TIDMDCC
RNS Number : 1983F
DCC PLC
16 May 2017
16 May 2017
DCC Reports a Year of Strong Growth and Development
DCC, the leading international sales, marketing and business
support services group, today announced its results for the year
ended 31 March 2017.
Highlights 2017 2016 % change
----------------------------- ----------- ----------- ---------
DCC Energy volumes (litres) 14.649bn 13.021bn +12.5%
----------------------------- ----------- ----------- ---------
Revenue - continuing(1)
(excl. DCC Energy) GBP3.196bn GBP2.932bn +9.0%
----------------------------- ----------- ----------- ---------
Operating profit(2) -
continuing1 GBP345.0m GBP285.3m +20.9%
----------------------------- ----------- ----------- ---------
Total operating profit2 GBP363.6m GBP300.5m +21.0%
----------------------------- ----------- ----------- ---------
Adjusted earnings per
share2 - continuing1 286.6p 242.8p +18.1%
----------------------------- ----------- ----------- ---------
Total adjusted earnings
per share2 303.7p 257.1p +18.1%
----------------------------- ----------- ----------- ---------
Dividend per share 111.80p 97.22p +15.0%
----------------------------- ----------- ----------- ---------
Free cash flow 3 GBP415.5m GBP291.1m +42.7%
----------------------------- ----------- ----------- ---------
Return on capital employed
- continuing1 20.3% 21.9%
----------------------------- ----------- ----------- ---------
-- All divisions of DCC recorded strong profit growth, with
Group operating profit on a continuing basis increasing by 20.9%
(12.8% on a constant currency basis) to GBP345.0 million.
-- Adjusted earnings per share on a continuing basis up 18.1%
(10.3% on a constant currency basis) to 286.6 pence.
-- Proposed 16.3% increase in the final dividend, which,
together with the interim dividend increase of 12.5%, will see the
total dividend for the year increase by 15.0%, the 23(rd)
consecutive year of dividend growth since DCC listed in 1994.
-- Excellent cash flow performance, with free cash flow
conversion of 114% and a return on total capital employed of
20.3%.
-- Very active period of corporate development, with over GBP550
million committed to acquisitions, including the agreed acquisition
of Esso's retail network in Norway, the agreed acquisition of
Shell's LPG business in Hong Kong & Macau, DCC's first material
step beyond Europe, and further acquisition activity across DCC
Energy, DCC Healthcare and DCC Technology.
-- The agreed disposal of DCC's environmental division for an
enterprise value of GBP219 million brings increased strategic focus
to the Group.
-- The Group expects that the year ending 31 March 2018 will be another year of profit growth and development.
(1) Excluding DCC Environmental, the agreed disposal of which
was announced on 5 April 2017
(2) Excluding net exceptionals and amortisation of intangible
assets
(3) After net capital expenditure and before net exceptionals,
interest and tax payments
Commenting on the results, Tommy Breen, Chief Executive,
said:
"I am very pleased to report that the year ended 31 March 2017
has been a strong year of growth and development for DCC. The
results reflect the continued successful execution of our strategy
in significantly growing our operating profits, converting those
profits into cash and re-deploying capital into our Energy,
Healthcare and Technology businesses.
The Group continues to have the ambition, capacity and
opportunity for further development. We expect that the coming year
will be another year of profit growth and development for DCC."
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 992 778
UK / International: +44 (0)203 427 1905
Passcode: 4979141
Webcast Link: https://edge.media-server.com/m6/p/q6eq9non
This report, a webcast of the presentation and further
information on DCC is available at www.dcc.ie.
For reference, please contact:
Tommy Breen, Chief Executive Tel: +353 1 2799
400
Fergal O'Dwyer, Chief Financial Email: investorrelations@dcc.ie
Officer
Kevin Lucey, Head of Capital Web: www.dcc.ie
Markets
For media enquiries: Powerscourt Tel: +44 20 7250
(Lisa Kavanagh) 1446
Group Results
A summary of the Group's results for the year ended 31 March
2017 is as follows:
2017 2016
GBP'm GBP'm % change
Revenue - continuing(1) 12,270 10,448 +17.4%
Operating profit(2)
DCC Energy 254.9 205.2 +24.3%
DCC Healthcare 49.0 45.0 +8.7%
DCC Technology 41.1 35.1 +17.1%
Operating profit(2) - continuing(1) 345.0 285.3 +20.9%
Operating profit(2) - discontinued operations 18.6 15.2 +22.2%
Group operating profit(2) 363.6 300.5 +21.0%
Equity accounted investments' profit after tax 0.7 0.5
Finance costs (net) (32.1) (29.0)
Profit before net exceptionals, amortisation of intangible
assets and tax 332.2 272.0 +22.1%
Net exceptional charge after tax and non-controlling
interests (24.8) (23.7)
Amortisation of intangible assets (39.2) (31.6)
Profit before tax 268.2 216.7 +23.7%
Taxation (47.3) (36.0)
Profit after tax 220.9 180.7 +22.2%
Non-controlling interests (4.7) (2.7)
Attributable profit 216.2 178.0 +21.4%
Adjusted earnings per share(2) - continuing(1) 286.6p 242.8p +18.1%
Total adjusted earnings per share(2) 303.7p 257.1p +18.1%
Dividend per share 111.80p 97.22p +15.0%
Operating cash flow 546.9 411.7 +32.8%
Free cash flow(3) 415.5 291.1 +42.7%
Net debt at 31 March 121.9 54.5
Total equity at 31 March 1,507.7 1,350.5
Return on capital employed - continuing(1) 20.3% 21.9%
(1) Excluding DCC Environmental, the agreed disposal of which was announced on 5 April 2017
(2) Excluding net exceptionals and amortisation of intangible assets
(3) After net capital expenditure and before net exceptionals, interest and tax payments
----------------------------------------------------------------------------------------------------------------------
Revenue - continuing operations
Revenue from continuing operations increased by 17.4% (11.5% on
a constant currency basis) to GBP12.3 billion.
Overall volumes in DCC Energy increased by 12.5% to 14.6 billion
litres, driven by the full year impact of the acquisition of the
Esso Retail business in France and by the first time contribution
of the acquisitions of Gaz Européen and Dansk Fuels. On a
like-for-like basis, volumes were 1.0% ahead of the prior year. DCC
Energy's revenue increased by 20.7% (14.0% on a constant currency
basis).
Excluding DCC Energy, revenue from continuing operations was up
9.0% (5.0% on a constant currency basis), with revenue in DCC
Technology increasing by 10.1% (5.8% on a constant currency basis)
and revenue in DCC Healthcare increasing by 3.2% (1.3% on a
constant currency basis).
Operating profit - continuing operations
Operating profit from continuing operations increased by 20.9%
to GBP345.0 million (12.8% on a constant currency basis);
approximately one third of the constant currency operating profit
growth was organic. The Group also benefited from the full year
impact of the acquisitions completed during the prior year. The
average sterling/euro translation rate for the year of 1.1956 was
12.7% weaker than the average of 1.3697 in the prior year.
Operating profit in DCC Energy, the Group's largest division,
was 24.3% ahead of the prior year and 13.9% ahead of the prior year
on a constant currency basis. DCC Energy benefited from the full
year impact of the acquisitions of Butagaz and Esso Retail France
in the prior year. Over one third of the constant currency profit
growth was organic and was driven by a strong performance from the
LPG business, despite the headwind of rising product prices.
Operating profit in DCC Healthcare was 8.7% ahead of the prior
year (8.0% on a constant currency basis); approximately two thirds
of the constant currency growth was organic. The business benefited
from a strong organic performance from DCC Health & Beauty
Solutions, although DCC Vital was, as anticipated, impacted
somewhat by the weakness of sterling, particularly in pharma
products. Medisource, acquired by DCC Vital in January 2017, has
traded in line with expectations.
Operating profit in DCC Technology increased by 17.1% (12.5% on
a constant currency basis), benefiting from the contributions from
acquisitions completed in the current and prior year. Approximately
one third of the constant currency operating profit growth was
organic and was driven by a good performance from the UK and Irish
business. A weaker demand environment impacted trading in the
French retail-focused business, although the Swedish and supply
chain businesses experienced better trading conditions and achieved
good organic growth.
An analysis of the divisional performance in each half of the
year, for the Group's continuing operations, is set out below:
2016/17 2015/16 % change
---------------------- ---------------------- -------------------------
H1 H2 FY H1 H2 FY H1 H2 FY
Operating GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
profit*
DCC Energy 76.0 178.9 254.9 52.9 152.3 205.2 +43.8% +17.5% +24.3%
DCC Healthcare 19.8 29.2 49.0 18.4 26.6 45.0 +7.0% +9.8% +8.7%
DCC Technology 11.3 29.8 41.1 8.6 26.5 35.1 +31.9% +12.2% +17.1%
Group 107.1 237.9 345.0 79.9 205.4 285.3 +34.0% +15.8% +20.9%
Adjusted
EPS* (pence) 82.2 204.4 286.6 62.1 180.7 242.8 +32.2% +13.1% +18.1%
* Excluding net exceptionals and amortisation of
intangible assets
Operating profit - discontinued operations
The Group's discontinued operations represent the operations of
DCC Environmental, the disposal of which was announced on 5 April
2017. The disposal is expected to complete during the first quarter
of the Group's financial year ending 31 March 2018.
DCC Environmental achieved very strong organic profit growth,
with operating profit increasing to GBP18.6 million, 22.2% ahead of
the prior year.
Finance costs (net)
Net finance costs increased to GBP32.1 million (2016: GBP29.0
million) primarily due to the non-cash partial unwind of discounted
acquisition related liabilities acquired in the Butagaz
transaction. The underlying finance costs of the Group were broadly
in line with the prior year as they are principally driven by the
level of the Group's gross private placement debt, which remained
largely unchanged. Average net debt during the year was GBP301
million compared to GBP185 million during the year ended 31 March
2016, with the increase reflecting the full year impact of the
completion of the acquisitions of Butagaz and Esso Retail France
during the prior year and the aggregate spend of GBP394 million on
acquisitions and net capital expenditure in the current year.
Profit before net exceptional items, amortisation of intangible
assets and tax
Profit before net exceptional items, amortisation of intangible
assets and tax increased by 22.1% to GBP332.2 million (14.4% on a
constant currency basis).
Net exceptional charge and amortisation of intangible assets
The Group incurred a net exceptional charge after tax and
non-controlling interests of GBP24.8 million as follows:
GBP'm
Restructuring costs 19.3
Acquisition related costs 10.3
Adjustments to contingent acquisition consideration 5.1
IAS39 mark-to-market gain (10.1)
Other 1.6
26.2
Tax and non-controlling interest (1.4)
Net exceptional charge 24.8
----------------------------------------------------- -------
The Group has focused on the efficiency of its operating
infrastructures and sales platforms, particularly in areas where it
has been acquisitive in recent years. The Group incurred an
exceptional charge of GBP19.3 million in relation to restructuring
of existing and acquired businesses. The majority of the charge
relates to restructuring and integration in the Energy division
where the Group has been most acquisitive. The charge also includes
integration costs related to acquisition activity and costs in
respect of the pre-operating period of the new UK national
distribution centre in the Technology division.
Acquisition costs, which include professional fees and tax costs
(such as stamp duty) incurred in evaluating and completing
acquisitions, amounted to GBP10.3 million and reflect the
significant level of development activity undertaken by the Group
during the year.
Most of the Group's debt has been raised in the US Private
Placement market and swapped, using long term interest, currency
and cross currency interest rate derivatives, to both fixed and
floating rate sterling and euro. The level of ineffectiveness
calculated under IAS 39 on the fair value and cash flow hedge
relationships relating to fixed rate debt, together with gains or
losses arising from marking to market swaps not designated as
hedges, offset by foreign exchange translation gains or losses on
the related fixed rate debt, is charged or credited as an
exceptional item. In the year ended 31 March 2017, this amounted to
an exceptional non-cash gain of GBP10.1 million. Following this
credit, the cumulative net exceptional charge taken in respect of
the Group's outstanding US Private Placement debt and related
hedging instruments is GBP5.6 million. This, or any subsequent
similar non-cash charges or gains, will net to zero over the
remaining term of this debt and the related hedging
instruments.
The net increase in the provision for contingent acquisition
consideration is due to the stronger than anticipated trading
performance of a small number of businesses acquired during the
last three years, where earn-out arrangements are in place.
There was a net tax charge of GBP1.7 million and a
non-controlling interest credit of GBP3.1 million in relation to
the above net exceptional charge.
The charge for the amortisation of acquisition related
intangible assets increased to GBP39.2 million from GBP31.6
million, principally reflecting acquisitions completed in the
current and prior year.
Profit before tax
Profit before tax increased by 23.7% to GBP268.2 million.
Taxation
The effective tax rate for the Group increased to 17.5% from 16%
in the prior year. The increase is primarily due to the larger
proportion of the Group's profits now generated in Continental
Europe.
Adjusted earnings per share
Adjusted earnings per share on a continuing basis increased by
18.1% (10.3% on a constant currency basis) to 286.6 pence.
Total adjusted earnings per share also increased by 18.1% (10.8%
on a constant currency basis) to 303.7 pence.
Dividend
The Board is recommending an increase of 16.3% in the final
dividend to 74.63 pence per share, which, when added to the interim
dividend of 37.17 pence per share, gives a total dividend for the
year of 111.80 pence per share. This represents a 15% increase over
the total prior year dividend of 97.22 pence per share. The
dividend is covered 2.6 times by adjusted earnings per share on a
continuing basis (2.5 times in 2016). It is proposed to pay the
final dividend on 20 July 2017 to shareholders on the register at
the close of business on 26 May 2017.
Over its 23 years as a listed company, DCC has an unbroken
record of dividend growth at a compound annual rate of 14.7%.
Cash flow
The Group generated excellent operating and free cash flow
during the year as set out below:
Year ended 31 March 2017 2016
GBP'm GBP'm
Group operating profit 363.6 300.5
Decrease in working capital 84.0 37.6
Depreciation and other 99.3 73.6
Operating cash flow 546.9 411.7
Capital expenditure (net) (131.4) (120.6)
Free cash flow 415.5 291.1
Interest and tax paid, net of dividend from equity accounted investments (91.2) (63.4)
Free cash flow after interest and tax 324.3 227.7
Acquisitions (262.4) (394.0)
Dividends (incl. dividends paid to non-controlling interests) (95.3) (80.9)
Exceptional items/disposals (net) (31.5) (15.4)
Share issues 2.6 197.7
Net outflow (62.3) (64.9)
Opening net (debt)/cash (54.5) 30.0
Translation and other (5.1) (19.6)
Closing net debt (121.9) (54.5)
--------------------------------------------------------------------------- ------------- -------------
Operating cash flow in 2017 was GBP546.9 million compared to
GBP411.7 million in the prior year. Working capital reduced by
GBP84.0 million, with the inflow driven by the increase in the oil
price during the year and a seasonal reduction in working capital
in a number of businesses acquired in the second half of the year.
Overall working capital days were negative 3.3 days sales, compared
to negative 3.9 days sales in the prior year, reflecting the
acquisition during the year of businesses with positive working
capital characteristics. DCC Technology selectively uses supply
chain financing solutions to sell, on a non-recourse basis, a
portion of its receivables relating to certain larger supply
chain/sales and marketing activities. The level of supply chain
financing at 31 March 2017 increased modestly on the prior year and
supply chain financing had a positive impact on Group working
capital days of 4.2 days (31 March 2016: 4.9 days).
Net capital expenditure amounted to GBP131.4 million for the
year (2016: GBP120.6 million) and was net of disposal proceeds of
GBP12.3 million. The increased level of gross capital expenditure
reflects the increasing scale of the Group and also an increase in
development capital expenditure in the Energy division's Retail
business. The net capital expenditure exceeded the depreciation
charge in the year by GBP39.4 million.
The Group's free cash flow amounted to GBP415.5 million, an
excellent 114% conversion of operating profit into cash.
Return on capital employed
The creation of shareholder value through the delivery of
consistent, long-term returns well in excess of its cost of capital
is one of DCC's core strategic aims. The increase in the Group's
operating profit and strong working capital management resulted in
a Group return on capital employed from continuing operations of
20.3%. The return on capital employed by division was as
follows:
2017 2016
DCC Energy 21.6% 24.4%
DCC Healthcare 17.5% 17.1%
DCC Technology 17.1% 17.8%
Group - continuing 20.3% 21.9%
-------------------- ------ ------
As previously reported, in the prior year the overall Group
return and that of DCC Energy was flattered somewhat by the
acquisitions of Butagaz and Esso Retail France which were completed
during the prior year. The pro-forma return for DCC Energy and the
Group for the prior year (i.e. including these acquisitions as if
they had been in place for the full year ended 31 March 2016) would
have been approximately 21% and 20% respectively.
Committed acquisitions, disposal and capital expenditure
Committed acquisition and capital expenditure in the current
year amounted to GBP685.3 million as follows:
Acquisitions Capex Total
GBP'm GBP'm GBP'm
DCC Energy 461.3 79.9 541.2
DCC Healthcare 28.4 8.0 36.4
DCC Technology 64.2 36.9 101.1
DCC Environmental - 6.6 6.6
Total 553.9 131.4 685.3
------------------- ------------------- ----------- -----------------
Acquisition activity
Committed acquisition expenditure amounted to GBP553.9 million
and included:
DCC Energy
Shell LPG Hong Kong & Macau
On 5 April 2017, DCC announced that DCC Energy had reached
agreement with Shell Gas (LPG) Holdings BV to acquire its liquefied
petroleum gas ("LPG") business in Hong Kong and Macau ("Shell
HK&M") based on an enterprise value of HK$1.165 billion (c.
GBP120 million). The business is one of the leading LPG businesses
in Hong Kong and is the market leader in Macau. The business is
required to be separated from the broader Shell Hong Kong
operations and the transaction requires certain regulatory consents
and operating licence approvals. The acquisition is expected to
complete before the end of DCC's financial year ending 31 March
2018.
Shell HK&M is one of the leading LPG sales and marketing
businesses in Hong Kong and Macau, where it has been selling LPG
for almost sixty years. The business provides LPG in bulk, cylinder
and autogas formats to domestic, commercial and industrial
customers. In Hong Kong it is the market leader in supplying piped
LPG to the very large apartment complexes common in the territory.
Shell HK&M supplies the complexes through its infrastructure of
bulk tanks and piping to service the energy needs of over 100,000
households. Shell HK&M is the number three player in the
cylinder market and also supplies autogas to Shell's retail
network. The business is the market leader in the smaller Macau
market. Shell HK&M is headquartered in Kowloon and operates a
terminal and filling plant on Tsing Yi Island.
In the year ended 31 December 2016, the business supplied
approximately 74,000 tonnes of LPG and under DCC's ownership is
expected to deliver an annual operating profit of c. HK$145 million
(c. GBP15 million). Following the completion of the acquisition,
the business will continue to operate under the Shell brand in both
Hong Kong and Macau, based on a long term brand licence
agreement.
The acquisition is consistent with DCC Energy's ambition to
build a substantial presence in the global LPG market. The
acquisition represents a further strengthening of DCC's
relationship with Shell and gives DCC a strong market position in
Hong Kong and Macau. It is also DCC's first material step in
building its business beyond Europe and gives DCC a platform for
development in the growing LPG market in Asia.
Esso Retail Norway
On 7 February 2017, DCC Energy announced 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%(3) 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 will be NOK 2.43 billion (c. GBP235 million), plus
the value of stock in tank at the date of acquisition, all payable
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.
The transaction is subject to customary regulatory approvals and
closing conditions and is expected to complete in the final
calendar quarter of 2017.
(3) Estimate based on Wood MacKenzie market data
Gaz Européen
In January 2017, DCC Energy acquired Gaz Européen Holdings SAS
("Gaz Européen"), a natural gas retail and marketing business which
supplies business and public sector customers in France. DCC
acquired 97% of the share capital of Gaz Européen on completion,
based on an initial enterprise value of EUR110 million (GBP96
million). The remaining shares, which are held by members of Gaz
Européen's management team, will be acquired based on Gaz
Européen's results for the three years ending 31 March 2021, 2022
and 2023.
Gaz Européen is a specialist retailer of natural gas and focuses
on supplying energy management companies, apartment blocks (with
collective heating systems), public authorities and the service
sector in France. In its financial year ended 31 December 2015, the
company supplied c. 5.1 TWh of natural gas (equivalent to
approximately 390,000 tonnes of LPG) and currently supplies c.
10,000 sites. The company is headquartered in Paris and employs 31
staff; it has an experienced and ambitious management team with a
track record of delivering strong growth. In its financial year
ended 31 December 2015, Gaz Européen generated revenue of EUR205
million (GBP178 million) and normalised operating profit of EUR15.7
million (GBP13.7 million).
DCC Energy has, for some time, been developing its presence in
natural gas organically in selected geographies as it believes that
there is a significant opportunity to leverage its sales and
marketing expertise, customer reach and brand recognition in the
LPG and oil distribution markets into complementary adjacencies,
including the natural gas sector. Gaz Européen is DCC Energy's
first major acquisition in natural gas and complements Butagaz's
leading position in LPG in France. One of the key strengths
identified during the acquisition of Butagaz was its brand
recognition amongst French gas consumers generally. The combination
of Butagaz's marketing and brand strength and Gaz Européen's
expertise in the natural gas market will provide an excellent
platform for growth in the French natural gas market.
DCC Healthcare
Medisource
In January 2017, DCC Healthcare strengthened its position in the
procurement, sales and marketing of pharmaceutical products in
Ireland when it completed the acquisition of Medisource Ireland
Limited ("Medisource") for an initial enterprise valuation of
EUR31.5 million (GBP27.4 million).
Medisource is a specialist in the procurement and sale of exempt
medicinal products ("EMPs"). EMPs are pharmaceutical products which
are imported into a market with the authorisation of the relevant
regulatory authority (the Health Products Regulatory Authority in
Ireland) in order to meet requirements of specific patients where
no suitable licenced product is available in that market. The
products are typically licenced in another jurisdiction. Medisource
has a market leadership position in EMPs in Ireland based on
excellent customer service and a strong network of international
suppliers. The acquisition complements DCC Vital's current pharma
product offering in Ireland, strengthens DCC Vital's access to the
hospital and retail pharmacy channel and will provide further
insight into potential pharma product development opportunities.
DCC Healthcare expects to generate a return on its investment in
Medisource in line with the divisional return on capital employed
in its first full year of ownership.
DCC Technology
Hammer
In December 2016, DCC Technology completed the acquisition of
Hammer Consolidated Holdings Limited ("Hammer"), a specialist
distributor of server and storage solutions to resellers in the UK
and Continental Europe. Employing 165 people and based in
Basingstoke, Hampshire, Hammer distributes products for a range of
leading suppliers and also provides product design and build
solutions tailored to the requirements of customers in specific
industries. The business is complementary to DCC Technology's
existing server and storage business and has added almost 1,000 new
reseller customers. In its most recent financial year, Hammer
recorded sales of GBP155.0 million and operating profit of GBP6.3
million. The acquisition was based on an initial enterprise value
of GBP38.3 million and was structured as an initial payment at
completion, followed by earn out payments over three years based on
Hammer's future trading results.
Medium
In November 2016, DCC Technology acquired Medium (U.K.) Limited
("Medium"), a distributor of professional audio visual equipment to
resellers in the UK. Medium, which partners with a number of
leading brands in the market including CTouch, LG, NEC and Samsung,
is complementary to DCC Technology's developing position in
professional audio visual products in the UK market. The
consideration for the acquisition was based on an enterprise
valuation of GBP8.3 million.
DCC also acquired a number of other small businesses during the
year in the Energy, Healthcare and Technology sectors.
Total cash spend on acquisitions for the year ended 31 March
2017
The total cash spend on acquisitions in the year was GBP262.4
million. This included the payment of deferred and contingent
acquisition consideration previously provided of GBP59.1
million.
Disposal
DCC Environmental
On 5 April 2017, DCC announced that it had agreed to sell its
Environmental division to Exponent 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.
DCC expects to receive cash proceeds on completion of
approximately GBP170 million (25% of the British businesses are
owned by DCC's long-standing minority partner). The transaction is
expected to complete in the first quarter of DCC's financial year
ending 31 March 2018. The transaction is expected to give rise to
an exceptional profit in the year ending 31 March 2018 of
approximately GBP30 million.
Capital expenditure
Net capital expenditure for the year of GBP131.4 million (2016:
GBP120.6 million) compares to a depreciation charge of GBP92.0
million (2016: GBP74.8 million). The capital expenditure is net of
GBP12.3 million of proceeds on disposal of fixed assets.
DCC Technology has now successfully completed the construction
and commissioning of a new, purpose built, 450,000 sq. ft. UK
national distribution centre in the north of England, close to the
majority of its existing facilities. The facility is now
operational, with activity being transitioned from the existing
warehousing infrastructure on a phased basis. The transition will
be fully completed by the end of the year ending 31 March 2018.
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. As a result of the
operating cash flow in the year, DCC's financial position remains
very strong. At 31 March 2017, the Group had net debt of GBP121.9
million, total equity of GBP1.5 billion, cash resources, net of
overdrafts, of GBP973 million and a further GBP400 million of
undrawn committed debt facilities. The Group's outstanding term
debt at 31 March 2017 had an average maturity of 5.6 years.
Substantially all of the Group's debt has been raised in the US
Private Placement market with an average credit margin of 1.69%
over floating Euribor/Libor.
At 31 March 2017, the Group's Net Debt: EBITDA was 0.3 times. As
referred to above, the Group has committed to acquire Shell
HK&M and Esso Retail Norway and also to dispose of its
Environmental Division. The pro-forma net impact of these
transactions would be to increase the Group's net debt at 31 March
2017 by approximately GBP185 million equating to a pro-forma Net
Debt: EBITDA of 0.6 times.
Management and organisational changes
As announced on 5 April 2017, Tommy Breen, Chief Executive, will
retire from the Group after over 30 years of service. He will stand
down from his position and from the Board following the conclusion
of the Group's Annual General Meeting on 14 July 2017. He will be
succeeded by Donal Murphy, Executive Director and Managing Director
of DCC Energy. Donal joined DCC in 1998 and has led the growth and
development of the Energy division as Managing Director since 2006.
Prior to his current role he was Managing Director of the
Technology division.
For the year ending 31 March 2018 DCC will report LPG and Retail
& Oil as two separate divisions, consistent with the revised
management and organisational structure of the Group. Henry Cubbon
will continue to lead DCC's LPG business. Eddie O'Brien, previously
Managing Director of DCC's Retail and Fuelcard activities, will
assume responsibility for all Retail & Oil activities. The four
divisional Managing Directors of LPG, Retail & Oil, Healthcare
and Technology will report to the Chief Executive.
Outlook
The Group expects that the year ending 31 March 2018 will be
another year of profit growth and development.
Annual Report and Annual General Meeting
DCC's 2017 Annual Report will be published in June 2017. The
Company's Annual General Meeting will be held at 11.00 am on Friday
14 July 2017 in The InterContinental Hotel, Simmonscourt Road,
Ballsbridge, Dublin 4, Ireland.
Performance Review - Divisional Analysis
DCC Energy 2017 2016 % change
---------------------------- ----------- ------------ ---------
Volumes (litres) 14.649b 13.021b +12.5%
---------------------------- ----------- ------------ ---------
Revenue GBP9,074.1 GBP7,515.3m +20.7%
---------------------------- ----------- ------------ ---------
Operating profit GBP254.9m GBP205.2m +24.3%
---------------------------- ----------- ------------ ---------
Operating profit per
litre 1.74p 1.58p
---------------------------- ----------- ------------ ---------
Return on capital employed 21.6% 24.4%
---------------------------- ----------- ------------ ---------
DCC Energy had an excellent year, with operating profit
increasing to GBP254.9m, 24.3% ahead of the prior year (13.9% ahead
on a constant currency basis) and generating a return on capital
employed of 21.6%. The business benefited from the full year
contribution of acquisitions completed in the prior year and strong
organic growth in the LPG business. In addition, it was another
year of significant development activity for DCC Energy.
DCC Energy sold 14.6 billion litres of product during the year,
an increase of 12.5% over the prior year. Volumes were 1.0% ahead
of the prior year on a like-for-like basis, with the LPG business
achieving strong organic volume growth with commercial and
industrial customers.
DCC will present LPG and Retail & Oil as two separate
divisions from 1 April 2017, in line with the revised management
and organisational structure of the business.
DCC Energy - LPG 2017 2016 % change
---------------------- ---------- ---------- ---------
Volumes (litres) 3.077b 2.295b +34.1%
---------------------- ---------- ---------- ---------
Operating profit GBP160.4m GBP116.8m +37.4%
---------------------- ---------- ---------- ---------
Operating profit per
litre 5.21p 5.08p
---------------------- ---------- ---------- ---------
The LPG business had an excellent year achieving operating
profit growth of 37.4%, 23.9% on a constant currency basis.
Approximately half of the constant currency operating profit growth
was organic. The very strong volume growth of 34.1% included the
benefit of a full year's volumes from Butagaz, acquired in the
prior year, and also from the acquisition of the Gaz Européen
natural gas business in France, acquired in January 2017. The
like-for-like volume growth was 6.1%. This strong organic volume
performance was broadly based, with good growth in Britain, Ireland
and France. The LPG business has continued to focus on growing its
sales to industrial and commercial customers, with the commercial
and environmental benefits of LPG continuing to attract new
customers to the segment.
The operating margin per litre was modestly ahead of the prior
year and declined, as anticipated, on a constant currency basis due
to the impact on mix of lower margin natural gas volumes becoming
more material during the year and a significantly higher product
price environment relative to the prior year.
In recent years, the LPG business has organically developed its
natural gas offering in Ireland and now has a substantial market
share in the commercial sector of the market. In January 2017, DCC
completed the acquisition of Gaz Européen, a specialist retailer of
natural gas to business customers in France, principally
co-ownership housing. The business has performed in line with
expectation since acquisition. It is intended to launch a start-up
consumer offering in natural gas during the coming year, which will
require investment in sales and marketing, but importantly, will
leverage the natural gas operations and expertise of Gaz Europeén
and the Butagaz brand, France's most-recognised gas brand.
On 5 April 2017, DCC announced that agreement had been reached
with Shell Gas (LPG) Holdings BV to acquire its liquefied petroleum
gas business in Hong Kong and Macau ("Shell HK&M"). The
business is one of the leading LPG businesses in Hong Kong and is
the market leader in Macau. In its most recent financial year to 31
December 2016, Shell HK&M distributed approximately 74,000
tonnes of LPG to its customers and under DCC's ownership is
expected to achieve operating profit of HK$145 million (c. GBP15
million). The acquisition gives DCC a strong market position in
Hong Kong and Macau and provides a platform for development in the
growing LPG market in Asia.
Following the completion of the acquisition of Shell HK&M,
the LPG business will have strong market leadership positions in
eight countries and is well placed to continue its development in
existing territories, build on its emerging position in natural gas
and, over time, further develop its geographic footprint.
DCC Energy - Retail & 2017 2016 % change
Oil
----------------------- --------- --------- ---------
Volumes (litres) 11.572b 10.726b +7.9%
----------------------- --------- --------- ---------
Operating profit GBP94.5m GBP88.4m +6.9%
----------------------- --------- --------- ---------
Operating profit per
litre 0.82p 0.82p
----------------------- --------- --------- ---------
DCC Energy Retail & Oil had a good year, with operating
profit growth of 6.9% (1.2% on a constant currency basis). The
volume growth of 7.9% was driven by the inclusion for the full year
of the Esso Retail business in France and the acquisition of Dansk
Fuels in Denmark in November 2016. Organically, volumes and
operating profits were in line with the prior year.
The Retail businesses achieved good growth during the year,
benefiting from the full year contribution from the Esso Retail
business in France and good performances from the Swedish and
Fuelcard businesses. The Retail business continues to invest in
building its network of sites and leveraging its strong sales
offering in fuel cards in Britain. The Oil business continued to
experience difficult trading conditions in Britain and Ireland,
however good progress was made in the development of the business
in adjacent areas, such as aviation and lubricants. The
restructuring and integration of Dansk Fuels, Shell's Danish
commercial, aviation and retail business acquired in November 2016,
is progressing in line with expectations.
On 7 February 2017, DCC announced that agreement had been
reached with Esso Norges AS to acquire its retail petrol station
network in Norway. The retail network is the third largest in
Norway with approximately 20% of retail volumes and comprises a
national network of 142 company-operated sites (127 retail service
stations and 15 unmanned stations) and contracts to supply 108
Esso-branded dealer owned stations (together referred to as "Esso
Retail Norway"). Esso Retail Norway sells c. 600 million litres of
fuel annually. The majority of the stations are in the more
populous south of the country and, of the 142 company-operated
sites, 110 are held freehold, with 32 being leasehold.
The agreement to acquire Esso Retail Norway will see DCC
Energy's Retail & Oil business operate in eight countries in
Europe, supplying commercial, industrial, domestic and retail
customers. The business will operate a retail network of c. 1,000
sites and supply an additional 2,000 dealer-owned stations.
DCC Healthcare 2017 2016 % change
---------------------------- ---------- ---------- ---------
Revenue GBP506.5m GBP490.7m +3.2%
---------------------------- ---------- ---------- ---------
Operating profit GBP49.0m GBP45.0m +8.7%
---------------------------- ---------- ---------- ---------
Operating margin 9.7% 9.2%
---------------------------- ---------- ---------- ---------
Return on capital employed 17.5% 17.1%
---------------------------- ---------- ---------- ---------
DCC Healthcare performed strongly during the year, generating
operating profit growth of 8.7% (8.0% on a constant currency basis)
and approximately two thirds of the constant currency profit growth
was organic. The business again improved its operating margin and
continues to generate excellent returns on capital employed.
DCC Vital, which is focused on the sales and marketing of
medical devices and pharmaceuticals to healthcare providers in
Britain and Ireland, generated good operating profit growth.
In Britain, DCC Vital generated strong profit growth in the
supply of products and services to general practitioners ("GP's"),
enhancing its market leadership position in that sector. The
business also grew its sales of medical devices into hospitals,
particularly in the areas of laparoscopic surgery and anaesthesia.
As reported previously, pharma margins were impacted by the weaker
sterling exchange rate. In Ireland, DCC Vital grew its pharma sales
both organically and by acquisition. In January 2017, it enhanced
its offering to Irish hospital and retail pharmacy customers with
the acquisition of Medisource, the market leader in the sourcing
and supply of exempt medicinal products. Medisource has performed
well since acquisition. DCC Vital also grew its sales of medical
devices to hospitals in Ireland, with particularly good growth in
the diagnostics area. In addition, the business successfully
launched a range of products for the Irish GP market, leveraging
its existing GP supplies portfolio and infrastructure in
Britain.
DCC Health & Beauty Solutions, which provides outsourced
solutions to international nutrition and beauty brand owners,
continued its track record of very strong organic revenue and
profit growth, benefiting from further investment in sales and
product development resources. The business generated strong sales
growth in nutrition across all of its product formats - tablets,
capsules, soft gels and liquids - with particularly strong growth
in soft gels and liquids. The sales growth was achieved with
customers across its key markets of Britain, Scandinavia and
continental Europe. The business's activities in the beauty sector
also performed very well with strong sales growth across a range of
customers, particularly in the premium skincare area. Design Plus,
acquired in September 2015, generated very strong organic sales and
profit growth, benefiting from sales growth into the US market and
cross-selling into existing DCC Health & Beauty customers.
DCC Healthcare is well placed to continue to build on its track
record of organic and acquisitive growth. The business is ambitious
to expand its geographic footprint and to enhance its product and
service offering to healthcare providers and health and beauty
brand owners.
DCC Technology 2017 2016 % change
---------------------------- ----------- ---------- ---------
Revenue GBP2.689bn GBP2.442b +10.1%
---------------------------- ----------- ---------- ---------
Operating profit GBP41.1m GBP35.1m +17.1%
---------------------------- ----------- ---------- ---------
Operating margin 1.5% 1.4%
---------------------------- ----------- ---------- ---------
Return on capital employed 17.1% 17.8%
---------------------------- ----------- ---------- ---------
DCC Technology, which trades as Exertis, achieved strong
operating profit growth of 17.1% (12.5% on a constant currency
basis), reflecting organic profit growth in the UK and Ireland and
the benefit of the acquisitions of Hammer and CUC completed in the
current and prior year respectively.
The UK business generated strong growth. The business benefited
from the acquisition of Hammer and good organic growth in audio
visual, print and office supplies, smart technology and security
products, which more than offset the continued weak market for
computing and mobile products. Hammer, acquired in December 2016,
has performed well since acquisition and has significantly
strengthened the server and storage offering of Exertis,
particularly in the provision of products and services to the
growing application and cloud-service provider market. The
acquisition, together with recent investments in the wireless
networking, security and audio visual business units, have enabled
the UK business to further develop its vendor portfolio and
identify opportunities to extend its enterprise solutions
offering.
The UK business has completed and commissioned its new national
distribution centre in Lancashire. The centre is now operational
and the transition from the business' existing facilities will be
completed by the end of the financial year ending 31 March 2018.
The upgrade of the business' technology platform is also being
implemented on a phased basis and is progressing in line with
expectations.
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. The
business in the Middle East, although modest, achieved very strong
organic growth as it continues to expand its supplier relationships
and customer reach in the region.
DCC Technology's business in Continental Europe recorded a mixed
performance. CUC, now renamed Exertis Connect, which was acquired
in December 2015, performed well and has successfully extended its
cable and connector product range into the UK and Sweden. Operating
profit declined in the French consumer products business reflecting
a weak demand environment, particularly for consumer storage and
navigation products, which resulted in margin pressure. The
business in the Nordic region generated good growth, driven by
continued growth in audio visual products and the organic expansion
of its operations into Norway.
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.
Forward-looking statements
This announcement contains some forward-looking statements that
represent DCC's expectations for its business, based on current
expectations about future events, which by their nature involve
risk and uncertainty. DCC believes that its expectations and
assumptions with respect to these forward-looking statements are
reasonable, however because they involve risk and uncertainty as to
future circumstances, which are in many cases beyond DCC's control,
actual results or performance may differ materially from those
expressed in or implied by such forward-looking statements.
Group Income Statement
For the year ended 31 March 2017
2017 Restated 2016
-------------------------------------------- --------------------------------------------
Pre Exceptionals Pre Exceptionals
exceptionals (note 5) Total exceptionals (note Total
5)
Continuing Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
operations
Revenue 4 12,269,802 - 12,269,802 10,447,630 - 10,447,630
Cost of sales (11,006,805) - (11,006,805) (9,437,643) - (9,437,643)
------------- ------------- -------------- -------------- ------------- -------------
Gross profit 1,262,997 - 1,262,997 1,009,987 - 1,009,987
Administration
expenses (323,320) - (323,320) (280,541) - (280,541)
Selling and
distribution
expenses (605,182) - (605,182) (455,769) - (455,769)
Other operating
income 28,297 1,879 30,176 25,124 13,609 38,733
Other operating
expenses (17,787) (38,176) (55,963) (13,456) (27,261) (40,717)
------------- ------------- -------------- -------------- ------------- -------------
Operating profit before
amortisation
of intangible assets 345,005 (36,297) 308,708 285,345 (13,652) 271,693
Amortisation of intangible
assets (39,130) - (39,130) (31,146) - (31,146)
-------------- ------------- -------------
Operating profit 4 305,875 (36,297) 269,578 254,199 (13,652) 240,547
Finance costs (72,910) - (72,910) (64,790) (9,419) (74,209)
Finance income 40,973 10,101 51,074 35,962 - 35,962
Equity accounted investments'
profit after tax 712 - 712 504 - 504
-------------- ------------- -------------
Profit before tax 274,650 (26,196) 248,454 225,875 (23,071) 202,804
Income tax
expense (44,113) (1,756) (45,869) (33,707) 710 (32,997)
------------- ------------- -------------- -------------- ------------- -------------
Profit for the year
(continuing operations) 230,537 (27,952) 202,585 192,168 (22,361) 169,807
Profit for the
year from
discontinued
operations 8 15,160 - 15,160 12,224 (988) 11,236
------------- ------------- -------------- -------------- ------------- -------------
Profit after tax
for the
financial
year 1 245,697 (27,952) 217,745 204,392 (23,349) 181,043
------------- ------------- -------------- -------------- ------------- -------------
Profit
attributable
to:
Owners of the
Parent 216,197 178,031
Non-controlling
interests 1,548 3,012
-------------- -------------
217,745 181,043
-------------- -------------
Earnings per
ordinary
share
Basic earnings
per share 6 243.64p 202.64p
Diluted earnings
per share 6 242.00p 201.02p
Basic adjusted
earnings per
share 6 303.68p 257.14p
Diluted adjusted
earnings per
share 6 301.63p 255.07p
-------------- -------------
Earnings per ordinary share
- continuing operations
Basic earnings
per share 6 226.56p 189.85p
Diluted earnings
per share 6 225.04p 188.33p
Basic adjusted
earnings per
share 6 286.59p 242.78p
Diluted adjusted
earnings per
share 6 284.66p 240.83p
-------------- -------------
Group Statement of Comprehensive Income
For the year ended 31 March 2017
Restated
2017 2016
GBP'000 GBP'000
Group profit for the financial
year 217,745 181,043
Other comprehensive income:
Items that may be reclassified
subsequently to profit or
loss
Currency translation 37,084 37,971
Movements relating to
cash flow hedges (6,803) 2,230
Movement in deferred tax
liability on cash flow
hedges 1,334 120
-------- ---------
31,615 40,321
-------- ---------
Items that will not be reclassified
to profit or loss
Group defined benefit pension
obligations:
- remeasurements (3,056) 4,894
- movement in deferred tax
asset 413 (570)
-------- ---------
(2,643) 4,324
-------- ---------
Other comprehensive income
for the financial year, net
of tax 28,972 44,645
-------- ---------
Total comprehensive income
for the financial year 246,717 225,688
-------- ---------
Attributable to:
Owners of the Parent 242,735 220,411
Non-controlling interests 3,982 5,277
-------- ---------
246,717 225,688
-------- ---------
Attributable to:
Continuing operations 230,199 212,978
Discontinued operations 16,518 12,710
-------- ---------
246,717 225,688
-------- ---------
Group Balance Sheet
As at 31 March 2017
2017 2016
Notes GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 750,020 739,503
Intangible assets 1,422,572 1,297,065
Equity accounted investments 24,938 22,139
Deferred income tax assets 22,619 21,285
Derivative financial instruments 273,767 209,518
2,493,916 2,289,510
------------ -----------
Current assets
Inventories 456,395 393,948
Trade and other receivables 1,222,597 916,069
Derivative financial instruments 18,233 15,915
Cash and cash equivalents 1,048,064 1,182,034
------------ -----------
2,745,289 2,507,966
Assets classified as held
for sale 8 193,170 -
2,938,459 2,507,966
Total assets 5,432,375 4,797,476
------------ -----------
EQUITY
Capital and reserves attributable
to owners of the Parent
Share capital 15,455 15,455
Share premium 277,211 277,211
Share based payment reserve 9 18,146 14,954
Cash flow hedge reserve 9 (13,581) (8,112)
Foreign currency translation
reserve 9 105,537 70,887
Other reserves 9 932 932
Retained earnings 1,074,434 948,316
------------ -----------
Equity attributable to
owners of the Parent 1,478,134 1,319,643
Non-controlling interests 29,587 30,833
------------ -----------
Total equity 1,507,721 1,350,476
------------ -----------
LIABILITIES
Non-current liabilities
Borrowings 1,319,967 1,260,421
Derivative financial instruments 506 343
Deferred income tax liabilities 155,297 133,646
Post employment benefit
obligations 11 29 347
Provisions for liabilities 255,650 213,115
Acquisition related liabilities 66,617 81,411
Government grants 261 904
------------ -----------
1,798,327 1,690,187
------------ -----------
Current liabilities
Trade and other payables 1,820,517 1,437,832
Current income tax liabilities 25,051 45,172
Borrowings 148,445 192,804
Derivative financial instruments 5,894 8,401
Provisions for liabilities 31,022 31,373
Acquisition related liabilities 28,300 41,231
------------ -----------
2,059,229 1,756,813
Liabilities associated
with assets classified
as held for sale 8 67,098 -
2,126,327 1,756,813
Total liabilities 3,924,654 3,447,000
------------ -----------
Total equity and liabilities 5,432,375 4,797,476
------------ -----------
Net debt included above
(including cash attributable
to assets held for sale) 10 (121,949) (54,502)
------------ -----------
Group Statement of Changes in Equity
For the year Attributable to owners
ended 31 of the Parent
March 2017
---------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
9)
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
--------------- ------------------ --------------- ------------- ------------ ---------------- ------------
For the year Attributable to owners
ended 31 of the Parent
March 2016
----------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
9)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2015 14,688 83,032 849,119 35,909 982,748 4,245 986,993
Profit for the
financial
year - - 178,031 - 178,031 3,012 181,043
Currency
translation - - - 35,706 35,706 2,265 37,971
Group defined
benefit
pension
obligations:
- remeasurements - - 4,894 - 4,894 - 4,894
- movement in
deferred
tax asset - - (570) - (570) - (570)
Movements
relating to
cash flow
hedges - - - 2,230 2,230 - 2,230
Movement in
deferred
tax liability
on cash
flow hedges - - - 120 120 - 120
Total
comprehensive
income - - 182,355 38,056 220,411 5,277 225,688
Issue of share
capital 767 194,179 - - 194,946 - 194,946
Re-issue of
treasury
shares - - 2,781 - 2,781 - 2,781
Share based
payment - - - 2,198 2,198 - 2,198
Dividends - - (80,938) - (80,938) - (80,938)
Non-controlling
interest
arising on
acquisition - - (5,001) 2,498 (2,503) 21,311 18,808
At 31 March 2016 15,455 277,211 948,316 78,661 1,319,643 30,833 1,350,476
--------------- ------------------ --------------- ------------- ------------- ---------------- -------------
Group Cash Flow Statement
For the year ended 31
March 2017
2017 2016
Note GBP'000 GBP'000
Cash flows from operating
activities
Profit for the financial
year 217,745 181,043
Add back non-operating
expenses/(income)
- tax 49,054 35,314
- share of equity accounted
investments' profit (712) (504)
- net operating exceptionals 36,297 14,640
- net finance costs 21,999 38,408
---------- ----------
Group operating profit
before exceptionals 324,383 268,901
Share-based payments expense 3,192 2,198
Depreciation 92,015 74,822
Amortisation of intangible
assets 39,168 31,622
(Profit)/loss on disposal
of property, plant and
equipment (173) 415
Amortisation of government
grants (235) (419)
Other 4,571 (3,412)
Decrease in working capital 83,949 37,585
---------- ----------
Cash generated from operations
before exceptionals 546,870 411,712
Exceptionals (31,269) (19,567)
---------- ----------
Cash generated from operations 515,601 392,145
Interest paid (70,108) (64,432)
Income tax paid (62,180) (35,346)
---------- ----------
Net cash flows from operating
activities 383,313 292,367
---------- ----------
Investing activities
Inflows:
Proceeds from disposal
of property, plant and
equipment 12,315 13,523
Dividends received from
equity accounted investments 125 365
Disposal of subsidiaries
and equity accounted investments - 4,173
Interest received 40,966 36,004
53,406 54,065
---------- ----------
Outflows:
Purchase of property,
plant and equipment (143,698) (134,172)
Acquisition of subsidiaries 12 (203,327) (390,042)
Payment of accrued acquisition
related liabilities (59,069) (3,913)
---------- ----------
(406,094) (528,127)
---------- ----------
Net cash flows from investing
activities (352,688) (474,062)
---------- ----------
Financing activities
Inflows:
Proceeds from issue of
shares 2,600 197,727
Net cash inflow on derivative
financial instruments 14,212 1,953
Increase in finance lease
liabilities - 59
16,812 199,739
---------- ----------
Outflows:
Repayment of interest-bearing
loans and borrowings (108,140) (14,832)
Repayment of finance lease
liabilities (177) (151)
Dividends paid to owners
of the Parent 7 (90,036) (80,938)
Dividends paid to non-controlling (5,228) -
interests
(203,581) (95,921)
---------- ----------
Net cash flows from financing
activities (186,769) 103,818
---------- ----------
Change in cash and cash
equivalents (156,144) (77,877)
Translation adjustment 38,929 38,249
Cash and cash equivalents
at beginning of year 1,090,037 1,129,665
---------- ----------
Cash and cash equivalents
at end of year 972,822 1,090,037
---------- ----------
Cash and cash equivalents
consists of:
Cash and short term bank
deposits 1,048,064 1,182,034
Overdrafts (88,041) (91,997)
Cash and short term deposits 12,799 -
attributable to assets held
for sale
972,822 1,090,037
---------- ----------
Notes to the Condensed Financial Statements
For the year ended 31 March 2017
1. Basis of Preparation
The financial information, from the Group Income Statement to
note 16, contained in this preliminary results statement has been
derived from the Group financial statements for the year ended 31
March 2017 and is presented in sterling, rounded to the nearest
thousand. The financial information does not include all the
information and disclosures required in the annual financial
statements. The Annual Report will be distributed to shareholders
and made available on the Company's website www.dcc.ie. It will
also be filed with the Companies Registration Office. The auditors
have reported on the financial statements for the year ended 31
March 2017 and their report was unqualified. The financial
information for the year ended 31 March 2016 represents an
abbreviated, restated (see note 8) version of the Group's statutory
financial statements on which an unqualified audit report was
issued and which have been filed with the Companies Registration
Office.
The financial information presented in this report has been
prepared in accordance with the Listing Rules of the Financial
Services Authority and the accounting policies that the Group has
adopted for 2017 which are consistent with those applied in the
prior year.
2. Accounting Policies
There were no changes to IFRS which became effective for the
Group during the financial year which resulted in material changes
to the Group's consolidated financial statements.
3. Reporting Currency
The Group's financial statements are presented in sterling,
denoted by the symbol 'GBP'. Results and cash flows of operations
based in non-sterling countries have been translated into sterling
at average rates for the year, and the related balance sheets have
been translated at the rates of exchange ruling at the balance
sheet date. The principal exchange rates used for translation of
results and balance sheets into sterling were as follows:
Average rate Closing
rate
---------------------- --------------------
2017 2016 2017 2016
StgGBP1= StgGBP1= StgGBP1= StgGBP1=
Euro 1.1956 1.3697 1.1689 1.2633
Swedish Krona 11.3729 12.7937 11.1423 11.6547
Danish Krone 8.9150 10.2297 8.6942 9.4134
Norwegian Krone 10.9811 12.4995 10.7169 11.8938
4. Segmental Reporting
DCC is an international sales, marketing and business support
services group headquartered in Dublin, Ireland. Operating segments
are reported in a manner consistent with the internal reporting
provided to the chief operating decision maker. The chief operating
decision maker has been identified as Mr. Tommy Breen, Chief
Executive and his executive management team.
As announced on 5 April 2017, the Group entered into an
agreement to dispose of its Environmental division. Following this
change in the composition of operating segments, segmental
reporting has been revised and the prior year segmental disclosures
have been restated as required under IFRS 8.
The Group is organised into three operating segments: DCC
Energy, DCC Healthcare and DCC Technology.
DCC Energy is the leading liquefied petroleum gas ('LPG') and
oil sales and marketing business in Europe with a growing position
in the retail petrol station market.
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 European sales, marketing and
services partner for global technology brands.
Net finance costs and income tax are managed on a centralised
basis and therefore these items are not allocated between operating
segments for the purpose of presenting information to the chief
operating decision maker and accordingly are not included in the
detailed segmental analysis below. Intersegment revenue is not
material and thus not subject to separate disclosure.
An analysis of the Group's performance, based on continuing
operations, by operating segment and geographic location
is as follows:
(a) By operating segment
Year ended 31
March 2017
-----------------------------------------------------------
DCC DCC DCC
Continuing operations Energy Healthcare Technology Total
GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 9,074,135 506,562 2,689,105 12,269,802
--------- ---------------- --------------- -------------
Operating profit* 254,941 48,944 41,120 345,005
Amortisation of intangible
assets (28,239) (7,258) (3,633) (39,130)
Net operating exceptionals
(note 5) (20,487) (2,695) (13,115) (36,297)
--------- ---------------- --------------- -------------
Operating profit 206,215 38,991 24,372 269,578
--------- ---------------- --------------- -------------
Year ended 31 March 2016
(restated)
-------------------------------------------------------------------
DCC DCC DCC
Continuing operations
Energy Healthcare Technology Total
GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 7,515,308 490,617 2,441,705 10,447,630
--------- ---------------- --------------- -------------
Operating profit* 205,181 45,039 35,125 285,345
Amortisation of intangible
assets (21,381) (7,138) (2,627) (31,146)
Net operating exceptionals
(note 5) (9,057) 5,859 (10,454) (13,652)
--------- ---------------- --------------- -------------
Operating profit 174,743 43,760 22,044 240,547
--------- ---------------- --------------- -------------
(b) By geography
The Group has a presence in 15 countries worldwide. The
following represents a geographical analysis of revenue and
non-current assets in accordance with IFRS 8, which requires
disclosure of information about the country of domicile (Republic
of Ireland) and countries with material revenue and non-current
assets.
Revenue from continuing operations is derived almost entirely
from the sale of goods and is disclosed based on the location of
the entity selling the goods. The analysis of non-current assets is
based on the location of the assets. There are no material
dependencies or concentrations on individual customers which would
warrant disclosure under IFRS 8.
Non-current
Revenue assets**
------------------------ --------------------
Restated
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Republic of Ireland 759,439 639,149 123,348 132,892
United Kingdom 7,239,193 6,852,640 985,717 1,010,908
France 2,402,290 1,487,875 869,895 733,287
Other 1,868,880 1,467,966 218,570 181,620
----------- ----------- --------- ---------
12,269,802 10,447,630 2,197,530 2,058,707
----------- ----------- --------- ---------
* Operating profit before amortisation of intangible assets and
net operating exceptionals
** Non-current assets comprise intangible assets, property,
plant and equipment and equity accounted investments
5. Exceptionals
Restated
2017 2016
GBP'000 GBP'000
Restructuring costs (19,345) (15,777)
Acquisition and related costs (10,308) (7,226)
Adjustments to contingent acquisition
consideration (5,114) 6,290
Impairment of property, plant
and equipment (1,164) (947)
Gain arising from legal case
settlements - 4,291
Legal and other operating exceptional
items (366) (283)
Net operating exceptional items (36,297) (13,652)
Mark to market of swaps and
related debt 10,101 (9,419)
--------- ---------
Net exceptional items before
taxation (26,196) (23,071)
Tax attributable to net exceptional
items (1,756) 710
--------- ---------
Net exceptional items after
taxation (continuing operations) (27,952) (22,361)
Net exceptional items relating
to discontinued operations - (988)
--------- ---------
Net exceptional items after
taxation (27,952) (23,349)
Non-controlling interest share
of net exceptional items after
taxation 3,138 (323)
--------- ---------
Net exceptional items attributable
to owners of the Parent (24,814) (23,672)
--------- ---------
The Group has focused on the efficiency of its operating
infrastructures and sales platforms, particularly in areas where it
has been acquisitive in recent years. The Group incurred an
exceptional charge of GBP19.345 million (2016: GBP15.777 million)
in relation to restructuring of existing and acquired businesses.
The majority of the charge relates to restructuring and integration
in the Energy division where the Group has been most acquisitive.
The charge also includes integration costs related to acquisition
activity and costs in respect of the pre-operating period of the
new UK national distribution centre in the Technology division.
Acquisition costs, which include professional fees and tax costs
(such as stamp duty) incurred in evaluating and completing
acquisitions, amounted to GBP10.308 million (2016: GBP7.226
million) and reflect the significant level of development activity
undertaken by the Group during the year.
The net increase in the provision for contingent acquisition
consideration of GBP5.114 million (2016: decrease of GBP6.290
million) is due to the stronger than anticipated trading
performance of a small number of businesses acquired during the
last three years, where earn-out arrangements are in place.
Most of the Group's debt has been raised in the US Private
Placement market and swapped, using long term interest, currency
and cross currency interest rate derivatives, to both fixed and
floating rate sterling and euro. The level of ineffectiveness
calculated under IAS 39 on the fair value and cash flow hedge
relationships relating to fixed rate debt, together with gains or
losses arising from marking to market swaps not designated as
hedges, offset by foreign exchange translation gains or losses on
the related fixed rate debt, is charged or credited as an
exceptional item. In the year ended 31 March 2017, this amounted to
an exceptional non-cash gain of GBP10.101 million (2016: charge of
GBP9.419 million). Following this credit, the cumulative net
exceptional charge taken in respect of the Group's outstanding US
Private Placement debt and related hedging instruments is GBP5.6
million. This, or any subsequent similar non-cash charges or gains,
will net to zero over the remaining term of this debt and the
related hedging instruments.
There was a net tax charge of GBP1.756 million (2016: credit of
GBP0.710 million) and a non-controlling interest credit of GBP3.138
million (2016: charge of GBP0.323 million) in relation to the above
net exceptional charge.
The gain arising from legal case settlements in the prior year
of GBP4.291 million was primarily due to a final cash recovery in
respect of the Pihsiang legal claim.
6. Earnings per Ordinary Share
Discontinued Discontinued
Continuing operations Continuing operations
operations (note Total operations (note Total
8) 8)
2017 2017 2017 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit attributable
to owners of the
Parent 201,037 15,160 216,197 166,795 11,236 178,031
Amortisation of
intangible assets
after tax 28,456 6 28,462 23,811 390 24,201
Exceptionals after
tax (note 5) 24,814 - 24,814 22,684 988 23,672
---------- ------------ --------- ---------- ---------------- -----------
Adjusted profit
after taxation and
non-controlling
interests 254,307 15,166 269,473 213,290 12,614 225,904
---------- ------------ --------- ---------- ---------------- -----------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
2017 2017 2017 2016 2016 2016
Basic earnings per pence pence pence pence
ordinary share pence pence
Basic earnings per
ordinary share 226.56p 17.08p 243.64p 189.85p 12.79p 202.64p
Amortisation of
intangible assets
after tax 32.07p 0.01p 32.08p 27.11p 0.44p 27.55p
Exceptionals after
tax 27.96p - 27.96p 25.82p 1.13p 26.95p
---------- ------------ --------- ---------- ---------------- -----------
Adjusted basic earnings
per
ordinary share 286.59p 17.09p 303.68p 242.78p 14.36p 257.14p
---------- ------------ --------- ---------- ---------------- -----------
Weighted average
number of ordinary
shares in issue
(thousands) 88,735 87,854
--------- -----------
Basic earnings per share is calculated by dividing the profit
attributable to owners of the Parent by the weighted average number
of ordinary shares in issue during the year, excluding ordinary
shares purchased by the Company and held as treasury shares. The
adjusted figures for basic earnings per ordinary share (a non-GAAP
financial measure) are intended to demonstrate the results of the
Group after eliminating the impact of amortisation of intangible
assets and net exceptionals.
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
2017 2017 2017 2016 2016 2016
Diluted earnings pence pence pence pence
per ordinary share pence pence
Basic earnings per
ordinary share 225.04p 16.96p 242.00p 188.33p 12.69p 201.02p
Amortisation of
intangible assets
after tax 31.84p 0.01p 31.85p 26.89p 0.43p 27.32p
Exceptionals after
tax 27.78p - 27.78p 25.61p 1.12p 26.73p
---------- -------------------- --------- ---------- ------------ -----------
Adjusted basic earnings
per
ordinary share 284.66p 16.97p 301.63p 240.83p 14.24p 255.07p
---------- -------------------- --------- ---------- ------------ -----------
Weighted average
number of ordinary
shares in issue
(thousands) 89,338 88,564
--------- -----------
The earnings used for the purposes of the continuing diluted
earnings per ordinary share calculations were GBP201.037 million
(2016: GBP166.795 million) and GBP254.307 million (2016: GBP213.290
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 GBP15.160 million
(2016: GBP11.236 million) and GBP15.166 million (2016: GBP12.614
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 year
ended 31 March 2017 was 89.338 million (2016: 88.564 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:
2017 2016
'000 '000
Weighted average number of ordinary
shares in issue 88,735 87,854
Dilutive effect of options and awards 603 710
------ ------
Weighted average number of ordinary
shares for diluted earnings per share 89,338 88,564
------ ------
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.
7. Dividends
2017 2016
GBP'000 GBP'000
Final - paid 64.18 pence
per share on 21 July 2016
(2016: paid 55.81 pence
per share on 23 July 2015) 57,621 50,646
Interim - paid 37.17 pence
per share on 12 December
2016
(2016: paid 33.04 pence
per share on 7 December
2015) 32,415 30,292
90,036 80,938
--------------------- ---------
The Directors are proposing a final dividend in respect of the
year ended 31 March 2017 of 74.63 pence per ordinary share
(GBP66.284 million). This proposed dividend is subject to approval
by the shareholders at the Annual General Meeting.
8. Discontinued Operations
As announced on 5 April 2017, the Group entered into an
agreement to dispose of the Environmental segment. The proceeds on
disposal will be used to fund the continued development of DCC's
Energy, Healthcare and Technology divisions. The disposal is
expected to complete in the quarter to 30 June 2017 at which time
control of the Environmental businesses will pass to the acquirer.
The transaction is expected to give rise to an exceptional profit
in the year ending 31 March 2018 of approximately GBP30
million.
The conditions for the segment to be classified as a
discontinued operation have been satisfied, and, accordingly, the
results of the Environmental segment are presented separately as
discontinued operations in the Group Income Statement and the
assets and liabilities of this segment are classified as an asset
held for sale at the balance sheet date.
The following table details the results of discontinued
operations included in the Group Income Statement:
2017 2016
GBP'000 GBP'000
Revenue 175,232 153,455
Cost of sales (119,654) (107,551)
---------- ----------
Gross profit 55,578 45,904
Operating expenses (37,032) (30,726)
---------- ----------
Operating profit before amortisation
of intangible assets and exceptional
items 18,546 15,178
Amortisation of intangible
assets (38) (476)
Net operating exceptionals - (988)
---------- ----------
Operating profit 18,508 13,714
Net finance costs (163) (161)
---------- ----------
Profit before tax 18,345 13,553
Income tax expense (3,185) (2,317)
---------- ----------
Profit from discontinued operations
after tax 15,160 11,236
---------- ----------
The following table details the cash flow from discontinued
operations included in the Group Cash Flow Statement:
2017 2016
GBP'000 GBP'000
Net cash flow from operating
activities 22,461 19,153
Net cash flow from investing
activities (6,661) (12,389)
Net cash flow from discontinued
operations 15,800 6,764
-------- ---------
The fair value less costs to sell of the major classes of assets
and liabilities held for sale as at 31 March 2017 are as
follows:
2017
GBP'000
Assets
Property, plant and equipment 65,551
Intangible assets 79,335
Deferred income tax assets 298
Inventories 1,922
Trade and other receivables 33,264
Interest receivable 1
Cash and cash equivalents 12,799
---------
Assets classified as held for
sale 193,170
---------
Liabilities
Trade and other payables (35,741)
Amounts due in respect of property,
plant and equipment (32)
Current income tax liabilities (3,533)
Deferred income tax liabilities (357)
Provisions for liabilities
and charges (3,800)
Acquisition related liabilities (23,204)
Government grants (431)
---------
Liabilities associated with
assets classified as held for
sale (67,098)
---------
Net assets of the disposal
group 126,072
---------
The proceeds on disposal are expected to exceed the carrying
value of the related net assets and accordingly no impairment
losses have been recognised on the classification of these
operations as held for sale.
9. Other Reserves
For the year ended 31
March 2017
Foreign
Share Cash currency
based flow
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
------------------- -------- ----------- -------- -------
For the year ended 31
March 2016
Foreign
Share Cash currency
based flow
payment hedge translation Other
reserve reserve reserve reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2015 12,756 (10,462) 32,683 932 35,909
Currency translation - - 35,706 - 35,706
Movements relating
to cash flow hedges - 2,230 - - 2,230
Movement in deferred tax
liability on cash flow hedges
- 120 - - 120
Transfer to non-controlling
interests - - 2,498 - 2,498
Share based payment 2,198 - - - 2,198
At 31 March 2016 14,954 (8,112) 70,887 932 78,661
------------------- -------- ----------- -------- -------
10. Analysis of Net Debt
2017 2016
GBP'000 GBP'000
Non-current assets:
Derivative financial instruments 273,767 209,518
------------ ------------
Current assets:
Derivative financial instruments 18,233 15,915
Cash and cash equivalents 1,048,064 1,182,034
------------ ------------
1,066,297 1,197,949
------------ ------------
Non-current liabilities:
Finance leases (165) (127)
Derivative financial instruments (506) (343)
Unsecured Notes (1,319,802) (1,260,294)
------------ ------------
(1,320,473) (1,260,764)
------------ ------------
Current liabilities:
Bank borrowings (88,041) (91,997)
Finance leases (190) (379)
Derivative financial instruments (5,894) (8,401)
Unsecured Notes (60,214) (100,428)
------------ ------------
(154,339) (201,205)
------------ ------------
Net debt excluding cash attributable
to assets held for sale (134,748) (54,502)
Cash and short-term deposits attributable 12,799 -
to assets held for sale (note 8)
------------ ------------
Net debt including cash attributable
to assets held for sale (121,949) (54,502)
------------ ------------
11. Post Employment Benefit Obligations
The Group's defined benefit pension schemes' assets were
measured at fair value at 31 March 2017. The defined benefit
pension schemes' liabilities at 31 March 2017 were updated to
reflect material movements in underlying assumptions.
The net deficit on the Group's post employment benefit
obligations decreased from GBP0.347 million at 31 March 2016 to
GBP0.029 million at 31 March 2017. The movement in the deficit
primarily reflects contributions in excess of the current service
cost offset by an actuarial loss on liabilities arising from a
decrease in the discount rate used to value these liabilities.
12. Business Combinations
A key strategy of the Group is to create and sustain market
leadership positions through acquisitions in markets it currently
operates in, together with extending the Group's footprint into new
geographic markets. In line with this strategy, the principal
acquisitions completed by the Group during the year, together with
percentages acquired were as follows:
-- the acquisition in November 2016 of 100% of Shell's
commercial, aviation and retail fuels business in Denmark ('Dansk
Fuels');
-- the acquisition of 100% of Medium (U.K.) ('Medium') in
November 2016. Medium is a distributor of professional audio visual
equipment to resellers in the UK;
-- the acquisition in December 2016 of 100% of Hammer
Consolidated Holdings Limited ('Hammer'), a UK based specialist
distributor of server and storage solutions to resellers in the UK
and Continental Europe;
-- the acquisition in January 2017 of 79% of Medisource Ireland
Limited, a specialist in the procurement and sale of Exempt
Medicinal Products, based in Ireland; and
-- the acquisition of 97% of Gaz Européen Holdings SAS ('Gaz
Européen') in January 2017. Gaz Européen, which is based in France,
is a natural gas retail and marketing business which supplies
business and public sector customers.
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 year,
together with measurement period adjustments made to the
provisional fair values in respect of the acquisition of Butagaz
S.A.S. which was completed during the year ended 31 March 2016.
These measurement period adjustments, which have no net cash
impact, resulted in an increase in goodwill of GBP0.986 million and
primarily comprise reclassifications between categories of assets
and liabilities.
Gaz Européen Others Total Total
2017 2017 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 468 7,797 8,265 204,605
Intangible assets - other
intangible assets 48,595 19,918 68,513 298,014
Equity accounted investments - 404 404 15,292
Deferred income tax assets - 60 60 11,605
----------------- --------- --------- ---------
Total non-current assets 49,063 28,179 77,242 529,516
----------------- --------- --------- ---------
Current assets
Inventories 9,287 22,920 32,207 52,339
Trade and other receivables 61,627 144,901 206,528 97,904
----------------- --------- --------- ---------
Total current assets 70,914 167,821 238,735 150,243
----------------- --------- --------- ---------
Liabilities
Non-current liabilities
Deferred income tax liabilities (16,731) (3,171) (19,902) (101,174)
Provisions for liabilities - (11,129) (11,129) (169,894)
Government grants - - - (46)
Total non-current liabilities (16,731) (14,300) (31,031) (271,114)
----------------- --------- --------- ---------
Current liabilities
Trade and other payables (46,539) (118,238) (164,777) (95,423)
Provisions for liabilities (102) (5,215) (5,317) (18,604)
Current income tax asset/(liability) 29 12,312 12,341 (18,719)
Acquisition related liabilities - (13,522) (13,522) -
----------------- --------- ---------
Total current liabilities (46,612) (124,663) (171,275) (132,746)
----------------- --------- --------- ---------
Identifiable net assets
acquired 56,634 57,037 113,671 275,899
Non-controlling interest
arising on acquisition - - - (21,311)
Other reserve movements
arising on acquisition - - - 2,503
Intangible assets - goodwill 44,328 72,847 117,175 214,470
----------------- --------- --------- ---------
Total consideration 100,962 129,884 230,846 471,561
----------------- --------- --------- ---------
Satisfied by:
Cash 109,736 132,282 242,018 500,492
Cash and cash equivalents
acquired (11,158) (27,533) (38,691) (110,450)
----------------- --------- --------- ---------
Net cash outflow 98,578 104,749 203,327 390,042
Acquisition related liabilities 2,384 25,135 27,519 81,519
----------------- --------- --------- ---------
Total consideration 100,962 129,884 230,846 471,561
----------------- --------- --------- ---------
The acquisition of Gaz Européen has been deemed to be a
substantial transaction and separate disclosure of the fair values
of the identifiable assets and liabilities has therefore been made.
None of the remaining business combinations completed during the
year were considered sufficiently material to warrant separate
disclosure of the fair values attributable to those combinations.
The carrying amounts of the assets and liabilities acquired,
determined in accordance with IFRS, before completion of the
combination together with the adjustments made to those carrying
values disclosed above were as follows:
Book Fair value Fair
value adjustments value
Gaz Européen GBP'000 GBP'000 GBP'000
Non-current assets (excluding
goodwill) 590 48,473 49,063
Current assets 71,103 (189) 70,914
Non-current liabilities - (16,731) (16,731)
Current liabilities (45,816) (796) (46,612)
-------- ----------- --------
Identifiable net assets acquired 25,877 30,757 56,634
Goodwill arising on acquisition 75,085 (30,757) 44,328
-------- ----------- --------
Total consideration 100,962 - 100,962
-------- ----------- --------
Book Fair value Fair
value adjustments value
Others GBP'000 GBP'000 GBP'000
Non-current assets (excluding
goodwill) 30,105 (1,926) 28,179
Current assets 168,343 (522) 167,821
Non-current liabilities (1,470) (12,830) (14,300)
Current liabilities (123,184) (1,479) (124,663)
--------- ----------- ---------
Identifiable net assets acquired 73,794 (16,757) 57,037
Goodwill arising on acquisition 56,090 16,757 72,847
--------- ----------- ---------
Total consideration 129,884 - 129,884
--------- ----------- ---------
Book Fair value Fair
value adjustments value
Total GBP'000 GBP'000 GBP'000
Non-current assets (excluding
goodwill) 30,695 46,547 77,242
Current assets 239,446 (711) 238,735
Non-current liabilities (1,470) (29,561) (31,031)
Current liabilities (169,000) (2,275) (171,275)
--------- ----------- ---------
Identifiable net assets acquired 99,671 14,000 113,671
Goodwill arising on acquisition 131,175 (14,000) 117,175
--------- ----------- ---------
Total consideration 230,846 - 230,846
--------- ----------- ---------
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 2018 Annual Report as stipulated by IFRS
3.
The principal factors contributing to the recognition of
goodwill on business combinations entered into by the Group are the
expected profitability of the acquired business and the realisation
of cost savings and synergies with existing Group entities.
None of the goodwill recognised in respect of acquisitions
completed during the financial year is expected to be deductible
for tax purposes.
Acquisition related costs included in other operating expenses
in the Group Income Statement amounted to GBP10.308 million.
No contingent liabilities were recognised on the acquisitions
completed during the year or the prior financial years.
The gross contractual value of trade and other receivables as at
the respective dates of acquisition amounted to GBP210.874 million.
The fair value of these receivables is GBP206.528 million (all of
which is expected to be recoverable) and is inclusive of an
aggregate allowance for impairment of GBP4.346 million.
The fair value of contingent consideration recognised at the
date of acquisition is calculated by discounting the expected
future payment to present value at the acquisition date. In
general, for contingent consideration to become payable,
pre-defined profit thresholds must be exceeded. On an undiscounted
basis, the future payments for which the Group may be liable for
acquisitions completed during the year range from GBP2.630 million
to GBP56.697 million.
The acquisitions during the year contributed GBP318.4 million to
revenues and GBP6.8 million to profit after tax and non-controlling
interests. Had all the business combinations effected during the
year occurred at the beginning of the year, total Group revenue
(continuing) for the year ended 31 March 2017 would have been
GBP12,843.3 million and total Group profit after tax (continuing)
would be GBP211.3 million.
13. Seasonality of Operations
The Group's operations are significantly second-half weighted
primarily due to a portion of the demand for DCC Energy's products
being weather dependent and seasonal buying patterns in DCC
Technology.
14. Related Party Transactions
There have been no related party transactions or changes in
related party transactions that could have a material impact on the
financial position or performance of the Group during the 2017
financial year.
15. Events after the Balance Sheet Date
As announced on 5 April 2017, the Group reached agreement to
dispose of its Environmental division. The transaction is expected
to complete in the quarter to 30 June 2017, following receipt of
competition clearance from the Irish competition authority. The
Group expects to receive cash proceeds on completion of
approximately GBP170 million (25% of the British businesses are
owned by DCC's long-standing minority partner) and the transaction
is expected to give rise to an exceptional profit in the year
ending 31 March 2018 of approximately GBP30 million.
The Group also announced on 5 April 2017 that it has reached
agreement with Shell Gas (LPG) Holdings BV to acquire its liquefied
petroleum gas ('LPG') business in Hong Kong and Macau based on an
enterprise value of HK$1.165 billion (c. GBP120 million). The
business is one of the leading LPG businesses in Hong Kong and is
the market leader in Macau. The business is required to be
separated from the broader Shell Hong Kong operations and the
transaction requires certain regulatory consents and operating
licence approvals. The acquisition is expected to complete before
the end of DCC's financial year ending 31 March 2018.
16. Board Approval
This report was approved by the Board of Directors of DCC plc on
15 May 2017.
Supplementary Financial Information
For the year ended 31 March 2017
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:
Operating profit before net exceptionals and amortisation of
intangible assets ('EBITA')
Definition
This comprises operating profit as reported in the Group Income
Statement before net operating exceptional items and amortisation
of intangible assets.
2017 2016
Calculation GBP'000 GBP'000
=============================================== ======== ========
Operating profit before net exceptionals
and amortisation
of intangible assets ('EBITA') - continuing 345,005 285,345
Operating profit before net exceptionals
and amortisation
of intangible assets ('EBITA') - discontinued 18,546 15,178
=============================================== ======== ========
Operating profit before net exceptionals
and amortisation of intangible assets
('EBITA') 363,551 300,523
=============================================== ======== ========
Operating profit before net exceptionals, depreciation and
amortisation of intangible assets ('EBITDA')
Definition
EBITDA represents earnings before net interest, tax,
depreciation, amortisation of intangible assets, share of equity
accounted investments' profit after tax and net exceptional
items.
2017 2016
Calculation GBP'000 GBP'000
============= ======== ========
EBITA 363,551 300,523
Depreciation 92,015 74,822
============= ======== ========
EBITDA 455,566 375,345
============= ======== ========
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.
2017 2016
Calculation GBP'000 GBP'000
======================================== ======== ========
Finance costs before exceptional items (72,910) (64,790)
Finance income before exceptional items 40,973 35,962
======================================== ======== ========
Net interest - continuing (31,937) (28,828)
Net interest - discontinued (163) (161)
======================================== ======== ========
Net interest (32,100) (28,989)
======================================== ======== ========
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 EBITA less net
interest.
2017 2016
Calculation GBP'000 GBP'000
================================================== ======== ========
EBITA 363,551 300,523
Net interest (32,100) (28,989)
================================================== ======== ========
EBT 331,451 271,534
================================================== ======== ========
Income tax expense before exceptionals
and deferred tax attaching to
amortisation of intangible assets - continuing 54,787 41,042
Income tax expense before exceptionals
and deferred tax attaching to
amortisation of intangible assets - discontinued 3,217 2,403
================================================== ======== ========
Total income tax expense before exceptionals
and deferred tax attaching to
amortisation of intangible assets 58,004 43,445
================================================== ======== ========
Effective tax rate (%) 17.5% 16.0%
================================================== ======== ========
Adjusted earnings per share
Definition
The Group defines adjusted earnings per share as basic earnings
per share adjusted for the impact of net exceptional items and
amortisation of intangible assets.
2017 2016
Calculation pence pence
=========================================== ====== ======
Adjusted earnings per share - continuing 286.59 242.78
Adjusted earnings per share - discontinued 17.09 14.36
=========================================== ====== ======
Adjusted earnings per share 303.68 257.14
=========================================== ====== ======
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.
2017 2016
Revenue - continuing, constant currency GBP'000 GBP'000
======================================== ========== ==========
Revenue - continuing 12,269,802 10,447,630
Currency impact (622,001) -
======================================== ========== ==========
Revenue - continuing, constant currency 11,647,801 10,447,630
======================================== ========== ==========
EBITA - continuing, constant currency
======================================== ========== ==========
EBITA - continuing 345,005 285,345
Currency impact (23,084) -
======================================== ========== ==========
EBITA - continuing, constant currency 321,921 285,345
======================================== ========== ==========
Adjusted earnings per share - continuing,
constant currency
============================================ ======== =======
Adjusted earnings - continuing 254,307 213,290
Currency impact (16,677) -
============================================ ======== =======
EBITA - continuing, constant currency 237,630 213,290
Weighted average number of ordinary shares
in issue ('000) 88,735 87,854
============================================ ======== =======
Adjusted earnings per share - continuing,
constant currency 267.80p 242.78p
============================================ ======== =======
Dividend cover
Definition
The dividend cover ratio measures the Group's ability to pay
dividends from earnings.
2017 2016
Calculation pence pence
========================================= ====== ======
Adjusted earnings per share - continuing 286.59 242.78
Dividend 111.80 97.22
========================================= ====== ======
Dividend cover (times) 2.6x 2.5x
========================================= ====== ======
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.
2017 2016
Calculation GBP'000 GBP'000
========================================== ======== ========
Purchase of property, plant and equipment 143,698 134,172
Proceeds from disposal of property, plant
and equipment (12,315) (13,523)
========================================== ======== ========
Net capital expenditure 131,383 120,649
========================================== ======== ========
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.
2017 2016
Calculation GBP'000 GBP'000
====================================== ========= =========
Cash generated from operations before
exceptionals 546,870 411,712
Net capital expenditure (131,383) (120,649)
====================================== ========= =========
Free cash flow 415,487 291,063
====================================== ========= =========
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.
2017 2016
Calculation GBP'000 GBP'000
========================================= ======== ========
Free cash flow 415,487 291,063
Interest paid (70,108) (64,432)
Income tax paid (62,180) (35,346)
Dividends received from equity accounted
investments 125 365
Interest received 40,966 36,004
========================================= ======== ========
Free cash flow (after interest and tax
payments) 324,290 227,654
========================================= ======== ========
Cash conversion ratio
Definition
The cash conversion ratio expresses free cash flow as a
percentage of EBITA.
2017 2016
Calculation GBP'000 GBP'000
========================== ======== ========
Free cash flow 415,487 291,063
EBITA 363,551 300,523
========================== ======== ========
Cash conversion ratio (%) 114% 97%
========================== ======== ========
Net debt/EBITDA
Definition
The net debt to earnings before net interest, tax, depreciation,
amortisation of intangible assets, share of equity accounted
investments' profit after tax and net exceptional items ('EBITDA')
ratio is a measurement of leverage, and shows how many years it
would take for a company to pay back its debt if net debt and
EBITDA are held constant.
2017 2016
Calculation GBP'000 GBP'000
================ ======== ========
Net debt 121,949 54,502
EBITDA 455,566 375,345
================ ======== ========
Net debt/EBITDA 0.3 0.2
================ ======== ========
Return on capital employed ('ROCE') - continuing
Definition
ROCE represents operating profit (continuing) before net
operating exceptional items and amortisation of intangible assets
expressed as a percentage of the average total continuing capital
employed. Total continuing capital employed represents total equity
adjusted for net debt/cash, goodwill and intangibles written off,
acquisition related liabilities and equity accounted
investments.
2017 2016
Calculation GBP'000 GBP'000
============================================= ========= =========
Total equity 1,507,721 1,350,476
Net debt (continuing) 134,748 69,473
Goodwill and intangibles written off
(continuing) 228,340 189,210
Equity accounted investments (continuing) (24,938) (22,139)
Acquisition related liabilities (continuing,
current and non-current) 94,917 99,438
Net assets of the disposal group (126,072) (104,694)
============================================= ========= =========
1,814,716 1,581,764
============================================= ========= =========
Average total capital employed - continuing 1,698,240 1,301,757
EBITA - continuing 345,005 285,345
============================================= ========= =========
Return on capital employed (%) - continuing 20.3% 21.9%
============================================= ========= =========
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 year.
2017 2016
Calculation GBP'000 GBP'000
======================================== ======== =========
Net cash outflow on acquisitions during
the year 203,327 390,042
Cash outflow on acquisitions which were
committed to in the previous year (34,372) (351,045)
Acquisition related liabilities arising
on acquisitions during the year 41,041 81,519
Acquisition related liabilities which
were committed to in the previous year (14,082) (79,288)
Amounts committed in the current year 358,000 39,000
======================================== ======== =========
Committed acquisition expenditure 553,914 80,228
======================================== ======== =========
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 government
grants).
2017 2016
Calculation GBP'000 GBP'000
======================================== =========== ===========
Inventories 456,395 393,948
Inventories (asset classified as held
for sale) 1,922 -
Trade and other receivables 1,222,597 916,069
Trade and other receivables (asset held
for sale) 33,264 -
Interest receivable (included in trade
and other receivables) (223) (230)
Trade and other payables (1,820,517) (1,437,832)
Trade and other payables (asset held
for sale) (35,741) -
Interest payable (included in trade
and other payables) 4,534 3,967
Amounts due in respect of property,
plant and equipment (included in trade
and other payables) 6,349 2,967
Government grants (included in trade
and other payables) 9 26
======================================== =========== ===========
Net working capital (131,411) (121,085)
======================================== =========== ===========
Working capital (days)
Definition
Working capital days measures how long it takes in days for the
Group to convert working capital into revenue.
2017 2016
Calculation GBP'000 GBP'000
======================= ========= =========
Net working capital (131,411) (121,085)
March revenue 1,223,575 967,014
======================= ========= =========
(3.3 (3.9
Working capital (days) days) days)
======================= ========= =========
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZMGMKNKKGNZM
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May 16, 2017 02:00 ET (06:00 GMT)
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