An unprecedented 7 per cent fall in the number of UK deaths in the first six months of the year was bad news for funeral services provider Dignity (DTY). But that made it all the more impressive that the company bucked the trend and still managed flat sales growth.
Tight cost control and higher pricing also kept underlying operating profit flat, while the dip in reported pre-tax profit was down to higher finance costs following a further debt issue in 2013. Chief executive Mike McCollum explained that the abnormally low death rate in the period should be seen in the context of last year's unusually high rate. Accordingly, he expects the rate of decline to normalise in the second half, leaving full-year profit forecasts unchanged.
Meanwhile, the group continued to expand in the half year, acquiring eight funeral locations and opening two satellite ones, bringing the total number to 698. Mr McCollum says his pipeline of further acquisitions is now "stronger than usual". The number of unfulfilled funeral plans also grew by 8 per cent to 332,000, which represents future potential business.
Investec expects pre-tax profit of £56.6m for the full year, giving EPS of 81.5p, up from 72.1p in 2013.
| DIGNITY (DTY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,378p | MARKET VALUE: | £ 739m | |
| TOUCH: | 1,376-1,380p | 12-MONTH HIGH: | 1,550p | LOW: 1,291p |
| DIVIDEND YIELD**: | 1.3% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 111p* | NET DEBT: | £356m | |
| Half-year to 27 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share** (p) |
|---|---|---|---|---|
| 2013 | 133 | 32.0 | 42.1 | 108 |
| 2014 | 133 | 31.5 | 45.2 | 6.49 |
| % change | - | -2 | +7 | ** |
Ex-div: 24 Sep Payment: 31 Oct **Cash return to shareholders in lieu of interim dividend for 2013 financial year of 108p a share paid in August 2013, in addition to final dividend of 11.83p *Includes intangible assets of £255m or 475p a share | ||||
