The great thing about the funeral business is that demand will never dry up. As long as you're good at what you do, a steady income stream is guaranteed. So it's no surprise that Dignity (DTY) has reported yet another year of robust trading.
Underlying operating profit, excluding non-cash refinancing charges, rose 8 per cent to £84.9m as acquisitions and price increases offset a lower death rate. The market remains highly fragmented, so Dignity will continue to snap up independent outfits as part of its long-term growth strategy. The number of unfulfilled pre-arranged funeral plans - which represents a secure pipeline of future business - grew by 25,000 to 348,000. Crucially, Dignity's customer service levels continued to score top marks, too.
Shareholders also enjoyed a 120p special dividend following a refinancing deal that left surplus cash on the balance sheet. Chief executive Mike McCollum says this process will be repeated, assuming debt remains cheap and the business continues to perform well.
Current trading is being buoyed by a surge in the death rate, so Mr McCollum warns not to read too much into Dignity's bumper first-quarter figures. Panmure Gordon expects underlying pre-tax profit to £60.3m this year, giving EPS of 96p, up from £58.5m and 86p.
| DIGNITY (DTY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,936p | MARKET VALUE: | £953m | |
| TOUCH: | 1,929-1,943p | 12-MONTH HIGH: | 2,040p | LOW:1,300 |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | na | |
| NET ASSET VALUE: | * | NET DEBT: | £530m | |
| Year to 26 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 199 | 39.8 | 47 | 8.88 |
| 2011 | 210 | 40.3 | 63 | 14.60 |
| 2012 | 230 | 45.4 | 65 | 16.10 |
| 2013** | 257 | 49.6 | 73 | 11.83 |
| 2014** | 269 | -67.7 | -104 | 19.50 |
| % change | +5 | - | - | +55 |
Ex-div: 28 May Payment: 26 Jun *Negative shareholders' funds **Excludes special dividends of 108p a share in 2013, and 120p a share in 2014 | ||||
