Half-year results from funeral service provider Dignity (DTY) are largely as expected. Last year recorded an exceptionally high number of deaths which, unsurprisingly, handed Dignity a great set of results for 2015. But bosses warned at the close of that financial period the death rate would slow in 2016. It's done just that, with the number of deaths down 4.7 per cent to 302,000, and a total of 36,700 funerals conducted during the period, a 7 per cent reduction year-on-year.
It's logical, therefore, to see a dip in group revenues and profits. On an underlying basis, however, and comparing the numbers with 2014 - a much better comparator for the current death rate - operating profits rose 22 per cent in the first half and underlying earnings per share by 45 per cent.
Death rates will continue to normalise in the second half of the year, but management is still committed to growing EPS by 10 per cent a year. In the meantime, the group has spent over £5m on six new funeral locations and is finalising construction plans on two new crematoria sites for which it has planning permission.
Broker Investec Securities expects pre-tax profit of £70.3m for the year ending December 2016, giving EPS of 111p (from £72.2m and 114p in FY2015).
| DIGNITY (DTY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,683p | MARKET VALUE: | £1.33bn | |
| TOUCH: | 2,678-2,683p | 12-MONTH HIGH: | 2,870p | LOW: 2,182p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 24 | |
| NET ASSET VALUE: | * | NET DEBT: | £491m | |
| Half-year to 24 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 159 | 45.0 | 71.0 | 7.1 |
| 2016 | 158 | 41.5 | 65.9 | 7.9 |
| % change | - | -8 | -7 | +10 |
Ex-div: 22 Sep Payment: 28 Oct *Negative shareholders' funds | ||||
