 million)Dividend per share Interim dividend of 3.33p paid with a further 6.67p final dividend proposed (2006: interim dividend 3.03p, final dividend 6.06p) (a) Underlying earnings per share is calculated as profit on ordinaryactivities before exceptional items and profit on sale of fixed assets and aftertaxation divided by the weighted average number of Ordinary Shares in issue inthe period. (b) Before profit on sale of fixed assets and non-recurring costsexpensed relating to redemption of B shares in August 2006. (c) Before lump sum payment to final salary pension scheme of £10million in August 2006 and £0.7 million payment in respect of redemption of Bshares. Highlights • Outlook remains positive. • Strong trading performance. • Both funerals and crematoria divisions produced good results and margins continued to expand. • Continued high customer satisfaction results. • 21 funeral locations acquired in 2007 (and a further 6 funeral locations acquired since December). • Total unfulfilled pre-arranged funeral plans increased to 197,300 plans. Peter Hindley, Chief Executive of Dignity plc: "Dignity's stable and predictable business has once again delivered stronggrowth in operating profits, increasing 8 per cent to £47.6 million. Thisperformance, combined with an efficient capital structure, resulted in earningsper share increasing 26 per cent to 33.4 pence per share. Trading in the first two months of 2008 has been strong and the Group is wellplaced to deliver further growth in 2008." For more information Peter Hindley, Chief ExecutiveMike McCollum, Finance DirectorDignity plc +44 (0) 20 7466 5000 Richard OldworthSuzanne BrocksBuchanan Communications +44 (0) 20 7466 5000 Chairman's Statement Results The Group's fourth year as a listed company has once again been successful. Wehave delivered on all aspects of our strategy, which has been in place sinceflotation. Good performance from all divisions, supported by an efficient capitalstructure, has resulted in a 26 per cent increase in underlying earnings pershare (which excludes profit on sale of fixed assets and non-recurringexceptional items) to 33.4 pence per share (2006: 26.6 pence per share). Basic earnings per share were 34.4 pence per share (2006: 25.9 pence per share),an increase of 33 per cent. The year finished on a high, with the Group entering the FTSE 250 in December2007. Dividends In October, an interim dividend of 3.33 pence per Ordinary Share was paid inrespect of profits relating to 2007. The Board has proposed that a final dividend of 6.67 pence per Ordinary Shareshould be paid from profits generated in 2007. Subject to shareholder consent atthe Annual General Meeting, this will be paid on 27 June 2008 to members on theregister at close of business on 6 June 2008. These dividends represent a 10 per cent increase year on year, continuing thepattern of progressive dividends since flotation. The Board, management and people One of Dignity's key strengths is its people, who are all focused on providingclient service excellence in whatever role they perform. According to ourclients, our service continues to be excellent, which taken with these operatingresults demonstrates that commitment. There were no changes to the Board in 2007 and I thank my fellow Directors fortheir continued support. I am delighted the Non-Executive Directors have agreedto extend their commitment to work with the Group for a further two years. Outlook for 2008 Given the success of our strategy so far, we plan that our approach for 2008will remain unchanged. Trading in the first eight weeks of 2008 has been strong and the Group is wellplaced to deliver further growth in this coming year. Richard Connell Chairman 13 March 2008 Chief Executive's Overview Strong performance Dignity's stable and predictable business has once again delivered strong growthin underlying operating profits, increasing 8 per cent to £47.6 million (2006:£44.1 million). Operating profits increased 10 per cent to £47.7 million (2006:£43.4 million). Combined with our funding strategy, this has delivered anexcellent return for our shareholders in the period. Valuing our people During the period, my fellow Executive Directors and I have increased the numberof visits to our funeral locations to see at first hand the quality of servicebeing provided by our staff. During each visit, we have spoken to colleagues whoare passionate about looking after each and every family to the best of theirability. They truly are a credit to this business and we look forward to meetingother colleagues in similar visits in 2008. I am delighted that service excellence has been converted into strong operatingresults. This enabled us to make a discretionary bonus payment of £1.2 millionto permanent members of staff not covered by any other bonus scheme. Thisequates to £600 for each full time employee and is an increase of 20 per centover that paid in the previous period. Furthermore, we continue to maintain our final salary pension scheme, keeping itopen to new employees. Following our £10.0 million lump sum contribution in2006, the scheme shows a surplus within these financial statements of £6.8million (2006: £0.6 million). Investing in growth responsibly Since flotation, the Group has invested £35.9 million in acquisitions of funeralbusinesses, representing 43 funeral locations. This investment in qualitybusinesses delivers excellent returns for our shareholders and is a veryeffective use of our excess operating cash. Similarly, £20.9 million has been invested in 224 hearses and limousines and 436other new vehicles in the last four years, whilst £14.6 million of other capitalexpenditure has been spent to improve the facilities at 169 locations. Thissubstantial investment is helping to provide our staff with a better environmentfor delivering excellent client service. The marketing of pre-arranged funeral plans also serves as a significantinvestment in the business, being a key driver of incremental revenues forfuture periods. The Group expects to carry out the funeral for the majority ofthese sales, which in turn, through client service excellence andrecommendations, will deliver further volumes going forward. At the same time,these plans provide great peace of mind to people in our communities, who knowthat their affairs will be dealt with as they wish. Our focus The Group's strategy is very clearly focused on growing profitability in aresponsible and sustainable manner. Underpinning this is a commitment toexcellent client service and recognition of the importance of balancing theneeds of our customers, our employees, our shareholders and the communities inwhich we work. We satisfy the needs of all our stakeholders by staying committed to bothhelping people through one of the most difficult times of their lives and to ourstrategy. These have remained consistent for many years. Business Review Introduction The Group's operations are managed across three main areas, namely funeralservices, crematoria and pre-arranged funeral plans, which respectivelyrepresent 79 per cent, 16 per cent and 5 per cent of the Group's revenues.Funeral services revenues relate to the provision of funerals and ancillaryitems such as memorials and floral tributes. Crematoria revenues arise fromcremation services and the sale of memorials and burial plots at the Group'scrematoria and cemeteries. Pre-arranged funeral plan income represents amountsto cover the costs of marketing and administering the sale of plans. Office for National Statistics data Some of the Group's key performance indicators rely on the total number ofestimated deaths for each period. This information is obtained from the Officefor National Statistics (ONS). In April 2007, the ONS suspended the provision of this information, pending theimplementation of a new computerised births, marriages and deaths system. In October 2007, provision of the information recommenced. Historically, theestimates were updated by the ONS from time to time, with such results typicallyfluctuating by approximately one per cent. To maintain consistency of its keyperformance indicators, the Group has not amended its reporting for thesechanges in the past. It is unclear at present whether the new computerised system will cause similaror smaller differences between the initial and final published deaths in anyperiod and therefore it is unclear to what extent the 2007 estimates aredirectly comparable to the 2006 estimates, which were reported under the oldsystem. Nonetheless, the figures continue to give a good general background to theGroup's performance. The initial publication recorded total estimated deaths for 2007 of 553,000(2006: 548,100). Funeral services The Group operates a network of 540 (2006: 521) funeral locations throughoutBritain, trading under local established names. During the period, the Groupconducted 66,500 funerals (2006: 66,500) representing approximately 12.0 percent (2006: 12.1 per cent) of total estimated deaths in Britain. Underlying operating profits were £42.1 million (2006: £39.3 million), anincrease of 7.1 per cent. This reflects the benefit from increased spend perfuneral and continued cost control. Reported operating profits were £42.2million (2006: £39.3 million), an increase of 7.4 per cent. 2007 has been the busiest period for funeral acquisitions since flotation, witha total of £16.6 million being invested in 21 funeral locations. Allacquisitions matched the Group's criteria for investment and have complementedthe existing core business well with their geographical locations and clientservice ethic. The Group closed two (2006: six) unprofitable locations in the period. The division has continued to benefit from financial investment in the period tohelp maintain and improve the network. £4.9 million has been spent in the periodto acquire 46 new hearses and limousines and 99 other vehicles. Furthermore, theGroup has spent £2.4 million on ongoing maintenance capital expenditure torefurbish and improve 84 locations. Client service The Group has always been clear that client service excellence is at the heartof our strategy for growth. Our quality of client service is borne out in theresponses to the surveys that are sent out to each family we care for. These results continue to demonstrate exceptional levels of service, with 98 percent (2006: 98 per cent) of families responding saying that they would eitherdefinitely or probably recommend our services. Maintaining this level of service is of key importance, given that 75 per centof the Group's funeral business comes from reputation and recommendation. As a result, close monitoring of local survey results, regular training anddetailed procedures are in place to ensure standards are maintained. Crematoria The Group operates 22 crematoria and performed 38,900 cremations (2006: 38,500)in the period. This market share of 7.0 per cent (2006: 7.0 per cent) reflectsthe Group's position as the largest single operator of crematoria in Britain.The market share in 2007 includes approximately 500 additional cremations at twolocations following the temporary closure of a nearby local authoritycrematorium. Revenues of £25.7 million (2006: £23.2 million) have resulted in operatingprofits of £14.0 million (2006: £12.1 million), an increase of 15.7 per cent.This reflects an improved performance in memorial sales following detailedtraining and focus in the period. This programme of training continues into2008. During the period, the Group opened new memorial areas at its locations in SouthLondon and Crawley, at a cost of £0.5 million. These developments will in timehold many commemorative memorials and provide space for quiet contemplation whenfamilies visit in the following years to remember their loved ones. In addition to this investment, the Group has spent £0.7 million improving thefacilities at its 22 locations. Pre-arranged funeral plans The Group continues to be the market leader in this area. Unfulfilledpre-arranged funeral plans were 197,300 at the end of the period (2006:188,800). These plans represent future incremental business for the funeraldivision, as the Group expects to perform the majority of these funerals. On 8 January 2007, the Group acquired the minority interest in Advance PlanningLimited from Age Concern Enterprises Limited (ACEnt). As part of thisarrangement, the Group has a 10-year marketing agreement in place with ACEnt toprovide pre-arranged funeral plans using the Age Concern brand during this time.This is an excellent development, as this route to market has proved to besuccessful in the past. In order to grow this part of the business, our focus has been on two distinctareas; developing the Dignity Funeral Plan endorsed by the actor ChristopherTimothy and developing marketing and distribution relationships with furtherreputable affinity partners. In both cases successful tests lead us to expectfurther progress in 2008. Head office Head office costs relate to central services that are not specificallyattributed to a particular operational division. These include the provision ofIT, finance, personnel and Directors' emoluments. In addition, the Grouprecords the costs of incentive bonus arrangements such as Long Term IncentivePlans (LTIPs) and management incentives for 95 managers across all divisionswithin this segment. Costs in the period were £10.9 million (2006: £9.7 million), an increase of 12.4per cent. This primarily reflects the increased pay-out of bonus arrangementsand a payment to a former director in lieu of notice. Investment for the future Acquisition activity in funeral services has continued in the first quarter of2008, with a further six funeral locations being acquired for totalconsideration of £4.4 million. Consistent application of our acquisitioncriteria will continue, ensuring only well established, respected businesses areacquired that will contribute to the future growth of the Group. The Group continues to seek opportunities with local authorities to manage theircrematoria and cemeteries. We continue to be the preferred bidder for RotherhamMetropolitan Borough Council's crematorium and cemeteries and anticipate legalcompletion in the second quarter of 2008. In the pre-arranged funeral plan division, testing of various opportunitiescontinues, each focused on the overall goal of increasing the number ofunfulfilled pre-arranged funeral plans. Peter Hindley Chief Executive 13 March 2008 Financial Review The market conditions in which the Group operates and its trading performanceduring the 52 week period ended 28 December 2007 are described in the Chairman'sStatement, the Chief Executive's Overview and the Business Review. Financial highlights 2007 2006 % increaseRevenue (£ million) 159.5 149.8 6 Underlying operating profit* (£ million) 47.6 44.1 8Underlying profit before tax* (£ million) 30.1 27.9 8Underlying earnings per share* (pence) 33.4 26.6 26 Underlying cash generated from operations* (£ million) 57.5 51.7 11 Operating profit (£ million) 47.7 43.4 10Profit before tax (£ million) 30.2 27.2 11Basic earnings per share (pence) 34.4 25.9 33 Interim dividend (pence) 3.33 3.03 10Final dividend (pence) 6.06 - n/a * Underlying amounts exclude profit on sale of fixed assets and exceptionalitems. The Board has proposed a dividend of 6.67 pence per Ordinary Share as a finaldistribution of profits relating to 2007. This brings the total dividend inrespect of 2007 to 10 pence per share, an increase of 10 per cent. Capital structure and financing The Group's only external long term debt financing is the Class A and B SecuredNotes, rated A and BBB respectively. The Board considers that maintaining a leveraged balance sheet is appropriatefor the Group, given the highly stable and predictable nature of its cash flows.This has the benefit of maximising shareholder returns, whilst leavingsufficient flexibility to invest in the growth of the business. The Board is of the opinion that the following provides additional indicativeinformation regarding the net debt position of the Group: 28 December 2007 29 December 2006 £m £m Net amounts owing on Class A and B Secured Notes per (267.0) (268.4)financial statementsAdd: unamortised issue costs (17.2) (18.6) Gross amounts owing (284.2) (287.0)Accrued interest on Class A and B Secured Notes (paid (9.9) -31 December 2007)Cash and cash equivalents 52.6 41.4 Net debt (241.5) (245.6) The Group's finance expense substantially consists of the interest on the ClassA and B Secured Notes and ancillary instruments. The principal and interest onthe Secured Notes amortise fully over their life and are completely repaid by2031. The interest rate is fixed for the life of the Secured Notes and interestis calculated on the outstanding principal. The net finance charge in the periodrelating to these instruments was £20.1 million (2006: £19.4 million). This yearon year increase reflects the Secured Notes issued in February 2006 onlyincurring interest since issue in 2006 and for a full 52 week period in 2007. Other ongoing finance costs incurred in the period amounted to £0.8 million(2006: £1.0 million), including the unwinding of discounts on the Group'sprovisions and other financial liabilities. Interest receivable on bank deposits was £2.7 million (2006: £4.0 million).Interest receivable in 2006 was greater due to the £90.0 million proceeds of thedebt issue in 2006, which were retained in cash for approximately six monthsbefore being returned to shareholders and used to pay a £10.0 millioncontribution to the Group's pension scheme. This contribution to the pension scheme has helped to improve its position,demonstrated by the £0.7 million (2006: £nil) of net finance income. Nosignificant interest was earned on the debenture loan (2006: £0.2 million)following its repayment during the period. Underlying profit after tax The Board believes that whilst statutory reporting measures provide a usefulindication of the financial performance of the Group, additional insight isgained by excluding certain non-recurring or non-trading transactions.Accordingly, the following information is presented to aid understanding of theperformance of the Group: 52 week period 52 week period ended ended 28 December 29 December 2007 2006 £m £mOperating profit for the 47.7 43.4period as reported Add/(deduct) the effects of:Exceptional costs of redemption of B shares - 0.7Profit on sale of fixed assets (0.1) - Underlying operating profit 47.6 44.1Net finance charges (17.5) (16.2) Underlying profit before tax 30.1 27.9 Tax charge on underlying profit before tax (9.1) (8.6) Underlying profit after tax 21.0 19.3 Weighted average number of Ordinary Shares in issue during 62.8 72.6the period (million) Underlying EPS (pence) 33.4p 26.6pIncrease in underlying EPS (per cent) 26 Earnings per share The Group's earnings were £21.6 million (2006: £18.8 million). Basic earningsper share were 34.4 pence per share (2006: 25.9 pence per share). However, the Group's reported earnings include the £0.5 million one off benefitfor taxation described later in this review and £0.1 million profit on sale offixed assets. Consequently, the Group's underlying profit after tax was £21.0million (2006: £19.3 million), giving underlying earnings per share of 33.4pence per share (2006: 26.6 pence per share), an increase of 26 per cent. This increase demonstrates the strong operating performance combined with a 13per cent reduction in the weighted average number of shares in issue. Thisreduction was a combination of two factors. The principal factor is the result of what was effectively a share buy backprogramme, made possible by the issue of Secured Notes and return of value of £1per share (£80 million) in August 2006. Secondly, the first Save As You Earn (SAYE) and Long Term Incentive Plan (LTIP)Schemes introduced in 2004, the year of flotation, matured. This resulted in 1.0million new Ordinary Shares being issued at various points during the period.Consequently, the weighted average number of shares was 62.8 million in theperiod, compared to 72.6 million in the previous period. Cash flow and cash balances Cash generated from operations before exceptional items was £57.5 million (2006:£51.7 million). This increase in cash generation is more than the equivalentincrease in operating profits before depreciation. This demonstrates that theGroup's operations convert trading activities to cash efficiently, witheffective working capital management also positively impacting the position. A busy year for acquisitions witnessed £16.6 million (2006: £7.3 million) beingspent on funeral acquisitions, with a further £2.0 million (2006: £nil million)being incurred in the period to acquire the minority interest in AdvancePlanning Limited. Capital expenditure increased year on year, with £8.5 million (2006: £8.0million) being spent principally on replacing older vehicles in the Group'sfleet in line with a planned replacement programme and improvements to theGroup's premises and plant. During the period, the Group's £1.0 million debenture loan to KCH RepatriationLimited was repaid. In addition, £1.5 million was received in exchange for newOrdinary Shares following the completion of the Group's first SAYE scheme. The Group also made a final dividend payment in the period totalling £3.8million. No separate final dividend was paid in 2006, as a result of the £1 pershare return of value in August 2006. Cash balances at the end of the period were £52.6 million. £12.4 millionrepresents amounts legally set aside to fund the Group's liabilities to Class Aand B Secured Noteholders. This payment was due on 31 December 2007, the firstday of the Group's 2008 trading period as it reports on a 52 week basis ratherthan on a calendar year. These funds do not qualify as cash or cash equivalentsfor the purposes of IAS 7, Cash Flow Statements. Accordingly, £10.2 million hasbeen reported within the cash flow statement as 'Payments to restricted bankaccounts for finance charges' and £2.2 million has been reported as 'Payments torestricted bank accounts for repayment of borrowings'. £21.5 million of the remainder has been set aside for acquisitions, of which£4.4 million has been used since the balance sheet date. £10.6 million has alsobeen set aside for future corporation tax and dividend payments. However, thesefunds could be used for further acquisitions if suitable opportunities arose,with statutory payments being funded out of future operating cash flows. Full details and analysis of the Group's cash balances are included in note 7. Taxation In June 2007, legislation was passed confirming that the rate of corporation taxwould reduce from 30 per cent to 28 per cent from 1 April 2008. As a result, theGroup recognised exceptional tax income of £0.5 million through its incomestatement to reflect the one off reduction in the period of the Group's deferredtax position. This also had the effect of reducing the Group's effective tax rate (excludingthe non-recurring adjustment) to 30 per cent in 2007, compared to 31 per cent inthe previous period. The Group anticipates its effective tax rate will transition to 29 per cent inthe 2009 financial period and beyond following these legislative changes. The latest Budget Report was issued on 12 March 2008, the day before the releaseof this preliminary announcement. Accordingly, it is too early to have completedany detailed analysis on any new proposals announced by the Chancellor of theExchequer. The Group will make appropriate announcements in due course asrequired by the Listing Rules if any aspect is considered to have a materialeffect on the Group's earnings. However, further legislation is anticipated in respect of Industrial BuildingsAllowances. If this is substantially enacted in the form expected in 2008, thenthis will result in a one off charge to the income statement of £0.5 million. Key performance indicators The Group uses a number of performance indicators to both manage the businessand ensure that the Group's strategy and objectives are being delivered. 52 week period 52 week period ended ended 28 December 29 December 2007 2006Total estimated number of deaths (number) 553,000 548,100Number of funerals performed (number) 66,500 66,500Funeral market share (per cent) 12.0 12.1Number of cremations performed (number) 38,900 38,500Crematoria market share (per cent) 7.0 7.0Unfulfilled pre-arranged funeral plans (number) 197,300 188,800 Underlying earnings per share (£ million) 33.4 26.6Underlying operating profit (£ million) 47.6 44.1Underlying cash generated from operations (£ million) 57.5 51.7 These key performance indicators are produced using information supplied by ONSand company data. Mike McCollumFinance Director13 March 2008 Consolidated income statementFor the 52 week period ended 28 December 2007 52 week 52 week period period ended ended 28 December 29 December 2007 2006 Note £m £m Revenue 1 159.5 149.8Cost of sales (77.0) (73.2) Gross profit 82.5 76.6 Administrative expenses (36.3) (34.4)Other operating income 1.5 1.2 Operating profit before exceptional charges 1 47.7 44.1Exceptional charges 2 - (0.7) Operating profit 1 47.7 43.4 Finance charges 3 (21.7) (22.1)Finance income 3 4.2 5.9 Profit before tax 1 30.2 27.2Taxation - before exceptional items 4 (9.1) (8.4)Taxation - exceptional 4 0.5 -Taxation 4 (8.6) (8.4) Profit for the period attributable to equity shareholders 21.6 18.8 Earnings per share for profit attributable to equityshareholders (pence)- Basic and diluted 5 34.4p 25.9p The results have been derived wholly from continuing activities throughout theperiod. Consolidated statement of recognised income and expense For the 52 week period ended 28 December 2007 52 week 52 week period period ended ended 28 December 29 December 2007 2006 £m £mProfit for the period 21.6 18.8 Actuarial gains on retirement benefit obligations 5.4 2.4Deferred tax on actuarial gains on retirement benefit (1.5) (0.7)obligations Net income not recognised in income statement 3.9 1.7 Total recognised income for the period 25.5 20.5 Attributable to:Equity shareholders of the parent 25.5 20.5 Consolidated balance sheetAs at 28 December 2007 28 29 December December 2007 2006 Note £m £mAssetsNon-current assetsGoodwill 119.6 111.3Intangible assets 24.7 12.1Property, plant and 91.1 89.1equipmentFinancial and other assets 4.5 5.6Retirement benefit asset 6.8 0.6 246.7 218.7Current assetsInventories 3.4 3.0Trade and other 22.7 19.2receivablesCash and cash equivalents 7 52.6 41.4 78.7 63.6 Total assets 325.4 282.3LiabilitiesCurrent liabilitiesFinancial liabilities 7.1 4.6Trade and other payables 33.0 19.2Current tax liabilities 1.9 2.7Provisions for liabilities 1.3 1.4and charges 43.3 27.9Non-current liabilitiesFinancial liabilities 267.1 271.0Deferred tax liabilities 14.9 7.2Other non-current 2.8 2.9liabilitiesProvisions for liabilities 1.9 1.6and charges 286.7 282.7 Total liabilities 330.0 310.6 Shareholders' equityOrdinary shares 8 5.7 5.6Share premium account 8 33.8 31.6Capital redemption reserve 8 80.0 80.0Other reserves 8 (9.0) (9.5)Retained earnings 8 (115.1) (134.8) Equity attributable to (4.6) (27.1)shareholdersMinority interest in 8 - (1.2)equity Total equity (4.6) (28.3)Total equity and 325.4 282.3liabilities Consolidated cash flow statement For the 52 week period ended 28 December 2007 52 week period 52 week period ended ended 28 December 29 December 2007 2006 Note £m £mCash flows from operating activitiesCash generated from operations before exceptional payments 9 57.5 51.7Exceptional costs in respect of redemption of B shares - (0.7)Exceptional contribution to pension scheme - (10.0)Cash generated from operations 9 57.5 41.0Finance income received 2.1 4.2Finance charges paid (10.3) (20.8)Payments to restricted bank accounts for finance charges 7 (10.2) -Tax paid (6.4) (6.1) Net cash generated from operating activities 32.7 18.3 Cash flows from investing activitiesAcquisition of subsidiaries and businesses (16.6) (7.3)Acquisition of minority interest (2.0) -Proceeds from sale of property, plant and equipment 0.9 0.6Purchase of property, plant and equipment (8.5) (8.0)Transfers to restricted bank accounts 7 (0.3) - Net cash used in financing activities (26.5) (14.7) Cash flows from financing activitiesProceeds from issue of Secured Notes - 90.2Issue costs in respect of Secured Notes - (3.7)Receipt of debenture loan 1.0 -Repayment of borrowings (2.1) (4.1)Payments to restricted bank accounts for repayment of 7 (2.2) -borrowingsInterim dividends paid to shareholders 6 (2.1) (1.9)Final dividends paid to shareholders* 6 (3.8) -Proceeds from issue of shares under SAYE scheme 1.5 -Redemption of B shares* - (80.0) Net cash (used)/generated in financing activities (7.7) 0.5 Net (decrease) / increase in cash and cash equivalents (1.5) 4.1 Cash and cash equivalents at the beginning of the period 40.2 36.1 Cash and cash equivalents at the end of the period 7 38.7 40.2 *No final dividend was paid in 2006 because of the redemption of B shares madein August 2006, which equated to £1 per Ordinary Share. 1 Revenue and segmental analysis Funeral Crematoria Pre-arranged Head Group services £m funeral office plans £m £m £m £m 52 week period ended 28 December 2007 Revenue 126.3 25.7 7.5 - 159.5 Segment result 42.2 14.0 2.4 (10.9) 47.7 Finance charges (21.7)Finance income 4.2 Profit before tax 30.2Taxation (8.6) Profit for the period 21.6Attributable to:Equity shareholders of the parent 21.6 The segment assets and liabilities were as follows: Funeral Crematoria Pre-arranged Head Group services funeral office plansAs at 28 December 2007 £m £m £m £m £m Segment assets 201.4 56.8 12.7 1.8 272.7Unallocated assets:Financial assets - loans and 0.1receivablesCash and cash equivalents 52.6 Total assets 325.4 Segment liabilities (19.9) (2.7) (2.1) (5.2) (29.9)Unallocated liabilities:Borrowings (273.4)Accrued interest (9.9)Corporation tax (1.9)Deferred tax (14.9) Total liabilities (330.0) Other segment items:Capital expenditure (including 23.9 0.7 - 0.4 25.0acquisitions)Depreciation 5.8 1.2 - 0.3 7.3Amortisation 0.1 - - 0.6 0.7Impairment of trade receivables 1.0 - - - 1.0Other non cash expenses - - - 0.8 0.8Profit on sale of fixed assets 0.1 - - - 0.1 1 Revenue and segmental analysis (continued) Funeral Crematoria Pre-arranged Head Group services funeral plans office52 week period ended 29 December 2006 £m £m £m £m £m Revenue 120.0 23.2 6.6 - 149.8 Segment result before exceptional charges 39.3 12.1 2.4 (9.7) 44.1Exceptional charges - - - (0.7) (0.7) Segment result 39.3 12.1 2.4 (10.4) 43.4 Finance charges (22.1)Finance income 5.9 Profit before tax 27.2Taxation (8.4) Profit for the period 18.8 Attributable to:Equity shareholders of the parent 18.8 The segment assets and liabilities were as follows: Funeral Crematoria Pre-arranged Head Group services funeral plans officeAs at 29 December 2006 £m £m £m £m £mSegment assets 174.0 55.6 8.4 1.8 239.8Unallocated assets:Financial assets - loans and receivables 1.1Cash and cash equivalents 41.4 Total assets 282.3 Segment liabilities (17.7) (2.4) (1.8) (4.0) (25.9)Unallocated liabilities:Borrowings (274.8)Corporation tax (2.7)Deferred tax (7.2) Total liabilities (310.6) Other segment items:Capital expenditure (including acquisitions) 14.1 0.9 - 0.2 15.2Depreciation 5.4 1.2 - 0.3 6.9Amortisation 0.1 - - 0.5 0.6Impairment of trade receivables 1.0 0.1 - - 1.1Other non-cash expenses 0.2 - - 0.8 1.0 2 Exceptional items 52 week period 52 week period ended ended 28 December 29 December 2007 2006 £m £mProfessional fees in relation to redemption of B Shares - 0.7Total exceptional items - 0.7 3 Net finance charges 52 week period 52 week period ended ended 28 December 29 December 2007 2006 £m £mFinance chargesClass A and B Secured Notes - issued April 2003 14.4 14.6Class A and B Secured Notes - issued February 2006 5.2 5.3Amortisation of issue costs - issued April 2003 1.1 0.9Amortisation of issue costs - issued February 2006 0.2 0.3Other loans 0.1 0.1Interest payable on finance leases 0.1 0.1Unwinding of discounts 0.6 0.8 Finance charges 21.7 22.1 Finance incomeBank deposits (2.7) (4.0)Release of premium on Secured Notes - issued February 2006 (0.8) (0.9)Prepaid interest on issue of Class A and B Secured Notes - (0.8)Net finance income on retirement benefit obligations (0.7) -Debenture loan - (0.2) Finance income (4.2) (5.9)Net finance charges 17.5 16.2 4 Taxation Analysis of charge in the period 52 week 52 week period period ended ended 28 29 December December 2007 2006 £m £mCurrent tax - current period 7.0 6.6Adjustment for prior period (0.2) (0.2) 6.8 6.4 Deferred tax - current period 2.3 1.8Adjustment for prior period - 0.2Exceptional adjustment for rate change - 30 (0.5) -% to 28 % 1.8 2.0Taxation 8.6 8.4 All tax relates to continuing operations. 5 Earnings per share The calculation of basic earnings per Ordinary Share has been based on theprofit for the relevant period. For diluted earnings per Ordinary Share, the weighted average number of OrdinaryShares in issue is adjusted to assume conversion of all dilutive potentialOrdinary Shares. The Group has two classes of potentially dilutive Ordinary Shares being thoseshare options granted to employees under the Group's SAYE Scheme and thecontingently issueable shares under the Group's LTIP Schemes. At the balance sheet date, the performance criteria for the vesting of theawards under the LTIP Schemes had not been met and these contingently issueableshares have been excluded from the diluted EPS calculations. The Board believes that profit on ordinary activities before exceptional items,profit on sale of fixed assets and after taxation is a useful indication of theGroup's performance, as it excludes significant non-recurring items. Thisreporting measure is defined as 'Underlying profit after taxation' in theFinancial Review. Accordingly, the Board believes that earnings per share calculated by referenceto this underlying profit after taxation is also a useful indicator of financialperformance. Reconciliations of the earnings and the weighted average number of shares usedin the calculations are set out below. Weighted average number of Per share Earnings shares amount £m millions Pence52 week period ended 28 December 2007Profit attributable to shareholders - Basic and diluted EPS 21.6 62.8 34.4Deduct: Exceptional items and profit on sale of fixed assets (net of (0.6)taxation) Underlying profit after taxation - Basic EPS 21.0 62.8 33.4 52 week period ended 29 December 2006Profit attributable to shareholders - Basic and diluted EPS 18.8 72.6 25.9Add back: Exceptional items (net of taxation) 0.5 Underlying profit after taxation - Basic EPS 19.3 72.6 26.6 In 2007, the potential issue of new shares pursuant to the Group's share optionplans in the period would not affect the earnings per share (2006: would affectearnings per share by less than 0.1 pence per share if exercised). 6. Dividends 52 week period 52 week period ended ended 28 December 29 December 2007 2006 £m £mFinal dividend paid: 6.06p per Ordinary Share (2006: nil p) 3.8 -Interim dividend paid: 3.33p (2006: 3.03p) per Ordinary Share 2.1 1.9 Total dividends recognised in the period 5.9 1.9 A final dividend of 6.67 pence per share, in respect of 2007, has been proposedby the Board. This will be paid on 27 June 2008 provided approval is gainedfrom shareholders at the Annual General Meeting on 6 June 2008 and will be paidto shareholders on the register at close of business on 6 June 2008. 7 Cash And Cash Equivalents 28 December 29 December 2007 2006 Note £m £mOperating cash as reported in the cash flow statement as cash 38.7 40.2and cash equivalentsRecoveries: pre-arranged funeral plans (a) 1.5 1.2Amounts set aside for debt service payments (b) 12.4 -Cash and cash equivalents as reported in the balance sheet 52.6 41.4 (a) Recoveries may not be used for one year following receipt and thereforedo not meet the definition of cash and cash equivalents in IAS 7, Cash FlowStatements. Movements in theses amounts are shown as 'Transfers to restrictedbank accounts' in 'Investing activities'. (b) This amount was transferred to restricted bank accounts which could onlybe used for the payment of the interest and principal on the Secured Notes, therepayment of liabilities due on the Group's interest rate swaps and commitmentfees due on its undrawn borrowing facilities and for no other purpose. This amount does not meet the definition of cash and cash equivalents in IAS 7,Cash Flow Statements. This amount was used to pay these respective parties on 31December 2007. £10.2 million is shown within the cash flow statement as 'Payments to restricted bank accounts for finance charges'. £2.2 million is shownwithin 'Financing activities' as 'Payments to restricted bank accounts forrepayment of borrowings'. 8 Statement of changes in shareholders' equity Share Capital Share premium redemption Other Retained Minority Total capital account reserve reserves earnings Total interest equity £m £m £m £m £m £m £m £mShareholders' equity as at 5.6 111.6 - (10.4) (74.2) 32.6 (1.2) 31.4 30 December 2005Profit for the 52 weeks ended - - - - 18.8 18.8 - 18.8 29 December 2006Reclassification of actuarial - - - (0.8) 0.8 - - -gains and losses on definedbenefit plans (net of deferredtax)*Actuarial gains and losses on - - - - 2.4 2.4 - 2.4defined benefit plansDeferred tax on pensions - - - - (0.7) (0.7) - (0.7)Effects of employee share - - - 0.7 - 0.7 - 0.7optionsDeferred tax on employee share - - - 1.0 - 1.0 - 1.0optionsIssue of B shares - (80.0) - - - (80.0) - (80.0)Redemption of B shares - - 80.0 - (80.0) - - -Dividends - - - - (1.9) (1.9) - (1.9) Shareholders' equity as at 5.6 31.6 80.0 (9.5) (134.8) (27.1) (1.2) (28.3) 29 December 2006Profit for the 52 weeks ended - - - - 21.6 21.6 - 21.6 28 December 2007Actuarial gains and losses on - - - - 5.4 5.4 - 5.4defined benefit plansDeferred tax on pensions - - - - (1.5) (1.5) - (1.5)Effects of employee share - - - 0.8 - 0.8 - 0.8optionsTax on employee share options - - - 0.6 - 0.6 - 0.6Adjustment for tax rate change (0.1) 0.1 - - -30 per cent to 28 per centShare issue under 2004 SAYE 0.1 1.4 - - - 1.5 - 1.5SchemeShare issue under 2004 LTIP - 0.8 - - - 0.8 - 0.8SchemeGift to Employee Benefit Trust - - - (0.8) - (0.8) - (0.8)Acquisition of minority - - - - - - 1.2 1.2interestDividends - - - - (5.9) (5.9) - (5.9) Shareholders' equity as at 28 5.7 33.8 80.0 (9.0) (115.1) (4.6) - (4.6)December 2007 * These amounts have been reclassified in accordance with IAS 19 (Revised). Included within other reserves is the merger accounting consolidation differenceof £12.3 million, which arose on 20 December 2002 as part of the Groupreconstruction effected at that time. The capital redemption reserve represents £80,002,465 B shares that were issuedon 2 August 2006 and redeemed for cash on the same day. 9 Reconciliation of cash generated from operations 2007 2006 £m £mNet profit for the period 21.6 18.8Adjustments for:Taxation 8.6 8.4Net finance charges 17.5 16.2Profit on disposal of fixed assets (0.1) -Depreciation charges 7.3 6.9Amortisation of intangibles 0.7 0.6Changes in working capital (excluding 1.1 0.1acquisitions)Employee share options 0.8 0.7 Cash generated from operations before 57.5 51.7exceptional itemsExceptional costs in respect of - (0.7)redemption of B sharesExceptional contribution to pension - (10.0)scheme Cash generated from operations 57.5 41.0 10 Basis of preparation European law requires that the Group's consolidated financial statements for the52 week period ended 28 December 2007 are prepared in accordance with allapplicable International Financial Reporting Standards ('IFRSs'), as adopted bythe European Union. These financial statements have been prepared in accordancewith IFRS, International Financial Reporting Interpretations Committee ('IFRIC')interpretations (as issued by the International Accounting Standards Board) andthose parts of the Companies Act 2006 applicable to companies reporting underIFRS. The consolidated financial statements have been prepared under the historic costconvention, as modified by the revaluation of land and buildings and financialassets and liabilities at fair value through the income statement. 11 Securitisation In accordance with the terms of the securitisation carried out in April 2003 andthe subsequent further Secured Notes issue in February 2006, 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 &Poors), the Security Trustee and the holders of the Secured Notes issued inconnection with the securitisation, confirming compliance with the covenantsestablished under the securitisation. Copies of these reports are available at www.dignityfuneralsplc.co.uk This information is provided by RNS The company news service from the London Stock Exchange