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RNS
DCC PLC  -  DCC   

Results for the year ended 31 March 2017

Released 07:00 16-May-2017

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 - continuing1 (excl. DCC Energy)

£3.196bn

£2.932bn

+9.0%

Operating profit2 - continuing1

£345.0m

£285.3m

+20.9%

Total operating profit2

£363.6m

£300.5m

+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

£415.5m

£291.1m

+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 £345.0 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 23rd 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 £550 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 £219 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.

 

 

Excluding DCC Environmental, the agreed disposal of which was announced on 5 April 2017

Excluding net exceptionals and amortisation of intangible assets

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 Officer

     Email: investorrelations@dcc.ie

Kevin Lucey, Head of Capital Markets

                               Web: www.dcc.ie

 

For media enquiries: Powerscourt (Lisa Kavanagh) 

 

                 Tel: +44 20 7250 1446

 

 

 

Group Results

A summary of the Group's results for the year ended 31 March 2017 is as follows:

 

 

                    2017

                      £'m

                      2016

                        £'m

% change

Revenue - continuing1

                    12,270

      10,448

+17.4%

Operating profit2

 

 

 

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 profit2 - continuing1

                      345.0

                      285.3

+20.9%

Operating profit2 - discontinued operations

                        18.6

                        15.2

              +22.2%

Group operating profit2

         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 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%

Operating cash flow

         546.9

         411.7

+32.8%

Free cash flow3

                      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 - continuing1

                   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 £12.3 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 £345.0 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 profit*

£'m

£'m

£'m

 

£'m

£'m

£'m

 

 

 

 

 

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 £18.6 million, 22.2% ahead of the prior year.

 

Finance costs (net)

Net finance costs increased to £32.1 million (2016: £29.0 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 £301 million compared to £185 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 £394 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 £332.2 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 £24.8 million as follows:

 

 

                    £'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 £19.3 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 £10.3 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 £10.1 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 £5.6 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 £1.7 million and a non-controlling interest credit of £3.1 million in relation to the above net exceptional charge.

 

The charge for the amortisation of acquisition related intangible assets increased to £39.2 million from £31.6 million, principally reflecting acquisitions completed in the current and prior year.

 

Profit before tax

Profit before tax increased by 23.7% to £268.2 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

               £'m

 

   2016

               £'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 £546.9 million compared to £411.7 million in the prior year.  Working capital reduced by £84.0 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 £131.4 million for the year (2016: £120.6 million) and was net of disposal proceeds of £12.3 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 £39.4 million.

 

The Group's free cash flow amounted to £415.5 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 £685.3 million as follows:

 

 

       Acquisitions

Capex

      Total

 

       £'m

      £'m

            £'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 £553.9 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. £120 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. £15 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. £235 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.

 

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 €110 million (£96 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 €205 million (£178 million) and normalised operating profit of €15.7 million (£13.7 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 €31.5 million (£27.4 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 £155.0 million and operating profit of £6.3 million. The acquisition was based on an initial enterprise value of £38.3 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 £8.3 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 £262.4 million. This included the payment of deferred and contingent acquisition consideration previously provided of £59.1 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 £219 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 £170 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 £30 million.

 

Capital expenditure

Net capital expenditure for the year of £131.4 million (2016: £120.6 million) compares to a depreciation charge of £92.0 million (2016: £74.8 million). The capital expenditure is net of £12.3 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 £121.9 million, total equity of £1.5 billion, cash resources, net of overdrafts, of £973 million and a further £400 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 £185 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

£9,074.1

£7,515.3m

+20.7%

Operating profit

£254.9m

£205.2m

+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 £254.9m, 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

£160.4m

£116.8m

+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. £15 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 & Oil

2017

2016

% change

Volumes (litres)

11.572b

10.726b

+7.9%

Operating profit

£94.5m

£88.4m

+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

£506.5m

£490.7m

+3.2%

Operating profit

£49.0m

£45.0m

+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

£2.689bn

£2.442b

+10.1%

Operating profit

£41.1m

£35.1m

+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

Exceptionals

(note 5)

 

Total

 

Pre exceptionals

Exceptionals

(note 5)

 

Total

 

Continuing operations

Notes

£'000

£'000

£'000

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

£'000

 

£'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

 

 

£'000

 

£'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 ended 31 March 2017

Attributable to owners of the Parent

 

 

 

 

 

 

Other

 

Non-

 

 

Share

Share

Retained

reserves

 

controlling

Total

 

capital

premium

earnings

(note 9)

Total

interests

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'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 ended 31 March 2016

Attributable to owners of the Parent

 

 

 

 

 

 

Other

 

Non-

 

 

Share

Share

Retained

reserves

 

controlling

Total

 

capital

premium

earnings

(note 9)

Total

interests

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'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

 

£'000

 

£'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 interests

 

 

 

(5,228)

 

-

 

 

 

 

(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 attributable to assets held for sale

 

 

 

12,799

 

-

 

 

 

 

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 '£'. 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

 

Stg£1=

Stg£1=

Stg£1=

Stg£1=

 

 

 

 

 

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                                                  

 

 

 

£'000

 

          £'000

 

£'000

 

£'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                                                  

 

 

 

£'000

 

          £'000

 

£'000

 

£'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.

 

 

 

 

                         Revenue

 

                Non-current assets**

 

 

 

Restated

 

 

 

 

 

2017

2016

 

2017

2016

 

 

£'000

£'000

 

£'000

£'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

 

 

 

£'000

 

£'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 £19.345 million (2016: £15.777 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 £10.308 million (2016: £7.226 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 £5.114 million (2016: decrease of £6.290 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 £10.101 million (2016: charge of £9.419 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 £5.6 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 £1.756 million (2016: credit of £0.710 million) and a non-controlling interest credit of £3.138 million (2016: charge of £0.323 million) in relation to the above net exceptional charge.

 

The gain arising from legal case settlements in the prior year of £4.291 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 8)

Total

 

operations

(note 8)

Total

 

2017

2017

2017

 

2016

2016

2016

 

£'000

£'000

£'000

 

£'000

£'000

£'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 ordinary share

pence

pence

pence

 

pence

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 per ordinary share

pence

pence

pence

 

pence

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 £201.037 million (2016: £166.795 million) and £254.307 million (2016: £213.290 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 £15.160 million (2016: £11.236 million) and £15.166 million (2016: £12.614 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

 

 

 

 

£'000

 

£'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 (£66.284 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 £30 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

 

 

 

£'000

 

£'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

 

 

 

£'000

 

£'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

 

 

 

 

 

£'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 based

Cash flow

currency

 

 

 

payment

hedge

translation

Other

 

 

reserve

reserve

reserve

reserves

Total

 

£'000

£'000

£'000

£'000

£'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 based

Cash flow

currency

 

 

 

payment

hedge

translation

Other

 

 

reserve

reserve

reserve

reserves

Total

 

£'000

£'000

£'000

£'000

£'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

 

 

 

£'000

 

£'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 to assets held for sale (note 8)

 

12,799

 

-

 

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 £0.347 million at 31 March 2016 to £0.029 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 £0.986 million and primarily comprise reclassifications between categories of assets and liabilities.

 

 

 

 

 

 

 

 

Gaz Européen

Others

Total

Total

 

 

2017

2017

2017

2016

 

 

£'000

£'000

£'000

£'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

£'000

£'000

£'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

£'000

£'000

£'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

£'000

£'000

£'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 £10.308 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 £210.874 million.  The fair value of these receivables is £206.528 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance for impairment of £4.346 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 £2.630 million to £56.697 million.

 

The acquisitions during the year contributed £318.4 million to revenues and £6.8 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 £12,843.3 million and total Group profit after tax (continuing) would be £211.3 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 £170 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 £30 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. £120 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.

 

Calculation

2017

£'000

2016

£'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.

 

Calculation

2017

£'000

2016

£'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.

 

Calculation

2017

£'000

2016

£'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.

 

Calculation

2017

£'000

2016

£'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.

 

Calculation

2017

pence

2016

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.

 

Revenue - continuing, constant currency

2017

£'000

2016

£'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.

 

Calculation

2017

pence

2016

 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.

 

Calculation

2017

£'000

2016

£'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.

 

Calculation

2017

£'000

2016

£'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.

 

Calculation

2017

£'000

2016

£'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.

 

Calculation

2017

£'000

2016

£'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. 
 

Calculation

2017

£'000

2016

£'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.

 

Calculation

2017

£'000

2016

£'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.

 

Calculation

2017

£'000

2016

£'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).

 

Calculation

2017

£'000

2016

£'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.

 

Calculation

2017

£'000

2016

£'000

Net working capital

(131,411)

(121,085)

March revenue

1,223,575

967,014

Working capital (days)

(3.3 days)

(3.9 days)

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Results for the year ended 31 March 2017 - RNS