Dignity plc
4KingEdwardsCourt
KingEdwardsSquare
SuttonColdfield
WestMidlandsB736AP
FormoreinformationonDignity,
pleasevisitourinvestorrelationswebsite:
www.dignityfuneralsplc.co.uk
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Dignity plc Annual Report & Accounts 2012
Every day:
We are
committed to
client service
excellence
About Dignity
At28December2012Dignityowned636funerallocationsandoperated37crematoria
intheUnitedKingdom.TheGroupcontinuestohaveastrongmarketpresencein
pre-arrangedfuneralplans,wherepeopleplanandpayfortheirfuneralinadvance.
WeareaFTSE250companylistedontheLondonStockExchange,withover
2,550employeesservingfamiliesandlocalcommunitiesacrosstheUnitedKingdom
forgenerations.
Helpingpeopleatoneofthemostdifficulttimesintheirlivesremainsatthevery
heartofeverythingwedo.
Contents
Our Business
Keyfinancialhighlights
01
02 Dignityataglance
03 Ourperformancein2012
FromtheChairman
04
05
Chief Executive’soverview
06 Ourconsistentstrategyforgrowth
07 Ourcommitmenttoclientserviceexcellence–
TheDignityclientsurvey
08 Dignitytoday
09 Ourproudheritage
10 Businessreview
16
Financialreview
19 Ourkeyperformanceindicators
Principalrisksanduncertainties
20
Corporateandsocialresponsibility
22
Governance
32 Boardof Directors
34
45 Directors’statementoncorporategovernance
51 Directors’ report
ReportonDirectors’remuneration
Financial Statements
54
Group Accounts
Independentauditors’reporttothemembers
of Dignity plc
Consolidatedincomestatement
Consolidatedstatementof comprehensiveincome
Consolidatedbalancesheet
Consolidatedstatementof changesinequity
Consolidatedstatementof cashflows
55
55
56
57
58
59 Notestothefinancialstatements
92
Company Accounts
Independentauditors’ reporttothemembers
of Dignityplc
93 DignityplcCompanybalancesheet
94 NotestotheDignityplcfinancialstatements
97
Financialrecord
Other Information
99 Noticeof Meeting
103 Shareholderinformation
104 Contactdetailsandadvisers
Financialcalendar
Front cover: LouiseBainton,FuneralServiceArranger
atWKaye&SoninLeeds,whopassedtheNational
Associationof FuneralDirectorsDiplomain2012.
Our business
Governance
Financial statements
Other information
Key financial highlights
Delivering a strong performance
Current period financial highlights 2012 2011 Increase %
Revenue (£million) 229.6 210.1 9
Underlying operating profit(a) (£million) 69.4 64.5 8
Underlying profit before tax(a) (£million) 46.1 41.6 11
Underlying earnings per share(b) (pence) 62.8 55.1 14
Cash generated from operations(c) (£million) 83.3 74.2 12
Operating profit (£million) 68.7 63.2 9
Profit before tax (£million) 45.4 40.3 13
Basic earnings per share (pence) 65.1 62.6 4
Interim dividend(d) (pence) 5.36 4.87 10
Final dividend(e) (pence) 9.77 8.88 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)
and exceptional items, 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 declared and paid in the period out of earnings generated in the same period.
(e) The final dividend represents the final dividend that was declared and paid in the period relating to the earnings generated in the previous period.
+9%
Revenue up 9%
to £229.6 million
+8%
Underlying operating profit
up 8% to £69.4 million
+14%
Underlying earnings per share
up 14% to 62.8 pence per share
Revenue (£m)
Underlying operating profit (£m)
Underlying earnings per share (pence)
199.1
210.1
229.6
184.7
175.8
240
220
200
180
160
140
120
100
80
60
40
20
0
70
60
50
40
30
20
10
0
61.0
64.5
69.4
52.1
56.4
62.8
55.1
38.2
40.5
46.4
70
60
50
40
30
20
10
0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Revenue by area (£m)
Underlying operating profit by area* (£m)
Funeral services 157.9
Crematoria 46.6
Pre-arranged funeral
plans 25.1
Funeral services 54.2
Crematoria 23.3
Pre-arranged funeral
plans 6.5
*Excludes central overheads
of £14.6 million
01 | Dignity plc Annual Report & Accounts 2012
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
At 28 December 2012, we operated a
network of 636 funeral locations throughout
the United Kingdom generally trading under
established local trading names.
Funeral services revenues relate to the
provision of funerals and ancillary items
such as memorials and floral tributes.
In 2012, the Group conducted 63,200
funerals, which represents approximately
11.2 per cent of estimated total deaths
in Britain.
99.3%
99.3 per cent of clients said that we met
or exceeded their expectations
Number of funeral locations in the UK
636
63,200
Number of funerals conducted during 2012
Business overview
We are the largest single operator of
crematoria in Britain. At 28 December 2012,
we operated 37 crematoria in England
and Scotland.
Crematoria revenues arise from cremation
services and the sale of memorials and
burial plots at the Group’s crematoria and
cemeteries. In 2012, we carried out 50,500
cremations representing 9.2 per cent of
estimated total deaths in Britain.
365
Our grounds are open 365 days
of the year
37
Number of crematoria Dignity operates in
England and Scotland
50,500
Number of cremations conducted during 2012
Pre-arranged funeral plans
Business overview
The Group has a strong market presence in
the provision of pre-arranged funeral plans
with 290,000 unfulfilled funeral plans as at
28 December 2012.
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. Dignity works with a number
of reputable affinity partners.
525,000
We have already helped more than
525,000 people arrange their funeral
in advance
290,000
Number of unfulfilled funeral plans as at
28 December 2012
02 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Our performance in 2012
The Group has performed strongly in 2012. Revenue is up 9 per cent, underlying operating
profits are up 8 per cent and underlying earnings per share are up 14 per cent. We continued
to make good progress across all our operations.
Operational and financial summary
Group operating profits
share (%)
Revenue up 8%
to £157.9 million
Underlying operating profit
up 7% to £54.2 million
Revenue (£m)
Underlying operating profit (£m)
137.2
138.5
143.3
146.5
157.9
65%
Funeral services
160
140
120
100
80
60
40
20
0
46.3
47.3
49.3
50.8
54.2
60
50
40
30
20
10
0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Operational and financial summary
Operational and financial summary
Group operating profits
share (%)
Revenue up 12%
to £46.6 million
Underlying operating profit
up 9% to £23.3 million
Revenue (£m)
Underlying operating profit (£m)
28%
Crematoria
37.5
41.6
46.6
34.4
29.2
50
45
40
35
30
25
20
15
10
5
0
23.3
19.9
21.3
17.6
14.6
25
20
15
10
5
0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Operational and financial summary
Group operating profits
share (%)
Total unfulfilled pre-arranged
funeral plans increased to 290,000
Underlying operating profit
up 18% to £6.5 million
7%
Total number of unfulfilled plans
Underlying operating profit (£m)
290,000
265,000
238,000
204,000 216,000
300,000
275,000
250,000
225,000
200,000
175,000
150,000
125,000
100,000
6.5
5.5
4.3
3.5
2.5
7
6
5
4
3
2
1
0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Pre-arranged funeral plans
03 | Dignity plc Annual Report & Accounts 2012
From the Chairman
A year of continued
strong revenue and
profit growth
Results
In 2012, Dignity continued to deliver strong growth across
all areas of its business.
Underlying operating profits increased eight per cent to
£69.4 million (2011: £64.5 million). Underlying earnings
per share increased 14 per cent to 62.8 pence per Ordinary
Share (2011: 55.1 pence per Ordinary Share).
Dividends
The Board is proposing a final dividend of 10.75 pence per
Ordinary Share to be paid on 28 June 2013 to members
on the register at close of business on 24 May 2013. This
dividend is subject to the approval of shareholders at the
Annual General Meeting on 6 June 2013. This final dividend
represents a 10 per cent increase on the previous year and
continues the rate of increase seen historically.
The Board
In last year’s annual report, I described changes to the
Board’s composition that were effective from 1 April 2012.
All these changes have gone well and the Board continues
to operate effectively.
I would like to thank all the members of the Board for
their support in the year and recognise the significant
contributions Alan McWalter has already made as Senior
Non-Executive Director and Chair of the Remuneration
Committee; Ishbel Macpherson has made as Chair of the
Audit Committee; and Jane Ashcroft and Martin Pexton
have made in their first year on the Board.
Peter Hindley, Chairman
Governance
The Board is committed to the highest standards of
corporate governance in order to achieve its objectives and
meet the necessary standards of accountability and integrity.
The Directors’ Statement on Corporate Governance and the
Report on Directors’ Remuneration on pages 34 to 44 provide
a description of how the main and supporting principles
of The UK Corporate Governance Code (2010) have been
applied within Dignity plc during 2012.
Our people
One of Dignity’s strengths is that it has remained focused
on fundamentally the same strategy for over ten years. The
strategy is reliant on our staff continuing to deliver very high
levels of service. Once again this year, the service we have
provided our clients has been outstanding and I would like
to pay tribute to every member of staff within the business
that has helped to achieve this.
Outlook for 2013
2013 has already seen exciting developments for the Group,
with the announcement in January of the acquisition of Yew
Holdings Limited (Yew) for £58.3 million in cash. This was
partly financed with debt, with the balance of proceeds from
a £24.2 million equity placing, the first since the Group’s
flotation in 2004. This placing was over subscribed, which
was a pleasing sign of support for the Group.
I am sure that this acquisition will create value for our
shareholders in the coming years.
The Board’s expectations are positive and unchanged, with
core operational performance expected to deliver improved
profitability in the year.
“One of Dignity’s strengths is
that it has remained focused on
fundamentally the same strategy
for over ten years.”
+8%
Underlying operating
profit up 8 per cent to
£69.4 million (2011:
£64.5 million).
10.75 pence
Final dividend of 10.75
pence. An increase of
10 per cent on the
previous year, continuing
the rate of increase
seen historically.
04 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Chief Executive’s overview
We aim to achieve our
business objectives in a
caring and human manner
Mike McCollum, Chief Executive
Our performance
I am pleased with the performance of the Group, with
underlying operating profits increasing eight per cent and
underlying earnings per share increasing 14 per cent to
62.8 pence. Each operating division has made good
progress in the year and is well placed for the future.
Valuing our people
The performance we achieve is a result of the hard work,
dedication and diligence of all our people across the Group.
We continuously strive to attract, develop and retain the best
people, enabling them to fulfil their potential and meet and
exceed our clients’ expectations.
The recent acquisition of Yew has expanded our presence
in the North of England and offers exciting opportunities
for the Group.
A consistent strategy and resilient business model
We continue to believe that the strategy we have used for
over ten years remains the most appropriate one for this
business and has created significant value for shareholders.
Our objectives are simple: prioritise client service, manage
our operations efficiently, expand our portfolio of funeral
and crematoria locations and gain new clients through the
sale of pre-arranged funeral plans.
A shareholder who invested at the time of our flotation
in 2004 has received their entire initial investment back
in cash and still has a shareholding worth approximately
three and a half times that initial investment.
Meeting clients’ needs and striving for excellence
We are focused on service because our clients do not use
us by chance. Three quarters have used us before or choose
us because of recommendation and reputation. They return
and recommend us because of the quality service we provide.
I am delighted that yet again this year, customer satisfaction
has been at very high levels. However, we are not complacent
and continue to work with our staff to help them improve
the service we provide year over year. Quite rightly, clients
expectations have risen over time. It is up to us to continue
to improve our service to meet these increasing expectations.
In the past year, 99.3 per cent of clients said that we met
or exceeded their expectations.
Leveraging our financial stability and strength
Our robust business model and stable, cash generative
nature continues to allow us to maintain a suitable level
of debt within the business. We continue to believe that
periodically rebalancing our capital structure is an efficient
activity and is a meaningful way of creating value for
our shareholders.
Managing our business responsibly
As an industry leader, we aim to be both successful and
good corporate citizens. We aim to achieve our business
objectives in a caring and human manner, acting responsibly
in all our relationships and playing a positive role in the
communities we serve.
During the year, we completed our project to ensure we
have mercury abatement equipment installed at 20 of
our crematoria locations. We have also progressed our
programme of installing smart meters in our locations,
thus reducing our environmental footprint and controlling
our costs.
Our marketplace and future regulatory landscape
The market remains competitive. Within funerals, new
competitors continue to open putting pressure on existing
operators. This is not something new and is a feature of the
industry that we have successfully dealt with for many years.
With crematoria, lower land values means that it is possible
to acquire land and build new crematoria. We are focused
on identifying and acquiring such opportunities wherever
possible. Nevertheless, the number of crematoria in the
UK being developed is limited.
The funeral industry remains unregulated. There have
been calls for regulation in the past year. I would welcome
regulation of the industry and am sure that Dignity’s
operations could set the benchmark for the facilities and
practices required under such a situation.
Creating value and delivering on our key priorities
As a board, we are committed to creating value for our
shareholders. We believe this is best achieved by prioritising
client service, continuing to run the core business efficiently,
acquiring quality funeral and crematorium businesses where
possible, selling pre-arranged funeral plans and then using
our stable, cash generative business model to leverage our
capital structure. However, we will do this remembering that
every day, we are here to help people through one of the
most difficult times in their lives.
05 | Dignity plc Annual Report & Accounts 2012
Our consistent strategy for growth
We are here to help people at one of the most difficult times in their lives.
We do this with compassion, respect, openness and care.
Our aim is to be the company everyone knows they can trust in their time of need.
In turn we believe this will also allow us to create value for shareholders and through
our clear, consistent strategy and resilient business model, the Group is well positioned
to continue to deliver long term sustainable growth.
Our strategy
We plan to grow the profitability of our business by:
• Continuing to control our operating costs;
• 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;
• Developing or acquiring additional funeral locations;
• Developing, managing or acquiring additional
crematoria; and
• National marketing, principally through affinity partners,
of pre-arranged funeral plans.
Our key priorities
Ensuring the highest levels of client service excellence:
Continued investment:
• High levels of client service demonstrably affect clients’
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.
• 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.
Delivering on our strategy
98.2%
18 locations
98.2 per cent of clients would recommend us.
We have acquired 18 funeral locations in the period
for an investment of £10.6 million.
£2.0 million
£11.8 million
Discretionary bonuses totalling £2.0 million were
made to staff across the business.
We have invested £11.8 million maintaining our
properties and replacing our specialist vehicles.
06 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Our commitment to client service excellence ~ The Dignity client survey
Serving the people in our local communities 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.
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.
We strive to set the highest standards for the funeral profession:
In the last five years, we have received over 165,000 responses and from the
responses in the last year we know that, having received the final invoice:
99.3% (2011: 99.3%)
99.7% (2011: 99.7%)
99.3 per cent of respondents said that we met or exceeded
their expectations;
99.7 per cent thought our staff listened to their needs
and wishes;
98.2% (2011: 98.1%)
98.2 per cent of respondents would recommend us;
99.9% (2011: 99.9%)
99.9 per cent thought our staff were respectful;
99.8% (2011: 99.8%)
99.8 per cent thought our premises were clean and tidy;
99.8% (2011: 99.7%)
99.8 per cent thought our vehicles were clean and
comfortable;
99.3% (2011: 99.2%)
99.3 per cent of clients agreed that our staff had fully
explained what would happen before and during the funeral;
99.3% (2011: 99.3%)
99.3 per cent agreed that our staff were compassionate
and caring;
98.9% (2011: 98.8%)
98.9 per cent said that the funeral service took place
on time; and
98.8% (2011: 98.8%)
98.8 per cent said that the final invoice matched the
estimate provided.
This consistent level of service underpins our funeral business.
07 | Dignity plc Annual Report & Accounts 2012
Dignity today
A leading provider of funeral
related services
Dignity is the leading provider of funeral related services in
the UK. Our business continues to grow due to the dedication
of all our people and working at the heart of our communities is
a crucial part of our success and our future. As an industry leader,
we strive to set the highest standards of service, facilities and care,
ensuring we are well positioned to meet the needs of our clients
for generations to come.
Today
Dignity is a British company that is
listed on the London Stock Exchange.
Dignity maintains the rich heritage of
funeral businesses that have served their
local communities for generations and
strives to set the highest standards in
the profession for client service and
care for the deceased.
What we believe in
We are here to help people at one of the
most difficult times in their lives. We do
this with compassion, respect, openness
and care. We want to be the company
that everyone knows they can trust in
their time of need.
In our communities
Everyone within Dignity is extremely
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.
Our staff support hundreds of local
initiatives, good causes, clubs and
events every year.
FTSE4Good
Dignity has been identified by the FTSE
Group in its FTSE4Good initiative as a
company that meets globally recognised
standards of corporate responsibility.
Investing in our business
Dignity invests approximately £4.5
million per annum in new vehicles and
significant sums each year maintaining
its premises and providing staff training.
This investment helps to meet and
exceed our clients’ expectations.
08 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Our proud heritage
Serving local communities
for generations
We have a rich and proud heritage and many of our businesses have
been serving their local communities for generations. Our oldest funeral
location was established in 1812 and our oldest crematorium in 1903.
We value this heritage as a core strength at the heart of our business –
local people, dedicated to the communities they serve with a wealth
of knowledge and experience.
2008
Northern Ireland
Dignity acquires
six locations in
Northern Ireland.
Three of these are
in Belfast with one
each in Bangor,
Newtonabbey and
Carrickfergus.
1994
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.
1950
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.
1930
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.
1928
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.
1914
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.
1903
Birmingham
Crematorium
Birmingham
Crematorium
opened in 1903.
At this time it was
only one of nine
crematoria in
the UK.
1880
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.
1876
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.
1884
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.
1857
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.
1857
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.
1855
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.
1848
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.
1812
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.
09 | Dignity plc Annual Report & Accounts 2012
Business review
Focused on delivering
client service excellence
“The quality of
our service is borne
out in the responses
we receive to the
surveys we send out
to each family we
care for. ”
Andrew Davies
Operations Director
Key points
36 locations
The Group’s funeral
location portfolio increased
by 36 reflecting increases
from acquisitions and new
satellite funeral locations.
£9.7million
£9.7 million has been
invested in improving and
maintaining our vehicles
and premises.
99.3%
99.3 per cent of
respondents to our client
survey in 2012 said that
we met or exceeded
their expectations.
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 seven per cent of the
Group’s operating profits in 2012.
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 2012 was 551,000 compared to 539,000
for 2011. 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.
Although annual deaths declined significantly
between the early 1990s and 2012, from
640,000 to 551,000, the last five years
have seen a more stable number of deaths
fluctuating between 553,000 and 539,000
per annum.
Funeral services
Overview
Funeral services relate to the provision
of funerals and ancillary items, such as
memorials and floral tributes.
Performance
As at 28 December 2012, the Group operated
a network of 636 (2011: 600) funeral
locations throughout the United Kingdom,
generally trading under local established
names. During the period, the Group
conducted 63,200 funerals (2011: 62,300).
Approximately two per cent of these
funerals were conducted in Northern Ireland.
Excluding Northern Ireland, these funerals
represent approximately 11.2 per cent
(2011: 11.3 per cent) of total estimated
deaths in Britain. Whilst funerals divided
by estimated deaths is a reasonable measure
of our market share, the Group does not
have a complete national presence and
consequently, this calculation can only
ever be an estimate.
Underlying operating profits were £54.2
million (2011: £50.8 million), an increase
of seven per cent. We consider this to be
a good performance.
This performance has been achieved through
successful execution of our strategy. Average
income per funeral has increased, whilst
margins are slightly lower as a consequence
of the effect of new openings in the period
being at lower margins as well as some one
off costs absorbed in the second half
of the year.
Progress and Developments
Investment in the core portfolio
We continue to invest in our premises and
our fleet, with a total of £9.7 million of
capital expenditure incurred in 2012.
Approximately 60 per cent of this was
used to maintain our fleet of hearses and
limousines. The remainder was used to
improve our premises, including ensuring
our mortuary areas are maintained to a high
standard. We believe this investment in client
facing areas and behind the scenes is critical
in ensuring the greatest care possible can
be given to a family’s loved one.
Funeral location portfolio
The Group’s funeral location portfolio
increased by 36 locations in the year,
reflecting acquisitions, disposals and the
continuation of the new satellite programme,
which started in 2010.
Net acquisition investment of £10.6 million
increased the portfolio by 18 funeral
locations in the United Kingdom. Each of
these acquisitions will fit well within the
Group’s existing network.
19 new satellite funeral locations (2011: 25)
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.
10 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
We are the leading provider of funeral related
services in the UK and we strive to set the
highest standards in service and care.
Our actions during the year
We are investing in our people, locations
and fleet to enhance customer experience
and service
Each year Dignity invests in staff training initiatives, the
refurbishment of funeral properties and the renewal of
our fleet, enabling our staff to provide the highest
standards of client service excellence.
Above: Hazel Short, Business Manager at David Stockwell
& Co, Monmouth. Below: Steve Korsman, Funeral Service
Operative, D Caesar Jones, Cardiff.
We are increasing our network of local
funeral locations to help more families
Dignity has continued to open new satellite locations that
are close enough to existing business centres to use their
specialist vehicles and mortuary facilities but far enough
away to serve new families.
Above: Louise Bainton, Funeral Service Arranger, W Kaye
& Son, Leeds, which opened a satellite location during
2012. Below: Client advice literature at L Fulcher Funeral
Services, Thetford.
11 | Dignity plc Annual Report & Accounts 2012
Business review continued
Leveraging our scale, expertise
and experience
“We are committed
to providing the
local communities
we serve with the
highest standard of
service and facilities.”
Steve Gant
General Manager, Crematoria
Key points
37crematoria
Dignity is the largest
single operator of
crematoria in Britain,
operating 37 crematoria.
£6.1million
The portfolio changes
in the year represents an
investment of £6.1 million.
2012
Dignity has successfully
met its obligations to
comply with mercury
abatement legislation
by the end of 2012.
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 2012.
One location was closed in the period, being
a leasehold location.
Opportunities
The Group’s investment in satellite funeral
locations has now reached a stage where
focus will be turned to understanding and
improving the profitability of the 62 locations
already opened. Whilst a few will be opened
in 2013 where locations have already been
found, activity to find further locations
has ceased for the time being. The Group
expects to take approximately two to three
years on this next stage of the project.
The acquisition of 40 funeral locations as
part of Yew in January 2013 represents an
excellent opportunity to improve the Group’s
presence in the North of England and create
value for shareholders. Four other funeral
locations have also been acquired or opened
since the year end.
Crematoria
Overview
Crematoria services relate to cremation
services and the sale of memorials and
burial plots at the Group’s crematoria
and cemeteries.
Performance
The Group is the largest single operator of
crematoria in Britain, operating 37 (2011:
35) crematoria as at 28 December 2012.
The Group performed 50,500 cremations
(2011: 47,600) in the period, representing
9.2 per cent (2011: 8.8 per cent) of deaths
in Britain.
Operating profits were £23.3 million (2011:
£21.3 million), an increase of 9 per cent.
This reflects a strong performance from the
established crematoria and an improving
contribution from recently opened locations.
Progress and Developments
The Group is now compliant with legislative
requirements on mercury abatement,
with 20 of the Group’s portfolio fitted with
abatement equipment. The project has
required an investment of £7.4 million by
the Group. This includes some expenditure
expected to be incurred in early 2013 to
finish the civil and cosmetic works at
the locations.
£2.1 million (2011: £1.7 million) has also
been spent on new cremators and other
general 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 year, the Group opened its newly
constructed crematorium in Essex. Whilst it
will take approximately five to seven years to
reach maturity, it represents another positive
step in the division’s growth.
In addition, the Group now operates
Haringey Council’s crematorium and
cemeteries. Consideration of £0.1 million
was paid and a further £1.1 million has been
invested there to date. These facilities have
been leased to the Group for 50 years.
The changes to the portfolio in the year
represented an investment of £6.1 million
(with £3.6 million of this incurred in 2011).
In addition £1.9 million was invested in the
year on other crematoria developments that
were started in previous years. A further
capital investment of approximately £1.2
million is expected in 2013 to complete the
investment in Haringey’s crematorium.
Opportunities
The Group continues to identify further
locations suitable for new crematoria and
is also continuing to seek partnerships with
local authorities.
The Group’s crematoria portfolio increased
to 39 in January 2013 following the
acquisition of Yew.
12 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
We are the largest single operator of crematoria
in Britain with a growing portfolio of well-established
and modern state-of-the art crematoria – meeting the
needs of the local communities we serve.
Our actions during the year
We are continuing to develop, manage and
acquire new crematoria
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.
Above: Wyre Forest Crematorium & Cemetery,Worcestershire.
Below: Lancaster & Morecambe Crematorium has been
awarded two horticultural awards in 2012 for the
development and maintenance of its grounds.
Left: Dignity has
successfully completed
the installation of specialist
equipment to reduce
mercury emissions from
crematoria by 50 per cent
by the end of 2012.
We are identifying the development
sites of tomorrow
The development of a new crematorium in Essex was
completed during the period and became operational in
October 2012.
Top right: Bentley Crematorium & Cemetery, Essex.
Above: Steve Gant, General Manager, Crematoria; Alan
Lathbury, Head of Business Development and Paul Smith
of Cre8 Building Solutions at Bentley Crematorium.
13 | Dignity plc Annual Report & Accounts 2012
Business review continued
Developing partnerships
and opportunities for growth
“We have achieved
strong sales in the
period and we
continue to reach
new customers
through our growing
portfolio of affinity
partners.”
Steve Wallis
General Manager, Pre-arrangement
Key points
290,000
There were 290,000
unfulfilled pre-arranged
funeral plans at the end
of the period. This reflects
strong sales through the
Group’s affinity partners
and funeral locations.
40,000
Focused marketing
activity has resulted in
approximately 40,000
new funeral plan sales.
1st place
Dignity’s Client Service
Centre was awarded first
place in the annual ‘Top 50
Call Centres for Customer
Service’ awards.
The Group’s customer service centre, based
in its head office in Sutton Coldfield, gained
first prize in the annual ‘Top 50 Call Centres
for Customer Service’ awards. Furthermore,
this represents the fourth consecutive year
where a top five place has been achieved; a
unique feat in the history of the competition
and testament to the high quality service
provided to our customers.
Opportunities
Opportunities for growth continue through
the development of existing relationships
and the creation of new ones.
As part of the acquisition of Yew, the Group
has taken over the administration of Yew’s
outstanding pre-arranged funeral plans
totalling approximately 9,000, of which
approximately two thirds are anticipated
to be ultimately performed by Dignity. The
Group intends to sell its own pre-arranged
funeral plans through the new Yew branches
going forward.
Central overheads
Overview
Central overheads 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 £14.6 million
(2011: £13.1 million), an increase of 11
per cent. The majority of the year on year
increase above inflation reflects higher
bonuses paid to operational managers
of the business.
Pre-arranged funeral plans
Overview
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. 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.
Performance
Operating performance in the year has been
strong, with operating profits of £6.5 million
in the period (2011: £5.5 million). In recent
years, the Group has received 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). Both years’ operating profits
include Recoveries of £1.5 million.
As expected and highlighted in the
Group’s Interim Management Statement in
November 2012, the Group will not receive
any Recoveries from its pre-arranged funeral
plan trusts in 2013. However, the latest
actuarial valuations of the pre-arranged
funeral plan trusts at 28 September 2012
showed them to have a surplus of £14.0
million and sufficient assets to pay out all
funerals at the current projected rates
anticipated by the actuary.
As with all the Group’s operating profits,
pre-arranged funeral plan profits convert
efficiently into a similar amount of cash.
Progress and Developments
Focused marketing activity with its partners
has resulted in approximately 40,000 new
plan sales and the number of unfulfilled
pre-arranged funeral plans increasing
to 290,000 (2011: 265,000) as at
28 December 2012.
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.
14 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
We are one the UK’s leading providers of
pre-arranged funeral plans and we continue
to strengthen our position in this growing market.
Our actions during the year
We are growing our portfolio of affinity
partners to reach new customers
We continue to reach new customers through both our
growing portfolio of reputable affinity partners and our
established funeral locations.
Above: Lindsay Duncan, Affinity Partner Relationship
Manager. Below: Dignity’s literature allows clients to
consider the options and benefits of a Funeral Plan
at their convenience.
We continue to focus on developing
financially secure products and services
As one of the UK’s leading providers of pre-arranged
funeral plans, we offer one of the most financially secure
plans available today.
Above: Raul Picart, Senior Campaign Manager,
Pre-arrangement Marketing. Below: Jordan O’Gara,
Client Service Advisor, Client Service Centre, Sutton Coldfield.
15 | Dignity plc Annual Report & Accounts 2012
Financial review
A strong financial
performance
Steve Whittern, Finance Director
Introduction
These financial results have been prepared in accordance
with International Financial Reporting Standards (IFRSs) and
the accounting policies used are consistent with those used
in the 52 week period ending 30 December 2011.
Financial highlights
The Group’s financial performance is summarised below:
Underlying reporting measures
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 52 week
period ended period ended
28 December 30 December Increase
2012 2011 %
Revenue (£million) 229.6 210.1 9
Underlying operating profit* (£million) 69.4 64.5 8
Underlying profit before tax* (£million) 46.1 41.6 11
Underlying earnings per share* (pence) 62.8 55.1 14
Cash generated from operations (£million) 83.3 74.2 12
Operating profit (£million) 68.7 63.2 9
Profit before tax (£million) 45.4 40.3 13
Basic earnings per share (pence) 65.1 62.6 4
Dividends paid in the period:
Interim dividend (pence) 5.36 4.87 10
Final dividend (pence) 9.77 8.88 10
*Underlying amounts exclude profit on sale of fixed assets, external
transaction costs and exceptional items.
The Board has proposed a dividend of 10.75 pence per
Ordinary Share as a final distribution of profits relating
to 2012 to be paid on 28 June 2013, subject to
shareholder approval.
52 week 52 week
period ended period ended
28 December 30 December
2012 2011
£m £m
Operating profit for the
period as reported 68.7 63.2
Deduct the effects of:
Profit on sale of fixed assets (0.1) (0.2)
External transaction costs 0.8 1.5
Underlying operating profit 69.4 64.5
Net finance costs (23.3) (22.9)
Underlying profit before tax 46.1 41.6
Tax charge on underlying profit before tax (11.7) (11.4)
Underlying profit after tax 34.4 30.2
Weighted average number of Ordinary
Shares in issue during the period (million) 54.8 54.8
Underlying EPS (pence) 62.8p 55.1p
Increase in Underlying EPS (per cent) 14% 19%
Earnings per share
The Group’s earnings were £35.7 million (2011: £34.3
million). Basic earnings per share were 65.1 pence per
share (2011: 62.6 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 £34.4 million
(2011: £30.2 million), giving underlying earnings per share
of 62.8 pence per share (2011: 55.1 pence per share), an
increase of 14 per cent.
This growth in excess of the growth in operating profits
reflects the leveraging effect of the Group’s capital structure
as well as some benefit from the reduction in headline
Corporation Tax rates.
16 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
“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.”
+8%
£83.3 million
Underlying operating
profits have increased eight
per cent to £69.4 million.
The Group continues
to convert its profits
efficiently into cash.
Cash flow and cash balances
Cash generated from operations was £83.3 million (2011:
£74.2 million). This reflects the Group’s continued ability to
convert profits into cash. Cash generation is stronger than
the previous period as a result of the growth in operating
profits and beneficial working capital movements. Some
of these working capital movements represent timing
differences between years and in the long term, the Group
would expect to convert its operating profits efficiently
into cash.
Capital expenditure on property, plant and equipment was
£20.4 million (2011: £22.8 million).
This is analysed as:
28 December 30 December
2012 2011
£m £m
Vehicle replacement programme
and improvements to locations 11.8 10.8
Branch relocations 1.0 0.9
Satellite locations 1.3 1.1
Development of new crematoria 4.4 9.0
Mercury abatement project 1.9 1.0
Total property, plant and equipment 20.4 22.8
Partly funded by:
Disposal proceeds (0.8) (0.9)
Net capital expenditure 19.6 21.9
and used to pay amounts falling due on the Group’s Secured
Notes on 31 December 2012. These amounts totalling
£17.6 million (2011: £1.5 million) do not therefore meet
the definition of cash for cash flow reporting purposes.
Approximately £13.5 million of the remaining cash
balance was immediately available for acquisitions and
developments and approximately £19.7 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 £0.1 million
before deferred tax (2011: £1.3 million). This reflects the
continued low gilt yield and thus the discount rate used
by the actuary to calculate the liabilities at the year end.
The scheme currently remains open to both new and
existing members of staff. Work is underway to ensure the
Group can comply with auto enrolment from its staging date
of July 2013.
Taxation
The Group’s effective tax rate in the period was 25.5 per
cent (excluding the exceptional rate change) (2011: 27.5
per cent). Following the Government’s announcement to
reduce the rate of Corporation Tax in future years, the
Group expects its effective rate in 2013 to be approximately
24.5 per cent.
In addition, the Group spent £10.7 million on the acquisition
of 18 funeral locations and one crematorium.
Capital expenditure on mercury abatement represents the
monies incurred to comply with new legislation. The total
spent to date is £6.7 million and the total anticipated capital
expenditure is approximately £7.4 million.
The Group also paid dividends on Ordinary Shares totalling
£8.3 million (2011: £7.5 million) in the period.
The Group’s consolidated income statement includes
exceptional income of £2.0 million which reflects the
reduction in the headline Corporation Tax rate from 25
per cent to 23 per cent. Further exceptional credits will be
recognised in future years if the Chancellor substantively
enacts additional reductions in Corporation Tax rates.
The Group’s cash tax payments were £8.6 million (2011:
£10.4 million) in the period. This reduction principally
follows the utilisation of £3.4 million of tax losses, as
described in last year’s annual report.
Cash balances at the end of the period were £55.6 million
(2011: £36.9 million). £1.5 million (2011: £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. In a similar way, the Group also had
£16.1 million of cash that was held in a separate account
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 and A+ and BBB+ by
Fitch. Both agencies affirmed the rating of the Secured
Notes in September 2012.
17 | Dignity plc Annual Report & Accounts 2012
Financial review continued
£11.8 million
£11.8 million has been
invested in maintaining
our property and fleet
portfolio.
A+
Fitch affirmed the
A+ rating of the Class
A Secured Notes in
September 2012.
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 28 December 2012 was 2.43 times
(2011: 2.27 times), directly reflecting the improved
profitability of the Group. Further details may be found
in note 24.
Crematoria Acquisition Facility
At the balance sheet date, the Group owed £10 million
on its 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 £343.5 million (2011: £349.5 million). Net debt was
£299.6 million (2011: £312.7 million), including the premia
on the Secured Notes. The reduction in gross debt reflects
the amortisation profile of the Secured Notes and associated
premia. Gross debt includes £4.2 million (2011: £nil) that
was repaid on 31 December 2012.
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 £22.7 million (2011: £23.1 million).
Finance costs of £0.5 million (2011: £0.5 million) were
incurred in respect of the Crematoria Acquisition Facility.
Other ongoing finance costs incurred in the period
amounted to £0.7 million (2011: £0.3 million), including
the unwinding of discounts on the Group’s provisions,
other financial liabilities net of interest capitalised in
accordance with IAS 23.
Interest receivable on bank deposits was £0.4 million
(2011: £0.3 million). Net finance income of £0.2 million
(2011: £0.7 million) was recognised in respect of the
Group’s pension scheme in accordance with IAS 19.
Post balance sheet events
On 25 January 2013, the Group completed the acquisition
of Yew for cash consideration of £58.3 million. Funding for
the acquisition, associated external transaction costs and
anticipated one off capital expenditure of £2.5 million was
through a combination of equity and debt.
2,283,019 Ordinary Shares were issued at a price of £10.60,
generating gross proceeds of £24.2 million. These Ordinary
Shares rank pari passu with all other Ordinary Shares.
A further £5.8 million was drawn under the Group’s
Crematoria Acquisition Facility. The fully drawn £15.8 million
facility is secured against seven crematoria held outside the
Securitisation Group.
A new £34 million five year term loan with the Royal Bank of
Scotland was then raised against the Yew assets and certain
other trading assets held outside the Securitisation Group.
Approximately £2 million of principal is repayable annually
and the pre tax cost of the debt is fixed at approximately
four per cent for the term of the loan. The term loan has
no undrawn amounts.
The acquisition of Yew was made outside the Securitisation
Group. Consequently, it does not adversely affect the timing
or overall quantum of any potential future return of value.
On 27 February 2013, the £15.8 million Crematoria
Acquisition Facility was refinanced with the Royal Bank of
Scotland. The renewed facility is for a period of five years,
with the principal repayable in one amount at the end of
the term. The cost of funds is fixed for the term of the
loan at approximately 3.3 per cent. This facility has no
undrawn amounts.
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.
18 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Our key performance indicators
Our business goal is to continue building a sustainable business that meets the needs of all
our stakeholders. 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 and
measured against them.
KPI
Total estimated number
of deaths in Britain
(number)
52 week period ended
28 December 2012
551,000
(2011: 539,000)
Funeral market share excluding
Northern Ireland
(per cent)
11.2%
(2011: 11.3%)
Number of funerals performed
(number)
Number of cremations performed
(number)
Crematoria market share
(per cent)
Unfulfilled pre-arranged
funeral plans
(number)
63,200
(2011: 62,300)
50,500
(2011: 47,600)
9.2%
(2011: 8.8%)
290,000
(2011: 265,000)
Underlying earnings per share
(pence)
62.8 pence
(2011: 55.1 pence)
Underlying operating profit
(£million)
Financial risk management
Cash generated from operations
(£million)
£69.4 million
(2011: £64.5 million)
£83.3 million
(2011: £74.2 million)
KPI definitions
Developments in 2012
This is as reported by the
Office of National Statistics.
This is the number of funerals
performed by the Group in
Britain divided by the total
estimated number of deaths
in Britain.
The number of deaths was
higher than the previous year.
Over the last three years, the
number of deaths has been
broadly flat.
Acquisition activity has broadly
offset reductions in core market
share resulting from increased
competition. This has been a
feature of Dignity’s business
model for many years.
This is the number of funerals
performed according to our
operational data.
Changes are a consequence of
the total number of deaths and
the Group’s market share.
This is the number of cremations
performed according to our
operational data.
Changes are a consequence of
the total number of deaths and
the Group’s market share.
This is the number of cremations
performed by the Group divided
by the total estimated number
of deaths in Britain.
This increase reflects the
additional locations acquired
and the maturing of recently
constructed crematoria.
This is the number of pre-
arranged funeral plans where
the Group has an obligation to
provide a funeral in the future.
This increase reflects continued
strong sales activity offset by the
crystallisation of plans sold in
previous years.
This is underlying profit after tax
divided by the weighted average
number of Ordinary Shares in
issue in the period
This is the statutory operating
profit of the Group excluding
profit on sale of fixed assets and
external transaction costs.
This is the statutory cash
generated from operations
excluding external transaction
costs.
Strong growth following the
increase in operating profits.
Strong growth driven by the core
business rather than acquisition
activity.
The Group continues to convert
operating profits into cash
efficiently.
In addition to these key performance indicators, the Group closely monitors the results of its client surveys. Highlights
of these results can be found on page 7. A summary of the Group’s financial record for the last five years can be found
on pages 97 and 98.
19 | Dignity plc Annual Report & Accounts 2012
Principal risks and uncertainties
Managing risk responsibly
Our approach to risk management
This section highlights the principal risks affecting the Group,
together with the key mitigating activities in place to manage
those risks.
Risk process
Our risk process is designed to identify, evaluate and manage
our operational and financial risks.
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.
Risk management process
Overall Board responsibilities
Risks and impact identified
• Risks mapped to controls currently in place
• Residual risks prioritised for mitigation
• Confirmed with the Board
Existing control enforced and tested
• Remedial action plans implemented
• Board member accountable
Controls identified
• Suggested action plans agreed
• Options for controls identified and costed
• Plans approved by the Board
20 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Operational risk management
Risk description
Mitigating activities
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.
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
Ability to increase average
revenues per funeral or
cremation
Significant reduction in
market share
Demographic shifts in
population
Competition
Taxes
Financial risk management
Regulation of pre-arranged
funeral plans
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.
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.
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.
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.
The Group believes that its focus on client service
excellence helps to mitigate this risk.
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.
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.
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.
There can be no assurance that changes will not be
made to UK taxes, such as VAT. VAT is not currently
chargeable on the majority of the Group’s services.
The introduction of such a tax could therefore
significantly increase the cost to clients of the
Group’s services.
Pre-arranged funeral plans are not a regulated
product, but are subject to a specific financial
services exemption. Changes to the basis of any
regulation could affect the Group’s opportunity
to sell pre-arranged funeral plans in the future.
There are barriers to entry in the funerals services
market due to the importance of established local
reputation and in the crematoria market due to the
need to obtain planning approval for new crematoria
and the cost of developing new crematoria.
There are currently specific exemptions under
European legislation for the UK on the VAT
treatment of funerals. Any change would apply
to the industry as a whole and not just the Group.
Any changes would apply to the industry as
a whole and not just the Group.
Financial risk management
Risk description
Mitigating activities
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.
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.
An assessment of the Group’s exposures to financial risks and a description of how these risks are managed are included in note 2 to the
consolidated financial statements.
21 | Dignity plc Annual Report & Accounts 2012
Corporate and social responsibility
Growing our
business responsibly
“We aim to achieve our business objectives
in a caring and responsible manner and we
strive to ensure that we continue to operate
responsibly and deliver the excellent service
upon which our business depends.”
Richard Portman, Corporate Services Director
Introduction
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.
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.
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. Our objective is to be the company that everyone
knows they can trust in their time of need.
The flat management 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 four per
cent of our employees are based at our Head Office in
Sutton Coldfield 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 ensconced 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.
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
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 brochure 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 brochure, ‘Serving our 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 policies and procedures to prevent bribery.
Our guiding principles
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
working for a responsible company.
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 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.
22 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Our corporate responsibility programme focuses on developing our people, creating
a culture of workplace safety, promoting environmental sustainability and making a positive
impact on the communities we serve.
Our CSR commitments
Our people
Principle
We value our people and understand,
respect and value personal and cultural
differences. Dignity is committed to high
standards of employment practice and
aims to encourage, retain and develop
successful employees.
Health & safety
Principle
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
Business benefits
We train and develop our staff to enable
them to fulfil their potential, giving them
the skills to be able to meet and exceed
our clients’ expectations. The development
and retention of our people enables us to
continue to improve our operations and
the quality of the service we provide to
our clients.
Measuring performance
Dignity measures 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.
Business benefits
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. Maintaining our
physical assets minimises the risk of injury
and helps us to preserve the integrity of
our operations.
Measuring performance
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.
Investigating accidents, collation and analysis
of statistics and ill-health investigation
reactively monitors health and safety.
Principle
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.
Business benefits
We promote ‘environmental issues’ and
sustainability, continually seeking new
initiatives that enable us to become more
efficient, reduce operational costs and
minimise the impact of our business
activities on the environment.
Measuring performance
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.
Our communities
Principle
We are committed to making a difference
to our clients and to improving the welfare
of all who live in the communities we serve.
23 | Dignity plc Annual Report & Accounts 2012
Business benefits
Making a positive contribution to the local
communities we serve is embedded in our
corporate culture and is enthusiastically
supported by our staff. Building closer
relationships with the communities we
serve helps us to promote our business
and gain a greater understanding of our
clients’ and local needs.
Measuring performance
All funds raised for our corporate charity
are recorded in detail and can be easily
cross-referenced as deposits go into a
specific bank account. Therefore, the amount
of money being raised can be compared
with previous years and this process
facilitates funds being allocated to the
geographical region that generated them.
Corporate and social responsibility continued
Employee service
Employee ratio (%)
“We are committed to high standards of
employment practice and aim to encourage,
retain and develop successful employees.”
Our people
We are committed to high standards of employment practice
and aim to encourage, retain and develop successful
employees.
Our employees are critical to the continued success of
Dignity and staff turnover is low. A third of our staff have
over 10 years service.
As in previous years there continues to be a broadly equal
split of male and female staff.
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 Board
met the target it had set itself of having 20 per cent female
representation on the Board. Of the 27 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. Dignity has five members of staff
who are accredited NAFD tutors and three British Institute
of Embalming (BIE) training specialists. During the past year,
seven Dignity employees achieved recognised qualifications
with the NAFD.
Dignity’s Training Department also provides a number of
management development courses covering areas such as
Business Planning, Financial Analysis, Recruitment Skills
and Presentation Skills.
Less than 1 year (13%)
1 – 4 years (27%)
5 – 9 years (27%)
10 – 19 years (23%)
Over 20 years (10%)
Male (50%)
Female (50%)
The courses provided by our Training Department are
assessed via feedback from delegates and line managers
with a view to guaranteeing that they are relevant and add
value to the contribution made by each employee.
During the past twelve months the Training Department
has launched ‘Identity and personal effects’ training. This is
designed as a 1:1 course to ensure our rigorous procedures
are followed in all branches. A new ‘Funeral quotation’
training course has been developed and has been trialled
as a one day course for managers to deliver. The department
has also developed a new ‘Overview of making funeral
arrangements’ course. This will be trialled in four trading
regions during 2013. The Training Department has continued
to concentrate on providing skills and refresher training for
our Funeral Service Arrangers by delivering the ‘Bringing
the deceased into our care’ and ‘Spending time with the
deceased’ courses.
To help embed a health and safety culture at Dignity,
728 members of staff have completed a ‘Manual handling’
course and 31 employees have completed ‘Ladder’ training.
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.
Dignity provides additional support to staff development
through its Welfare Trust, which provides funds for
professional training and hardship grants. The trust has
approximately £1.6 million available for future use.
Recognising achievement
Dignity has budgeted to reward its loyal staff with long
service awards totalling approximately £225,000 in 2013.
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.
24 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Key developments in 2012
2,000
Approximately 2,000 delegates
attended training courses facilitated
by Dignity’s Training Department in
the last twelve months.
99.9%
99.9 per cent of clients that respond
to our survey thought that our staff
were respectful.
Our actions during the year
33%
A third of Dignity’s employees have
over ten year’s service.
20%
Dignity has met the target it has set itself
of having 20 per cent female representation
on the Board of Directors.
£225,000
Dignity has budgeted to reward its loyal
staff with long service awards totalling
approximately £225,000 in 2013.
We enable our people to excel
Dignity’s investment in training enables our staff to reach
their full potential and gives them the skills to provide our
clients with the highest standards of service.
Below: Michelle Hales, Crematorium Manager and Ella
Arundell, Memorial Consultant at Bentley Crematorium.
Bottom: Seamus Sharkey, Gardener, Lancaster &
Morecambe Crematorium.
We value our people and recognise
achievements
We are committed to high standards of employment
practice and aim to encourage, retain and develop
successful employees.
Above: Jennie Myers, Funeral Director, L Fulcher, Bury
St Edmunds. Below right: Kay Jessop, Funeral Service
Arranger, C & A Reed, Sheffield.
25 | Dignity plc Annual Report & Accounts 2012
Corporate and social responsibility continued
Health and Safety training (number)
14
110
179
0
20 40 60 80 100 120 140 160 180
Employees with NEBOSH qualification: 14
Employees with IOSH qualification: 110
Employees with CIEH qualification: 179
Dignity has 14 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.
Dignity also has 110 managers or officers that have
successfully completed the Institution of Occupational
Safety and Health (IOSH) course.
There are also 179 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 of Directors; and
• Reactive monitoring
Investigating accidents, collation and analysis of statistics
and ill-health investigation reactively monitors health
and safety.
“Effective health and safety is vital to Dignity and
a key priority of the Directors. Our operations
are conducted at all times 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.”
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.
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 Directors and employees to share objectives, best
practice and news in a cost effective manner.
Health and Safety
Effective health 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
& Safety Officer.
Regional Health & Safety Officers operate in each of the
geographical funeral trading areas. Dignity’s head office,
crematoria and manufacturing facility also each have their
own manager 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).
26 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Key developments in 2012
303
200
303 members of staff have now completed
a health and safety training course.
There are now 200 health and safety
co-ordinators embedded across the business.
19%
728
We have seen a 19 per cent reduction in the
number of accidents reported over the last
five years.
728 Dignity employees have attended the
Manual Handling training course during the
past twelve months.
Our actions during the year
We continue to develop training initiatives
Dignity’s Training Department provides a variety of role
specific courses to help reinforce the understanding each
employee has of their role and ensures policies and
procedures are followed.
Right: Lisa Gilbert, Head of Human Resources.
We are improving our health and safety
performance across our operations
Dignity is committed to the prevention of accidents.
Procedures are regularly reviewed and updated to ensure
that staff minimise any risks associated with their role.
Left: Ian Best, Cremator Technician, Wyre Forest
Crematorium & Cemetery, Worcestershire.
We are committed to providing accessible
and enhanced facilities for families
Dignity is dedicated to providing facilities that provide
the highest level of comfort and ease of access for those
visiting our premises.
Right: Disabled parking and hearing loop facilities are
just two of the facilities designed to help visitors to
Wyre Forest Crematorium.
27 | Dignity plc Annual Report & Accounts 2012
Corporate and social responsibility continued
“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.”
Environmental sustainability
Submission to Carbon Disclosure Project
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 has invested approximately £7.4 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 this specialist technology installed at 20 of its
crematoria. The installation of this equipment is now complete
and has been managed so as to ensure there is no disruption
to our usual services at the crematoria.
Due to this investment approximately 18,000 cremations
at Dignity crematoria were mercury abated during 2012.
Wyre Forest Crematorium and Cemetery, which officially
opened in January 2012, has received a Green Apple Award
from The Green Organisation. This is an independent, non-
political, non-profit organisation that recognises
environmental best practice.
Reducing our carbon footprint
Dignity aims to reduce its future carbon footprint and in
2012 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.
2011
2010
2009 2008 2007 2006
Scope 1
Scope 2
15,202 16,798 15,005 15,875 16,048 15,992
7,388
6,938
8,366 10,923 10,633 10,351
Total
22,590 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 2012 will be made in May 2013.
Sustainable sources
Dignity’s coffin manufacturing facility in East Yorkshire
has ISO 14001 accreditation, an internationally accepted
standard for an effective Environmental management system
that is designed to address the balance between maintaining
profitability and reducing environmental impact.
Our coffins are manufactured using raw materials that are
sourced from well-managed and sustainable sources. 97 per
cent of the coffins manufactured by Dignity are from Forest
Stewardship Council (FSC) accredited timber.
Reducing energy consumption
We now have 767 smart meters installed at our premises to
help reduce our energy consumption. This figure represents
85 per cent of our target, which we expect to meet in 2013.
At the heart of local communities
Everyone within Dignity is extremely 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.
Dignity’s five fairground organs continue to be made available
at no cost to charities and community groups across the
country. The fairground organs never fail to attract crowds
and during 2012 helped raise approximately £41,000.
During 2012, Dignity branches and the administration centre
in north London have been donating their shredded paper
to Holloway Prison. Nominated prisoners use the shredded
paper to provide bedding for some ‘rescued’ chickens as part
of a rehabilitation programme that sees inmates caring for
the ailing animals.
28 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Key developments in 2012
£7.4 million
Dignity has invested approximately
£7.4 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.
18,000
Approximately 18,000 cremations at Dignity
crematoria were mercury abated during 2012.
767
Dignity now has 767 smart meters installed
in our premises to reduce our energy
consumption.
15%
The data that Dignity submits to the Carbon
Disclosure Project show that the Group has
reduced its figure for metric tonnes of CO2
equivalent by 15 per cent over the past five years.
Our actions during the year
We are investing in the latest energy
efficient technology
Dignity has reduced its energy consumption by installing
767 smart meters at its premises.
Left: Smart meter installation. Below: Environmentally
friendly LED lighting has been installed at Perry Barr
Crematorium, Birmingham.
We are committed to meeting our
environmental performance targets
Dignity has invested approximately £7.4 million in
its crematoria to conform to the government directive
to reduce mercury emissions from crematoria by
50 per cent by the end of 2012.
Left: Dignity is committed to sustainability across
its business.
We continue to promote sustainable
development across the business
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 takes seriously the
responsibility of managing global resources and
endeavours to source products ethically and with
consideration to the environment.
29 | Dignity plc Annual Report & Accounts 2012
Corporate and social responsibility continued
“Everyone at 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.
By listening to and understanding the needs of local
communities our staff are able to respond by providing
help where it is most needed.”
In February, staff at A H Apps in Kent held a very successful
charity car wash to raise money for a local boy suffering with
Duchenne Muscular Dystrophy. The money raised helped his
family to make improvements to their home that would
significantly improve his quality of life.
There were many fundraising activities held nationwide for
Marie Curie including sponsored walks, golf tournaments,
parachute jumps, organising stalls at fetes and taking part in
the Great Daffodil Appeal, where branches sold the charity’s
lapel badges.
In July, two Dignity employees from Bristol succeeded in
kayaking the 92 mile length of the River Wye. The duo took
four days to complete the challenge and raised £500.
Dignity employees also took part in Marie Curie’s Blooming
Great Tea Party, often adding a local delicacy to the hot
drinks, cakes and sandwiches that were for sale. Staff at
W J Angove & Son in Falmouth have held two Tea Parties and
raised over £400 by combining the party with a Craft Fayre
at their premises featuring local artists. The Tea Party at
L Fulcher in Bury St Edmunds was so successful that it was
extended for two hours after the intended finishing time.
Staff at South London Crematorium raised £200 for Marie
Curie with an Open Day and Memorial Service and the team
at W M Tyre & Son in Scotland raised £1,000 by climbing
Goat Fell.
Over the past 12 months our staff have also continued to
support a variety of other charities.
In North London, a team of seven cyclists took part in
a 56 mile charity road trip from the capital to Brighton to
raise funds for The Samaritans, Walking with the Wounded
and British Heart Foundation.
Steve Wallis, General Manager of the Group’s pre-arranged
funeral plan business and Shirley Roberts, Crematoria
Regional Manager, Memorial Sales, completed the London
Marathon to raise money for Age UK and Cancer Research
UK respectively.
Staff at Blackburns Funeral Service in Kent, accompanied by
a local priest, took part in a static 24-hour cycling marathon
and raised over £800 for Teenage Cancer Trust and local
youth groups. Joseph Potts Funeral Directors in Glasgow
raised £1,300 for Macmillan Cancer Research and Phillips
Funeral Service in St Albans raised £400 for their local
hospice by taking part in a Midnight Walk event.
The Group has made no individual charitable donations
greater than £2,000 in the period.
The Dignity Easter Egg Challenge continued to prove a
popular community activity with staff at our funeral locations
and crematoria with many people participating this year
for the first time after being inspired by their colleagues’
previous efforts. This year thousands of chocolate eggs and
gifts were distributed to children’s hospitals, care homes,
hospices, MENCAP and a women’s refuge.
Staff at Ginns & Gutteridge in Leicestershire encouraged
local primary school children to enjoy the Olympics by
transporting them to the funeral location in limousines
so they could take advantage of the prime location as
the Olympic Torch was carried past the branch.
In September, staff at Robertshaw Greenwood in Hebden
Bridge hosted a Bring and Buy Sale in aid of Hebden Bridge
Disaster Fund. In recent years the town has been subjected
to torrential rainfall that has left many homes and businesses
ruined due to flooding. Staff at the branch were eager to help
local people rebuild their lives and provided items that could
be purchased for a donation to the Fund.
Dignity branches in Acton and Ealing launched a new project
in November that involves restoring and maintaining the
graves of Polish pilots and military personal that came to
the UK during World War II to join Britain’s armed forces.
In many cases the graves of these heroes would remain
neglected as they have no surviving family in this country.
Dignity has continued to support many grass-roots sports
clubs by providing financial assistance, kit and equipment
in addition to sponsoring tournaments and trophies. In many
communities these clubs are the focal point for socialising
and healthy exercise and some would struggle to survive
without our help.
Supporting charities
During 2012, Dignity supported Marie Curie Cancer Care as
our corporate charity. This extremely worthwhile organisation
provides high quality nursing, totally free, to give people with
terminal cancer the choice of dying at home supported by
their families. The charity also has nine hospices across
the UK and cares for approximately 30,000 patients a year.
All Dignity businesses have been matched with a local Marie
Curie office so that all funds raised go to help cancer patients
in their area.
30 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
“To demonstrate our values and principles
our staff support hundreds of community
initiatives, local and national charities, good
causes, clubs and events every year.”
Our staff support hundreds of charities
and good causes each year
To demonstrate our values and principles our staff support
hundreds of community initiatives, local and national
charities, good causes, clubs and events every year.
Far left: David Emberson, Consultant with J W Emberson
of Grimsby raised £800 for Marie Curie Cancer Care by
completing the Dales Way Challenge. Left: Shirley Roberts,
Crematoria Regional Manager, Memorial Sales raised £3,600
for Cancer Research UK by completing the London Marathon.
Key developments in 2012
£42,000
Dignity raised £42,000 for its corporate
charity, Marie Curie Cancer Care, during 2012.
£41,000
Dignity’s five fairground organs helped to
raise approximately £41,000 in the past
12 months for a variety of charities and
good causes.
Our actions during the year
We continue to focus on making a difference
in the local communities we serve
Everyone at 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.
Right: Children from Newton Burgoland Primary School
enjoyed a great view of the Olympic Torch at Ginns
& Gutteridge in Loughborough.
We are proud to support Marie Curie
Cancer Care as our corporate charity 2012
Each Dignity funeral location and crematoria has been
linked with their local Marie Curie fundraising office so that
the money they raise goes to help care for cancer patients
in their community.
Right: Robert Cooksley and Garry Wooldridge of R Davies
& Son in Bristol completed the 92-mile Wye River Kayak
Challenge in aid of Marie Curie Cancer Care.
31 | Dignity plc Annual Report & Accounts 2012
Board of Directors
“The role of our
experienced Board
is to lead the Group
with a view to the
creation of strong,
sustainable performance
and long-term
shareholder value.”
Peter Hindley (69) (n)
(Non-Executive Chairman)
Mike McCollum (45)
(Chief Executive)
Appointed to the Board: 2004
Appointed to the Board: 2004
Background and experience:
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.
Background and experience:
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.
External appointments:
Director of Funeral Planning
Authority Limited.
Steve Whittern (38)
(Finance Director)
Andrew Davies (51)
(Operations Director)
Richard Portman (51)
(Corporate Services Director)
Appointed to the Board: 2009
Appointed to the Board: 2004
Appointed to the Board: 2006
Background and experience:
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.
External appointments:
None.
Background and experience:
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.
External appointments:
None.
Background and experience:
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.
External appointments:
None.
32 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Alan McWalter (59) (a)(n)(r)
(Senior Independent Director)
Ishbel Macpherson (52) (a)(n)(r)
(Non-Executive Director)
Appointed to the Board: 2009
Appointed to the Board: 2009
Background and experience:
Alan is a Non-Executive Director
of Churchill China plc, Haygarth Group
Limited, Fabris Lane Limited and is
Non-Executive Chairman of Constantine
Group plc and Kornicis Group Limited.
Prior to these roles Alan was Group
Marketing Director of Marks and
Spencer plc and before that held
senior positions with Kingfisher plc
and Thomson Consumer Electronics.
Background and experience:
Ishbel is a Non-Executive Director
of Synthomer plc and Dechra
Pharmaceuticals plc. She is also Senior
Independent Non-Executive Director of
May Gurney Integrated Services 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.
Board Committee Key
(a) Member of the Audit Committee
(n) Member of the Nomination Committee
(r) Member of the Remuneration Committee
Jane Ashcroft (46) (a)(n)(r)
(Non-Executive Director)
Martin Pexton (56) (a)(n)(r)
(Non-Executive Director)
Appointed to the Board: 2012
Appointed to the Board: 2012
Background and experience:
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.
Background and experience:
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.
33 | Dignity plc Annual Report & Accounts 2012
Report on Directors’ remuneration
for the 52 week period ended 28 December 2012
Dear Shareholder,
On behalf of the Board, I am pleased to present the Remuneration Committee’s Report on Directors’
Remuneration for 2012.
As you may be aware, the Government has tabled proposals to reform the way Directors’ remuneration is voted
upon and reported. In particular, the Department of Business, Innovation and Skills (“BIS”) has produced two
consultation papers, the results of which, amongst other things, will have an impact on the content and
presentation of information in the Report on Directors Remuneration.
The new legislative requirements will not come into effect until October 2013 but, although not mandatory for
this report, the Committee has decided to adopt some of these changes early so incorporating extra information,
including a remuneration policy table and graphs showing Executive Directors’ remuneration at various
performance levels. Consistent with the proposals, the report has been split into two sections: a Policy Report
which sets out the policy on the remuneration of the executive and non-executive directors taking effect from
28 December 2012 and an Implementation report which discloses how the remuneration policy has been
implemented in the period ended 28 December 2012. We will be seeking your support for both parts of the
report by way of a single advisory vote at the forthcoming AGM on 6 June 2013.
For the year under review, the business continued to perform strongly. Underlying operating profit increased
eight per cent on the previous period. Underlying earnings per share increased 14 per cent to 62.8 pence per
Ordinary Share.
Accordingly, the strong performance in EPS growth has generated maximum annual bonus payments for Executive
Directors, being 100 per cent of individuals' base salaries. Long-term incentive awards made in March 2009 under
the shareholder-approved Long Term Incentive Plan (“LTIP”) were subject to a relative total shareholder return
(“TSR”) measure. Over the 3-year performance period, Dignity returned 54 per cent compared to the median of
the TSR peer group of 82 per cent and as a consequence none of the award vested. We believe that this represents
a fair link between reward and performance for the year under review.
Remuneration Policy for 2013
We are committed to ensuring that rewards for executives are closely aligned to the interests of shareholders
through having all our incentive arrangements linked to challenging performance targets, focused on growing
earnings and generating market-beating levels of shareholder return.
Following prior consultation with shareholders, we will be changing the performance measures attached to
awards to be made under the LTIP in March 2013. Whilst Total Shareholder Return (“TSR”) remains an important
benchmark of the success of the Company and provides a strong alignment with the returns received by
shareholders, to improve the line of sight between performance and reward for executives and to target more
directly the long-term financial performance of the business, an Earnings per Share measure will also be
introduced for future awards. Each measure – TSR and EPS growth – applies independently, each to 50 per cent
of the overall LTIP award. In line with best practice, the Committee is also introducing clawback provisions into the
Group's annual bonus plan and LTIP and share ownership guidelines for Executive Directors. Except for executive
salary reviews, no other changes to remuneration are being made for 2013.
The Remuneration Committee encourages dialogue with the Company’s shareholders and will consult with major
shareholders ahead of any significant future changes to the remuneration policy. We were delighted that the 2011
Remuneration Report received a 98.5 per cent vote in favour at the last AGM. Thank you for your continued support.
Alan McWalter
Chair, Remuneration Committee
6 March 2013
34 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Introduction
This report sets out the remuneration policy operated by the Group in respect of the Executive Directors, together with
disclosures on all Directors’ remuneration. In addition to considering the new proposals from BIS on disclosure, this
Directors’ remuneration report has been prepared in accordance with the requirements of the Companies Act 2006
and Schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) 2008 regulations
which set out the current requirements for the disclosure of Directors' remuneration, and also in accordance with the
requirement of the Listing Rules of the Financial Services Authority. The current legislation requires the auditors to
report on the ‘auditable parts’ of this report and to state whether, in their opinion, the auditable parts of the report
have been properly prepared in accordance with the relevant legislation.
The Board has reviewed the Group’s compliance with the UK Corporate Governance Code (2010) (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.
Policy report
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.
35 | Dignity plc Annual Report & Accounts 2012
Report on Directors’ remuneration continued
for the 52 week period ended 28 December 2012
The table below summarises the main components of Dignity’s remuneration policy for the 2013 financial year:
Element of pay
Purpose and link
to Company’s strategy
How operates in practice
Maximum potential value
Description of performance
metrics applying
Changes to policy for 2013
Base salary
Essential to recruit and
retain executives.
Reflects individual’s
experience, role and
performance.
Benefits
Operate competitive benefits
to help recruit and retain
executives.
Annual bonus
To motivate executives and
incentivise the achievement
of annual financial and/or
strategic business targets.
As outlined in the Chief
Executive’s overview.
Reviewed annually and fixed
for 12 months commencing
1 January. Decision influenced
by:
• role, experience,
responsibility and
performance;
• average change in broader
workforce salary; and
• Periodic benchmarking for
each role against similar roles
in broadly similar UK listed
companies and companies
of similar size.
Salaries are generally
positioned around market
levels against broadly similar
UK listed companies and
companies of a similar size
with future increases generally
linked to average of workforce
generally.
For promotions, role changes
or where a Director gains
experience of being in the
role, salary increases may
be higher than that of the
workforce.
Benefits comprise provision
of company car (or cash
allowance in lieu), fuel, landline
telephone at residence, mobile
phone, family private medical
cover and a pre-arranged
funeral plan for the individual
or spouse.
Bonus payment is determined
by the Committee after the
year end, based on performance
against the targets set at the
outset of the year. Targets are
reviewed annually.
The bonus is payable in cash
following the audit of the
performance year.
Bonus payments can be clawed
back in the event of financial
misstatement or miscalculation
of performance conditions.
Not applicable.
None.
There was no change to policy
in 2012. Executive Directors’
salaries, including the CEO,
have increased by 2 per cent in
line with the average increase
across the general workforce.
Directors’ salaries, with the
exception of Steve Whittern,
were increased by 2 per cent
which broadly reflects current
employee salary inflation and
is in line with the average
increase across the Dignity
workforce. Steve Whittern’s
salary was increased by
13 per cent. His salary was
deliberately set at a below
market rate when he was
appointed in 2009 with the
expectation that adjustment
to his salary would be made
as he progressed in the role.
The Remuneration Committee
has now decided that his
experience in the role now
merits a significant increase in
salary. Salary levels effective
from 1 January 2013 are:
Chief Executive – £466,900
Finance Director – £235,000
Operations Director –
£265,200
Corporate Services Director –
£212,200.
Not applicable.
None.
No change to policy.
Maximum bonus opportunity
is 100 per cent of salary.
No change to policy.
The bonus is based on
achievement of challenging
financial targets relative to
the business plan taking into
account market conditions at
the start of the year. For 2013:
• 70 per cent of the bonus is
payable for meeting a first
demanding EPS target set
by the Committee. Nothing
is payable for performance
below this first target.
• A further 30 per cent
is payable for achieving
a second and more
demanding EPS target.
• Awards vest on a pro rata
basis for performance
between the first and second
EPS targets.
The precise targets are
commercially sensitive and
will be disclosed when the
bonus outcome is determined
and reported in the 2013
remuneration report. The
targets are ratified by the
Board and are designed to
enhance shareholder value.
See footnote 1.
Notes
1. Profit growth is a key Group financial measure and consistent with this, the Committee has chosen EPS targets to determine the payment of annual bonuses for 2013.
2. Total Shareholder Return is an important benchmark of the success of the business and provides a strong alignment with the returns received by shareholders.
The FTSE 350 index is an appropriate comparator group given the lack of directly comparable companies in the UK and because Dignity is a constituent of the group.
The EPS measure ensures a focus on long-term profitability which the Committee believes is a driver of shareholder value.
3. 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.
36 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Element of pay
Purpose and link
to Company’s strategy
How operates in practice
Maximum potential value
Description of performance
metrics applying
Changes to policy for 2013
Long–term
incentives
Incentivises twenty seven
senior managers and the four
Executive Directors to achieve
superior long term shareholder
returns.
Provides long term retention.
Aligns the interests of the
executives and shareholders
through the requirement to
build up a substantial
shareholding.
As outlined in the Chief
Executive’s overview.
Under the LTIP, the maximum
annual award to an individual
is 125 per cent of salary.
For 2013 an award of 125 per
cent of salary will be made
to Executive Directors. 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.
See footnote 3 for overall
plan limit.
Awards of nil-cost options are
granted annually under the
2009 Long Term Incentive Plan.
Awards vest subject to the
achievement of stretching
performance conditions
measured over a period of
three years.
Quantum is reviewed annually
(subject to the LTIP individual
limit) taking into account overall
remuneration, the performance
of the Company and the
executive being made the
award.
Vested awards are subject
to clawback in the event of
financial misstatement or
miscalculation of performance
conditions.
In determining the target range
for any financial measures that
may apply, the Committee
ensures they are challenging by
taking into account current and
anticipated trading conditions,
the long–term business plan
and external expectations.
Prior to 2013 awards under
the plan were subject to a
single measure, relative TSR.
Following consultation with
major shareholders, an audited
EPS growth measure was
introduced. From 2013, the
TSR and EPS conditions shall
each apply to 50 per cent of
the total award.
Awards vest at the end of a three-
year performance period subject
to the satisfaction of challenging
performance measures.
Until 2013, all of the awards
were subject to a relative TSR
measure, which is independently
calculated by Deloitte LLP,
comparing Dignity's performance
against the constituents of the
FTSE 350. From 2013 however,
half of the awards will be
subject to TSR. 25 per cent
of this part of the award vests
at median, with 100 per cent
vesting for upper quartile
performance with straight line
vesting in between. For this part
of the award, no vesting can
occur unless the Committee
considers that the underlying
financial performance of the
Company has been satisfactory.
The other half is subject to
a sliding scale of underlying
earnings per share growth
targets measured over 3
financial years. For 2013,
15 per cent of this part of the
award vests for compound
annual growth in underlying
EPS above RPI of 6 per cent
p.a., 50 per cent vests for
9 per cent p.a. real growth with
full vesting for 11 per cent p.a.
real growth or better. For
performance between these
points, vesting is on a straight–
line basis. Performance is
measured over the 3-year period
ending 31 December 2015.
To be consistent with the
measurement period for EPS,
the TSR condition for the
2013 awards will be measured
over the same period i.e.
from 1January 2013 to
31 December 2015.
See footnote 2.
Pension
Helps recruit and retain
executives.
Provides a discrete element
of the package to contribute
to post retirement lifestyle.
Non–Executive
Chairman and
Directors’ fees
To attract and retain high
quality and experienced
Non–Executive Chairman
and Directors.
Richard Portman is a member
of the Dignity Pension and
Assurance Scheme, which is
a defined benefit and tax
approved scheme.
Mike McCollum ceased to be an
active member of the Dignity
Pension and Assurance Scheme
on 31 March 2012. In lieu of a
company pension contribution
he now receives a supplement
of 15 per cent of his basic
salary, which amounted to
£52,000 in the period.
No contributions are made
for Andrew Davies and
Steve Whittern.
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 reviewed
from time to time and are set
by reference to broadly similar
UK listed companies and
companies of a similar size.
37 | Dignity plc Annual Report & Accounts 2012
The accrual rate is one
eightieth for every completed
year of service.
None.
No change to policy.
Not applicable.
None.
No change to policy.
Fees are as follows:
Chairman £160,000 (4.6 per cent
increase at the start of 2013).
Alan McWalter £57,800 (5 per
cent increase at the start of 2013).
Ishbel Macpherson £51,800
(4.9 per cent increase at the
start of 2013).
Martin Pexton £41,000
no increase.
Jane Ashcroft £41,000
no increase.
The increases in Ishbel
Macpherson's and Alan
McWalter's salaries principally
reflect their respective
appointments as Chair of
the Audit Committee and
Senior Independent
Non–Executive Director.
Report on Directors’ remuneration continued
for the 52 week period ended 28 December 2012
In determining the remuneration policy for Executive Directors, the Committee takes account of the policy for
employees across the Group. The remuneration policy is broadly consistent for Executive Directors and the remainder
of the workforce. Key differences are set out below:
Consistency in policy
The Company takes into account the overall rate of increase in
pay across the Group when considering salary increases for
each category of employee.
Eligible employees can participate in the Dignity Pension
and Assurance Scheme.
The annual bonus scheme operates across the Group.
The Company supports and encourages Group wide share
ownership to share in the long term success of the Company.
Divergence in policy
No divergence from policy.
No divergence from policy.
There are different targets and level of potential reward
depending on seniority, role and responsibility.
The employee population as a whole are offered the
opportunity to participate in the Group's SAYE scheme.
More senior management and executives are provided
with long term incentive share awards to provide
alignment with the interests of shareholders and
reward based on long term performance.
Remuneration Scenarios for Executive Directors
The charts below provide estimates for the potential remuneration of each Executive Director based on the
remuneration policy in place for 2013. Potential outcomes are based on different performance scenarios.
£’000
1,600
1,400
1,200
1,000
800
600
400
200
0
Notes:
Performance shares
Annual Bonus
Pension
Benefits
Basic salary
37%
28%
29%
26%
18%
18% 10% 6% 4%
3% 3% 2% 1%
38%
30%
19% 28%
7% 6% 3% 2%
30%
37%
29%
30%
18% 28%
10% 8% 4% 3%
36%
29%
18% 27% 29%
3% 3%
7%
6%
8% 6% 3% 3%
84% 69% 38% 29%
93% 75% 39% 30%
90% 74% 39% 30%
85% 70% 38% 29%
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Chief Executive
Finance Director
Operations Director
Corporate Services Director
(i)
Fixed pay comprises basic salary, benefits and pension. Fixed pay is constant across all four scenarios.
(ii) For Threshold; assumed no bonus payment as no bonus is payable if performance is below On–target level. Assumed 20 per cent of LTIP vests (being the average
of the start to earn values for the TSR and EPS elements being 25 per cent and 15 per cent respectively).
(iii) For On–target; assumed 70 per cent of maximum bonus paid (which is also the start–to–earn point) and 60 per cent of LTIP (being the mid–point between start to
earn and maximum).
(iv) For Maximum; assumed full bonus payment and LTIP vests in full.
(v) No account has been taken of any changes in the Company's share price since the end of the period.
38 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
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
Ishbel Macpherson
Alan McWalter
Jane Ashcroft
Martin Pexton
Contract date
Notice period
1 April 2004
1 April 2004
1 November 2006
1 January 2009
7 December 2012
14 December 2012
14 December 2012
1 April 2012
1 April 2012
12 months
12 months
12 months
12 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
12 months
24 months
24 months
15 months
15 months
Other than in certain special circumstances warranting termination without notice the Company can terminate an
Executive Director’s contract by giving 12 months’ notice. Alternatively, following notice of termination the Company
may terminate an Executive Director’s contract with immediate effect by paying an amount equal to base salary plus
the fair value of contractual benefits subject to the deduction of tax. There are no special provisions relating to change
of control. The policy on termination is that the Group does not make payments beyond its contractual obligations and
the Committee ensures that there are no unjustified payments for failure.
In accordance with the terms of the UK Corporate Governance Code all Directors submit themselves for re–election at
the Annual General Meeting each year.
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.
Relative importance of spend on pay
The following table sets out the percentage change in profit, dividends and overall spend of pay in the 2012 financial
year compared with the prior year.
Underlying operating profit
Underlying earnings per share
Dividends paid in the period
Employee remuneration costs
2012
£m
69.4
62.8
8.3
71.3
2011
£m
64.5
55.1
7.5
66.3
Percentage
change
%
8
14
10
8
How shareholder views are taken into account
The Remuneration Committee considers shareholder feedback received in relation to the AGM each year and guidance
from shareholder representative bodies more generally. This feedback, plus any additional feedback received during any
meetings from time to time, is then considered as part of the Company's annual review of remuneration policy. For
2013, we were grateful for the constructive feedback received from major shareholders and representative bodies on
our proposals to introduce an EPS measure alongside relative TSR under the LTIP for 2013.
39 | Dignity plc Annual Report & Accounts 2012
Report on Directors’ remuneration continued
for the 52 week period ended 28 December 2012
Implementation Report
Directors’ remuneration (Audited)
The total of Directors’ remuneration for the period was £2,780,000 (2011: £2,710,000), including pension
contributions of £30,000 (2011: £50,000). The remuneration of individual Directors for the year or from their date of
appointment was as follows:
Executive Directors
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Non–Executive Directors
Jane Ashcroft (appointed 1 April 2012)***
Peter Hindley***
James Newman (retired 1 April 2012)**
Bill Forrester (retired 1 April 2012)
Ishbel Macpherson****
Alan McWalter*****
Martin Pexton (appointed 1 April 2012)***
Salary and
fees
£’000
Non cash
benefits*
£’000
Cash benefits*
£’000
Annual
performance
related bonus
£’000
458
260
208
208
31
153
17
12
47
53
31
4
14
4
3
–
1
–
–
–
–
–
67
15
15
15
–
–
–
–
–
–
–
458
260
208
208
–
–
–
–
–
–
–
Total
2012
£’000
987
549
435
434
31
154
17
12
47
53
31
Total
2011
£’000
917
538
427
426
–
154
66
48
41
43
–
Total
1,478
26
112
1,134
2,750
2,660
*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. Mike McCollum ceased to be an active member of the Dignity Pension and Assurance Scheme on 31 March 2012. In lieu of a company pension contribution
he now receives a supplement of 15 per cent of his basic salary, which amounted to £52,000 in the period.
**James Newman’s fees and expenses are invoiced to the Company by West Wood on Derwent Limited.
*** No fee reviews were made for 2012 in respect of these Non–Executive Directors.
**** Ishbel Macpherson became Chairman of the Audit Committee on 1 April 2012 and received an additional prorated fee of £8,400 per annum.
***** Alan McWalter became Senior Independent Non–Executive Director on 1 April 2012 and received an additional prorated fee of £7,000 per annum.
No Director waived emoluments in respect of the 52 week period ended 28 December 2012 or the 52 week period
ended 30 December 2011.
Single total remuneration figure of Directors' remuneration (Audited)
Following the draft proposals published by BIS, the following table presents a single total remuneration figure for 2012
for the Executive Directors (the single figure for the Non–Executive Directors would be as presented above). The
principal additional component included in the single figure relates to the vesting of long–term incentive awards.
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Fixed Pay
Pensions
£
63
–
19
–
Salary
£
458
260
208
208
Pay for Performance
Taxable
benefits
£
19
29
19
18
Annual
Bonus
£
458
260
208
208
LTIP
£
–
–
–
–
Total
Remuneration
£
998
549
454
434
The LTIP values for the 2009 LTIP award which was capable of vesting in March 2012 were zero as the TSR
performance was below median.
The bonus refers to performance in the 2012 financial year and was paid in cash in March 2013.
Pension includes contribution to the Group’s defined benefit pension scheme.
40 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Determination of 2012 annual bonus outcome (Unaudited)
The targets for the 2012 annual bonus were based on the achievement of set earnings per share growth targets.
70 per cent of the maximum bonus (being 100 per cent of salary for Executive Directors) was payable for achieving
a first EPS target of 59.7 pence per share and 100 per cent for a second, more demanding EPS target of 61.5 pence
per share.
The strong growth in underlying EPS over the year of 14 per cent meant that the first and second EPS targets were met.
Accordingly, the Committee awarded Executive Directors full bonuses in respect of the 2012 financial year, being
100 per cent of base salary. None of the annual bonus is deferred.
Long Term Incentive Plan (Audited)
Details of the nil cost option awards made under the LTIP are disclosed in the table below:
Director
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Award
grant date
20.03.09(2)
19.03.10(3)
18.03.11(4)
28.03.12(5)
20.03.09(2)
19.03.10(3)
18.03.11(4)
28.03.12(5)
20.03.09(2)
19.03.10(3)
18.03.11(4)
28.03.12(5)
20.03.09(2)
19.03.10(3)
18.03.11(4)
28.03.12(5)
Share price
at grant
(pence)
617p
671p
691p
815p
617p
671p
691p
815p
617p
671p
691p
815p
617p
671p
691p
815p
As at
31.12.11
89,184
82,011
81,223
–
50,673
46,597
46,129
–
40,538
37,278
36,903
–
30,404
27,958
36,903
–
Granted
during
year
–
–
–
70,219
–
–
–
39,884
–
–
–
31,907
–
–
–
31,907
Lapsed
during
year
Exercised
during
year
89,184
–
–
–
50,673
–
–
–
40,538
–
–
–
30,404
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
As at
28.12.12
–
82,011
81,223
70,219
–
46,597
46,129
39,884
–
37,278
36,903
31,907
–
27,958
36,903
31,907
Earliest date
shares can be
acquired
Latest date
shares can be
acquired
n/a
19.03.13
21.03.14
29.03.15
n/a
19.03.13
21.03.14
29.03.15
n/a
19.03.13
21.03.14
29.03.15
n/a
19.03.13
21.03.14
29.03.15
n/a
18.03.14
17.03.15
27.03.22
n/a
18.03.14
17.03.15
27.03.22
n/a
18.03.14
17.03.15
27.03.22
n/a
18.03.14
17.03.15
27.03.22
(1) Awards under the LTIP up to and including those made in 2009 were only 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 18 March 2009.
(3) Value based on the average mid market share price for the previous 28 days to 18 March 2010.
(4) Value based on the average mid market share price for the previous 28 days to 17 March 2011.
(5) Value based on the average mid market share price for the previous 28 days to 22 March 2012.
LTIP awards granted in the year (Audited)
LTIP awards granted to Executive Directors on 28 March 2012 were as follows:
Executive
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Number of LTIP
awards
70,219
39,884
31,907
31,907
Face/Maximum Value
of Awards
at Grant Date*
571,875
325,000
260,000
260,000
% of Award Vesting at
Threshold (Maximum)
25% (100%)
25% (100%)
25% (100%)
25% (100%)
Performance Period
28.3.12 – 28.3.15
28.3.12 – 28.3.15
28.3.12 – 28.3.15
28.3.12 – 28.3.15
* Based on a 28 day average share price to 22 March 2012 of 815p.
The 2012 LTIP awards will vest subject to the Company’s TSR performance over a three–year period commencing on
28 March 2012, with no opportunity to re–test. TSR will be compared to the constituents of the FTSE 350. No award
will vest unless the Committee considers that the Group’s underlying financial performance over the period has been
satisfactory. None of the award shall vest if the Company's ranking is below median. At median, 25 per cent of the
award will vest and the award will vest in full if the Company is ranked in the upper quartile. Awards will vest on a
straight–line basis for a ranking between median and upper quartile.
41 | Dignity plc Annual Report & Accounts 2012
Report on Directors’ remuneration continued
for the 52 week period ended 28 December 2012
Determination of LTIP awards with performance periods ending in the year (Audited)
During the year, the TSR performance period for the awards made on 20 March 2009 ended. Dignity’s TSR of 54 per
cent was below the median of 82 per cent so none of the awards capable of vesting actually vested.
Performance level
Below threshold
Threshold
Stretch or above
Actual achieved
TSR relative to FTSE 350 companies
Performance required
Below median
Median
Upper quartile or above
Below median
% vesting
0%
40%
100%
0%
Inland Revenue Approved SAYE Share Option Scheme (Audited)
Richard Portman
Steve Whittern
22 October 2010
22 October 2010
Date
of grant
Number
held at
30 December
2011
1,283
1,283
Granted
Lapsed
–
–
–
–
Number
held at
28 December
2012
1,283
1,283
Exercise
date
1 December 2013
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 28 December 2012 was £10.80 per share. The high and low share closing
prices in the period were £10.80 per share and £7.56 per share respectively.
Directors’ interest in shares (Unaudited)
To further align the interests of senior management with those of shareholders, Executive Directors are subject to
share ownership guidelines. Executive Directors are required to accumulate a holding of Ordinary Shares in the
Company to the value of 100 per cent of their salary at 1 March 2013. Until the guideline is met the Executive Director
is expected to retain 50 per cent of shares acquired under the Company's share plans (after allowing for tax and
national insurance liabilities).
The interests of the Directors in the share capital of Dignity plc at 28 December 2012 are set out below.
Number of Ordinary Shares
At 28 December 2012
Mike McCollum
Andrew Davies
Richard Portman
Steve Whittern
Peter Hindley
At 30 December
2011 or date of
appointment
522,418
304,649
222,784
110,285
188,790
Legally owned
Subject to SAYE
270,000
161,250
106,782
10,737
188,790
–
–
1,283
1,283
–
Subject to
performance
conditions under
the LTIP
233,453
132,610
106,088
96,768
–
Ishbel Macpherson
5,695
5,695
Alan McWalter
3,000
3,000
Jane Ashcroft
Martin Pexton
–
–
–
–
–
–
–
–
–
–
–
–
Percentage of salary held
in legally owned shares
under the shareholding
700.3%*
736.3%*
609.4%*
55.3%*
Not applicable to
Non-Executive Directors
Not applicable to
Non-Executive Directors
Not applicable to
Non-Executive Directors
Not applicable to
Non-Executive Directors
Not applicable to
Non-Executive Directors
There has been no change in the interests set out above between 28 December 2012 and 6 March 2013.
* The shareholding guideline for the Executive Directors is that they hold 100 per cent of their basic salary as shares based on their salary at 1 March 2013 and the
previous 28 day average share price at that date of 1,211 pence per share.
42 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Directors’ pension entitlements (Audited)
Defined benefit salary scheme
Change in
accrued benefit
over the
period (1)
£
Transfer value at
28 December
2012 (2)
£
Transfer value at
30 December
2011
(2)
£
Mike McCollum
Richard Portman
1,382
3,272
1,235,829
551,431
1,052,797
441,228
Change in
transfer value
less
Directors’
contributions
£
175,021
95,643
Change in
accrued
benefit in
excess of
inflation
£
–
2,487
Transfer
value of
change in
accrued
benefit net of
Directors’
contributions
£
Accumulated
total
accrued
pension at
28 December
2012 (3)
£
(18,633)
19,909
102,566
38,936
(1) During 2012, 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. Mike McCollum ceased to be an active member of the Dignity Pension and
Assurance Scheme on 31 March 2012. In lieu of a company pension contribution he now receives a supplement of 15 per cent of his basic salary. The Group has
also arranged permanent life cover equal to the benefit he would have received had he remained in the Scheme.
(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.
Loss of office payments (Audited)
No Executive Director left in the year and no compensation for loss of office was paid.
Membership of the Remuneration Committee (Unaudited)
The Code requires that a Group of the size of Dignity plc has a Remuneration Committee comprising a minimum of
three non–executives. The Committee is chaired by Non–Executive Director, Alan McWalter. The Committee members
until 1 April 2012 were Bill Forrester, Alan McWalter, Ishbel Macpherson and James Newman. After their retirement
from the Board, Bill Forrester and James Newman were replaced by Jane Ashcroft and Martin Pexton.
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 Non–Executive Directors are not eligible for pensions and do not participate in the Group’s
bonus or share schemes.
The Remuneration Committee 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 considers
the performance of the Executive Directors as a prelude to recommending their annual remuneration, bonus awards
and share awards to the Board for final approval.
The Committee met five times during the year. 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 awards granted under the Group’s Long Term Incentive Plan (LTIP). The meetings also approved the
payment of the 2011 performance related bonus and dealt with the vesting of the shares awarded in 2009 under the
LTIP scheme. During the year, the Committee also introduced share ownership guidelines for the Executive Directors
and clawback provisions for the annual bonus and LTIP.
The Committee also receives advice from several sources, namely:
• The Chairman and the Chief Executive who 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.
• New Bridge Street (a trading name of Aon Corporation) is the Committee’s executive remuneration advisor and is a
signatory to the Remuneration Consultants Group's Code of Conduct. Aon Corporation does not provide any other
services to the Group.
New Bridge Street were appointed by the Remuneration Committee having historically provided adhoc services and
provided a range of advice to the Committee during the year, including clawback of incentive payments, share
ownership guidelines, the impact of the BIS reforms on reporting and shareholder voting, market developments
generally and the introduction of EPS targets for LTIP awards. Total fees charged were approximately £39,000 and
were charged on a time spent basis.
43 | Dignity plc Annual Report & Accounts 2012
Report on Directors’ remuneration continued
for the 52 week period ended 28 December 2012
Statement of shareholder voting at the AGM (Unaudited)
At last year's AGM, the Directors' Remuneration Report received the following votes from shareholders:
For
Against
Abstentions
Total
Total number of votes
% of votes cast
42,454,217
638,109
1,504,299
44,596,625
95.20%
1.43%
3.37%
100%
Performance graph (Unaudited)
Consistent with previous years, the Remuneration Committee has chosen to compare the Group’s TSR to the
FTSE 350 index.
5 Year Total Shareholder Return
100%
80%
60%
40%
20%
0%
–20%
–40%
8
0
r
a
M
8
0
n
u
J
8
0
p
e
S
8
0
c
e
D
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
r
a
M
2
1
n
u
J
2
1
p
e
S
2
1
c
e
D
3
1
n
a
J
3
1
b
e
F
Dignity plc
FTSE 350 Index
On behalf of the Board
Alan McWalter
Chair of the Remuneration Committee
6 March 2013
44 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Directors’ statement on corporate governance
for the 52 week period ended 28 December 2012
Introduction
This statement explains how Dignity has incorporated the requirements of The UK Corporate Governance Code (2010)
(the 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
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 34 to 44 provide a description of how the main and supporting
principles of the Code have been applied within Dignity plc during 2012. The Group has complied with all provisions
of the Code throughout the 2012 accounting period.
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.
The management of the Group on a day to day basis is delegated, via the Executive Directors, to an experienced senior
and middle management team whose size and structure is commensurate with the complexity of the Group’s activities.
Managers have the necessary skills and knowledge relevant to their areas of responsibility. The remainder of the
responsibilities vest with the Board except capital expenditures, acquisition projects and significant financial matters
where some delegation occurs under the formally adopted Schedule of Matters Reserved for the Board and the
Expenditure Authorisation Policy.
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 considers 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.
45 | Dignity plc Annual Report & Accounts 2012
Directors’ statement on corporate governance continued
for the 52 week period ended 28 December 2012
The four independent Non–Executive Directors who served from the start of the period to 1 April 2012 were Bill
Forrester, Ishbel Macpherson, Alan McWalter, and James Newman. On 1 April 2012, Bill Forrester and James Newman
retired from the Board and were replaced by Jane Ashcroft and Martin Pexton. They 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 received
full induction training. The terms and conditions of all Directors’ appointments are available for inspection at the
Group’s registered office.
Biographical details for the Non–Executive Directors appear on pages 32 and 33 . Their role is to challenge
constructively the management of the Group and help develop proposals on strategy.
Alan McWalter is the 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 replaced James Newman when he retired 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, that they will have sufficient time to devote to their responsibilities as Directors of the Group.
Jane Ashcroft, Ishbel Macpherson, Alan McWalter, and Martin Pexton are independent of management, as defined by
the Code.
All Directors are able to take independent professional advice on the furtherance of their duties if necessary at
the Group’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.
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
Jane Ashcroft
Andrew Davies
Bill Forrester(iv)
Peter Hindley
Mike McCollum
Alan McWalter
Ishbel Macpherson
James Newman(iv)
Martin Pexton
Richard Portman
Steve Whittern
Main Board(i)
Audit
Committee
Remuneration
Committee
Nomination
Committee
6
3
5
2
6
6
6
6
2
4
5
6
3
2
2(ii)
1
3(ii)
3(ii)
3
3
1
2
2(iii)
3(ii)
5
2
–
1
5(ii)
3(ii)
5
5
1
3
5(iii)
–
2
2
–
–
2
–
2
2
–
2
2(iii)
–
(i)
Only full Board meetings have been included in the attendance analysis. Seven 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.
(iv) Bill Forrester and James Newman retired from the Board on 1 April 2012. Prior to their retirement they attended all Board and Committee meetings.
46 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
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.
Three formal meetings between the Chairman and the Non–Executive Directors, without the Executive Directors being
present were held during 2012.
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 into account the views of the other Executive Directors. The Board was satisfied that its performance and that
of its Chairman, individual Directors and Committees was of the appropriate standard.
As required under the Code the Board will undertake an external evaluation of its own performance in the second
quarter of 2013. This evaluation will be completed by Independent Audit Limited.
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 Board are happy that the role of Company Secretary is undertaken by
the Corporate Service Director as, whilst there may be merit in separating the roles, the Board believes it is the most
cost effective and sensible way of filling the role particularly given the skills and knowledge of the Corporate Services
Director. 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, 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 2012. 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, until 1 April 2012 were Bill Forrester, Alan McWalter, Ishbel Macpherson and James
Newman. After their retirement from the Board, Bill Forrester and James Newman were replaced by Jane Ashcroft and
Martin Pexton. 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 2012 was made up of the independent Non–Executive Directors. The Committee members
during 2012 were, until 1 April 2012, Bill Forrester, Alan McWalter, Ishbel Macpherson and James Newman. After their
retirement from the Board Bill Forrester and James Newman were replaced by Jane Ashcroft and Martin Pexton. The
Chairman Ishbel Macpherson, is considered to have recent and relevant financial experience to chair this Committee
and she assumed the Chairmanship from James Newman 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 pages 32
and 33. The Committee has specific written terms of reference that explain its authority and duties. The Committee
has met three times during 2012. The external auditors, the Chairman, the Chief Executive and the Finance Director
have attended all the meetings by invitation. The Operations Director attended the meetings in July and December of
2012 by invitation. The external auditors and the Head of Internal Audit separately meet with the Chairman of the
Audit Committee. During 2012, the Chairman met with the external Auditors on three occasions and the Chairman met
with the Head of Internal Audit on two occasions.
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
47 | Dignity plc Annual Report & Accounts 2012
Directors’ statement on corporate governance continued
for the 52 week period ended 28 December 2012
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. There is a formal policy adopted by both the Audit Committee and the Board covering non–
audit work that may be undertaken by the external auditors. The Committee reviews whether that policy has been
complied with and the remuneration received by the external auditors for such non–audit work. This is to safeguard the
independence of the external auditors. The Committee were satisfied in the period that this work, which was principally
for tax advice, 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 70.
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. In reaching this decision, the Audit Committee has
agreed to retain PricewaterhouseCoopers LLP as auditors up to and including the audit of the 2014 financial results at
which point it will consider a tender in line with prevailing guidelines at the time. The external auditors are required to
rotate the Group audit partner every five years and this is the fourth 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 10 to 15), the Financial Review (pages 16 to 18), Interim Reports,
Interim Management Statements and in price sensitive announcements. The Group will release its Annual Information
Update by 1 April 2013. A summary of the Directors’ responsibilities for the financial statements is set out on
page 51.
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 2013. 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 was in place for the period and in place
up to the date the Statement on Corporate Governance was signed and approved for the Annual Report and Accounts
2012. 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
48 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
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 Audit Committee and the Chief
Executive. 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
selected areas of the head office function and any area where a Director requests a review. During 2012 (as in 2011),
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; 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. This was in place
throughout the accounting period and at the date of approval of the Annual Report. 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 10 to 15.
Nomination Committee
Peter Hindley, the Chairman, chaired the Nomination Committee during 2012, which met on two occasions during the
year. The other members of the Committee are Jane Ashcroft, Ishbel Macpherson, Alan McWalter and Martin Pexton.
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. In 2011 the
Committee was involved in the identification and appointment of the new Non–Executive Directors, Jane Ashcroft and
Martin Pexton.
The Nomination Committee and by extension the Board strongly supports the spirit of Lord Davies’ Report “Women on
Boards”. In 2011 it set a goal of twenty 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. This objective was achieved by the appointment of Jane
Ashcroft to the Board on 1 April 2012.
We continue to 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.
49 | Dignity plc Annual Report & Accounts 2012
Directors’ statement on corporate governance continued
for the 52 week period ended 28 December 2012
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 the 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.
The Board regards the Annual General Meeting, which this year is on 6 June 2013, 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.
5. 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. Under the Articles of Association the Company may appoint, by
Ordinary Resolution, any person who is willing to act as a Director either to fill a vacancy or in addition to the existing
Board. The Board may also appoint one or more of its body to act as executive directors. The Company may remove
any Director, by Ordinary Resolution, before the expiry of his period of office. The Articles of Association can be
amended by special resolution of the shareholders. 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.
6. Substantial shareholdings
The Group has been notified of the following interests of 3 per cent or more of the issued share capital:
As at 28 December 2012
As at 6 March 2013
Number of
Ordinary
Shares
Percentage
of issued
share capital
Number of
Ordinary
Shares
Percentage
of issued
share capital
3,640,829
2,957,175
2,787,652
2,778,272
2,189,991
6.65% 3,640,829
5.40% 2,957,175
5.09% 2,787,652
5.07% 2,778,272
4.00% 2,189,991
6.65%
5.40%
5.09%
5.07%
4.00%
Holder
Tiger Global Management LLC
Franklin Templeton Institutional
BAM & Oppenheimer Funds
Montanaro Group
Kames Capital
By order of the Board
Richard Portman
Company Secretary
6 March 2013
50 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Directors’ report
for the 52 week period ended 28 December 2012
The Directors present their report and the audited
consolidated financial statements for Dignity plc
and its subsidiaries for the 52 week period ended
28 December 2012.
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 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.
Each of the Directors, whose names and functions are listed
on page 32 and 33 of the Annual Report, confirm that, to the
best of their knowledge and belief:
• 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 16 to 19 of the Annual
Report. A review of the development of the business in 2012,
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 21.
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 427 Ordinary Shares of
10.5 pence each to satisfy options exercised under the Save
As You Earn Scheme (SAYE). The SAYE options were granted
in 2010.
The 2010 SAYE scheme does not vest until October 2013,
at which point option holders will have the ability to exercise
their options.
The issued share capital of Dignity plc at 28 December 2012
consisted of 54,757,481 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.
51 | Dignity plc Annual Report & Accounts 2012
Directors’ report continued
for the 52 week period ended 28 December 2012
A special resolution passed at the last Annual General
Meeting on 14 June 2012 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 five
per cent above the average middle market quotation for the
preceding five business days. At the same meeting the
Company was also given authority to allot Ordinary Shares
up to an aggregate nominal value of £1,916,496 of which
up to £287,474 may be for cash on a non pre-emptive basis.
These authorities will expire at the conclusion of the next
Annual General Meeting on 6 June 2013. 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 55. Group profit before tax
amounted to £45.4 million (2011: £40.3 million).
Dividends
An interim dividend of 5.36 pence (2011: 4.87 pence) per
share was paid on 26 October 2012. The Board has proposed
a final dividend of 10.75 pence (2011: 9.77 pence) per
share, which, subject to approval at the Annual General
Meeting, will be paid on 28 June 2013 to shareholders on
the register at close of business on 24 May 2013.
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 36 days
(2011: 40 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
maintaining cremators and their abatement equipment.
If this company ceased to trade, the Group may have
difficulties in maintaining such equipment.
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 22 to 31.
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 endeavours, 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 pages 39 and 42. 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 6 June 2013.
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.
Health and safety policy
The Group’s operations are designed 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
22 to 31.
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
22 to 31 alongside other social and ethical considerations.
Donations
The Group made charitable donations amounting to
£0.1 million (2011: £0.1 million) during the period. There
were no political donations. Further information can be
found on page 30.
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 2013.
52 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Post balance sheet events
Please refer to note 32 of the Notes to the Consolidated
Financial Statements for further details.
25 January 2013
On 25 January 2013, the Group acquired the entire issued
share capital of Yew Holdings Limited for a consideration
of £58.3 million. Yew Holdings Limited owns and operates
40 funeral locations and two crematoria in Northern England.
These businesses will be integrated into the Group’s existing
operations and branch network.
2,283,019 Ordinary Shares were issued at a price of £10.60,
generating proceeds of £24.2 million. These Ordinary Shares
rank pari passu with all other Ordinary Shares.
A further £5.8 million was drawn under the Group’s
Crematoria Acquisition Facility. As a result, the £15.8 million
facility is secured against seven crematoria held outside the
Securitisation Group.
A new £34 million five year term loan with the Royal Bank of
Scotland was then raised against the Yew assets and certain
other trading assets held outside the Securitisation Group.
Approximately £2 million of principal is repayable annually
and the pre tax cost of the debt is fixed at approximately
four per cent for the term of the loan. The term loan has
no undrawn amounts.
The acquisition of Yew was made outside the Securitisation
Group. Consequently, it does not adversely affect the timing
or overall quantum of any potential future return of value.
27 February 2013
On 27 February 2013, the £15.8 million Crematoria
Acquisition Facility was refinanced with the Royal Bank of
Scotland. The new facility is for a period of five years, with
the principal repayable in one amount at the end of the
term. The cost of funds is fixed for the term of the loan
at approximately 3.3 per cent. This facility has no
undrawn amounts.
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 Company’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 45 to 50, which is
incorporated by reference.
By order of the Board
Richard Portman
Company Secretary
6 March 2013
53 | Dignity plc Annual Report & Accounts 2012
Independent auditors’ report to the members of Dignity plc
for the 52 week period ended 28 December 2012
We have audited the consolidated financial statements of Dignity plc for the 52 week period ended 28 December 2012
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 51, 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 & Accounts 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 28 December 2012 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 28 December 2012 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 52, 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
28 December 2012 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
6 March 2013
54 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Consolidated income statement
for the 52 week period ended 28 December 2012
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 28 December 2012
Profit for the period
Actuarial loss on retirement benefit obligations
Tax on actuarial loss on retirement benefit obligations
Other comprehensive loss
Total comprehensive income for the period
Attributable to:
Equity shareholders of the parent
55 | Dignity plc Annual Report & Accounts 2012
Note
3
3
3
5
3
4
4
5
6
6
6
3
8
8
Note
28
6
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
229.6
(95.3)
134.3
(67.1)
1.5
68.7
69.4
0.1
(0.8)
68.7
(25.8)
2.5
45.4
(11.7)
2.0
(9.7)
35.7
65.1p
62.8p
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
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
35.7
(0.9)
0.2
(0.7)
35.0
34.3
(7.9)
2.1
(5.8)
28.5
35.0
28.5
Consolidated balance sheet
as at 28 December 2012
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
28 December
2012
£m
30 December
2011
£m
Note
9
9
10
11
28
13
14
15
16
17
19
16
20
17
19
22
151.1
53.4
157.1
12.6
0.1
374.3
6.5
25.6
55.6
87.7
148.0
46.3
147.6
12.6
1.3
355.8
5.9
24.6
36.9
67.4
462.0
423.2
24.5
46.2
5.1
1.1
76.9
310.1
24.2
2.8
3.4
340.5
417.4
5.7
17.4
99.3
(7.2)
(70.6)
44.6
462.0
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
The financial statements on pages 55 to 91 were approved by the Board of Directors on 6 March 2013 and were signed on
its behalf by:
M K McCollum
Chief Executive
S L Whittern
Finance Director
56 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Consolidated statement of changes in equity
for the 52 week period ended 28 December 2012
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)
Shareholders’ equity as at
30 December 2011
Profit for the 52 weeks ended
28 December 2012
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 25% to 23%
Dividends (see note 7)
Ordinary
share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Other
reserves
£m
Retained
earnings
£m
5.7
17.4
99.3
(8.8)
(118.4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.1
(0.1)
(0.1)
–
34.3
(7.9)
2.1
28.5
–
–
0.1
(7.5)
5.7
17.4
99.3
(7.9)
(97.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.2
(0.4)
(0.1)
–
(7.2)
35.7
(0.9)
0.2
35.0
–
–
–
(8.3)
(70.6)
Total
equity
£m
(4.8)
34.3
(7.9)
2.1
28.5
1.1
(0.1)
–
(7.5)
17.2
35.7
(0.9)
0.2
35.0
1.2
(0.4)
(0.1)
(8.3)
44.6
Shareholders’ equity as at 28 December 2012
5.7
17.4
99.3
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 £0.7 million loss (December 2011: £5.8 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.
57 | Dignity plc Annual Report & Accounts 2012
Consolidated statement of cash flows
for the 52 week period ended 28 December 2012
Cash flows from operating activities
Cash generated from operations before external transaction costs
External transaction costs in respect of acquisitions
Cash generated from operations
Finance income received
Finance costs paid
Payments to 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
Repayment of borrowings
Payments to restricted bank accounts for repayment of borrowings
Total payments in respect of borrowings
Dividends paid to shareholders on Ordinary Shares
Purchase of C Shares in respect of Deferred Dividend Option
Net cash used in financing activities
Net increase/(decrease) 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
28 December
2012
£m
52 week period
ended
30 December
2011
£m
83.3
(1.0)
82.3
0.3
(12.6)
(11.9)
(24.5)
(8.6)
49.5
(10.7)
0.8
(11.8)
(1.0)
(1.3)
(4.4)
(1.9)
(20.4)
(30.3)
(4.1)
(4.2)
(8.3)
(8.3)
–
(16.6)
2.6
35.4
38.0
17.6
55.6
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
Note
25
15
26
15
7
15
15
15
58 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Notes to the financial statements
for the 52 week period ended 28 December 2012
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 28 December
2012 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.
59 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
1 Accounting policies (continued)
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 allowance 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 allowances 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 pre–arranged 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 receivable 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
receivable 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.
60 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
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.
61 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
1 Accounting policies (continued)
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.
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 and adjusted if appropriate at each balance
sheet date.
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 the 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.
62 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
1 Accounting policies (continued)
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.
Inventories
Inventories, which comprise funeral supplies and monumental masonry, are stated at the lower of cost and net
realisable value. 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.
63 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
1 Accounting policies (continued)
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.
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(c) 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.
64 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
1 Accounting policies (continued)
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.
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 2012
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or
after 1 January 2012 that would be expected to have a material impact on the Group.
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 28 December 2012 or later periods but which the Group has not early adopted:
IAS 1, Financial statement presentation, regarding other comprehensive income. This amendment requires entities to
group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to
profit or loss subsequently (reclassification adjustments). The Group is yet to assess the full impact of the
amendment.
IAS 19, Employee benefits was amended in June 2011, effective 1 January 2013. 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.
This is not expected to have a material impact on the Group.
IAS 27 (revised 2011), Separate financial statements, effective 1 January 2013. This revision includes the requirements
relating to separate financial statements. This is not expected to have any impact on the Group.
IAS 32 (amendment), Financial instruments: Presentation and IFRS 7, Financial instruments disclosure on asset and
liability offsetting, effective 1 January 2014. These amendments are to the application guidance in IAS 32 and clarify
some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. This is not
expected to have any impact on the Group.
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, effective 1 January 2014, 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 2014. 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.
65 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
1 Accounting policies (continued)
IFRS 13, Fair value measurement, effective 1 January 2014. 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.
Annual improvements 2011. These annual improvements address six issues in the 2009–2011 reporting cycle.
It includes changes to: IFRS 1, First time adoption, IAS1, Financial statement presentation, IAS 16, Property plant
and equipment and IAS 34, Interim financial reporting. This is not expected to have any impact on the Group.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material
impact on the Group.
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 was refinanced in February 2013 as described in the
Financial Review.
The Group has significant cash balances that are held by institutions rated at least A–1 by Standard and Poor’s. These
balances earn interest by reference to the Bank of England base rate. If interest rates reduced by one per cent at the
beginning of 2012 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 28 December 2012 the actual ratio was 2.43 times
(2011: 2.27 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 and repay holders of Class A and B Secured Notes. 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 Standards & Poor’s and A+ and BBB+ respectively by Fitch.
66 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
2 Financial risk management (continued)
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).
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 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 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 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), by
segment, was as follows:
Underlying
operating profit
before
depreciation and
amortisation
£m
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
61.7
25.9
6.7
(14.2)
80.1
(7.5)
(2.6)
(0.2)
(0.4)
(10.7)
54.2
23.3
6.5
(14.6)
69.4
(25.8)
2.5
46.1
(11.7)
–
(11.7)
34.4
62.8p
(0.5)
(0.2)
–
–
(0.7)
–
–
(0.7)
–
2.0
2.0
1.3
53.7
23.1
6.5
(14.6)
68.7
(25.8)
2.5
45.4
(11.7)
2.0
(9.7)
35.7
65.1p
Revenue
£m
157.9
46.6
25.1
–
229.6
52 week period ended 28 December 2012
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)
67 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
3 Revenue and segmental analysis (continued)
The segment assets and liabilities were as follows:
As at 28 December 2012
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
Funeral
services
£m
262.5
Crematoria
£m
124.0
Pre–arranged
funeral plans
£m
17.2
Central
overheads
£m
2.7
Group
£m
406.4
55.6
462.0
(24.7)
(5.7)
(6.1)
(6.0)
(42.5)
(333.9)
(11.7)
(5.1)
(24.2)
(417.4)
30.6
10.5
0.2
1.4
1.2
0.1
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
20.7
7.5
–
1.3
–
0.1
8.4
2.6
–
0.1
–
–
–
–
0.2
–
–
–
1.5
0.4
–
–
1.2
–
The revenue and operating profit, 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
68 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
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
4 Net finance costs
Funeral
services
£m
249.5
Crematoria
£m
117.5
Pre–arranged
funeral plans
£m
16.7
Central
overheads
£m
2.6
Group
£m
386.3
36.9
423.2
(23.5)
(4.9)
(6.0)
(5.9)
(40.3)
(338.2)
(0.1)
(2.3)
(25.1)
(406.0)
35.0
9.7
0.1
0.9
1.1
0.2
23.0
7.0
–
1.1
–
–
11.6
2.3
–
(0.2)
–
–
–
–
0.1
–
–
–
0.4
0.4
–
–
1.1
0.2
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
23.0
1.6
0.5
0.4
0.1
0.4
26.0
(0.2)
25.8
(0.4)
(1.9)
(0.2)
(2.5)
23.3
23.5
1.6
0.5
0.3
0.1
0.5
26.5
(0.6)
25.9
(0.3)
(2.0)
(0.7)
(3.0)
22.9
Finance costs
Class A and B Secured Notes
Amortisation of issue costs
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
Net finance income on retirement benefit obligations (note 28)
Finance income
Net finance costs
69 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
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
– Tax advisory services
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
71.3
13.1
10.5
0.2
7.9
0.8
(1.5)
1.4
0.1
0.1
0.4
0.6
66.3
12.5
9.7
0.1
6.6
1.5
(1.5)
0.9
0.1
0.1
0.6
0.8
The external transaction costs comprise £0.8 million (2011: £1.5 million) of acquisition expenses. The impact on taxation
of these is a credit of £nil million (2011: £0.3 million).
6 Taxation
Analysis of charge in the period
Current tax – current period
Adjustments for prior period
Total corporation tax
Deferred tax – current period
Adjustments for prior period
Exceptional adjustment for rate change – 25% to 23% (2011: 27% to 25%)
Exceptional adjustment for recognition of brought forward losses (note 20)
Total deferred tax
Taxation
Tax on items charged to equity
Deferred tax credit on actuarial losses on retirement benefit obligations
Deferred tax charge/(credit) relating to maturity of option schemes
Corporation tax credit on actuarial losses on retirement benefit obligations
Corporation tax charge relating to maturity of option schemes
Adjustment for rate change – 25% to 23% (2011: 27% to 25%)
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
10.9
0.2
11.1
0.5
0.1
(2.0)
–
(1.4)
9.7
8.0
(0.3)
7.7
3.2
0.3
(1.8)
(3.4)
(1.7)
6.0
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
(0.2)
0.2
–
0.2
(0.1)
0.1
(1.9)
(0.2)
(0.2)
0.3
–
(2.0)
70 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
6 Taxation (continued)
Total tax charge
Total current tax charge
Total deferred tax credit
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
11.3
(1.5)
7.8
(3.8)
The taxation charge in the period is lower (2011: lower) than the standard rate of corporation tax in the UK of
24.5 per cent (2011: 26.5 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 24.5% (2011: 26.5%)
Effects of:
Adjustments in respect of prior period
Exceptional adjustment in respect of closing deferred tax rate change – 25% to 23%
(2011: 27% to 25%)
Exceptional adjustment for recognition of brought forward losses
Expenses not deductible for tax purposes
Total taxation
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
45.4
11.1
0.3
(2.0)
–
0.3
9.7
40.3
10.7
–
(1.8)
(3.4)
0.5
6.0
Under IFRS the tax rate is lower (2011: lower) than the standard UK tax rate of 24.5 per cent (2011: 26.5 per cent)
principally due to the exceptional adjustments in both periods. Without these exceptional adjustments the rate would
be higher (2011: 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 26 per cent to 24 per cent with effect from 1 April 2012. Accordingly the Group’s profits for this
accounting period are taxed at an effective rate of 25.5 per cent (2011: 27.5 per cent). As a result, the Group
recognised exceptional tax income of £2.0 million (2011: £1.8 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 legislation to reduce the main rate of corporation
tax from 24 per cent to 23 per cent from 1 April 2013 was substantively enacted at the balance sheet date and so the
deferred tax balance has been calculated at 23 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 two per cent in 2014 when it will be 21 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: 9.77p per Ordinary Share (2011: 8.88p)
Interim dividend paid: 5.36p per Ordinary Share (2011: 4.87p)
Dividend on Ordinary Shares
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
5.4
2.9
8.3
4.9
2.6
7.5
The interim dividend represents the interim dividend that was approved and paid in the period out of earnings
generated in the same period.
71 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
7 Dividends (continued)
The final dividend represents the final dividend that was approved and paid in the period relating to the earnings
generated in the previous period.
Consequently, total dividends recognised in the period were £8.3 million, 15.13 pence per share (2011: £7.5 million,
13.75 pence per share).
A final dividend of 10.75 pence per share, in respect of 2012, has been proposed by the Board. This will be paid on
28 June 2013 provided that approval is gained from shareholders at the Annual General Meeting on 6 June 2013 and
will be paid to shareholders on the register at close of business on 24 May 2013.
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.
Reconciliations of the earnings and the weighted average number of shares used in the calculations are set out below:
52 week period ended 28 December 2012
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 £nil million)
Underlying profit after taxation – Basic EPS
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
Weighted
average
number of
shares
millions
Per share
amount
pence
54.8
65.1
54.8
54.8
62.8
62.6
54.8
55.1
Earnings
£m
35.7
(1.3)
34.4
34.3
(4.1)
30.2
In 2012 and 2011, 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.
72 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
9 Goodwill and other intangible assets
Cost
At 31 December 2010
Acquisition of subsidiaries and
other businesses
At 30 December 2011
Acquisition of subsidiaries and
other businesses (note 26(a))
At 28 December 2012
Accumulated amortisation
At 31 December 2010
Amortisation charge
At 30 December 2011
Amortisation charge
At 28 December 2012
Net book amount at
28 December 2012
Net book amount at
30 December 2011
Trade
names
£m
36.8
6.9
43.7
7.3
51.0
–
–
–
–
–
51.0
43.7
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
(0.6)
(0.1)
(0.7)
(0.2)
(0.9)
2.3
2.5
4.0
–
4.0
–
4.0
(3.9)
–
(3.9)
–
(3.9)
0.1
0.1
0.2
–
0.2
–
0.2
(0.2)
–
(0.2)
–
(0.2)
–
–
44.2
6.9
51.1
7.3
58.4
(4.7)
(0.1)
(4.8)
(0.2)
(5.0)
142.9
5.1
148.0
3.1
151.1
–
–
–
–
–
187.1
12.0
199.1
10.4
209.5
(4.7)
(0.1)
(4.8)
(0.2)
(5.0)
53.4
151.1
204.5
46.3
148.0
194.3
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:
Intangible
assets
£m
51.0
–
2.3
0.1
53.4
43.6
–
2.6
0.1
46.3
Goodwill
£m
106.1
40.3
4.7
–
151.1
103.0
40.3
4.7
–
148.0
Total
£m
157.1
40.3
7.0
0.1
204.5
146.6
40.3
7.3
0.1
194.3
At 28 December 2012
Funeral services
Crematoria
Pre–arranged funeral plans
Central overheads
At 30 December 2011
Funeral services
Crematoria
Pre–arranged funeral plans
Central overheads
73 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
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 central
overheads 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
(2011: 2.25 per cent). The cash flows are discounted at a pre–tax rate of 10.2 per cent (2011: 10.2 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 21 per cent (2011: 20 per cent), or the growth rate would have to reduce to at least
minus 10 per cent (2011: 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 (2011: £nil).
10 Property, plant and equipment
Cost
At 31 December 2010
Additions
Acquisition of subsidiaries and other businesses
Disposals
Reclassification
At 30 December 2011
Additions
Acquisition of subsidiaries and other businesses (note 26(a))
Disposals
Reclassification
At 28 December 2012
Accumulated depreciation
At 31 December 2010
Depreciation charge
Disposals
At 30 December 2011
Depreciation charge
Disposals
At 28 December 2012
Net book amount at 28 December 2012
Net book amount at 30 December 2011
Freehold
land and
buildings
£m
Leasehold
buildings
£m
Plant, machinery,
fixtures and
fittings
£m
Motor
vehicles
£m
79.0
3.8
0.9
(0.2)
2.9
86.4
2.7
0.5
(0.3)
3.5
92.8
(10.9)
(2.2)
–
(13.1)
(2.4)
0.1
(15.4)
77.4
73.3
28.7
3.4
–
–
3.7
35.8
1.9
–
(0.1)
0.3
37.9
(8.4)
(1.3)
–
(9.7)
(1.5)
–
(11.2)
26.7
26.1
34.7
10.3
–
(0.8)
(6.6)
37.6
9.9
–
(0.5)
(3.8)
43.2
(12.2)
(2.8)
0.8
(14.2)
(3.1)
0.5
(16.8)
26.4
23.4
42.6
5.3
0.7
(1.9)
–
46.7
5.5
0.2
(2.5)
–
49.9
(19.9)
(3.4)
1.4
(21.9)
(3.5)
2.1
(23.3)
26.6
24.8
Total
£m
185.0
22.8
1.6
(2.9)
–
206.5
20.0
0.7
(3.4)
–
223.8
(51.4)
(9.7)
2.2
(58.9)
(10.5)
2.7
(66.7)
157.1
147.6
Depreciation expense of £3.5 million (2011: £3.4 million) is included within cost of sales and £7.0 million (2011: £6.3
million) is included within administrative expenses.
Included within plant, machinery, fixtures and fittings net book value is £7.8 million (2011: £7.3 million) relating to
assets held in the course of construction.
In 2012, borrowing costs of £0.2 million (2011: £0.6 million) were capitalised as components of the cost of
construction of qualifying assets, applying an annualised average capitalisation rate of 6.8 per cent
(2011: 6.9 per cent).
Details of any securities over assets are disclosed in note 30.
74 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
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
28 December
2012
£m
30 December
2011
£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
£5.4 million (2011: £4.8 million). This includes amounts in respect of the crematoria being developed at
Weston–super–Mare and Enfield.
11 Non–current financial and other assets
Prepayments
Deferred commissions
Note
(a)
(b)
28 December
2012
£m
30 December
2011
£m
10.0
2.6
12.6
10.1
2.5
12.6
(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 receivable 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
There were no inventory write–downs in either period.
28 December
2012
£m
30 December
2011
£m
0.2
6.3
6.5
0.2
5.7
5.9
75 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
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
28 December
2012
£m
30 December
2011
£m
18.3
(3.4)
14.9
3.0
3.6
4.1
25.6
16.5
(3.1)
13.4
2.6
4.2
4.4
24.6
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
Amounts set aside for debt service payments
Cash and cash equivalents as reported in the balance sheet
28 December
2012
£m
30 December
2011
£m
Note
(a)
(b)
38.0
1.5
16.1
55.6
35.4
1.5
–
36.9
(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, Statement of Cash Flows.
(b) This amount was transferred to restricted bank accounts which could only be used for the payment of the interest
and principal on the Secured Notes, the repayment of liabilities due on the Group’s interest rate swaps (see note 16(c))
and commitment fees due on its undrawn borrowing facilities (see note 21(d)) and for no other purpose.
This amount does not meet the definition of cash and cash equivalents in IAS 7, Statement of Cash Flows. Whilst not
applicable in 2011, this amount was used to pay these respective parties on 31 December 2012. Of this amount
£11.9 million is shown within the Statement of Cash Flows as ‘Payments to restricted bank accounts for finance costs’
and £4.2 million is shown within ‘Financing activities’ as ‘Payments to restricted bank accounts for repayment
of borrowings’.
16 Financial liabilities
Current
Class A Secured Notes
Premium on Secured Notes
Other current financial liabilities
Crematoria Acquisition Facility
Non–current
Class A and B Secured Notes
Premium on Secured Notes
Finance lease obligations
Other non–current financial liabilities
Crematoria Acquisition Facility
76 | Dignity plc Annual Report & Accounts 2012
28 December
2012
£m
30 December
2011
£m
Note
(a)
(a)
(c)
(d)
(e)
(a)
(a)
(b)
(c)
(d)
11.6
1.9
1.0
10.0
24.5
287.2
18.2
0.7
4.0
–
310.1
6.6
2.0
0.7
–
9.3
294.7
20.0
0.7
4.3
9.9
329.6
Our business
Governance
Financial statements
Other information
16 Financial liabilities (continued)
(a) Class A and B Secured Notes
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.
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.
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 A notes, the Further A notes and the Second Further A notes are collectively referred to as the Secured A Notes.
The B notes, the Further B notes and the Second Further B notes are collectively referred to as the Secured B Notes.
The Secured A Notes and the Secured B Notes are collectively referred to as the Secured Notes or the Class A and B
Secured Notes.
The aggregate principal outstanding on the Secured Notes and related issue costs have been presented on a net basis
in the table on page 76. The Secured Notes are secured by first ranking security in respect of the undertakings and
assets of Dignity (2002) Limited and its subsidiaries.
At 28 December 2012, £147.8 million (2011: £151.9 million) of the principal of the Secured A Notes and
£165.6 million (2011: £165.6 million) of the principal of the Secured B Notes was outstanding.
At 28 December 2012, £6.3 million (2011: £7.4 million) and £8.3 million (2011: £8.8 million) of the transaction costs
in respect of the A notes and the B notes respectively remain unamortised.
The Secured A Notes and Secured B Notes were issued at a premium of £9.3 million and £19.0 million respectively,
which is being released in proportion to the interest cost in the notes. At the balance sheet date £5.7 million (2011:
£6.6 million) and £14.4 million (2011: £15.4 million) respectively remained unamortised.
For further details of security over the Secured Notes see note 30(a).
(b) 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
The finance leases and hire purchase liabilities are secured on the related assets.
28 December
2012
£m
30 December
2011
£m
–
–
0.2
0.5
0.7
–
–
0.2
0.5
0.7
77 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
16 Financial liabilities (continued)
(c) 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.
(d) 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 on page 76.
At 28 December 2012, £10.0 million (2011: £10.0 million) of the principal was outstanding. At 28 December 2012,
£nil million (2011: £0.1 million) of the transaction costs remained unamortised.
For further details of security over the Crematoria Acquisition Facility see note 30(b).
(e) Current financial liabilities
The current financial liabilities represent the amounts falling due within one year of the Group’s accounting reference
date, 31 December.
17 Trade and other payables
Current
Trade payables
Tax and social security
Other current liabilities
Accruals and deferred income
Non–current
Deferred income
Deferred consideration for acquisitions
Long service awards
Other non–current liabilities
78 | Dignity plc Annual Report & Accounts 2012
28 December
2012
£m
30 December
2011
£m
9.7
1.3
1.7
33.5
46.2
1.2
0.1
1.1
0.4
2.8
9.3
1.3
1.4
20.6
32.6
1.1
0.2
1.0
0.3
2.6
Our business
Governance
Financial statements
Other information
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
28 December
2012
£m
30 December
2011
£m
8.8
24.4
120.3
153.5
7.6
20.6
86.9
115.1
The non–cancellable operating leases principally relate to leasehold land and buildings.
Of the total operating lease payments charged to trading expenses, £nil million (2011: £nil 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 £0.4 million (2011: £0.3 million). Total future sublease payments
receivable relating to operating leases amount to £0.7 million (2011: £0.6 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 to income statement
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)
2.8
0.7
(0.3)
(0.2)
0.1
3.1
0.3
–
–
(0.1)
–
0.2
1.4
–
(0.2)
–
–
1.2
Total
£m
4.5
0.7
(0.5)
(0.3)
0.1
4.5
Provisions have been analysed between current and non–current as follows:
Current
Non–current
28 December
2012
£m
30 December
2011
£m
1.1
3.4
4.5
1.4
3.1
4.5
(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, £0.5 million (2011: £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 2021.
79 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
19 Provisions for liabilities and charges (continued)
(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 (2011: £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 five years.
20 Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 23 per cent
(2011: 25 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 – 25% to 23% (2011: 27% to 25%)
Exceptional adjustment for recognition of brought forward losses
Taken to equity (note 6)
Arising on acquisitions (note 26(a))
At end of period
28 December
2012
£m
30 December
2011
£m
25.1
0.6
(2.0)
–
–
0.5
24.2
27.3
3.5
(1.9)
(3.4)
(2.1)
1.7
25.1
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 – 25% to 23% (2011: 27% to 25%)
Taken to equity (note 6)
Arising on acquisitions
At end of period
Deferred tax assets
At beginning of period
Charged to income statement (note 6)
Adjustment for rate change – 25% to 23% (2011: 27% to 25%)
Taken to equity (note 6)
At end of period
Pensions
£m
Accelerated tax
depreciation
£m
0.3
(0.1)
–
(0.2)
–
–
16.4
0.6
(1.3)
–
0.1
15.8
Losses
£m
(0.7)
0.7
–
–
–
Other
£m
10.5
(0.5)
(0.6)
–
0.4
9.8
Other
£m
(1.4)
(0.1)
(0.1)
0.2
(1.4)
Total
£m
27.2
–
(1.9)
(0.2)
0.5
25.6
Total
£m
(2.1)
0.6
(0.1)
0.2
(1.4)
All of the deferred tax assets were available for offset against deferred tax liabilities and hence the net deferred tax
provision at 28 December 2012 was £24.2 million (2011: £25.1 million).
Other deferred tax liabilities includes goodwill on trade names and capital gains rolled forward, other tax assets
includes option schemes and long service awards.
80 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
20 Deferred tax (continued)
During 2011, a deferred tax asset was recognised in respect of previously unrecognised losses within the Group. These
amounted to £3.4 million net, of which £0.7 million has been utilised in the period (2011: £2.7 million). Accordingly
these have now been fully utilised. 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 – 25% to 23% (2011: 27% to 25%)
21 Financial instruments
52 week
period ended
28 December
2012
£m
52 week
period ended
30 December
2011
£m
(0.2)
0.2
–
(1.9)
(0.2)
–
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.
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.
(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 and
including swaps) (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)
28 December 2012
30 December 2011
Book value
£m
Fair value
£m
Book value
£m
Fair value
£m
(309.4)
(0.7)
(310.1)
(410.2)
(0.7)
(410.9)
(328.9)
(0.7)
(329.6)
(415.8)
(0.7)
(416.5)
(24.5)
(44.9)
22.0
55.6
(2.8)
(27.5)
(44.9)
22.0
55.6
(2.8)
(9.3)
(31.3)
20.4
36.9
(2.6)
(10.9)
(31.3)
20.4
36.9
(2.6)
81 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
21 Financial instruments (continued)
(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 Secured 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 Secured Notes
Swaps
Crematoria Acquisition Facility
Interest payable on Crematoria
Acquisition Facility
Finance leases
Debt repayments
Other financial liabilities
28 December 2012
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
13.2
33.8
1.0
10.0
0.4
–
58.4
34.7
93.1
9.7
21.8
0.7
–
–
0.1
32.3
0.2
32.5
10.4
21.2
0.7
–
–
0.1
32.4
0.3
32.7
23.3
40.4
1.4
–
–
0.1
65.2
0.6
65.8
256.9
153.4
3.3
–
–
2.7
416.3
1.0
417.3
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
Total
£m
313.5
270.6
7.1
10.0
0.4
3.0
604.6
36.8
641.4
Total
£m
317.5
282.1
7.4
10.0
1.0
3.0
621.0
34.4
655.4
82 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
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.
Non–cash liabilities
Issue costs on Secured Notes
Premium on Secured Notes
Non–cash liabilities
Issue costs on Secured Notes
Premium on Secured Notes
Issue costs on Crematoria
Acquisition Facility
28 December 2012
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
1.5
(1.9)
(0.4)
1.5
(1.8)
(0.3)
1.4
(1.7)
(0.3)
2.6
(3.2)
(0.6)
7.6
(11.5)
(3.9)
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
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)
Total
£m
14.6
(20.1)
(5.5)
Total
£m
16.2
(22.0)
0.1
(5.7)
(c) Trade receivables
As at 28 December 2012, £7.3 million of the gross trade receivables (2011: £6.9 million) were past due and partially
impaired. A provision for impairment is established based on historical experience. The amount of the provision, as at
28 December 2012, was £3.4 million (2011: £3.1 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
28 December
2012
£m
30 December
2011
£m
4.6
2.7
7.3
4.3
2.6
6.9
28 December
2012
£m
30 December
2011
£m
(3.1)
(1.4)
1.1
(3.4)
(3.7)
(0.9)
1.5
(3.1)
(d) Borrowing facilities
(i) The Group has the following undrawn committed borrowing facilities available at 28 December 2012, 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
83 | Dignity plc Annual Report & Accounts 2012
28 December
2012
£m
30 December
2011
£m
55.0
–
–
55.0
50.0
5.0
–
55.0
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
21 Financial instruments (continued)
£50.0 million (2011: £50.0 million) of the amount on page 83 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 (2011: £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
54,757,481 (2011: 54,757,054) Ordinary Shares of £0.105 (2011: £0.105) each
Each Ordinary Share carries equal voting rights and there are no restrictions on any share.
28 December
2012
£m
30 December
2011
£m
0.1
0.2
2.7
3.0
(2.3)
0.7
–
0.2
2.8
3.0
(2.3)
0.7
28 December
2012
£m
30 December
2011
£m
5.7
5.7
During the period, the Group received £nil million in relation to the 427 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 2010, 2011 and 2012.
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
2010 – LTIP
2011 – LTIP
2012 – LTIP
23 Share–based payments
Exercise price
(pence)
701.00
–
–
–
Exercise period
1 December 2013
to 31 May 2014
19 March 2013
to 19 March 2014
21 March 2014
to 21 March 2015
28 March 2015
to 28 March 2016
2012
Number
2011
Number
2010
Number
166,160
185,031
207,231
255,844
255,844
255,844
285,430
285,430
251,836
n/a
n/a
n/a
In respect of share–based payment arrangements, total charges to the income statement were £1.2 million
(2011: £1.1 million). The Directors consider that these amounts are immaterial and hence further detailed disclosures
have been omitted.
84 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
24 Net debt
Net amounts owing on Class A and B Secured Notes per financial statements
Add: unamortised issue costs (note 16(a))
Gross amounts owing on 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(d))
Gross amounts owing
Accrued interest on Class A and B Secured Notes
Accrued interest on Crematoria Acquisition Facility
Cash and cash equivalents (note 15)
Net debt
28 December
2012
£m
30 December
2011
£m
(318.9)
(14.6)
(333.5)
(10.0)
–
(323.3)
(16.2)
(339.5)
(9.9)
(0.1)
(343.5)
(349.5)
(11.6)
(0.1)
55.6
–
(0.1)
36.9
(299.6)
(312.7)
In addition to the above, the consolidated balance sheet also includes finance lease obligations and other financial
liabilities which totalled £5.7 million (2011: £5.7 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 28 December 2012, the actual ratio was 2.43 times (2011: 2.27 times).
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)
Cash generated from operations before external transaction costs
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
35.7
9.7
23.3
(0.1)
10.5
0.2
(0.4)
(1.2)
0.4
0.8
3.2
1.2
83.3
34.3
6.0
22.9
(0.2)
9.7
0.1
(0.7)
1.8
–
1.2
(2.0)
1.1
74.2
Other non–cash transactions
Non–cash charges comprise amortisation of deferred debt issue costs, as discussed in note 16(a).
85 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
26 Acquisitions
(a) Acquisition of subsidiary and other businesses
Property, plant and equipment
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
0.7
7.3
0.9
(0.1)
(0.5)
8.3
3.2
11.5
During 2012, the Group acquired the operational interest of 18 funeral locations and one crematorium. 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 2013. 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 receivables, inventories and accruals which 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)
Share option charges (note 23)
86 | Dignity plc Annual Report & Accounts 2012
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
11.5
0.1
(0.9)
10.7
17.6
0.1
(5.7)
12.0
52 week period
ended
28 December
2012
£m
52 week period
ended
30 December
2011
£m
63.6
4.6
1.9
1.2
71.3
59.1
4.6
1.5
1.1
66.3
Our business
Governance
Financial statements
Other information
27 Employees and Directors (continued)
Key management are considered to be the Board of Directors only. Total key management remuneration in the period
was £3.6 million (2011: £3.5 million), including £0.8 million (2011: £0.8 million) of share option charges. 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
2012
Number
135
2,048
297
63
2,543
2011
Number
130
2,004
283
59
2,476
Directors’ emoluments
Details of Directors’ emoluments are disclosed in the Report on Directors’ Remuneration on pages 40 to 43 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
2012
£m
0.1
2011
£m
0.1
Defined benefit plans
The Group operates a defined benefit scheme the Dignity Pension and Assurance Scheme. A full actuarial valuation was
carried out as at 6 April 2011. The valuation results of the merged scheme were updated to 28 December 2012 by a
qualified independent Actuary.
For 2012, the employer’s contribution rate payable was 9.2 per cent of Pensionable Salaries (2011: 9.2 per cent
of Pensionable Salaries). The total monetary contribution paid by the employer for 2012 was £1.3 million (2011:
£1.4 million). In addition special contributions of £nil (2011: £nil) have been paid to make the total contribution
for the year £1.3 million (2011: £1.4 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
2012
2011
4.65%
4.65%
2.8%
2.8%
2.1%
2.9%
2.1%
4.85%
5.0%
3.25%
2.9%
2.3%
3.0%
2.0%
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 (2011: same).
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
87 | Dignity plc Annual Report & Accounts 2012
2012
£m
87.0
(86.9)
0.1
2011
£m
84.5
(83.2)
1.3
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
28 Pension commitments (continued)
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
2012
£m
1.8
–
1.8
4.0
(4.2)
(0.2)
2011
£m
1.4
–
1.4
4.1
(4.8)
(0.7)
Expected contributions to the Group’s pension scheme for the 52 week period ended 27 December 2013 are
approximately £1.4 million.
Analysis of fair value of plan assets
Equity and property
Debt
Cash
Fair value of plan assets
2012
2011
£m
47.5
30.9
8.6
87.0
%
54.6
35.5
9.9
100.0
£m
45.1
22.5
16.9
84.5
%
53.4
26.6
20.0
100.0
At 28 December 2012 and 30 December 2011 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
Analysis of the movement in the balance sheet asset
2012
£m
(83.2)
(1.8)
–
(4.0)
3.7
(1.4)
(0.2)
(86.9)
2012
£m
84.5
4.2
1.3
1.4
(3.7)
(0.7)
87.0
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
At beginning of period
Total expense as above
Actuarial losses
Contributions by Group
At end of period
88 | Dignity plc Annual Report & Accounts 2012
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
2012
£m
1.3
(1.6)
(0.9)
1.3
0.1
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
2011
£m
8.5
(0.7)
(7.9)
1.4
1.3
Our business
Governance
Financial statements
Other information
28 Pension commitments (continued)
Cumulative actuarial gains and losses recognised in equity
At beginning of period
Net actuarial losses recognised in the period
At end of period
2012
£m
(0.2)
(0.9)
(1.1)
2011
£m
7.7
(7.9)
(0.2)
The actual return on plan assets was £3.5 million (2011: £0.2 million).
History of experience gains and losses
2012
2011
2010
2009
2008
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)
(0.7)
0.8%
0.7
0.8%
(86.9)
87.0
0.1
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
(4.6)
5.4%
1.0
1.2%
(83.2)
84.5
1.3
Liabilities
£m
(86.9)
(83.3)
(90.7)
(89.4)
(84.6)
(2.6)
3.0%
(1.1)
1.4%
(76.1)
84.6
8.5
Assets
£m
87.0
87.0
87.0
87.0
87.0
(4.5)
5.8%
(0.3)
0.4%
(68.0)
77.1
9.1
Surplus/
(deficit)
£m
0.1
3.7
(3.7)
(2.4)
2.4
2.8
4.1%
(1.0)
1.8%
(55.9)
69.1
13.2
Increase/
(decrease) in
surplus
£m
–
3.6
(3.8)
(2.5)
2.3
(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 £511.2 million at 28 December 2012
(2011: £446.8 million) in respect of 238,000 (2011: 220,000) unfulfilled pre–arranged funeral plans. The remaining
52,000 (2011: 45,000) unfulfilled pre–arranged funeral plans related to those backed by Insurance Plans, as described
in note 1 to the consolidated financial statements.
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 28 September 2012 (2011: 30 September 2011) using assumptions determined by
the trustees. These valuations showed the Trusts to have liabilities in respect of the pre–arranged funeral plan trusts of
£465.4 million as at 28 September 2012 (2011: £373.3 million). The corresponding market value of the assets of the
pre–arranged funeral plan trusts was £479.4 million (2011: £415.7 million) as at the same date. Consequently the
actuarial valuation recorded total surpluses of £14.0 million at 28 September 2012 (2011: £42.4 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.
89 | Dignity plc Annual Report & Accounts 2012
Notes to the financial statements continued
for the 52 week period ended 28 December 2012
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 28 December 2012, the amount outstanding in relation to these borrowings was £333.5 million
(2011: £339.5 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 28 December 2012, the amount outstanding in relation to these borrowings was £10.0 million
(2011: £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.
£23,000 has been charged in the three months to 1 April 2012 and £126,000 has been charged in total under the
contract. James Newman is a Non–Executive Director of Bglobal and the transaction was formally approved by the
Board and is at arm’s length. James Newman retired from the Dignity Board on 1 April 2012.
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 allowances in relation to plans sold net of cancellations; and
• Receipts from the Trusts in respect of carrying out funerals.
90 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
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31 Related party transactions (continued)
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
2012
£m
0.3
28.9
31.6
2011
£m
0.3
24.3
26.3
2012
£m
–
1.4
1.6
2011
£m
–
1.4
1.2
32 Post balance sheet events
On 25 January 2013, the Group completed the acquisition of Yew for cash consideration of £58.3 million, see page 53
of the Directors’ Report for further details.
In addition to the acquisition of Yew, the Group has acquired one funeral location since the balance sheet date.
On 27 February 2013, the £15.8 million Crematoria Acquisition Facility was refinanced with Nat West (acting through
its agent the Royal Bank of Scotland). The new facility is for a period of five years, with the principal repayable in one
amount at the end of the term. The cost of funds is fixed for the term of the loan at approximately 3.3 per cent. This
facility has no undrawn amounts.
91 | Dignity plc Annual Report & Accounts 2012
Independent auditors’ report to the members of Dignity plc
for the 52 week period ended 28 December 2012
We have audited the parent company financial statements of Dignity plc for the 52 week period ended 28 December
2012 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 51, 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 & Accounts 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 28 December 2012;
• 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 28 December 2012 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 28
December 2012.
Matthew Mullins (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Birmingham
6 March 2013
92 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Dignity plc Company balance sheet
as at 28 December 2012
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
28 December
2012
£m
30 December
2011
£m
Note
C2
C3
C4
C5
C5
C5
C5
C5
C6
137.5
136.3
131.0
18.9
149.9
120.5
29.1
149.6
(13.2)
(14.1)
136.7
274.2
274.2
5.7
17.4
99.3
3.4
148.4
274.2
135.5
271.8
271.8
5.7
17.4
99.3
2.2
147.2
271.8
The financial statements on pages 93 to 96 were approved by the Board of Directors on 6 March 2013 and were signed
on its behalf by:
M K McCollum
Chief Executive
S L Whittern
Finance Director
93 | Dignity plc Annual Report & Accounts 2012
Notes to the Dignity plc financial statements
for the 52 week period ended 28 December 2012
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 28
December 2012. For the comparative period, the Company’s financial statements have been prepared for the 52 week
period ended 30 December 2011.
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).
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.
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.
94 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
C2 Investments in subsidiary undertakings
Cost and net book amount
At beginning of period
Additions in respect of share–based payments
At the 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 services
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
Finance 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
£m
136.3
1.2
137.5
Percentage
held
Number of shares at
28 December 2012
100%
100%
100%
100%
100%
99%
100%
100%
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
100%
Shares at 1p each
100%
50,000 Ordinary at £1 each
100%
1,102,271 Ordinary at £1 each
100%
50,000 Ordinary at £1 each
100%
2,000,000 Ordinary at £1 each
100%
1,000 Ordinary at £1 each
1,500,000 Ordinary at £1 each
100%
110,000,002 Ordinary at 0.01p each 100%
100%
1,000 Ordinary at £1 each
100%
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 at £1 each
1 Ordinary at £1 each
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.
The Directors believe that the carrying value of the investments is supported by their underlying net assets.
C3 Debtors
Amounts falling due within one year:
Amounts owed by group undertakings
Other debtors
C4 Creditors: amounts falling due within one year
Amounts owed to subsidiary undertakings
Accruals and deferred income
Corporation Tax
95 | Dignity plc Annual Report & Accounts 2012
28 December
2012
£m
30 December
2011
£m
130.9
0.1
131.0
120.5
–
120.5
28 December
2012
£m
30 December
2011
£m
12.4
0.2
0.6
13.2
13.8
0.2
0.1
14.1
Notes to the Dignity plc financial statements continued
for the 52 week period ended 28 December 2012
C5 Called up share capital and reserves
Allotted and fully paid Equity shares
54,757,481 (2011: 54,757,054) Ordinary Shares of £0.105 (2011: £0.105) each
Each Ordinary Share carries equal voting rights and there are no restrictions on any share.
28 December
2012
£m
30 December
2011
£m
5.7
5.7
During the period, the Group received £nil million in relation to the 427 shares issued with a nominal value of 10.5
pence per share.
Reserves and share premium account
At beginning of 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
2.2
–
–
1.2
3.4
147.2
9.5
(8.3)
–
148.4
Total
£m
266.1
9.5
(8.3)
1.2
268.5
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.
£6.1 million (2011: £4.9 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
Net additions to shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
28 December
2012
£m
30 December
2011
£m
9.5
(8.3)
1.2
2.4
271.8
274.2
29.3
(7.5)
1.1
22.9
248.9
271.8
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.
C7 Staff costs
(a) Employees
There were no staff costs in the period (2011: £nil).
The average number of people, including Non–Executive Directors, employed by the Company during the period was:
Administration and managerial
2012
4
2011
4
(b) Directors’ remuneration
The Directors are directors of the ultimate parent company, Dignity plc and details of their emoluments are included in
pages 40 to 43. They received no emoluments in respect of their services to the Company (2011: £nil).
C8 Related party transactions
There are no related party transactions for either period.
96 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
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
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
157.9
46.6
25.1
229.6
54.2
23.3
6.5
(14.6)
69.4
(25.8)
2.5
46.1
(11.7)
34.4
62.8p
68.7
35.7
65.1p
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
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)
551,000
63,200
11.2%
50,500
9.2%
290,000
83.3
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
2012
2011
2010
2009
2008
Net debt
Net amounts owing on Class A and B Secured Notes
per financial statements
Add: unamortised issue costs
Gross amounts owing on 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
Gross amounts owing
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
(318.9)
(14.6)
(323.3)
(16.2)
(331.3)
(17.8)
(258.6)
(14.6)
(263.0)
(15.9)
(333.5)
(339.5)
(349.1)
(273.2)
(278.9)
(10.0)
–
(9.9)
(0.1)
(9.9)
(0.1)
(9.8)
(0.2)
(7.2)
(0.2)
(343.5)
(349.5)
(359.1)
(283.2)
(286.3)
Accrued interest on Class A and B Secured Notes
Accrued interest on Crematoria Acquisition Facility
Cash and cash equivalents
(11.6)
(0.1)
55.6
–
(0.1)
36.9
–
(0.1)
48.1
(9.6)
(0.1)
45.8
(9.7)
–
46.7
Net debt
(299.6)
(312.7)
(311.1)
(247.1)
(249.3)
97 | Dignity plc Annual Report & Accounts 2012
Financial record* continued
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
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
204.5
157.1
12.6
0.1
374.3
55.6
32.1
87.7
194.3
147.6
12.6
1.3
355.8
36.9
30.5
67.4
182.4
133.6
12.0
8.5
336.5
48.1
29.2
77.3
175.6
116.8
9.4
9.1
310.9
45.8
25.6
71.4
163.1
110.9
4.5
13.2
291.7
46.7
26.3
73.0
Total assets
462.0
423.2
413.8
382.3
364.7
Current liabilities
Non–current liabilities
Total liabilities
Equity attributable to shareholders
Total equity and liabilities
Notes
76.9
340.5
417.4
44.6
462.0
45.6
360.4
406.0
17.2
423.2
47.0
371.6
418.6
(4.8)
413.8
48.6
298.2
346.8
35.5
382.3
47.6
298.7
346.3
18.4
364.7
* This information has been extracted from the current and previous Annual Reports and accordingly does not constitute audited information.
** Market share excluding funerals performed in Northern Ireland.
98 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
Notice of Meeting
Notice is hereby given that the 2013 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 6 June 2013 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 28 December 2012.
2. To approve the Report on Directors’ Remuneration for the 52 weeks ended 28 December 2012 as set out on pages
34 to 44 of the Annual Report 2012.
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 pages 32 and 33.
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 10.75 pence per Ordinary Share and to authorise its payment on 28 June 2013 to
shareholders on the register of members at the close of business on 24 May 2013.
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 Relevant Securities:
a) comprising equity securities (as defined in section 560(1) of the Act) up to an aggregate nominal amount of
£3,992,835 (such amount to be reduced by the aggregate nominal amount of Relevant Securities allotted pursuant to
paragraph (b) of this resolution) in connection with a rights issue:
(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 exclusions or other arrangements as the directors 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; and
b) otherwise than pursuant to paragraph (a) of this resolution, up to an aggregate nominal amount of £1,996,417.50
(such amount to be reduced by the aggregate nominal amount of Relevant Securities allotted pursuant to paragraph
(a) of this resolution in excess of £1,996,417.50),
provided that (unless previously revoked, varied or renewed) these authorities shall expire at the conclusion of the next
annual general meeting of the Company after the passing of this resolution or on 5 September 2014 (whichever is the
earlier), save that, in each case, the Company may make an offer or agreement before the authority expires which would
or might require Relevant Securities to be allotted after the authority expires and the directors may allot Relevant
Securities pursuant to any such offer or agreement as if the authority had not expired.
99 | Dignity plc Annual Report & Accounts 2012
Notice of Meeting continued
In this resolution, (Relevant Securities) means shares in the Company or rights to subscribe for or to convert any security into
shares in the Company; a reference to the allotment of Relevant Securities includes the grant of such a right; and a reference
to the nominal amount of a Relevant Security which is a right to subscribe for or to convert any security into shares in the
Company is to the nominal amount of the shares which may be allotted pursuant to that right.
These authorities are 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 and pursuant to section 570 of the Act, the Directors be and are generally
empowered to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the authorities
granted by resolution 14 as if section 561(1) of the Act did not apply to any such allotment as if section 561(1) of the
Act did not apply to any such allotment, provided that this power shall be limited to:
a) the allotment of equity securities in connection with an offer of equity securities (whether by way of a rights issue,
open offer or otherwise, but, in the case of an allotment pursuant to the authority granted by paragraph (a) of
resolution 14, such power shall be limited to the allotment of equity securities in connection with a rights issue):
(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 exclusions or other arrangements as the Directors 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; and
b) the allotment of equity securities pursuant to the authority granted by paragraph (b) of resolution 14 (otherwise than
pursuant to paragraph (a) of this resolution) up to an aggregate nominal amount of £299,462.62,
and (unless previously revoked, varied or renewed) this power shall expire at the conclusion of the next Annual General
Meeting of the Company after the passing of this resolution or on 5 September 2014 (whichever is the earlier), save that
the Company may make an offer or agreement before this power expires which would or might require equity securities
to be allotted for cash after this power expires and the Directors may allot equity securities for cash pursuant to any such
offer or agreement as if this power 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 5,704,050;
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 highest
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 5 September 2014
(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
100 | Dignity plc Annual Report & Accounts 2012
By order of the Board
Richard Portman
Company Secretary
6 March 2013
Our business
Governance
Financial statements
Other information
Notes:
1.
2.
3.
4.
5.
6.
7.
8.
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 4 June 2013 (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.
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 were charged at 8 pence per minute plus network extras. Lines are open from 8.30am to 5.30pm Monday to Friday.
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.
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 4 June 2013 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 4 June 2013 shall be disregarded in
determining the rights of any person to attend, speak or vote at the meeting.
The following are available for inspection at the Company’s registered office during normal business hours from the date of this notice until the time of the meeting.
They will be available for at least 15 minutes prior to, and during, the Annual General Meeting:
• 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 pages 32 and 33 of the Annual Report 2012.
Total Voting Rights: As at 12 April 2013 (being the last practicable date before the publication of this notice), the Company's issued share capital consists of
57,040,500 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 4 June 2013 (or if the meeting is adjourned no later than 48 hours (excluding
any part of the day that is not a working day) before the time of the adjourned meeting).
11. CREST members who wish to appoint a proxy or proxies for the meeting (or any adjournment of it) 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
4 June 2013 (or if the meeting is adjourned, no later than 48 hours (excluding any part of a day that is not a working day) before the time of any adjourned meeting).
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 or her 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.
101 | Dignity plc Annual Report & Accounts 2012
Notice of Meeting continued
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.
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 338A 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.
21. No other methods of communication will be accepted. Any electronic communication sent by a shareholder to the Company or Equiniti which is found to contain a virus
will not be accepted by the Company.
102 | Dignity plc Annual Report & Accounts 2012
Our business
Governance
Financial statements
Other information
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) 190 383 3113 if faxing from outside the UK.
*At the time of publication, calls to these numbers cost eight pence per minute plus network extras. 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 dividend tax voucher. Choosing e-mail notification will result in you joining the Equiniti Shareview Service in accordance
with its terms and conditions.
Share price information
The latest Dignity plc share price can be obtained via the Company’s investor website www.dignityfuneralsplc.co.uk.
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 register to do so with the Mailing Preference Service at www.mpsonline.org.uk.
Annual General Meeting
The Company’s Annual General Meeting will be held on 6 June 2013, at 11.00 am at DLA Piper UK LLP, Victoria Square
House, Victoria Square, Birmingham, West Midlands, B2 4DL.
103 | Dignity plc Annual Report & Accounts 2012
Auditors:
PricewaterhouseCoopers LLP
Cornwall Court
19 Cornwall Street
Birmingham B3 2DT
Joint Brokers:
Panmure Gordon & Co
One New Change
London EC4M 9AF
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
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
6 March 2013
Preliminary announcement
of 2012 results
6 June 2013
Annual General Meeting
28 June 2013
2013 financial half year end
28 June 2013 (subject to shareholder approval)
Payment of 2012 final dividend
31 July 2013 (provisional)
Announcement of interim results
25 October 2013 (provisional)
Payment of 2013 interim dividend
27 December 2013
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
Main photography by Bexon Woodhouse
www.bexonwoodhouse.com
Printed in the UK by CPI Colour, a certified CarbonNeutral® printing company,
using vegetable based inks and water based sealants. The printer and paper
manufacturing mill are both certified with ISO 14001 Environmental Management
systems standards and both are Forest Stewardship Council (FSC) certified.
104 | Dignity plc Annual Report & Accounts 2012
About Dignity
At28December2012Dignityowned636funerallocationsandoperated37crematoria
intheUnitedKingdom.TheGroupcontinuestohaveastrongmarketpresencein
pre-arrangedfuneralplans,wherepeopleplanandpayfortheirfuneralinadvance.
WeareaFTSE250companylistedontheLondonStockExchange,withover
2,550employeesservingfamiliesandlocalcommunitiesacrosstheUnitedKingdom
forgenerations.
Helpingpeopleatoneofthemostdifficulttimesintheirlivesremainsatthevery
heartofeverythingwedo.
Contents
Our Business
Keyfinancialhighlights
01
02 Dignityataglance
03 Ourperformancein2012
FromtheChairman
04
05
Chief Executive’soverview
06 Ourconsistentstrategyforgrowth
07 Ourcommitmenttoclientserviceexcellence–
TheDignityclientsurvey
08 Dignitytoday
09 Ourproudheritage
10 Businessreview
16
Financialreview
19 Ourkeyperformanceindicators
Principalrisksanduncertainties
20
Corporateandsocialresponsibility
22
Governance
32 Boardof Directors
34
45 Directors’statementoncorporategovernance
51 Directors’ report
ReportonDirectors’remuneration
Financial Statements
54
Group Accounts
Independentauditors’reporttothemembers
of Dignity plc
Consolidatedincomestatement
Consolidatedstatementof comprehensiveincome
Consolidatedbalancesheet
Consolidatedstatementof changesinequity
Consolidatedstatementof cashflows
55
55
56
57
58
59 Notestothefinancialstatements
92
Company Accounts
Independentauditors’ reporttothemembers
of Dignityplc
93 DignityplcCompanybalancesheet
94 NotestotheDignityplcfinancialstatements
97
Financialrecord
Other Information
99 Noticeof Meeting
103 Shareholderinformation
104 Contactdetailsandadvisers
Financialcalendar
Front cover: LouiseBainton,FuneralServiceArranger
atWKaye&SoninLeeds,whopassedtheNational
Associationof FuneralDirectorsDiplomain2012.
Dignity plc
4KingEdwardsCourt
KingEdwardsSquare
SuttonColdfield
WestMidlandsB736AP
FormoreinformationonDignity,
pleasevisitourinvestorrelationswebsite:
www.dignityfuneralsplc.co.uk
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Dignity plc Annual Report & Accounts 2012
Every day:
We are
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