Dignity resurrected after second-half funerals show signs of life
A second half recovery in volumes helped Dignity lay 2014 to rest in style, with results from the funeral services group topping analysts forecasts despite the pall cast by a 3.5% annual decline in funeral numbers.
Dignity
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16:45 24/05/23
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Results surprised City analysts, largely reflecting the earlier timing of the company's annual price increases, with revenues rearing up 4.7% to £268.9m and underlying profit before tax resurrected from half-year falls to register an 11% rise to £58.5m.
The group recorded a statutory loss due to non-cash charges resulting from the refinancing undertaken during the period, which allowed a £64.4m return of cash to shareholders.
Underlying earnings per share stiffened 19.1% to 85.8p, well above consensus expectations of less than 82p, with a final dividend increased by 10.0% to 13.01p, giving a full year payout of 19.50p on top of the cash return.
During the period, Dignity invested £24.7m in 12 smaller acquisitions acquisitions of funeral businesses, after the larger purchase of Yew Holdings in 2013, which performed very strongly and exceeded management expectations.
Chief executive Mike McCollum said the company would continue on its stately strategic course, targeting 10% EPS growth over the medium term, but he noted that the first quarter 2015 result should be significantly higher than the same period in the prior year as deaths in the first eight weeks of the year were roughly 23% higher than the abnormally low number prior year.
As seen in previous years, this is likely to normalise over the remainder of the year and mean expectations for 2015 therefore remain "positive and unchanged".
Broker Panmure Gordon said the results exceeded our expectations and the "outlook remains excellent" in light of the continuing EPS growth target.
"Strong earnings and cash flows, sustainable growth rates and low risks make this a highly attractive company."