Mike McCollum, chief executive of funeral planner Dignity (DTY), admits a 13 per cent increase in the death rate during the first six months of the financial year "is almost unprecedented". Nonetheless, even as the death rate normalises during the second half, the group expects to materially outperform current market expectations for the full year.
Thanks to the accelerated death rate in the first half, underlying operating profits, which exclude profits or losses on asset sales, rose 31 per cent to £59.7m. Asked whether the group could consider another special return to shareholders, Mr McCollum said the board "had no immediate plans". In its 11 years as a public company, Dignity has issued bonds four times, in turn restructuring its securitised debt and freeing up cash to hand back to shareholders.
Mr McCollum says the stunning 2015 performance so far is "a blip", and has encouraged the market not to change their future profit expectations. That hasn't stopped Investec doing exactly that, upping earnings per share forecasts for 2016 and 2017 by 5.1 per cent and 4.8 per cent respectively.
Analysts at the brokerage also increased its current-year EPS estimate by 4.5 per cent to 101.5p, on pre-tax profits of £63.9m (compared with 85.8p and £58.5m in 2014).
| DIGNITY (DTY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,458p | MARKET VALUE: | £1.21bn | |
| TOUCH: | 2,437-2,455p | 12-MONTH HIGH: | 2,470p | LOW: 1,324p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | NA | |
| NET ASSET VALUE: | * | NET DEBT: | £497m | |
| Half-year to 26 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 133 | 31.5 | 45.2 | 6.49 |
| 2015 | 159 | 45.0 | 71.0 | 7.14 |
| % change | +19 | +43 | +57 | +10 |
Ex-div: 24 Sep Payment: 30 Oct *Negative shareholder funds | ||||
