TIDMDCC
RNS Number : 4009Y
DCC PLC
17 May 2016
17 May 2016
Results for the year ended 31 March 2016
DCC, the international sales, marketing, distribution and
business support services group, today announced its results for
the year ended 31 March 2016.
Highlights 2016 20151 % change
------------------------------ ---------- ---------- ---------
DCC Energy volumes (litres) 12.770b 10.754b +18.7%
------------------------------ ---------- ---------- ---------
Revenue (excl. DCC Energy) GBP3.086b GBP2.982b +3.5%
------------------------------ ---------- ---------- ---------
Operating profit2 GBP300.5m GBP221.7m +35.5%
------------------------------ ---------- ---------- ---------
Adjusted earnings per share2 257.1p 202.2p +27.2%
------------------------------ ---------- ---------- ---------
Dividend per share 97.22p 84.54p +15.0%
------------------------------ ---------- ---------- ---------
Free cash flow 3 GBP291.1m GBP314.5m
------------------------------ ---------- ---------- ---------
Return on capital employed 21.0% 18.9%
------------------------------ ---------- ---------- ---------
-- 35.5% growth in Group operating profit to GBP300.5 million,
driven in particular by the performance of DCC Energy.
-- Adjusted earnings per share up 27.2% to 257.1 pence.
-- Proposed 15.0% increase in the final dividend.
-- Continued very strong cash flow performance and a return on capital employed of 21.0%.
-- Completion during the year of the Group's two largest ever
acquisitions, Butagaz and Esso Retail France, with both trading
well.
-- Further acquisition activity in each of DCC Energy, DCC Healthcare and DCC Technology.
-- The Group expects that the year ending 31 March 2017 will be
another year of profit growth and development.
1 Income Statement items represent continuing operations (i.e.
excluding DCC Food & Beverage which was disposed of)
2 Excluding net exceptionals and amortisation of intangible
assets
3 After net capital expenditure and before net exceptionals,
interest and tax payments
Commenting on the results, Tommy Breen, Chief Executive,
said:
"I am very pleased to report that the year ended 31 March 2016
was a record year of performance and development for DCC. Group
operating profit of GBP300.5 million was 35.5% ahead of the prior
year. This excellent result was driven significantly by DCC Energy,
where we benefitted from the Group's two largest ever acquisitions,
and also by very strong performances from the Healthcare and
Environmental divisions, notwithstanding a more difficult
background for DCC Technology.
The completion and successful integration of both Butagaz and
Esso Retail France were significant achievements during the year
and have materially increased the scale of our Energy business.
Both acquisitions are trading well.
Adjusted earnings per share increased by 27.2% to 257.1
pence.
In line with the increase in the interim dividend, the Board has
proposed an increase in the final dividend of 15%, the 22(nd)
consecutive year of dividend growth.
DCC's excellent cash generation continued during the year, with
97% conversion of operating profit to free cash flow,
notwithstanding an increased level of development capital
expenditure. Together with the very significant growth in operating
profit, this resulted in the Group's return on capital employed
being 21%.
With a modest level of net debt at the end of the year, DCC's
strong and liquid balance sheet provides significant financial
capacity for further development.
We expect that the coming year will be another year of profit
growth and development for the Group."
Presentation of results and dial-in / webcast facility
There will be a presentation of these results to analysts and
investors/fund managers at 9.00 am today in the London Stock
Exchange. The slides for this presentation can be downloaded from
DCC's website, www.dcc.ie.
There will also be audio conference access to, and a live
webcast of, the presentation. The access details for the
presentation are:
Ireland: 1800 937 656
UK / International: +44 (0) 203 427 1902
Passcode: 2504996
Webcast Link: http://edge.media-server.com/m/p/m9gorgeh
This report, a webcast of the presentation and further
information on DCC is available at www.dcc.ie.
For reference, please contact:
Tommy Breen, Chief Executive Tel: +353 1 2799 400
Fergal O'Dwyer, Chief Financial Officer Email: investorrelations@dcc.ie
Kevin Lucey, Head of Group Finance & Investor Web: www.dcc.ie
Relations
For media enquiries: Powerscourt (Lisa Tel: +44 20 7250 1446
Kavanagh)
Group Results
A summary of the Group's results for the year ended 31 March
2016 is as follows:
2016 2015
GBP'm GBP'm % change
Revenue 10,601 10,606 -
Operating profit(1)
DCC Energy 205.2 119.4 +71.9%
DCC Healthcare 45.0 39.7 +13.5%
DCC Technology 35.1 49.3 -28.8%
DCC Environmental 15.2 13.3 +14.2%
Group operating profit(1) 300.5 221.7 +35.5%
Equity accounted investments' profit after tax 0.5 0.4
Finance costs (net) (29.0) (28.9)
Profit before net exceptionals, amortisation of
intangible assets and tax 272.0 193.2 +40.8%
Net exceptional charge before tax (24.1) (22.0)
Amortisation of intangible assets (31.6) (24.1)
Profit before tax from continuing operations 216.3 147.1 +47.0%
Profit before tax from discontinued operations - 16.2
Taxation (35.3) (18.9)
Profit after tax 181.0 144.4 +25.4%
Non-controlling interests (3.0) -
Attributable profit 178.0 144.4 +23.3%
Adjusted earnings per share(1) 257.1 pence 202.2 pence +27.2%
Dividend per share 97.22 pence 84.54 pence +15.0%
Operating cash flow 411.7 377.8
Free cash flow(2) 291.1 314.5
Net (debt) / cash at 31 March (54.5) 30.0
Total equity at 31 March 1,350.5 987.0
Return on capital employed 21.0% 18.9%
(1) Excluding net exceptionals and amortisation of intangible assets
(2) After net capital expenditure and before net exceptionals, interest and tax payments
----------------------------------------------------------------------------------------------------------------------
Group revenue
Volumes in DCC Energy increased by 18.7%, primarily driven by
the first time contribution from the Esso Retail business in
France. On a like-for-like basis, volumes were very modestly behind
the prior year, largely due to the adverse impact of the milder
winter weather conditions. DCC Energy's revenue declined by 1.4%
(1.5% ahead on a constant currency basis) with average selling
prices per litre reducing by 16.9%, due to the impact of lower oil
prices.
Excluding DCC Energy, revenue from continuing operations was up
3.5% (5.6% up on a constant currency basis).
Consequently, Group revenue from continuing operations was flat
year on year (2.6% ahead on a constant currency basis) at GBP10.6
billion, primarily reflecting the impact of lower oil prices.
Group operating profit
Group operating profit from continuing operations increased by
35.5% to GBP300.5 million (40.0% on a constant currency basis),
driven predominantly by acquisitions completed during the year. The
average euro/sterling translation rate for the year of 0.7301 was
7.5% lower than the average of 0.7890 in the prior year.
Operating profit in DCC Energy, the Group's largest division,
was 71.9% ahead of the prior year (79.6% ahead on a constant
currency basis), largely driven by the significant acquisitions
completed during the year of Butagaz, Esso Retail France and DLG,
all of which traded at, or ahead of, expectations. Although DCC
Energy was adversely impacted by the relatively mild winter weather
conditions, a good margin and cost performance was achieved.
Operating profit in DCC Healthcare was 13.5% ahead of the prior
year and approximately two thirds of this growth was organic. DCC
Healthcare benefitted from an improved sales mix and good cost
control in DCC Vital and also from a strong performance in DCC
Health & Beauty Solutions, where strong organic profit growth
was complemented by the first time contribution from Design
Plus.
Operating profit in DCC Technology declined by 28.8% due to the
weak performance of its UK business, despite good growth in the
Irish, Continental European and Supply Chain Services businesses.
As previously reported, the UK business was adversely impacted by a
reduction in sales of products from one large supplier,
particularly in the first half of the year, and also by weaker than
anticipated demand for tablet computing, smartphone and gaming
products.
DCC Environmental achieved very strong organic profit growth,
with operating profit increasing to GBP15.2 million, 14.2% ahead of
the prior year.
An analysis of the divisional performance in each half of the
year, for the Group's continuing operations, is set out below:
2015/16 2014/15** % change
---------------------- ---------------------- -------------------------
H1 H2 FY H1 H2 FY H1 H2 FY
Operating profit* GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
DCC Energy 52.9 152.3 205.2 31.9 87.5 119.4 +65.6% +74.1% +71.9%
DCC Healthcare 18.4 26.6 45.0 15.9 23.8 39.7 +16.1% +11.7% +13.5%
DCC Technology 8.6 26.5 35.1 15.2 34.1 49.3 -43.6% -22.2% -28.8%
DCC Environmental 8.5 6.7 15.2 7.1 6.2 13.3 +20.0% +7.6% +14.2%
Group 88.4 212.1 300.5 70.1 151.6 221.7 +26.1% +39.9% +35.5%
Adjusted EPS*
(pence) 70.3 186.8 257.1 59.3 142.9 202.2 +18.5% +30.7% +27.2%
* Excluding net exceptionals and amortisation of intangible assets
** Excludes DCC Food & Beverage, which has now been disposed of
Finance costs (net)
Net finance costs were in line with the prior year at GBP29.0
million (2015: GBP28.9 million). Although the Group's average net
debt during the year was GBP185 million, compared to GBP339 million
during the prior year, the Group's finance costs are substantially
driven by the level of gross debt, which was in line with the prior
year at GBP1.1 billion.
Profit before net exceptional items, amortisation of intangible
assets and tax
Profit before net exceptional items, amortisation of intangible
assets and tax increased by 40.8% to GBP272.0 million.
Net exceptional charge and amortisation of intangible assets
The Group incurred a net exceptional charge after tax and
non-controlling interests of GBP23.7 million as follows:
GBP'm
Restructuring costs 16.5
IAS39 mark-to-market charge 9.4
Acquisition related costs 7.5
Other (9.3)
24.1
Tax and non-controlling interest (0.4)
Net exceptional charge 23.7
---------------------------------- ------------
The Group has focused on the efficiency of its operating
infrastructures and sales platforms, particularly in areas where it
has been acquisitive in recent years. The Group incurred an
exceptional charge of GBP16.5 million in relation to the related
restructuring of existing and acquired businesses.
Most of the Group's debt has been raised in the US Private
Placement market and swapped, using long term interest, currency
and cross currency interest rate derivatives, to both fixed and
floating rate sterling and euro. The level of ineffectiveness
calculated under IAS 39 on the fair value and cash flow hedge
relationships relating to fixed rate debt, together with gains or
losses arising from marking to market swaps not designated as
hedges, offset by foreign exchange translation gains or losses on
the related fixed rate debt, is charged or credited as an
exceptional item. In the year ended 31 March 2016, this amounted to
an exceptional non-cash charge of GBP9.4 million. Cumulatively, the
net exceptional charges taken in respect of the Group's outstanding
US Private Placement debt and related hedging instruments is
GBP15.0 million. These, or any subsequent similar non-cash charges
will, through future net credits, reverse and net to zero over the
remaining term of this debt and the related hedging
instruments.
Acquisition costs, which include professional fees and tax costs
(such as stamp duty) incurred in evaluating and completing
acquisitions, amounted to GBP7.5 million and reflect the
significant level of development activity undertaken by the
Group.
The balance of the exceptional items principally relates to a
gain arising from the write back of contingent acquisition
consideration no longer payable (GBP6.3 million) and a net gain on
legal claims (GBP4.3 million), primarily due to a final cash
recovery in respect of the Pihsiang legal claim.
There was a net tax credit of GBP0.7 million and a
non-controlling interest charge of GBP0.3 million in relation to
the above net exceptional charge.
The charge for the amortisation of acquisition related
intangible assets increased to GBP31.6 million from GBP24.1
million, principally reflecting acquisitions completed in the
current and prior year.
Profit before tax
Profit before tax from continuing operations increased by 47.0%
to GBP216.3 million.
Taxation
The effective tax rate for the Group increased to 16% from 12%
in the prior year. The increase is primarily due to the larger
proportion of the Group's profits now generated in Continental
Europe.
Non-controlling interest
The non-controlled element of the Group's consolidated profit
after tax amounted to GBP3.0 million.
Adjusted earnings per share
Adjusted earnings per share increased by 27.2% (31.3% on a
constant currency basis) to 257.1 pence, reflecting very strong
profit growth and the issue of 4.2 million new ordinary shares in
the equity placing completed in May 2015.
Dividend
The Board is recommending an increase of 15% in the final
dividend to 64.18 pence per share, which, when added to the interim
dividend of 33.04 pence per share, gives a total dividend for the
year of 97.22 pence per share. This represents a 15% increase over
the total prior year dividend of 84.54 pence per share. The
dividend is covered 2.6 times by adjusted earnings per share (2.5
times in 2015). It is proposed to pay the final dividend on 21 July
2016 to shareholders on the register at the close of business on 27
May 2016.
Over its 22 years as a listed company, DCC has an unbroken
record of dividend growth at a compound annual rate of 14.7%.
Cash flow
The Group generated excellent operating and free cash flow
during the year as set out below:
Year ended 31 March 2016 2015
GBP'm GBP'm
Operating profit 300.5 228.2
Decrease in working capital 37.6 102.6
Depreciation and other 73.6 47.0
Operating cash flow 411.7 377.8
Capital expenditure (net) (120.6) (63.3)
Free cash flow 291.1 314.5
Interest and tax paid, net of dividend from equity accounted investments (63.4) (60.0)
Free cash flow after interest and tax 227.7 254.5
Acquisitions (394.0) (123.5)
Dividends (80.9) (66.1)
Disposals / exceptional items (net) (15.4) 38.6
Share issues 197.7 1.7
Net (outflow) / inflow (64.9) 105.2
Opening net cash / (debt) 30.0 (87.3)
Translation and other (19.6) 12.1
Closing net (debt) / cash (54.5) 30.0
--------------------------------------------------------------------------- ------------ ------------
Operating cash flow in 2016 was GBP411.7 million compared to
GBP377.8 million in the prior year. Working capital reduced by
GBP37.6 million, with overall working capital days increasing
modestly to a negative 3.9 days sales from negative 4.9 days sales
in the prior year. DCC Technology selectively uses supply chain
financing solutions to sell, on a non-recourse basis, a portion of
its receivables relating to certain larger supply chain/sales and
marketing activities. The level of supply chain financing at 31
March 2016 was broadly unchanged year on year and had a positive
impact on Group working capital days of 4.9 days (31 March 2015:
5.4 days).
A much increased level of development capital expenditure in the
current year, principally in respect of the new UK distribution
centre in DCC Technology, resulted in total capital expenditure for
the year of GBP120.6 million (2015: GBP63.3 million). The total
capital expenditure exceeded the depreciation charge in the year by
GBP45.8 million. Despite this increased level of development
capital expenditure, the Group's free cash flow amounted to
GBP291.1 million, an excellent 97% conversion of operating profit
into cash.
Return on capital employed
The creation of shareholder value through the delivery of
consistent, long-term returns well in excess of its cost of capital
is one of DCC's core strategic aims. The increase in the Group's
operating profit and strong working capital management resulted in
a Group return on capital employed of 21.0%. The return on capital
employed by division was as follows:
2016 2015
DCC Energy 24.4% 19.8%
DCC Healthcare 17.1% 16.6%
DCC Technology 17.8% 25.5%
DCC Environmental 11.7% 9.7%
Group 21.0% 18.9%
------------------- ------ ------
The overall Group return and that of DCC Energy was flattered
somewhat by the acquisitions of Butagaz and Esso Retail France
which were completed during the year. The pro-forma return for DCC
Energy and the Group (i.e. including these acquisitions as if they
had been in place for the full year) would have been approximately
21% and 19% respectively.
Committed acquisition and capital expenditure
Committed acquisition and capital expenditure in the current
year amounted to GBP200.9 million as follows:
Acquisitions Capex Total
GBP'm GBP'm GBP'm
DCC Energy 40.9 68.3 109.2
DCC Healthcare 20.3 8.4 28.7
DCC Technology 19.0 31.6 50.6
DCC Environmental - 12.4 12.4
Total 80.2 120.7 200.9
------------------- ------------------- --------- --------------
Acquisition activity
Committed acquisition expenditure amounted to GBP80.2 million
and included:
DCC Energy
Dansk Fuels
On 23 March 2016 DCC announced it had reached agreement to
acquire a commercial, aviation and retail fuels business in
Denmark, formerly owned by Shell. The completion of the acquisition
by DCC is conditional, inter alia, on EC competition clearance. The
transaction is expected to complete in the second half of calendar
2016, after the relevant clearances have been received.
The acquisition will comprise Shell's commercial and aviation
distribution business in Denmark and a retail petrol station
network of 139 sites (comprising 95 manned and 44 unmanned sites)
together with contracts to supply 66 dealers. DCC will also enter
into a long term brand partnership with Shell to operate the
network under the Shell brand. The transaction will require a total
investment by DCC of approximately DKK300 million (GBP30 million).
The business will be merged with DCC's existing oil distribution
business in Denmark and will leverage DCC Energy's newly developed
retail operating platform. The acquired business will have total
incremental volumes of approximately 0.9 billion litres and is
expected to generate an initial return on invested capital
commensurate with DCC's Energy's existing returns.
DCC Healthcare
Design Plus
In September 2015, DCC Health & Beauty Solutions
strengthened its market position in the contract manufacture of
creams and liquids through the acquisition of Design Plus
(Holdings) Ltd ("Design Plus") based in Lancashire, England. The
consideration, which was paid in cash at completion, was based on
an enterprise value of GBP15 million. Design Plus has brought
specialist expertise in sachet filling, where it is the market
leader in this segment in Britain, and strong relationships with a
complementary range of health and beauty brand owners and retailers
in Britain, Continental Europe and the USA.
Espiner
In October 2015, DCC Vital acquired Espiner Medical ("Espiner"),
a small medical devices company based near Bristol, England.
Espiner has developed a range of tissue retrieval bags for use in
laparoscopic surgical procedures. The acquisition will increase DCC
Vital's own brand revenues and also provides access to a network of
international distributors.
DCC Technology
CUC
In December 2015, DCC Technology completed the acquisition of
CUC Groupe ("CUC"), a cabling and connectors distribution business
headquartered near Paris. Employing 192 people and with annual
revenue of approximately EUR60 million, CUC sells a broad range of
cabling products to over 9,000 customers (resellers, systems
integrators and electricians) from its operations in France and
Germany. The acquisition adds specialist expertise in cabling and
connector products and has significantly broadened the customer
base of the Continental European business.
A number of acquisitions, announced in the prior year, were
completed during the year. These included:
DCC Energy
Butagaz
DCC Energy completed the acquisition of Butagaz, a leading LPG
business in France, from Shell. Butagaz is DCC's largest
acquisition to date and represented a major step forward in the
continuing expansion of its LPG business. The French LPG market is
the second largest in Western Europe and approximately twice the
size of the market in Britain. The acquisition of Butagaz has
provided DCC Energy with a substantial presence in the French LPG
market, an experienced management team and a high quality sales,
marketing and operating infrastructure. Following receipt of
competition clearance from the EC, the agreement to acquire Butagaz
became unconditional in all respects on 1 September 2015, well
ahead of the schedule anticipated at the time of announcing the
acquisition.
The final consideration for the acquisition of Butagaz
(inclusive of debt-like items which will fall due over time) was
EUR437 million (GBP319 million).
Esso Retail France
In June 2015, DCC Energy completed the acquisition of the assets
that comprise the Esso Express unmanned retail petrol station
network and the Esso branded motorway concessions in France from
Esso Société Anonyme Française. The business has annual volumes of
approximately 1.9 billion litres and the total consideration,
inclusive of stock in tank at the date of acquisition, was EUR122
million (GBP89 million).
DLG Denmark
In July 2015, following the receipt of competition clearance,
DCC Energy combined its Danish oil distribution business with the
fuel distribution activities of DLG, a leading Danish agricultural
business. The transaction resulted in DCC Energy owning 60% of the
enlarged business which distributes approximately 400 million
litres of fuel and is now managed by DCC Energy's management
team.
DCC Technology
Computers Unlimited
In May 2015, DCC Technology acquired Computers Unlimited for an
initial enterprise value of GBP24 million. Computers Unlimited is a
consumer technology distributor operating primarily in the UK but
also with operations in France and Spain. The business is focused
on the 'connected home' and professional design markets and
distributes a range of products that are complementary to those
distributed by DCC Technology, including design software, printers,
accessories and premium audio systems.
Total cash spend on acquisitions for the year ended 31 March
2016
The total cash spend on acquisitions in the year was GBP394.0
million.
Capital expenditure
Net capital expenditure for the year of GBP120.6 million (2015:
GBP63.3 million) compares to a depreciation charge of GBP74.8
million (2015: GBP59.7 million).
As previously reported, DCC Technology is continuing to
integrate its UK businesses under the Exertis brand and as part of
this project is significantly upgrading its ERP and logistics
infrastructure. DCC Technology has commenced the construction of a
new, purpose built, 450,000 sq.ft. UK national distribution centre
in the north of England, close to the majority of its existing
facilities. The project is progressing well and the relocation to
the new facility will take place on a phased basis, beginning in
the second half of the financial year ending 31 March 2017.
Financial strength
An integral part of the Group's strategy is the maintenance of a
strong and liquid balance sheet to leave it well placed to take
advantage of development opportunities as they arise. To that end,
and cognisant that the Group had already committed to acquire both
the Esso Retail and Butagaz businesses in France, in May 2015 the
Group successfully completed a placing of new ordinary shares
representing 5% of its issued share capital. The shares were placed
at a premium to the previous day's closing price, raising a net
GBP193 million.
As a result of the placing and the strong operating cash flow in
the year, DCC's financial position remains very strong. At 31 March
2016, the Group had net debt of GBP54.5 million and total equity of
GBP1.3 billion. At the same date, DCC had cash resources, net of
overdrafts and short term debt, of GBP1.0 billion. In addition,
during March 2016, the Group successfully extended its committed
revolving credit facility for a further five years and also
increased the size of the facility from GBP150 million to GBP400
million. The revolving credit facility currently remains undrawn.
The Group's outstanding term debt at 31 March 2016 had an average
maturity of 6.1 years. Substantially all of the Group's debt has
been raised in the US Private Placement market with an average
credit margin of 1.66% over floating Euribor/Libor.
Outlook
The Group expects that the year ending 31 March 2017 will be
another year of profit growth and development.
Annual Report and Annual General Meeting
DCC's 2016 Annual Report will be published in June 2016. The
Company's Annual General Meeting will be held at 11.00 am on Friday
15 July 2016 in The InterContinental Hotel, Simmonscourt Road,
Ballsbridge, Dublin 4, Ireland.
Performance Review - Divisional Analysis
DCC Energy 2016 2015 % change
---------------------------- ------------ ------------ ---------
Volumes (litres) 12.770b 10.754b +18.7%
---------------------------- ------------ ------------ ---------
Revenue GBP7,515.3m GBP7,624.1m -1.4%
---------------------------- ------------ ------------ ---------
Operating profit GBP205.2m GBP119.4m +71.9%
---------------------------- ------------ ------------ ---------
Operating profit per litre 1.61p 1.11p
---------------------------- ------------ ------------ ---------
Return on capital employed 24.4% 19.8%
---------------------------- ------------ ------------ ---------
DCC Energy had an excellent year with operating profit
increasing to GBP205.2 million, 71.9% ahead of the prior year
(79.4% ahead on a constant currency basis) and generating a return
on capital employed of 24.4% (approximately 21% on a pro-forma
basis i.e. if the acquisitions of Butagaz and Esso Retail France
were in place for the full year). The business benefitted from the
significant level of development activity and strong organic
operating profit growth in LPG.
DCC Energy sold 12.8 billion litres of product, an increase of
18.7% over the prior year driven by acquisitions. Volumes were 0.8%
lower on a like for like basis as heating-related volumes were
adversely impacted by the extremely mild temperatures, particularly
in the quarter to December 2015 which was the warmest on record in
the UK. DCC Energy's revenue declined by 1.4% (1.5% ahead on a
constant currency basis) with average selling prices per litre
reducing by 16.9%, due to the impact of lower oil prices.
The LPG business had an excellent year, benefiting from the
acquisition of Butagaz and a substantial reduction in the
underlying cost of product. Butagaz, which has performed strongly
since acquisition, has significantly increased the scale of DCC
Energy's LPG operations and on a pro-forma basis DCC Energy now
sells approximately 1.2 million tonnes of LPG with leading market
positions across six countries in Western Europe.
Excluding Butagaz, despite the mild winter weather, the business
achieved good organic volume growth, driven by both increased sales
to existing commercial and industrial customers and also oil to LPG
conversions, as the commercial and environmental benefits of LPG
over other fuels are increasingly recognised by customers.
The Oil business recorded a satisfactory performance, given the
impact of milder weather on the relatively higher margin
heating-related volumes.
In Britain the business was adversely impacted by the mild
winter and difficult market conditions in certain commercial
sectors; however the business continues to progress its development
in complementary areas, including lubricants and aviation fuels. In
other markets the business performed strongly, achieving good
organic growth and benefiting from the acquisition of the DLG fuel
distribution business in Denmark. The Danish business will be
further expanded by the agreement to acquire Shell's commercial and
aviation fuels business, as announced by DCC on 23 March 2016,
which is expected to complete in the second half of calendar
2016.
The Retail & Fuel Card business achieved an excellent
result, with a strong organic performance in existing markets
complemented by significant progress in the development of the
business.
In June 2015, DCC Energy completed the acquisition of the Esso
Retail petrol station business in France, comprising 272 unmanned
Esso Express sites and concessions to operate 47 Esso branded
motorway sites. The integration of the business into DCC's newly
developed operating platform was completed to plan and the business
has performed strongly since acquisition. The operating
infrastructure and expertise now in place provide DCC Energy with a
scalable platform for further growth in the Retail sector. DCC
Energy now operates 694 retail sites across four countries and will
be further enhanced by the agreement to acquire 139 retail sites in
Denmark, as announced on 23 March 2016. The Fuel Card business
continued its record of strong organic growth and continued to grow
its market share in Britain.
The year ended 31 March 2016 was a year of significant growth
and development for DCC Energy. The business now has leadership
positions in 10 countries across Europe in its chosen sectors of
LPG, Oil and Retail & Fuel Card. DCC Energy is well positioned
to continue to grow its business in both existing and new
geographies, particularly in light of the continuing divestment
programmes of the major oil and gas companies.
DCC Healthcare 2016 2015 % change
---------------------------- ---------- ---------- ---------
Revenue GBP490.7m GBP488.1m +0.5%
---------------------------- ---------- ---------- ---------
Operating profit GBP45.0m GBP39.7m +13.5%
---------------------------- ---------- ---------- ---------
Operating margin 9.2% 8.1%
---------------------------- ---------- ---------- ---------
Return on capital employed 17.1% 16.6%
---------------------------- ---------- ---------- ---------
DCC Healthcare performed very strongly during the year and
achieved operating profit growth of 13.5%, approximately two thirds
of which was organic, whilst continuing to generate excellent
returns on capital employed. DCC Healthcare delivered a further
increase in its operating margin, benefitting from its focus on
improving the sales mix across the business and leveraging the
increased scale of its sales and operating platform. DCC Healthcare
also completed two bolt-on acquisitions which enhanced its product
and service offering.
DCC Vital, which is focused on the sales and marketing of
pharmaceuticals and medical devices to healthcare providers in
Britain and Ireland, recorded strong operating profit growth. The
business made good progress during the year in streamlining its
activities and product portfolio as it continues to increase its
focus on the sales and marketing of its own products, in particular
by exiting certain lower margin activities including pharma
compounding and by consolidating back office facilities and
activities. DCC Vital achieved excellent growth in hospital
injectable pharmaceuticals and benefitted from the launch of a
number of own-licence pharma products. The business generated good
growth across each of its medical devices product categories and
further strengthened its own brand offering in this area through
the bolt-on acquisition of Espiner in niche surgical consumables in
Britain. DCC Vital also delivered continued good organic growth in
the primary care sector, across its portfolio of medical equipment,
consumables and related services.
DCC Health & Beauty Solutions, which provides outsourced
solutions to international nutrition and beauty brand owners,
continued its track record of strong organic profit growth.
Particularly strong organic growth was achieved in nutritional
products with increased sales to a number of European customers.
The business also benefitted from a number of successful new beauty
product development projects on behalf of international brand
owners. In addition, further efficiencies were realised from the
final phase of the integration of its Swedish tablet manufacturing
and packing operations into its larger tabletting facility in
Britain. Design Plus, which was acquired in September 2015 and is
the market leader in Britain in sachet filling for health and
beauty brand owners, has performed strongly since acquisition. This
acquisition has extended DCC Health & Beauty Solutions' service
offering to brand owners and has provided access to new customers,
opening up a range of additional growth opportunities.
DCC Healthcare is well placed to continue building on its track
record of organic and acquisitive growth over the last five years
and its strengthened operating platforms. The business is ambitious
to further develop its product and service offering to healthcare
providers and health and beauty brand owners and to expand its
geographic footprint beyond its current markets.
DCC Technology 2016 2015 % change
---------------------------- ---------- ---------- ---------
Revenue GBP2.442b GBP2.350b +3.9%
---------------------------- ---------- ---------- ---------
Operating profit GBP35.1m GBP49.3m -28.8%
---------------------------- ---------- ---------- ---------
Operating margin 1.4% 2.1%
---------------------------- ---------- ---------- ---------
Return on capital employed 17.8% 25.5%
---------------------------- ---------- ---------- ---------
DCC Technology had a very difficult year with operating profit
declining by 28.8% as challenging trading conditions experienced in
the UK, its largest business, more than offset good performances in
the division's other activities.
The UK business, which accounted for 72% of the revenue of the
division, was, as reported previously, materially affected by a
reduction in sales of products from one large supplier,
particularly in the first half of the year, and also by weaker than
anticipated demand for tablet computing, smartphone and gaming
products. These factors contributed to a like-for-like sales
decline of 7%. Although the business achieved growth in other areas
such as audio visual and components, the change in product mix,
together with the effects of negative operating leverage,
contributed to a reduction in operating margin in the UK.
In response to the challenging trading conditions in the UK, the
business has reduced its cost base and is continuing to build its
market position in new and developing product categories such as
smart technology, audio visual, network security and virtual
reality. The capital infrastructure projects in progress will
significantly enhance the IT and operational capability of the
business, provide capacity for further growth and enable efficiency
improvements. The projects remain on course for completion in the
first half of 2017.
DCC Technology's business in Ireland achieved strong growth and
benefitted from improved demand across a number of product
segments, reflecting good business development activity and the
continued recovery of the Irish economy.
The Continental European business achieved good growth,
reflecting strong organic growth in the Nordics and Benelux,
offsetting weaker demand in the French market. The business also
benefitted in the final quarter from the acquisition of CUC, which
has performed in line with expectations. The acquisition of CUC has
added specialist expertise in cabling and connector products and
also significantly broadened the customer base of the Continental
European business.
The Supply Chain Services business performed well, with good
business development over the year bringing new customers and
contributing to strong revenue growth, albeit at lower margins.
DCC Technology is focused on further broadening the base of its
activities in the coming year, from both a product and a customer
perspective. The business is confident that the business
development and cost efficiency initiatives undertaken will bring
about a return to growth in the coming year.
DCC Environmental 2016 2015 % change
---------------------------- ---------- ---------- ---------
Revenue GBP153.5m GBP143.6m +6.9%
---------------------------- ---------- ---------- ---------
Operating profit GBP15.2m GBP13.3m +14.2%
---------------------------- ---------- ---------- ---------
Operating margin 9.9% 9.3%
---------------------------- ---------- ---------- ---------
Return on capital employed 11.7% 9.7%
---------------------------- ---------- ---------- ---------
DCC Environmental performed very strongly during the year,
increasing its operating profit by 14.2% to GBP15.2 million. The
growth in operating profit, all of which was organic, resulted in
the return on capital employed increasing to 11.7%.
The British business performed strongly during the year, with
continued good business development activity, particularly in the
non-hazardous business in the East Midlands. The business also
performed well in the hazardous area, successfully mitigating the
effects of the significant fall in oil prices and recording good
growth across a range of specialist service areas.
The Irish business also performed strongly. An improving
economic environment assisted business development efforts across a
number of service lines, notwithstanding a more difficult year in
the treatment of waste oil. The business also benefitted from cost
reduction initiatives implemented in the prior year.
Forward-looking statements
This announcement contains some forward-looking statements that
represent DCC's expectations for its business, based on current
expectations about future events, which by their nature involve
risk and uncertainty. DCC believes that its expectations and
assumptions with respect to these forward-looking statements are
reasonable, however because they involve risk and uncertainty as to
future circumstances, which are in many cases beyond DCC's control,
actual results or performance may differ materially from those
expressed in or implied by such forward-looking statements.
Group Income Statement
For the year ended 31 March 2016
2016 2015
------------------------------------------ ------------------------------------------
Pre Exceptionals Pre Exceptionals
exceptionals (note 5) Total exceptionals (note 5) Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing
operations
Revenue 4 10,601,085 - 10,601,085 10,606,080 - 10,606,080
Cost of sales (9,545,194) - (9,545,194) (9,781,910) - (9,781,910)
------------- ------------- ------------ ------------- ------------- ------------
Gross profit 1,055,891 - 1,055,891 824,170 - 824,170
Administration
expenses (304,029) - (304,029) (262,923) - (262,923)
Selling and
distribution
expenses (463,877) - (463,877) (350,978) - (350,978)
Other operating
income 26,416 13,829 40,245 19,657 7,914 27,571
Other operating
expenses (13,878) (28,469) (42,347) (8,210) (27,718) (35,928)
------------- ------------- ------------ ------------- ------------- ------------
Operating profit before
amortisation
of intangible assets 300,523 (14,640) 285,883 221,716 (19,804) 201,912
Amortisation of
intangible
assets (31,622) - (31,622) (24,057) - (24,057)
------------- ------------- ------------
Operating
profit 4 268,901 (14,640) 254,261 197,659 (19,804) 177,855
Finance costs (64,970) (9,419) (74,389) (60,216) (2,191) (62,407)
Finance income 35,981 - 35,981 31,288 - 31,288
Equity accounted
investments'
profit after tax 504 - 504 402 - 402
------------- ------------- ------------
Profit before tax from
continuing
operations 240,416 (24,059) 216,357 169,133 (21,995) 147,138
Profit before
tax
from
discontinued
operations 14 - - - 5,088 11,079 16,167
------------- ------------- ------------ ------------- ------------- ------------
Profit before
tax 240,416 (24,059) 216,357 174,221 (10,916) 163,305
Income tax
expense (36,024) 710 (35,314) (18,881) - (18,881)
------------- ------------- ------------ ------------- ------------- ------------
Profit after
tax for
the financial
year 204,392 (23,349) 181,043 155,340 (10,916) 144,424
------------- ------------- ------------ ------------- ------------- ------------
Profit attributable
to:
Owners of the Parent 178,031 144,427
Non-controlling interests 3,012 (3)
------------------- ------------
181,043 144,424
------------------- ------------
Profit after tax for the financial year comprises:
Profit after tax from continuing
operations 181,043 128,661
Profit after tax from discontinued
operations - 15,763
------------------- ------------
181,043 144,424
------------------- ------------
Earnings per ordinary
share
Basic - continuing operations 6 202.64p 153.20p
Basic - discontinued
operations 6 - 18.77p
------------------- ------------
Basic 6 202.64p 171.97p
------------------- ------------
Diluted - continuing
operations 6 201.02p 152.10p
Diluted - discontinued
operations 6 - 18.63p
------------------- ------------
Diluted 6 201.02p 170.73p
------------------- ------------
Group Statement of Comprehensive Income
For the year ended 31 March 2016
2016 2015
GBP'000 GBP'000
Group profit for the financial
year 181,043 144,424
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss
Currency translation:
- arising in the year 37,971 (15,007)
- recycled to the Income Statement
on disposal - (2,721)
Movements relating to cash flow
hedges 2,230 (6,942)
Movement in deferred tax liability
on cash flow hedges 120 324
-------- ---------
40,321 (24,346)
-------- ---------
Items that will not be reclassified
to profit or loss
Group defined benefit pension obligations:
- remeasurements 4,894 (19,302)
- movement in deferred tax asset (570) 2,187
-------- ---------
4,324 (17,115)
-------- ---------
Other comprehensive income for the
financial year, net of tax 44,645 (41,461)
-------- ---------
Total comprehensive income for
the financial year 225,688 102,963
-------- ---------
Attributable to:
Owners of the Parent 220,411 103,555
Non-controlling interests 5,277 (592)
-------- ---------
225,688 102,963
-------- ---------
Attributable to:
Continuing operations 225,688 103,378
Discontinued operations - (415)
-------- ---------
225,688 102,963
-------- ---------
Group Balance Sheet
As at 31 March 2016
2016 2015
Notes GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 739,503 464,689
Intangible assets 1,297,065 759,179
Equity accounted investments 22,139 4,963
Deferred income tax assets 21,285 9,380
Derivative financial instruments 209,518 233,150
2,289,510 1,471,361
----------- ----------
Current assets
Inventories 393,948 320,655
Trade and other receivables 916,069 847,274
Derivative financial instruments 15,915 5,395
Cash and cash equivalents 1,182,034 1,260,942
----------- ----------
2,507,966 2,434,266
Assets classified as held for
sale - 12,196
2,507,966 2,446,462
Total assets 4,797,476 3,917,823
----------- ----------
EQUITY
Share capital 15,455 14,688
Share premium 277,211 83,032
Share based payment reserve 8 14,954 12,756
Cash flow hedge reserve 8 (8,112) (10,462)
Foreign currency translation reserve 8 70,887 32,683
Other reserves 8 932 932
Retained earnings 948,316 849,119
----------- ----------
Equity attributable to owners
of the Parent 1,319,643 982,748
Non-controlling interests 30,833 4,245
----------- ----------
Total equity 1,350,476 986,993
----------- ----------
LIABILITIES
Non-current liabilities
Borrowings 1,260,421 1,314,386
Derivative financial instruments 343 92
Deferred income tax liabilities 133,646 30,533
Post employment benefit obligations 10 347 10,230
Provisions for liabilities 213,115 29,016
Acquisition related liabilities 81,411 40,149
Government grants 904 1,272
----------- ----------
1,690,187 1,425,678
----------- ----------
Current liabilities
Trade and other payables 1,437,832 1,312,136
Current income tax liabilities 45,172 16,095
Borrowings 192,804 149,472
Derivative financial instruments 8,401 7,902
Provisions for liabilities 31,373 8,096
Acquisition related liabilities 41,231 3,235
----------- ----------
1,756,813 1,496,936
Liabilities associated with assets
classified as held for sale - 8,216
1,756,813 1,505,152
Total liabilities 3,447,000 2,930,830
----------- ----------
Total equity and liabilities 4,797,476 3,917,823
----------- ----------
Net (debt)/cash included above
(including cash attributable to
assets held for sale) 9 (54,502) 29,987
----------- ----------
Group Statement of Changes in Equity
For the year Attributable to owners of the
ended 31 March Parent
2016
----------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
8)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2015 14,688 83,032 849,119 35,909 982,748 4,245 986,993
Profit for the
financial year - - 178,031 - 178,031 3,012 181,043
Currency
translation - - - 35,706 35,706 2,265 37,971
Group defined
benefit pension
obligations:
- remeasurements - - 4,894 - 4,894 - 4,894
- movement in
deferred tax
asset - - (570) - (570) - (570)
Movements
relating to
cash
flow hedges - - - 2,230 2,230 - 2,230
Movement in
deferred tax
liability
on cash flow
hedges - - - 120 120 - 120
Total
comprehensive
income - - 182,355 38,056 220,411 5,277 225,688
Issue of share
capital 767 194,179 - - 194,946 - 194,946
Re-issue of
treasury shares - - 2,781 - 2,781 - 2,781
Share based
payment - - - 2,198 2,198 - 2,198
Dividends - - (80,938) - (80,938) - (80,938)
Non-controlling
interest
arising
on acquisition - - (5,001) 2,498 (2,503) 21,311 18,808
At 31 March 2016 15,455 277,211 948,316 78,661 1,319,643 30,833 1,350,476
--------------- ------------------ --------------- ------------- ------------- ---------------- -------------
For the year Attributable to owners of the
ended 31 March Parent
2015
----------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
8)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2014 14,688 83,032 786,158 57,540 941,418 4,837 946,255
Profit for the
financial year - - 144,427 - 144,427 (3) 144,424
Currency
translation:
- arising in the
year - - - (14,418) (14,418) (589) (15,007)
- recycled to
the Income
Statement
on disposal - - - (2,721) (2,721) - (2,721)
Group defined
benefit pension
obligations:
- remeasurements - - (19,302) - (19,302) - (19,302)
- movement in
deferred tax
asset - - 2,187 - 2,187 - 2,187
Movements
relating to
cash
flow hedges - - - (6,942) (6,942) - (6,942)
Movement in
deferred tax
liability
on cash flow
hedges - - - 324 324 - 324
Total
comprehensive
income - - 127,312 (23,757) 103,555 (592) 102,963
Re-issue of
treasury shares - - 1,699 - 1,699 - 1,699
Share based
payment - - - 2,126 2,126 - 2,126
Dividends - - (66,050) - (66,050) - (66,050)
At 31 March 2015 14,688 83,032 849,119 35,909 982,748 4,245 986,993
--------------- ------------------ --------------- ------------- ------------- ---------------- -------------
Group Cash Flow Statement
For the year ended 31 March 2016
2016 2015
Note GBP'000 GBP'000
Cash flows from operating activities
Profit for the financial year 181,043 144,424
Add back non-operating expenses/(income)
- tax 35,314 18,881
- share of equity accounted investments'
profit (504) (489)
- net operating exceptionals 14,640 8,725
- net finance costs 38,408 31,313
---------- ----------
Group operating profit before
exceptionals 268,901 202,854
Share-based payments expense 2,198 2,126
Depreciation 74,822 59,710
Amortisation of intangible assets 31,622 25,345
Loss/(profit) on disposal of property,
plant and equipment 415 (3,256)
Amortisation of government grants (419) (358)
Other (primarily pension payments) (3,412) (11,159)
Decrease in working capital 37,585 102,556
---------- ----------
Cash generated from operations
before exceptionals 411,712 377,818
Exceptionals (19,567) (16,454)
---------- ----------
Cash generated from operations 392,145 361,364
Interest paid (64,432) (59,678)
Income tax paid (35,346) (32,361)
---------- ----------
Net cash flows from operating
activities 292,367 269,325
---------- ----------
Investing activities
Inflows:
Proceeds from disposal of property,
plant and equipment 13,523 16,054
Government grants received - 52
Dividends received from equity
accounted investments 365 828
Disposal of subsidiaries and equity
accounted investments 4,173 55,090
Interest received 36,004 31,222
54,065 103,246
---------- ----------
Outflows:
Purchase of property, plant and
equipment (134,172) (79,401)
Acquisition of subsidiaries 11 (390,042) (107,223)
Payment of accrued acquisition
related liabilities (3,913) (16,326)
---------- ----------
(528,127) (202,950)
---------- ----------
Net cash flows from investing
activities (474,062) (99,704)
---------- ----------
Financing activities
Inflows:
Proceeds from issue of shares 197,727 1,699
Increase in interest-bearing loans
and borrowings - 448,989
Net cash inflow on derivative 1,953 -
financial instruments
Increase in finance lease liabilities 59 -
199,739 450,688
---------- ----------
Outflows:
Repayment of interest-bearing
loans and borrowings (14,832) (169,631)
Repayment of finance lease liabilities (151) (486)
Net cash outflow on derivative
financial instruments - (9,832)
Dividends paid to owners of the
Parent 7 (80,938) (66,050)
(95,921) (245,999)
---------- ----------
Net cash flows from financing
activities 103,818 204,689
---------- ----------
Change in cash and cash equivalents (77,877) 374,310
Translation adjustment 38,249 (58,206)
Cash and cash equivalents at beginning
of year 1,129,665 813,561
---------- ----------
Cash and cash equivalents at end
of year 1,090,037 1,129,665
---------- ----------
Cash and cash equivalents consists
of:
Cash and short term bank deposits 1,182,034 1,260,942
Overdrafts (91,997) (133,629)
Cash and short term deposits attributable
to assets held for sale - 2,352
1,090,037 1,129,665
---------- ----------
Notes to the Condensed Financial Statements
For the year ended 31 March 2016
1. Basis of Preparation
The financial information, from the Group Income Statement to
note 16, contained in this preliminary results statement has been
derived from the Group financial statements for the year ended 31
March 2016 and is presented in sterling, rounded to the nearest
thousand. The financial information does not include all the
information and disclosures required in the annual financial
statements. The Annual Report will be distributed to shareholders
and made available on the Company's website www.dcc.ie. It will
also be filed with the Companies Registration Office. The auditors
have reported on the financial statements for the year ended 31
March 2016 and their report was unqualified. The financial
information for the year ended 31 March 2015 represents an
abbreviated version of the Group's statutory financial statements
on which an unqualified audit report was issued and which have been
filed with the Companies Registration Office.
The financial information presented in this report has been
prepared in accordance with the Listing Rules of the Financial
Services Authority and the accounting policies that the Group has
adopted for 2016 which are consistent with those applied in the
prior year.
2. Accounting Policies
There were no changes to IFRS which became effective for the
Group during the financial year which resulted in material changes
to the Group's consolidated financial statements.
3. Reporting Currency
The Group's financial statements are presented in sterling,
denoted by the symbol 'GBP'. Results and cash flows of operations
based in non-sterling countries have been translated into sterling
at average rates for the year, and the related balance sheets have
been translated at the rates of exchange ruling at the balance
sheet date. The principal exchange rates used for translation of
results and balance sheets into sterling were as follows:
Average rate Closing rate
---------------------- --------------------
2016 2015 2016 2015
StgGBP1= StgGBP1= StgGBP1= StgGBP1=
Euro 1.3697 1.2674 1.2633 1.3749
Swedish Krona 12.7937 11.6866 11.6547 12.7734
Danish Krone 10.2297 9.4577 9.4134 10.2705
Norwegian Krone 12.4995 10.7266 11.8938 11.9669
4. Segmental Reporting
DCC is a sales, marketing, distribution and business support
services group headquartered in Dublin, Ireland. Operating segments
are reported in a manner consistent with the internal reporting
provided to the chief operating decision maker. The chief operating
decision maker has been identified as Mr. Tommy Breen, Chief
Executive and his executive management team. The Group is organised
into four operating segments: DCC Energy, DCC Healthcare, DCC
Technology and DCC Environmental.
DCC Energy markets and sells oil products and services for
transport, commercial/industrial, marine, aviation and home heating
use in Europe. DCC Energy markets and sells liquefied petroleum gas
for similar uses in Europe. DCC Energy also owns, operates and
supplies unmanned and manned retail service stations in Europe.
DCC Healthcare sells, markets and distributes pharmaceuticals
and medical products in the British and Irish markets. DCC
Healthcare also provides outsourced product development,
manufacturing, packaging and other services to health and beauty
brand owners in Europe.
DCC Technology sells, markets and distributes a broad range of
consumer and business technology products and services in
Europe.
DCC Environmental provides a broad range of waste management and
recycling services to the industrial, commercial, construction and
public sectors in Britain and Ireland.
Net finance costs and income tax are managed on a centralised
basis and therefore these items are not allocated between operating
segments for the purpose of presenting information to the chief
operating decision maker and accordingly are not included in the
detailed segmental analysis below. Intersegment revenue is not
material and thus not subject to separate disclosure.
An analysis of the Group's performance, based on continuing operations,
by operating segment and geographic location is as follows:
(a) By operating segment
Year ended 31 March 2016
-------------------------------------------------------------------------------
DCC Energy DCC Healthcare DCC Technology DCC Environmental Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 7,515,308 490,617 2,441,705 153,455 10,601,085
---------- -------------- --------------- ----------------- ------------
Operating profit* 205,181 45,039 35,125 15,178 300,523
Amortisation of intangible
assets (21,381) (7,138) (2,627) (476) (31,622)
Net operating exceptionals
(note 5) (9,057) 5,859 (10,454) (988) (14,640)
---------- -------------- --------------- ----------------- ------------
Operating profit 174,743 43,760 22,044 13,714 254,261
---------- -------------- --------------- ----------------- ------------
Year ended 31 March 2015
----------------------------------------------------------------------------
DCC Energy DCC Healthcare DCC Technology DCC Environmental Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 7,624,082 488,114 2,350,284 143,600 10,606,080
---------- -------------- --------------- ----------------- ------------
Operating profit* 119,392 39,689 49,341 13,294 221,716
Amortisation of intangible
assets (14,334) (6,143) (2,794) (786) (24,057)
Net operating exceptionals
(note 5) (7,137) (1,161) (11,101) (405) (19,804)
---------- -------------- --------------- ----------------- ------------
Operating profit 97,921 32,385 35,446 12,103 177,855
---------- -------------- --------------- ----------------- ------------
(b) By geography
The Group has a presence in 15 countries worldwide. The
following represents a geographical analysis of the segment
information presented above in accordance with IFRS 8, which
requires disclosure of information about the country of domicile
(Republic of Ireland) and countries with material revenue and
non-current assets.
Revenue Non-current assets**
----------------------- ----------------------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Republic of Ireland 659,723 717,077 132,892 120,238
United Kingdom 6,985,521 8,023,403 1,010,908 951,649
France 1,487,875 210,275 733,287 6,866
Other 1,467,966 1,655,325 181,620 150,078
----------- ---------- ---------------- ----------------
10,601,085 10,606,080 2,058,707 1,228,831
----------- ---------- ---------------- ----------------
Revenue and operating profit are derived almost entirely from
the sale of goods and are disclosed based on the location of the
entity selling the goods. There are no material dependencies or
concentrations on individual customers which would warrant
disclosure under IFRS 8. The Balance Sheet information presented
above is disclosed based on the location of the assets.
* Operating profit before amortisation of intangible assets and
net operating exceptionals
** Non-current assets comprise intangible assets, property,
plant and equipment and equity accounted investments
5. Exceptionals
2016 2015
GBP'000 GBP'000
Restructuring costs (16,517) (15,027)
Impairment of goodwill - (5,637)
Acquisition and related costs (7,478) (3,396)
Impairment of property, plant and equipment (947) (1,508)
Adjustments to contingent acquisition
consideration 6,290 415
Gain arising from legal case settlements 4,291 894
Restructuring of Group defined benefit
pension schemes - 6,381
Legal and other operating exceptional
items (279) (1,926)
Net operating exceptional items (14,640) (19,804)
Mark to market of swaps and related debt (9,419) (2,191)
--------- ---------
Net exceptional items before taxation
(continuing operations) (24,059) (21,995)
Net exceptional items relating to discontinued
operations - 11,079
--------- ---------
Net exceptional items before taxation (24,059) (10,916)
Tax attributable to net exceptional items 710 -
--------- ---------
Net exceptional items after taxation (23,349) (10,916)
Non-controlling interest share of net (323) -
exceptional items after taxation
--------- ---------
Net exceptional items attributable to
owners of the Parent (23,672) (10,916)
--------- ---------
The analysis of the net operating exceptional items is as
follows:
2016 2015
GBP'000 GBP'000
Exceptional operating income 13,829 7,914
Exceptional operating expense (28,469) (27,718)
--------- -----------------
(14,640) (19,804)
--------- -----------------
The Group has focused on the efficiency of its operational
infrastructures and sales platforms, particularly in areas where it
has been acquisitive in recent years. The Group incurred an
exceptional charge of GBP16.517 million in relation to the related
restructuring of existing and acquired businesses.
Most of the Group's debt has been raised in the US Private
Placement market and swapped, using long term interest, currency
and cross currency interest rate derivatives, to both fixed and
floating rate sterling and euro. The level of ineffectiveness
calculated under IAS 39 on the fair value and cash flow hedge
relationships relating to fixed rate debt, together with gains or
losses arising from marking to market swaps not designated as
hedges, offset by foreign exchange translation gains or losses on
the related fixed rate debt, is charged or credited as an
exceptional item. In the year ended 31 March 2016, this amounted to
an exceptional non-cash charge of GBP9.419 million. Cumulatively,
the net exceptional charges taken in respect of the Group's
outstanding US Private Placement debt and related hedging
instruments is GBP15.0 million. These cumulative charges, or any
subsequent similar non-cash charges will, through future net
credits, reverse and net to zero over the remaining term of this
debt and related hedging instruments.
Acquisition costs, which include the professional and tax costs
(such as stamp duty) relating to the evaluation and completion of
acquisition opportunities, amounted to GBP7.478 million and reflect
the significant level of acquisition activity undertaken by the
Group.
The balance of the exceptional items relates to a gain arising
from the write back of contingent acquisition consideration due to
movements in the fair value of the underlying amounts payable
(GBP6.290 million) and a net gain on legal claims (GBP4.291
million), primarily due to a final cash recovery in respect of the
Pihsiang legal claim.
There was a net tax credit of GBP0.710 million and a
non-controlling interest charge of GBP0.323 million in relation to
the above net exceptional charges.
6. Earnings per Ordinary Share
Continuing Discontinued
operations operations Total
2016 2015 2015 2015
GBP'000 GBP'000 GBP'000 GBP'000
Profit attributable to
owners of the Parent 178,031 128,664 15,763 144,427
Amortisation of intangible
assets after tax 24,201 19,171 1,166 20,337
Exceptionals after tax
(note 5) 23,672 21,995 (11,079) 10,916
--------- ------------------- ------------------- -----------
Adjusted profit after taxation
and non-controlling interests 225,904 169,830 5,850 175,680
--------- ------------------- ------------------- -----------
Basic earnings per ordinary Continuing Discontinued
share
Total operations operations Total
2016 2015 2015 2015
pence pence pence pence
Basic earnings per ordinary
share 202.64p 153.20p 18.77p 171.97p
Amortisation of intangible
assets after tax 27.55p 22.83p 1.39p 24.22p
Exceptionals after tax 26.95p 26.19p (13.19p) 13.00p
--------- ------------------- ------------------- -----------
Adjusted basic earnings per
ordinary
share 257.14p 202.22p 6.97p 209.19p
--------- ------------------- ------------------- -----------
Weighted average number of ordinary
shares
in issue (thousands) 87,854 83,983
--------- -----------
Basic earnings per share is calculated by dividing the profit
attributable to owners of the Parent by the weighted average number
of ordinary shares in issue during the year, excluding ordinary
shares purchased by the Company and held as treasury shares. The
adjusted figures for basic earnings per ordinary share (a non-GAAP
financial measure) are intended to demonstrate the results of the
Group after eliminating the impact of amortisation of intangible
assets and net exceptionals.
Diluted earnings per Continuing Discontinued
ordinary share
Total operations operations Total
2016 2015 2015 2015
pence pence pence pence
Diluted earnings per
ordinary share 201.02p 152.10p 18.63p 170.73p
Amortisation of intangible
assets after tax 27.32p 22.66p 1.38p 24.04p
Exceptionals after tax 26.73p 26.00p (13.10p) 12.90p
----------- ------------- --------------- ----------------
Adjusted diluted earnings per
ordinary share 255.07p 200.76p 6.91p 207.67p
----------- ------------- --------------- ----------------
Weighted average number of ordinary shares
in issue (thousands) 88,564 84,594
----------- ----------------
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. Share options
and awards are the Company's only category of dilutive potential
ordinary shares.
Employee share options and awards, which are performance-based,
are treated as contingently issuable shares because their issue is
contingent upon satisfaction of specified performance conditions in
addition to the passage of time. These contingently issuable shares
are excluded from the computation of diluted earnings per ordinary
share where the conditions governing exercisability would not have
been satisfied as at the end of the reporting period if that were
the end of the vesting period.
The adjusted figures for diluted earnings per ordinary share are
intended to demonstrate the results of the Group after eliminating
the impact of amortisation of intangible assets and net
exceptionals.
The weighted average number of ordinary shares used in
calculating the diluted earnings per share for the year ended 31
March 2016 was 88.564 million (2015: 84.594 million). A
reconciliation of the weighted average number of ordinary shares
used for the purposes of calculating the diluted earnings per share
amounts is as follows:
2016 2015
'000 '000
Weighted average number of ordinary shares in
issue 87,854 83,983
Dilutive effect of options and awards 710 611
------ ------
Weighted average number of ordinary shares for
diluted earnings per share 88,564 84,594
------ ------
7. Dividends
2016 2015
GBP'000 GBP'000
Final - paid 55.81 pence per share
on 23 July 2015
(2015: paid 50.73 pence per share
on 24 July 2014) 50,646 41,927
Interim - paid 33.04 pence per
share on 7 December 2015
(2015: paid 28.73 pence per
share on 28 November 2014) 30,292 24,123
80,938 66,050
------------------- --------
The Directors are proposing a final dividend in respect of the
year ended 31 March 2016 of 64.18 pence per ordinary share
(GBP56.816 million). This proposed dividend is subject to approval
by the shareholders at the Annual General Meeting.
8. Other Reserves
For the year ended 31 March
2016
Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2015 12,756 (10,462) 32,683 932 35,909
Currency translation - - 35,706 - 35,706
Movements relating to cash
flow hedges - 2,230 - - 2,230
Movement in deferred tax liability
on cash flow hedges - 120 - - 120
Transfer to non-controlling
interests - - 2,498 - 2,498
Share based payment 2,198 - - - 2,198
At 31 March 2016 14,954 (8,112) 70,887 932 78,661
------------------- --------- ----------------------- -------- ---------
For the year ended 31 March
2015
Foreign
Share Cash flow currency
based
payment hedge translation Other
reserve reserve reserve reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2014 10,630 (3,844) 49,822 932 57,540
Currency translation:
- arising in the year - - (14,418) - (14,418)
- recycled to the Income Statement
on disposal of
subsidiary - - (2,721) - (2,721)
Movements relating to cash
flow hedges - (6,942) - - (6,942)
Movement in deferred tax liability
on cash flow hedges - 324 - - 324
Share based payment 2,126 - - - 2,126
At 31 March 2015 12,756 (10,462) 32,683 932 35,909
------------------- --------- ----------------------- -------- ---------
9. Analysis of Net (Debt)/Cash
2016 2015
GBP'000 GBP'000
Non-current assets:
Derivative financial instruments 209,518 233,150
------------ --------------------
Current assets:
Derivative financial instruments 15,915 5,395
Cash and cash equivalents 1,182,034 1,260,942
------------ --------------------
1,197,949 1,266,337
------------ --------------------
Non-current liabilities:
Finance leases (127) (213)
Derivative financial instruments (343) (92)
Unsecured Notes (1,260,294) (1,314,173)
------------ --------------------
(1,260,764) (1,314,478)
------------ --------------------
Current liabilities:
Bank borrowings (91,997) (133,629)
Finance leases (379) (357)
Derivative financial instruments (8,401) (7,902)
Unsecured Notes (100,428) (15,486)
------------ --------------------
(201,205) (157,374)
------------ --------------------
Net (debt)/cash excluding cash attributable
to assets held for sale (54,502) 27,635
Cash and short term deposits attributable
to assets held for sale - 2,352
------------ --------------------
Net (debt)/cash including cash attributable
to assets held for sale (54,502) 29,987
------------ --------------------
10. Post Employment Benefit Obligations
The Group's defined benefit pension schemes' assets were
measured at fair value at 31 March 2016. The defined benefit
pension schemes' liabilities at 31 March 2016 were updated to
reflect material movements in underlying assumptions.
The net deficit on the Group's post employment benefit
obligations decreased from GBP10.230 million at 31 March 2015 to
GBP0.347 million at 31 March 2016. The decrease in the deficit was
primarily driven by an actuarial gain on liabilities which arose
from an increase in the discount rate used to value these
liabilities together with contributions in excess of the current
service cost.
11. Business Combinations
A key strategy of the Group is to create and sustain market
leadership positions through acquisitions in markets it currently
operates in, together with extending the Group's footprint into new
geographic markets. In line with this strategy, the principal
acquisitions completed by the Group during the year, together with
percentages acquired were as follows:
-- the acquisition in May 2015 of 100% of Computers Unlimited, a
consumer technology distributor operating primarily in the UK but
also with operations in France and Spain;
-- the acquisition of 100% of the assets that comprise Esso's
unmanned and motorway retail petrol station network in France
('Esso Retail France'), completed in June 2015;
-- the combination of the Group's Danish oil distribution
business with the fuel distribution activities of DLG, a leading
Danish agricultural business. The transaction, which completed in
July 2015, resulted in DCC Energy owning 60% of the enlarged
business;
-- the acquisition in September 2015 of 100% of Design Plus
(Holdings) Ltd, a market leader in sachet filling in Britain;
-- the acquisition in October 2015 of 100% of CUC Groupe, a
cabling and connectors distribution business headquartered near
Paris with operations in France and Germany; and
-- the consideration for the acquisition of 100% of Butagaz
S.A.S. ('Butagaz'), a leading liquefied petroleum gas business in
France, was paid on 2 November 2015.
The carrying amounts of the assets and liabilities acquired
(excluding net cash/debt acquired), determined in accordance with
IFRS before completion of the business combinations, together with
the fair value adjustments made to those carrying values were as
follows:
Esso Retail
Butagaz France Others Total
2016 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 119,801 78,583 6,221 204,605
Intangible assets - other intangible
assets 264,881 16,561 16,572 298,014
Equity accounted investments 15,292 - - 15,292
Deferred income tax assets 11,383 - 222 11,605
--------- ----------- -------- ---------
Total non-current assets 411,357 95,144 23,015 529,516
--------- ----------- -------- ---------
Current assets
Inventories 10,034 19,932 22,373 52,339
Trade and other receivables 69,919 1,211 26,774 97,904
--------- ----------- -------- ---------
Total current assets 79,953 21,143 49,147 150,243
--------- ----------- -------- ---------
Liabilities
Non-current liabilities
Deferred income tax liabilities (90,947) (5,702) (4,525) (101,174)
Provisions for liabilities (150,865) (18,611) (418) (169,894)
Government grants - - (46) (46)
Total non-current liabilities (241,812) (24,313) (4,989) (271,114)
--------- ----------- -------- ---------
Current liabilities
Trade and other payables (50,697) (17,254) (27,472) (95,423)
Provisions for liabilities (18,604) - - (18,604)
Current income tax liability (18,318) - (401) (18,719)
--------- ----------- --------
Total current liabilities (87,619) (17,254) (27,873) (132,746)
--------- ----------- -------- ---------
Identifiable net assets acquired 161,879 74,720 39,300 275,899
Non-controlling interest arising
on acquisition - - (21,311) (21,311)
Other reserve movements arising
on acquisition - - 2,503 2,503
Intangible assets - goodwill 157,527 14,457 42,486 214,470
--------- ----------- -------- ---------
Total consideration 319,406 89,177 62,978 471,561
--------- ----------- -------- ---------
Satisfied by:
Cash 339,660 95,362 65,470 500,492
Cash and cash equivalents acquired (91,125) (14,602) (4,723) (110,450)
--------- ----------- -------- ---------
Net cash outflow 248,535 80,760 60,747 390,042
Acquisition related liabilities 70,871 8,417 2,231 81,519
--------- ----------- -------- ---------
Total consideration 319,406 89,177 62,978 471,561
--------- ----------- -------- ---------
The acquisitions of Butagaz and Esso Retail France have been
deemed to be substantial transactions and separate disclosure of
the fair values of the identifiable assets and liabilities has
therefore been made. None of the remaining business combinations
completed during the year were considered sufficiently material to
warrant separate disclosure of the fair values attributable to
those combinations. The carrying amounts of the assets and
liabilities acquired, determined in accordance with IFRS, before
completion of the combination together with the adjustments made to
those carrying values disclosed above were as follows:
Book Fair value Fair
value adjustments value
Butagaz GBP'000 GBP'000 GBP'000
Non-current assets (excluding goodwill) 301,336 110,021 411,357
Current assets 82,873 (2,920) 79,953
Non-current liabilities (202,385) (39,427) (241,812)
Current liabilities (81,732) (5,887) (87,619)
--------- ----------- ---------
Identifiable net assets acquired 100,092 61,787 161,879
Goodwill arising on acquisition 219,314 (61,787) 157,527
--------- ----------- ---------
Total consideration 319,406 - 319,406
--------- ----------- ---------
Book Fair value Fair
value adjustments value
Esso Retail France GBP'000 GBP'000 GBP'000
Non-current assets (excluding goodwill) 80,343 14,801 95,144
Current assets 21,430 (287) 21,143
Non-current liabilities (18,611) (5,702) (24,313)
Current liabilities (17,254) - (17,254)
-------- ----------- --------
Identifiable net assets acquired 65,908 8,812 74,720
Goodwill arising on acquisition 23,269 (8,812) 14,457
-------- ----------- --------
Total consideration 89,177 - 89,177
-------- ----------- --------
Book Fair value Fair
value adjustments value
Others GBP'000 GBP'000 GBP'000
Non-current assets (excluding goodwill) 6,443 16,572 23,015
Current assets 49,293 (146) 49,147
Non-current liabilities (788) (4,201) (4,989)
Current liabilities (27,463) (410) (27,873)
-------- ----------- --------
Identifiable net assets acquired 27,485 11,815 39,300
Non-controlling interest and related reserve
movement (18,808) - (18,808)
Goodwill arising on acquisition 54,301 (11,815) 42,486
-------- ----------- --------
Total consideration 62,978 - 62,978
-------- ----------- --------
Book Fair value Fair
value adjustments value
Total GBP'000 GBP'000 GBP'000
Non-current assets (excluding goodwill) 388,122 141,394 529,516
Current assets 153,596 (3,353) 150,243
Non-current liabilities (221,784) (49,330) (271,114)
Current liabilities (126,449) (6,297) (132,746)
--------- ----------- ---------
Identifiable net assets acquired 193,485 82,414 275,899
Non-controlling interest and related reserve
movement (18,808) - (18,808)
Goodwill arising on acquisition 296,884 (82,414) 214,470
--------- ----------- ---------
Total consideration 471,561 - 471,561
--------- ----------- ---------
The initial assignment of fair values to identifiable net assets
acquired has been performed on a provisional basis in respect of a
number of the business combinations above given the timing of
closure of these transactions. Any amendments to these fair values
within the twelve month timeframe from the date of acquisition will
be disclosable in the 2017 Annual Report as stipulated by IFRS
3.
The principal factors contributing to the recognition of
goodwill on business combinations entered into by the Group are the
expected profitability of the acquired business and the realisation
of cost savings and synergies with existing Group entities.
GBP26.566 million of the goodwill recognised in respect of
acquisitions completed during the financial year is expected to be
deductible for tax purposes.
Acquisition related costs included in other operating expenses
in the Group Income Statement amounted to GBP7.478 million.
No contingent liabilities were recognised on the acquisitions
completed during the year or the prior financial years.
The gross contractual value of trade and other receivables as at
the respective dates of acquisition amounted to GBP100.127 million.
The fair value of these receivables is GBP97.904 million (all of
which is expected to be recoverable) and is inclusive of an
aggregate allowance for impairment of GBP2.223 million.
The fair value of contingent consideration recognised at the
date of acquisition is calculated by discounting the expected
future payment to present value at the acquisition date. In
general, for contingent consideration to become payable,
pre-defined profit thresholds must be exceeded. On an undiscounted
basis, the future payments for which the Group may be liable for
acquisitions completed during the year range from nil to GBP4.325
million.
There were no adjustments processed during the year to the fair
value of business combinations completed during the year ended 31
March 2015 where those fair values were not readily determinable as
at 31 March 2015.
The acquisitions during the year contributed GBP1,473.9 million
to revenues and GBP49.0 million to profit after tax and
non-controlling interests. Had all the business combinations
effected during the year occurred at the beginning of the year,
total Group revenue for the year ended 31 March 2016 would have
been GBP11,079.0 million and total Group profit after tax would be
GBP189.9 million.
12. Seasonality of Operations
The Group's operations are significantly second-half weighted
primarily due to a portion of the demand for DCC Energy's products
being weather dependent and seasonal buying patterns in DCC
Technology.
13. Related Party Transactions
There have been no related party transactions or changes in
related party transactions that could have a material impact on the
financial position or performance of the Group during the 2016
financial year.
14. Discontinued Operations
The Group's discontinued operations for the year ended 31 March
2015 comprise the results of the Group's former DCC Food &
Beverage segment. The conditions for the businesses disposed of to
be classified as discontinued operations were fulfilled in the
second half of the year ended 31 March 2015. The following table
details the results of discontinued operations included in the
prior year comparatives of the Group Income Statement:
2015
GBP'000
Revenue 143,360
-------
Operating profit before amortisation of intangible
assets and exceptional items 6,483
Amortisation of intangible assets (1,288)
-------
Operating profit before exceptional items 5,195
Net finance costs (194)
Share of equity accounted investments' profit
after tax 87
-------
Profit before exceptional items and tax 5,088
Exceptional items 2,865
Profit on disposal of discontinued operations 8,214
-------
Profit before tax 16,167
Income tax expense (404)
-------
Profit from discontinued operations after tax 15,763
-------
Assets and liabilities classified as held for sale at 31 March
2015 comprise the fair value of the assets and liabilities of
Bottle Green Limited (the remaining subsidiary of the Group's
former Food & Beverage division) which was sold on 28 April
2015.
There were no discontinued operations in the year ended 31 March
2016.
15. Events after the Balance Sheet Date
There have been no material events subsequent to 31 March 2016
which would require adjustment to or disclosure in this report.
16. Board Approval
This report was approved by the Board of Directors of DCC plc on
16 May 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZMGMKRVMGVZM
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May 17, 2016 02:00 ET (06:00 GMT)
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