Dignity plc Annual Report & Accounts 2011
Dedicated to the local communities we serve
Dignity plc AnnualReport&Accounts2011
About Dignity
Dignityowns600funerallocationsandoperates35crematoriaintheUnited
Kingdom.TheGroupcontinuestohaveastrongmarketpresenceinpre-arranged
funeralplans,wherepeopleplanandpayfortheirfuneralinadvance.
WeareaFTSE250companylistedontheLondonStockExchange,withover
2,450employeesservingfamiliesandlocalcommunitiesacrosstheUnited
Kingdomforgenerations.
Helpingpeopleatoneof themostdifficulttimesintheirlivesremainsatthe
veryheartof everythingwedo.
Contents
Our Business
01 Keyfinancialhighlights
02 Dignityataglance
03 Ourperformancein2011
04 Chairman’sstatement
05 Chief Executive’soverview
06 Dedicatedtothelocalcommunitiesweserve
08 Businessreview
14 Financialreview
17 Principalrisksanduncertainties
18 Corporateandsocialresponsibility
Governance
28 Boardof Directors
29 Directors’ report
32 ReportonDirectors’remuneration
39 Directors’statementoncorporategovernance
Financial Statements
Group Accounts
45 Independentauditors’reporttothemembers
of Dignity plc
46 Consolidatedincomestatement
46 Consolidatedstatementof comprehensiveincome
47 Consolidatedbalancesheet
48 Consolidatedstatementof changesinequity
49 Consolidatedstatementof cashflows
50 Notestothefinancialstatements
Company Accounts
84 Independentauditors’ reporttothemembers
of Dignityplc
85 DignityplcCompanybalancesheet
86 NotestotheDignityplcfinancialstatements
90 Financialrecord
Shareholder Communications
92 Noticeof Meeting
96 Shareholderinformation
ibc Contactdetailsandadvisers
Financialcalendar
Front cover: Dignitystrivestosetthehigheststandardof serviceforthe
funeralprofessionintermsof clientserviceandcareforthedeceased.
01 | Dignity plc Annual Report & Accounts 2011
Key financial highlights
Current period financial highlights 2011 2010 Increase %
Revenue (£million) 210.1 199.1 6
Underlying operating profit(a) (£million) 64.5 61.0 6
Underlying profit before tax(a) (£million) 41.6 40.4 3
Underlying earnings per share(b) (pence) 55.1 46.4 19
Cash generated from operations(c) (£million) 74.2 74.5 –
Operating profit (£million) 63.2 60.4 5
Profit before tax (£million) 40.3 39.8 1
Basic earnings per share (pence) 62.6 46.9 33
Interim dividend(d,e) (pence) 4.87 – n/a
Final dividend(f) (pence) 8.88 8.07 10
(a) Underlying profit is calculated as profit excluding profit on sale of fixed assets and external transaction costs.
(b) Underlying earnings per share is calculated as profit on ordinary activities after taxation, before profit on sale of fixed assets and external transaction costs (both net of tax), divided
by the weighted average number of Ordinary Shares in issue in the period.
(c) Cash generated from operations excludes external transaction costs.
(d) Interim dividend represents the interim dividend that was approved and paid in the period out of earnings generated in the same period.
(e) An interim dividend was not paid separately in 2010, but was instead included within the £1 Return of Value per Ordinary Share paid in October 2010.
(f) The final dividend represents the final dividend that was approved and paid in the period relating to the earnings generated in the previous period.
+6%
Revenue up 6%
to £210.1 million
+6%
Underlying operating profit
up 6% to £64.5 million
+19%
Underlying earnings per share
up 19% to 55.1 pence per share
Revenue (£m)
Underlying operating profit (£m)
Underlying earnings per share (pence)
175.8
184.7
159.5
199.1
210.1
220
200
180
160
140
120
100
80
60
40
20
0
52.1
56.4
47.6
64.5
61.0
70
60
50
40
30
20
10
0
55.1
38.2
40.5
46.4
33.4
60
50
40
30
20
10
0
2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
Revenue by area (£m)
Underlying operating profit by area* (£m)
Funeral services 146.5
Crematoria 41.6
Pre-arranged funeral
plans 22.0
Funeral services 50.8
Crematoria 21.3
Pre-arranged funeral
plans 5.5
*Excludes central overheads
of £13.1 million
02 | Dignity plc Annual Report & Accounts 2011
Dignity at a glance
The Group’s operations are managed across three main areas, namely funeral services,
crematoria and pre-arranged funeral plans. Our people across the business are dedicated
to making a difference to the families and local communities they serve. We aim to achieve
our business objectives in a caring and responsible manner, recognising the economic, social
and environmental impact of our activities.
Funeral services
Crematoria
Business overview
Funeral services revenues relate
to the provision of funerals and
ancillary items such as memorials
and floral tributes. We operate a
network of 600 funeral locations
throughout the United Kingdom
generally trading under established
local trading names. In 2011, the
Group conducted 62,300 funerals,
which represents approximately
11.3 per cent of estimated total
deaths in Britain.
65%
Group operating
profits share
600
Number of funeral
locations in the UK
62,300
Number of funerals
conducted during 2011
Business overview
Crematoria revenues arise from
cremation services and the sale
of memorials and burial plots
at the Group’s crematoria and
cemeteries. We are the largest
single operator of crematoria in
Britain. We operate 35 crematoria
in England and Scotland and
carried out 47,600 cremations in
2011 representing 8.8 per cent of
estimated total deaths in Britain.
28%
Group operating
profits share
35
Number of crematoria
in England and Scotland
47,600
Number of cremations
conducted during 2011
Pre-arranged funeral plans
Business overview
Pre-arranged funeral plans income
represents amounts to cover
the costs of marketing and
administering the sales of plans.
Pre-arranged funeral plans allow
people to plan and pay for their
funeral in advance. The Group has
a strong market presence in the
provision of pre-arranged funeral
plans with 265,000 unfulfilled
funeral plans as at 30 December
2011. Dignity works with a number
of reputable affinity partners.
7%
Group operating
profits share
265,000
Number of unfulfilled
funeral plans as at
30 December 2011
03 | Dignity plc Annual Report & Accounts 2011
Our performance in 2011
The Group has performed strongly in 2011 particularly given the challenging 53 week
comparable period. Revenue is up 6 per cent, underlying operating profits are up 6 per cent
and underlying earnings per share are up 19 per cent. We continue to make good progress
across all our operations.
Operational and financial summary
Revenue up 2%
to £146.5 million
Underlying operating profit
up 3% to £50.8 million
Revenue (£m)
Underlying operating profit (£m)
137.2
138.5
126.3
143.3
146.5
160
140
120
100
80
60
40
20
0
42.1
46.3
47.3
49.3
50.8
60
50
40
30
20
10
0
2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
Operational and financial summary
Revenue up 11%
to £41.6 million
Underlying operating profit
up 7% to £21.3 million
Revenue (£m)
Underlying operating profit (£m)
41.6
34.4
37.5
29.2
25.7
45
40
35
30
25
20
15
10
5
0
22
20
18
16
14
12
10
8
6
4
2
0
21.3
19.9
17.6
14.0
14.6
2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
Operational and financial summary
Total unfulfilled pre-arranged
funeral plans increased to 265,000
Underlying operating profit
up 28% to £5.5 million
Total number of unfulfilled plans
Underlying operating profit (£m)
265,000
238,000
204,000
216,000
197,300
275,000
250,000
225,000
200,000
175,000
150,000
125,000
100,000
5.5
4.3
3.5
2.4
2.5
6
5
4
3
2
1
0
2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
Key developments
• Good cost control has
helped performance.
• 10 locations acquired.
• 25 satellite locations
opened.
Key developments
• Division performed well
with significant growth
year on year.
• Two locations added
in the year.
• Two further locations due
to open in 2012.
• Mercury abatement project
on track for completion
in 2012.
Key developments
• Strong performance
in the period.
• Plans outstanding
continue to grow.
• The most successful
sales year since the
creation of pre -arranged
funeral plans.
04 | Dignity plc Annual Report & Accounts 2011
Chairman’s statement
“The Board’s expectations for 2012 remain
positive and unchanged.”
Results
I am pleased to report another successful year for
the Group.
Underlying operating profits have increased by 6 per cent
to £64.5 million (2010: £61.0 million). Underlying earnings
per share have increased 19 per cent to 55.1 pence per
Ordinary Share (2010: 46.4 pence per Ordinary Share).
Dividends
The Board is proposing a final dividend of 9.77 pence per
Ordinary Share to be paid on 29 June 2012 to members
on the register at close of business on 25 May 2012. This
dividend is subject to the approval of shareholders at the
Annual General Meeting on 14 June 2012. This final
dividend represents a 10 per cent increase on the previous
year and is consistent with the annual increases made
since flotation in 2004.
The Board
We have announced a number of changes regarding our
Non-Executive Directors, which will be effective from
1 April 2012.
James Newman and Bill Forrester will be retiring from the
Board. James has been Senior Non-Executive Director and
Chair of the Audit Committee since flotation. Bill has, until
recently, been Chair of the Remuneration Committee during
the same period.
I would like to thank both of them for their support over the
last eight years, which has been a period of great success
for the Group.
Peter Hindley, Chairman
I am also pleased to welcome Jane Ashcroft and Martin
Pexton to the Board. Their biographies describe their
background and I am sure they will contribute to the
Board enormously and will help Dignity to continue to
generate value for its shareholders in the future. Jane
and Martin will also sit on the Audit, Remuneration and
Nomination Committees.
I am also delighted that Alan McWalter has agreed to
become the Senior Non-Executive Director. Alan has also
become Chair of the Remuneration Committee. Ishbel
Macpherson will become Chair of the Audit Committee.
Our people
Dignity remains dependent on the quality of its staff, who
care for our clients at one of the most difficult times in their
lives. They continue to deliver outstanding client service and
I am grateful for the part each member of staff has played
during the year.
Outlook for 2012
The number of deaths in the first quarter of 2012 is
expected to be a lower proportion of the year as a whole
than in 2011. However, the Board’s expectations for 2012
remain positive and unchanged.
Our strategy for growth
We plan to grow the profitability of our business by:
• Operating in a traditional market where people use
our services based on our reputation and through
recommendations, where we believe our continued
commitment to excellent service for our clients
will generate a high level of referral and organic
revenue growth;
• Continuing to control our operating costs;
• Developing or acquiring additional funeral locations;
• Developing, managing or acquiring additional
crematoria; and
• National marketing, principally through affinity partners,
of pre-arranged funeral plans.
05 | Dignity plc Annual Report & Accounts 2011
Chief Executive’s overview
“The Group has performed well despite
a challenging comparable 53 week period.”
Mike McCollum, Chief Executive
Our performance
The Group has performed well, with underlying operating
profits increasing 6 per cent despite a continued reduction
in the number of deaths per year and a challenging 53 week
comparable period. We remain focused on our commitment
to help as many families as possible at one of the most
difficult times in their lives, which in turn we believe will
allow us to create value for our shareholders.
National marketing, principally through affinity partners,
of pre-arranged funeral plans
This has been the most successful year to date for pre-
arranged funeral plans, both in terms of profitability and
the number of plans sold. This reflects continued focus on
developing new affinity relationships with reputable third
parties as well as strengthening relationships with existing
partners such as Age UK.
Delivering on our strategy
Continued commitment to client service excellence
Client service excellence remains central to our operations.
Given approximately three-quarters of our funeral
business is generated through our reputation or through
recommendations, this focus has created, and will continue
to, create value.
A strong platform for sustainable growth
Yet again this year, the Group has been able to invest in
the maintenance of its existing assets, grow the business
through acquisition and open new locations, all without the
need for any additional external funding. This is a testament
to the continued highly cash generative nature of the Group
as a whole.
Continuing to control our costs
We remain focused on cost control and continue to identify
ways to minimise our cost base without compromising on
the quality of our customer service.
Acquiring and developing additional funeral locations
This year has witnessed the acquisition of 10 established
funeral locations. We have also opened 25 new satellite
locations, bringing the total number opened since the
project started in 2010 to 43.
Developing, managing or acquiring additional crematoria
Opportunities continue to arise within the crematoria division.
Two newly built locations became operational in 2011 and
a further two are due to become operational in 2012.
Valuing our people
I am always heartened by the time many families take to
write directly to me to record their thanks for the wonderful
job we did for their particular family. Similar evidence of
the care and dedication shown by our staff can be found in
each and every one of our locations. They continue to do a
tremendous job and I am very grateful for all their support
in an increasingly competitive market.
I was once again delighted that the Group’s success was
able to be shared with staff with discretionary bonus
payments totalling £1.6 million.
Dedicated to the local communities we serve
Working at the heart of local communities is a crucial part
of our success and of our future. We continue to expand our
network into areas of the country we do not currently serve.
This will allow us to help more families at one of the most
difficult times in their lives.
Our key priorities
Ensuring the highest levels of client service excellence:
• High levels of client service demonstrably affect client’s
willingness to recommend our services. Recommendations
and our reputation generates approximately 75 per cent
of our funeral business.
Attracting, developing and retaining the best people:
• Our employees are central to the success of the business.
We seek to attract and retain the best people through
appropriate remuneration and ongoing training.
Continued investment:
• We invest heavily in our existing business to ensure it is
of the best possible standard, both in client facing areas
and behind the scenes. We also seek to invest in new
businesses that will help Dignity grow and create value
for shareholders.
Delivering long term shareholder returns:
• Our business is driven by relatively predictable factors
over long periods of time. This allows us to operate and
fund our business in a way that generates value over
the long term.
06 | Dignity plc Annual Report & Accounts 2011
Dedicated to the local communities we serve
Our history
Serving local communities
for generations
Dignity is a British company and is the leading provider of funeral
related services in the UK. We have a rich and proud heritage and
our oldest funeral location was established in 1812 and our oldest
crematorium in 1903. Many of our businesses have been serving
their local communities for generations.
1812
1848
1855
1857
1857
1876
1880
1884
George S Munn
& Co, Glasgow
George S Munn & Co.
is Dignity’s oldest
funeral directors and
is situated on the
south side of Glasgow.
They have been
providing funeral
services to their
local community
since 1812.
J Rymer Funeral
Service, York
In 1848, James
Rymer founded the
family business in
premises very close
to York Minster. By
1925, Jack Rymer,
then aged 15, was
managing the
business after the
death of his father.
J Rymer Funeral
Service joined the
Dignity network in
1994 and today is
managed by the
sixth generation of
the Rymer family.
Ginns & Gutteridge,
Leicestershire
Ginns Funeral
Directors was listed
in a local trade
directory in 1855.
In the early 20th
century there were
several competing
funeral businesses
bearing this name –
all run by different
members of the
Ginns family, until
they amalgamated
with another local
funeral director and
Ginns & Gutteridge
was established.
Lawrence Funeral
Service, Halifax
In 1857, John
Lawrence established
his family business,
J Lawrence & Sons,
in Halifax, Yorkshire.
They produced
furniture but
occasionally made
coffins for local
families. By 1945,
the Lawrence family
were arranging
enough funerals
to open a chapel
of rest.
E Finch & Sons,
Aldershot
In 1857, Emmanuel
Finch established
E Finch & Sons on
the High Street of
Aldershot. During
the 20th century
the business built
its reputation by
conducting military
funerals and
pioneering many new
initiatives, including
the first motorised
hearse in the area.
Beckenham
Cemetery, Kent
Beckenham
Cemetery, the oldest
cemetery operated
by Dignity, opened
in 1876. It includes
the resting place of
cricketing legend
W G Grace.
J H Kenyon, London
James H Kenyon
opened his first
funeral location on
Edgware Road in
1880. The business
expanded to include
five branches in
northwest London
and became one
of the most well-
known names in
the profession,
conducting funerals
for the Royal Family,
politicians and other
prominent figures.
Frederick W Paine,
London
Charles Paine
opened his first
funeral location in
Station Road, New
Malden, in 1884.
Ten years later the
business was passed
on to his eldest son,
Frederick W Paine,
who opened two
further funeral
locations over the
next few years.
Our people
Over 2,450 people dedicated
to client service excellence
We are funeral people and this is all we do. Our people come from
the local towns and cities they serve or from families that have been
in the funeral profession for generations and all are dedicated to
delivering client service excellence.
07 | Dignity plc Annual Report & Accounts 2011
1903
1914
1928
1930
1950
1994
2008
Today
Birmingham
Crematorium
Birmingham
Crematorium opened
in 1903. At this time
it was only one of
nine crematoria in
the UK.
John Bardgett & Son,
Newcastle upon Tyne
John Bardgett, who
had been a branch
manager of another
local funeral director,
established his own
business in 1914. By
1916 his three sons,
John Ernest, Arthur
and Stanley had
joined him and
formed a limited
company in 1935.
They were the first
funeral services in
Newcastle to have
motorised vehicles.
Jonathan Harvey,
Glasgow
In 1928, Jonathan
Harvey, a local motor
engineer who
managed a vehicle
hire company and
cab service, opened
a funeral business
on Argyle Street in
Glasgow. A second
Jonathan Harvey
funeral location was
established in 1950
and over the next 40
years another four
branches were
opened in the city.
South London
Crematorium
Following World War
One more people
became interested
in cremation and the
fifth crematorium in
London was built in
Streatham in 1930.
There were originally
three chapels but
only St George’s
remains in use today.
The mausoleum was
the first to be built
in Britain in over
150 years.
Seaford & Newhaven
Funeral Service,
East Sussex
C Morling Ltd,
primarily a building
company whose
carpenters had made
coffins for over 100
years, opened an
office in Seaford as
its funeral business.
Dignity Caring
Funeral Services
All of these
businesses came
together in 1994
when Dignity was
created through
the merger of
Plantsbrook Group
and Great Southern
Group and was re-
branded as Dignity
in 2001.
Northern Ireland
Dignity acquires six
locations in Northern
Ireland. Three of these
are in Belfast with
one each in Bangor,
Newtonabbey and
Carrickfergus.
Dignity is a British
company that is
listed on the London
Stock Exchange.
Dignity maintains
the rich heritage
of these companies
and strives to set
the highest standards
in the industry.
In 2011, we opened
a state-of-the-art
crematorium and
cemetery in Wyre
Forest, Worcestershire.
Our promise
Helping our clients
every step of the way
Serving the people in our local communities at one of the most
difficult times in their lives remains at the heart of everything we
do and we are committed to providing the highest standards of
service and care and to helping our clients every step of the way
when they need us.
What we are here
to do:
• To help people
in one of the most
difficult times in
their life.
How we do this:
• With compassion,
respect, openness
and care.
What we want to be:
• The company
everyone knows
they can trust in
their time of need.
08 | Dignity plc Annual Report & Accounts 2011
Business review
“The quality of our client service is borne
out in the responses we receive to the surveys
we send out to each family we care for with
98 per cent of families responding saying
they would recommend us.”
We can arrange funerals for all
cultures and religions at any of
our funeral locations across the
UK. Additionally, our Asian Funeral
Directors in Birmingham, London
and Leicester offer a specialist
service for the needs of Asian
families.
Left: Polish funeral specialists,
Joanna Nowak of Henry Paul
Funeral Directors, Ealing and
Agnieszka Galla of W S Bond,
Acton, London.
Introduction
The Group’s operations are managed across three main
areas; funeral services, crematoria and pre-arranged funeral
plans, which respectively represented 65 per cent, 28 per
cent and 7 per cent of the Group’s operating profits in
2011. Funeral services relate to the provision of funerals
and ancillary items, such as memorials and floral tributes.
Crematoria services relate to cremation services and
the sale of memorials and burial plots at the Group’s
crematoria and cemeteries. Pre-arranged funeral plans
represents the sale of new plans and administration of
existing plan holders.
Office for National Statistics data
Some of the Group’s key performance indicators rely
on the total number of estimated deaths for each period.
This information is obtained from the Office for National
Statistics (ONS).
The initial publication of recorded total estimated deaths
in Britain for the 52 weeks in 2011 was 539,000 compared
to 557,000 for the 53 weeks in 2010. Historically, the ONS
has updated these estimates from time to time. As in
previous years, the Group does not restate any of its key
performance indicators when these figures are restated in
the following year.
Funeral services
Overview
The Group operates a network of 600 (2010: 567) funeral
locations throughout the United Kingdom, generally trading
under local established names. During the period, the Group
conducted 62,300 funerals (2010: 64,500). Approximately
two per cent of these funerals were conducted in Northern
Ireland. Excluding Northern Ireland, these funerals represent
approximately 11.3 per cent (2010: 11.4 per cent) of total
estimated deaths in Britain.
In addition, whilst funerals divided by estimated deaths is
a reasonable measure of our market share, the Group does
not have a complete national presence. Consequently, this
calculation can only ever be an estimate.
Delivering client service excellence: the Dignity client survey
To ensure we maintain the highest levels of client service excellence,
all Dignity funeral locations send a written client survey to the
families we serve. In the last five years, we have received over
150,000 responses and from the responses in the last year we
know that, having received the final invoice:
• 99.3 (2010: 99.2) per cent of respondents said that we met or
exceeded their expectations;
• 98.1 (2010: 98.1) per cent of respondents would recommend us;
• 99.9 (2010: 99.9) per cent thought our staff were respectful;
• 99.8 (2010: 99.8) per cent thought our premises were clean
and tidy;
• 99.7 (2010: 99.8) per cent thought our vehicles were clean
and comfortable;
• 99.7 (2010: 99.7) per cent thought our staff listened to their
needs and wishes;
• 99.2 (2010: 99.2) per cent of clients agreed that our staff had
fully explained what would happen before and during the funeral;
• 99.3 (2010: 99.2) per cent agreed that our staff were
compassionate and caring;
• 98.8 (2010: 98.9) per cent said that the funeral service took
place on time; and
• 98.8 (2010: 98.9) per cent said that the final invoice matched
the estimate provided.
This consistent level of service underpins our funeral business.
Developments
Underlying operating profits were £50.8 million (2010:
£49.3 million), an increase of 3 per cent. This is a good
performance by the division, particularly considering the
comparable period is for 53 weeks.
Continuing to enhance our client service
We continue to invest in staff
training initiatives, refurbishment
of our funeral locations and the
renewal of our fleet, enabling
our staff to provide the highest
standards of client service
excellence.
During the period Dignity invested
£9.5 million on refurbishment of
funeral related properties and
renewal of fleet.
£9.5 million
Left: The interior of W S Harrison
& Son in Whitley Bay, Tyne and Wear.
33 locations
The Group’s funeral location
portfolio increased by 33 reflecting
increases from acquisitions and
new satellite funeral locations.
09 | Dignity plc Annual Report & Accounts 2011
Caring
“Serving families at one of the most difficult
times in their lives remains at the very heart
of everything we do and everyday we take
care and time to understand their individual
needs and to help them arrange the funeral
they want for their loved one.”
Providing care and compassion when it’s needed most
We are the leading provider of funeral related services in the UK with a network of 600
funeral locations trading under locally established and respected names, which in many
cases have been serving their local communities for generations. At the heart of what we
do is helping people at one of the most difficult times in their lives and we continue to
focus on consistently delivering on our promise.
We know that every client is different and as well as providing advice and support, we
listen carefully to what a family wants to make sure we understand their individual needs
and ensure that we arrange the funeral they want for their loved one. From the first time
a family contacts us through to the support we provide after the funeral, our staff devote
themselves to delivering the highest quality of service with care and compassion.
Right: Kaye Sheen, Funeral Service Arranger at Holland Funeral Service in
Malvern, Worcestershire.
10 | Dignity plc Annual Report & Accounts 2011
Business review continued
“We are committed to providing the local
communities we serve with the highest
standard of service and facilities to meet
the needs of generations to come.”
Dignity continues to invest in the
grounds of its crematoria and
cemeteries to create a place of
beauty and tranquillity where
visitors can take their time to
reflect and remember the lives
of their loved ones.
Left: The Gardens of
Remembrance at Glynn Valley
Crematorium in Bodmin, Cornwall.
This performance has been achieved through successful
execution of our strategy. Average revenues have increased,
costs have remained well controlled and acquisition activity
has generated incremental profits.
Satellite locations are anticipated to be loss making in their
first full year of operation and be profitable in their third
year of operation. The total portfolio opened under this
initiative broadly broke even in 2011.
Investment in our properties and our fleet remains central
to the delivery of our strategy. This year, the funeral services
division has received investment of approximately £9.5
million. Approximately 53 per cent of this has funded the
routine replacement of our hearses and limousines. The
remainder has been used to improve our premises, including
investment ‘behind the scenes’ on mortuary equipment and
associated requirements, which we believe is essential to
provide the best possible service to our families.
Funeral location portfolio
The Group’s funeral location portfolio has increased by
33 in the year, reflecting acquisitions, disposals and the
continuation of the new satellite funeral locations
programme, which started in 2010.
Net acquisition investment of £12.0 million increased the
portfolio by 10 funeral locations in the United Kingdom
(including two in Northern Ireland). Each of these
acquisitions met the Group’s criteria of being larger than
average, long-established businesses that fit well within
the Group’s existing network.
25 new satellite funeral locations (2010: 18) were opened
in the year. The principle of these locations is that they must
be situated close enough to existing business centres to use
their specialist vehicles and mortuary equipment, but far
enough away that they service new families. In this way,
these funeral locations will provide the same outstanding
level of client service that people experience from other
Dignity funeral locations without the need for significant
capital investment.
Two locations were closed in the period. This reflects the
disposal of two valuable freehold locations for cash that
can be reinvested in the business.
Since the year end, the Group has acquired four established
funeral locations and opened a further three new satellite
locations.
Crematoria
Overview
The Group is the largest single operator of crematoria in
Britain, operating 35 (2010: 33) crematoria. The Group
performed 47,600 cremations (2010: 45,200) in the period,
representing 8.8 per cent (2010: 8.1 per cent) of deaths
in Britain.
Developments
Operating profits were £21.3 million (2010: £19.9 million),
an increase of 7 per cent. This reflects a strong performance
from the established crematoria and an improving
contribution from recently opened locations.
The Group has spent £1.0 million (2010: £2.1 million)
during the year as part of its obligations to comply with
the mercury abatement legislation, which is effective from
the end of 2012. As a result of the investment so far, nine
crematoria now have the required equipment installed and
operational. Legislation requires any crematorium constructed
after October 2006 to have mercury abatement equipment.
Consequently an additional four crematoria within the
Group’s portfolio already comply with the legislation. The
Group expects to be fully compliant before the 31 December
2012 deadline, by installing equipment at six further locations.
Building on our experience and expertise
We leverage our experience and
expertise to identify further acquisition
opportunities and locations suitable
for new build crematoria. We also
continue to seek new partnerships
with local authorities and to invest
in new developments at existing
crematoria.
We invested £1.7 million in
the upgrading of our existing
crematoria in the period.
£9.0 million
£1.7 million
Left: Wyre Forest Crematorium and
Cemetery in Worcestershire.
£9.0 million invested in the
period in changes to our
crematoria portfolio.
11 | Dignity plc Annual Report & Accounts 2011
Dedicated
“We know that families get a great deal
of comfort from having somewhere peaceful
to remember their loved ones and our
dedicated team of gardeners take great care
and pride in maintaining our memorial
gardens to the very highest standards.”
Providing a peaceful place to remember for generations
We are the largest single operator of crematoria in the UK with a growing portfolio of
well established and modern, state of the art crematoria. Our oldest crematorium in
Birmingham was established in 1903 and played an important role in setting standards
and is still serving its local community today. As an industry leader, we continue to raise
standards of service and facilities, ensuring we are well positioned to meet the needs
of our local communities for generations to come.
Some of our new initiatives include; extended service times, more accessible facilities
and providing greater choice for families. We continue to develop our crematoria and
grounds which are open 365 days of the year for visitors, and our dedicated team of
gardeners take great care and pride in maintaining them to the very highest standards.
Right: Andrew Cox, Gardener at Birmingham Crematorium.
12 | Dignity plc Annual Report & Accounts 2011
Business review continued
“Our business continues to grow thanks
to the dedication of all our people.
Whether arranging a funeral, providing
a peaceful place to remember or helping
people plan ahead, at its core is the service
excellence we deliver.”
We use valuable customer
insight and ongoing training and
support to our staff to ensure we
consistently maintain and further
improve on the services and
products we provide.
Left: Shah Islam, Client Service
Adviser at Dignity’s Client Service
Centre in Sutton Coldfield.
£1.7 million (2010: £1.3 million) has also been spent on
new cremators and other improvements to the crematoria
locations. This investment helps our locations provide the
best possible service in comfortable surroundings to the
funeral directors and families that use them.
During the period, the Group completed the construction of
two crematoria in Somerset and Worcestershire. Somerset
became operational at the end of the first quarter of 2011,
whilst Worcestershire became operational shortly before the
end of the year.
Work continues to complete the construction of a new
crematorium in Essex. The Group is also the preferred
bidder to operate Haringey Council’s crematorium.
The changes to the portfolio in the year represented an
investment of £9.0 million. A further capital investment of
approximately £5.9 million is expected in 2012 to complete
the current developments.
The Group continues to identify further locations suitable
for a new crematorium and is also continuing to seek
partnerships with local authorities.
Pre-arranged funeral plans
Overview
The Group continues to have a strong market presence in
this area. These plans represent future incremental business
for the funeral division, as the Group expects to perform the
majority of these funerals.
Developments
The division has performed strongly in the period. Focused
marketing activity with its partners has resulted in the
number of unfulfilled pre-arranged funeral plans increasing
to 265,000 (2010: 238,000) with operating profits in the
division increasing to £4.0 million excluding Recoveries
(2010: £2.8 million excluding Recoveries).
In recent years, the Group receives monies from the
Trusts, in line with the relevant Trust’s deed, which have
been assessed by the trustees as not required to ensure the
Trust has sufficient assets to meet its future liabilities in
respect of current members (‘Recoveries’). Recoveries were
£1.5 million in both 2010 and 2011.
As with all the Group’s operating profits, pre-arranged
funeral plan profits convert efficiently into a similar amount
of cash.
The Group has continued to work hard at developing its
portfolio of affinity partners and has formed a number of
new partnerships in the period with organisations in the
retail and financial services arena.
The number of plan sales and also operating profits have
increased strongly for a number of years.
Central overheads
Overview
Head office costs relate to central services that are not
specifically attributed to a particular operating division.
These include the provision of IT, finance, personnel and
Directors’ emoluments. In addition and consistent with
previous periods, the Group records the costs of incentive
bonus arrangements, such as Long Term Incentive Plans
(LTIPs) and annual performance bonuses, which are provided
to over 100 managers working across the business.
Developments
Costs in the period were £13.1 million (2010: £12.5
million), an increase of 5 per cent. This year on year
increase principally reflects the additional cost of bonuses
paid to the operational managers of the business, together
with some additional pension costs. The Group has also
invested in greater numbers of IT and personnel staff to
support the ever growing business.
Maximising our opportunities for growth
We continue to strengthen and
develop our marketing and
distribution relationships and have
formed a number of new partnerships
in the period with organisations in
the retail and financial services
arena to maximise opportunities
for growth.
There were 265,000 unfulfilled
pre-arranged funeral plans at the end
of the period. This reflects strong
sales through the Group’s funeral
locations and affinity partners.
265,000
Left: Steve Wallis, General Manager
for Pre-arrangement and Debbie Hall,
Senior Campaign Manager at Dignity’s
Head Office in Sutton Coldfield.
Top 5
Dignity’s Client Service Centre
achieved a top five place for three
consecutive years in the biggest ever
survey into UK call centres.
13 | Dignity plc Annual Report & Accounts 2011
Trusted
“As one of the UK’s leading providers of
pre-arranged funeral plans, we offer one of
the most financially secure plans available
today and have helped more than 480,000
people plan ahead, providing welcome peace
of mind for them and their families.”
Providing more people with peace of mind for the future
We continue to have a strong market presence in pre-arranged funeral plans and have
already helped more than 480,000 people plan and pay for their funerals in advance.
As interest increases and more people choose to plan ahead for the future, we continue
to focus on developing new and financially secure products that meet their needs and
bring peace of mind for them and their families. We continue to reach new customers
through both our growing portfolio of reputable affinity partners and via our own
established network of local funeral locations where previous experience, reputation
and recommendation are one of our key drivers for growth.
Right: Nicola Brooks, Funeral Service Arranger at Joseph Swift & Asian Funeral
Directors in Leicester.
14 | Dignity plc Annual Report & Accounts 2011
Financial review
“Earnings per share increased 19 per cent
to 55.1 pence per share.”
Steve Whittern, Finance Director
Earnings per share
The Group’s earnings were £34.3 million (2010: £29.0
million). Basic earnings per share were 62.6 pence per
share (2010: 46.9 pence per share).
The Group’s measures of underlying performance
exclude the effect (after tax) of the profit on sale of fixed
assets, external transaction costs and exceptional items.
Consequently, underlying profit after tax was £30.2 million
(2010: £28.7 million), giving underlying earnings per share
of 55.1 pence per share (2010: 46.4 pence per share),
an increase of 19 per cent.
This year on year growth reflects the full benefit of the
Return of Value and subsequent share consolidation that
was completed in 2010. Further details of this transaction
may be found in the 2010 Annual Report.
Cash flow and cash balances
Cash generated from operations was £74.2 million
(2010: £74.5 million). This reflects the Group’s continued
ability to convert profits into cash. The previous year’s
cash flow was stronger than normal as a result of certain
timing differences.
Capital expenditure on property, plant and equipment was
£22.8 million (2010: £27.9 million).
This is analysed as:
30 December 31 December
2011 2010
£m £m
Vehicle replacement programme
and improvements to locations 10.8 10.3
Branch relocations 0.9 0.6
Satellite locations 1.1 1.0
Development of new crematoria 9.0 13.9
Mercury abatement project 1.0 2.1
Total property, plant and equipment 22.8 27.9
Partly funded by:
Disposal proceeds (0.9) (1.1)
Net capital expenditure 21.9 26.8
In addition, the Group spent £12.0 million on the acquisition
of 10 funeral locations.
Financial highlights
The Group’s financial performance is summarised below:
52 week 53 week
period ended period ended
30 December 31 December Increase
2011 2010 %
Revenue (£million) 210.1 199.1 6
Underlying operating profit* (£million) 64.5 61.0 6
Underlying profit before tax* (£million) 41.6 40.4 3
Underlying earnings per share* (pence) 55.1 46.4 19
Cash generated from operations (£million) 74.2 74.5 –
Operating profit (£million) 63.2 60.4 5
Profit before tax (£million) 40.3 39.8 1
Basic earnings per share (pence) 62.6 46.9 33
Dividends paid in the period:
Interim dividend (pence) 4.87 – n/a
Final dividend (pence) 8.88 8.07 10
*Underlying amounts exclude profit on sale of fixed assets, external
transaction costs and exceptional items.
The Board has proposed a dividend of 9.77 pence per
Ordinary Share as a final distribution of profits relating
to 2011 to be paid on 29 June 2012, subject to
shareholder approval.
Underlying profit after tax
The Board believes that, whilst statutory reporting measures
provide a useful indication of the financial performance of
the Group, additional insight is gained by excluding certain
non-recurring or non-trading transactions. Accordingly, the
following information is presented to aid understanding of
the performance of the Group:
52 week 53 week
period ended period ended
30 December 31 December
2011 2010
£m £m
Operating profit for the
period as reported 63.2 60.4
Deduct the effects of:
Profit on sale of fixed assets (0.2) (0.5)
External transaction costs 1.5 1.1
Underlying operating profit 64.5 61.0
Net finance costs (22.9) (20.6)
Underlying profit before tax 41.6 40.4
Tax charge on underlying profit before tax (11.4) (11.7)
Underlying profit after tax 30.2 28.7
Weighted average number of Ordinary
Shares in issue during the period (million) 54.8 61.8
Underlying EPS (pence) 55.1p 46.4p
Increase in underlying EPS (per cent) 19% 15%
15 | Dignity plc Annual Report & Accounts 2011
+6%
Underlying operating profits
have increased six per cent to
£64.5 million.
£10.8 million
Capital expenditure on the
existing portfolio.
£7million
Total anticipated investment
in mercury abatement.
Capital expenditure on mercury abatement represents the
monies incurred to comply with new legislation. The total
spent to date is £4.8 million and the total anticipated capital
expenditure is approximately £7.0 million. The project will
be completed by the end of 2012.
The Group also paid dividends on Ordinary Shares totalling
£7.5 million (2010: £5.1 million) in the period. In 2010,
no interim dividend was paid, as it was included within the
Return of Value. The underlying increase in dividend per
Ordinary Share is 10 per cent.
Cash balances at the end of the period were £36.9 million
(2010: £48.1 million). £1.5 million (2010: £1.5 million)
represents amounts received as Recoveries from the pre-
arranged funeral plan trusts. These amounts are legally
required, under the terms of the Group’s securitisation,
to be retained in a separate bank account for one year
following receipt and do not therefore meet the definition
of cash for cash flow reporting purposes.
Approximately £14.1 million of the remaining cash balance
was immediately available for acquisitions and developments
and approximately £17.0 million was set aside for future
corporation tax and dividend payments.
Further details and analysis of the Group’s cash balances
are included in note 15 to the consolidated financial
statements.
Pensions
The balance sheet shows a surplus of £1.3 million before
deferred tax (2010: £8.5 million). This reduction is explained
by the significant reduction in gilt yields during the year and
thus the discount rate used by the actuary to calculate the
liabilities at the year end.
The scheme remains open to both new and existing members
of staff. The Board is currently investigating the implications
of auto enrolment, which is expected to impact the Group
from April 2013.
Taxation
The Group’s effective tax rate in the period was 27.5 per
cent (excluding the exceptional rate change) (2010: 29 per
cent). Following the Government’s announcement to reduce
the rate of Corporation Tax in future years, the Group
expects its effective rate in 2012 to be approximately
26.5 per cent.
The Group’s consolidated income statement includes
exceptional income of £1.8 million which reflects the
reduction in the headline Corporation Tax rate from 27
per cent to 25 per cent. Further exceptional credits will be
recognised in future years if the Chancellor substantively
enacts additional reductions in Corporation Tax rates.
The Group has also recognised a non-recurring tax credit
of £3.4 million in the period reflecting the utilisation of
losses incurred in the past and previously unrecognised
for deferred tax purposes. This follows the completion of
an exercise which investigated the Group’s ability to simplify
its structure. This project became possible following changes
to the terms of the Group’s Secured Notes in 2010.
Approximately 90 per cent of this will be recognised as
a cash benefit in 2012, with the balance expected to
crystallise in 2013. External transaction costs of £0.4
million have been incurred in relation to this project.
Capital structure and financing
Secured Notes
The Group’s principal source of long term debt financing is
the Class A and B Secured Notes. They are rated A and BBB
respectively by Standard and Poor’s. Following an upgrade in
the year, the Secured Notes are rated A+ and BBB+ by Fitch.
The Board considers that maintaining a leveraged balance
sheet is appropriate for the Group, given the highly stable
and predictable nature of its cash flows. This predictability
is matched in the Secured Notes. The principal amortises
fully over their life and is scheduled to be repaid by 2031.
The interest rate is fixed for the life of the Secured Notes
and interest is calculated on the outstanding principal.
This has the benefit of enhancing shareholder returns,
whilst leaving sufficient flexibility to invest in the growth
of the business.
The Group’s primary financial covenant under the Secured
Notes requires EBITDA to total debt service to be above
1.5 times. The ratio at 30 December 2011 was 2.27 times
(2010: 2.56 times). This is a direct consequence of the
additional debt issued in 2010. Further details may be
found in note 24.
Crematoria Acquisition Facility
The Group is also fully drawn on a £10 million Crematoria
Acquisition Facility, which was used to fund the acquisition
of five crematoria locations in the last quarter of 2008.
The principal on this facility is repayable in one amount in
November 2013 and interest is either fixed or capped at
approximately 5.6 per cent. All interest is payable in cash on
a quarterly basis. Further details may be found in note 16.
Net debt
As set out in note 24, the Group’s gross debt outstanding
was £349.5 million (2010: £359.1 million). Net debt was
£312.7 million (2010: £311.1 million), including the premia
on the Secured Notes. The reduction in gross debt reflects
the amortisation profile of the Secured Notes and
associated premia.
16 | Dignity plc Annual Report & Accounts 2011
Financial review continued
£74.2 million
Cash generation remains strong.
A+
The Group’s Class A and B
Secured Notes are rated A+
and BBB+ respectively by Fitch.
Net finance costs
The Group’s finance expense substantially consists of the
interest on the Class A and B Secured Notes and ancillary
instruments. The net finance cost in the period relating to
these instruments was £23.1 million (2010: £20.3 million).
This increase recognises the full year effect of the further
Secured Notes that were issued in 2010.
Finance costs of £0.5 million (2010: £0.5 million) were
incurred in respect of the Crematoria Acquisition Facility.
Other ongoing finance costs incurred in the period
amounted to £0.3 million (2010: £0.6 million), including
the unwinding of discounts on the Group’s provisions, other
financial liabilities and interest capitalised in accordance
with IAS 23.
In addition to these key performance indicators, the Group
closely monitors the results of its client surveys. Highlights
of these results can be found in the Business Review.
A summary of the Group’s financial record for the last five
years can be found on pages 90 to 91.
Forward-looking statements
Certain statements in this Annual Report are forward-
looking. Although the Board believes that the expectations
reflected in these forward-looking statements are reasonable,
it can give no assurance that these expectations will prove
to have been correct. Because these statements involve
risks and uncertainties, actual results may differ materially
from those expressed or implied by these forward-looking
statements.
Interest receivable on bank deposits was £0.3 million
(2010: £0.4 million). Net finance income of £0.7 million
(2010: £0.4 million) was recognised in respect of the
Group’s pension scheme in accordance with IAS 19.
Key performance indicators
The Group uses a number of performance indicators to both
manage the business and ensure that the Group’s strategy
and objectives are being delivered.
52 week 53 week
period ended period ended
30 December 31 December
2011 2010
Total estimated number of
deaths in Britain (number) 539,000 557,000
Number of funerals performed
(number) 62,300 64,500
Funeral market share excluding
Northern Ireland (per cent) 11.3 11.4
Number of cremations
performed (number) 47,600 45,200
Crematoria market share (per cent) 8.8 8.1
Unfulfilled pre-arranged funeral plans
(number) 265,000 238,000
Underlying earnings per share
(pence) 55.1 46.4
Underlying operating profit
(£million) 64.5 61.0
Cash generated from operations(a)
(£million) 74.2 74.5
(a) Cash generated from operations excludes external transaction costs.
(b) These key performance indicators are produced using information
supplied by ONS and company data.
17 | Dignity plc Annual Report & Accounts 2011
Principal risks and uncertainties
Our risk process is designed to identify, evaluate and
manage our operational and financial risks.
Operational risk management
Significant reduction in the death rate
There is a risk that the number of deaths in any year
significantly reduces. This would have a direct result on
the financial performance of both the funerals and
crematoria divisions.
However, the profile of deaths has historically followed
a similar profile to that predicted by the ONS, giving the
Group the ability to plan its business accordingly.
Nationwide adverse publicity
Nationwide adverse publicity could result in a significant
reduction in the number of funerals or cremations
performed in any financial period. This would have a direct
result on the financial performance of that division.
However, this risk is addressed by ensuring appropriate
policies and procedures are in place, which are designed
to ensure client service excellence. These policies and
procedures retain flexibility for the business to serve
families in accordance with local traditions.
Ability to increase average revenues
per funeral or cremation
Operating profit growth is in part attributable to the
Group’s ability to increase the average revenue per funeral
or cremation. There can be no guarantee that future
average revenues per funeral or cremation will increase
at rates similar to previous periods.
However, the Group believes that its focus on client
service excellence helps to mitigate this risk.
Significant reduction in market share
It is possible that other external factors, such as new
competitors, could result in a significant reduction in
market share within funeral or crematoria operations.
This would have a direct result on the financial
performance of that division.
However, the Group believes that this risk is mitigated for
funeral operations by reputation and recommendation
being a key driver to the choice of funeral director being
used and for crematoria operations is mitigated by
difficulties associated with building new crematoria.
Demographic shifts in population
There can be no assurance that demographic shifts in
population will not lead to a reduced demand for funeral
services in areas where Dignity operates. In such situations,
Dignity would seek to follow the population shift.
Competition
The UK funeral services market and crematoria market is
currently very fragmented.
There can be no assurance that there will not be further
consolidation in the industry or that increased competition
in the industry, whether in the form of intensified price
competition, service competition, over capacity or otherwise,
would not lead to an erosion of the Group’s market share,
average revenues or costs of funerals and consequently
a reduction in its profitability.
However, there are barriers to entry in the funerals
services market due to the importance of established local
reputation and to the crematoria market due to the need
to obtain planning approval for new crematoria and the
cost of developing new crematoria.
Financial risk management
An assessment of the Group’s exposure to financial risks
and a description of how these risks are managed are
included in note 2 to the consolidated financial statements.
The Group manages the operational and financial risks
described through a combination of regular Board reports
and also monthly and weekly management information that
is reviewed by the Executive Directors.
Financial Covenant under the Secured Notes
The Group’s Secured Notes requires EBITDA to total debt
service to be above 1.5 times. If this financial covenant is
not achieved, then this may lead to an Event of Default
under the terms of the Secured Notes, which could result
in the Security Trustee taking control of the securitisation
group on behalf of the Secured Noteholders.
In addition, the Group is required to achieve a more
stringent ratio of 1.85 times for the same test in order to
be permitted to transfer excess cash from the securitisation
group to Dignity plc. If this stricter test is not achieved,
then the Group’s ability to pay dividends would be impacted.
However, the nature of the Group’s debt means that the
denominator is now fixed unless further Secured Notes are
issued in the future. This means that the covenant headroom
will change proportionately with changes in EBITDA.
18 | Dignity plc Annual Report & Accounts 2011
Corporate and social responsibility
“Meeting the needs of our clients, shareholders
and engaging our employees whilst considering
the communities and environment in which
we work is at the heart of our business.”
Introduction
At Dignity we aim to achieve our business objectives in
a caring and responsible manner, we strive to ensure that
we continue to operate responsibly and deliver the excellent
service upon which our business depends. We are committed
to meeting the needs of our clients, shareholders and
engaging all our employees whilst considering the impact
of our activities on the communities and environment in
which we work.
Within Dignity, Corporate Services Director, Richard
Portman, is accountable for corporate and social
responsibility and under this remit identifies major issues
and reports these to his fellow Board members.
Management and accountability
The governing principles of Dignity are that we are here to
help people at one of the most difficult times of their lives
and we do this with compassion, respect, openness and
care. We aim to be the company that everyone knows they
can trust in their time of need.
The flat structure of Dignity means that local management
are empowered to make decisions that provide quick and
effective solutions to the needs of their clients, businesses
and the communities they serve. Only five per cent of our
employees are based at our head office in the West Midlands
where they perform such necessary business tasks as
finance, IT, HR and purchasing. This approach demonstrates
our commitment to providing staff in locations where they
can directly help and support our clients.
Our values, which are enshrined in our governing principles,
are a fundamental part of our culture. By living these values,
we ensure that we operate in a responsible way and that we
deliver the excellent service upon which our business depends.
We foster a responsible culture:
We make our clients feel confident in us so that they are
reassured they are being served by responsible individuals
Our CSR approach
O U R PEOPLE
NITIE S
U
M
M
O
C
R
U
O
Building trust
with all our
stakeholders
Striving for
excellence in
everything
we do
H
E
Making
a positive
impact on our
communities
A
L
T
H
&
S
A
F
E
T
Meeting our
responsibilities
to our clients,
suppliers &
partners
Y
T
N
O
U
R ENVIRO N M E
Richard Portman, Corporate Services Director
working for a responsible company. We give our clients
confidence that they can rely on us to understand their
needs and to take care of all the arrangements; and to feel
confident that we can be responsible for looking after their
loved one.
Dignity has been identified by the FTSE Group in its
FTSE4Good initiative as a company that is working towards
environmental sustainability, developing positive relationships
with stakeholders and upholding and supporting universal
human rights.
We have created a culture of workplace safety so that our
staff understand and abide by legislation and guidelines
ensuring their own health and safety and that of their
colleagues and clients.
We promote ‘environmental issues’ and sustainability,
continually seeking new initiatives that reduce the impact
of our business activities on our environment.
Making a positive contribution to charities and our local
communities is embedded into our corporate culture and
is enthusiastically supported by our staff.
We enable our people to excel:
We train and develop our staff to the very highest standards,
enabling them to fulfil their potential and giving them the
skills to be able to meet and exceed our clients’ expectations.
We build trust and respect:
We build trust and respect with everyone touched by our
business operations – our clients, our colleagues, our
suppliers, trade associations, local authorities and members
of the communities we serve. Everyone at Dignity understands
that at all times they are an ambassador for the Company
and that the future success of the business depends on
its reputation.
Our CSR commitments
Our people
Dignity is committed to high standards of employment practice and aims
to encourage, retain and develop successful employees.
Health and safety
Our business is conducted at all times in such a way as to ensure, as far as
is reasonably practical, the health, safety and welfare of all our employees
and all persons who may be attending our premises.
Our environment
We are committed to maintaining the quality of the environment in which
we all live and we aim to reduce the impact of our operations so that we
act in an environmentally friendly manner.
Our communities
We are committed to making a difference to both our clients and to
improving the welfare of all who live in the communities we serve.
19 | Dignity plc Annual Report & Accounts 2011
Responsible
“We aim to achieve our business objectives
in a caring and responsible manner and
by living these values, we ensure that we
continue to operate responsibly and deliver
the excellent service upon which our
business depends.”
Growing our business responsibly
Dignity has grown through the careful acquisition of other funeral
businesses. Upon acquisition, many proprietors continue to be
involved in management or consultancy roles and Dignity provides
support to all staff that join us as part of an acquisition to enable
them to reach their true potential.
The families that choose to use our services do so based on our
reputation and through recommendations. We believe our continued
commitment to excellent service for our clients will generate a
high level of referral and organic growth.
Our key CSR highlights
1,300
Approximately 1,300 delegates
attended training courses facilitated
by Dignity’s Training Department
during the past twelve months.
12%
The number of accidents reported
per thousand staff employed has
been reduced by approximately
12 per cent over the last three years.
15,500
Approximately 15,500 cremations
at Dignity crematoria were mercury
abated during 2011.
£100,000
Dignity raised approximately
£100,000 for its corporate charity,
Together for Short Lives, over the
past two years.
20 | Dignity plc Annual Report & Accounts 2011
Corporate and social
responsibility continued
Our CSR areas of focus
We have focused our corporate and social responsibilities
on four key areas:
• Our people
• Health and safety
• Our environment
• Our communities
Measuring our performance
Our people:
Dignity monitors employment applications and appointments
to ensure that we comply with all employment legislation.
A record is kept of training courses attended by each
employee and this is analysed to help develop future
training requirements.
Health and safety:
Proactively, health and safety is monitored via quarterly
return analysis, premises inspections, health surveillance,
line manager observations of how tasks are performed and
regular reports to the Board of Directors. Investigating
accidents, collation and analysis of statistics and ill-health
investigation reactively monitors health and safety.
Our environment:
Dignity submits its carbon data to the Carbon Disclosure
Project, a not-for-profit organisation that measures disclosures
from thousands of organisations across the world’s major
economies. The results are disclosed on page 24.
Our communities:
All funds raised for our corporate charity are recorded in
detail and can be easily cross-referenced as deposits go into
a specific Dignity Charity Account. Therefore the amount of
money being raised for charity can be compared with previous
performance and this process facilitates funds being
allocated to the geographical region that generated them.
Dignity has been identified by the
FTSE Group in its FTSE4Good
initiative as a company that meets
globally recognised standards of
corporate responsibility.
We submit our carbon footprint data
to the Carbon Disclosure Project
that measures disclosures from
thousands of organisations across
the world’s major economies.
Dignity’s manufacturing facility has
gained ISO14001 accreditation, an
internationally accepted standard for
developing an effective Environmental
Management System.
14001
Code of conduct
Our Code of Conduct ensures that all staff are aware of
the principles that govern how we operate in the business
environment and explains the standards of behaviour that
all our employees are expected to adhere to.
The Code of Conduct states that all clients should be
supported during the funeral arrangements, at the service or
when choosing a memorial or funeral plan in a paternalistic
manner. We should be compassionate and caring; pay
attention to detail; spend as much time as the client needs;
be open and straightforward and keep in regular contact
with the client.
Our Code of Conduct is also reinforced in a staff handbook,
‘Helping our clients every step of the way’, which is given
to all new employees working in our funeral locations.
The aim of the handbook is to embed all new employees
into the Dignity culture and to remind existing members
of staff of the standards of behaviour and attitudes that
are expected of them. A similar handbook, ‘Serving our
local communities’ is provided to our staff working at
our crematoria.
The Code of Conduct is also published on the Dignity plc
investor website www.dignityfuneralsplc.co.uk.
We adhere to the Bribery and Corruption Act of 2010 and
have introduced policies and procedures to minimise the
risk of bribery.
Building trust and acting with integrity
Our business is built upon our
reputation and relationships with
our clients, our local communities,
our people, our partners and
shareholders. We demonstrate our
values and principles through our
day-to-day behaviour and conduct
ourselves in a way that is
responsible and ethical.
99.9%
98.1%
98.1 per cent of respondents to
our client survey say they would
recommend us.
99.9 per cent of clients that
respond to our survey thought
our staff were respectful.
Left: Wayne Goddard, Funeral
Manager at Ginns & Gutteridge
in Leicester.
21 | Dignity plc Annual Report & Accounts 2011
Providing helpful advice and guidance
Left: During the past year we have refreshed a range of ten client
information leaflets which are intended to offer useful help and
guidance for bereaved families. These simple leaflets range
from ‘A guide to funeral etiquette’ to ‘Helping friends through
bereavement’. They are available at our funeral locations and
to download from our website: www.dignityfunerals.co.uk.
Our people
Our aim: We are committed to high standards of
employment practice and aim to encourage, retain and
develop successful employees.
Dignity’s Training Department provides a variety of role
specific courses that help to reinforce the understanding
each employee has of their role and ensures Dignity’s
policies and procedures are followed.
Our employees are critical to the continued success of Dignity
and staff turnover is low. The average length of service for
staff is 7.7 years and approximately a third of our staff have
over 10 years service. The average age of our employees
is 47 years.
As in previous years there continues to be an almost equal
split of male and female staff with 51 per cent male
employees and 49 per cent female.
The Davies Report
We fully support the principal recommendations of the
Davies Report encouraging the increase in the number of
women on the Board of Directors. During 2012 the Dignity
Board of Directors is set to meet the target it has set itself
of having 20 per cent female representation on the Board.
Of the 28 senior managers within Dignity, 25 per cent
are female.
Training and development
Dignity’s investment in training enables our staff to provide
our clients with the highest standards of service and care.
Dignity has a number of training centres around the UK and
provides employees with both in-house and external training
programmes. External training includes both relevant job
training and tutoring for professional qualifications including
the National Association of Funeral Directors (NAFD) Diploma
in Funeral Directing and Membership of the British Institute
of Embalming (BIE).
During the past twelve months the Training Department has
concentrated on providing skills and refresher courses for
our Funeral Service Arrangers and delivering the ‘Bringing
the deceased into our care’ and ‘Spending time with the
deceased’ courses. To meet the needs of Dignity’s expanding
crematoria operation the Training Department have provided
induction courses for Crematorium Managers to help them
understand their role and the high standard of service we
aim to provide. Staff in the Client Service Centre received
the highly acclaimed Mary Gober Customer Service training
during 2011.
The courses provided by our Training Department are
continually assessed via feedback from delegates and line
managers to guarantee that they are relevant and add value
to the contribution made by each employee.
Dignity’s Training Department also provides a number of
management development courses covering more complex
issues such as Business Planning, Financial Analysis,
Recruitment Skills and Presentation Skills.
Our on the job training concentrates on a “buddy” system
where an experienced member of the team provides new
operational staff with guidance on the responsibilities
of their role, our professional practices and company
procedures in addition to demonstrating our commitment
to being a client focused organisation.
Striving for excellence in all that we do
Dignity’s aim is to be the ultimate
funeral professional. Whether we are
arranging a funeral service, helping
mourners attending a service or
looking after a client choosing a
memorial or pre-arrangement plan,
our continued focus on training and
development enables us to maintain
and strive for the very highest levels
of client service excellence.
99.3 per cent of clients that
respond to our client survey said
that we met or exceeded their
expectations.
99.3%
Left: Carl Mean, Funeral Manager, North East; Brian Phillips, Area Manager,
Worcestershire; Annette McDonald, Business Manager, Aberdeen and Philip
Smyth, Business Manager, North West London at Dignity’s Training Centre
in Bilston, West Midlands.
22 | Dignity plc Annual Report & Accounts 2011
Corporate and social
responsibility continued
Employee service
Employee ratio (%)
Less than 1 year (11%)
1 – 4 years (35%)
5 – 9 years (23%)
10 – 19 years (21%)
Over 20 years (10%)
Male (51%)
Female (49%)
In addition, Dignity has five members of staff who are
accredited NAFD tutors and three BIE training specialists.
During the past year eight Dignity employees achieved
recognised qualifications with the NAFD.
Dignity provides additional support to staff development
through its Welfare Trust, which provides funds for
professional training. The Trust has approximately
£1.6 million available for future use.
Engaging our staff
Dignity publishes a quarterly in-house magazine, ‘Dignity
Express’, which is supplemented by monthly news bulletins
to keep all employees and pensioners informed of what is
happening within the organisation. ‘Dignity Express’ enables
the Company’s Directors and employees to share objectives,
best practice and news in a cost effective manner. News,
useful information and background on the Company is also
available to staff via a dedicated employee website.
Recognising achievement
Dignity has budgeted to reward its loyal staff with long
service awards totalling approximately £0.2 million in 2012.
Promoting diversity
Within Dignity there is no discrimination on the grounds
of gender, race, religion, age or sexual orientation in terms
of recruitment or career advancement. We encourage
colleagues to show respect and understanding to each
other and prejudice of any kind will not be tolerated.
Recruitment
A detailed job description identifying key responsibilities
and competencies for each role in addition to a personal
specification for the ideal applicant have been developed
to aid recruitment. These enable the interviewer to assess
each candidate’s suitability for the role to which they
have applied.
When interviewing for management positions competency
based interviews are held and candidates are expected to be
able to clearly demonstrate their experience and expertise
during the selection process.
Health and Safety
Our aim: Effective heath and safety management continues
to be vital to Dignity and a key priority of the Directors.
Our operations are conducted at all times in such a way
as to ensure, as far as is reasonably practical, the health,
safety and welfare of all our employees and all persons
who may be attending our premises.
Dignity has a full-time Health and Safety Manager who is
dedicated to these issues and is supported by a Health
and Safety Officer.
Regional Health and Safety Officers operate in each of the
geographical funeral trading areas. Dignity’s head office,
crematoria and manufacturing facility also have their own
managers with responsibility for Health and Safety. The
majority of these managers and officers have qualifications
from the National Examination Board in Occupational Safety
and Health (NEBOSH) or are scheduled to take these
examinations.
Dignity has 15 managers with qualifications from the
National Examination Board in Occupational Safety and
Health (NEBOSH). Within this group there are also 10 that
possess the NEBOSH Fire Certificate.
Valuing our people and promoting diversity
At Dignity there is no discrimination
on the grounds of gender, age, race,
religion or sexual orientation in
terms of recruitment or career
advancement and we encourage
colleagues to respect each other.
Dignity has budgeted to reward its
loyal staff with long service awards
totalling approximately £200,000
in 2012.
£200,000
Left: Jyotshna Surti, Funeral Service
Arranger at Joseph Swift & Asian
Funeral Directors in Leicester.
31%
Almost a third of Dignity’s employees
have over ten years service.
23 | Dignity plc Annual Report & Accounts 2011
Health and Safety training (number)
15
102
143
0
20 40 60 80 100 120 140 160
Employees with NEBOSH qualification: 15
Employees with IOSH qualification: 102
Employees with CIEH qualification: 143
Dignity also has 102 managers or officers that have
successfully completed the Institution of Occupational
Safety and Health (IOSH) course.
There are also 143 employees that have completed the
Chartered Institute of Environmental Health (CIEH) Working
Safely one-day course.
Effective health and safety management
Health and safety performance is measured in two ways.
• Proactive monitoring
Health and safety is proactively monitored via quarterly
return analysis, premises inspections, health surveillance,
line manager observations of how tasks are performed
and regular reports to the Board.
• Reactive monitoring
Investigating accidents, collation and analysis of statistics
and ill-health investigation reactively monitors health
and safety.
Training programmes and initiatives
To achieve the NEBOSH qualifications employees had to
study current legislation and best practice over a year-long
course and successfully complete a written two-hour
examination plus a two hour practical assessment.
Over 700 Dignity employees attended the Manual Handling
training course during 2011. By attending this course it is
intended that our employees will have a greater appreciation
of the risks of any manual handling required by their role
with the objective of reducing the number of injuries
incurred by our Funeral Service Operatives.
Environment
Our aim: Maintaining the quality of the environment in
which we all live is an important concern for Dignity and all
areas of the business operate in accordance with the Group’s
environmental policy. We recognise the impact of our
operations on local surroundings and our aim is to reduce
this and operate in an environmentally friendly manner.
Our business continues to have a low environmental
impact and its activities are not expected to give rise to any
significant environmental risk over the next twelve months.
Dignity and its employees undertake to act whenever
necessary to meet or exceed the standards of current
environmental legislation and we continue to review the
policies, systems and services to this end. All waste
generated is properly disposed of in accordance with
current legislation and steps are taken to recycle waste
wherever this is practical.
Minimising our impact on the local environment
Dignity’s coffin manufacturing facility in East Yorkshire,
has gained ISO14001 accreditation.
ISO14001 is an internationally accepted standard that
sets out how you can go about putting in place an effective
Environmental Management System. The standard is designed
to address the delicate balance between maintaining
profitability and reducing environmental impact.
Dignity’s voluntary application for ISO14001 began in
June 2010 with an assessment of the environmental
impact of the business from the sourcing of raw materials
to emissions to land, air and water during manufacture
Prioritising health and safety
260
Dignity is committed to the
prevention of accidents. Procedures
and training are regularly reviewed
and updated to ensure that staff
minimise any risks associated with
their role.
Left: The Health & Safety Regional
Managers meeting at Dignity’s Head
Office in Sutton Coldfield.
260 members of staff have now
completed a health and safety
course.
12%
We have seen approximately a
12 per cent reduction in the number
of accidents reported per 1,000
employees over the last three years.
24 | Dignity plc Annual Report & Accounts 2011
Corporate and social
responsibility continued
Meeting targets
Dignity is investing approximately
£7 million in its crematoria to
conform to the government directive
to reduce mercury emissions from
crematoria by 50 per cent before
the end of 2012.
Left: The installation of mercury
abatement technology at Randalls
Park Crematorium in Surrey.
Submission to Carbon Disclosure Project
Scope 1
Scope 2
Total
2010
2009 2008 2007 2006
16,798 15,005 15,875 16,048 15,992
6,938
8,366 10,923 10,633 10,351
23,736 23,371 26,798 26,681 26,343
All figures are metric tonnes of CO2 equivalent. Dignity does not make any
scope 3 disclosures. The return for 2011 will be made in 2012.
Sustainable sources
Our coffins are manufactured using raw materials that
are sourced from well-managed and sustainable sources.
91 per cent of the coffins required by Dignity’s businesses
are now manufactured from Forest Stewardship Council (FSC)
accredited timber at the company’s facility in East Yorkshire.
Reducing energy consumption
We now have 335 smart meters installed at our premises to
help reduce our energy consumption. This figure represents
35 per cent of our target.
to energy sources and transportation. From this the
management set targets for reducing the environmental
impact of their business and developed a programme for
implementing them. The review and improvements were
independently approved and regularly audited by a third-
party specialist with goals set for continual improvement.
Dignity is investing approximately £7 million in its crematoria
to conform to the government directive to reduce mercury
emissions from crematoria by 50 per cent before the
end of 2012.
Dignity has already installed this specialist technology
at nine of its crematoria and during 2011 began the
projects to install mercury abatement equipment at Oxford,
Chichester, Loughborough, Nuneaton and Weston-super-Mare
Crematoria. The installation of this new equipment will
be completed in 2012 and has been managed so as to
ensure there is no disruption to our usual services at
the crematoria.
Approximately 15,500 cremations at Dignity crematoria
were mercury abated during 2011.
Reducing our carbon footprint
Dignity aims to reduce its future carbon footprint and in
2011 Dignity continued to submit its data to the Carbon
Disclosure Project. This is a not-for-profit organisation
that aims to improve the environment by measuring
disclosures from thousands of organisations across
the world’s major economies.
Committed to environmental sustainability
Maintaining the quality of the
environment in which we all live is
an important concern for Dignity
and all areas of the business
operate in accordance with the
Group’s environmental policy.
Dignity’s coffin manufacturing
facility in East Yorkshire has gained
ISO14001 accreditation.
ISO14001
Left: Elaine Smith, Assistant
Regional Management Accountant
recycling waste paper at Dignity’s
Head Office.
91 per cent of the coffins required
by Dignity businesses are now made
from FSC accredited timber.
91%
25 | Dignity plc Annual Report & Accounts 2011
In our communities
Our aim: Everyone within Dignity is committed to not only
making a real difference to our clients but also to improving
the welfare of all who live within the communities we serve.
To demonstrate our values and principles our staff have
supported hundreds of local initiatives, good causes, clubs
and events every year. By listening to and understanding the
needs of local communities our staff are able to respond
by providing help where it is most needed.
For example, the staff at W S Harrison & Son in North
Tyneside have ensured the survival of a local bowls club
that had existed since 1922 by providing sponsorship and
financial support that offset their recent increase in running
costs. Without Dignity’s help local residents were facing the
closure of the club and the social centre it provides. Dignity
has also continued to support many other bowling clubs
and tournaments throughout the UK.
During the past year Dignity has continued to support grass
roots sport by providing training equipment and kit to many
youth football and cricket teams across the UK.
Both of these initiatives provide different sectors of the
local community with a focal point for socialising and
healthy exercise.
The Dignity Easter Egg Challenge once again proved
popular with staff at our funeral locations with thousands
of chocolate gifts being collected and distributed to local
hospices, children’s hospital wards, special needs centres
and others less fortunate.
Environmentally
friendly choices
Dignity takes seriously the
responsibility of managing global
resources and endeavors to source
products ethically and with
consideration to the environment.
As a result, we offer a range of
alternative, biodegradable coffins,
containers and scatter tubes made
from sustainable materials and
can arrange burials in designated
woodland sites.
Last November, many Dignity funeral locations and
crematoria chose to support the Royal British Legion’s
poppy appeal and remember those serving in the Armed
Forces that have given their lives defending Britain and its
interests. Staff at East London Crematorium alone raised
£2,000 by holding a Remembrance Day Service.
In addition to this a war memorial at East London
Crematorium, to local civilians that lost their lives during
the air raids of World War 2, has also been completely
renovated and housed in a new granite memorial.
In December, E F Edwards of Birmingham helped supporters
of Aston Villa to mark the centenary of the death of William
McGregor, founder of The Football League and Chairman
of their club during its formative years. Dignity offered to
cover the shortfall in funds raised by Villa supporters who
were looking to restore McGregor’s grave and provided a
limousine and chauffeur to transport high profile guests
to the Service of Re-Dedication at a local church and
reception at Villa Park.
At the heart of our local communities
Everyone at Dignity is committed to making a real difference not only
to our clients but also to improving the welfare of all who live in the
communities we serve. Our staff support hundreds of local initiatives,
good causes, clubs and events every year.
Left: Joanne Tolley, Funeral Service Arranger/Administrator, at a Macmillan
Coffee Morning held at the Dignity funeral location in Droitwich Spa.
26 | Dignity plc Annual Report & Accounts 2011
Corporate and social
responsibility continued
Supporting charities
In 2011, Dignity employees and clients continued to raise
funds for the staff elected charity – Together for Short Lives
(formerly Children’s Hospices UK). This worthy cause is the
national charity that gives voice and support to 41 children’s
hospices and provides care for approximately 20,000
children each year. All Dignity funeral locations and
crematoria have been linked with a local children’s hospice
and over the last two years they have raised a total of
approximately £100,000.
There were many fund raising initiatives held nationwide
during the year including tea parties, car washes, sponsored
walks, cycling events, marathons and golf tournaments.
Some brave members of staff even took part in The Big
Jump! – a sponsored charity skydive that raises funds for
children’s hospices.
There were also two rather unusual fund raisers for Together
for Short Lives that Dignity staff were involved with. One of
our business managers in South London took part in a
trapeze act as part of an Aerial Skills Circus show and
another funeral director organised a concert where he and
colleagues not only demonstrated their musical ability but
also their professional, organisational and administrative
skills to maximise fund raising.
The Dignity Bi-Annual Dinner & Dance organised by staff
from the Scotland area raised a staggering £4,000 for their
local children’s hospice. Dignity employees in Glasgow also
raised £1,895 with a Bucket Shake across the city’s
shopping centre.
Left: Dignity staff took part in
The Southend Bikeathon, an
annual event that raises money for
Leukaemia & Lymphoma Research.
Right: Dignity has continued to
support grass-roots sports clubs
around the UK.
‘Malverns by Moonlight’ is a fundraiser for Macmillan Cancer
Support that was initiated and developed by Dignity staff
in the South West region. This year the team decided to use
their professional skills to help support the event so the
business manager drove the Dignity minibus and worked in
conjunction with West Midlands Search and Rescue team,
providing safety for the hilltop walk. The administrators
managed the registration of all participants and a funeral
director organised a team of 20 crowd control marshals.
The event saw 500 women take to the Malvern Hills and
raised £25,000 for Macmillan.
Our five charity fairground organs continued to be a vital aid
in fund raising activities and almost £93,000 was raised for
a variety of national and local charities in 2011.
Dignity employees also supported Cancer Research UK,
Marie Curie Cancer Care, Help for Heroes, Cure Leukaemia
and a number of breast cancer charities during the past
12 months.
Supporting charities and good causes
Making a difference to the
communities we serve is at the
heart of everything we do. Our staff
continue to work tirelessly each year
to help raise valuable funds for local
and national charities.
£100,000
Dignity raised £100,000 for its
corporate charity, Together for Short
Lives, over the past two years.
Left: In 2012 Dignity will support
Marie Curie Cancer Care as its
corporate charity.
£93,000
Dignity’s five fairground organs
helped to raise £93,000 in the past
12 months for a variety of charities
and good causes.
27 | Dignity plc Annual Report & Accounts 2011
Supportive
“Over the past two years we are delighted to
have supported Together for Short Lives, our
staff elected corporate charity, which delivers
vital care and support for children and
families when it’s needed most.”
Helping to make a real difference
Together for Short Lives care for more than 20,000 children each year and the charity
supports and gives a national voice to 41 hospices across the UK. Dignity’s corporate charity
continued to be supported by many of our staff who took part in various fund raising events
in 2011 and have raised £100,000 over the past two years.
Above: Zoe Wakefield, Treasury Assistant; Lindsey Paris, Administration Assistant; Jo Gater,
Client Service Centre Support Coordinator and Joe Povey, Post room Assistant who all work
at Dignity’s Head Office raised funds for Together For Short Lives (formerly Children’s
Hospices UK) by taking part in The Big Jump – a charity skydiving event.
28 | Dignity plc Annual Report & Accounts 2011
Board of Directors
1
4
7
2
5
8
3
(a) Member of the Audit Committee
(n) Member of the Nomination Committee
(r) Member of the Remuneration Committee
(*) Non-Executive Director appointed to
the Board on 1 April 2012
9
6
1. Peter Hindley (68) (n)
(Non-Executive Chairman)
Peter has extensive experience of the industry having been
appointed Chief Executive of Plantsbrook Group plc in 1991.
Following the acquisition of Plantsbrook Group plc and Great
Southern Group plc by SCI in 1994, he was appointed CEO of
SCI (UK). He subsequently led a management buy out of the
Group from SCI in 2002. The Company was then floated on the
Stock Exchange in 2004. Peter became Non-Executive Chairman
in January 2009. Before entering the funeral service industry,
Peter spent 25 years in retailing, holding senior positions in
Debenhams, Burtons and Harris Queensway.
2. Mike McCollum (44)
(Chief Executive)
Mike joined Dignity’s former parent, SCI, in 1995 from KPMG
Corporate Finance in London. He was appointed Finance Director
at the end of 2001 and became Chief Executive at the beginning
of 2009. He has a law degree from Birmingham University (LL.B),
is a solicitor and also holds an MBA from Warwick University.
3. Steve Whittern (37)
(Finance Director)
Steve joined the Group in 1999 from KPMG. He was appointed
Finance Director at the beginning of 2009, having spent the
previous two years as Financial Controller, being responsible
for the Group's finance function. Steve led the further debt issue
and Return of Value in 2010. Steve is an FCA and holds a
mathematics degree from Warwick University.
4. Andrew Davies (50)
(Operations Director)
Andrew joined his family owned business in 1979 and worked
as a funeral director and embalmer until the business was
sold to Great Southern Group in 1993. He then held various
management positions within Great Southern Group and following
the acquisition by SCI in 1994, held senior operational positions
within SCI (UK). He became Operations Director in 2001 and was
a member of the management buy out team in 2002.
5. Richard Portman (50)
(Corporate Services Director)
Richard joined SCI from HSBC as Chief Accountant in 1999.
Following the IPO, Richard was appointed as Company Secretary
and became Corporate Services Director in 2006. Richard is an
FCA, holds a geography degree from Birmingham University and
is a Member of the Chartered Management Institute and of the
Investor Relations Society.
6. James Newman (62) (a)(n)(r)
(Senior Independent Director)
James has a portfolio of non-executive directorships in both the
private and public sectors. He is currently Chairman of Straight
plc and Brulines Group plc and Senior Non-Executive Director
of Bglobal plc. He is also Chairman of Finance Yorkshire, and
Chairman of the Sheffield City Region Local Enterprise Partnership
Board. He was formerly Deputy Chief Executive and Finance
Director of Kelda Group plc and a number of other public
companies. He has also been Chairman of Waste Recycling,
Deputy Chairman of the Governors of Sheffield Hallam University
and a Non-Executive Director of Scott Wilson Group plc and
Richmond Foods plc. James is an FCA and a Member of the
Association of Corporate Treasurers.
7. Bill Forrester (71) (a)(n)(r)
(Non-Executive Director)
Bill is the Chairman of Nuaire Group Ltd and a Director of Brittpac
Limited. Prior to this he was Group Chief Executive of SIG plc,
Europe’s largest distributor of insulation, ceiling, partitioning and
roofing products and Chairman of John Laing plc, the infrastructure
investment group. He was also the Managing Director at Kuwait
Insulation Manufacturing Company and the Sales and Marketing
Director at BP Rockwool Limited.
8. Ishbel Macpherson (51) (a)(n)(r)
(Non-Executive Director)
Ishbel was appointed to the Board on 12 January 2009. Ishbel
is a Non-Executive Director of GAME Group plc and May Gurney
Integrated Services plc, Senior Independent Director of Hydrogen
Group plc and Chairman of Speedy Hire plc. Prior to those roles
she held senior positions with Barclays de Zoete Wedd, Hoare
Govett and Dresdner Kleinwort Wasserstein.
9. Alan McWalter (58) (a)(n)(r)
(Non-Executive Director)
Alan was appointed to the Board on 12 January 2009. Alan
is a Non-Executive Director of Churchill China plc, Haygarth
Group Ltd, Fabris Lane Ltd and is Non-Executive Chairman of
Constantine Group plc and Kornicis Group Ltd. Prior to these
roles Alan was Marketing Director of Marks and Spencer plc
and prior to that held senior positions with Kingfisher plc and
Thomson Consumer Electronics.
Jane Ashcroft (45)(*)
(Non-Executive Director)
Jane is Chief Executive of Anchor, a leading provider of services
to older people and has held a number of senior positions
since joining them in 1999. She is also Non-Executive Chair of
the English Community Care Association and was previously
a Non-Executive Director of Stroud & Swindon Building Society.
A graduate of Stirling University, she is a Fellow of the Institute
of Chartered Secretaries & Administrators and a Member of the
Chartered Institute of Personnel and Development.
Martin Pexton (55)(*)
(Non-Executive Director)
Martin was previously Managing Director of LMS Capital plc
and prior to that an Executive Director of London Merchant
Securities plc and Personnel Director of the law firm Allen
& Overy. He has also in the past held a number of non-executive
positions including roles with Minerva plc and Inflexion plc as
well as a number with private companies. He has an MBA from
the London Business School.
29 | Dignity plc Annual Report & Accounts 2011
Directors’ report
The Directors present their report and the audited
consolidated financial statements for Dignity plc and its
subsidiaries for the 52 week period ended 30 December 2011.
Each of the Directors, whose names and functions are listed
on page 28 of the Annual Report, confirm that, to the best
of their knowledge and belief:
The company registration number of Dignity plc is
4569346.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual
Report, the Report on Directors’ Remuneration and the
financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the Group financial statements in
accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union, and have elected
to prepare the parent company financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards
and applicable law). Under company law the Directors
must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and the Company and of the profit
or loss of the Group for that period. In preparing these
financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them
consistently;
• Make judgements and accounting estimates that are
reasonable and prudent; and
• State whether IFRSs as adopted by the European Union
and applicable UK Accounting Standards have been
followed, subject to any material departures disclosed
and explained in the Group and parent Company financial
statements respectively.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and the Group and enable them to ensure that the financial
statements and the Report on Directors’ Remuneration
comply with the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the IAS Regulation.
They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and
integrity of the Group’s websites and legislation in the
United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in
other jurisdictions.
• The Group financial statements, which have been prepared
in accordance with IFRSs as adopted by the EU, give a true
and fair view of the assets, liabilities, financial position and
profit of the Group; and
• The Directors’ report contained in the Annual Report
includes a fair review of the development and performance
of the business and the position of the Group, together
with a description of the principal risks and uncertainties
that it faces.
Principal activities and business review
The principal activity of the Group is the provision of funeral
services including funeral directing, crematoria operation
and the marketing and administration of pre-arranged
funeral plans. The principal activity of the Company is that
of a holding company.
The principal activities and key performance indicators
of the Group are also described on pages 14 to 16 of
the Financial Review. A review of the development of the
business in 2011, events affecting the Group since the end
of the financial year and likely future developments are
referred to in the Business Review, which is incorporated
into this Directors’ Report by reference.
The review of business activities in the Business Review,
Financial Review and the Directors’ Statement of Corporate
Governance are in line with the requirements of the
Companies Act 2006.
Principal risks and uncertainties
Operational risks are considered on page 17.
An assessment of the Group’s exposure to financial risks
and a description of how these risks are managed are
included in note 2 to the consolidated financial statements.
Share capital
During the period, the Group issued 52 Ordinary Shares
of 10.5 pence each to satisfy options exercised under the
Save As You Earn Scheme. The SAYE options were granted
in 2010.
The issued share capital of Dignity plc at 30 December
2011 consisted of 54,757,054 Ordinary Shares of 10.5
pence each. All the Ordinary Shares carry the same rights
and obligations. There are no other class or type of share
in issue.
A special resolution passed at the last Annual General
Meeting on 9 June 2011 gives Dignity plc the authority to
purchase up to 2,737,852 Ordinary Shares of 10.5 pence
each at not less than nominal value and not more than
5 per cent above the average middle market quotation for
the preceding 5 business days. At the same meeting the
Company was also given authority to allot Ordinary Shares
30 | Dignity plc Annual Report & Accounts 2011
Directors’ report continued
up to an aggregate nominal value of £1,916,496 of which
up to £287,474 may be for cash. These authorities will
expire at the conclusion of the next Annual General Meeting
on 14 June 2012. It is the intention of the Directors to
seek renewal of these authorities at that Annual General
Meeting. There are no restrictions at the period end on the
transfer of securities.
Results
The results for the period are set out in the Consolidated
Income Statement on page 46. Group profit before tax
amounted to £40.3 million (2010: £39.8 million).
Dividends
An interim dividend of 4.87 pence per share was paid on
28 October 2011. The Board has proposed a final dividend
of 9.77 pence per share, which, subject to approval at the
Annual General Meeting, will be paid on 29 June 2012 to
shareholders on the register at close of business on
25 May 2012.
Payments policy
The Group or Company has no formal code or standard that
deals specifically with the payment of suppliers. However,
the Group or Company policy on the payment of all creditors
is to ensure that the terms of payment as specified by, and
agreed with, the supplier are not exceeded, provided all
trading terms and conditions have been complied with. The
average creditor payment period for the Group was 40 days
(2010: 32 days). The Company has no trade creditors.
Key contractual arrangements
The Directors consider there to be one key contractual
arrangement in relation to the supply and maintenance of
cremators. This company is responsible for supplying and
installing the cremator abatement equipment. If this
company ceased to trade, the Group may have difficulties in
installing the necessary equipment by the end of 2012.
Employment policies
During the period the Group has maintained its obligations
to develop and improve arrangements aimed at involving
employees in its affairs. Methods of communication used
include an in-house newsletter, an employee website,
bulletins and management briefings. This is discussed
in more detail in the Corporate and Social Responsibility
Report on pages 18 to 27.
Employment policies are designed to provide equal
opportunities irrespective of age, sexuality, colour, ethnic
or national origin, religion, nationality, sex or marital status.
Full consideration is given to the employment, training and
career development of disabled persons, subject only to
their aptitudes and abilities. The Group endeavour, as far as
practicable, to treat disabled persons equally with others
and will also endeavour to help and accommodate persons
who become disabled whilst working for Dignity.
Directors and their interests
Details of the Directors of the Company who were in
office during the period and up to the date of signing the
financial statements are shown in the Report on Directors’
Remuneration on page 35. In accordance with the Articles
of Association and the UK Corporate Governance Code
(2010 Code), at the Annual General Meeting, all Directors
will retire as Directors of the Company and, being eligible,
offer themselves for re-election at the Annual General
Meeting on 14 June 2012.
During the period, the Company maintained liability
insurance for its Directors and Officers. The Directors of
each of the Company’s subsidiaries have the benefit of an
indemnity provision in the Company’s Articles of Association.
The indemnity provision, which is a qualifying third party
indemnity provision as defined by Section 234 of the
Companies Act 2006, was in force throughout the period
and is currently in force.
The Takeover Directive
The Group has one class of voting share capital, Ordinary
Shares. All of the shares rank pari passu. There are no
special control rights in relation to the Group’s shares. The
rules governing the appointment and replacement of Board
members and changes to the Articles of Association accord
with usual English company law provisions. The Board has
authority to purchase its own shares and is seeking renewal
of that power at the forthcoming Annual General Meeting
within the limits set out in the notice of that meeting. There
are no significant agreements to which the Group is party
which take effect, alter or terminate in the event of change
of control of the Group.
Health and safety policy
The Group’s operations are designed at all times in such a
way as to ensure, so far as reasonably practical, the health,
safety and welfare of all of our employees and all other
persons who may be attending our premises. This is discussed
in the Corporate and Social Responsibility Report on pages
18 to 27.
Corporate Social Responsibility
Maintaining the quality of the environment in which we all
live is an important concern for the Group. This is discussed
in the Corporate and Social Responsibility Report on pages
18 to 27 alongside other social and ethical considerations.
Donations
The Group made charitable donations amounting to
£0.1 million (2010: £0.1 million) during the period.
There were no political donations. Further information
can be found on page 26.
31 | Dignity plc Annual Report & Accounts 2011
Going concern
The Directors receive and review regularly management
accounts, cash balances, forecasts and the annual budget
together with covenant reporting. After careful consideration,
and mindful of the current market conditions, the Directors
confirm they are satisfied that the Group has adequate
resources to continue operating for the foreseeable future.
For this reason, they continue to adopt the going concern
basis for preparing the financial statements. The Directors
formally considered this matter at the Board meeting held
on 1 March 2012.
Post balance sheet events
Please refer to note 32 of the Notes to the Consolidated
Financial Statements for further details.
Independent Auditors and disclosure
of information to Auditors
A resolution for the reappointment of
PricewaterhouseCoopers LLP will be proposed at
the forthcoming Annual General Meeting.
In the case of each of the persons who are Directors at the
time when the report is approved, the following applies:
• So far as the Director is aware, there is no relevant audit
information of which the Company’s auditors are
unaware; and
• The Directors have taken appropriate steps to make
themselves aware of any relevant audit information and
to establish that the Group’s auditor is aware of that
information.
Corporate Governance Statement
The information that fulfils the requirements of a corporate
governance statement in accordance with rule 7.2 of the
Disclosure and Transparency Rules can be found in this
Directors’ Report and in the Directors’ Statement on
Corporate Governance on pages 39 to 44, which is
incorporated by reference.
By order of the Board
Richard Portman
Company Secretary
7 March 2012
32 | Dignity plc Annual Report & Accounts 2011
Report on Directors’ remuneration
for the 52 week period ended 30 December 2011
This report sets out the remuneration policy operated by the Group in respect of the Executive Directors, together with
disclosures on all Directors’ remuneration. The auditors are required to report on the ‘auditable’ part of this report and
to state whether, in their opinion, that part of the report has been properly prepared in accordance with the Companies
Act 2006.
The Board has reviewed the Group’s compliance with the 2010 Combined Code (the Code) on remuneration related
matters and has followed the Code in the preparation of the report of the Remuneration Committee. It is the opinion
of the Board that the Group complied with all remuneration related aspects of the Code during the period.
Unaudited information
The Remuneration Committee is responsible for developing policy on remuneration for Executive Directors and senior
management and for determining specific remuneration packages for each of the Executive Directors.
Alan McWalter chairs the Remuneration Committee, having assumed the Chairmanship from Bill Forrester, who
remains on the Committee, on 27 September 2011. Its other members are the independent Non–Executive Directors:
James Newman and Ishbel Macpherson.
At the end of March 2012, Bill Forrester and James Newman will retire from the Board and hence the Remuneration
Committee. They will be replaced on the Committee by the two new Non–Executive Directors, Jane Ashcroft and Martin
Pexton.
The Code requires that a Group of the size of Dignity plc has a Remuneration Committee comprising a minimum
of three non–executives. The Remuneration Committee members have no personal financial interest, other than as
shareholders, in matters to be decided, no potential conflicts of interests arising from cross directorships and no
day–to–day involvement in running the business.
The Chairman and the Chief Executive attend the Remuneration Committee by invitation or when required and the
Company Secretary, who is also the Corporate Services Director, attends meetings when required as Secretary to
the Remuneration Committee. No Executive Director takes part in discussions relating to their own remuneration
and benefits.
The Remuneration Committee is formally constituted with written terms of reference. A copy of the terms of reference
is available for inspection on the Group’s investor website www.dignityfuneralsplc.co.uk. The Committee met five times
during 2011. At those meetings basic salaries of Executive Directors and senior managers were reviewed, the targets
and quantum of annual performance related bonuses for Directors were also agreed, as were options granted under
the Group’s Long Term Incentive Plan (LTIP). The meetings also approved the payment of the 2010 performance related
bonus and dealt with the vesting of the shares awarded under the LTIP scheme in 200 . A further meeting was also
held on 1 March 2012 to approve the payment of the performance related bonus for 2011, and the 2012 LTIP awards.
8
In 2008, the Committee retained the external benefit consultants, Hewitt New Bridge Street, to complete a review of
the Executive Directors’ remuneration. In discussions with the Committee, and in consultation with Hewitt New Bridge
Street, it was decided that a ‘Comparator Group’ would be defined consisting of all companies in the Consumer Goods
and Consumer Services Sector of the FTSE 250 filtered to exclude companies deriving more than 50 per cent of their
turnover from overseas or having a market capitalisation in excess of £1.4 billion at that time. This gave a group of 32
companies with an average market capitalisation of £628 million at November 2008 as the Comparator Group. At that
date Dignity had a market capitalisation of £473 million and an enterprise value (including net debt) of £710 million.
The bottom half of the FTSE 250 was also used as a reference point for the benchmarking process. The Committee
continue to believe that the use of this Comparator Group is the most appropriate way of reviewing and setting
Executive Directors’ salaries.
Remuneration policy
The objective of the remuneration policy is to provide remuneration packages to each Executive Director that will:
• Align rewards with the interests of shareholders;
• Motivate and encourage superior performance;
• Allow the Group to retain the talent needed to execute its business strategy;
• Enable the Group to be competitive when recruiting appropriately skilled and experienced management; and
• Ensure that the overall package for each director is linked to strategic objectives.
The Remuneration Committee believes that this policy will retain and develop further the Group’s entrepreneurial
culture, whilst also focusing executive remuneration on performance which the Committee believes will best serve
shareholders’ interests. It is therefore the aim of the Remuneration Committee to encourage and reward superior
performance by Executive Directors with that performance being based on strong financial performance and returns
to shareholders. This is achieved by weighting the overall remuneration package towards achievement of that
performance. Only 31 per cent of each Executive Directors’ total potential remuneration package (ignoring benefits
and pension contributions) is accounted for by basic salary, assuming a full annual bonus is achieved and a maximum
conditional award under the LTIP is made and then that LTIP vests in full.
33 | Dignity plc Annual Report & Accounts 2011
The Remuneration Committee will continue to review all aspects of the policy on an annual basis to ensure that
rewards continue to be in line with the Group’s objectives and shareholders’ interests.
Basic salary
When determining the basic salary of the Executive Directors, the Remuneration Committee takes into consideration:
• The levels of base salary for similar positions with comparable status, responsibility and skills, in organisations of
broadly similar size and complexity;
• The performance of the individual Executive Director;
• The individual Executive Director’s experience and responsibilities; and
• Pay and conditions throughout the Group.
No changes were made to their basic salaries during the period. The salary review for 2012 was set at 2 per cent by
the Remuneration Committee. Salaries effective from 1 January 2012 are:
Name
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Total
2011
£’000
449
255
204
204
2012
£’000
458
260
208
208
1,112
1,134
Annual performance related bonus
The targets for the year, which are based on the achievement of set earnings per share targets, are reviewed and set
annually by the Committee to ensure that they are appropriate to the current market conditions and remain
challenging. They are ratified by the full Board. The targets are designed to enhance shareholder value.
The maximum bonus attainable for 2011 by Executive Directors was 100 per cent of basic salary. A bonus of
70 per cent is attainable for meeting the first earnings per share target set by the Committee and a further bonus of
30 per cent may be earned by achieving a second and more demanding earnings per share target. The increase in
underlying earnings per share during the period was 18.8 per cent and the bonus percentage earned by the Executive
Directors in the period was 100 per cent.
No other bonuses of any description were paid in the period to Executive Directors.
No changes have been proposed to the Annual Performance Related Bonus for 2012 at the date of the signing of the
Annual Report. This will continue to be based on demanding earnings per share targets with a maximum bonus equal
to 100 per cent of base salary.
Share incentives
Shareholders approved the current discretionary share incentive plan, the LTIP, on 5 June 2009. If existing LTIPs were
to be amended or if there was a new LTIP Scheme, approval would be sought from the shareholders. The Committee
reviewed the performance conditions for LTIPs during 2011 and concluded that the use of Total Shareholder Return
(TSR) continued to the most appropriate performance condition to apply.
All Executive Directors and other employees are entitled to be considered for the grant of conditional share awards
under the LTIP. Under the rules, the maximum annual award that can be made to an individual is 125 per cent of
salary. All four Executive Directors serving at the start of the year, were granted conditional share awards during 2011
equivalent to the maximum award. The Committee deemed this award appropriate, as in previous years, mindful of the
need to encourage superior performance from the Executive Directors and ensure that a significant proportion of their
total remuneration is linked to the performance of the Group. This award is in addition to those made in 2004 through
to 2011. Total awards made to the Executive Directors under the scheme are shown on pages 36 and 37.
Eligible Executives are awarded rights, in the form of nil cost conditional share awards, to acquire a maximum number
of shares at the beginning of a three year period, the proportion of which they will be entitled to receive at the end of
that period depending on the extent to which the performance conditions set by the Remuneration Committee at the
time the allocation is made, are satisfied.
The Remuneration Committee selected comparative TSR as the performance condition for LTIP awards as it ensures
that the Group outperforms the FTSE 350 Index over the measurement period in delivering shareholder value, before
participants are entitled to receive any of their awards. The constituent companies of the FTSE 350 Index, at the time
the awards are made, are selected as a benchmark as there are no directly comparable quoted companies in the
United Kingdom and as Dignity is a constituent of the FTSE 350 this is a valid benchmark. The Remuneration
Committee will calculate the TSR in accordance with the rules of the scheme and ratify the calculation prior to the
release of any award. Performance conditions under the LTIP are not subject to re–testing.
34 | Dignity plc Annual Report & Accounts 2011
Report on Directors’ remuneration continued
for the 52 week period ended 30 December 2011
The percentage of the conditional share awards made up to and including the awards in 2009 are exercisable on
vesting as follows:
• Ranked in the top quintile: 100 per cent of the total award;
• Ranked at median: 40 per cent of the total award;
• Ranked below median: zero; and
• Ranked between median and top quintile: straight–line apportionment.
The percentage of the conditional share awards exercisable on vesting from the 2010 awards and onwards is
calculated as follows:
• Ranked in the top quartile: 100 per cent of the total award;
• Ranked at median: 25 per cent of the total award;
• Ranked below median: zero; and
• Ranked between median and top quartile: straight–line apportionment.
In addition and irrespective of the TSR performance target, no award will vest unless, in the opinion of the
Remuneration Committee, the underlying financial performance of the Group has been satisfactory over the
measurement period. The Committee will also introduce claw back provisions during 2012.
The graph shows the Group’s TSR compared to the FTSE 350. This gives a broad indication of the likelihood of any
conditional award vesting.
3 Year Total Shareholder Return
100%
75%
50%
25%
0%
9
0
r
a
M
9
0
n
u
J
9
0
p
e
S
9
0
c
e
D
0
1
r
a
M
0
1
n
u
J
0
1
p
e
S
0
1
c
e
D
1
1
r
a
M
1
1
n
u
J
1
1
p
e
S
1
1
c
e
D
2
1
n
a
J
2
1
b
e
F
Dignity plc
FTSE 350 Index
On 18 March 2011 the conditional share awards made in 2008 under the LTIP became capable of vesting. The TSR of
the Group over the measurement period was compared to that of the constituent companies of the FTSE 350 at the
time the awards were made. The performance of the Group was found to be below the median. As a consequence no
shares were capable of vesting and the options lapsed.
The total conditional awards held by each Director are shown on pages 36 and 37 in the section of the Remuneration
Committee’s Report that is subject to audit.
In accordance with the ABI guidelines, the Group can issue a maximum of 10 per cent of its issued share capital in
a rolling ten year period to employees under all share plans. In addition, of this 10 per cent, the Company can only
issue five per cent to satisfy awards under discretionary or executive plans. At the period end, conditional awards under
the LTIP Scheme to Executive Directors and senior managers amount to 1.48 per cent of the current issued share
capital. If the awards in 2004, to 2008, that have vested, are included, that percentage is 3.32 per cent. The total,
including SAYE options granted in both the 2004, 2007 and 2010 Schemes, is 5.42 per cent.
Pensions
Mike McCollum and Richard Portman are members of the Group’s pension scheme into which the Group contributed
10.5 per cent of salary (details are set out within the audited section of this report on page 36). The Group makes no
pension contributions for Andrew Davies or Steve Whittern. No Non–Executive Directors receive any pension contributions.
35 | Dignity plc Annual Report & Accounts 2011
Benefits in kind
Benefits included the following elements: provision of a company car or allowance; fuel; landline telephone at each
Executive Director’s home residence; and a mobile telephone; together with a pre–arranged funeral plan in accordance
with any scheme established by the Group in respect of the funeral of the Executive Director or his wife. All Executive
Directors received all of their benefits in kind.
Non–Executive Directors’ fees
The Board determines the fees of the Non–Executive Directors. It is based upon recommendations from the Chairman
and Chief Executive (or, in the case of the Chairman, based on recommendations from the Remuneration Committee
and the Chief Executive). The level of fees of the Non–Executive Directors reflects the time commitment and
responsibility of their respective roles. Their fees are set by reference to the constituent companies of the bottom
half of the FTSE 250.
Service contracts
Details of the service contracts with all Executive Directors and letters of appointment with Non–Executive Directors are
as follows:
Name
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Peter Hindley
James Newman
Bill Forrester
Ishbel Macpherson
Alan McWalter
Jane Ashcroft
Martin Pexton
Contract date
1 April 2004
1 April 2004
1 November 2006
1 January 2009
7 December 2010
31 March 2010
31 March 2010
7 December 2010
7 December 2010
1 April 2012
1 April 2012
Notice period
12 months
12 months
12 months
12 months
3 months
3 months
3 months
3 months
3 months
3 months
3 months
Unexpired term of contract
or letter of approval
Rolling Contract
Rolling Contract
Rolling Contract
Rolling Contract
24 months
3 months
3 months
12 months
12 months
24 months
24 months
There are no special provisions in service contracts of employees or Directors relating to cessation of employment or
change of control. The policy on termination is that the Group does not make payments beyond its contractual
obligations, which do not include any payment from the takeover or liquidation of the Group. In addition, the
Remuneration Committee ensures that there have been no unjustified payments for failure.
Under the Company’s Articles of Association, one third of the Directors are required to submit themselves for
re–election every year. This requirement has been superseded by the requirements of the Code which requires that all
Directors offer themselves for re–election each year. In accordance with the terms of the Code all Directors, as they did
in 2011, will submit themselves for re–election at the forthcoming Annual General Meeting in June 2012.
No Executive Directors hold a Non–Executive position with any other company. However, the Group allows one such
appointment per Executive Director, for which they can retain the fees.
Audited information
The following information on pages 35 to 38 has been audited.
Directors’ interest in shares
The interests of the Directors and their families in the Ordinary Shares of the Company at 30 December 2011 and
31 December 2010 were as follows:
Name
Peter Hindley
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
James Newman
Bill Forrester
Ishbel Macpherson
Alan McWalter
Ordinary Shares of 10.5 pence
30 December 2011
Number
31 December 2010
Number
188,790
270,000
161,250
106,782
10,737
10,000
6,666
5,695
3,000
188,790
270,000
161,250
106,782
6,987
10,000
6,666
5,695
3,000
There has been no change in the interest set out above between 30 December 2011 and 7 March 2012.
A policy on minimum shareholdings for Executive Directors will be implemented during 2012.
36 | Dignity plc Annual Report & Accounts 2011
Report on Directors’ remuneration continued
for the 52 week period ended 30 December 2011
Directors’ remuneration
The total of Directors’ remuneration for the period was £2,710,000 (2010: £2,541,000), including pension
contributions of £50,000 (2010: £43,000). The remuneration of individual Directors for the year or from their date of
appointment was as follows:
Salary and
fees
£’000
Non cash
benefits*
£’000
Cash benefits*
£’000
Annual
performance
related bonus
£’000
Executive Directors
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Non–Executive Directors
Peter Hindley
James Newman**
Bill Forrester
Ishbel Macpherson
Alan McWalter ***
Total
449
255
204
204
153
66
48
41
43
1,463
4
13
4
3
1
–
–
–
–
25
15
15
15
15
–
–
–
–
–
449
255
204
204
–
–
–
–
–
Total
2011
£’000
917
538
427
426
154
66
48
41
43
Total
2010
£’000
899
526
418
319
151
60
45
40
40
60
1,112
2,660
2,498
*Benefits include the following elements: provision of a company car or allowance, fuel, landline telephone at each Executive Director’s home residence
and a mobile telephone together with a pre–arranged funeral plan in accordance with any scheme established by the Group in respect of the funeral of
the Executive Director or his wife.
**James Newman’s fees and expenses are invoiced to the Company by West Wood on Derwent Ltd.
*** No fee reviews were made for 2012 in respect of the Non–Executive Directors, except Alan McWalter who received additional fees when he assumed
the Chairmanship of the Remuneration Committee on 27 September 2011.
No Director waived emoluments in respect of the 52 week period ended 30 December 2011 or the 53 week period
ended 31 December 2010.
Directors’ pension entitlements
Defined benefit salary scheme
Change in
accrued benefit
over the
period (1)
£
Transfer value at
30 December
2011 (2)
£
Transfer value at
31 December
2010
(2)
£
Mike McCollum
Richard Portman
6,003
2,678
1,052,797
441,228
831,170
343,210
Change in
transfer value
less
Directors’
contributions
£
190,211
83,738
Change in
accrued
benefit in
excess of
inflation
£
1,484
1,138
Transfer
value of
change in
accrued
benefit net of
Directors’
contributions
£
Accumulated
total
accrued
pension at
30 December
2011 (3)
£
(18,596)
(1,380)
101,184
35,664
(1) Throughout 2011 the above Directors were members of the Dignity Pension and Assurance Scheme, which is a defined benefit and tax approved
scheme to which both the Director and the Group contribute and remains open to all employees.
(2)Transfer values have been calculated in accordance with the transfer value basis set by the Trustees.
(3) Pension accruals shown are the amounts that would be paid annually on retirement based on service at the end of the current period. This equates to
accrued entitlement.
Long Term Incentive Plan
Members approved the LTIP on 5 June 2009.
Awarded in 2011 for £nil consideration:
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Market
value of shares
conditionally
awarded during the
period (2)
£
Value of shares
conditionally
awarded during the
period as a percentage
of salary (3)
561,250
318,750
255,000
255,000
125%
125%
125%
125%
2011
Number of shares
conditionally
awarded during the
period
Date of the end
of the holding
period when
shares may be
exercised
81,223
46,129
36,903
36,903
After 20 March 2014
After 20 March 2014
After 20 March 2014
After 20 March 2014
37 | Dignity plc Annual Report & Accounts 2011
Awarded in 2010 for £nil consideration:
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Awarded in 2009 for £nil consideration:
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Awarded in 2008 for £nil consideration:
Market
value of shares
conditionally
awarded during the
period (4)
£
Value of shares
conditionally
awarded during the
period as a percentage
of salary (3)
550,000
312,500
250,000
187,500
125%
125%
125%
125%
2010
Number of shares
conditionally
awarded during the
period
Date of the end
of the holding
period when
shares may be
exercised
82,011
46,597
37,278
27,958
After 18 March 2013
After 18 March 2013
After 18 March 2013
After 18 March 2013
Market
value of shares
conditionally
awarded during the
period (5)
£
Value of shares
conditionally
awarded during the
period as a percentage
of salary (3)
550,000
312,500
250,000
187,500
125%
125%
125%
125%
2009
Number of shares
conditionally
awarded during the
period
Date of the end
of the holding
period when
shares may be
exercised
89,184
50,673
40,538
30,404
After 20 March 2012
After 20 March 2012
After 20 March 2012
After 20 March 2012
Peter Hindley
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
The total options held by Directors at 30 December 2011 were:
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Total
Number of shares
conditionally
awarded on
18 March 2008
60,212
47,309
34,407
25,805
4,000
2008
Market value of
shares conditionally
awarded on
18 March 2008
£
437,500
343,750
250,000
187,500
29,080
Number of shares
vesting in
period to
30 December
2011 (6)
–
–
–
–
–
Ordinary Shares of 10.5 pence
LTIP
252,418
143,399
114,719
95,265
605,801
SAYE
–
–
1,283
1,283
2,566
TOTAL
252,418
143,399
116,002
96,548
608,367
(1) Awards under the LTIP up to and including those made in 2009 will only be released if the Group’s comparative TSR performance is equal to or
greater than the median level of performance over the holding period at which point 40 per cent of the award will be released, with full vesting
occurring for upper quintile performance. Vesting occurs on a straight–line basis between those points. The Award in 2010 and all awards thereafter
will only be released if the Group’s comparative TSR performance is equal or greater than the median level of performance over the holding period at
which point 25 per cent of the award will be released with full vesting occurring for an upper quartile performance. Vesting occurs on a straight–line
basis between these points.
(2) Value based on the average mid market share price for the previous 28 days to 17 March 2011.
(3) Value as a percentage of salary as at the date the awards were made.
(4) Value based on the average mid market share price for the previous 28 days to 18 March 2010.
(5) Value based on the average mid market price for the previous 28 days to 18 March 2009.
(6) None of the options awarded in 2008 vested as the TSR of Dignity was found to be below median when compared to the Competitor Group over the
measurement period.
38 | Dignity plc Annual Report & Accounts 2011
Report on Directors’ remuneration continued
for the 52 week period ended 30 December 2011
Inland Revenue Approved SAYE Share Option Scheme
Richard Portman
Steve Whittern
22 October 2010
22 October 2010
Date
of grant
Number
held at
31 December
2010
1,283
1,283
Granted
Lapsed
Number
held at
30 December
2011
Exercise
date
–
–
–
–
1,283 1 December 2013
1,283 1 December 2013
The SAYE options granted on 22 October 2010 have an exercise price of £7.01 per share and must be exercised within
six months of the date shown above. The share price on this day was £6.46.
The market price of the Group’s shares on 30 December 2011 was £8.21 per share. The high and low share closing
prices in the period were £8.54 per share and £6.49 per share respectively.
On behalf of the Board
Alan McWalter
Chair of the Remuneration Committee
7 March 2012
39 | Dignity plc Annual Report & Accounts 2011
Directors’ statement on corporate governance
Introduction
This statement explains how Dignity has incorporated the requirements of the 2010 Code. The Board is committed
to high standards of corporate governance in order to achieve its objectives and meet the necessary standards of
accountability and integrity. In accordance with the Listing Rules of the Financial Services Authority, Dignity plc is
required to state whether it has complied with the relevant provisions set out in the 2010 Combined Code (the Code)
and, where the provisions have not been complied with, to provide an explanation. Dignity plc is also required to
explain how it has applied the principles set out in the Code. This Directors’ Statement on Corporate Governance
and the Report on Directors’ Remuneration on pages 32 to 34 provide a description of how the main and supporting
principles of the Code have been applied within Dignity plc during 2011. The Group has complied with all provisions
of the Code throughout the 2011 accounting period with the exception of:
On 29 December 2008 Peter Hindley was appointed Chairman upon relinquishing his responsibilities as Chief Executive
and the retirement of the then Chairman. This is contrary to provision A.3.1. of the Code. However, as suggested by the
Code, this appointment was only made after consultation with major shareholders of the Group. The Board felt it was
important to retain the skills and knowledge of Peter Hindley, given he is both a prominent and influential figure in the
funeral industry. Peter Hindley is not regarded as independent under provision A.3.1. of the Code.
Narrative statement
The Code establishes principles of good governance, which are split into four areas as outlined below:
1. The Board and its Effectiveness
The Group is controlled through the Board of Directors that meets regularly throughout the year. Informal meetings are
held between individual Directors as required. The Board has adopted a formal schedule of matters reserved to it.
The Board is responsible for the long term success of the Group which includes:
• Overall management of the Group;
• Setting and reviewing the strategy of the Group;
• Approval of major capital expenditure and acquisition projects, and consideration of significant financial matters;
• Monitoring the exposure to key business risks;
• Setting annual budgets and reviewing progress towards achievement of these budgets; and
• Proposing and making dividend payments to shareholders.
All Directors are provided with the necessary papers in advance of the meetings to permit them to make informed
decisions at those meetings. The Board also considers employee issues and key appointments, including the role of
Company Secretary.
The Board comprises eight Directors and the Non–Executive Chairman. There are the same number of independent
Non–Executive Directors and Executive Directors which the Board consider to be an appropriate and effective
combination. The Board also considers that four Executive Directors are sufficient to manage a Company of this size
and organisational structure and they have all confirmed that they are able to devote sufficient time to their roles.
There is a clear division of responsibility between the Non–Executive Chairman and the Chief Executive so as to give no
individual, unfettered powers of decision making. The Chairman is responsible for:
• The leadership of the Board;
• Ensuring the Board functions in all aspects of its role;
• Facilitating the effective contribution of the Non–Executive Directors and ensuring constructive relations between
Executive and Non–Executive Directors;
• Ensuring all Directors receive accurate, timely and clear information;
• Setting the agenda so all relevant issues are discussed, ensuring sufficient time is devoted to discussing issues
particularly strategic ones; and
• Ensuring effective communication with stakeholders and acting as the public face of the Group.
The Chief Executive is responsible for:
• Operational management and control of the Group on a day–to–day basis, local operational decisions are the
responsibility of the local managers, who are accountable to the Chief Executive and other Board members;
• Formulating and proposing strategy to the Board; and
• Implementing the strategy and policies adopted by the Board.
The four independent Non–Executive Directors who served during the period are Bill Forrester, Ishbel Macpherson,
Alan McWalter, and James Newman. Biographical details, including committee membership, appear on page 28.
Their role is to constructively challenge the management of the Group and help develop proposals on strategy.
40 | Dignity plc Annual Report & Accounts 2011
Directors’ statement on corporate governance continued
James Newman is the appointed Senior Independent Director of the Group. His role is to provide a sounding board for
the Chairman and act as an intermediary for other Directors if needed and to be available to shareholders if necessary.
He will be replaced by Alan McWalter when he retires from the Board on 1 April 2012.
The Chairman and the Non–Executive Directors are required to and have formally confirmed to the Board, mindful of
their other commitments they have, that they will have sufficient time to devote to their responsibilities as Directors of
the Group.
Bill Forrester, Ishbel Macpherson, Alan McWalter, and James Newman are independent of management, as defined by
the Code.
Bill Forrester and James Newman retire as Non–Executive Directors at the end of March 2012. They are to be replaced
by Jane Ashcroft and Martin Pexton, whose biographies appear on page 28, and who were appointed by the Board with
the assistance of external recruitment consultants. The selection process followed was based on the specific criteria
for the new Non–Executive Directors set by the Chairman and the remainder of the Board. Both new Directors will
receive full induction training. The terms and conditions of their appointments are available for inspection at the
Group’s registered offices.
All Directors are able to take independent professional advice on the furtherance of their duties if necessary at
the Company’s expense. They also have access to the advice and services of the Company Secretary, who is also
the Corporate Services Director and, where it is considered appropriate and necessary, training is made available to
Directors. All Directors receive annual training and updates on the duties and responsibilities of being a Director of
a listed company. This covers legal, accounting and tax matters as required. From the start of 2012 the Chairman
will regularly meet with each Director to discuss their training and development needs.
The Company maintains appropriate insurance cover in respect of any legal action against its Directors. The level
of cover is currently £50 million.
The Directors have, during the period, formally reminded themselves of their duties as Directors under the Companies
Act 2006 (Section 171–177). These duties include the need to avoid conflicts of interest (Section 175). No such
conflicts of interest exist.
In accordance with the Code all Directors will submit themselves for re–election at the forthcoming Annual
General Meeting.
The Board has established a Remuneration Committee, an Audit Committee and a Nomination Committee, each
of which operate within defined terms of reference. The specific terms of reference for each of the Committees may
be obtained from the Company Secretary at the Registered Office and they are also available for inspection on the
Group’s investor website www.dignityfuneralsplc.co.uk. All Committees are provided with sufficient resources to
undertake their duties.
Those attending and the frequency of Board and Committee meetings held during the year was as follows:
Number of meetings
Andrew Davies
Bill Forrester
Peter Hindley
Mike McCollum
Alan McWalter
Ishbel Macpherson
James Newman
Richard Portman
Steve Whittern
Main Board(i)
Audit
Committee
Remuneration
Committee
Nomination
Committee
6
6
5
6
6
5
6
6
6
6
3
–
2
3(ii)
3(ii)
3
3
3
3(iii)
3(ii)
5
–
4
5(ii)
–
5
5
4
4(iii)
–
2
–
1
2
–
2
2
2
2(iii)
–
(i) Only full Board meetings have been included in the attendance analysis. Nine further meetings were held with a quorum of Directors to approve
announcements, documents or the issue of shares under the LTIP and SAYE.
(ii) In attendance by invitation of the respective Committee.
(iii) Richard Portman attended certain Committee meetings in his capacity as Company Secretary.
When Directors are unable to attend a meeting, they are advised of the matters to be discussed and given an
opportunity to make their views known to the Chairman prior to the meeting. A process exists whereby such views will
be included in the minutes of the meeting if necessary.
A process exists whereby the Non–Executive Directors can meet with the Chairman without the Executive Directors
being present. Three such meetings were held during 2011.
41 | Dignity plc Annual Report & Accounts 2011
During the year, the Board again undertook a formal and rigorous evaluation of its own performance and that of its
Committees and Directors by way of the issue of a detailed questionnaire to all Directors. This was then followed by
a detailed review of the responses, by the Directors, and identification of any actions arising. The Non–Executive
Directors, led by the Senior Independent Director, are responsible for the performance evaluation of the Chairman
taking in to account the views of the other Executive Directors. The Board was satisfied that its performance and
that of its individual Directors and Committees was of the appropriate standard. Full evaluations will be completed
again during 2012. As required under the Code the Board will implement external facilitation such that it meets the
requirement of having external facilitation once every three years. Such an external evaluation will be completed
by the end of the 2013 financial period at the latest.
The Company Secretary, Richard Portman, is responsible for the preparation and distribution of all agendas,
minutes and related Board and Committee papers. As Corporate Services Director, he attends the Board meetings
in his capacity as a Director of the Company but also acts as Secretary to those meetings. He attends the Committee
meetings in his capacity as Company Secretary and also as Secretary of those Committees when requested to do so
by the Chairman of that Committee. He is also responsible for ensuring all Board procedures are followed and for
advising the Board on corporate governance matters. The appointment and removal of the Company Secretary is
a matter for the Board as a whole.
2. Directors’ remuneration
The Remuneration Committee, chaired by Alan McWalter, who assumed the Chairmanship from Bill Forrester on
27 September 2011, determines and agrees with the Board, within formal terms of reference, the framework and
policy of Directors’ and senior management’s remuneration and its cost to the Group. The Committee met five times
during 2011. The Committee considers the performance of the Executive Directors as a prelude to recommending their
annual remuneration, bonus awards and awards of share options to the Board for final approval.
The Committee members during 2011 were the independent Non–Executive Directors, Bill Forrester, James Newman,
Ishbel Macpherson and Alan McWalter. The Code requires a Committee of at least three members. The Chief Executive
and the Chairman can also attend the meetings by invitation of the Committee. No Director or senior manager is
involved in any decisions with regard to their own remuneration. The Chairman of the Board is not a member of
the Remuneration Committee.
The Executive Directors recommend the remuneration of Non–Executive Directors and recommendations take into
account role, responsibilities and time commitment in the fulfilment of those duties. The Non–Executive Directors are
not eligible for pensions and do not participate in the Group’s bonus or share schemes. The Committee has considered
the remuneration of senior management immediately below Board level during the year. It concluded that their
remuneration was commensurate with their various duties and in line with market rates.
3. Accountability and audit
Audit Committee
The Audit Committee in 2011 comprised the four independent Non–Executive Directors. The Chairman James
Newman, who is a Fellow of the Institute of Chartered Accountants in England and Wales, is considered to have
recent and relevant financial experience to chair this Committee. He will be replaced by Ishbel Macpherson upon
his retirement from the Board on 1 April 2012. Its membership is restricted to Non –Executive Directors whose
qualifications are shown in their biographies on page 28. She is considered to have the relevant financial experience to
chair the Committee. The Committee has specific written terms of reference that explain its authority and duties. The
Committee has met three times during 2011. The external auditors, the Chairman, the Chief Executive and the Finance
Director have attended all the meetings by invitation. The external auditors and the internal audit function also have the
right to private audiences with the Audit Committee or its Chairman if either party requires or requests them. Two
meetings were held during 2011 between the Chairman and the external auditors.
The Chairman of the Board is not a member of the Audit Committee.
The Committee reviews the Group’s Annual Report, Interim Report and other formal announcements related to
the Group’s financial performance before submission to the Board. It keeps under review the Group’s accounting
policies, financial controls and internal control and risk management systems. It also evaluates, on a regular basis,
the work of the internal audit function and reviews its effectiveness. The Committee also reviews matters brought
to its attention both internally and by the external auditors. The Committee reports all findings to the Board.
A formal process, established via the Audit Committee, exists by which employees of the Group may, in confidence,
raise concerns about possible improprieties in financial reporting or other matters. This ensures arrangements are in
place for the proportionate and independent investigation of such matters and appropriate follow–up action.
The Committee also keeps under review the relationship with the external auditors, including their terms of
engagement, independence, objectivity and effectiveness taking into consideration relevant UK profession and
regulatory requirements. The Committee reviews the remuneration received by the external auditors for non–audit work
to safeguard the independence of the external auditors, which during the period principally relates to taxation advice.
The Committee were satisfied that this work did not affect the external auditors independence and given the nature of
the work it was pragmatic and cost effective for them to complete the work. Details of the fees paid to the external
auditors for all types of work are shown on page 61.
42 | Dignity plc Annual Report & Accounts 2011
Directors’ statement on corporate governance continued
During 2011 the Committee adopted a formal policy as to the approach of such work. The external auditors have
confirmed their audit independence in writing to the Committee. The Committee also retains responsibility for the
appointment and removal of the external auditors.
PricewaterhouseCoopers LLP have been the Group’s auditors since the management buy out from SCI in 2002.
PricewaterhouseCoopers LLP, were auditors of SCI at this time. The Audit Committee considers that the relationship
with the auditors is working well and remains satisfied with their effectiveness. Accordingly, it has not considered it
necessary to date to require the firm to tender for the audit work. The external auditors are required to rotate the
Group audit partner every five years and this is the third year for the current lead audit partner Matthew Mullins.
There are no contractual obligations restricting the Company’s choice of external auditor. However, under the
terms of the Secured Notes, Dignity (2002) Limited and certain of its subsidiaries are only permitted to use
PricewaterhouseCoopers LLP, KPMG LLP, Deloitte LLP or Ernst & Young LLP (or their successor firms).
Reporting responsibilities
The Board is required to present a balanced and understandable assessment of the Group’s position and prospects,
not only in the Directors’ Report and Accounts but also in the Chairman’s Statement (page 4), the Chief Executive’s
Overview (page 5), the Business Review (pages 8 to 13), the Financial Review (pages 14 to 16), Interim Reports,
Interim Management Statements and in price sensitive announcements. The Group will release its Annual Information
Update by 2 April 2012. A summary of the Directors’ responsibilities for the financial statements is set out on page 29.
Going concern
The Directors receive and review regularly management accounts, cash balances, forecasts and the annual budget
together with securitised debt covenant compliance. After careful consideration, and mindful of the current market
conditions, the Directors confirm they are satisfied that the Group and the Company has adequate resources to
continue operating for the foreseeable future. The Directors formally considered this matter at the Board meeting
held on 1 March 2012. For this reason, they continue to adopt the going concern basis for preparing the financial
statements.
Internal control and Risk Management
The Board recognises it is responsible for the Group’s system of internal control and risk management, which is
designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide only
reasonable, and not absolute, assurance against material misstatement or loss. A formal ongoing process of
identifying, evaluating and managing the significant risks faced by the Group exists. This process was in place
at the date of approval of the Annual Report and is in accordance with the Code and the Turnbull Guidance.
Internal controls are formally reviewed on an ongoing basis. Internal Audit completes a programme of work each
year that provides assurance that the internal controls they have tested are working effectively and also propose
improvements where appropriate and necessary. Coupled with this, the bi–annual review of the Risk Register provides
a further formal review mechanism for considering and reviewing internal controls. All such work is reported to and
monitored by the Audit Committee.
The Audit Committee on behalf of the Board, as part of an ongoing process, has formally reviewed and continues
to keep under review the effectiveness of the Group’s systems of internal controls, including financial, operational
and compliance controls and risk management systems. The Audit Committee reviews risk management annually
and receives reports from executive management regarding weaknesses in internal control, any losses arising out
of weaknesses in internal control and progress in implementing revised procedures to improve and enhance internal
control. There have been no reports of system weaknesses that have resulted or would have resulted in a material
misstatement or loss.
The key procedures, which operated throughout the period, are as follows:
• Financial reporting – The Group has a comprehensive system of internal budgeting and forecasting. The Group’s
monthly actual results analysed by operating division are reported to the Board and significant variances to budget
are investigated with revised forecasts prepared as necessary. Operational management receives comprehensive
management accounts covering their areas of responsibility, which forms the basis for the consolidated accounts;
• Financial controls – The Executive Directors have defined appropriate and necessary financial controls and
procedures to be employed by operational management. Key controls over major business risks include reviews
against budgets and forecasts, review against key performance indicators and exception reporting;
• Quality and integrity of personnel – One of the Group’s core values is integrity. This is regarded as vital to the
maintenance of the Group’s system of internal financial control. The Directors have put in place an organisation
structure appropriate to the size and complexity of the Group with defined lines of responsibility and delegation
of authority where the Board considers it necessary and appropriate;
• Internal audit – The Group has a dedicated Internal Audit team, which reports to the Chief Executive and the Audit
Committee. It coordinates the completion of self–assessment reports by operational management that assists in
highlighting areas of control weakness or exposure. Internal audit reviews are completed on such areas together with
43 | Dignity plc Annual Report & Accounts 2011
selected areas of the head office function and any area where a Director requests a review. During 2011 (as in 2010),
there were quarterly meetings between the Head of Internal Audit and the Executive Directors to formally review and
discuss Internal Audit’s work programme and findings. In addition, regular meetings between Internal Audit and the
external auditors, PricewaterhouseCoopers LLP, were held during the year to discuss and plan audit work and
to ensure a complementary approach. The Head of Internal Audit provides reports to the Audit Committee at
every meeting;
• Procedures – The Group has established and documented processes and procedures covering most parts of its
operations, both client facing and in support departments. These provide clear guidance on the correct or most
appropriate course of action in various circumstances. Procedures are supplemented by training where needs have
been identified. Both Internal Audit and a comprehensive management structure monitor the adherence to such
processes and procedures. A comprehensive review of procedures and training commenced during 2008 and is
ongoing; and
• Risk assessment – Management has responsibility for the identification and evaluation of significant risks that might
arise in their area of responsibility together with the design of suitable internal controls. The Executive Directors and
the wider management team continually assess the risks. A Risk Register is maintained, which is formally presented
to and reviewed by the Audit Committee twice a year.
These procedures are designed to, amongst other things, help to provide assurance around the process of preparing
consolidated financial statements and the financial reporting system.
An explanation of how the Group creates and preserves value and the strategy for delivering its objectives is included
in the Business Review section on pages 8 to 13.
Nomination Committee
Peter Hindley, the Chairman, chaired the Nomination Committee during 2011, which met on two occasions during the
year. The other members of the Committee are James Newman, Bill Forrester, Ishbel Macpherson and Alan McWalter.
The Committee regularly reviews and makes recommendations to the Board on the structure, size and composition
of the Board and the senior management team. It is also responsible for identifying and nominating, for the approval
of the Board, replacement or additional Directors and members of the senior management team. Such appointments
would be preceded by the preparation, by the Committee, of a role description and capabilities. The Committee was
actively involved in the identification and appointment of the new Non–Executive Directors, Martin Pexton and
Jane Ashcroft.
The Nomination Committee and by extension the Board strongly supports the spirit of Lord Davies’ Report “Women
on Boards” and will work towards a goal of 20 per cent of board positions filled by women by 2015. To facilitate
achievement of this aspiration, as retiring Directors are replaced, the Committee will ensure that our executive search
agents include the strongest possible field of female candidates. We will however remain mindful of the overall need to
recruit the very best candidates regardless of gender. The Board will continue to encourage similar diversity in senior
management positions and throughout the workforce.
The Group will continue to publish the details on corporate diversity suggested in Recommendation 2 of the
Davies Report, support the changes to the UK Corporate Governance Code in Recommendation 3 and report on
our compliance (Recommendation 4) and appointment process (Recommendation 5) in our Annual Report.
The Committee formally considers succession planning annually under the written terms of reference.
4. Relations with shareholders
The Group encourages two–way communication with both its institutional and private shareholders and responds
promptly to any queries received.
The Chief Executive and Finance Director have regular meetings with institutional investors, fund managers and
analysts to discuss information made public by the Group. Where appropriate or if requested, such meetings could
include either or both the Chairman and the Senior Independent Director. The Chairman, Senior Independent Director
and the Non–Executive Directors are also available to meet separately with shareholders if necessary or requested to
discuss any issues that they may have. The Chairman is also available to discuss governance and strategy matters with
the major shareholders. The Corporate Services Director, in his additional role as Company Secretary, generally deals
with queries from private shareholders.
The Group has and will arrange visits to its funeral locations and crematoria, if requested by a shareholder, where
it will not disrupt services to our clients.
Each year all shareholders receive the Annual Report and Accounts. The Interim Report is no longer published as a
paper document but is available on the Group’s separate investor website www.dignityfuneralsplc.co.uk, upon which
users can also access the latest financial and corporate news.
44 | Dignity plc Annual Report & Accounts 2011
Directors’ statement on corporate governance continued
The Board regards the Annual General Meeting, which this year is on 14 June 2012, as an opportunity to communicate
directly with all shareholders. At least 20 working days notice will be given of the Annual General Meeting at which all
Directors plan to be present and available to answer questions.
Substantial shareholdings
As at 7 March 2012, the Company had been notified of the following interests of 3 per cent or more of the issued
share capital:
Holder
Franklin Templeton Institutional
Tiger Global Management LLC
BAM & Oppenheimer Funds
Montanaro Group
Standard Life Investments
Baillie Gifford and Co
BlackRock Inc
Kames Capital
Legal & General Group plc
UBS Global Asset Management Ltd
Number of
Ordinary Shares
5,428,056
3,640,829
2,787,652
2,737,670
2,704,738
2,688,153
2,670,275
2,189,991
2,182,083
1,864,533
Percentage of
issued share capital
9.91%
6.65%
5.09%
5.00%
4.94%
4.91%
4.88%
4.00%
3.99%
3.41%
45 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Independent auditors’ report to the members of Dignity plc
for the 52 week period ended 30 December 2011
We have audited the consolidated financial statements of Dignity plc for the 52 week period ended 30 December
2011 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income,
the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Statement of
Cash Flows, and the related notes. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities, set out on page 29, the directors are
responsible for the preparation of the consolidated financial statements and for being satisfied that they give a
true and fair view. Our responsibility is to audit and express an opinion on the consolidated financial statements in
accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require
us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the group’s circumstances
and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates
made by the directors; and, the overall presentation of the financial statements. In addition, we read all the financial
and non–financial information in the Annual Report to identify material inconsistencies with the audited financial
statements. If we become aware of any apparent material misstatements or inconsistencies we consider the
implications for our report.
Opinion on financial statements
In our opinion the consolidated financial statements:
• give a true and fair view of the state of the group’s affairs as at 30 December 2011 and of its profit and cash flows
for the 52 week period then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the lAS
Regulation.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the 52 week period ended 30 December 2011 for
which the consolidated financial statements are prepared is consistent with the consolidated financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
• the Directors’ statement set out on page 31, in relation to going concern;
• the part of the Directors’ Statement on Corporate Governance relating to the Company’s compliance with the nine
provisions of the UK Corporate Governance Code specified for our review; and
• certain elements of the report to shareholders by the Board on directors remuneration.
Other matter
We have reported separately on the parent company financial statements of Dignity plc for the 52 week period
ended 30 December 2011 and on the information in the Report on Directors’ Remuneration that is described as
having been audited.
Matthew Mullins (Senior Statutory Auditor)
For and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Birmingham
7 March 2012
46 | Dignity plc Annual Report & Accounts 2011
Consolidated income statement
for the 52 week period ended 30 December 2011
Revenue
Cost of sales
Gross profit
Administrative expenses
Other income
Operating profit
Analysed as:
Operating profit before profit on sale of fixed assets
and before external transaction costs
Profit on sale of fixed assets
External transaction costs
Operating profit
Finance costs
Finance income
Profit before tax
Taxation – before exceptional items
Taxation – exceptional
Taxation
Profit for the period attributable to equity shareholders
Earnings per share for profit attributable to equity shareholders
– Basic and diluted (pence)
Underlying Earnings per share (pence)
Consolidated statement of comprehensive income
for the 52 week period ended 30 December 2011
Profit for the period
Actuarial loss on retirement benefit obligations
Tax on actuarial loss on retirement benefit obligations
Other comprehensive loss
Comprehensive income for the period
Attributable to:
Equity shareholders of the parent
Group Accounts
Note
3
3
5
4
4
5
6
6
6
3
8
8
Note
28
6
52 week period
ended
30 December
2011
£m
53 week period
ended
31 December
2010
£m
210.1
(89.2)
120.9
(59.2)
1.5
63.2
64.5
0.2
(1.5)
63.2
(25.9)
3.0
40.3
(11.2)
5.2
(6.0)
34.3
62.6p
55.1p
199.1
(87.3)
111.8
(53.2)
1.8
60.4
61.0
0.5
(1.1)
60.4
(22.5)
1.9
39.8
(11.5)
0.7
(10.8)
29.0
46.9p
46.4p
52 week period
ended
30 December
2011
£m
53 week period
ended
31 December
2010
£m
34.3
(7.9)
2.1
(5.8)
28.5
29.0
(2.0)
0.6
(1.4)
27.6
28.5
27.6
47 | Dignity plc Annual Report & Accounts 2011
Consolidated balance sheet
as at 30 December 2011
Assets
Non–current assets
Goodwill
Intangible assets
Property, plant and equipment
Financial and other assets
Retirement benefit asset
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Financial liabilities
Trade and other payables
Current tax liabilities
Provisions for liabilities and charges
Non–current liabilities
Financial liabilities
Deferred tax liabilities
Other non–current liabilities
Provisions for liabilities and charges
Total liabilities
Shareholders’ equity
Ordinary share capital
Share premium account
Capital redemption reserve
Other reserves
Retained earnings
Equity attributable to shareholders
Total equity and liabilities
Group Accounts
30 December
2011
£m
31 December
2010
£m
Note
9
9
10
11
28
13
14
15
16
17
19
16
20
17
19
22
148.0
46.3
147.6
12.6
1.3
355.8
5.9
24.6
36.9
67.4
142.9
39.5
133.6
12.0
8.5
336.5
5.2
24.0
48.1
77.3
423.2
413.8
9.3
32.6
2.3
1.4
45.6
329.6
25.1
2.6
3.1
360.4
406.0
5.7
17.4
99.3
(7.9)
(97.3)
17.2
423.2
8.7
32.0
4.8
1.5
47.0
338.5
27.3
2.9
2.9
371.6
418.6
5.7
17.4
99.3
(8.8)
(118.4)
(4.8)
413.8
The financial statements on pages 46 to 83 were approved by the Board of Directors on 7 March 2012 and were signed
on its behalf by:
M K McCollum
Chief Executive
S L Whittern
Finance Director
48 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Consolidated statement of changes in equity
as at 30 December 2011
Shareholders’ equity as at 25 December 2009
Profit for the 53 weeks ended
31 December 2010
Actuarial loss on defined
benefit plans
Tax on pensions
Total comprehensive income
Effects of employee share options
Tax on employee share options
Adjustment for tax rate change 28% to 27%
Share issue under 2007 LTIP Scheme
Gift to Employee Benefit Trust (1)
Issue of B Shares in respect of Capital
Option (see note 7)
Redemption of B Shares in respect of
Capital Option (see note 7)
Dividend in respect of Special Dividend Option
and Deferred Dividend Option (see note 7)
Dividends (see note 7)
Shareholders’ equity as at
31 December 2010
Profit for the 52 weeks ended
30 December 2011
Actuarial loss on defined
benefit plans
Tax on pensions
Total comprehensive income
Effects of employee share options
Tax on employee share options
Adjustment for tax rate change 27% to 25%
Dividends (see note 7)
Ordinary
share
capital
£m
5.7
Share
premium
account
£m
35.8
Capital
redemption
reserve
£m
80.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.9
–
(19.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
19.3
–
–
Other
reserves
£m
(8.9)
–
–
–
–
0.9
0.1
–
–
(0.9)
–
–
–
–
Retained
earnings
£m
(77.1)
29.0
(2.0)
0.6
27.6
–
–
0.1
–
–
Total
equity
£m
35.5
29.0
(2.0)
0.6
27.6
0.9
0.1
0.1
0.9
(0.9)
–
(19.3)
(19.3)
(44.6)
(5.1)
5.7
17.4
99.3
(8.8)
(118.4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.1
(0.1)
(0.1)
–
(7.9)
34.3
(7.9)
2.1
28.5
–
–
0.1
(7.5)
(97.3)
–
(44.6)
(5.1)
(4.8)
34.3
(7.9)
2.1
28.5
1.1
(0.1)
–
(7.5)
17.2
Shareholders’ equity as at 30 December 2011
5.7
17.4
99.3
(1) Relating to issue of shares under 2007 LTIP scheme.
The above amounts relate to transactions with owners of the Company except for the profit for the period and also
pension items (net of tax) of £5.8 million loss (December 2010: £1.4 million loss).
The capital redemption reserve represents £80,002,465 B Shares that were issued on 2 August 2006 and redeemed
for cash on the same day and £19,274,610 B Shares that were issued on 10 October 2010 and redeemed for cash on
11 October 2010.
49 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Consolidated statement of cash flows
for the 52 week period ended 30 December 2011
Cash flows from operating activities
Cash generated from operations before external transaction costs and
exceptional pension contributions
Costs in respect of redemption of B and C Shares
Exceptional contribution to pension scheme
External transaction costs in respect of acquisitions
Cash generated from operations
Finance income received
Finance costs paid
Transfer from restricted bank accounts for finance costs
Total payments in respect of finance costs
Tax paid
Net cash generated from operating activities
Cash flows from investing activities
Acquisition of subsidiaries and businesses (net of cash acquired)
Proceeds from sale of property, plant and equipment
Vehicle replacement programme and improvements to locations
Branch relocations
Satellite locations
Development of new crematoria
Mercury abatement project
Purchase of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of Secured Notes
Issue costs in respect of borrowings of Secured Notes
Repayment of borrowings
Transfer from restricted bank accounts for repayment of borrowings
Total payments in respect of borrowings
Dividends paid to shareholders on Ordinary Shares
Redemption of B Shares in respect of Capital Option
Redemption of C Shares in respect of Special Dividend Option
Purchase of C Shares in respect of Deferred Dividend Option
Net cash (used)/generated in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
Restricted cash
Cash and cash equivalents at the end of the period as reported in
the consolidated balance sheet
52 week period
ended
30 December
2011
£m
53 week period
ended
31 December
2010
£m
74.2
–
–
(1.2)
73.0
0.3
(24.9)
–
(24.9)
(10.4)
38.0
(12.0)
0.9
(10.8)
(0.9)
(1.1)
(9.0)
(1.0)
(22.8)
(33.9)
–
–
(7.7)
–
(7.7)
(7.5)
–
–
(0.1)
(15.3)
(11.2)
46.6
35.4
1.5
36.9
74.5
(0.8)
(1.0)
(0.3)
72.4
0.4
(32.6)
9.9
(22.7)
(10.1)
40.0
(5.8)
1.1
(10.3)
(0.6)
(1.0)
(13.9)
(2.1)
(27.9)
(32.6)
87.1
(4.5)
(8.9)
2.6
(6.3)
(5.1)
(19.3)
(44.5)
–
7.4
14.8
31.8
46.6
1.5
48.1
Note
25
26
16
7
7
7
7
15
15
15
50 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements
for the 52 week period ended 30 December 2011
1 Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below.
These policies have been consistently applied to all periods presented, unless otherwise stated.
Basis of preparation
European law requires that the Group’s consolidated financial statements for the 52 week period ended 30 December
2011 are prepared in accordance with all applicable International Financial Reporting Standards (‘IFRSs’), as adopted
by the European Union. These financial statements have been prepared in accordance with IFRS, International
Financial Reporting Interpretations Committee (‘IFRIC’) interpretations (as issued by the International Accounting
Standards Board) and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated financial statements are prepared on a going concern basis and have been prepared under the
historic cost convention, as modified by financial assets and liabilities at fair value through the income statement.
Preparation of financial statements
The preparation of financial statements in conformity with International Financial Reporting Standards requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities. This will
also affect the disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reported period. Actual results may differ from those estimates.
Basis of consolidation
The financial statements are presented in the form of Group financial statements. The Group financial statements
consolidate the accounts of the Company and the entities controlled by the Company (including all of its subsidiary
entities) after eliminating internal transactions. Control is achieved where the Company has the power to govern the
financial and operating policies of an investee entity so as to obtain economic benefits from its activities.
Results of subsidiary undertakings acquired during the period are included from the effective date of control using the
acquisition method of accounting. The separable net assets, both tangible and intangible, of newly acquired subsidiary
undertakings are incorporated into the financial statements on the basis of the fair value to the Group as at the
effective date of control.
Exceptional items
Exceptional items are of a non–recurring nature to the results for the period and are therefore presented separately.
External transaction costs
External transaction costs are of a non–recurring nature to the results for the period and are therefore presented
separately. They relate wholly to external costs incurred by the Group.
Pre–arranged funeral plan trusts
The three pre–arranged funeral plan trusts were not consolidated during the period as they were not controlled by the
Group. Specifically, Article 60 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001
requires a majority of the managing trustees to be independent of the Group. Furthermore, the Group did not direct
their financial and operating policies, nor did it have substantially all of the risks and rewards of their ownership.
Revenue
Revenue from funeral operations comprises the amount recoverable from customers for the provision of funerals, income
from crematoria and other services, to the extent that those services have been performed or the goods supplied.
Revenues include amounts receivable from the pre–arranged funeral plan trusts for funerals performed by the Group for
pre–arranged funeral plan members.
Income from memorial sales is recognised at the point of sale, to the extent that the goods have been supplied. Costs
of maintaining memorials are recognised as incurred.
The accounting policies for recognising turnover for pre–arranged funeral plans are stated below. The Group pays
certain disbursements such as crematoria fees, burial plots, ministers’ fees and doctors’ fees on behalf of its clients.
These amounts are recovered as part of the invoicing process. However, these amounts are not included within net
revenues as they are simply passed on to the customer at cost.
The Group views the United Kingdom as one geographical segment, given each local business exhibits similar long
term characteristics.
All amounts are exclusive of VAT.
51 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Pre–arranged funeral plans
Trust plans
The Group markets and sells pre–arranged funeral plans, monies received from selling funeral plans being held
and controlled by independent pre–arranged funeral plan trusts (‘the Trusts’). The responsibility for the ultimate
performance of funerals is allocated to funeral directors, who are selected by the beneficiary of the plan and some
of whom are not owned by the Group.
The Group receives monies from the Trusts in respect of the following transactions:
• A marketing and administration fee in respect of each plan sold. The marketing element is only refundable in the
event that the plan is subsequently cancelled. A provision is made for cancellations based on historical experiences,
where material, to cover the estimated marketing element refundable to the Trusts. Marketing and administration
fees are included in Group revenue when the related plan is sold less the provision for refunds arising on
cancellations; and
• Further contributions are also received from the Trusts in return for the provision of general ongoing administrative
services supplied to the Trusts. These contributions are included in Group revenue for the period to which they relate.
All costs in respect of the marketing and administration of the pre–arranged funeral plans are expensed in the Group
income statement as incurred.
From time to time, the Group receives monies from certain of the Trusts, in line with the relevant Trust’s deed, which
have been assessed by the trustees as not required to ensure the Trust has sufficient assets to meet its future liabilities
in respect of current members (‘Recoveries’). All Recoveries are recognised as other operating income in the period in
which the trustees approve their payment.
The Group makes payments on behalf of the Trusts relating to the ongoing overheads of the Trusts, refunds to
members of the Trusts in event of cancellation, and the payments made to third party funeral directors when the
funeral is ultimately performed. All such payments are reimbursed in full by the Trusts on demand, in accordance with
the terms of the relevant Trust’s deed.
Neither the sales value of plans nor the costs of providing funerals are recognised in the financial statements of the
Group when a prearranged funeral plan is sold.
Each Dignity marketing company contractually guarantees with the customer of a pre–arranged funeral plan that
(i) if the customer chooses to cancel their selected funeral plan, a full refund will be made to the customer of all
monies paid in respect thereof (less in certain cases an administration fee payable to the relevant Dignity marketing
company); (ii) the funeral director’s services (as selected by the customer) will be provided regardless of price rises in the
future; and (iii) for certain plans sold, specific disbursements will be provided regardless of price rises in the future.
Insurance plans
The Group is the named beneficiary on a number of life assurance products sold by third party insurance companies,
in consideration for which the Group has committed to performing the funeral (including some disbursements) of the
plan holder at no further charge.
A commission is paid when the policy is charged to the Group. As this commission is fully refundable if the Group does
not perform the funeral for any reason, it is carried as a debtor and expensed when the funeral is performed.
In the event of death of the policyholder, the Group makes an agreed payment to the nominated funeral director and a
debtor is recognised. At this time a commission fee is recognised as turnover. All monies are reclaimed in full from the
life insurance company.
Share–based payments
The Group issues equity settled share–based payments to certain employees. A fair value for the equity settled share
awards is measured at the date of grant. Management measures the fair value using the valuation technique that they
consider to be the most appropriate to value each class of award, which include Black–Scholes calculations and Monte
Carlo simulations. The valuations take into account factors such as non–transferability, exercise restrictions and
behavioural considerations.
An expense is recognised to spread the fair value of each award over the vesting period on a straight–line basis, after
allowing for an estimate of the share awards that will eventually vest. The estimate of the level of vesting is reviewed at
least annually, with any impact on the cumulative charge being recognised immediately. When the options are exercised
the Company issues new shares.
52 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
1 Accounting policies (continued)
Earnings per Ordinary Share
Basic Earnings per Ordinary Share (‘EPS’) is calculated by dividing the profit on ordinary activities after taxation by the
weighted average number of shares in issue during the period. Diluted EPS is calculated by dividing profit on ordinary
activities after taxation by the weighted average number of shares in issue during the period increased by the effects of
all dilutive potential Ordinary Shares (primarily share options). Underlying Earnings per Ordinary Share is calculated by
dividing the underlying profit after tax by the weighted average number of shares in issue during the period.
Intangible assets – goodwill
Goodwill, which represents the excess of the fair value of the consideration for subsidiaries and other businesses over
the fair values of the net assets acquired and liabilities assumed, is capitalised and stated at historical cost less
provisions for impairment.
Goodwill is allocated to cash–generating units for the purpose of impairment testing. The business and subsidiaries
acquired are generally combined with existing operations in the year of acquisition, or the year thereafter and are
therefore only considered to be separate cash–generating units during this time.
Intangible assets – trade names
Intangible trade names are recognised as assets at the fair value of the consideration paid to acquire them and are
carried at historical cost less provisions for amortisation and impairment. When acquired as part of a business
combination the fair value is calculated by reference to the estimated incremental cash flows expected to arise by
virtue of the trade name being well–established.
Amortisation is provided from the date of acquisition so as to write–off the asset on a straight–line basis over the term
of its useful life. Where there are indicators that a trade name has an indefinite life then these assets are not amortised
but are subject to annual impairment reviews. The factors that indicate an indefinite life of trade names acquired
include the fact that the Group is a significant operator in a well–established market with inelastic demand, the
conservative nature of the UK funeral industry that acts as a barrier to entry for new trade names, and the Group’s
track record for actively monitoring and relocating trade names to combat shifting demographics. In addition, when
allocating a useful life to acquired trade names, the following matters are considered:
• The strength of the trade name in its local environment which is assessed by reference to relative market share and
anticipated profitability;
• The likelihood that market based factors could truncate a trade name’s life such as competition and shifting
demographics and the Group’s ability to combat these;
• The length of time, prior to acquisition, for which trade has been conducted under the name acquired; and
• The likely support the Group will give to the name in its local environment through marketing and promotion,
maintaining community awareness etc.
The useful lives of all capitalised trade names are considered to be indefinite and are reviewed on an annual basis.
Intangible assets – non–compete contracts
Non–compete contracts arising from business combinations are capitalised at the fair value, which is calculated as the
present value of any consideration paid discounted at the Group’s cost of capital.
All costs are amortised over the term of the relevant agreement on a straight–line basis.
Intangible assets – software
Where computer software is not an integral part of a related item of computer hardware, the software is treated as an
intangible asset. Acquired computer software licences are capitalised on the basis of costs incurred to acquire and
bring into use the specific software.
An internally generated intangible asset arising from the Group’s development of computer systems (including
websites) is recognised if and only if the costs are directly associated with the production of identifiable and unique
software products, controlled by the Group and it is probable that future economic benefits will flow to the Group.
All other costs incurred in research or development are expensed as incurred. Capitalised costs will include, where
appropriate, directly attributable payroll costs and a portion of direct overheads.
Costs recognised as assets are amortised over their estimated useful lives (three to eight years) using the
straight–line method.
Intangible assets – use of third party brand name
The Group has a marketing agreement with Age UK Enterprises Limited, giving rights to market pre–arranged funeral
plans under the Age UK brand. The value of this right has been recognised as a separate intangible asset.
53 | Dignity plc Annual Report & Accounts 2011
Group Accounts
This asset is being amortised over twenty years on a straight–line basis, recognising that each year’s additional
marketing activity generates incremental revenues and profits to the Group for at least the following twenty years.
Property, plant and equipment
Assets are recorded in the balance sheet at cost less accumulated depreciation and any recognised impairment loss.
Cost includes, where appropriate, directly attributable costs incurred in bringing each asset to its present location
and condition.
Depreciation is charged (excluding freehold land and assets in the course of construction) so as to write off the cost of
assets to their residual value, over their expected useful lives using the straight–line method. The bases and annual
depreciation rates in use for the various classes of assets are as follows:
Freehold and long leasehold buildings
Short leasehold buildings
Motor vehicles
Computers
Other plant and equipment
Fixtures and fittings
2% – 10%
Over term of lease
11% – 20%
20%
5% – 33%
15%
Freehold land is not depreciated on the basis that land has an unlimited life. Where the historical cost of land and
buildings cannot be split, the Directors have estimated that the historical cost attributable to land is one third (based
on historical data) of the original cost of acquiring the land and buildings. This estimate is regularly reviewed.
Major renovations of the Group’s trading premises and crematory re–linings are depreciated over the remaining life
of the related asset or to the estimated date of the next major renovation or cremator re–lining, whichever is sooner.
Asset lives and residual values for each class of asset are reviewed annually.
Borrowing costs
If the construction phase of property, plant or equipment extends over a long period, the interest incurred on borrowed
capital up to the date of completion is capitalised as part of cost of construction in accordance with IAS 23
(Borrowing Costs).
Repairs and renewals
All repairs and renewals are charged to the income statement unless they represent an enhancement to the
original asset.
Property, plant and equipment held under leases
When assets are financed by leasing agreements, where the risks and rewards are substantially transferred to the
Group, the assets are treated as if they had been purchased outright and the corresponding liability to the lessor is
included as an obligation under finance leases. Depreciation on leased assets is charged to the income statement on
the same basis as owned assets. Leasing payments are treated as consisting of capital and interest elements and the
interest is charged to the income statement so as to achieve a constant rate on the outstanding lease obligation.
All other leases are ‘operating leases’ and the relevant annual rentals are charged to the income statement.
Profit on sale of fixed assets
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are
recognised within profit on sale of fixed assets in income statement.
Impairment of assets
The carrying values of intangible assets and property, plant and equipment are reviewed for impairment in periods
where events or changes in circumstances indicate that the carrying value may not be recoverable. Assets that have an
indefinite useful life (e.g. goodwill) are not subject to amortisation and are tested annually for impairment.
Where an asset does not generate cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash–generating unit to which the asset belongs. For goodwill this is considered at a
business segment level as that is the level at which the return on assets acquired is monitored. For other intangibles
(principally trade names) this is considered at a regional level for each business segment as this is the level where cash
inflows are largely independent. Recoverable amount is the higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future discounted cash flows of the cash–generating unit are estimated, based on
latest management expectations for the following year and an annual growth rate in subsequent years. These cash
flows are discounted at rates that management estimate to be the risk affected average cost of capital for the
particular segment and compared to the carrying value of the relevant asset. Any impairment in the value of an asset
below its carrying value is charged to the income statement within operating profit. A reversal of an impairment loss is
recognised in the income statement to the extent that the original loss was recognised.
54 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
1 Accounting policies (continued)
Inventories
Inventories, which comprise funeral supplies and monumental masonry, are stated at the lower of cost and fair value
less costs to sell. Cost includes all directly attributable costs incurred in bringing each product to its present location
and condition. Fair value less costs to sell is based on estimated selling price less any further costs expected to be
incurred in completion and sale.
Taxation
The tax charge for the period includes the charge for tax currently payable and deferred tax. The current tax charge
represents the estimated amount due that arises from the operations of the Group in the period and after making
adjustments to estimates in respect of prior years.
Deferred tax is recognised in respect of all differences between the carrying amount of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, except where the
temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred
tax assets and liabilities are offset to generate a net asset or liability.
Deferred tax liabilities are recognised where the carrying value of an asset is greater than its associated tax basis or
where the carrying value of a liability is less than its associated tax basis. Deferred tax is provided for any differences
that exist between the tax base and accounting base of intangibles arising from a business combination that does not
involve the acquisition of a subsidiary.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available
evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future
reversal of the deductible temporary difference can be utilised.
Deferred tax is measured at the tax rates that are expected to apply in the periods in which the timing differences are
expected to reverse, based on tax rates and laws that have been enacted or substantively enacted, by the balance
sheet date.
Pensions
The cost of defined contribution retirement schemes is charged as an expense as the costs become payable.
Any difference between the payments and the charge is recognised as a short term asset or liability.
For defined benefit retirement schemes, the cost of providing the benefits is determined using the projected unit credit
method, with actuarial valuations being carried out at each balance sheet date.
Past service cost is recognised immediately to the extent the benefits are vested, and otherwise are amortised on
a straight–line basis over the average period until the benefits become vested. The current service cost and the
recognised element of any past service cost are presented within operating profit. The expected return on plan assets
less the interest arising on the pension liabilities is presented within net finance costs. Actuarial gains and losses are
recognised in full in the period in which they occur, outside of the consolidated income statement and presented in the
consolidated statement of comprehensive income.
The expected return on plan assets reflects the estimate made by management of the long term yields that will arise
from the specific assets held within the pension plan. The rate of return is determined by identifying an appropriate
rate of return for each class of asset held in conjunction with the Group’s professional adviser. The retirement benefit
net asset recognised in the balance sheet represents the fair value of any relevant scheme assets net of the present
value of the defined benefit obligation as adjusted for unrecognised past service cost. The discount rate applied in
arriving at the present value represents yields on high quality corporate bonds in a similar economic environment with
lives similar to the maturity of the pension liabilities.
Provisions
Provisions are recognised when the Company or the Group has a present obligation (legal or constructive) as a result
of a past event, where it is probable that a transfer of economic benefits will be required to settle the obligation and
where a reliable estimate can be made of the amount of the obligation.
Provisions (other than deferred tax) are discounted where the present value of the provision is materially different to
the undiscounted value. The unwinding of discounts is included within finance costs.
Employee share trust
The assets of the employee share trust are held by a separate limited company, of which the Directors consider that
Dignity plc has de facto control. In accordance with IFRS 2, share–based payment, the trust’s assets and liabilities are
recognised in the Group’s balance sheet within share capital and reserves.
55 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Dividends
Dividend distributions to the Company’s shareholders are recognised as a liability in the financial statements in the
period in which they are approved by the Company’s shareholders. Interim dividends are recorded in the financial
statements when paid.
Foreign currency
Foreign currency transactions recognised in the income statement are translated into Sterling at the exchange rate on
the date the transaction took place.
Financial instruments
Borrowings
All borrowings are stated at the fair value of consideration received after deduction of transaction costs. The
transaction costs, interest payable and premium on debt finance are charged/credited to the income statement, as
finance costs/income, on a constant–yield basis over the term of the borrowings, or over a shorter period where it is
more likely than not that the lender will require earlier repayment using the effective interest method.
Early termination costs on borrowings
Premiums and discounts arising on the early repayment of borrowings are written–off to the income statement
as incurred.
Interest rate swaps
The Group currently uses several types of financial instruments as part of an overall interest rate risk management
strategy. It does not enter into financial instruments for trading purposes. Interest rate risk associated with net debt
is managed by using a combination of fixed and floating rate borrowings and financial liabilities. The cash flows from,
and losses arising on terminations of, these contracts are recognised as cash flows from operating activities. See note
16(e) for further information.
Trade receivables
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost.
A provision for impairment is established based on historical experience. When a trade receivable is not collectable
it is written–off against the allowance account. Subsequent recovery of amounts previously written–off are credited
against administration expenses in the income statement.
Trade payables
Trade payables are not interest bearing and are initially recognised at fair value and subsequently measured at
amortised cost.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all
of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct
transaction costs.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits.
Critical accounting estimates
The preparation of financial statements in accordance with IFRS requires management to make estimates and
assumptions in certain circumstances that affect reported amounts. The most sensitive estimates affecting the
financial statements are in the areas of assessing the recoverability of receivables, post–retirement benefits, the
recognition and measurement of goodwill and other intangible assets.
Provision for doubtful trade receivables
Provision is made against accounts that in the estimation of management may be impaired. Within each division,
assessment is made of the recoverability of trade receivables based on a range of factors including the age of the
receivable and the type of services provided. The provision is assessed monthly against actual experience of
irrecoverable accounts and adjusted if appropriate.
Pensions
The Group operates a defined benefit pension scheme that is accounted for using methods that rely on actuarial
assumptions to estimate costs and liabilities for inclusion in the financial statements. These actuarial assumptions
include discount rates, assumed rates of return, salary increases and mortality rates.
While management believes that the actuarial assumptions are appropriate, any significant changes to those used
would affect the balance sheet and income statement. The Group considers that the most significant assumptions are
the discount rate and the inflation rate. See note 28 for further details.
56 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
1 Accounting policies (continued)
Goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy
stated in note 1 “Impairment of assets”. The recoverable amounts of cash–generating units have been determined
based on value–in–use calculations. The use of this method requires the estimation of future cash flows and the choice
of a suitable discount rate in order to calculate the present value of these cash flows. Actual outcomes could vary from
those calculated. See note 9 for further details.
Other intangible assets
The decision process to ascertain whether trade names will have an indefinite life are detailed in note 1 “Intangible
assets – trade names”. These assets with an indefinite life are reviewed for impairment on an annual basis. When a
review for impairment is conducted, the recoverable amount is determined based on value–in–use calculations prepared
on the basis of management’s assumptions and estimates. See note 9 for further details.
Standards, amendments and interpretations effective in 2011
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or
after 1 January 2011 that would be expected to have a material impact on the Group.
IAS 1, Presentation of financial statements, effective 1 January 2011.This amendment clarifies that an entity will
present an analysis of other comprehensive income for each component of equity. This has no material impact on the
Group’s financial statements.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted
The following interpretations to existing standards have been published that are mandatory for accounting periods
beginning on or after 30 December 2011 or later periods but which the Group has not early adopted:
IAS 12, Income taxes on deferred tax, effective 1 January 2012, subject to endorsement by the EU. This amendment
introduces an exception to the existing principal for the measurement of deferred tax assets or liabilities arising on
investment property measured at fair value. The impact of this standard is currently being assessed but is not
expected to have an impact on the Group.
IAS 19, Employee benefits was amended in June 2011. The impact on the Group will be as follows: to immediately
recognise all past service costs and to replace interest costs and expected return on plan assets with a net interest
amount that is calculated by applying the discount rate to the net defined benefit asset. The Group is yet to assess the
full impact of the amendment.
IFRS 9, Financial instruments (to replace) IAS 39, Financial instruments: Recognition and measurement. This standard
introduces new requirements for classifying and measuring financial assets and is likely to affect the Group’s accounting
for financial assets. The standard is not applicable until 1 January 2015 subject to endorsement by the EU. The impact
of this standard is currently being assessed.
IFRS 10, Consolidated financial statements, builds on existing principals by identifying the concept on control as the
determining factor in whether an entity should be included within the consolidated financial statements of the parent
company. This is not expected to have any impact on the Group.
IFRS 12, Disclosure of interests in other entities, effective 1 January 2013 subject to endorsement by the EU. This
standard includes disclosure requirements for all forms of interests in other entities, including joint arrangements,
associates, special purpose vehicles and other off balance sheet vehicles. The Group is yet to assess the full impact of
this standard but it is not expected to have a significant impact on the Group.
IFRS 13, Fair value measurement, effective 1 January 2013, subject to endorsement by the EU. This standard aims to
improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair
value measurements and disclosure requirements for use across IFRSs. The Group is yet to assess IFRS13’s full impact.
57 | Dignity plc Annual Report & Accounts 2011
Group Accounts
2 Financial risk management
The Group finances its operations by a mixture of shareholders’ funds, Secured Notes and bank borrowings.
This approach seeks to minimise financing costs and generate optimum shareholder value through efficient
leveraging of the Group’s balance sheet, which is made possible by the stable and predictable cash generative
nature of the business.
It is not the Group’s policy to actively trade in derivatives.
Market risk
Currency risk
All the Group’s financial assets and liabilities are denominated in Sterling. The Group purchases minimal amounts
from overseas. Accordingly, exposure to currency fluctuations are not significant and therefore not actively managed.
Interest rate risk and other price risk
The Group’s main borrowings consist of Class A and B Secured Notes, which are at fixed interest rates, resulting
in a predetermined repayment profile. The fair value of these financial instruments is based on underlying gilt prices
and yield spreads based on the market’s current view of the risk profile of the Secured Notes. Consequently, the fair
value of these instruments will fluctuate. Fair values are not relevant to the Group unless it was to change its funding
strategy and repay the Secured Notes early.
The Group also has a £10 million Crematoria Acquisition Facility (‘the Crematoria Acquisition Facility’). £7.4 million
carries interest at 5.59 per cent per annum. The remaining £2.6 million carries interest at a rate relative to three
month LIBOR, with such rate being capped at 5.59 per cent. Consequently, the Group carries limited risk to increases
in LIBOR on this facility. The Crematoria Acquisition Facility is fully drawn and will be repayable in one payment in
November 2013.
The Group has significant cash balances that are held by institutions rated at least A–1 by Standard and Poors.
These balances earn interest by reference to the Bank of England base rate. If base rates reduced by one per cent at
the beginning of 2011 then the Group would receive £0.1 million less interest income on an annualised basis for
each £10.0 million held.
None of the Group’s other financial liabilities or financial assets carry any significant interest rate risk.
Credit risk
Trade receivables are the main source of credit risk to the Group. However, this risk is minimised as much as possible
through well–established credit control procedures. Quantitative disclosures regarding the aging of these receivables
are included in note 21(c).
Liquidity risk
The Group manages its liquidity risk by maintaining sufficient cash reserves, committed undrawn borrowing facilities
and regular monitoring and forecasting of cash balances. In addition, the Group is required under the terms of its
secured borrowings to maintain a precisely defined EBITDA to total debt service ratio of at least 1.5 times. This ratio
was determined when raising the debt as being sufficient to ensure all borrowings could be repaid. This covenant test
has been satisfied on each quarterly testing date in the period. At 30 December 2011 the actual ratio was 2.27 times
(2010: 2.56 times).
Capital risk management
The Group’s objective under managing capital is to safeguard the Group’s ability to continue as a going concern
in order to provide returns for shareholders, repay holders of Class A and B Secured Notes and benefit other
shareholders. It also aims to reduce its cost of capital by maintaining an optimal capital structure. The Group’s capital
comprises equity and net debt as set out in note 24. The Group’s principal source of long term debt financing is the
Class A and B Secured Notes, rated A and BBB respectively by Standard & Poor’s and A+ and BBB+ respectively
by Fitch.
The Group monitors its capital structure based on gross debt, as summarised in note 24, to underlying earnings before
interest, taxation, depreciation and amortisation.
In order to achieve these objectives, the Group may adjust the amount of dividends paid to shareholders, return capital
to shareholders, issue new shares or issue further Class A and B Secured Notes.
During the period, the Group achieved its covenants under the terms of the Group’s secured borrowings (see ‘Liquidity
risk’ above).
58 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
3 Revenue and segmental analysis
Operating segments are reported in a manner consistent with internal reporting provided to the chief operating
decision maker who is responsible for allocating resources and assessing performance of the operating segments.
The chief operating decision maker of the Group has been identified as the four Executive Directors. The Group has
three reporting segments, funeral services, crematoria and pre–arranged funeral plans. The Group also reports central
overheads, which comprise unallocated central expenses.
Funeral services represent the sale of funerals and memorials at the time of need.
Crematoria represent the performance of cremations at the time of need, together with the sale of memorials.
Pre–arranged funeral plans represent the sale of funerals in advance to customers wishing to make their own funeral
arrangements, and the marketing and administration costs associated with making such sales.
Substantially all Group revenue is derived from, and substantially all of the Group’s net assets are located in, the
United Kingdom and Channel Islands and relates to services provided. Overseas transactions are not material.
Underlying profit is stated before profit before profit on sale of fixed assets, external transaction costs and exceptional
items. Underlying operating profit is included as it is felt that adjusting operating profit for these items provides a
useful indication of the Group’s performance.
The operating profit (which includes Recoveries within pre–arranged funeral plans of £1.5 million in both periods and
£nil dividend from a fixed asset investment received (2010: £0.3 million)), by segment, was as follows:
Underlying
operating profit
before
depreciation and
amortisation
£m
57.8
23.6
5.6
(12.7)
74.3
Revenue
£m
146.5
41.6
22.0
–
210.1
52 week period ended 30 December 2011
Funeral services
Crematoria
Pre–arranged funeral plans
Central overheads
Group
Finance costs
Finance income
Profit before tax
Taxation – continuing activities
Taxation – exceptional
Taxation
Underlying earnings for the period
Total other items
Profit after taxation
Earnings per share for profit attributable to equity shareholders
– Basic and diluted (pence)
Depreciation
and
amortisation
£m
Underlying
operating profit/
(loss)
£m
Profit on sale of
fixed assets,
external
transaction
costs and
exceptional
items
£m
Operating
profit/(loss)
£m
(7.0)
(2.3)
(0.1)
(0.4)
(9.8)
50.8
21.3
5.5
(13.1)
64.5
(25.9)
3.0
41.6
(11.4)
–
(11.4)
30.2
55.1p
(1.5)
–
–
0.2
(1.3)
–
–
(1.3)
0.2
5.2
5.4
4.1
49.3
21.3
5.5
(12.9)
63.2
(25.9)
3.0
40.3
(11.2)
5.2
(6.0)
34.3
62.6p
59 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Funeral
services
£m
249.5
Crematoria
£m
117.5
Pre–arranged
funeral plans
£m
Head office
£m
16.7
2.6
Group
£m
386.3
36.9
423.2
(23.5)
(4.9)
(6.0)
(5.9)
(40.3)
3 Revenue and segmental analysis (continued)
The segment assets and liabilities were as follows:
As at 30 December 2011
Segment assets
Unallocated assets:
Cash and cash equivalents
Total assets
Segment liabilities
Unallocated liabilities:
Borrowings – excluding finance leases
Accrued interest
Corporation tax
Deferred tax
Total liabilities
Other segment items:
Additions to non–current assets (other than
financial instruments and deferred tax)
Depreciation (note 10)
Amortisation (note 9)
Impairment of trade receivables (note 21 (c))
Other non cash expenses (note 23)
Profit on sale of fixed assets
23.0
7.0
–
1.1
–
–
11.6
2.3
–
(0.2)
–
–
–
–
0.1
–
–
–
0.4
0.4
–
–
1.1
0.2
The revenue and operating profit, by segment, was as follows:
Underlying
operating profit
before
depreciation and Depreciation and
amortisation
£m
amortisation
£m
56.0
22.0
4.4
(12.2)
70.2
(6.7)
(2.1)
(0.1)
(0.3)
(9.2)
Revenue
£m
143.3
37.5
18.3
–
199.1
53 week period ended 31 December 2010
Funeral services
Crematoria
Pre–arranged funeral plans
Central overheads
Group
Finance costs
Finance income
Profit before tax
Taxation – continuing activities
Taxation – exceptional
Taxation
Underlying earnings for the period
Total other items
Profit after taxation
Earnings per share for profit attributable to equity shareholders
– Basic and diluted (pence)
Underlying
Profit on sale of
fixed assets,
external
operating transaction costs
and exceptional
items
£m
profit/
(loss)
£m
0.2
–
–
(0.8)
(0.6)
–
–
(0.6)
0.2
0.7
0.9
0.3
49.3
19.9
4.3
(12.5)
61.0
(22.5)
1.9
40.4
(11.7)
–
(11.7)
28.7
46.4p
(338.2)
(0.1)
(2.3)
(25.1)
(406.0)
35.0
9.7
0.1
0.9
1.1
0.2
Operating
profit/(loss)
£m
49.5
19.9
4.3
(13.3)
60.4
(22.5)
1.9
39.8
(11.5)
0.7
(10.8)
29.0
46.9p
60 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
3 Revenue and segmental analysis (continued)
The segment assets and liabilities were as follows:
As at 31 December 2010
Segment assets
Unallocated assets:
Cash and cash equivalents
Total assets
Segment liabilities
Unallocated liabilities:
Borrowings – excluding finance leases
Accrued interest
Corporation tax
Deferred tax
Total liabilities
Other segment items:
Additions to non–current assets (other
than financial instruments and deferred tax)
Depreciation (note 10)
Amortisation (note 9)
Impairment of trade receivables (note 21(c))
Other non cash expenses (note 23)
Profit on sale of fixed assets
4 Net finance costs
Funeral
services
£m
247.1
Crematoria
£m
101.2
Pre–arranged
funeral plans
£m
Head office
£m
14.0
3.4
Group
£m
365.7
48.1
413.8
(22.8)
(4.7)
(5.2)
(7.2)
(39.9)
(346.5)
(0.1)
(4.8)
(27.3)
(418.6)
33.6
9.0
0.2
1.3
1.0
0.5
14.5
6.7
–
1.3
–
0.5
17.8
2.1
–
–
–
–
–
–
–
–
–
–
1.3
0.2
0.2
–
1.0
–
Finance costs
Class A and B Secured Notes – issued April 2003
Class A and B Secured Notes – issued February 2006
Class A and B Secured Notes – issued September 2010
Amortisation of issue costs – issued April 2003
Amortisation of issue costs – issued February 2006
Amortisation of issue costs – issued September 2010
Crematoria Acquisition Facility
Other loans
Interest payable on finance leases
Unwinding of discounts
Finance costs
Less: interest capitalised (note 10)
Net finance costs
Finance income
Bank deposits
Release of premium on Secured Notes – issued February 2006
Release of premium on Secured Notes – issued September 2010
Net finance income on retirement benefit obligations (note 28)
Finance income
Net finance costs
52 week period
ended
30 December
2011
£m
53 week period
ended
31 December
2010
£m
13.5
4.9
5.1
1.0
0.2
0.4
0.5
0.3
0.1
0.5
26.5
(0.6)
25.9
(0.3)
(0.8)
(1.2)
(0.7)
(3.0)
22.9
13.8
5.0
1.3
1.0
0.2
0.1
0.5
0.2
0.1
0.5
22.7
(0.2)
22.5
(0.4)
(0.8)
(0.3)
(0.4)
(1.9)
20.6
61 | Dignity plc Annual Report & Accounts 2011
Group Accounts
5 Profit before tax
Analysis by nature
The following items have been included in arriving at profit before tax:
Staff costs (note 27)
Cost of inventories recognised as an expense (included in cost of sales) (note 13)
Depreciation of property, plant and equipment – owned assets (note 10)
Amortisation of intangible assets (included in administrative expenses) (note 9)
Operating lease rentals – property
External transaction costs
Recoveries (included within other operating income)
Trade receivables impairment (included in administrative expenses) (note 21(c))
Services provided by the Group’s auditors and its associates:
Fees payable to the Company’s auditors for the audit of parent company
and consolidated financial statements
Fees payable to the Company’s auditors and its associates for other services:
– The audit of Company’s subsidiaries pursuant to legislation
– Other services pursuant to legislation
– Tax services
– Fees in relation to issue of Secured Notes
52 week period
ended
30 December
2011
£m
53 week period
ended
31 December
2010
£m
66.3
12.5
9.7
0.1
6.6
1.5
(1.5)
0.9
0.1
0.1
–
0.6
–
0.8
64.7
12.7
9.0
0.2
6.4
1.1
(1.5)
1.3
0.1
0.1
–
0.1
1.4
1.7
The external transaction costs comprise £nil (2010: £0.8 million) in respect of the Return of Value and £1.5 million
(2010: £0.3 million) of acquisition expenses. The impact on taxation of these is a credit of £0.3 million (2010:
£0.3 million).
6 Taxation
Analysis of charge in the period
Current tax – current period
Adjustments for prior period
Deferred tax – current period
Adjustments for prior period (note 20)
Exceptional adjustment for rate change – 27% to 25% (2010: 28% to 27%)
Exceptional adjustment for recognition of brought forward losses (note 20)
Taxation
All tax relates to continuing operations.
Tax on items charged to equity
Deferred tax credit on actuarial losses on retirement benefit obligations
Deferred tax credit relating to maturity of option schemes
Corporation tax credit on actuarial losses on retirement benefit obligations
Corporation tax relief relating to maturity of option schemes
Adjustment for rate change – 27% to 25% (2010: 28% to 27%)
52 week period
ended
30 December
2011
£m
53 week period
ended
31 December
2010
£m
8.0
(0.3)
7.7
3.2
0.3
(1.8)
(3.4)
(1.7)
6.0
11.2
(0.3)
10.9
0.4
0.2
(0.7)
–
(0.1)
10.8
52 week period
ended
30 December
2011
£m
53 week period
ended
31 December
2010
£m
(1.9)
(0.2)
(0.2)
0.3
–
(2.0)
(0.2)
–
(0.4)
(0.1)
(0.1)
(0.8)
62 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
6 Taxation (continued)
Total tax charge
Total current tax charge
Total deferred tax credit
52 week period
ended
30 December
2011
£m
53 week period
ended
31 December
2010
£m
7.8
(3.8)
10.4
(0.4)
The taxation charge in the period is lower (2010: lower) than the standard rate of corporation tax in the UK 26.5 per
cent (2010: 28 per cent). The differences are explained below:
Profit before taxation
Profit before taxation multiplied by the standard rate
of corporation tax in the UK of 26.5% (2010: 28%)
Effects of:
Adjustments in respect of prior period
Exceptional adjustment in respect of closing deferred
tax rate change – 27% to 25% (2010: 28% to 27%)
Exceptional adjustment for recognition of brought forward losses
Expenses not deductible for tax purposes
Total taxation
52 week period
ended
30 December
2011
£m
53 week period
ended
31 December
2010
£m
40.3
10.7
–
(1.8)
(3.4)
0.5
6.0
39.8
11.1
(0.1)
(0.7)
–
0.5
10.8
Under IFRS the tax rate is lower (2010: lower) than the standard UK tax rate of 26.5 per cent (2010: 28 per cent)
principally due to the exceptional adjustments in both periods. Without these exceptional adjustments the rate would
be higher (2010: higher) due to a combination of the impact of disallowable trading expenses and expenditure on the
Group’s premises that does not attract any deductions for tax purposes. The standard rate of corporation tax in the UK
changed from 28 per cent to 26 per cent with effect from 1 April 2011. Accordingly the Group’s profits for this
accounting period are taxed at an effective rate of 27.5 per cent. As a result, the Group recognised exceptional tax
income of £1.8 million (2010: £0.7 million) through its income statement to reflect the one off reduction in the period
of the Group’s deferred tax position.
In addition to the changes in rates of corporation tax disclosed above a number of further changes to the UK
corporation tax system were announced in the March 2011 UK Budget Statement. Legislation to reduce the main rate
of corporation tax from 26 per cent to 25 per cent from 1 April 2012 was substantively enacted at the balance sheet
date and so the deferred tax balance has been calculated at 25 per cent.
Further rate changes are anticipated, if these are subsequently enacted in the form expected then the corporation tax
rate will reduce by a further 1 per cent per annum until 2014 when it will be 23 per cent. The changes had not been
substantively enacted at the balance sheet date and therefore are not recognised in these financial statements.
Each percentage point reduction in corporation tax rate is expected to reduce the deferred tax liability by
approximately £1 million. These impacts will be recognised in the period in which substantive enactment occurs.
7 Dividends
Final dividend paid: 8.88p per Ordinary Share (2010: 8.07p)
Interim dividend paid: 4.87p per Ordinary Share (2010: nil p)
Dividend on Ordinary Shares (excluding special dividend)
Special dividend relating to Return of Value: £1 per C Share
52 week period
ended
30 December
2011
£m
53 week period
ended
31 December
2010
£m
4.9
2.6
7.5
–
5.1
–
5.1
44.6
Current year
The Interim dividend represents the interim dividend that was approved and paid in the period out of earnings
generated in the same period.
The final dividend represents the final dividend that was approved and paid in the period relating to the earnings
generated in the previous period.
63 | Dignity plc Annual Report & Accounts 2011
Group Accounts
7 Dividends (continued)
Consequently, total dividends recognised in the period were £7.5 million, 13.75 pence per share (2010: £49.7 million,
108.07 pence per share).
A final dividend of 9.77 pence per share, in respect of 2011, has been proposed by the Board. This will be paid on
29 June 2012 provided that approval is gained from shareholders at the Annual General Meeting on 14 June 2012 and
will be paid to shareholders on the register at close of business on 25 May 2012.
Prior year
On 15 October 2010, the Group returned a total of £63.9 million to Ordinary Shareholders equating to £1 for each
Ordinary Share held following the issue of further Secured Notes. Ordinary Shareholders were able to elect to receive
this Return of Value as either:
(a) A return of capital (the ‘Capital Option’);
(b) A special dividend (the ‘Special Dividend Option’); or
(c) A deferred income option (the ‘Deferred Dividend Option’).
Ordinary Shareholders elected to receive £19.3 million as a return of capital, £44.6 million as a special dividend
including £0.1 million as deferred income.
No interim dividend was paid in the year as it was included within the Return of Value. The planned interim dividend of
4.43 pence per share which was due to be paid on 29 October 2010 was declared but cancelled following the decision
to return capital to shareholders.
8 Earnings per share
The calculation of basic earnings per Ordinary Share has been based on the profit for the relevant period.
For diluted earnings per Ordinary Share, the weighted average number of Ordinary Shares in issue is adjusted to
assume conversion of all dilutive potential Ordinary Shares.
The Group has two classes of potentially dilutive Ordinary Shares being those share options granted to employees
under the Group’s SAYE Scheme and the contingently issuable shares under the Group’s LTIP Schemes. At the balance
sheet date, the performance criteria for the vesting of the awards under the LTIP Schemes had not been met and these
contingently issuable shares have been excluded from the diluted EPS calculations.
The Board believes that profit on ordinary activities before profit on sale of fixed assets, external transaction costs,
exceptional items and after taxation is a useful indication of the Group’s performance, as it excludes significant
non–recurring items. This reporting measure is defined as ‘Underlying profit after taxation’.
Accordingly, the Board believes that earnings per share calculated by reference to this underlying profit after taxation is
also a useful indicator of financial performance.
On 8 October 2010, shareholders approved a share capital consolidation together with a Special Dividend of £1 per
Ordinary Share. The overall effect of the transaction was that of a share repurchase at fair value. The reduction in the
number of Ordinary Shares is the result of a corresponding reduction in resources.
Reconciliations of the earnings and the weighted average number of shares used in the calculations are set out below:
52 week period ended 30 December 2011
Profit attributable to shareholders – Basic and diluted EPS
Deduct: Exceptional items, profit on sale of fixed assets and
external transaction costs (net of taxation of £0.2 million)
Underlying profit after taxation – Basic EPS
53 week period ended 31 December 2010
Profit attributable to shareholders – Basic and diluted EPS
Deduct: Exceptional items, profit on sale of fixed assets and
external transaction costs (net of taxation of £0.2 million)
Underlying profit after taxation – Basic EPS
Weighted
average
number of
shares
millions
Per share
amount
pence
54.8
62.6
54.8
61.8
55.1
46.9
61.8
46.4
Earnings
£m
34.3
(4.1)
30.2
29.0
(0.3)
28.7
In 2011 and 2010, the potential issue of new shares pursuant to the Group’s share option plans would have no impact
on the calculation of earnings per share.
64 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
9 Goodwill and other intangible assets
Cost
At 25 December 2009
Additions
Acquisition of subsidiaries and
other businesses
At 31 December 2010
Acquisition of subsidiaries
and other businesses
(note 26(a))
At 30 December 2011
Accumulated amortisation
At 25 December 2009
Amortisation charge
At 31 December 2010
Amortisation charge
At 30 December 2011
Net book amount at
30 December 2011
Net book amount at
31 December 2010
Trade
names
£m
33.1
–
3.7
36.8
6.9
43.7
–
–
–
–
–
43.7
36.8
Use of third
party brand
name
£m
Software
£m
Non–
compete
agreements
£m
Sub–total
£m
Goodwill
£m
Total
£m
3.2
–
–
3.2
–
3.2
(0.5)
(0.1)
(0.6)
(0.1)
(0.7)
2.5
2.6
3.9
0.1
–
4.0
–
4.0
(3.8)
(0.1)
(3.9)
–
(3.9)
0.1
0.1
0.2
40.4
139.7
180.1
–
–
0.1
3.7
–
3.2
0.1
6.9
0.2
44.2
142.9
187.1
–
0.2
(0.2)
–
(0.2)
–
(0.2)
–
–
6.9
51.1
5.1
148.0
12.0
199.1
(4.5)
(0.2)
(4.7)
(0.1)
(4.8)
–
–
–
–
–
(4.5)
(0.2)
(4.7)
(0.1)
(4.8)
46.3
148.0
194.3
39.5
142.9
182.4
Impairment tests for goodwill and other intangible assets
As described in note 1, goodwill and other intangible assets with an indefinite life are subject to annual impairment
tests in accordance with IAS 36, Impairment of Assets.
For the purpose of impairment testing:
(i) Goodwill is tested at a business segment level.
(ii) Other intangible assets are allocated to the Group’s cash–generating units (‘CGUs’) which are considered to be on a
regional basis.
The segmental allocation is shown below:
Amortisation of £0.1 million (2010: £0.2 million) is included within administrative expenses in the income statement.
At 30 December 2011
Funeral services
Crematoria
Pre–arranged funeral plans
Head office
At 31 December 2010
Funeral services
Crematoria
Pre–arranged funeral plans
Head office
Intangible
assets
£m
43.6
–
2.6
0.1
46.3
36.8
–
2.6
0.1
39.5
Goodwill
£m
103.0
40.3
4.7
–
148.0
97.9
40.3
4.7
–
142.9
Total
£m
146.6
40.3
7.3
0.1
194.3
134.7
40.3
7.3
0.1
182.4
65 | Dignity plc Annual Report & Accounts 2011
Group Accounts
9 Goodwill and other intangible assets (continued)
The recoverable amount of a CGU is based on a value–in–use calculation. However, the assets allocated to head office
are tested for impairment by reference to the Group as a whole.
The value–in–use calculations use cash flow projections based on the latest management expectations. Key assumptions
used to produce the annual budget are the estimated UK death rates (based on historical death rates supplied by
ONS), anticipated market share (based on actual experience) and anticipated price increases (based on actual
experience). Cash flows beyond the initial 12 month period are extrapolated using a growth rate of 2.25 per cent
(2010: 2.25 per cent). The cash flows are discounted at a pre–tax rate of 10.2 per cent (2010: 9.2 per cent). This rate
is used to analyse each CGU because they all have similar risk profiles. Based on these calculations, the discount rate
would have to increase to at least 20 per cent (2010: 19 per cent), or the growth rate would have to reduce to at least
minus 9 per cent (2010: minus 9 per cent) to result in any impairment of goodwill, intangible assets, property, plant
and equipment and working capital.
On the basis of the above, the review indicated that no impairment arose in any segment (2010: £nil).
10 Property, plant and equipment
Freehold
land and
buildings
£m
Leasehold
buildings
£m
Plant,
machinery,
fixtures and
fittings
£m
Cost
At 25 December 2009
Additions
Acquisition of subsidiaries and other businesses
Disposals
Reclassification
At 31 December 2010
Additions
Acquisition of subsidiaries and other
businesses (note 26(a))
Disposals
Reclassification
At 30 December 2011
Accumulated depreciation
At 25 December 2009
Depreciation charge
Disposals
At 31 December 2010
Depreciation charge
Disposals
At 30 December 2011
Net book amount at 30 December 2011
Net book amount at 31 December 2010
73.8
0.6
0.2
(0.2)
4.6
79.0
3.8
0.9
(0.2)
2.9
86.4
(9.0)
(1.9)
–
(10.9)
(2.2)
–
(13.1)
73.3
68.1
23.4
2.7
–
(0.1)
2.7
28.7
3.4
–
–
3.7
35.8
(7.5)
(1.0)
0.1
(8.4)
(1.3)
–
(9.7)
26.1
20.3
Motor
vehicles
£m
40.0
4.0
0.4
(1.8)
–
42.6
5.3
0.7
(1.9)
–
46.7
Total
£m
161.8
25.8
0.6
(3.2)
–
185.0
22.8
1.6
(2.9)
–
206.5
24.6
18.5
–
(1.1)
(7.3)
34.7
10.3
–
(0.8)
(6.6)
37.6
(10.7)
(17.8)
(45.0)
(2.6)
1.1
(3.5)
1.4
(9.0)
2.6
(12.2)
(19.9)
(51.4)
(2.8)
0.8
(3.4)
1.4
(9.7)
2.2
(14.2)
(21.9)
(58.9)
23.4
22.5
24.8
22.7
147.6
133.6
Depreciation expense of £3.4 million (2010: £3.5 million) is included within cost of sales and £6.3 million
(2010: £5.5 million) is included within administrative expenses.
Included within plant, machinery, fixtures and fittings net book value is £7.3 million (2010: £8.9 million) relating to
assets held in the course of construction.
In 2011, borrowing costs of £0.6 million (2010: £0.2 million) were capitalised as components of the cost of
construction of qualifying assets, applying an annualised average capitalisation rate of 6.9 per cent
(2010: 6.7 per cent).
Details of any securities over assets are disclosed in note 30.
66 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
10 Property, plant and equipment (continued)
Additional headings have been included in the Consolidated Statement of Cash Flows for property, plant and
equipment in order to provide additional information on the different types of expenditure that the Group has incurred
during the year.
Assets held under finance leases, which relate solely to leasehold land and buildings, have the following net book amount:
Cost
Accumulated depreciation
Net book amount
30 December
2011
£m
31 December
2010
£m
1.0
(0.3)
0.7
1.0
(0.3)
0.7
The Group had capital expenditure authorised by the Board and contracted for at the balance sheet date of £4.8 million
(2010: £9.3 million). This includes amounts in respect of the crematoria being developed at Weston–super–Mare and Essex.
11 Non–current financial and other assets
Prepayments
Deferred commissions
Note
(a)
(b)
30 December
2011
£m
31 December
2010
£m
10.1
2.5
12.6
10.2
1.8
12.0
(a) Prepayments
This balance represents the amounts paid to acquire the long leasehold interest in land at certain of the Group’s
properties. Management consider that leases greater than fifty years at inception are long leases. The balance is
expensed on a straight–line basis over the term of the relevant lease. The leases expire at various times over the next
thirty to nine hundred years.
(b) Deferred commissions
The Group is the named beneficiary on a number of life assurance products sold by third party insurance companies.
A commission is paid when the policy is charged to the Group. As this commission is fully refundable if the Group does
not perform the funeral for any reason, it is carried as a debtor and expensed when the funeral is performed.
12 Investments
A list of the trading entities included within the financial information are included in note C2 to the Company’s
financial statements.
13 Inventories
Materials
Finished goods
30 December
2011
£m
31 December
2010
£m
0.2
5.7
5.9
0.9
4.3
5.2
The cost of inventories recognised within cost of sales amounted to £12.5 million (2010: £12.7 million).
There were no inventory write–downs in either period.
67 | Dignity plc Annual Report & Accounts 2011
Group Accounts
14 Trade and other receivables
Trade receivables
Less: provision for impairment (note 21(c))
Net trade receivables
Receivables due from related parties (note 31)
Prepayments and accrued income
Other receivables
30 December
2011
£m
31 December
2010
£m
16.5
(3.1)
13.4
2.6
4.2
4.4
24.6
19.6
(3.7)
15.9
2.4
3.7
2.0
24.0
Concentrations of credit risk with respect to trade receivables are limited due to the Group’s customer base being
large and unrelated. Due to this, management believes there is no further credit risk provision required in excess of
normal provision for doubtful recoverables. For further details of the trade receivables past due and impaired refer to
note 21(c).
Due to the short term nature of these balances, the carrying value is considered to be their fair value.
15 Cash and cash equivalents
Operating cash as reported in the consolidated statement of cash flows as cash
and cash equivalents
Recoveries: pre–arranged funeral plans
Cash and cash equivalents as reported in the balance sheet
Note
(a)
30 December
2011
£m
31 December
2010
£m
35.4
1.5
36.9
46.6
1.5
48.1
(a) Recoveries may not be used for one year following receipt and therefore do not meet the definition of cash and
cash equivalents in IAS 7, Cash Flow Statements.
16 Financial liabilities
Current
Class A Secured Notes – issued April 2003
Class A Secured Notes – issued February 2006
Class A Secured Notes – issued September 2010
Premium on Secured Notes – issued February 2006
Premium on Secured Notes – issued September 2010
Other current financial liabilities
Non–current
Class A and B Secured Notes – issued April 2003
Class A and B Secured Notes – issued February 2006
Class A and B Secured Notes – issued September 2010
Premium on Secured Notes – issued February 2006
Premium on Secured Notes – issued September 2010
Finance lease obligations
Other non–current financial liabilities
Crematoria Acquisition Facility
30 December
2011
£m
31 December
2010
£m
Note
(a)
(b)
(c)
(b)
(c)
(e)
(g)
(a)
(b)
(c)
(b)
(c)
(d)
(e)
(f)
3.5
1.6
1.5
0.8
1.2
0.7
9.3
168.4
62.5
63.8
8.8
11.2
0.7
4.3
9.9
329.6
3.2
1.5
1.4
0.7
1.2
0.7
8.7
171.9
64.1
65.3
9.5
12.4
0.7
4.7
9.9
338.5
(a) Class A and B Secured Notes – issued April 2003
On 11 April 2003, Dignity Finance PLC issued £110,000,000 Class A Secured Notes (the ‘A notes’) and £100,000,000
Class B Secured Notes (the ‘B notes’).
The A notes carry interest at 6.31 per cent, payable half yearly in arrears. The A notes are repayable in instalments
ending in December 2023. The transaction costs incurred on issue of the A notes totalled £9.8 million. The B notes
carry interest at 8.151 per cent, payable half yearly in arrears. The B notes are repayable in instalments ending in
December 2030. The transaction costs incurred on issue of the B notes totalled £8.9 million.
68 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
16 Financial liabilities (continued)
The principal outstanding on the Secured Notes and related issue costs have been presented on a net basis in the table
above. Both the A notes and the B notes are secured by first ranking security in respect of the undertakings and assets
of Dignity (2002) Limited and its subsidiaries.
At 30 December 2011, £81.8 million (2010: £86.0 million) of the principal of the A notes and £100.0 million
(2010: £100.0 million) of the principal of the B notes was outstanding.
At 30 December 2011, £4.3 million (2010: £4.9 million) and £5.6 million (2010: £6.0 million) of the transaction costs
in respect of the A notes and the B notes respectively remain unamortised.
(b) Class A and B Secured Notes – issued February 2006
On 21 February 2006, Dignity Finance PLC issued £45,550,000 Class A Secured Notes (the ‘Further A notes’) and
£32,500,000 Class B Secured Notes (the ‘Further B notes’).
The Further A notes carry interest at 6.31 per cent, payable half yearly in arrears. The Further A notes are repayable
in instalments ending in December 2023. The transaction costs incurred on issue of the Further A notes totalled
£1.9 million. The Further B notes carry interest at 8.151 per cent, payable half yearly in arrears. The Further B notes
are repayable in instalments ending in December 2030. The transaction costs incurred on issue of the Further B notes
totalled £1.8 million. The principal outstanding on the Secured Notes and related issue costs have been presented on
a net basis in the table on page 67. Both the Further A notes and the Further B notes are secured by first ranking
security in respect of the undertakings and assets of Dignity (2002) Limited and its subsidiaries.
At 30 December 2011, £33.9 million (2010: £35.6 million) of the principal of the Further A notes and £32.5 million
(2010: £32.5 million) of the principal of the Further B notes was outstanding.
At 30 December 2011, £1.0 million (2010: £1.1 million) and £1.3 million (2010: £1.4 million) of the transaction costs
in respect of the Further A notes and the Further B notes respectively remain unamortised.
The Further A notes and Further B notes were issued at a premium of £3.6 million and £10.8 million respectively,
which is being released in proportion to the interest cost in the notes. At the balance sheet date £1.8 million (2010:
£2.1 million) and £7.8 million (2010: £8.2 million) respectively remained unamortised.
(c) Class A and B Secured Notes – issued September 2010
On 27 September 2010, Dignity Finance PLC issued £48,650,000 Class A Secured Notes (the ‘Second Further
A notes’) and £33,100,000 Class B Secured Notes (the ‘Second Further B notes’).
The Second Further A notes carry interest at 6.31 per cent, payable half yearly in arrears. The Second Further A notes
are repayable in instalments ending in December 2023. The transaction costs incurred on issue of the Second Further
A notes totalled £2.4 million. The Second Further B notes carry interest at 8.151 per cent, payable half yearly in
arrears. The Second Further B notes are repayable in instalments ending in December 2030. The transaction costs
incurred on issue of the Second Further B notes totalled £2.1 million. The principal outstanding on the Secured Notes
and related issue costs have been presented on a net basis in the table on page 67. Both the Second Further A notes
and the Second Further B notes are secured by first ranking security in respect of the undertakings and assets of
Dignity (2002) Limited and its subsidiaries.
At 30 December 2011, £36.2 million (2010: £38.0 million) of the principal of the Second Further A notes and
£33.1 million (2010: £33.1 million) of the principal of the Second Further B notes was outstanding.
At 30 December 2011, £2.1 million and £1.9 million (2010: £2.4 million and £2.0 million) of the transaction costs in
respect of the Second Further A notes and the Second Further B notes respectively remain unamortised.
The Second Further A notes and Second Further B notes were issued at a premium of £5.7 million and £8.2 million
respectively, which is being released in proportion to the interest cost in the notes. At the balance sheet date
£4.8 million and £7.6 million (2010: £5.5 million and £8.1 million) respectively remained unamortised.
For further details of security over the Class A and B Secured Notes see note 30(a).
69 | Dignity plc Annual Report & Accounts 2011
Group Accounts
16 Financial liabilities (continued)
(d) Obligations under finance leases
Obligations under finance leases and hire purchase payable:
Within one year
Between one and two years
Between two and five years
After five years
30 December
2011
£m
31 December
2010
£m
–
–
0.2
0.5
0.7
–
–
0.2
0.5
0.7
The finance leases and hire purchase liabilities are secured on the related assets.
(e) Other financial liabilities
On 20 December 2002, Dignity (2002) Limited entered into contracts to swap the floating rate interest on a bank loan
into fixed rate. Contractually, these swaps were not effective until 30 April 2003.
On 11 April 2003, as described in note 16(a), the Group issued Secured Notes at a fixed rate of interest. These notes
replaced the bank loan. Consequently, the swaps were no longer required as the Group had no interest rate risk on the
Secured Notes. As a result, the Group entered into further contracts on 11 April 2003 to swap fixed rate interest into
floating in order to offset the original swaps and eliminate any interest rate risk in this regard.
As a result of interest rate movements between these two dates, the combined effect of all the contracts was that the
Group makes fixed and determinable bi–annual payments on a notional principal amount.
These swap agreements were entered into under one ISDA master agreement. This master agreement forces the swaps
to be viewed and settled on a net basis only; a position that cannot be altered without the written consent of both parties.
Accordingly, the overall transaction represents a financial liability. The fair value represents the discounted net present
value of future cash flows. Further, as these contracts related to the raising of the Secured Notes, the liability has been
accounted for as a transaction cost of the Class A and B Secured Notes and is being amortised in accordance with
IAS 39.
(f) Crematoria Acquisition Facility
The Group also has a £10 million Crematoria Acquisition Facility (‘the Crematoria Acquisition Facility’). £7.4 million
carries interest at 5.59 per cent per annum. The remaining £2.6 million carries interest at a rate relative to three
month LIBOR, with such rate being capped at 5.59 per cent. Consequently, the Group carries limited risk to increases
in LIBOR on this facility. The Crematoria Acquisition Facility is fully drawn and will be repayable in one payment in
November 2013.
The transaction costs incurred on the Crematoria Acquisition Facility were £0.2 million. The principal outstanding on
the Crematoria Acquisition Facility and related issue costs have been presented on a net basis in the table above.
At 30 December 2011, £10.0 million (2010: £10.0 million) of the principal was outstanding. At 30 December 2011,
£0.1 million (2010: £0.1 million) of the transaction costs remained unamortised.
For further details of security over the Crematoria Acquisition Facility see note 30(b).
(g) Current financial liabilities
The current financial liabilities represent the amounts falling due within one year of the Group’s accounting reference
date, 31 December.
70 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
17 Trade and other payables
Current
Trade payables
Tax and social security
Other current liabilities
Other current liabilities – Deferred Dividend Option
Accruals and deferred income
Non–current
Deferred income
Deferred consideration for acquisitions
Long service awards
Other non–current liabilities
18 Obligations under finance leases and operating leases
For minimum lease payments obligations under finance leases refer to note 21(d)(ii).
The minimum lease payments under non–cancellable operating leases fall due as follows:
Not later than one year
Later than one year but not more than five years
More than five years
30 December
2011
£m
31 December
2010
£m
9.3
1.3
1.4
–
20.6
32.6
1.1
0.2
1.0
0.3
2.6
10.2
1.3
1.4
0.1
19.0
32.0
1.1
0.3
1.1
0.4
2.9
30 December
2011
£m
31 December
2010
£m
7.6
20.6
86.9
7.0
20.3
89.3
115.1
116.6
The non–cancellable operating leases principally relate to leasehold land and buildings.
Of the total operating lease payments charged to trading expenses, £nil million (2010: £0.1 million) are in respect of
contingent rentals. The contingent rentals are based on the revenues generated at the specific locations.
Sublease payments received in the year amount to £0.3 million (2010: £0.4 million). Total future sublease payments
receivable relating to operating leases amount to £0.6 million (2010: £0.5 million).
In addition, the Group has operating lease commitments with rentals determined in relation to revenues. No operating
lease commitment disclosures are required for these arrangements, as future lease payments represent contingent
rental payments.
19 Provisions for liabilities and charges
At beginning of period
Charged/(released) to income statement
Utilised in period
Amortisation of discount
At end of period
Dilapidations
£m
(a)
Onerous
contracts
£m
(b)
Cancellation
provision
£m
(c)
2.7
0.3
(0.3)
0.1
2.8
0.5
(0.1)
(0.1)
–
0.3
1.2
0.7
(0.5)
–
1.4
Total
£m
4.4
0.9
(0.9)
0.1
4.5
Provisions have been analysed between current and non–current as follows:
Current
Non–current
30 December
2011
£m
31 December
2010
£m
1.4
3.1
4.5
1.5
2.9
4.4
71 | Dignity plc Annual Report & Accounts 2011
Group Accounts
19 Provisions for liabilities and charges (continued)
(a) Dilapidations
The provision for dilapidations covers the costs of repair to leased premises occupied by the Group in respect of which
a dilapidations notification has been received, and properties where a dilapidation obligation exists but for which no
notification has been received.
It is anticipated that the element of provision relating to dilapidation notices served, £0.8 million (2010: £0.8 million),
will be incurred in the following financial year, and the element relating to dilapidation obligations where no notice has
been served will be utilised over the terms of the relevant property leases, the majority of which is expected to be by
31 December 2020.
(b) Onerous contracts
The Group has provided for the discounted future costs of certain contracts to which the Group is legally bound.
These contracts relate to vacant leasehold properties and other contracts from which no economic benefit is derived.
The provision will be utilised over the term of the contracts and it is anticipated that it will be fully utilised by 2038.
Included within the provision is an amount of £0.1 million (2010: £0.1 million) relating to the expected costs of
ongoing rent reviews, the outcomes of which have been based on recent experience of similar reviews on other
properties.
(c) Cancellation provision
As described in note 1, the Group receives monies from certain pre–arranged funeral plan Trusts in respect of the
marketing of pre–arranged funeral plans, which are refundable to the Trust in the event of cancellation.
The provision covers the expected cost of such cancellations anticipated to occur in future years relating to plans sold
before the balance sheet date and is anticipated to be utilised over the next three years.
20 Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 25 per cent
(2010: 27 per cent).
The movement on the deferred tax account is as shown below:
At beginning of period
Charged to income statement (note 6)
Adjustment for rate change – 27% to 25% (2010: 28% to 27%)
Exceptional adjustment for recognition of brought forward losses
Taken to equity (note 6)
Arising on acquisitions (note 26(a))
At end of period
30 December
2011
£m
31 December
2010
£m
27.3
3.5
(1.9)
(3.4)
(2.1)
1.7
25.1
26.0
0.6
(0.8)
–
(0.2)
1.7
27.3
The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction as
permitted by IAS 12) during the period are shown below:
Deferred tax liabilities
At beginning of period
Charged to income statement (note 6)
Adjustment for rate change – 27% to 25% (2010: 28% to 27%)
Taken to equity (note 6)
Arising on acquisitions
At end of period
Pensions
£m
Accelerated tax
depreciation
£m
2.3
–
(0.1)
(1.9)
–
0.3
16.9
0.5
(1.2)
–
0.2
16.4
Other
£m
9.5
0.3
(0.8)
–
1.5
10.5
Total
£m
28.7
0.8
(2.1)
(1.9)
1.7
27.2
72 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
20 Deferred tax (continued)
Deferred tax assets
At beginning of period
Charged to income statement (note 6)
Adjustment for rate change – 27% to 25% (2010: 28% to 27%)
Adjustment for recognition of brought forward losses
Taken to equity (note 6)
At end of period
Losses
£m
–
2.7
–
(3.4)
–
(0.7)
Other
£m
(1.4)
–
0.2
–
(0.2)
(1.4)
Total
£m
(1.4)
2.7
0.2
(3.4)
(0.2)
(2.1)
All of the deferred tax assets were available for offset against deferred tax liabilities and hence the net deferred tax
provision at 30 December 2011 was £25.1 million (2010: £27.3 million).
Other deferred tax liabilities includes goodwill on trade names and capital gains rolled forward, other tax assets
includes options schemes and long service awards.
During the period, a deferred tax asset was recognised in respect of previously unrecognised losses within the Group.
These amounted to £3.4 million net, of which £2.7 million has been utilised in the period. These were not recognised
previously as due to the nature of these losses, the Directors did not consider that taxable profits would arise in the
relevant company from which the future reversal of the underlying timing differences can be deducted. The Directors
now consider that sufficient taxable profits will arise in the relevant company from which the reversal of the underlying
timing differences can be deducted. There are no further unrecognised deferred tax losses within the Group.
Elements of these deferred tax balances may be payable/recoverable within one year. However, the Directors consider
that it is not possible to quantify the amount because the level of uncertainty in the timing of events and have
therefore classified the whole balance as due after more than one year.
The deferred income tax charged to equity during the period was as follows:
Deferred tax credit on actuarial losses on retirement benefit obligations
Deferred tax credit relating to maturity of option schemes
Adjustment for rate change – 27% to 25% (2010: 28% to 27%)
21 Financial instruments
2011
£m
(1.9)
(0.2)
–
2010
£m
(0.2)
–
(0.1)
Fair values of non–derivative financial assets and financial liabilities
Where market values are not available, fair values of financial assets and financial liabilities have been calculated by
discounting expected future cash flows at relevant interest rates. The carrying values of short term borrowings
approximate to book value.
Trade receivables are held net of impairment.
Fair value estimation
IFRS 7 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices) (level 2).
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
All assets and liabilities are held at amortised cost other than interest rate swaps which are held at fair value. These
swaps are level 2.
73 | Dignity plc Annual Report & Accounts 2011
Group Accounts
21 Financial instruments (continued)
(a) Fair value of current and non–current financial assets and liabilities
Long term borrowings (excluding finance lease
obligations and including swaps) (note 16)
Finance lease obligations (note 16)
Fair values of other financial assets and financial liabilities
Primary financial instruments held or issued to finance
the Group’s operations:
Short term borrowings (excluding finance lease obligations)
(note 16)
Trade and other payables (excluding statutory liabilities) (note 17)
Trade and other receivables (excluding prepayments) (note 14)
Cash and cash equivalents (note 15)
Other non–current financial liabilities (note 17)
30 December 2011
31 December 2010
Book value
£m
Fair value
£m
Book value
£m
Fair value
£m
(328.9)
(0.7)
(329.6)
(415.8)
(0.7)
(416.5)
(337.8)
(0.7)
(338.5)
(398.9)
(0.7)
(399.6)
(9.3)
(31.3)
20.4
36.9
(2.6)
(10.9)
(31.3)
20.4
36.9
(2.6)
(8.7)
(30.7)
20.3
48.1
(2.9)
(9.7)
(30.7)
20.3
48.1
(2.9)
(b) Maturity of financial liabilities
The tables below analyse the Group’s financial liabilities, which will be settled on a net basis into relevant maturity
groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts
disclosed in the tables are the contractual undiscounted cash flows, including interest costs yet to be incurred.
Cash liabilities
Class A and B Secured Notes (gross)
Interest payable on Notes
Swaps
Crematoria Acquisition Facility
Interest payable on Crematoria
Acquisition Facility
Finance leases
Debt repayments
Other financial liabilities
Cash liabilities
Class A and B Secured Notes (gross)
Interest payable on Notes
Swaps
Crematoria Acquisition Facility
Interest payable on Crematoria
Acquisition Facility
Finance leases
Debt repayments
Other financial liabilities
30 December 2011
In less than
one year
£m
In more than
one year but
not more than
two years
£m
In more than
two years but
not more than
three years
£m
In more than
three years but
not more than
five years
£m
In more than
five years
£m
8.3
23.0
0.7
–
0.5
–
32.5
32.3
64.8
8.9
22.4
0.7
10.0
0.5
0.1
42.6
0.3
42.9
9.7
21.8
0.7
–
–
0.1
32.3
0.2
32.5
21.6
41.8
1.4
–
–
0.1
64.9
0.4
65.3
269.0
173.1
3.9
–
–
2.7
448.7
1.2
449.9
31 December 2010
In less than
one year
£m
In more than
one year but
not more than
two years
£m
In more than
two years but
not more than
three years
£m
In more than
three years but
not more than
five years
£m
In more than
five years
£m
7.7
23.5
0.7
–
0.5
–
32.4
31.6
64.0
8.3
23.0
0.7
–
0.5
0.1
32.6
0.3
32.9
8.9
22.4
0.7
10.0
0.5
0.1
42.6
0.3
42.9
20.0
43.0
1.4
–
–
0.2
64.6
0.5
65.1
280.3
193.7
4.6
–
–
2.7
481.3
1.3
482.6
Total
£m
317.5
282.1
7.4
10.0
1.0
3.0
621.0
34.4
655.4
Total
£m
325.2
305.6
8.1
10.0
1.5
3.1
653.5
34.0
687.5
74 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
21 Financial instruments (continued)
The amounts disclosed in the tables below represent the anticipated amortisation profile for the issue costs and
premium relating to the issue of the A and B Secured Notes.
30 December 2011
In less than
one year
£m
In more than
one year but
not more than
two years
£m
In more than
two years but
not more than
three years
£m
In more than
three years but
not more than
five years
£m
In more than
five years
£m
Non–cash liabilities
Issue costs on Secured Notes
Premium on Secured Notes
Issue costs on Crematoria Acquisition Facility
1.6
(1.9)
–
(0.3)
1.5
(1.8)
0.1
(0.2)
1.5
(1.8)
–
(0.3)
2.7
(3.4)
–
(0.7)
8.9
(13.1)
–
(4.2)
Non–cash liabilities
Issue costs
Premium on Secured Notes
Crematoria Acquisition Facility
31 December 2010
In less than
one year
£m
In more than
one year but
not more than
two years
£m
In more than
two years but
not more than
three years
£m
In more than
three years but
not more than
five years
£m
In more than
five years
£m
1.6
(1.9)
–
(0.3)
1.6
(1.9)
–
(0.3)
1.5
(1.8)
0.1
(0.2)
2.8
(3.5)
–
(0.7)
10.3
(14.8)
–
(4.5)
Total
£m
16.2
(22.0)
0.1
(5.7)
Total
£m
17.8
(23.9)
0.1
(6.0)
(c) Trade receivables
As at 30 December 2011, £6.9 million of the gross trade receivables (2010: £8.4 million) were past due and partially
impaired. A provision for impairment is established based on historical experience. The amount of the provision, as at
30 December 2011, was £3.1 million (2010: £3.7 million). The individually impaired receivables principally relate to
monies owing for funerals performed by the funeral services division. The aging of these receivables is as follows:
One to six months
Over six months
The amount of gross trade receivables past due that were not impaired was not significant.
Movements on the Group’s provision for impairment of trade receivables are as follows:
At beginning of period
Charged to income statement
Utilised in period
At end of period
30 December
2011
£m
31 December
2010
£m
4.3
2.6
6.9
5.7
2.7
8.4
30 December
2011
£m
31 December
2010
£m
(3.7)
(0.9)
1.5
(3.1)
(3.6)
(1.3)
1.2
(3.7)
(d) Borrowing facilities
(i) The Group has the following undrawn committed borrowing facilities available at 30 December 2011, all of which
were at floating interest rates, in respect of which all conditions precedent had been met at that date:
Expiring within one year
Expiring between one and two years
Expiring in more than two years
30 December
2011
£m
31 December
2010
£m
50.0
5.0
–
55.0
50.0
–
5.0
55.0
75 | Dignity plc Annual Report & Accounts 2011
Group Accounts
21 Financial instruments (continued)
£50.0 million (2010: £50.0 million) of the amount above is a liquidity facility relating to the Class A and B Secured
Notes. This facility may only be used to repay interest and principal on the Secured Notes in the event of insufficient
cash to service these instruments. The facility is subject to annual renewal. However, if the bank providing the facility
does not renew it, then the provider is required to place £50.0 million (2010: £50.0 million) in a bank account, which
the Group may access as if it represented a borrowing facility on the same terms. The facility is available on these
terms until the Secured Notes have been repaid in full.
The remaining £5.0 million facility expires in April 2013. Both these facilities incur commitment fees at market rates.
(ii) The minimum lease payments under finance leases fall due as follows:
Not later than one year
Later than one year but not more than five years
More than five years
Future finance costs on finance leases
Present value of finance lease liabilities
22 Ordinary share capital
Allotted and fully paid Equity shares
54,757,054 (2010: 54,757,002) Ordinary Shares of £0.105 (2010: £0.105) each
30 December
2011
£m
31 December
2010
£m
–
0.2
2.8
3.0
(2.3)
0.7
–
0.2
2.9
3.1
(2.4)
0.7
30 December
2011
£m
31 December
2010
£m
5.7
5.7
From 1 October 2009, the Companies Act 2006 abolished the requirement for a company to have an authorised share
capital. The Company’s articles have been updated to show there are no restrictions to the Company’s ability to
issue shares.
Each Ordinary Share carries equal voting rights and there are no restrictions on any share.
During the period the Group received £nil million in relation to the 52 shares issued with a nominal value of
10.5 pence per share.
Potential issues of Ordinary Shares
Certain employees hold options to subscribe for shares in the Company under an approved Save As You Earn (SAYE)
Scheme started in 2010. In addition, Executive Directors and senior management hold options to subscribe for shares
in the Company under Long Term Incentive Plans (LTIPs) awarded in 2009, 2010 and 2011.
The total number of outstanding shares subject to options (excluding lapses), the periods in which they were granted
and the periods in which they may be exercised are given below:
Year of grant
2010 – SAYE
2009 – LTIP
2010 – LTIP
2011 – LTIP
Exercise price
(pence)
701.00
–
–
–
Exercise period
1 December 2013
to 31 May 2014
21 March 2012
to 21 March 2013
19 March 2013
to 19 March 2014
21 March 2014
to 21 March 2015
2011
Number
2010
Number
2009
Number
185,031
207,231
n/a
265,391
267,272
267,272
255,844
255,844
285,430
n/a
n/a
n/a
76 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
23 Share–based payments
LTIP Schemes
The LTIP Scheme was introduced after the flotation of the Group in 2004. Under the LTIP Scheme, the remuneration
committee can grant options over shares in the Company to employees of the Group. Awards under the LTIP Scheme
are generally reserved for Executive Directors and senior management. The Company has made annual grants since
April 2004. Options granted under the LTIP Scheme will become exercisable on the third anniversary of the date of
grant, subject to the conditions described on pages 33 and 34. Exercise of an option is subject to continued
employment unless an individual ceases to be an employee by reason of death, illness, redundancy or other similar
circumstances.
Options were valued using the Monte Carlo option pricing model. Performance conditions were included in the fair
value calculations. The fair value per option granted and the assumptions used in the calculation are as follows:
Grant date
Share price at grant date
Exercise price
Number of employees
Shares under option
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk free rate
Expected dividends expressed as a dividend yield
Possibility of ceasing employment before vesting
Fair value per option
17 March
2011
19 March
2010
20 March
2009
£7.21
–
29
285,430
3
26.5%
10
3
1.71%
1.2%
0%
£4.50
£6.55
–
32
255,844
3
26.4%
10
3
1.92%
2.2%
0%
£4.19
£5.66
–
30
268,799
3
23.1%
10
3
1.89%
2.1%
0%
£3.11
The expected volatility is calculated by reference to historical volatility over the last three years. The expected life is the
average expected period to exercise. The risk free rate of return is the yield on zero–coupon UK government bonds of a
term consistent with the assumed option life.
During the period, 1,881 options (2010: nil) under the 2009 LTIP Scheme, nil (2010: nil) under the 2010 LTIP scheme
and nil (2010: nil) under the 2011 LTIP scheme were forfeited. Nil options were exercised under the 2008 LTIP Scheme
during the period as the vesting criteria were not met. The options under the 2009, 2010 and 2011 LTIP Schemes have
not yet vested.
The charge to the income statement in the period in respect of the LTIP Schemes was £1.0 million (2010: £0.9 million),
all of which are equity based settled.
SAYE Scheme
One Inland Revenue approved SAYE Scheme was in place during the period. Options were valued using the Black–Scholes
option pricing model. No performance conditions were included in the fair value calculations. The fair value per option
granted and the assumptions used in the calculation are as follows:
Grant date
Share price at grant date
Exercise price
Number of employees
Shares under option
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk free rate
Expected dividends expressed as a dividend yield
Possibility of failing to save
Fair value per option
2010 Scheme
22 October 2010
£6.46
£7.01
489
207,231
3
26.6%
3.5
3.25
1.02%
2.2%
0%
£0.86
During the period 22,200 options (2010: nil options) under the 2010 SAYE Scheme were forfeited and 52 options
(2010: nil options) were exercised with a weighted average share price of £7.09.
77 | Dignity plc Annual Report & Accounts 2011
Group Accounts
23 Share–based payments (continued)
The expected volatility is calculated by reference to historical volatility over the last three years. The expected life is the
average expected period to exercise. The risk free rate of return is the yield on zero–coupon UK government bonds of a
term consistent with the assumed option life. The options under the 2010 SAYE Scheme have not yet vested.
The charge to the income statement in the period in respect of the SAYE Schemes was £0.1 million (2010: £0.1 million).
All of which are equity based settled.
24 Net debt
Net amounts owing on all Class A and B Secured Notes per financial statements
Add: unamortised issue costs (notes 16(a) and 16(b))
Gross amounts owing on all Class A and B Secured Notes per financial statements
Net amounts owing on Crematoria Acquisition Facility per financial statements
Add: unamortised issue costs on Crematoria Acquisition Facility (note 16(f))
Gross amounts owing
Accrued interest on Crematoria Acquisition Facility
Cash and cash equivalents (note 15)
Net debt
30 December
2011
£m
31 December
2010
£m
(323.3)
(16.2)
(339.5)
(9.9)
(0.1)
(331.3)
(17.8)
(349.1)
(9.9)
(0.1)
(349.5)
(359.1)
(0.1)
36.9
(0.1)
48.1
(312.7)
(311.1)
In addition to the above, the consolidated balance sheet also includes finance lease obligations and other financial
liabilities which totalled £5.7 million (2010: £5.9 million). These amounts do not represent sources of funding for the
Group and are therefore excluded from the calculation of net debt.
The Group’s primary financial covenant in respect of the Secured Notes requires EBITDA to total debt service to be at
least 1.5 times. At 30 December 2011, the actual ratio was 2.27 times (2010: 2.56 times). This is a direct
consequence of the additional debt issued in 2010.
These ratios are calculated for EBITDA and total debt service on a 12 month rolling basis and reported quarterly.
In addition, both terms are specifically defined in the legal agreement relating to the Secured Notes. As such, they
cannot be accurately calculated from the contents of this report.
25 Reconciliation of cash generated from operations
Net profit for the period
Adjustments for:
Taxation
Net finance costs
Profit on disposal of fixed assets
Depreciation charges
Amortisation of intangibles
Movement in inventories
Movement in trade receivables
Movement in trade payables
External transaction costs
Changes in other working capital (excluding acquisitions)
Employee share option charges (note 23)
2011
£m
34.3
6.0
22.9
(0.2)
9.7
0.1
(0.7)
1.8
–
1.2
(2.0)
1.1
2010
£m
29.0
10.8
20.6
(0.5)
9.0
0.2
(1.0)
(2.4)
5.0
1.1
1.7
1.0
Cash generated from operations before external transaction costs and exceptional pension
contributions
74.2
74.5
Other non–cash transactions
Non–cash charges comprise amortisation of deferred debt issue costs, as discussed in note 16(a), (b) and (c).
78 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
26 Acquisitions
(a) Acquisition of subsidiary and other businesses
Tangible fixed assets
Intangible assets:
Trade names
Cash acquired
Other working capital
Deferred taxation (note 20)
Net assets acquired
Goodwill arising
Satisfied by:
Cash paid on completion funded from internally generated cash flows
Provisional
fair value
£m
1.6
6.9
5.7
(0.2)
(1.7)
12.3
5.3
17.6
17.6
During 2011, the Group acquired the operational interest of 10 funeral locations. These transactions were either
acquisitions of trade and assets or acquisitions of the entire issued share capital of a limited company.
All these acquisitions have been accounted for under the acquisition method. None were individually material and
consequently have been aggregated.
All intangible assets were recognised at their respective fair values. The residual excess over the net assets acquired is
recognised as goodwill. This represents the value to the Group of the funeral locations.
The fair value adjustments contain provisional amounts, which will be finalised in 2012. These adjustments reflect the
recognition of trade names and associated deferred taxation and adjustments to reflect the fair value of other working
capital movements such as debtors, inventories and accruals and are immaterial.
The businesses acquired have their assets and liabilities amalgamated within the existing business structure and as
such, it is impractical to determine, without undue expense and delay due to the immaterial size of each, the post
acquisition results.
It is also not possible to quantify the results of these businesses prior to acquisition as it represents confidential
information relating to the vendors, which the Directors do not have authority to disclose.
(b) Reconciliation to cash flow statement
Cash paid on completion
Cash paid in respect of deferred consideration obligations
Cash acquired on acquisition
Acquisition of subsidiaries and businesses as reported in the cash flow statement
27 Employees and Directors
Wages and salaries
Social security costs
Other pension costs (note 28)
Employee share option charges (note 23)
Key management share option charges (note 23)
2011
£m
17.6
0.1
(5.7)
12.0
2011
£m
59.1
4.6
1.5
0.1
1.0
66.3
2010
£m
7.0
0.1
(1.3)
5.8
2010
£m
57.7
4.6
1.4
0.1
0.9
64.7
79 | Dignity plc Annual Report & Accounts 2011
Group Accounts
27 Employees and Directors (continued)
Key management are considered to be the Board of Directors only and thus no additional disclosures are presented
than that included in the Report on Directors’ Remuneration. The monthly average number of people, including
Directors, employed by the Group during the period was as follows:
Management and administration
Funeral services staff
Crematoria staff
Pre–arranged funeral plan staff
2011
Number
130
2,004
283
59
2,476
2010
Number
117
2,031
263
56
2,467
Directors’ emoluments
Details of Directors’ emoluments are disclosed in the Report on Directors’ Remuneration on pages 36 to 38 which
form part of these consolidated financial statements.
28 Pension commitments
Defined contribution plans
The Group contributes to certain individuals’ personal pension schemes. These contributions are accounted for as
defined contribution schemes.
The pension costs for defined contribution schemes are as follows:
Defined contribution schemes
2011
£m
0.1
2010
£m
0.1
Defined benefit plans
In 2005, the Group operated two defined benefit plans in the UK. On 6 April 2006 the Dignity 1972 Pension Scheme
was merged into the Dignity Pension and Assurance Scheme. A full actuarial valuation was carried out as at 6 April
2008. The valuation results of the merged scheme were updated to 30 December 2011 by a qualified independent
Actuary.
A full actuarial valuation was carried out as at 6 April 2011 and is expected to be approved by the pension trustees at
their meeting on 28 March 2012.
For 2011, the employer’s contribution rate payable was 9.2 per cent of Pensionable Salaries (2010: 9.2 per cent of
Pensionable Salaries). The total monetary contribution paid by the employer for 2011 was £1.4 million (2010: £1.3 million).
In addition special contributions of £nil (2010: £1 million) have been paid to make the total contribution for the year
£1.4 million (2010: £2.3 million).
The principal assumptions used by the actuary were:
Assumptions
Discount rate
Expected long term rate of return on assets
Rate of increase in salaries
Rate of increase in payment of post April 1997 pensionable service
Rate of increase in payment of post April 2005 pensionable service
RPI price inflation assumption
CPI price inflation assumption
2011
2010
4.85%
5.0%
3.25%
2.9%
2.3%
3.0%
2.0%
5.4%
5.7%
3.75%
3.4%
2.5%
3.5%
3.0%
The underlying mortality assumption is based upon the standard table known as S1PA on a year of birth basis, with
CMI_2009 future improvement factors, a long term rate of improvement of 1.25 per cent per annum and rated up two
years for males and down two years for females (2010: PCA00 on a year of birth usage, with medium cohort future
improvement factors subject to a minimum annual rate of future improvement equal to one per cent and rated up by
the addition of four years to age for males and by the addition of one year to age for females).
80 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
28 Pension commitments (continued)
Pensions and other post–retirement obligations
The amounts recognised in the balance sheet are determined as follows:
Fair value of plan assets
Present value of funded obligations
Net asset recognised in the balance sheet
Analysis of amount charged to income statement in respect of defined benefit schemes
Current service cost
Past service cost
Total included within cost of sales (staff costs)
Interest cost
Expected return on plan assets
Total included within finance income
2011
£m
84.5
(83.2)
1.3
2011
£m
1.4
–
1.4
4.1
(4.8)
(0.7)
2010
£m
84.6
(76.1)
8.5
2010
£m
1.1
0.2
1.3
3.9
(4.3)
(0.4)
Expected contributions to the Group’s pension scheme for the 52 week period ended 28 December 2012 are £1.4 million.
Analysis of fair value of plan assets
2011
2010
2009
2008
2007
Equity and property
Debt
Cash
Fair value of plan assets
£m
45.1
22.5
16.9
84.5
%
53.4
26.6
20.0
£m
%
£m
%
£m
%
£m
%
49.1
27.2
8.3
58.0
32.2
9.8
48.0
14.3
14.8
77.1
62.2
18.6
19.2
100.0
31.1
14.8
23.2
69.1
45.0
21.4
33.6
100.0
37.7
–
30.2
67.9
55.5
–
44.5
100.0
100.0
84.6 100.0
At 30 December 2011 and 31 December 2010 the Pension Trustees did not hold, on behalf of the scheme, any
direct investments in the Group, nor did the Group occupy any property or other assets included with the fair value of
plan assets.
Changes in the present value of the defined benefit obligation are as follows:
Present value of obligation at beginning of period
Current service cost
Past service cost
Interest cost
Benefits paid
Contributions by participants
Actuarial (losses)/gains
Present value of obligation at end of period
Changes in the fair value of plan assets are as follows:
Fair value of plan assets at beginning of period
Expected return on plan assets
Contributions by Group
Contributions by participants
Benefits paid
Actuarial (losses)/gains
Fair value of plan assets at end of period
2011
£m
(76.1)
(1.4)
–
(4.1)
3.1
(1.4)
(3.3)
(83.2)
2011
£m
84.6
4.8
1.4
1.4
(3.1)
(4.6)
84.5
2010
£m
(68.0)
(1.1)
(0.2)
(3.9)
3.1
(1.4)
(4.6)
(76.1)
2010
£m
77.1
4.3
2.3
1.4
(3.1)
2.6
84.6
2009
£m
(55.9)
(0.8)
(0.1)
(3.5)
2.9
(1.3)
(9.3)
(68.0)
2009
£m
69.1
3.8
1.3
1.3
(2.9)
4.5
77.1
2008
£m
(61.1)
(0.9)
(0.2)
(3.6)
2.8
(1.3)
8.4
(55.9)
2008
£m
67.9
4.3
1.2
1.3
(2.8)
(2.8)
69.1
2007
£m
(59.3)
(1.0)
(0.1)
(3.0)
2.6
(1.3)
1.0
(61.1)
2007
£m
59.9
3.7
1.2
1.3
(2.6)
4.4
67.9
81 | Dignity plc Annual Report & Accounts 2011
Group Accounts
28 Pension commitments (continued)
Analysis of the movement in the balance sheet asset
At beginning of period
Total expense as above
Actuarial losses
Contributions by Group
At end of period
Cumulative actuarial gains and losses recognised in equity
At beginning of period
Net actuarial losses recognised in the period
At end of period
2011
£m
8.5
(0.7)
(7.9)
1.4
1.3
2011
£m
7.7
(7.9)
(0.2)
2010
£m
9.1
(0.9)
(2.0)
2.3
8.5
2010
£m
9.7
(2.0)
7.7
The actual return on plan assets was £0.2 million (2010: £6.9 million).
History of experience gains and losses
2011
2010
2009
2008
2007
Experience adjustments arising on scheme assets:
Amount (£m)
Percentage of scheme’s assets
Experience adjustments arising on scheme liabilities:
Amount (£m)
Percentage of the present value of the scheme’s liabilities
Present value of scheme liabilities (£m)
Fair value of scheme assets (£m)
Surplus (£m)
(4.6)
5.4%
1.0
1.2%
(83.2)
84.5
1.3
(2.6)
3.0%
(1.1)
1.4%
(76.1)
84.6
8.5
(4.5)
5.8%
(0.3)
0.4%
(68.0)
77.1
9.1
2.8
4.1%
(1.0)
1.8%
(55.9)
69.1
13.2
Change in assumptions
No change
0.25% rise in discount rate
0.25% fall in discount rate
0.25% rise in inflation
0.25% fall in inflation
29 Pre–arranged funeral plans
Liabilities
£m
Assets Surplus/(deficit)
£m
£m
(83.2)
(79.6)
(87.0)
(85.0)
(81.5)
84.5
84.5
84.5
84.5
84.5
1.3
4.9
(2.5)
(0.5)
3.0
(4.4)
6.5%
(0.9)
1.5%
(61.1)
67.9
6.8
Increase/
(decrease) in
surplus
£m
–
3.6
(3.8)
(1.8)
1.7
(a) Contingencies and commitments
Dignity Pre–arrangement Limited, Dignity Securities Limited and Advance Planning Limited are fellow members of the
Dignity Group in the United Kingdom. These companies have sold pre–arranged funeral plans to their clients in the
past. All monies from these sales are held and controlled by three independent Trusts, being the National Funeral
Trust, the Dignity Limited Trust Fund and the Trust for Age UK Funeral Plans respectively. Further details of the
transactions can be found in the financial statements of these companies, which are available from 4 King Edwards
Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP.
The Group has given commitments to certain of these clients to perform their funeral. The agreed amounts payable to
either the Group or to third party funeral directors will be paid out of the funds held in the Trusts.
It is the view of the Directors that none of the commitments given to these clients are onerous to the Group.
(b) Pre–arranged funeral plan trust assets
The market value of the assets of the pre–arranged funeral plan trusts was £446.8 million at 30 December 2011
(2010: £373.8 million) in respect of 220,000 (2010: 200,000) unfulfilled pre–arranged funeral plans. The remaining
45,000 (2010:38,000) unfulfilled pre–arranged funeral plans related to those backed by Insurance Plans, as described
in note 1 to the consolidated financial statements.
82 | Dignity plc Annual Report & Accounts 2011
Group Accounts
Notes to the financial statements continued
for the 52 week period ended 30 December 2011
29 Pre–arranged funeral plans (continued)
The majority of the trustees of the pre–arranged funeral plan trusts are unconnected to the Group, as required by
current UK legislation. The trustees are required to have the Trusts’ liabilities actuarially valued once a year. The latest
valuations were performed as at 30 September 2011 (2010: 24 September 2010) using assumptions determined by
the trustees. These valuations showed the Trusts to have liabilities in respect of the pre–arranged funeral plan trusts of
£373.3 million as at 30 September 2011 (2010: £305.2 million). The corresponding market value of the assets of the
pre–arranged funeral plan trusts was £415.7 million (2010: £357.9 million) as at the same date. Consequently the
actuarial valuation recorded total surpluses of £42.4 million at 30 September 2011 (2010: £52.7 million).
(c) Accounting reporting date
The end of the reporting period of the financial statements of the Trusts may be different to the reporting period of
the financial statements of Dignity plc, but by no more than 7 days.
30 Contingent liabilities
(a) Securitisation
On 11 April 2003, the Group refinanced its debt by way of a whole business securitisation. On 21 February 2006 and
27 September 2010 further Secured Notes were issued on identical terms. As a result, the following guarantees and
charges were granted to BNY Mellon Corporate Trustee Services Limited (formerly BNY Corporate Trustee Services
Limited) in its capacity as Security Trustee in the securitisation:
• The Dignity (2002) Group have granted the Security Trustee fixed and floating charges over the assets and
undertakings of the Dignity (2002) Group;
• Dignity plc has granted the Security Trustee, with full title guarantee a first fixed charge over the shares (and any
monies receivable in respect of the shares) which it holds in Dignity (2004) Limited;
• Dignity (2004) Limited has granted the Security Trustee, with full title guarantee a first fixed charge over the shares
(and any monies receivable in respect of the shares) which it holds in Dignity Holdings No.2 Limited and Dignity
(2002) Limited;
• Dignity Holdings No. 2 Limited has granted the Security Trustee, with full title guarantee a first fixed charge over the
shares (and any monies receivable in respect of the shares) which it holds in Dignity Holdings Limited;
• Dignity Holdings Limited has granted the Security Trustee, with full title guarantee a first fixed charge over the shares
(and any monies receivable in respect of the shares) which it holds in Dignity Mezzco Limited;
• Dignity Holdings Limited has also assigned to the Security Trustee by way of security with full title guarantee, its right
title and interest in the loans (both interest and non interest bearing) to Dignity (2002) Limited;
• Dignity Mezzco Limited has also assigned to the Security Trustee by way of security with full title guarantee, its right
title and interest in the loan to Dignity (2002) Limited.
At 30 December 2011, the amount outstanding in relation to these borrowings was £339.5 million (2010:
£349.1 million).
(b) Crematoria Acquisition Facility
On 24 November 2008, the Group obtained a £10.0 million loan facility from the National Westminster Bank plc
(‘Nat West’), which is fully drawn. As a consequence of the legal structure of this facility:
• Dignity plc has granted Nat West, with full title guarantee a first fixed charge over the shares (and any monies
receivable in respect of the shares) which it holds in Dignity (2008) Limited;
• Dignity (2008) Limited has granted Nat West, with full title guarantee a first fixed charge over the shares (and any
monies receivable in respect of the shares) which it holds in Dignity Crematoria Limited;
• Dignity (2008) Limited and Dignity Crematoria Limited have granted Nat West fixed and floating charges over the
assets and undertakings of each of Dignity (2008) Limited and Dignity Crematoria Limited; and
• Dignity plc have acted as guarantor in the event that Dignity (2008) Limited fails to pay interest due on the facility.
In the opinion of the Directors no liability is likely to crystallise in respect of these guarantees.
At 30 December 2011, the amount outstanding in relation to these borrowings was £10.0 million (2010: £10.0 million).
31 Related party transactions
On 19 May 2010, the Group entered into a contract with Bglobal to have smart meters fitted at some of its locations,
£76,500 has been charged for the period. James Newman is a Non–Executive Director of Bglobal and the transaction
has been formally approved by the Board and is at arm’s length.
83 | Dignity plc Annual Report & Accounts 2011
Group Accounts
31 Related party transactions (continued)
Pre–arrangement trusts
During the period, the Group entered into transactions with the Trusts associated with the pre–arranged funeral plan
businesses. The nature of the relationship with the Trusts is set out in the accounting policies. Amounts may only be
paid out of the Trusts in accordance with the relevant Trust Deeds.
Transactions principally comprise:
• The recovery of marketing and administration expenses in relation to plans sold net of cancellations; and
• Receipts from the Trusts in respect of carrying out funerals.
Transactions also include:
• Receipts from the Trusts in respect of cancellations by existing members;
• Reimbursement by the Trusts of expenses paid by the Group on behalf of the respective Trusts; and
• The payment of realised surpluses generated by the Trust funds as and when the trustees sanction such payments.
Related party transactions are summarised below:
Dignity Limited Trust Fund
National Funeral Trust
Trust for Age UK Funeral Plans
Transactions during the period
Amounts due to the
Group at the period end
2011
£m
0.3
24.3
26.3
2010
£m
0.3
21.2
25.0
2011
£m
–
1.4
1.2
2010
£m
–
1.1
1.3
32 Post balance sheet events
The Group has acquired four funeral locations since the balance sheet date for a total consideration of £1.1 million.
84 | Dignity plc Annual Report & Accounts 2011
Company Accounts
Independent auditors’ report to the members of Dignity plc
for the 52 week period ended 30 December 2011
We have audited the parent company financial statements of Dignity plc for the 52 week period ended 30 December
2011 which comprise the Balance Sheet and the related notes. The financial reporting framework that has been
applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice).
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 29, the directors are responsible
for the preparation of the parent company financial statements and for being satisfied that they give a true and fair
view. Our responsibility is to audit and express an opinion on the parent company financial statements in accordance
with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the parent company’s
circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we
read all the financial and non–financial information in the Annual Report to identify material inconsistencies with the
audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we
consider the implications for our report.
Opinion on financial statements
In our opinion the parent company financial statements:
• give a true and fair view of the state of the company’s affairs as at 30 December 2011;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
• the part of the Report on Directors Remuneration to be audited has been properly prepared in accordance with the
Companies Act 2006; and
• the information given in the Directors’ Report for the 52 week period ended 30 December 2011 for which the parent
company financial statements are prepared is consistent with the parent company financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to
you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent company financial statements and the part of the Report on Directors Remuneration to be audited are not
in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the consolidated financial statements of Dignity plc for the 52 week period ended
30 December 2011.
Matthew Mullins (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Birmingham
7 March 2012
85 | Dignity plc Annual Report & Accounts 2011
Company Accounts
Dignity plc Company balance sheet
as at 30 December 2011
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Total current assets
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Other reserves
Profit and loss account
Total shareholders’ funds
30 December
2011
£m
31 December
2010
£m
Note
C2
C3
C4
C5
C5
C5
C5
C5
C6
136.3
135.2
120.5
29.1
149.6
(14.1)
135.5
271.8
271.8
5.7
17.4
99.3
2.2
147.2
271.8
94.5
33.0
127.5
(13.8)
113.7
248.9
248.9
5.7
17.4
99.3
1.1
125.4
248.9
The financial statements on pages 85 to 89 were approved by the Board of Directors on 7 March 2012 and were signed
on its behalf by:
M K McCollum
Chief Executive
S L Whittern
Finance Director
86 | Dignity plc Annual Report & Accounts 2011
Company Accounts
Notes to the Dignity plc financial statements
for the 52 week period ended 30 December 2011
C1 Principal accounting policies
Basis of preparation
These financial statements are prepared on a going concern basis under the historical cost convention and in
accordance with the Companies Act 2006 and applicable United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice). A summary of the principal accounting policies, which have been
consistently applied, is set out below.
In accordance with the concession granted under Section 408 of the Companies Act 2006, the profit and loss account
of the Company has not been separately presented in the financial statements.
In the current period, the Company’s financial statements have been prepared for the 52 week period ended
30 December 2011. For the comparative period, the Company’s financial statements have been prepared for the
53 week period ended 31 December 2010.
Furthermore, the Company has taken advantage of the exemption provided within FRS 29, Financial Instruments and
Disclosures, not to disclose details of any financial instruments held.
Fixed assets investments
Fixed asset investments are stated at historical cost, less any provision for impairment.
Impairment of fixed assets
The carrying values of fixed assets are reviewed for impairment in periods where events or changes in circumstances
indicate that the carrying value may not be recoverable or at the end of the first full financial year following the
recognition. Any impairment in the value of fixed assets below depreciated historical cost is charged to the profit and
loss account within operating profit. A reversal of an impairment loss is recognised in the profit and loss account to
the extent that the original loss was recognised.
Employee share schemes
The Company operates two employee share schemes: The Save As You Earn Scheme (‘SAYE’) and Long Term Incentive
Plan Scheme (‘LTIP’). See note 23 of the notes to the consolidated financial statements.
The Company applies UITF 44 in respect of share option schemes resulting in the charge for such schemes being
recognised in a subsidiary of the Company. The Company’s financial statements reflect the cost of the scheme as an
increase in the cost of investment in the subsidiary.
Employee share trust
The assets of the employee share trust are held by a separate limited company, of which the Directors consider that
Dignity plc has de facto control. In accordance with UITF 38, Accounting for ESOP Trusts and the substance of the
transaction, the trust’s assets and liabilities are recognised in the Company’s balance sheet within share capital
and reserves.
87 | Dignity plc Annual Report & Accounts 2011
Company Accounts
C2 Investments in subsidiary undertakings
Cost and net book amount
At beginning of the period
Additions in respect of share–based payments
End of period
Company name
Principal activity
Dignity Services
Dignity Funerals Limited
Pitcher and Le Quesne Limited
Dignity Pre–arrangement Limited
Dignity Securities Limited
Intermediate holding company
Funeral services
Funeral directors
Pre–arranged funeral plans
Pre–arranged funeral plans
Advance Planning Limited
Pre–arranged funeral plans
Dignity Finance PLC
Birkbeck Securities Limited
Dignity Finance Holdings Limited
Dignity Holdings No. 2 Limited
Dignity Mezzco Limited
Dignity Holdings Limited
Dignity (2002) Limited
Dignity (2004) Limited
Dignity (2008) Limited
Dignity Crematoria Limited
Finance company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Construction and leasing of
crematoria
Dignity (2011) Limited
Dignity Funerals No.2 Limited
Intermediate holding company
Funeral services
Number of shares at
30 December 2011
203,746,505 Ordinary at 1p each
577,376,905 Ordinary at 0.1p each
100 Ordinary at £1 each
5,001,001 Ordinary at £1 each
19,801 Ordinary at £1 each
750,000 8 pence Redeemable
Preference Shares at £1 each
7,500 A Ordinary at £1 each
2,500 B Ordinary at £1 each
3,863,291 0.0000001 pence
Redeemable Preference
Shares at 1p each
50,000 Ordinary at £1 each
1,102,271 Ordinary at £1 each
50,000 Ordinary at £1 each
2,000,000 Ordinary at £1 each
1,000 Ordinary at £1 each
1,500,000 Ordinary at £1 each
110,000,002 Ordinary at 0.01p each
1,000 Ordinary at £1 each
1 Ordinary at £1 each
10,000 A Ordinary at £1 each
10,000 B Ordinary at £1 each
10,000 C Ordinary at £1 each
10,000 D Ordinary at £1 each
10,000 E Ordinary at £1 each
1 Ordinary share at £1 each
1 Ordinary share at £1 each
£m
135.2
1.1
136.3
Percentage
held
100%
100%
99%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
All of the subsidiaries are incorporated in the United Kingdom except for Pitcher and Le Quesne Limited which is
incorporated in Jersey and is effectively 100 per cent controlled. All of the above shareholdings are held indirectly, with
the exception of Dignity (2004) Limited.
Additions in the period reflect the effect of capital contributions to subsidiaries as a result of share–based payment
schemes operated in those company’s over the shares of Dignity plc.
C3 Debtors
Amounts falling due within one year:
Amounts owed by group undertakings
C4 Creditors: amounts falling due within one year
Amounts due to subsidiary undertakings
Accruals and deferred income
Deferred Dividend Option
Corporation Tax
30 December
2011
£m
31 December
2010
£m
120.5
94.5
30 December
2011
£m
31 December
2010
£m
13.8
0.2
–
0.1
14.1
13.4
0.3
0.1
–
13.8
88 | Dignity plc Annual Report & Accounts 2011
Company Accounts
Notes to the Dignity plc financial statements continued
for the 52 week period ended 30 December 2011
C5 Called up share capital and reserves
Allotted and fully paid Equity shares
54,757,054 (2010: 54,757,002) Ordinary Shares of £0.105 (2010: £0.105) each
30 December
2011
£m
31 December
2010
£m
5.7
5.7
From 1 October 2009, the Companies Act 2006 abolished the requirement for a company to have an authorised share
capital. The Company’s articles have been updated to show there are no restrictions to the Company’s ability to
issue shares.
Each Ordinary Share carries equal voting rights and there are no restrictions on any share.
During the period, the Group received £nil million in relation to the 52 shares issued with a nominal value of
10.5 pence per share.
Reserves and share premium account
At the beginning of the period
Profit for the period
Dividends paid on Ordinary Shares
Effects of employee share options
At end of period
Share
premium
account
£m
17.4
–
–
–
17.4
Capital
redemption
reserve
£m
99.3
–
–
–
99.3
Other
reserves
£m
Profit and
loss account
£m
1.1
–
–
1.1
2.2
125.4
29.3
(7.5)
–
147.2
Total
£m
243.2
29.3
(7.5)
1.1
266.1
The capital redemption reserve represents £80,002,465 B Shares that were issued on 2 August 2006 and redeemed
for cash on the same day and £19,274,610 B Shares that were issued on 10 October 2010 and redeemed for cash on
11 October 2010.
£4.9 million (2010: £3.8 million) in other reserves relates to investments in own shares and therefore reduces profit
available for distribution.
C6 Reconciliation of movements in shareholders’ funds
Profit for the period
Dividends
Effects of employee share options
Gift to Employee Benefit Trust
Shares issued under 2007 LTIP Scheme
Issue of B Shares in respect of Capital Option
Dividend in respect of Special Dividend Option
and Deferred Dividend Option
Net additions to shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
30 December
2011
£m
31 December
2010
£m
29.3
(7.5)
1.1
–
–
–
110.3
(5.1)
0.9
(0.9)
0.9
(19.3)
–
(44.6)
22.9
248.9
271.8
42.2
206.7
248.9
Amounts payable to the Group’s auditors relating to the Company are included in note 5 of the Group financial
statements and are not material to disclose separately.
89 | Dignity plc Annual Report & Accounts 2011
Company Accounts
C7 Staff costs
(a) Employees
There were no staff costs in the period (2010: £nil).
The average number of people, including Non–Executive Directors, employed by the Company during the period was:
Administration and managerial
2011
4
2010
4
(b) Directors’ remuneration
The Directors are directors of the ultimate parent company, Dignity plc and details of their emoluments are included in
pages 36 to 38. They received no emoluments in respect of their services to the Company (2010: £nil).
C8 Related party transactions
There are no related party transactions for either period.
90 | Dignity plc Annual Report & Accounts 2011
Financial record
Summarised consolidated income statement
Revenue
Funeral services
Crematoria
Pre–arranged funeral plans
Underlying operating profit
Funeral services
Crematoria
Pre–arranged funeral plans
Central overheads
Finance costs
Finance income
Underlying profit before tax
Taxation
Underlying profit after tax
Underlying earnings per share (pence)
Operating profit
Profit after tax
Basic earnings per share (pence)
Key performance indicators
2011
£m
2010
£m
2009
£m
2008
£m
2007
£m
146.5
41.6
22.0
210.1
50.8
21.3
5.5
(13.1)
64.5
(25.9)
3.0
41.6
(11.4)
30.2
55.1p
63.2
34.3
62.6p
143.3
37.5
18.3
199.1
49.3
19.9
4.3
(12.5)
61.0
(22.5)
1.9
40.4
(11.7)
28.7
46.4p
60.4
29.0
46.9p
138.5
34.4
11.8
184.7
47.3
17.6
3.5
(12.0)
56.4
(21.6)
1.6
36.4
(10.6)
25.8
40.5p
57.5
26.6
41.8p
137.2
29.2
9.4
175.8
46.3
14.6
2.5
(11.3)
52.1
(21.6)
3.8
34.3
(10.1)
24.2
38.2p
53.2
24.6
38.8p
126.3
25.7
7.5
159.5
42.1
14.0
2.4
(10.9)
47.6
(21.7)
4.2
30.1
(9.1)
21.0
33.4p
47.7
21.6
34.4p
Total estimated number of deaths in Britain (number)
Number of funerals performed (number)
Funeral market share* (per cent)
Number of cremations performed (number)
Crematoria market share (per cent)
Unfulfilled pre–arranged funeral plans (number)
Cash generated from operations (£million)
539,000
62,300
11.3%
47,600
8.8%
265,000
74.2
557,000
64,500
11.4%
45,200
8.1%
238,000
74.5
545,000
65,000
11.8%
42,700
7.8%
216,000
65.3
553,000
68,700
12.3%
39,600
7.2%
204,000
62.3
553,000
66,500
12.0%
38,900
7.0%
197,300
57.5
2011
2010
2009
2008
2007
Net debt
Net amounts owing on Class A and B Secured Notes
per financial statements
Add: unamortised issue costs on Secured Notes
Net amounts owing on Crematoria Acquisition
Facility per financial statements
Add: unamortised issue costs
Gross amounts owing
Accrued interest on Class A and B Secured
Notes (paid 31 December)
Accrued interest on Crematoria Acquisition Facility
Cash and cash equivalents
Net debt
2011
£m
2010
£m
2009
£m
2008
£m
2007
£m
(323.3)
(16.2)
(331.3)
(17.8)
(258.6)
(14.6)
(263.0)
(15.9)
(267.0)
(17.2)
(9.9)
(0.1)
(9.9)
(0.1)
(9.8)
(0.2)
(7.2)
(0.2)
–
–
(349.5)
(359.1)
(283.2)
(286.3)
(284.2)
–
(0.1)
36.9
–
(0.1)
48.1
(9.6)
(0.1)
45.8
(9.7)
–
46.7
(9.9)
–
52.6
(312.7)
(311.1)
(247.1)
(249.3)
(241.5)
91 | Dignity plc Annual Report & Accounts 2011
Summarised consolidated balance sheet
Non–current assets
Goodwill and intangible assets
Property, plant and equipment
Financial and other assets
Retirement benefit asset
Current assets
Cash and cash equivalents
Other current assets
Total assets
Current liabilities
Non–current liabilities
Total liabilities
Equity attributable to shareholders
Total equity and liabilities
NOTES
* Market share excluding funerals performed in Northern Ireland.
2011
£m
2010
£m
2009
£m
2008
£m
2007
£m
194.3
147.6
12.6
1.3
355.8
36.9
30.5
67.4
423.2
45.6
360.4
406.0
17.2
423.2
182.4
133.6
12.0
8.5
336.5
48.1
29.2
77.3
413.8
47.0
371.6
418.6
(4.8)
413.8
175.6
116.8
9.4
9.1
310.9
45.8
25.6
71.4
382.3
48.6
298.2
346.8
35.5
382.3
163.1
110.9
4.5
13.2
291.7
46.7
26.3
73.0
364.7
47.6
298.7
346.3
18.4
364.7
144.3
91.1
4.5
6.8
246.7
52.6
26.1
78.7
325.4
43.3
286.7
330.0
(4.6)
325.4
92 | Dignity plc Annual Report & Accounts 2011
Notice of Meeting
Notice is hereby given that the 2012 Annual General Meeting of Dignity plc (‘the Company’) will be held at DLA Piper UK
LLP, Victoria Square House, Victoria Square, Birmingham, West Midlands, B2 4DL on Thursday 14 June 2012 at 11.00am
for the following purposes:
Ordinary Resolutions
To propose the following as ordinary resolutions:
1. To receive and consider the Group’s financial statements, and the reports of the Directors and auditors thereon for the
52 week period ended 30 December 2011.
2. To approve the Report on Directors’ Remuneration for the 52 weeks ended 30 December 2011 as set out on pages
32 to 38 of the Annual Report 2011.
The Chairman confirms that, following a formal evaluation, the Directors nominated for re-appointment in resolutions
3 to 11 (inclusive) below continue to be effective and demonstrate a commitment to the role. Full biographical details
are on page 28.
3. To re-appoint Peter Hindley, as a Director of the Company.
4. To re-appoint Mike McCollum, as a Director of the Company.
5. To re-appoint Andrew Davies, as a Director of the Company.
6. To re-appoint Richard Portman, as a Director of the Company.
7. To re-appoint Steve Whittern, as a Director of the Company.
8. To re-appoint Ishbel Macpherson, as a Director of the Company.
9. To re-appoint Alan McWalter, as a Director of the Company.
10. To re-appoint Jane Ashcroft, as a Director of the Company.
11. To re-appoint Martin Pexton, as a Director of the Company.
12. To re-appoint PricewaterhouseCoopers LLP as auditors of the Company to hold office from conclusion of the meeting
to the conclusion of the next meeting at which accounts are laid before the Company and to authorise the Directors
to fix their remuneration.
13. To approve the proposed dividend of 9.77 pence per Ordinary Share and to authorise its payment on 29 June 2012
to shareholders on the register of members on 25 May 2012.
14. That the Directors be and are hereby generally and unconditionally authorised pursuant to Section 551 of the
Companies Act 2006 (‘the Act’) to exercise all powers of the Company to allot shares in the Company or to grant
rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of
£1,916,496 provided that (unless previously revoked, varied or renewed) such authority shall expire at the conclusion
of the next Annual General Meeting after passing this resolution or on 13 September 2013 (whichever is earlier), save
that the Company may before such expiry make an offer or agreement which would or might require shares or grant
such rights to be allotted after such expiry and the Board may allot shares or grant such rights in pursuance of such
an offer or agreement as if the authority conferred hereby had not expired.
This authority is in substitution for all existing authorities under Section 551 of the Act (which, to the extent unused
at the date of this resolution, are revoked with immediate effect).
Special Resolutions
To propose the following as special resolutions:
15. That subject to the passing of resolution 14 the Directors be and are hereby empowered pursuant to Section 570 of
the Act to allot equity securities (within the meaning of Section 560 of the Act) for cash pursuant to the authority
conferred by resolution 14 as if Section 561(1) of the Act did not apply to any such allotment provided that this power
shall be limited to the allotment of equity securities:
a) in connection with an offer of equity securities (whether by way of a rights issue, open offer or otherwise):
(i) to holders of Ordinary Shares in the capital of the Company in proportion (as nearly as practicable) to the
respective numbers of Ordinary Shares held by them; and
(ii) to holders of other equity securities in the capital of the Company, as required by the rights of those securities
or, subject to such rights, as the Directors otherwise consider necessary,
but subject to such exclusion or other arrangements as the Board may deem necessary or expedient in relation
to treasury shares, fractional entitlements, record dates or any legal or practical problems under the laws of any
territory or the requirements of any regulatory body or stock exchange;
93 | Dignity plc Annual Report & Accounts 2011
b) to the allotment (otherwise than pursuant to sub paragraph (a) above) of equity securities up to an aggregate
nominal amount of £287,474;
and (unless previously revoked, varied or renewed) shall expire at the conclusion of the next Annual General Meeting
after passing this resolution or on 13 September 2013 (whichever is earlier), save that the Company may before such
expiry make an offer or agreement which would or might require equity securities to be allotted for cash after such
expiry and the Board may allot equity securities for cash in pursuance of such an offer or agreement as if the
authority conferred hereby had not expired.
This power is in substitution for all existing powers under Section 570 of the Act (which, to the extent unused at the
date of this resolution, are revoked with immediate effect).
16. That the Company be and is hereby generally and unconditionally authorised for the purposes of Section 701 of the
Act to make market purchases (as defined in Section 693(4) of the Act) of Ordinary Shares, subject as follows:
a) the maximum aggregate number of Ordinary Shares which may be purchased is 2,737,852;
b) the minimum price (including expenses) to be paid for each Ordinary Share shall be the nominal value of the
Ordinary Share and the maximum price is the higher of:
(i) an amount equal to 105 per cent of the average of the middle market quotation of the Company’s Ordinary
Shares as derived from the Daily Official List of the London Stock Exchange plc for the five business days
immediately prior to the day on which the purchase is made; and
(ii) an amount equal to the higher of the price of the last independent trade of an Ordinary Share and the higher
current independent bid for an Ordinary Share on the trading venue where the purchase is carried out.
Unless previously revoked, varied or renewed the authority conferred by this resolution shall expire at the conclusion
of the next Annual General Meeting of the Company after the passing of this resolution or on 13 September 2013
(whichever is earlier), except in relation to the purchase of shares the contract for which was entered into before the
expiry of such authority and such purchase will or may be executed or completed wholly or partly after such expiry
and accordingly the Company may make a purchase of Ordinary Shares pursuant to any such contract as if this
authority had not expired.
17. That a general meeting (other than an annual general meeting) may be called on with not less than 14 clear days notice.
Registered office:
4 King Edwards Court
King Edwards Square
Sutton Coldfield
West Midlands B73 6AP
By order of the Board
Richard Portman
Company Secretary
7 March 2012
Notes
1.
The right to vote at the meeting is determined by reference to the register of members. Only those shareholders registered in the register of members
of the Company as at 6.00pm on 12 June 2012 (or, if the meeting is adjourned 6.00pm on the date which is two working days before the date of the
adjourned meeting) shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time.
Changes to entries in the register of members after that time shall be disregarded in determining the rights of any person to attend or vote (and the
number of votes they may cast) at the meeting.
2. A member of the Company entitled to attend and to vote may appoint, one or more proxies to attend and vote instead. A proxy need not be a member
of the Company. A proxy form is enclosed. Completed proxy forms must be received by the Company’s Registrar, Equiniti, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA, no later than 48 hours before the time of the Annual General Meeting or in the event the meeting is adjourned, no later
than 48 hours before the time of any adjourned meeting. A shareholder may appoint more than one proxy in relation to the meeting and should do on a
separate proxy form, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. Failure
to specify the number of shares each proxy appointment relates to or specifying a number which when taken together with the numbers of shares set
out in the other proxy appointments is in excess of the number of shares held by the shareholder may result in the proxy appointment being invalid.
Additional proxy forms may be obtained by contacting the Company's registrar on 0871 384 2674* if calling from within the UK, or +44 (0) 121 415
7047 if calling from outside the UK or you may photocopy the proxy form. You will need to state clearly on each proxy form the number of shares in
relation to which the proxy is appointed. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.
The right of a member under Section 324 of the Companies Act 2006 (“the Act") to appoint a proxy does not apply to a person nominated to enjoy
information rights under Section 146 of the Act.
*At the time of publication, calls to this number was charged at 8 pence per minute from a BT landline. The prices charged by BT and other telephony
providers may change from time to time. Lines are open from 8.30am to 5.30pm Monday to Friday.
3. The appointment of a proxy will not preclude a member of the Company from attending, speaking and voting in person at the meeting if he or she
so wishes.
4.
In the case of shares held in uncertificated form, the Company pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies
that only members registered on the register of members of the Company at 6.00pm on 12 June 2012 shall be entitled to attend and vote at the
meeting in respect of the number of shares registered in their name at that time. Changes to entries on the register of members after 6.00pm on
12 June 2012 shall be disregarded in determining the rights of any person to attend, speak or vote at the meeting.
94 | Dignity plc Annual Report & Accounts 2011
Notice of Meeting continued
5. The following are available for inspection at the Company’s registered office during normal business hours on any weekday (excluding public holidays)
and will be available for at least 15 minutes prior to, and during, the Annual General Meeting:
6.
7.
8.
• the register of Directors’ interests and those of their immediate families in the share capital of the Company;
• copies of the Directors’ service contracts and letters of appointment; and
• a copy of the Company’s memorandum and articles of association.
Biographical details of those Directors who are offering themselves for re-election at the meeting are set out on page 28.
Total Voting Rights: As at 13 April 2012 (being the last practicable date before the publication of this notice), the Company's issued share capital
consists of 54,757,054 Ordinary Shares of 10.5 pence, (carrying one vote each).
Shareholders have the right to ask questions at the meeting relating to the business being dealt with at the meeting in accordance with Section 319A
of the Act. The Company must answer any such question unless:
(a) to do so would interfere unduly with the preparation for the meeting or would involve the disclosure of confidential information;
(b) the answer has already been given on a website in the form of an answer to a question; or
(c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
9.
The information required by Section 311 of the Act to be published in advance of the meeting, which includes the matters set out in this notice and
information relating to the voting rights of shareholders, is available at www.dignityfunerals.co.uk/corporate.
10. Members can appoint proxies electronically by logging on to the website www.sharevote.co.uk. You will need your voting reference numbers (the voting
ID, Task ID and shareholder reference number shown on your form of proxy). Alternatively, if you have registered for a Shareview portfolio, please access
the Equiniti shareview website at www.shareview.co.uk, by entering your portfolio identification particulars and click on the link ‘vote’ under your Dignity
plc holding details. For an electronic proxy appointment to be valid, the appointment must be received by no later than 11.00am on 12 June 2012.
11. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures
described in the CREST Manual (available at www.euroclear.com/CREST). CREST personal members or other CREST sponsored members and those
CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s) who will be able
to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy
Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s (formerly CRESTCo's) specifications and must contain
the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of
a proxy or an amendment to the instruction given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the
issuer's agent (ID RA 19) by no later than 11.00am on 12 June 2012. No such message received through the CREST network after this time will be
accepted. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST
Applications Host) from which the registrars are able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time,
any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear UK & Ireland Limited does not
make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the
input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s))
such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection,
CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST
Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
12. Where a copy of this notice is being received by a person who has been nominated to enjoy information rights under Section 146 of the Act ("nominee"):
(a) the nominee may have a right under an agreement between the nominee and the member by whom he was nominated, to be appointed, or to have
someone else appointed, as a proxy for the meeting; or
(b) if the nominee does not have any such right or does not wish to exercise such right, the nominee may have a right under any such agreement to
give instructions to the member as to the exercise of voting rights.
The statement of the rights of the shareholders in relation to the appointment of proxies in notes 2, 3, 10 and 11 does not apply to a nominee.
The rights in such notes can only be exercised by shareholders of the Company.
13. A shareholder which is a corporation may authorise one or more persons to act as its representative(s) at the meeting. Each such representative may
exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual shareholder, provided that (where there
is more than one representative and the vote is otherwise than on a show of hands) they do not do so in relation to the same shares.
14. A shareholder or shareholders meeting the qualification criteria set out in note 17 below may require the Company to give shareholders notice of a
resolution which may properly be proposed and is intended to be proposed at the meeting in accordance with Section 338 of the Act.
A resolution may properly be proposed unless (i) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the
Company's constitution or otherwise), (ii) it is defamatory of any person, or (iii) it is frivolous or vexatious.
The business which may be dealt with at the meeting includes a resolution circulated pursuant to this right.
Any such request must:
(a) identify the resolution of which notice is to be given, by either setting out the resolution in full or, if supporting a resolution requested by another
shareholder, clearly identifying the resolution which is being supported;
(b) comply with the requirements set out in note 18 below; and
(c) be received by the Company no later than six weeks before the meeting.
95 | Dignity plc Annual Report & Accounts 2011
15. A shareholder or shareholders meeting the qualification criteria set out in note 17 below may require the Company to include in the business to be
dealt with at the meeting any matter (other than a proposed resolution) which may properly be included in the business in accordance with Section 338
of the 2006 Act.
A matter may properly be included unless (i) it is defamatory of any person, or (ii) it is frivolous or vexatious.
Any such request must:
(a) identify the matter to be included in the business, by either setting out the matter in full or, if supporting a matter requested by another shareholder,
clearly identifying the matter which is being supported;
(b) set out the grounds for the request;
(c) comply with the requirements set out in note 18 below; and
(d) be received by the Company no later than six weeks before the meeting.
16. A shareholder or shareholders who meet the qualification criteria set out in note 17 below may require the Company to publish on its website a
statement setting out any matter that such shareholders propose to raise at the meeting relating to either the audit of the Company's accounts
(including the auditors' report and the conduct of the audit) that are to be laid before the meeting or any circumstances connected with an auditor
of the Company ceasing to hold office since the last annual general meeting of the Company in accordance with Section 527 of the Act.
Any such request must:
(a) identify the statement to which it relates, by either setting out the statement in full or, if supporting a statement requested by another shareholder,
clearly identifying the statement which is being supported;
(b) comply with the requirements set out in note 18 below; and
(c) be received by the Company at least one week before the meeting.
Where the Company is required to publish such a statement on its website:
(i) it may not require the shareholders making the request to pay any expenses incurred by the Company in complying with the request;
(ii) it must forward the statement to the Company's auditors no later than the time when it makes the statement available on the website; and
(iii) the statement may be dealt with as part of the business of the meeting.
17.
In order to require the Company (i) to circulate a resolution to be proposed at the meeting as set out in note 14, (ii) to include a matter in the business
to be dealt with at the meeting as set out in note 15, or (iii) to publish audit concerns as set out in note 16, the relevant request must be made by:
(a) a shareholder or shareholders having a right to vote at the meeting and holding at least five per cent of the total voting rights of the Company; or
(b) at least 100 shareholders having a right to vote at the meeting and holding, on average, at least £100 of paid up share capital.
For information on voting rights, including the total voting rights of the Company, see note 7 above and the website referred to in note 9 above.
18. Any request by a shareholder or shareholders to require the Company (i) to circulate a resolution to be proposed at the meeting as set out in note 14, (ii)
to include a matter in the business to be dealt with at the meeting as set out in note 15, or (iii) to publish audit concerns as set out in note 16:
(a) may be made either:
(i) in hard copy, by sending it to Dignity plc, 4 King Edwards Court, King Edwards Square, Sutton Coldfield, B73 6AP; or
(ii) in electronic form, by faxing it to +44 (0) 121 321 5644, marked for the attention of the Company Secretary or by e-mail to
CompanySecretary@dignityuk.co.uk (please state "Dignity plc: AGM" in the subject line of the email);
(b) must state the full name(s) and address(es) of the shareholder(s); and
(c) (where the request is made in hard copy form) must be signed by the shareholder(s).
19. Except as provided above, shareholders who wish to communicate with the Company in relation to the meeting should do so using the following means:
(a) calling our shareholder helpline on +44 (0) 871 384 2674; or
(b) by post, by sending it to Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA.
20. You may not use any electronic address provided in either this Notice of General Meeting or any related documents (including the Proxy form) to
communicate with the Company for any purpose other than those expressly stated.
96 | Dignity plc Annual Report & Accounts 2011
Shareholder information
General enquiries may be addressed to the Company Secretary, Richard Portman, at the Company’s registered office.
Other useful information is as follows:
General information
The Company is a public limited company which is listed on the London Stock Exchange and is incorporated and
domiciled in the United Kingdom.
Company registrars
Enquiries concerning shareholdings, change of address or other particulars, should be directed in the first instance
to the Company’s Registrars, Equiniti. They also provide a range of online shareholder information services at
www.shareview.co.uk where shareholders can check their holdings and find practical help on transferring shares and
updating personal details. Alternatively they can be contacted by telephone on +44 (0) 871 384 2674* if calling from
within the UK, or +44 (0) 121 415 7047 if calling from outside the UK, or by fax on +44 (0) 871 384 2100* if faxing
from within the UK, or +44 (0) 190 369 8403 if faxing from outside the UK.
*At the time of publication, calls to these numbers were charged at 8 pence per minute from a BT landline. The prices
charged by BT and other telephony providers may change from time to time. Lines are open from 8.30am to 5.30pm
Monday to Friday.
Shareholder communications
Shareholder documents are only sent in paper format to shareholders who have elected to receive documents in this
way. This approach enables the Company to reduce printing and distribution costs and its impact on the environment.
Shareholders who have not elected to receive paper copies are sent a notification whenever shareholder documents
are published to advise them how to access the documents via the Group website at www.dignityfuneralsplc.co.uk.
Shareholders may also choose to receive this notification via email with a link to the relevant page on the website.
Shareholders who wish to receive email notification should register online at www.shareview.co.uk click on ‘Register’
under the ‘Portfolio’ section. You will require your Shareholder Reference Number, which is given on your share certificate
or tax dividend voucher. Choosing e-mail notification will result in you joining the Equiniti Shareview Service in accordance
with its terms and conditions, which you can find at www.shareview.co.uk/terms.
Share price information
The latest Dignity plc share price can be obtained via the Company’s investor website www.dignityfuneralsplc.co.uk.
It can also be obtained in the UK on Ceefax.
Unsolicited mail
The Company is obliged by law to make its share register available upon request to the public and to other organisations
which may use it as a mailing list resulting in shareholders receiving unsolicited mail. Shareholders wishing to limit the
receipt of such mail should write to the Mailing Preference Service, Freepost 29 LON20771, London W1E 0ZT or telephone
+44 (0) 845 703 4599 for an application form. Calls to this number are charged at local rate.
Annual General Meeting
The Company’s Annual General Meeting will be held on 14 June 2012, at 11.00am at DLA Piper UK LLP, Victoria Square
House, Victoria Square, Birmingham, West Midlands, B2 4DL.
Auditors:
PricewaterhouseCoopers LLP
Cornwall Court
19 Cornwall Street
Birmingham B3 2DT
Joint Brokers:
Panmure Gordon & Co
Moorgate Hall
155 Moorgate
London EC2M 6XB
Investec
A division of Investec Bank plc
2 Gresham Street
London EC2V 7EE
Principal Bankers:
Royal Bank of Scotland plc
West Midlands Corporate Office
2 St Philips Place
Birmingham B3 2RB
Legal Adviser:
DLA Piper UK LLP
Victoria Square House
Victoria Square
Birmingham B2 4DL
IBC | Dignity plc Annual Report & Accounts 2011
Contact details and advisers
Registered Office:
Dignity plc
4 King Edwards Court
King Edwards Square
Sutton Coldfield
West Midlands B73 6AP
Tel: +44 (0) 121 354 1557
Fax: +44 (0) 121 321 5644
Email: enquiries@dignityuk.co.uk
www.dignityfuneralsplc.co.uk
Company Secretary:
Richard Portman FCA
Registered Number:
4569346
Registrars:
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Tel: +44 (0) 871 384 2674
Fax: +44 (0) 871 384 2100
www.shareview.co.uk
Financial calendar
7 March 2012
Preliminary announcement
of 2011 results
14 June 2012
Annual General Meeting
29 June 2012
2012 financial half year end
29 June 2012 (subject to shareholder approval)
Payment of 2011 final dividend
31 July 2012 (provisional)
Announcement of interim results
26 October 2012 (provisional)
Payment of 2012 interim dividend
28 December 2012
Financial period end
Acknowledgements
Dignity would like to thank all those who participated in producing this
Annual Report, particularly the members of staff for their contributions.
Designed & produced by Bexon Woodhouse
www.bexonwoodhouse.com
Main photography by Bexon Woodhouse
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Dignity plc
4 King Edwards Court
King Edwards Square
Sutton Coldfield
West Midlands B73 6AP
For more information on Dignity,
please visit our investor relations website:
www.dignityfuneralsplc.co.uk