TIDMDCC
RNS Number : 3787W
DCC PLC
14 November 2017
14 November 2017
DCC Reports Strong First Half of Performance and Development
DCC, the leading international sales, marketing and support
services group, today announced its results for the six months
ended 30 September 2017.
Highlights 2017 2016 % change
------------------------------------ -------------- ----------- ---------
DCC LPG volumes (thousand tonnes1) 645.6kT 555.4kT +16.2%
------------------------------------ -------------- ----------- ---------
DCC Retail & Oil volumes (billion
litres) 6.011bn 5.581bn +7.7%
------------------------------------ -------------- ----------- ---------
Revenue - continuing2
(ex DCC LPG and DCC Retail &
Oil) GBP1.616bn GBP1.389bn +16.4%
------------------------------------ -------------- ----------- ---------
Adjusted operating profit3 -
continuing2 GBP122.5m GBP107.1m +14.4%
------------------------------------ -------------- ----------- ---------
Adjusted earnings per share3
- continuing2 95.5p 82.2p +16.1%
------------------------------------ -------------- ----------- ---------
Interim dividend 40.89p 37.17p +10.0%
------------------------------------ -------------- ----------- ---------
Operating cash flow GBP84.0m GBP141.0m
------------------------------------ -------------- ----------- ---------
Net debt GBP112.3m GBP112.2m
------------------------------------ -------------- ----------- ---------
-- Strong first half performance with Group adjusted operating
profit on continuing activities increasing by 14.4% (up 9.7% on a
constant currency basis) to GBP122.5 million, with all divisions
recording growth on the prior year.
-- Adjusted earnings per share on continuing activities up 16.1%
(11.5% ahead on a constant currency basis) to 95.5 pence.
-- Interim dividend increased by 10.0% to 40.89 pence per share.
-- The Group continues to be very active from a development
perspective. Recently, DCC Retail & Oil completed the
acquisition of Esso Retail Norway and DCC Technology completed the
acquisition of MTR. DCC LPG remains on schedule to complete the
acquisition of Shell Hong Kong & Macau before the end of the
financial year.
-- In addition, on 7 November 2017, DCC LPG announced its
agreement to acquire Retail West from NGL Energy Partners, for an
enterprise value of $200 million (GBP152 million). This will be DCC
LPG's first step into the very large US LPG market and is DCC's
first substantial acquisition in North America.
-- Reflecting the announced acquisition activity to date, the
Group's cash spend on acquisitions in the current financial year
will be approximately GBP550 million.
-- The Group reiterates its belief that the year ending 31 March
2018 will be another year of profit growth and development.
1 1 tonne of LPG equivalent to 1,969 litres of oil
2 Continuing operations exclude DCC Environmental which was disposed of in May 2017
3 Excluding net exceptionals and amortisation of intangible assets
Commenting on the results, Donal Murphy, Chief Executive,
said:
"I am pleased to report that the first half of the year has been
another very active and successful period for DCC. The business has
performed strongly, with each of our divisions recording good
growth, albeit in the seasonally less significant first half of the
year.
DCC continues to be very active on the development front. The
recent completion of the acquisitions of Esso Retail Norway and MTR
demonstrate the continuing opportunity for DCC to redeploy the
organic cash flow of the business into attractive acquisition
opportunities in each of its chosen sectors. In addition, the
recent announcement of the acquisition of Retail West marks another
important milestone for the Group and will provide DCC with a
substantial, high-quality, LPG footprint in the very large North
American LPG market.
The Group continues to have the ambition and capacity for
further development and, importantly, as DCC increases in scale and
geographic reach, also has the opportunity to build substantial
market positions in its chosen sectors.
The Group reiterates its belief that the year ending 31 March
2018 will be another year of profit growth and development."
Presentation of results and dial-in / webcast facility
There will be a presentation of these results to analysts and
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) 20 3427 1907
Passcode: 3489165
Webcast Link: https://edge.media-server.com/m6/p/do8jgz5d
This report, the webcast of the presentation and further
information on DCC is available at www.dcc.ie.
For reference, please contact:
Donal Murphy, Chief Executive Tel: +353 1 2799 400
Fergal O'Dwyer, Chief Financial Officer Email: investorrelations@dcc.ie
Kevin Lucey, Head of Capital Markets Web: www.dcc.ie
For media enquiries: Powerscourt (Lisa Tel: +44 207 250 1446
Kavanagh)
Group Results
A summary of the Group's results for the six months ended 30
September 2017 is as follows:
2017 2016
GBP'm GBP'm % change
Revenue - continuing operations(1) 6,449 5,507 +17.1%
Adjusted operating profit(2) - continuing
operations(1)
DCC LPG 44.1 37.0 +19.2%
DCC Retail & Oil 42.2 39.0 +8.0%
DCC Healthcare 22.0 19.8 +11.6%
DCC Technology 14.2 11.3 +25.8%
Group adjusted operating profit(2) -
continuing operations(1) 122.5 107.1 +14.4%
Finance costs (net) and other (15.6) (16.3)
Profit before net exceptionals, amortisation
of intangible assets and tax 106.9 90.8 +17.8%
Net exceptional items before tax 16.6 (2.5)
Amortisation of intangible assets (20.5) (18.2)
Profit before tax 103.0 70.1 +46.9%
Taxation (13.2) (11.2)
Profit after tax 89.8 58.9 +52.5%
Profit after tax - discontinued operations 0.8 8.7
Non-controlling interests (1.9) (2.0)
Attributable profit 88.7 65.6
Adjusted earnings per share(2) -
continuing(1) 95.5 pence 82.2 pence +16.1%
Adjusted earnings per share(2) 96.4 pence 92.1 pence
Dividend per share 40.89 pence 37.17 pence +10.0%
Operating cash flow 84.0 141.0
Net debt at 30 September 112.3 112.2
(1) Continuing operations excludes DCC Environmental which was disposed of in May 2017
(2) Excluding net exceptionals and amortisation of intangible assets
Revenue - continuing operations
Overall, Group revenue increased by 17.1% (13.2% ahead on a
constant currency basis) to GBP6.4 billion.
Volumes in DCC LPG increased by 16.2% to 645,600 tonnes, driven
principally by the acquisition of Gaz Européen which completed
during the prior year. On a like-for-like basis, volumes were
modestly ahead of the prior year, with good growth in Britain and
Ireland. Reflecting acquisitions and the increased cost of product,
DCC LPG's revenue increased by 36.5% (up 28.7% on a constant
currency basis).
DCC Retail & Oil volumes increased by 7.7% to 6.0 billion
litres, benefiting from the acquisition of Dansk Fuels which
completed in November 2016. Organic volumes were in line with the
prior year. Reflecting higher oil prices, DCC Retail & Oil's
revenue increased by 15.5% (up 11.5% on a constant currency
basis).
Revenue excluding DCC LPG and DCC Retail & Oil increased by
16.4% (up 13.7% on a constant currency basis) to GBP1.6
billion.
Group adjusted operating profit - continuing operations
Group adjusted operating profit from continuing operations
increased by 14.4% to GBP122.5 million (9.7% ahead on a constant
currency basis), in the seasonally less significant first half. The
average sterling/euro translation rate for the six months ended 30
September 2017 of 1.1391 was 7.9% weaker than the average of 1.2364
in the comparative period. Substantially all of the constant
currency operating profit growth was organic.
Operating profit in DCC LPG was 19.2% ahead of the prior year
(11.5% ahead on a constant currency basis), despite the headwind of
an increasing cost of product and colder weather conditions in the
early part of the prior year, with strong profit growth in France
and good performances in Britain, Ireland and Scandinavia.
Operating profit in DCC Retail & Oil was 8.0% ahead of the
prior year (2.9% ahead on a constant currency basis), reflecting
good organic profit growth from the oil distribution businesses in
Denmark and Austria, and the retail and fuel card businesses also
performing in line with expectations.
Operating profit in DCC Healthcare was 11.6% ahead of the prior
year (10.9% ahead on a constant currency basis) and approximately
one third of the constant currency growth was organic. DCC Vital
benefited from a good performance in medical devices and also from
the acquisition of Medisource, which completed in January 2017. DCC
Health & Beauty Solutions again recorded very strong growth in
nutritional products.
Operating profit in DCC Technology increased by 25.8% (24.9%
ahead on a constant currency basis) in the seasonally less
significant first half. The UK and Ireland business performed in
line with expectations and benefited from the acquisition of
Hammer, which completed in December 2016, and also benefited
modestly from the acquisition of MTR in July 2017.
Finance costs (net)
Net finance costs decreased to GBP15.6 million (2016: GBP16.3
million), benefiting modestly from positive currency translation.
The underlying finance costs of the Group are largely driven by the
level of the Group's gross private placement debt, which was
broadly in line with the prior year during the first half. In
September 2017, the Group successfully completed the drawdown of a
new GBP450 million private placement debt issuance which will
result in an increase in the Group's gross debt for the second half
of the year. Average net debt during the first half was GBP313
million compared to GBP262 million during the six months ended 30
September 2016.
Profit before net exceptional items, amortisation of intangible
assets and tax
Profit before net exceptional items, amortisation of intangible
assets and tax increased by 17.8% (13.0% ahead on a constant
currency basis) to GBP106.9 million.
Net exceptional items and amortisation of intangible assets
The Group recorded a net exceptional gain before tax and
non-controlling interests of GBP16.6 million in the first six
months of the year.
The net gain principally reflects the exceptional gain of
approximately GBP30 million recorded on the sale of DCC's
environmental division which completed on 31 May 2017, offset by
acquisition and restructuring costs.
Acquisition costs include the professional fees and tax costs
(such as stamp duty) relating to the evaluation and completion of
acquisition opportunities and amounted to GBP3.5 million.
Restructuring costs amounted to GBP9.7 million and were principally
incurred in the restructuring and integration work following the
acquisition of Dansk Fuels and also the commissioning of the new
national distribution centre in DCC Technology's UK business.
The charge for the amortisation of acquisition related
intangible assets increased to GBP20.5 million from GBP18.2 million
in the prior year, with the increase principally reflecting
acquisitions completed in the prior year.
Profit before tax
Profit before tax increased by 46.9% to GBP103.0 million.
Taxation
The effective tax rate for the Group in the first half of the
year of 18.0% is based on the anticipated mix of profits for the
full year. This rate compares to a full year effective tax rate in
the prior year of 17.5%. The increase is primarily due to an
increase in the proportion of profits generated in Continental
Europe.
Discontinued operations
The Group's discontinued operations represent the activities of
DCC Environmental which was disposed of in May 2017.
Adjusted earnings per share
Adjusted earnings per share on a continuing basis increased by
16.1% (11.5% ahead on a constant currency basis) to 95.5 pence.
Total adjusted earnings per share increased by 4.6% (0.6% ahead
on a constant currency basis) to 96.4 pence.
Dividend
The Board has decided to pay an interim dividend of 40.89 pence
per share, which represents a 10% increase on the prior year
interim dividend of 37.17 pence per share. This dividend will be
paid on 11 December 2017 to shareholders on the register at the
close of business on 24 November 2017.
Cash flow
As with its operating profit, the Group's operating cash flow is
significantly weighted towards the second half of the year. The
cash flow of the Group for the six months ended 30 September 2017
can be summarised as follows:
Six months ended 30 September 2017 2016
GBP'm GBP'm
Adjusted operating profit 123.5 117.8
Increase in working capital (79.8) (17.0)
Depreciation and other 40.3 40.2
Operating cash flow 84.0 141.0
Capital expenditure (net) (69.1) (59.8)
Free cash flow 14.9 81.2
Net interest, tax paid and other (48.0) (42.1)
Free cash flow after interest and tax (33.1) 39.1
Acquisitions (56.3) (32.8)
Disposals 160.0 -
Dividends (66.4) (55.7)
Dividends paid to non-controlling interests - (5.1)
Exceptional items (net) (15.2) (8.8)
Share issues 3.3 2.1
Net outflow (7.7) (61.2)
Opening net debt (121.9) (54.5)
Translation and other 17.3 3.5
Closing net debt (112.3) (112.2)
Operating cash flow in the six months ended 30 September 2017 of
GBP84.0 million compares to GBP141.0 million in the prior year.
Working capital increased by GBP79.8 million over the six month
period from 31 March 2017, reflecting seasonal requirements,
although on a like-for-like basis the value of working capital at
30 September 2017 at negative GBP70 million was broadly similar to
that at 30 September 2016. Overall working capital days at 30
September 2017 increased to negative 1.7 days sales from negative
2.9 days sales in the prior year, reflecting the acquisitions
completed in the second half of the prior year of Gaz Européen,
Dansk Fuels and Hammer, each of which have a positive working
capital days profile.
Committed acquisitions, disposal and capital expenditure
Committed acquisition and continuing capital expenditure in the
current period amounted to GBP248.0 million as follows:
Acquisitions Capex Total
GBP'm GBP'm GBP'm
DCC LPG 152.6 27.9 180.5
DCC Retail & Oil 7.7 25.5 33.2
DCC Healthcare - 2.6 2.6
DCC Technology 19.9 11.8 31.7
Total 180.2 67.8 248.0
------------------ ------------------- ----------- -----------------
Acquisition activity
Committed acquisition expenditure amounted to GBP180.2 million
and included:
DCC LPG
Retail West
On 7 November 2017, DCC LPG announced that it had reached
agreement with NGL Energy Partners LP ("NGL") to acquire its Retail
West LPG division, Hicksgas LLC ("Retail West" or "the business"),
based on an enterprise value of US$200 million (c. GBP152
million).
The acquisition represents DCC LPG's entry into the US market
and is a further significant step in DCC's strategy to build a
global LPG business over time. The US is one of the world's largest
LPG markets and is an attractive and growing market. It is also
highly fragmented, with over 4,000 LPG distribution businesses
operating in the market. The acquisition of Retail West will
provide DCC with a substantial, high-quality presence in the US
with leading market positions in a number of states. The business
has an excellent customer base, a strong and well-invested
operational infrastructure and an experienced management team.
The transaction is expected to complete on 31 March 2018,
following receipt of customary regulatory consents and separation
from NGL.
Headquartered in Illinois, Retail West has been in business for
over 70 years and currently employs 390 people. It sells
approximately 130,000 tonnes(4) of LPG annually from 43 customer
service locations and 58 satellite facilities. The business trades
under three prominent regional brands, Hicksgas, Pacer Propane and
Propane Central, and a number of smaller, local brands. Retail West
has leading market positions in Illinois, Indiana and Kansas and
also operates in seven other states across the Mid-West and
North-West regions.
The business has a long-established and loyal base of 65,000
customers. Approximately two thirds of annual volume is sold to
residential customers, predominantly for heating purposes, with the
balance sold to commercial and agricultural customers in both small
and large bulk format.
Retail West has a well-invested asset base of approximately 100
bulk storage facilities and a company-owned distribution fleet of
over 150 vehicles. Retail West also owns the majority of tanks on
customer premises.
The business has an experienced and long-serving management team
who have a strong track record of delivering both organic and
acquisition growth. It has operated as a standalone division within
NGL and will continue to operate and develop under the leadership
of its existing management team, post completion of the
acquisition.
Retail West is expected to initially deliver an annual EBITDA of
approximately $28(5) million (GBP21 million) and EBITA of $20(5)
million (GBP15 million). The acquisition will be earnings accretive
from completion and the after tax cash payback will be
approximately 10 years. The business is very well placed to
continue its track record of profitable organic growth and also
provides a base for synergistic acquisition activity, both of which
would further enhance returns.
4, 5 Assuming normal winter weather conditions
DCC Technology
MTR
In July 2017, DCC Technology acquired MTR Group Ltd ("MTR"), a
fast growing UK based provider of second lifecycle solutions for
mobile and tablet devices.
Based in Harlow, Essex and employing 60 people, MTR provides a
broad range of services to retailers, mobile handset manufacturers
and insurance companies to source and refurbish mobile phones and
tablets for resale to customers in the UK and abroad. In the year
ended 30 November 2016, MTR generated service revenues of GBP11
million. The acquisition of MTR advances the DCC Technology
strategy of expanding its service proposition to vendors and
customers and provides access to the high growth second lifecycle
solutions market.
The following acquisition, announced in the prior year, was
completed after the balance sheet date:
DCC Retail & Oil
Esso Retail Norway
On 25 October 2017, DCC Retail & Oil completed the
acquisition of Esso Retail Norway. The acquisition is another
significant step for DCC in building its retail petrol station
business in Europe. The national network sells c. 600 million
litres of fuel annually and is the third largest in Norway with
approximately 20% of retail volumes. It comprises 142
company-operated sites (127 retail service stations and 15 unmanned
stations) and has contracts to supply 108 Esso-branded dealer owned
stations. The total consideration was approximately NOK 2.43
billion (c. GBP235 million), plus the value of stock in tank at the
date of acquisition, and was paid in cash on completion. The
acquired business, which is substantially asset backed, is expected
to generate a return on invested capital employed of approximately
15% in the first full year of ownership.
Full details of the acquisition were set out in DCC's Stock
Exchange announcement of 7 February 2017.
Total cash spend on acquisitions in the six months ended 30
September 2017
The total cash spend on acquisitions in the six months ended 30
September 2017 was GBP56.3 million. This included the payment of
deferred and contingent acquisition consideration previously
provided of GBP12.0 million, pre-completion deposits in respect of
both Esso Norway and Shell Hong Kong & Macau, the acquisition
of MTR and the completion of a number of small acquisitions.
Disposal
DCC Environmental
On 31 May 2017, DCC completed the disposal of its Environmental
division for an enterprise value of GBP219 million, on a debt-free,
cash-free basis. The Environmental division, which is active in the
treatment and recycling of non-hazardous and hazardous waste in
Britain and Ireland, comprises the British businesses, William
Tracey Group, Oakwood Fuels and Wastecycle, and Enva in
Ireland.
Full details of the disposal were set out in DCC's Stock
Exchange announcement of 5 April 2017.
Capital expenditure
Net capital expenditure for the six months of GBP69.1 million
(2016: GBP59.8 million) compares to a depreciation charge of
GBP44.3 million (2016: GBP42.9 million). Net capital expenditure on
a continuing basis was GBP67.8 million.
The increase in net capital expenditure over the prior year
principally reflects the increased scale of the Group and also
increased investment by DCC Retail & Oil in the organic
development of its retail site footprint and upgrading of its
existing network.
The construction of DCC Technology's new, purpose built, 450,000
sq.ft. UK national distribution centre in the north of England is
now complete. The facility has been commissioned and the relocation
from the existing warehouses, which is taking place on a staged
basis, has begun, with a number of the existing facilities now
closed. The relocation will be completed during the next financial
year. The related upgrade of the business' technology platform is
ongoing and is being completed on a phased basis.
Financial strength
An integral part of the Group's strategy is the maintenance of a
strong and liquid balance sheet to enable it to take advantage of
development opportunities as they arise. At 30 September 2017, the
Group had net debt of GBP112 million, total equity of GBP1.6
billion, cash resources, net of overdrafts, of GBP1.4 billion and a
further GBP400 million of undrawn committed debt facilities. The
Group's outstanding term debt at 30 September 2017 had an average
maturity of 6.8 years. Substantially all of the Group's debt has
been raised in the US private placement market with an average
credit margin of 1.61% over floating Euribor/Libor.
Management and organisational changes
As set out in DCC's Stock Exchange announcement of 5 April 2017,
Donal Murphy was appointed as Chief Executive of the Group on 14
July 2017.
DCC is now reporting its LPG and Retail & Oil businesses as
separate divisions, consistent with the revised management and
organisational structure of the Group. Henry Cubbon, who previously
led DCC's LPG business, continues to lead the business as
Divisional Managing Director. Eddie O'Brien, previously Managing
Director of DCC's Retail and Fuelcard activities, has assumed
responsibility for all Retail & Oil activities. The four
divisional Managing Directors, of LPG, Retail & Oil, Healthcare
and Technology, report to the Chief Executive.
Outlook
The Group reiterates its belief that the year ending 31 March
2018 will be another year of profit growth and development.
Performance Review - Divisional Analysis
DCC LPG 2017 2016 % change
---------------------------- ----------- ----------- ---------
Volumes (tonnes) (6) 645.6kT 555.4kT +16.2%
---------------------------- ----------- ----------- ---------
Revenue GBP502.0m GBP367.9m +36.5%
---------------------------- ----------- ----------- ---------
Operating profit GBP44.1m GBP37.0m +19.2%
---------------------------- ----------- ----------- ---------
Operating profit per tonne GBP68.30 GBP66.61
---------------------------- ----------- ----------- ---------
DCC LPG delivered strong organic growth in the first half of the
year with operating profit increasing by 19.2% to GBP44.1 million
(11.5% ahead on a constant currency basis), modestly ahead of
expectations.
DCC LPG sold 645,600 tonnes of product, an increase of 16.2%
over the prior year, largely driven by the acquisition of Gaz
Européen in the second half of the prior year. On a like-for-like
basis, volumes were modestly ahead of the prior year. During the
first half of the year, DCC LPG grew its operations in the natural
gas sector, as evidenced by the recent launch of a consumer natural
gas offering in France, and continues to invest in oil to LPG
conversions across industrial and commercial customer sectors.
The business in France performed strongly during the first half
of the year, delivering modest organic volume growth. Despite the
headwind of a rising cost of product and the anticipated seasonal
impact of natural gas storage and transmission costs, the business
generated strong operating profit growth due to good procurement
and operational cost control. Gaz Européen, which provides natural
gas to energy management companies, collective housing and public
and service sector customers, and was acquired in January 2017,
performed in line with expectations. The French business has also
recently launched a consumer natural gas and electricity business,
utilising Gaz Européen's operating platform and leveraging the
strength of Butagaz's leading gas brand position.
Both the British and Irish businesses performed in line with
expectations during the first half and delivered good organic
volume growth. In Ireland, the business has continued to develop
its natural gas and electricity offering. In Britain, the business
benefited from its continuing focus on the conversion of industrial
and commercial users of oil to LPG. Although more modest, the
business in Scandinavia also achieved good operating profit
growth.
Since the announcement of the agreement to acquire Shell's LPG
business in Hong Kong & Macau in April 2017, the carve-out,
integration planning and completion process has been progressing to
plan. The acquisition is expected to complete by the end of the
current financial year.
On 7 November 2017, DCC LPG announced its agreement to acquire
Retail West, a substantial LPG business operating in the Mid-West
and North-West states of the US. The business has an excellent
customer base and operational infrastructure and will provide DCC
LPG with a material footprint in the very large US energy market.
The acquisition is expected to complete on 31 March 2018.
Following the completion of the acquisitions of Shell Hong Kong
& Macau and Retail West, DCC LPG will operate in nine countries
and is well positioned to continue its expansion in both current
and new geographies.
6 1 tonne of LPG equivalent to 1,969 litres of oil
DCC Retail & Oil 2017 2016 % change
---------------------------- ------------- ------------- ---------
Volumes (litres) 6.011bn 5.581bn +7.7%
---------------------------- ------------- ------------- ---------
Revenue GBP4,331.6m GBP3,750.9m +15.5%
---------------------------- ------------- ------------- ---------
Operating profit GBP42.2m GBP39.0m +8.0%
---------------------------- ------------- ------------- ---------
Operating profit per litre 0.70 ppl 0.70 ppl
---------------------------- ------------- ------------- ---------
DCC Retail & Oil recorded a good performance in the first
half of the financial year, generating profit growth of 8.0% (2.9%
ahead on a constant currency basis), in what was a very active
development period for the business. DCC Retail & Oil completed
both the acquisition and integration of Esso Retail Norway and also
completed the restructuring and full integration of Dansk Fuels
into its existing operations.
The volume growth of 7.7% was driven by the acquisition of Dansk
Fuels, which completed in November 2016. Organically, volumes were
in line with the prior year, notwithstanding the relatively colder
weather conditions that prevailed in the prior year.
In Britain, the business performed well, with good growth in
commercial volumes offsetting lower heating volume demand. In the
oil distribution market, the business continues to make good
progress in expanding its activities into adjacent areas, such as
lubricants and aviation. The business has ambitions to develop a
substantial unmanned retail network and continues this investment,
opening eight new sites during the first half of the year, with a
pipeline of further sites under consideration. The Fuel Card
business continued to perform strongly and grow its market
share.
In Continental Europe, the Danish business delivered strong
profit growth. Following the acquisition of Dansk Fuels in November
2016, the business has now been fully integrated into DCC Retail
& Oil's existing operations in Denmark and Drogheda, Ireland.
The Danish business now has leading market positions across the
domestic, agricultural, commercial and aviation markets, in
addition to operating 148 retail sites under the Shell brand. In
France, where DCC operates approximately 320 retail sites under the
Esso brand, the business continued to invest in upgrading its sites
and customer proposition and performed well in a more competitive
market. Although more modest, both the Swedish and Austrian
businesses performed strongly during the first half, delivering
volume and profit growth.
In February 2017, DCC announced its agreement to acquire Esso's
retail petrol station network in Norway. The national network sells
c. 600 million litres of fuel annually and is the third largest in
Norway with approximately 20% of retail volumes. It comprises 142
company-operated sites (127 retail service stations and 15 unmanned
stations) and has contracts to supply 108 Esso-branded dealer owned
stations. With the completion of the integration required to carve
the network out of Exxon's global retail infrastructure, the
transaction completed, ahead of schedule, in October 2017.
Following the acquisition of Esso Retail Norway, DCC Retail
& Oil now has substantial market positions across eight
countries in Europe. In addition to its oil distribution and fuel
card activities, DCC Retail & Oil has grown its retail
footprint substantially in recent years and now operates a network
of approximately 1,000 retail sites and supplies an additional
2,000 dealer-owned stations.
DCC Healthcare 2017 2016 % change
------------------ ---------- ---------- ---------
Revenue GBP245.0m GBP244.3m +0.3%
------------------ ---------- ---------- ---------
Operating profit GBP22.0m GBP19.8m +11.6%
------------------ ---------- ---------- ---------
Operating margin 9.0% 8.1%
------------------ ---------- ---------- ---------
DCC Healthcare recorded a strong performance in the first half
of the year generating operating profit growth of 11.6% (10.9%
ahead on a constant currency basis), with approximately one third
of the constant currency operating profit growth being organic. The
business benefited from the acquisition of Medisource in the prior
year and continued its track record of strong organic profit growth
in the medical device and nutrition sectors.
DCC Vital, which is focused on the sales and marketing of
medical devices and pharmaceuticals to healthcare providers in
Britain and Ireland, achieved strong growth in operating profit. In
Ireland, the business generated strong growth in the supply of
medical devices to the Irish hospital and community care sectors
and also benefited from the acquisition of Medisource in January
2017, which has further expanded DCC Vital's product and service
offering in Ireland. In Britain, the business generated good growth
in the sales of medical consumables to the primary care sector
although the trading environment for DCC Vital's pharma activities
in Britain remains competitive, exacerbated by the fall in the
value of sterling in the prior year.
DCC Health & Beauty Solutions, which provides outsourced
solutions to international nutrition and beauty brand owners, again
recorded excellent organic growth in the nutrition sector. The
business delivered strong growth in sales to nutritional customers,
particularly soft gels, as it continued to benefit from its focus
on more complex product formulations and from increasing end-user
demand in Britain, Continental Europe and Asia. In the beauty
sector, the overall performance was held back somewhat by an
unfavourable sales mix and some destocking by customers, although
the business generated excellent growth in sachet filling,
including into the US market.
DCC Health & Beauty Solutions is progressing a number of
investment projects across its manufacturing activities which will
add new capacity and product capability over the second half of
this financial year and into next year, enhancing its ability to
meet the growing market demand for its services.
DCC Technology 2017 2016 % change
------------------ ----------- ----------- ---------
Revenue GBP1.371bn GBP1.144bn +19.8%
------------------ ----------- ----------- ---------
Operating profit GBP14.2m GBP11.3m +25.8%
------------------ ----------- ----------- ---------
Operating margin 1.0% 1.0%
------------------ ----------- ----------- ---------
DCC Technology achieved very strong operating profit growth of
25.8% (24.9% ahead on a constant currency basis), in the seasonally
less significant first half of the year. The very strong
performance was primarily driven by acquisitions completed in both
the current and prior years.
The UK and Ireland business performed very strongly and
benefited from good growth in key product areas, such as smart
home, enterprise and components, and from recent acquisitions.
Hammer, acquired in December 2016, has performed well since
acquisition and has significantly strengthened DCC Technology's
presence in the server, storage and related services markets. The
UK business has also enhanced its position in the audio visual
market through both the acquisition of Medium, completed in
December 2016, and the organic development of its vendor and
product portfolio, particularly in the education sector. The
business in Ireland achieved strong organic growth, driven by good
business development in the mobile and retail sectors and growth in
the sales of networking and security products.
DCC Technology continues to expand its service offering to
customers and vendors and the acquisition of MTR Group, completed
in July 2017, has significantly expanded the UK business' mobile
device refurbishment and managed services capability and the
business has performed well since acquisition. The new UK national
distribution centre in Lancashire, a further enabler of the
expansion in service offering, is now operational. The related
upgrade of the business' technology platform is ongoing and is
being completed on a phased basis.
In Continental Europe, the business in the Nordics generated
good organic growth, driven by continued growth in IT, audio visual
and entertainment products. In France, the French consumer products
business remains challenging, but the business addressing the
reseller and electrician markets performed well and is investing in
its audio visual proposition.
The Supply Chain Services business continues to invest in its
global service offering and achieved good organic profit growth as
it benefited from new contract wins and effective cost control.
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.
Principal risks and uncertainties
The Board of DCC is responsible for the Group's risk management
and internal control systems, which are designed to identify,
manage and mitigate potential material risks to the achievement of
the Group's strategic and business objectives. The Board has
approved a Risk Management Policy which sets out delegated
responsibilities and procedures for the management of risk across
the Group.
The principal risks and uncertainties facing the Group in the
short to medium term, as set out on pages 15 to 17 of the 2017
Annual Report (together with the principal mitigation measures),
continue to be the principal risks and uncertainties facing the
Group for the remaining six months of the financial year.
This is not an exhaustive statement of all relevant risks and
uncertainties. Matters which are not currently known to the Board
or events which the Board considers to be of low likelihood could
emerge and give rise to material consequences. The mitigation
measures that are maintained in relation to these risks are
designed to provide a reasonable and not an absolute level of
protection against the impact of the events in question
Group Income Statement
Unaudited 6 months ended Unaudited 6 months ended Audited year ended
30 September 2017 30 September 2016 (restated*) 31 March 2017
------------------------------------------------------------------- ----------------------------------------------------- -------------------------------------------
Pre exceptionals Exceptionals Pre exceptionals Exceptionals Pre Exceptionals
(note 6) Total (note 6) Total exceptionals (note 6) Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 5 6,449,472 - 6,449,472 5,507,286 - 5,507,286 12,269,802 - 12,269,802
Cost of sales (5,836,484) - (5,836,484) (4,963,253) - (4,963,253) (11,006,805) - (11,006,805)
-------------------------------------- ------------- ------------ ------------------------ ------------- ------------ ------------- ------------- -------------
Gross profit 612,988 - 612,988 544,033 - 544,033 1,262,997 - 1,262,997
Administration
expenses (190,756) - (190,756) (162,375) - (162,375) (323,320) - (323,320)
Selling and distribution
expenses (297,685) - (297,685) (278,593) - (278,593) (605,182) - (605,182)
Other operating
income 10,669 308 10,977 7,879 408 8,287 28,297 1,879 30,176
Other operating
expenses (12,718) (13,434) (26,152) (3,849) (4,824) (8,673) (17,787) (38,176) (55,963)
-------------------------------------- ------------- ------------ ------------------------ ------------- ------------ ------------- ------------- -------------
Operating profit before
amortisation of
intangible assets 122,498 (13,126) 109,372 107,095 (4,416) 102,679 345,005 (36,297) 308,708
Amortisation of
intangible
assets (20,527) - (20,527) (18,178) - (18,178) (39,130) - (39,130)
-------------------------------------- ------------- ------------ ------------------------ ------------- ------------ ------------- ------------- -------------
Operating profit 5 101,971 (13,126) 88,845 88,917 (4,416) 84,501 305,875 (36,297) 269,578
Finance costs (34,508) (2) (34,510) (35,676) - (35,676) (72,910) - (72,910)
Finance income 18,832 - 18,832 19,163 1,901 21,064 40,973 10,101 51,074
Equity accounted
investments'
profit after tax 92 - 92 182 - 182 712 - 712
-------------------------------------- ------------- ------------ ------------------------ ------------- ------------ ------------- ------------- -------------
Profit before
tax 86,387 (13,128) 73,259 72,586 (2,515) 70,071 274,650 (26,196) 248,454
Income tax
expense 7 (13,353) 157 (13,196) (10,837) (386) (11,223) (44,113) (1,756) (45,869)
-------------------------------------- ------------- ------------ ------------------------ ------------- ------------ ------------- ------------- -------------
Profit for the period
(continuing
operations) 73,034 (12,971) 60,063 61,749 (2,901) 58,848 230,537 (27,952) 202,585
Profit for the period
from
discontinued operations
8 790 29,742 30,532 8,719 - 8,719 15,160 - 15,160
-------------------------------------- ------------- ------------ ------------------------ ------------- ------------ ------------- ------------- -------------
Profit after tax for the
financial period 73,824 16,771 90,595 70,468 (2,901) 67,567 245,697 (27,952) 217,745
-------------------------------------- ------------- ------------ ------------------------ ------------- ------------ ------------- ------------- -------------
Profit
attributable
to:
Owners of the Parent 88,701 65,588 216,197
Non-controlling
interests 1,894 1,979 1,548
------------ ------------ -------------
90,595 67,567 217,745
------------ ------------ -------------
Earnings per ordinary share
Basic earnings
per
share 9 99.66p 73.95p 243.64p
Diluted earnings
per share 9 99.21p 73.42p 242.00p
Basic adjusted
earnings
per share 9 96.36p 92.14p 303.68p
Diluted adjusted
earnings
per share 9 95.93p 91.48p 301.63p
------------ ------------ -------------
Earnings per ordinary share - continuing
operations
Basic earnings
per
share 9 65.36p 64.12p 226.56p
Diluted earnings
per share 9 65.06p 63.66p 255.04p
Basic adjusted
earnings
per share 9 95.47p 82.23p 286.59p
Diluted adjusted
earnings per
share 9 95.04p 81.64p 284.66p
------------ ------------ -------------
Group Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Group profit for the period 90,595 67,567 217,745
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss
Currency translation:
- arising in the period 17,714 38,453 37,084
- recycled to the Income Statement (4,548) - -
on disposal
Movements relating to cash flow
hedges 20,292 9,409 (6,803)
Movement in deferred tax liability
on cash flow hedges (3,570) (1,504) 1,334
---------- ---------- ---------
29,888 46,358 31,615
---------- ---------- ---------
Items that will not be reclassified
to profit or loss
Group defined benefit pension obligations:
- remeasurements 1,702 (8,014) (3,056)
- movement in deferred tax asset (268) 1,227 413
---------- ---------- ---------
1,434 (6,787) (2,643)
---------- ---------- ---------
Other comprehensive income for the
period, net of tax 31,322 39,571 28,972
---------- ---------- ---------
Total comprehensive income for
the period 121,917 107,138 246,717
---------- ---------- ---------
Attributable to:
Owners of the Parent 119,122 102,678 242,735
Non-controlling interests 2,795 4,460 3,982
---------- ---------- ---------
121,917 107,138 246,717
---------- ---------- ---------
Attributable to:
Continuing operations 95,933 97,165 230,199
Discontinued operations 25,984 9,973 16,518
---------- ---------- ---------
121,917 107,138 246,717
---------- ---------- ---------
Group Balance Sheet
Unaudited Unaudited Audited
30 Sept. 30 Sept. 31 March
2017 2016 2017
Notes GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 789,947 778,618 750,020
Intangible assets 1,478,296 1,345,082 1,422,572
Equity accounted investments 24,632 26,019 24,938
Deferred income tax assets 23,128 22,802 22,619
Derivative financial instruments 180,109 271,609 273,767
2,496,112 2,444,130 2,493,916
------------ ------------ ------------
Current assets
Inventories 548,903 435,716 456,395
Trade and other receivables 1,204,122 997,017 1,222,597
Derivative financial instruments 18,479 37,132 18,233
Cash and cash equivalents 1,497,061 1,138,953 1,048,064
------------ ------------ ------------
3,268,565 2,608,818 2,745,289
Assets classified as held for
sale - - 193,170
------------
3,268,565 2,608,818 2,938,459
------------
Total assets 5,764,677 5,052,948 5,432,375
------------ ------------ ------------
EQUITY
Capital and reserves attributable to owners
of the Parent
Share capital 15,455 15,455 15,455
Share premium 277,211 277,211 277,211
Share based payment reserve 11 20,077 16,369 18,146
Cash flow hedge reserve 11 3,141 (207) (13,581)
Foreign currency translation reserve 11 117,802 106,859 105,537
Other reserves 11 932 932 932
Retained earnings 1,101,502 953,462 1,074,434
------------ ------------ ------------
Equity attributable to owners
of the Parent 1,536,120 1,370,081 1,478,134
Non-controlling interests 32,382 30,238 29,587
------------ ------------ ------------
Total equity 1,568,502 1,400,319 1,507,721
------------ ------------ ------------
LIABILITIES
Non-current liabilities
Borrowings 1,680,507 1,385,011 1,319,967
Derivative financial instruments 5,610 - 506
Deferred income tax liabilities 157,222 140,811 155,297
Post employment benefit obligations 13 (4,862) 7,045 29
Provisions for liabilities 258,909 233,079 255,650
Acquisition related liabilities 71,644 80,548 66,617
Government grants 257 752 261
------------ ------------ ------------
2,169,287 1,847,246 1,798,327
------------ ------------ ------------
Current liabilities
Trade and other payables 1,831,926 1,536,255 1,820,517
Current income tax liabilities 11,915 26,187 25,051
Borrowings 118,359 172,274 148,445
Derivative financial instruments 3,511 2,574 5,894
Provisions for liabilities 32,389 33,860 31,022
Acquisition related liabilities 28,788 34,233 28,300
------------ ------------ ------------
2,026,888 1,805,383 2,059,229
Liabilities associated with assets
classified as held for sale - - 67,098
------------ ------------ ------------
2,026,888 1,805,383 2,126,327
------------ ------------ ------------
Total liabilities 4,196,175 3,652,629 3,924,654
------------ ------------ ------------
Total equity and liabilities 5,764,677 5,052,948 5,432,375
------------ ------------ ------------
Net debt included above (including
cash attributable
to assets held for sale) 12 (112,338) (112,165) (121,949)
------------ ------------ ------------
Group Statement of Changes in Equity
For the six Attributable to owners of the
months ended 30 Parent
September 2017
------------------------------------------------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
11)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2017 15,455 277,211 1,074,434 111,034 1,478,134 29,587 1,507,721
Profit for the
period - - 88,701 - 88,701 1,894 90,595
Currency
translation:
- arising in
the period - - - 16,813 16,813 901 17,714
- recycled to
the Income
Statement
on disposal - - - (4,548) (4,548) - (4,548)
Group defined
benefit pension
obligations:
-
remeasurements - - 1,702 - 1,702 - 1,702
- movement in
deferred tax
asset - - (268) - (268) - (268)
Movements
relating to
cash
flow hedges - - - 20,292 20,292 - 20,292
Movement in
deferred tax
liability
on cash flow
hedges - - - (3,570) (3,570) - (3,570)
Total
comprehensive
income - - 90,135 28,987 119,122 2,795 121,917
Re-issue of
treasury
shares - - 3,309 - 3,309 - 3,309
Share based
payment - - - 1,931 1,931 - 1,931
Dividends - - (66,376) - (66,376) - (66,376)
----------------------- ---------------------------- ----------------------- -------------------- ------------------ ------------------------- ------------------
At 30 September
2017 15,455 277,211 1,101,502 141,952 1,536,120 32,382 1,568,502
----------------------- ---------------------------- ----------------------- -------------------- ------------------ ------------------------- ------------------
For the six Attributable to owners of the
months ended 30 Parent
September 2016
---------------------------------------------------------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
11)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2016 15,455 277,211 948,316 78,661 1,319,643 30,833 1,350,476
Profit for the
period - - 65,588 - 65,588 1,979 67,567
Currency
translation - - - 35,972 35,972 2,481 38,453
Group defined
benefit pension
obligations:
- remeasurements - - (8,014) - (8,014) - (8,014)
- movement in
deferred tax
asset - - 1,227 - 1,227 - 1,227
Movements
relating to
cash
flow hedges - - - 9,409 9,409 - 9,409
Movement in
deferred tax
liability
on cash flow
hedges - - - (1,504) (1,504) - (1,504)
Total
comprehensive
income - - 58,801 43,877 102,678 4,460 107,138
Re-issue of
treasury shares - - 2,065 - 2,065 - 2,065
Share based
payment - - - 1,415 1,415 - 1,415
Dividends - - (55,720) - (55,720) (5,055) (60,775)
------------------------ ----------------------------- ------------------------ -------------------- ------------------------ ------------------------- ------------------
At 30 September
2016 15,455 277,211 953,462 123,953 1,370,081 30,238 1,400,319
------------------------ ----------------------------- ------------------------ -------------------- ------------------------ ------------------------- ------------------
For the year Attributable to owners of the
ended 31 March Parent
2017
---------------------------------------------------------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
11)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2016 15,455 277,211 948,316 78,661 1,319,643 30,833 1,350,476
Profit for the
financial year - - 216,197 - 216,197 1,548 217,745
Currency
translation - - - 34,650 34,650 2,434 37,084
Group defined
benefit pension
obligations:
- remeasurements - - (3,056) - (3,056) - (3,056)
- movement in
deferred tax
asset - - 413 - 413 - 413
Movements
relating to
cash
flow hedges - - - (6,803) (6,803) - (6,803)
Movement in
deferred tax
liability
on cash flow
hedges - - - 1,334 1,334 - 1,334
Total
comprehensive
income - - 213,554 29,181 242,735 3,982 246,717
Re-issue of
treasury shares - - 2,600 - 2,600 - 2,600
Share based
payment - - - 3,192 3,192 - 3,192
Dividends - - (90,036) - (90,036) (5,228) (95,264)
------------------------ ----------------------------- ------------------------ -------------------- ------------------------ ------------------------- --------------------
At 31 March 2017 15,455 277,211 1,074,434 111,034 1,478,134 29,587 1,507,721
------------------------ ----------------------------- ------------------------ -------------------- ------------------------ ------------------------- --------------------
Group Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
Note GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the period 90,595 67,567 217,745
Add back non-operating expenses/(income)
- tax 13,370 13,071 49,054
- share of equity accounted investments'
profit (92) (182) (712)
- net operating exceptionals (16,616) 4,416 36,297
- net finance costs 15,694 14,685 21,999
---------- ---------- ----------
Group operating profit before
exceptionals 102,951 99,557 324,383
Share-based payments expense 1,931 1,415 3,192
Depreciation 44,263 42,913 92,015
Amortisation of intangible assets 20,527 18,266 39,168
(Profit)/loss on disposal of property,
plant and equipment (312) 369 (173)
Amortisation of government grants (16) (101) (235)
Other (5,552) (4,334) 4,571
(Increase)/decrease in working
capital (79,817) (17,046) 83,949
---------- ---------- ----------
Cash generated from operations
before exceptionals 83,975 141,039 546,870
Exceptionals (15,197) (8,752) (31,269)
---------- ---------- ----------
Cash generated from operations 68,778 132,287 515,601
Interest paid (32,457) (33,313) (70,108)
Income tax paid (35,905) (28,122) (62,180)
---------- ---------- ----------
Net cash flows from operating
activities 416 70,852 383,313
---------- ---------- ----------
Investing activities
Inflows:
Proceeds from disposal of property,
plant and equipment 2,525 6,076 12,315
Dividends received from equity
accounted investments 1,317 121 125
Disposal of subsidiaries and equity
accounted investments 8 160,054 - -
Interest received 19,001 19,191 40,966
182,897 25,388 53,406
---------- ---------- ----------
Outflows:
Purchase of property, plant and
equipment (71,592) (65,878) (143,698)
Acquisition of subsidiaries 14 (44,313) (6,609) (203,327)
Payment of accrued acquisition
related liabilities (12,014) (26,200) (59,069)
---------- ---------- ----------
(127,919) (98,687) (406,094)
---------- ---------- ----------
Net cash flows from investing
activities 54,978 (73,299) (352,688)
---------- ---------- ----------
Financing activities
Inflows:
Proceeds from issue of shares 3,309 2,065 2,600
Net cash inflow on derivative
financial instruments 13,914 1,002 14,212
Increase in interest-bearing loans 458,593 - -
and borrowings
475,816 3,067 16,812
---------- ---------- ----------
Outflows:
Repayment of interest-bearing
loans and borrowings (58,132) (29,895) (108,140)
Repayment of finance lease liabilities (6) (79) (177)
Dividends paid to owners of the
Parent 10 (66,376) (55,720) (90,036)
Dividends paid to non-controlling
interests - (5,055) (5,228)
(124,514) (90,749) (203,581)
---------- ---------- ----------
Net cash flows from financing
activities 351,302 (87,682) (186,769)
---------- ---------- ----------
Change in cash and cash equivalents 406,696 (90,129) (156,144)
Translation adjustment (650) 43,894 38,929
Cash and cash equivalents at beginning
of period 972,822 1,090,037 1,090,037
---------- ---------- ----------
Cash and cash equivalents at end
of period 1,378,868 1,043,802 972,822
---------- ---------- ----------
Cash and cash equivalents consists
of:
Cash and short-term bank deposits 1,497,061 1,138,953 1,048,064
Overdrafts (118,193) (95,151) (88,041)
Cash and short-term deposits attributable
to assets held for sale - - 12,799
1,378,868 1,043,802 972,822
---------- ---------- ----------
Notes to the Condensed Financial Statements
for the six months ended 30 September 2017
1. Basis of Preparation
The Group condensed interim financial statements which should be
read in conjunction with the annual financial statements for the
year ended 31 March 2017 have been prepared in accordance with the
Transparency (Directive 2004/109/EC) Regulations 2007, the related
Transparency rules of the Irish Financial Services Regulatory
Authority and in accordance with International Accounting Standard
34, Interim Financial Reporting (IAS 34) as adopted by the European
Union.
The preparation of the interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of certain
assets, liabilities, revenues and expenses together with disclosure
of contingent assets and liabilities. Estimates and underlying
assumptions are reviewed on an ongoing basis.
These condensed interim financial statements for the six months
ended 30 September 2017 and the comparative figures for the six
months ended 30 September 2016 are unaudited and have not been
reviewed by the Auditors. The summary financial statements for the
year ended 31 March 2017 represent an abbreviated version of the
Group's full accounts for that year, on which the Auditors issued
an unqualified audit report and which have been filed with the
Registrar of Companies.
2. Accounting Policies
The accounting policies and methods of computation adopted in
the preparation of the Group condensed interim financial statements
are consistent with those applied in the 2017 Annual Report and are
described in those financial statements on pages 179 to 187. There
were no new standards effective for the Group during the period
ended 30 September 2017.
The Group has not applied certain new standards, amendments and
interpretations to existing standards that have been issued but are
not yet effective, the most significant of which are as
follows:
Amendments to IAS 7 Statement of Cash Flows - Disclosure
Initiative (not yet EU endorsed):
These amendments are intended to improve the information
provided to users of financial statements regarding the entity's
financing activities.
Amendments to IAS 12 Income Taxes - Recognition of Deferred Tax
Assets for Unrealised Losses (not yet EU endorsed):
These amendments clarify, inter alia, that unrealised losses on
debt instruments measured at fair value (and measured at cost for
tax purposes) give rise to a deductible temporary difference
regardless of whether the instrument is recovered through sale or
by holding it to maturity or whether it is probable that the issuer
will pay all contractual cash flows. Entities are therefore
required to recognise deferred taxes for temporary differences from
unrealised losses of debt instruments measured at fair value if all
other recognition criteria for deferred taxes are met.
IFRS 9 Financial Instruments (effective date: DCC financial year
beginning 1 April 2018):
This standard is designed to replace IAS 39 Financial
Instruments: Recognition and Measurement and has been completed in
a number of phases with the final version issued by the IASB in
July 2014 and endorsed by the EU in November 2016. The Standard
includes requirements for recognition and measurement,
classification, and de-recognition of financial instruments, a new
expected credit loss model for calculating impairment on financial
assets and new rules for hedge accounting.
The new impairment model requires the recognition of impairment
provisions based on expected credit losses rather than only
incurred credit losses as is the case under IAS 39. It applies to
financial assets classified at amortised cost, contract assets
under IFRS 15 Revenue from Contracts with Customers, lease
receivables, loan commitments and certain financial guarantee
contracts. While the Group has not yet completed a detailed
assessment of how its impairment provisions would be affected by
the new model, it may result in an earlier recognition of credit
losses.
The new hedge accounting rules will align the accounting for
hedging instruments more closely with the Group's risk management
practises. As a general rule, more hedge relationships may be
eligible for hedge accounting, as the standard introduces a more
principles-based approach. The Group has performed an initial
assessment on the impact of IFRS 9, and it would appear that the
Group's current hedge relationships would continue to qualify as
hedges upon the adoption of IFRS 9. Accordingly, the Group does not
expect a significant impact on the accounting for its hedging
relationships.
The new standard also introduces expanded disclosure
requirements and changes in presentation. These are expected to
change the nature and extent of the Group's disclosures about its
financial instruments particularly in the first year of adoption of
the new standard. The Group will apply IFRS 9 from its effective
date.
IFRS 15 Revenue from Contracts with Customers (effective date:
DCC financial year beginning 1 April 2018):
This standard will replace IAS 18 Revenue, IAS 11 Construction
Contracts and related interpretations. IFRS 15 was endorsed by the
EU in September 2016. The standard establishes principles for
reporting useful information to users of financial statements about
the nature, amount, timing and uncertainty of revenue and cash
flows arising from contracts with customers. It specifies how and
when revenue should be recognised as well as requiring enhanced
disclosures. Revenue is recognised when an identified performance
obligation has been met and the customer can direct the use of, and
obtain substantially all the remaining benefits from, a good or
service as a result of obtaining control of that good or
service.
The Group is continuing to assess the potential impact resulting
from the application of IFRS 15. The Group will apply IFRS 15 from
its effective date.
IFRS 16 Leases (effective date: DCC financial year beginning 1
April 2019):
This standard will replace IAS 17 Leases. IFRS 16 is not yet
endorsed by the EU. The changes under IFRS 16 are significant and
will predominantly affect lessees, the accounting for which is
substantially reformed. The lessor accounting requirements
contained in IFRS 16's predecessor, IAS 17, will remain largely
unchanged. The main impact on lessees is that almost all leases
will be recognised on the balance sheet as the distinction between
operating and finance leases is removed for lessees. Under IFRS 16,
an asset (the right to use the leased item) and a financial
liability to pay rentals are recognised. The only exemptions are
short-term and low-value leases. The standard introduces new
estimates and judgemental thresholds that affect the
identification, classification and measurement of lease
transactions. More extensive disclosures, both qualitative and
quantitative, are also required.
At transition date, the Group will calculate the lease
commitments outstanding at that date and apply appropriate discount
rates to calculate the present value of the lease commitment which
will be recognised as a liability and a right of use asset on the
Group's Balance Sheet. In the Income Statement, the Group currently
recognises operating lease rentals in operating expenses. Under the
new standard, a right of use asset will be capitalised and
depreciated over the term of the lease with an associated finance
cost applied annually to the lease liability.
As detailed in note 5.4 of the 2017 Annual Report, the Group's
future minimum rentals payable under non-cancellable operating
leases at 31 March 2017 amounted to GBP236.7 million and the charge
recognised in the Income Statement for the year ended 31 March 2017
amounted to GBP51.7 million. These amounts provide an indication of
the scale of leases held at 31 March 2017 but should not be used as
a proxy for the impact of IFRS 16 on the Consolidated Balance Sheet
as a number of factors impact the calculation such as the discount
rate, the expected term of leases including renewal options and
exemptions for short-term leases and low-value leases.
The Group is continuing to assess its portfolio of leases to
calculate the impact of the new standard. The Group will apply IFRS
16 from its effective date, subject to EU endorsement.
3. Going Concern
Having reassessed the principal risks facing the Group (as
detailed on pages 15 to 17 of the 2017 Annual Report), the
Directors believe that the Group is well placed to manage these
risks successfully.
The Directors have a reasonable expectation that DCC plc, and
the Group as a whole, has adequate resources to continue in
operational existence for the foreseeable future, a period of not
less than twelve months from the date of this report. For this
reason, the Directors continue to adopt the going concern basis of
accounting in preparing the condensed interim financial
statements.
4. 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 period, 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
---------------------------------------- ----------------------------------------
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 Sept. 30 Sept. 31 March 30 Sept. 30 Sept. 31 March
2017 2016 2017 2017 2016 2017
StgGBP1= StgGBP1= StgGBP1= StgGBP1= StgGBP1= StgGBP1=
Euro 1.1391 1.2364 1.1956 1.1340 1.1614 1.1689
Swedish
Krona 10.9425 11.5928 11.3729 10.9424 11.1742 11.1423
Danish
Krone 8.4795 9.2173 8.9150 8.4399 8.6542 8.6942
Norwegian
Krone 10.6565 11.5655 10.9811 10.6742 10.4373 10.7169
5. Segmental Reporting
DCC is an international sales, marketing and 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. Donal Murphy, Chief
Executive and his executive management team.
As announced on 31 May 2017, the Group completed the disposal of
its Environmental division. In addition, and as noted in the
Group's results for the year ended 31 March 2017, DCC is presenting
DCC LPG and DCC Retail & Oil as separate reportable segments
from 1 April 2017, in line with the revised management and
organisational structures of the businesses. Previously, these two
segments comprised the Group's former DCC Energy segment. Following
these changes in the composition of operating segments, segmental
reporting has been revised and the comparative disclosures have
been restated as required under IFRS 8.
The Group is organised into four operating segments: DCC LPG,
DCC Retail & Oil, DCC Healthcare and DCC Technology.
DCC LPG is a leading liquefied petroleum gas ('LPG') sales and
marketing business in Europe, with a developing business in the
retailing of natural gas.
DCC Retail & Oil is a leader in the sales, marketing and
retailing of transport fuels and commercial fuels, heating oils and
related products and services in Europe.
DCC Healthcare is a leading healthcare business, providing
products and services to healthcare providers and health and beauty
brand owners.
DCC Technology is a leading route-to-market and supply chain
partner for global technology brands.
The chief operating decision maker monitors the operating
results of segments separately in order to allocate resources
between segments and to assess performance. Segment performance is
predominantly evaluated based on operating profit before
amortisation of intangible assets and net operating exceptional
items. 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.
The consolidated total assets of the Group as at 30 September
2017 amounted to GBP5.765 billion. This figure was not materially
different from the equivalent figure at 31 March 2017 (apart from
cash and derivative financial instruments which are managed
centrally) and therefore the related segmental disclosure note has
been omitted in accordance with IAS 34 Interim Financial
Reporting.
Intersegment revenue is not material and thus not subject to
separate disclosure.
An analysis of the Group's performance by segment and geographic
location is as follows:
(a) By operating segment
Unaudited six months ended 30 September 2017
--------------------------------------------------------------------------------
DCC Retail
DCC LPG & Oil DCC Healthcare DCC Technology Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 501,951 4,331,596 244,995 1,370,930 6,449,472
-------- ----------- ---------------- -------------- --------------
Adjusted operating profit* 44,077 42,159 22,047 14,215 122,498
Amortisation of intangible
assets (10,562) (3,944) (3,676) (2,345) (20,527)
Net operating exceptionals
(note 6) (602) (4,376) (1,324) (6,824) (13,126)
-------- ----------- ---------------- -------------- --------------
Operating profit 32,913 33,839 17,047 5,046 88,845
-------- ----------- ---------------- -------------- --------------
Unaudited six months ended 30 September 2016
(restated)
----------------------------------------------------------
DCC Retail
DCC LPG & Oil DCC Healthcare DCC Technology Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 367,859 3,750,915 244,283 1,144,229 5,507,286
------- ----------- ---------------- --------------- ---------------
Adjusted operating profit* 36,987 39,046 19,760 11,302 107,095
Amortisation of intangible
assets (8,562) (4,828) (3,307) (1,481) (18,178)
Net operating exceptionals
(note 6) (205) (1,614) (1,361) (1,236) (4,416)
------- ----------- ---------------- --------------- ---------------
Operating profit 28,220 32,604 15,092 8,585 84,501
------- ----------- ---------------- --------------- ---------------
Audited year ended 31 March 2017 (restated)
-------------------------------------------------------------------------
DCC Retail
DCC LPG & Oil DCC Healthcare DCC Technology Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 1,073,212 8,000,923 506,562 2,689,105 12,269,802
--------- ----------- ---------------- --------------- -------------
Adjusted operating profit* 160,462 94,479 48,944 41,120 345,005
Amortisation of intangible
assets (18,277) (9,962) (7,258) (3,633) (39,130)
Net operating exceptionals
(note 6) (6,854) (13,633) (2,695) (13,115) (36,297)
--------- ----------- ---------------- --------------- -------------
Operating profit 135,331 70,884 38,991 24,372 269,578
--------- ----------- ---------------- --------------- -------------
* Operating profit before amortisation of intangible assets and
net operating exceptionals
(b) By geography
The Group has a presence in 15 countries worldwide. The
following represents a geographical revenue analysis about the
country of domicile (Republic of Ireland) and countries with
material revenue.
Restated
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Republic of Ireland 426,442 322,824 759,439
United Kingdom 3,590,870 3,349,051 7,239,193
France 1,235,359 1,038,271 2,402,290
Other 1,196,801 797,140 1,868,880
---------- ---------- -------------------
6,449,472 5,507,286 12,269,802
---------- ---------- -------------------
6. Exceptionals
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Restructuring costs (9,742) (2,280) (19,345)
Acquisition and related costs (3,512) (1,374) (10,308)
Adjustments to contingent acquisition
consideration 140 73 (5,114)
Impairment of property, plant and equipment - (684) (1,164)
Legal and other operating exceptional
items (12) (151) (366)
Net operating exceptional items (13,126) (4,416) (36,297)
Mark to market of swaps and related debt (2) 1,901 10,101
---------- ---------- ---------
Net exceptional items before taxation (13,128) (2,515) (26,196)
Tax attributable to net exceptional items 157 (386) (1,756)
---------- ---------- ---------
Net exceptional items after taxation
(continuing operations) (12,971) (2,901) (27,952)
Net profit on disposal of Environmental 29,742 - -
division (note 8)
---------- ---------- ---------
16,771 (2,901) (27,952)
Non-controlling interest share of net
exceptional items after taxation 816 - 3,138
---------- ---------- ---------
Net exceptional items attributable to
owners of the Parent 17,587 (2,901) (24,814)
---------- ---------- ---------
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. Restructuring costs amounted
to GBP9.742 million and were principally incurred in the
restructuring and integration work resulting from the acquisition
of Dansk Fuels and also the implementation of the new national
distribution centre in the Technology division's UK business.
Acquisition related costs amounted to GBP3.512 million and
include the professional fees and tax costs (such as stamp duty)
relating to the evaluation and completion of acquisition
opportunities.
The Group recorded a net profit on disposal of the Environmental
division of GBP29.742 million, the sale of which was completed in
May 2017.
There was a net tax credit of GBP0.157 million and a
non-controlling interest credit of GBP0.816 million in relation to
the above net exceptional items.
7. Taxation
The taxation expense for the interim period is based on
management's best estimate of the weighted average tax rate that is
expected to be applicable for the full year. The Group's effective
tax rate for the period was 18% (six months ended 30 September
2016: 17.5% and year ended 31 March 2017: 17.5%).
8. Discontinued Operations
As announced on 31 May 2017, the Group completed the disposal of
the Environmental division. The proceeds on disposal will be used
to fund the continued development of DCC's continuing operations.
The conditions for the segment to be classified as a discontinued
operation were satisfied during the year ended 31 March 2017 and
the results of the Environmental segment were presented separately
in the 2017 Annual Report as discontinued operations in the Group
Income Statement and the assets and liabilities of this segment
were classified as an asset held for sale at the balance sheet
date. Accordingly, the results for the six months ended 30
September 2016 have been restated.
The following table summarises the consideration received, the
profit on disposal of discontinued operations and the net cash flow
arising on the disposal of this segment:
Unaudited
6 months
ended
30 Sept.
2017
Profit on disposal of discontinued GBP'000
operations
Net consideration:
Net proceeds received 164,517
Costs of disposal (4,463)
----------
Total net consideration 160,054
----------
Assets and liabilities disposed of:
Non-current assets 145,761
Current assets 34,261
Non-current liabilities (4,357)
Current liabilities (40,805)
----------
Net identifiable assets and liabilities
disposed of 134,860
Recycling of foreign exchange gain previously recognised
in foreign currency translation reserve (4,548)
----------
130,312
----------
Profit on disposal of discontinued
operations 29,742
----------
Net cash flow on disposal of discontinued
operations:
Total proceeds received 174,321
Cash and cash equivalents disposed
of (9,804)
----------
Net cash inflow from disposal of
discontinued operations 164,517
Disposal costs paid (4,463)
----------
Net cash flow on disposal of discontinued
operations: 160,054
----------
The following table details the results of discontinued
operations included in the Group Income Statement for the six
months ended 30 September 2017, together with comparative
figures:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Revenue 29,602 89,258 175,232
Cost of sales (20,285) (61,238) (119,654)
---------- ---------- ----------
Gross profit 9,317 28,020 55,578
Operating expenses (8,337) (17,292) (37,032)
---------- ---------- ----------
Operating profit before amortisation of
intangible assets 980 10,728 18,546
Amortisation of intangible assets - (88) (38)
Operating profit 980 10,640 18,508
Net finance costs (16) (73) (163)
---------- ---------- ----------
964 10,567 18,345
Profit on disposal of discontinued operations 29,742 - -
---------- ---------- ----------
30,706 10,567 18,345
Income tax expense (174) (1,848) (3,185)
---------- ---------- ----------
Profit from discontinued operations after
tax 30,532 8,719 15,160
---------- ---------- ----------
The following table details the cash flow from discontinued
operations included in the Group Cash Flow Statement for the six
months ended 30 September 2017, together with comparative
figures:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Net cash flow from operating activities (5,599) 12,022 22,461
Net cash flow from investing activities (1,331) (2,916) (6,661)
---------- ---------- ---------
Net cash flow from discontinued operations (6,930) 9,106 15,800
---------- ---------- ---------
9. Earnings per Ordinary Share
6 months ended 30 September 6 months ended 30 September
2017 2016
------------------------------------------ --------------------------------------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit
attributable to
owners of the
Parent 58,169 30,532 88,701 56,869 8,719 65,588
Amortisation of
intangible
assets after tax 14,653 - 14,653 13,164 71 13,235
Exceptionals after
tax 12,155 (29,742) (17,587) 2,901 - 2,901
------------- --------------- ---------- ---------------- ----------------- -------
Adjusted profit
after
taxation and
non-controlling
interests 84,977 790 85,767 72,934 8,790 81,724
------------- --------------- ---------- ---------------- ----------------- -------
Basic earnings
per ordinary
share
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 period, 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.
6 months ended 30 September 6 months ended 30 September
2017 2016
------------------------------------------ ----------------------------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
pence pence pence pence pence pence
Basic earnings per
ordinary
share 65.36p 34.30p 99.66p 64.12p 9.83p 73.95p
Amortisation of
intangible
assets after tax 16.46p - 16.46p 14.84p 0.08p 14.92p
Exceptionals after
tax 13.65p (33.41p) (19.76p) 3.27p - 3.27p
------------- --------------- ---------- ----------------- -------------- -----------
Adjusted basic
earnings
per
ordinary share 95.47p 0.89p 96.36p 82.23p 9.91p 92.14p
------------- --------------- ---------- ----------------- -------------- -----------
Weighted average
number
of ordinary shares
in
issue (thousands) 89,007 88,691
---------- -----------
Diluted earnings per ordinary share
Diluted earnings per ordinary 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 (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.
6 months ended 30 September 6 months ended 30 September
2017 2016
------------------------------------------ ---------------------------------------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
pence pence pence pence pence pence
Diluted earnings
per
ordinary share 65.06p 34.15p 99.21p 63.66p 9.76p 73.42p
Amortisation of
intangible
assets after tax 16.39p - 16.39p 14.73p 0.08p 14.81p
Exceptionals after
tax 13.59p (33.26p) (19.67p) 3.25p - 3.25p
------------- --------------- ---------- ----------------- -------------- ------------
Adjusted diluted
earnings
per
ordinary share 95.04p 0.89p 95.93p 81.64p 9.84p 91.48p
------------- --------------- ---------- ----------------- -------------- ------------
Weighted average
number
of ordinary shares
in
issue (dilutive,
thousands) 89,410 89,332
---------- ------------
The earnings used for the purposes of the continuing diluted
earnings per ordinary share calculations were GBP58.169 million
(six months ended 30 September 2016: GBP56.869 million) and
GBP84.977 million (six months ended 30 September 2016: GBP72.934
million) for the purposes of the continuing adjusted diluted
earnings per ordinary share calculations.
The earnings used for the purposes of the discontinued diluted
earnings per ordinary share calculations were GBP30.532 million
(six months ended 30 September 2016: GBP8.719 million) and GBP0.790
million (six months ended 30 September 2016: GBP8.790 million) for
the purposes of the discontinued adjusted diluted earnings per
ordinary share calculations.
The weighted average number of ordinary shares used in
calculating the diluted earnings per ordinary share for the six
months ended 30 September 2017 was 89.410 million (six months ended
30 September 2016: 89.332 million). A reconciliation of the
weighted average number of ordinary shares used for the purposes of
calculating the diluted earnings per ordinary share amounts is as
follows:
Unaudited Unaudited
6 months 6 months
ended ended
30 Sept. 30 Sept.
2017 2016
'000 '000
Weighted average number of ordinary shares in
issue 89,007 88,691
Dilutive effect of options and awards 403 641
--------- ---------
Weighted average number of ordinary shares for
diluted earnings per share 89,410 89,332
--------- ---------
10. Dividends
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Interim - paid 37.17 pence per share
on 12 December 2016 - - 32,415
Final - paid 74.63 pence per share
on 20 July 2017
(paid 64.18 pence per share on
21 July 2016) 66,376 55,720 57,621
66,376 55,720 90,036
---------------------- ------------------------- ---------
On 13 November 2017, the Board approved an interim dividend of
40.89 pence per share (GBP36.473 million). These condensed interim
financial statements do not reflect this dividend payable.
11. Other Reserves
For the six months ended 30
September 2017
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 2017 18,146 (13,581) 105,537 932 111,034
Currency translation:
- arising in the period - - 16,813 - 16,813
- recycled to the Income
Statement on disposal - - (4,548) - (4,548)
Movements relating to cash
flow hedges - 20,292 - - 20,292
Movement in deferred tax liability
on cash flow hedges - (3,570) - - (3,570)
Share based payment 1,931 - - - 1,931
------------------- --------- ----------- -------- -------
At 30 September 2017 20,077 3,141 117,802 932 141,952
------------------- --------- ----------- -------- -------
For the six months ended 30 September
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 2016 14,954 (8,112) 70,887 932 78,661
Currency translation - - 35,972 - 35,972
Movements relating to cash
flow hedges - 9,409 - - 9,409
Movement in deferred tax liability
on cash flow hedges - (1,504) - - (1,504)
Share based payment 1,415 - - - 1,415
------------------- --------- ----------- -------- -------
At 30 September 2016 16,369 (207) 106,859 932 123,953
------------------- --------- ----------- -------- -------
For the year ended 31 March
2017
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 2016 14,954 (8,112) 70,887 932 78,661
Currency translation - - 34,650 - 34,650
Movements relating to cash
flow hedges - (6,803) - - (6,803)
Movement in deferred tax liability
on cash flow hedges - 1,334 - - 1,334
Share based payment 3,192 - - - 3,192
------------------- --------- ----------- -------- -------
At 31 March 2017 18,146 (13,581) 105,537 932 111,034
------------------- --------- ----------- -------- -------
12. Analysis of Net Debt
Unaudited Unaudited Audited
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Non-current assets:
Derivative financial instruments 180,109 271,609 273,767
------------ ------------ -----------------
Current assets:
Derivative financial instruments 18,479 37,132 18,233
Cash and cash equivalents 1,497,061 1,138,953 1,048,064
------------ ------------ -----------------
1,515,540 1,176,085 1,066,297
------------ ------------ -----------------
Non-current liabilities:
Finance leases (190) (131) (165)
Derivative financial instruments (5,610) - (506)
Unsecured Notes (1,680,317) (1,384,880) (1,319,802)
------------ ------------ -----------------
(1,686,117) (1,385,011) (1,320,473)
------------ ------------ -----------------
Current liabilities:
Bank borrowings (118,193) (95,151) (88,041)
Finance leases (166) (322) (190)
Derivative financial instruments (3,511) (2,574) (5,894)
Unsecured Notes - (76,801) (60,214)
------------ ------------ -----------------
(121,870) (174,848) (154,339)
------------ ------------ -----------------
Net debt excluding cash attributable
to assets held for sale (112,338) (112,165) (134,748)
Cash and short-term deposits attributable
to assets held for sale - - 12,799
------------ ------------ -----------------
Net debt including cash attributable
to assets held for sale (112,338) (112,165) (121,949)
------------ ------------ -----------------
In September 2017, the Group successfully completed the drawdown
of a new c.GBP450 million private placement debt issuance.
13. Post Employment Benefit Obligations
The Group's defined benefit pension schemes' assets were
measured at fair value at 30 September 2017. The defined benefit
pension schemes' liabilities at 30 September 2017 were updated to
reflect material movements in underlying assumptions.
The Group's post employment benefit obligations moved from a net
deficit of GBP0.029 million at 31 March 2017 to a net asset of
GBP4.862 million at 30 September 2017. This movement was primarily
driven by an actuarial gain on liabilities arising from an increase
in the discount rate used to value these liabilities and by
contributions in excess of the current service cost.
The following actuarial assumptions have been made in
determining the Group's retirement benefit obligation for the six
months ended 30 September 2017:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
Discount rate
- Republic of Ireland 2.10% 1.50% 2.00%
- United Kingdom 2.70% 2.45% 2.55%
---------- ---------- ---------
14. 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, there were a number
of relatively small acquisitions completed by the Group during the
period, the largest of which was the acquisition by DCC Technology
of 100% of MTR Group Ltd, a UK based provider of second lifecycle
solutions for mobile and tablet devices.
The acquisition data presented below reflects the fair value of
the identifiable net assets acquired (excluding net cash/debt
acquired) in respect of acquisitions completed during the six
months ended 30 September 2017.
6 months 6 months
ended ended
30 Sept. 30 Sept.
2017 2016
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 6,695 (2,100)
Equity accounted investments 157 1,762
------------------- ----------------------
Total non-current assets 6,852 (338)
------------------- ----------------------
Current assets
Inventories 2,880 1,324
Trade and other receivables 2,307 3,724
------------------- ----------------------
Total current assets 5,187 5,048
------------------- ----------------------
Liabilities
Non-current liabilities
Deferred income tax liabilities (45) (13)
Total non-current liabilities (45) (13)
------------------- ----------------------
Current liabilities
Trade and other payables (2,826) 2,445
Provisions for liabilities and
charges - (5,043)
Current income tax liability (599) 8,479
Acquisition related liabilities - (9,717)
-------------------
Total current liabilities (3,425) (3,836)
------------------- ----------------------
Identifiable net assets acquired 8,569 861
Intangible assets - goodwill 18,918 6,798
------------------- ----------------------
Total consideration 27,487 7,659
------------------- ----------------------
Satisfied by:
Cash 13,111 8,813
Cash and cash equivalents acquired (108) (2,204)
------------------- ----------------------
Net cash outflow 13,003 6,609
Acquisition related liabilities 14,484 1,050
------------------- ----------------------
Total consideration 27,487 7,659
------------------- ----------------------
Reconciliation to Group Cash
Flow Statement:
Net cash outflow on acquisitions completed
during the period 13,003 6,609
Pre-completion deposits paid (Esso Norway
and Shell Hong Kong & Macau) 31,310 -
------ -----
Total outflow as reported in the Group
Cash Flow Statement 44,313 6,609
------ -----
None of the business combinations completed during the period
were considered sufficiently material to warrant separate
disclosure of the fair values attributable to those
combinations.
There were no adjustments made to the carrying amounts of assets
and liabilities acquired in arriving at their fair values. 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 Group's condensed interim financial
statements for the six months ending 30 September 2018 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.
Acquisition related costs included in other operating expenses
in the Group Income Statement amounted to GBP3.512 million (six
months ended 30 September 2016: GBP1.374 million).
No contingent liabilities were recognised on the acquisitions
completed during the financial period or the prior financial
years.
The gross contractual value of trade and other receivables as at
the respective dates of acquisition amounted to GBP2.315 million.
The fair value of these receivables is GBP2.307 million (all of
which is expected to be recoverable).
None of the goodwill recognised in respect of acquisitions
completed during the period is expected to be deductible for tax
purposes.
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 period range from GBP8.0 million
to GBP37.5 million.
The post-acquisition impact of sales and profit after tax of
acquisitions completed during the period was not material. The
revenue and profit of the Group determined in accordance with IFRS
for the period ended 30 September 2017 would not have been
materially different from that reported in the Income Statement,
had the acquisition date for all business combinations been the
beginning of the period.
15. Seasonality of Operations
The Group's operations are significantly second-half weighted
primarily due to a portion of the demand for DCC's LPG and Retail
& Oil products being weather dependent and seasonal buying
patterns in DCC Technology.
16. Related Party Transactions
There have been no related party transactions or changes in the
nature and scale of the related party transactions described in the
2017 Annual Report that could have had a material impact on the
financial position or performance of the Group in the six months
ended 30 September 2017.
17. Events after the Balance Sheet Date
Esso Retail Norway
On 25 October 2017, DCC announced it had completed the
acquisition of Esso's retail petrol station network in Norway.
Details of the acquisition were set out in DCC's Stock Exchange
Announcement on 7 February 2017. The total consideration was
approximately NOK 2.43 billion (c. GBP235 million), plus the value
of stock in tank at the date of acquisition, and was paid in cash
on completion. An initial assignment of fair values to identifiable
net assets acquired has not been completed given the timing of the
closure of the transaction.
Retail West
On 7 November 2017, DCC LPG announced that it had reached
agreement with NGL Energy Partners LP ('NGL') to acquire its Retail
West LPG division, Hicksgas LLC ('Retail West'), based on an
enterprise value of US$200 million (c. GBP152 million). The
transaction is expected to complete on 31 March 2018, following
receipt of customary regulatory consents and separation from
NGL.
18. Board Approval
This report was approved by the Board of Directors of DCC plc on
13 November 2017.
19. Distribution of Interim Report
This report and further information on DCC is available at the
Company's website www.dcc.ie. A printed copy is available to the
public at the Company's registered office at DCC House,
Leopardstown Road, Foxrock, Dublin 18, Ireland.
Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
-- the condensed set of interim financial statements for the six
months ended 30 September 2017 have been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU;
and
-- the interim management report includes a fair review of the information required by:
-- Regulation 8(2) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
-- Regulation 8(3) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being related party transactions that have taken
place in the first six months of the current financial year and
that have materially affected the financial position or performance
of the entity during that period; and any changes in the related
party transactions described in the last annual report that could
do so.
On behalf of the Board
John Moloney Donal Murphy
Chairman Chief Executive
13 November 2017
Supplementary Financial Information
Alternative Performance Measures
The Group reports certain alternative performance measures
('APMs') that are not required under International Financial
Reporting Standards ('IFRS') which represent the generally accepted
accounting principles ('GAAP') under which the Group reports. The
Group believes that the presentation of these APMs provides useful
supplemental information which, when viewed in conjunction with our
IFRS financial information, provides investors with a more
meaningful understanding of the underlying financial and operating
performance of the Group and its divisions.
These APMs are primarily used for the following purposes:
-- to evaluate the historical and planned underlying results of
our operations;
-- to set director and management remuneration; and
-- to discuss and explain the Group's performance with the
investment analyst community.
None of the APMs should be considered as an alternative to
financial measures derived in accordance with GAAP. The APMs can
have limitations as analytical tools and should not be considered
in isolation or as a substitute for an analysis of our results as
reported under GAAP. These performance measures may not be
calculated uniformly by all companies and therefore may not be
directly comparable with similarly titled measures and disclosures
of other companies.
The principal APMs used by the Group, together with
reconciliations where the non-GAAP measures are not readily
identifiable from the financial statements, are as follows:
Adjusted operating profit ('EBITA')
Definition
This comprises operating profit as reported in the Group Income
Statement before net operating exceptional items and amortisation
of intangible assets. Net operating exceptional items and
amortisation of intangible assets are excluded in order to assess
the underlying performance of our operations. In addition, neither
metric forms part of Director or management remuneration.
6 months 6 months
ended ended Year ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
---------------------------------------------------- --------- --------- -------------
Operating profit 88,845 84,501 269,578
Net operating exceptional items 13,126 4,416 36,297
Amortisation of intangible assets 20,527 18,178 39,130
---------------------------------------------------- --------- --------- -------------
Adjusted operating profit ('EBITA') - continuing 122,498 107,095 345,005
Adjusted operating profit ('EBITA') - discontinued 980 10,728 18,546
---------------------------------------------------- --------- --------- -------------
Adjusted operating profit ('EBITA') 123,478 117,823 363,551
---------------------------------------------------- --------- --------- -------------
Net interest
Definition
The Group defines net interest as the net total of finance costs
and finance income before interest related exceptional items as
presented in the Group Income Statement.
6 months 6 months
ended ended Year
ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
----------------------------------------- --------- --------- ---------
Finance costs before exceptional items (34,508) (35,676) (72,910)
Finance income before exceptional items 18,832 19,163 40,973
----------------------------------------- --------- --------- ---------
Net interest - continuing (15,676) (16,513) (31,937)
Net interest - discontinued (16) (73) (163)
----------------------------------------- --------- --------- ---------
Net interest (15,692) (16,586) (32,100)
----------------------------------------- --------- --------- ---------
Constant currency
Definition
The translation of foreign denominated earnings can be impacted
by movements in foreign exchange rates versus sterling, the Group's
presentation currency. In order to present a better reflection of
underlying performance in the period, the Group retranslates
foreign denominated current year earnings at prior year exchange
rates.
6 months 6 months
ended ended
30 Sept. 30 Sept.
2017 2016
Calculation: Revenue - continuing, constant GBP'000 GBP'000
currency
--------------------------------------------- ---------- ----------
Revenue - continuing 6,449,472 5,507,286
Currency impact (215,145) -
--------------------------------------------- ---------- ----------
Revenue - continuing, constant currency 6,234,327 5,507,286
---------------------------------------------- ---------- ----------
6 months 6 months
ended ended
30 Sept. 30 Sept.
2017 2016
Calculation: Adjusted operating profit GBP'000 GBP'000
- continuing, constant currency
----------------------------------------- --------- ---------
Adjusted operating profit - continuing 122,498 107,095
Currency impact (5,066) -
----------------------------------------- --------- ---------
Adjusted operating profit - continuing,
constant currency 117,432 107,095
------------------------------------------ --------- ---------
6 months 6 months
ended ended
30 Sept. 30 Sept.
2017 2016
Calculation: Adjusted earnings per share GBP'000 GBP'000
(pence) - continuing, constant currency
--------------------------------------------- --- --------- ---------
Adjusted earnings - continuing 84,977 72,934
Currency impact (3,385) -
-------------------------------------------- ---- --------- ---------
Adjusted earnings - continuing, constant
currency 81,592 72,934
Weighted average number of ordinary shares
('000) 89,007 88,691
-------------------------------------------------- --------- ---------
Adjusted earnings per share (pence) -
continuing, constant currency 91.67p 82.23p
-------------------------------------------------- --------- ---------
Effective tax rate
Definition
The Group's effective tax rate expresses the income tax expense
before exceptionals and deferred tax attaching to the amortisation
of intangible assets as a percentage of adjusted operating profit
less net interest.
6 months 6 months
ended ended Year ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
---------------------------------------------- --------- --------- -------------
Adjusted operating profit 123,478 117,823 363,551
Net interest (15,692) (16,586) (32,100)
---------------------------------------------- --------- --------- -------------
Earnings before taxation 107,786 101,237 331,451
---------------------------------------------- --------- --------- -------------
Income tax expense 13,196 11,223 45,869
Income tax relating to exceptional items 157 (386) (1,756)
Deferred tax attaching to amortisation
of intangible assets 5,874 5,014 10,674
---------------------------------------------- --------- --------- -------------
Income tax expense before exceptionals
and deferred tax attaching to amortisation
of intangible assets - continuing 19,227 15,851 54,787
Income tax expense before exceptionals
and deferred tax attaching to amortisation
of intangible assets - discontinued 174 1,865 3,217
---------------------------------------------- --------- --------- -------------
Total income tax expense before exceptionals
and deferred tax attaching to amortisation
of intangible assets 19,401 17,716 58,004
---------------------------------------------- --------- --------- -------------
Effective tax rate (%) 18.0% 17.5% 17.5%
---------------------------------------------- --------- --------- -------------
Net capital expenditure
Definition
Net capital expenditure comprises purchases of property, plant
and equipment, proceeds from the disposal of property, plant and
equipment and government grants received in relation to property,
plant and equipment.
6 months 6 months
ended ended Year
ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
------------------------------------------- --------- --------- ---------
Purchase of property, plant and equipment 71,592 65,878 143,698
Proceeds from disposal of property, plant
and equipment (2,525) (6,076) (12,315)
Net capital expenditure 69,067 59,802 131,383
------------------------------------------- --------- --------- ---------
Free cash flow
Definition
Free cash flow is defined by the Group as cash generated from
operations before exceptional items as reported in the Group Cash
Flow Statement after net capital expenditure.
6 months 6 months
ended ended Year
ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
--------------------------------------- --------- --------- ----------
Cash generated from operations before
exceptionals 83,975 141,039 546,870
Net capital expenditure (69,067) (59,802) (131,383)
--------------------------------------- --------- --------- ----------
Free cash flow 14,908 81,237 415,487
--------------------------------------- --------- --------- ----------
Free cash flow (after interest and tax payments)
Definition
Free cash flow (after interest and tax payments) is defined by
the Group as free cash flow after interest paid, income tax paid,
dividends received from equity accounted investments and interest
received.
6 months 6 months
ended ended Year
ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
------------------------------------------ --------- --------- ---------
Free cash flow 14,908 81,237 415,487
Interest paid (32,457) (33,313) (70,108)
Income tax paid (35,905) (28,122) (62,180)
Dividends received from equity accounted
investments 1,317 121 125
Interest received 19,001 19,191 40,966
------------------------------------------ --------- --------- ---------
Free cash flow (after interest and tax
payments) (33,136) 39,114 324,290
------------------------------------------ --------- --------- ---------
Committed acquisition expenditure
Definition
The Group defines committed acquisition expenditure as the total
acquisition cost of subsidiaries as presented in the Group Cash
Flow Statement (excluding amounts related to acquisitions which
were committed to in previous years) and future acquisition related
liabilities for acquisitions committed to during the period.
6 months 6 months
ended ended Year
ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
------------------------------------------- --------- --------- ---------
Net cash outflow on acquisitions during
the period 44,313 6,609 203,327
Net cash outflow on acquisitions which
were committed to in the previous period (31,310) (6,609) (34,372)
Acquisition related liabilities arising
on acquisitions during the period 14,484 1,050 41,041
Acquisition related liabilities which
were committed to in the previous period - (1,050) (14,082)
Amounts committed in the current period 152,672 180,515 358,000
------------------------------------------- --------- --------- ---------
Committed acquisition expenditure 180,159 180,515 553,914
------------------------------------------- --------- --------- ---------
Net working capital
Definition
Net working capital represents the net total of inventories,
trade and other receivables (excluding interest receivable), and
trade and other payables (excluding interest payable, amounts due
in respect of property, plant and equipment and current government
grants).
As at As at As at
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
----------------------------------------------- ------------ ------------ ------------
Inventories 548,903 435,716 456,395
Inventories (asset classified as held
for sale) - - 1,922
Trade and other receivables 1,204,122 997,017 1,222,597
Trade and other receivables (asset classified
as held for sale) - - 33,264
Interest receivable (included in trade
and other receivables) (59) (151) (223)
Trade and other payables (1,831,926) (1,536,255) (1,820,517)
Trade and other payables (asset classified
as held for sale) - - (35,741)
Interest payable (included in trade and
other payables) 5,268 5,342 4,534
Amounts due in respect of property, plant
and equipment (included in trade and other
payables) 4,093 228 6,349
Government grants (included in trade and
other payables) 9 83 9
----------------------------------------------- ------------ ------------ ------------
Net working capital (69,590) (98,020) (131,411)
----------------------------------------------- ------------ ------------ ------------
Working capital (days)
Definition
Working capital days measures how long it takes in days for the
Group to convert working capital into revenue.
As at As at As at
30 Sept. 30 Sept. 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
------------------------- ---------- ---------- ----------
Net working capital (69,590) (98,020) (131,411)
September/March revenue 1,219,059 1,014,498 1,223,575
------------------------- ---------- ---------- ----------
Working capital (days) (1.7 (2.9 (3.3
days) days) days)
------------------------- ---------- ---------- ----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMMMMLFVGNZM
(END) Dow Jones Newswires
November 14, 2017 02:00 ET (07:00 GMT)
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