Dignity Annual Reports and Accounts 2016
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Dignity_AR_2016_Cover_AWK Q9 tp_Layout 1 30/03/2017 13:43 Page 1 Dignity plc Annual Report & Accounts 2016 Dignity plc plc Dignity 4 King Edwards Court King Edwards Square 2016 Accounts & Report Annual Sutton Coldfield West Midlands B73 6AP www.dignityfuneralsplc.co.uk Delivering excellent client service and creating long-term sustainable value Funeral services Crematoria Pre-arranged funeral plans PDF Page: Covers.p1.pdf Process Plan: Single Page Merged HR Process Plan: CyanMagentaYellowBlackPANTONE 221 C Job Name: 66300z Dignity plc Annual Report 2016 Dignity_AR_2016_Cover_AWK Q9 tp_Layout 1 30/03/2017 13:44 Page 2 Dignity plc ifc Annual Report & Accounts 2016 Overview A strong and sustainable business Delivering excellent client service Serving the people in our local communities at one of the most difficult times in their lives remains at the heart of everything we do and we are committed to providing the highest standards of service and care. We are a FTSE 250 company listed on the London Stock Exchange, with over 3,000 employees serving families and local communities across the United Kingdom for generations. At 30 December 2016 Dignity owned 792 funeral locations and operated 44 crematoria in the United Kingdom. We continue to have a strong market presence in pre-arranged funeral plans, where people plan and pay for their funeral in advance. This report demonstrates how our clear and consistent strategy, strong governance, dedicated people and financial performance combine to create and sustain value for all our stakeholders – our clients, employees, shareholders and the local communities we serve. Contents Overview Financial Statements 01 Key financial highlights Group Accounts 02 Our history and purpose 66 Independent auditors’ report to the members of Dignity plc 03 A strong core business 70 Consolidated income statement 70 Consolidated statement of comprehensive income Strategic Report 71 Consolidated balance sheet 72 Consolidated statement of changes in equity 04 From the Chairman 73 Consolidated statement of cash flows 05 Chief Executive’s overview 74 Notes to the financial statements 06 Market overview 08 Strategy and business model Company Accounts 10 Our key performance indicators 107 Dignity plc Company balance sheet 13 The Dignity client survey 2016 108 Dignity plc Company statement 14 Our summary performance in 2016 of changes in equity 16 Operating review 109 Notes to the Dignity plc financial statements 23 Financial review Stay informed 27 Principal risks and uncertainties 116 Financial record Find out more about Dignity and the latest financial information, 32 Corporate and social responsibility results, presentations, reports and shareholder services or to view Other Information and download a pdf version of the Governance 2016 Annual Report: 118 Shareholder information www.dignityfuneralsplc.co.uk 38 Chairman’s introduction to governance 119 Contact details and advisers 39 Our governance structure 120 Financial calendar 40 Board of Directors Download 2016 Annual Acknowledgements 42 Directors’ statement on corporate governance Guide to icons Dignity would like to thank all those who participated in Report. producing this Annual Report, particularly the members 46 Audit Committee report of staff for their contributions. 49 Nomination Committee report Designed & produced by Bexon Woodhouse We have used icons throughout this Annual Report Main photography by Bexon Woodhouse 50 Report on Directors’ remuneration to guide you to further reading, links to other relevant www.bexonwoodhouse.com 64 Directors’ report information or to find out more online. 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. PDF Page: Covers.p2.pdf Process Plan: Single Page Merged HR Process Plan: CyanMagentaYellowBlackPANTONE 221 C Job Name: 66300z Dignity plc Annual Report 2016 Dignity_AR_FrontEnd_Master_2016 Q9 tp_Layout 1 30/03/2017 13:12 Page 4 Dignity plc Annual Report & Accounts 2016 01 Key financial highlights Generating consistent returns We have delivered a strong performance in 2016 along with consistent returns and sustained growth since flotation. Our continued success can also be measured by our high levels of client satisfaction and a continued commitment to excellent client service. Overview Overview Strong cash generation Progressive dividend Return of cash Our disciplined approachto cash, cost Final dividend of 15.74 pence proposed, £356.2 million returned to 01 – 03 and capital has strengthened our balance continuing the 10 per cent annual shareholders since flotation. sheet and allowed us to invest in the growth in the dividend per share. Dignity_AR_Insert_Masterbusiness both Q9 organically tp_Layout and 1 30/03/2017 16:34 Page 1234 through acquisitions. Revenue (£m) Strategic Report Strategic Current period financialThis summary highlights booklet 2016 2015 Increase/ 325 A CONSISTENT TRACK300 RECORD 313.6 (decrease) 305.3 demonstrates how we are 275 per cent 268.9 250 256.7 Our consistent track record in225 strong229.6 cash generation and Revenue (£million) 313.6 financial 305.3 discipline enables 3 us200 to reinvest and grow the Creating long-term business both organically and175 by strategic acquisition. Underlying operating profit(a) (£million) 101.7 98.7 3 150 –04 36 125 We generate revenues from new100 and returning clients and by sustainable(a) value Underlying profit before tax (£million) 75.2 carefully 72.2 acquiring businesses 4 75that complement our network of locations, extend our geographic50 reach and represent a Underlying earnings per share(b) (pence) 119.8 114.8 reasonable 4 return25 on our capital. 0 Cash generated from operations(c) (£million) 121.1 We 125.2 control and measure (3) growth by2012 making 2013 well informed 2014 2015 2016 decisions, supported by careful risk management and Revenue Governance Operating profit (£million) 97.7 95.5 good 2 governance. up 3% h to £313.6 million +3% Profit before tax (£million) 71.2 Our 69.0business is driven 3by relatively predictable factors over long periods of time. This allows us to operate and fund our Basic earnings per share (pence) 115.3 business 115.2 in a way that –generatesUnderlying value overoperating the long-term. profit (£m) 37 –37 65 Interim dividend paid in the period(d) (pence) 7.85 7.14 10 110 100 98.7 101.7 Final dividend paid in the period(e) (pence) 14.31 13.01 £3 1056.2m90 80 84.9 GROWTH Since flotation, £356.2 million in cash including78.4 dividends 70 . Deaths 590,000 588,000 has been returned – to shareholders.69.4 60 50 Non-GAAP measures 40 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 30 20 transactions. These measures are defined as follows: Financial Statements 10 (a) Underlying profit is calculated as profit excluding profit (or loss) on sale of fixed assets and external 0 STABILITY STABILITY transaction costs. 2012 2013 2014 2015 2016 (b) Underlying earnings per share is calculated as profit on ordinary activities after taxation, before profit (or loss) on sale of fixed assets and external transaction costs and exceptional items (all EXCELLENTnetA ofSTRONG tax),DEDICATED divided CORECLIENTUnderlying PEOPLE BUSINESS SERVICE operating profit by the weighted average number of Ordinary Shares in issue in the period. h (c) Cash generated from operations excludes external transaction costs. up 3% to £101.7 million +3% OurOur employeesAt Dignityobjective weare is focus ato key lead on asset thepeople funeraland –our those sector ability that into workprofessional attract, for us,develop Other notes (d) standardsandpartner retain of staffwith service. isus, important invest We achieve in ourin maintaining thisstrategy through and the the the long-term quality local of Interim dividend represents the interim dividend that was declared and paid in the period out of earnings 66 – 117 STRENGTH generated in the same period. sustainabilityourcommunities operations of the andwe Group. serve,our people butWeUnderlying valueabove together andall, those investwithearnings our whoin themestablished per depend share as they (pence) (e) The final dividend represents the final dividend that was declared and paid in thestrong periodare market relatingintegralon positions.tothe to the theservices delivery This we ensures ofprovide our strategicwe every keep day. objectives.at the forefront 120 earnings generated in the previous period. of the funeral industry. 119.8 WeOur have clients over are 3,000 the foundationdedicated110 employeesof our business working and across their 114.8 ourtrust operationsWe striveis earned to from maintain through a diverse this our range positionactions100 of boththrough backgrounds individually continuous and and many withimprovementas long a group. service. Ourand At prioritiesinvestment Dignity diversityand in90 our our success meansportfolio understanding are and determined by working and reflectingclosely with the our communities affinity partners in which80 and we our operate funeral and locations85.8 building to Other Information by our impact70 on them. 72.1 widen recognition of loyaltyour products with60 clients. and62.8 services and increase We have builtthe salea strong of pre-arranged