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RNS
DCC PLC  -  DCC   

Results for the year ended 31 March 2018

Released 07:00 15-May-2018

RNS Number : 0389O
DCC PLC
15 May 2018
 

 

15 May 2018

 

DCC Reports Strong Growth and Record Development Spend

 

DCC, the leading international sales, marketing and support services group, today announced its results for the year ended 31 March 2018.

 

Highlights

2018

2017

% change

DCC LPG volumes (thousand tonnes)1

1,876.2kT

1,565.6kT

+19.8%

DCC Retail & Oil volumes (billion litres)

12.308bn

11.572bn

+6.4%

Revenue - continuing2

(excl. DCC LPG and DCC Retail & Oil)

£3.598bn

£3.196bn

+12.6%

Adjusted operating profit - continuing2,3

£383.4m

£345.0m

+11.1%

Adjusted earnings per share - continuing2,3

317.5p

286.6p

+10.8%

Dividend per share

122.98p

111.80p

+10.0%

Free cash flow4

£328.1m

£415.5m

 

Return on capital employed - continuing2

17.5%

20.3%

 

                               

·     Strong performance for the year with all divisions recording good profit growth and Group adjusted operating profit on continuing operations increasing by 11.1% (8.6% ahead on a constant currency basis) to £383.4 million.

 

·     Adjusted earnings per share on continuing activities up 10.8% (8.3% ahead on a constant currency basis) to 317.5 pence.

 

·     Proposed 10.0% increase in the final dividend will see the total dividend for the year increase by 10.0%, the 24th consecutive year of dividend growth since DCC listed in 1994.

 

·     Good cash flow performance with free cash flow conversion of approximately 85% and a return on capital employed of 17.5%.

 

·     Record year of corporate development spend with approximately £670 million of acquisition capital deployed. 

 

·     Acquisitions completed across all divisions, including the acquisitions of Retail West and Elite One Source, DCC's first entry into the large US markets for LPG and for Health & Beauty Solutions.

 

·     The Group expects that the year ending 31 March 2019 will be another year of profit growth and development.

 

 

 


1  1 tonne of LPG equivalent to 1,969 litres of oil

2  Continuing operations exclude DCC Environmental which was disposed of in May 2017

3  Excluding net exceptionals and amortisation of intangible assets

4  After net capital expenditure and before net exceptionals, interest and tax payments

 

 

Commenting on the results, Donal Murphy, Chief Executive, said:

 

"It is pleasing to report that the year ended 31 March 2018 has been another year of strong growth for DCC, with each division recording good growth in operating profit.   

 

It was also a record year of development for the Group, with approximately £670 million of capital spent on acquisitions, the highest level of spend in DCC's history. The acquisition activity during the year again demonstrates DCC's ability to acquire and integrate businesses in our existing markets to strengthen our market positions, build scale and increase our relevance and service offerings to customers and suppliers. Importantly, it also reflects our strategy to extend our geographic footprint over time, as evidenced by DCC LPG's first acquisitions in the US and Asia and DCC Healthcare's first acquisition in the US. These acquisitions in new markets will provide further opportunities for both organic and acquisitive growth for the Group.

 

The Group continues to have the opportunity, ambition and capacity for further development across each of our divisions, supported by a strong and liquid balance sheet.

 

We expect that the year to 31 March 2019 will be another year of profit growth and development for the Group."

 

 

Presentation of results and dial-in / webcast facility

There will be a presentation of these results to analysts and 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:                                +353 (0)1 246 5621

UK / International:            +44 (0)330 336 9411

Passcode:                            5200365

Webcast Link:                    https://edge.media-server.com/m6/p/g6h5bc8u

 

This report, a webcast of the presentation and further information on DCC is available at www.dcc.ie.

 

 

For reference, please contact:

Donal Murphy, Chief Executive

             Tel: +353 1 2799 400

Fergal O'Dwyer, Chief Financial Officer

     Email: investorrelations@dcc.ie

Kevin Lucey, Head of Capital Markets

                               Web: www.dcc.ie

 

For media enquiries: Powerscourt (Lisa Kavanagh) 

 

                 Tel: +44 20 7250 1446

 

 

 

 

Group Results

A summary of the Group's results for the year ended 31 March 2018 is as follows:

 

 

       2018

         £'m

       2017

          £'m

% change

Revenue - continuing1

     14,265

       12,270

+16.3%

Operating profit2

 

 

 

DCC LPG

       167.5

         160.4

+4.4%

DCC Retail & Oil

       113.8

           94.5

+20.4%

DCC Healthcare

         54.3

            49.0

+11.0%

DCC Technology

         47.8

            41.1

+16.3%

Group adjusted operating profit2 - continuing1

      383.4

         345.0

+11.1%

Finance costs (net) and other

       (35.4)

         (31.2)

 

Profit before net exceptionals, amortisation of intangible assets and tax

      348.0

         313.8

+10.9%

Net exceptional credit/(charge) after tax and non-controlling interests

        11.4

          (24.8)

 

Amortisation of intangible assets

       (43.0)

          (39.2)

 

Profit before tax

      316.4

         249.8

+26.6%

Taxation

       (49.3)

          (44.1)

 

Profit after tax

      267.1

         205.7

+29.8%

Profit after tax - discontinued operations

          0.8

            15.2

 

Non-controlling interests

        (6.1)

            (4.7)

 

Attributable profit

     261.8

         216.2

+21.1%

Adjusted earnings per share2- continuing1

    317.5p

         286.6p

+10.8%

Adjusted earnings per share2

    318.4p

         303.7p

+4.8%

Dividend per share

  122.98p

        111.80p

+10.0%

Operating cash flow

    473.4

         546.9

 

Free cash flow3

    328.1

         415.5

 

Net debt at 31 March

    542.7

         121.9

 

Total equity at 31 March

1,677.9

      1,507.7

 

Return on capital employed - continuing1

   17.5%

        20.3%  

 

1 Continuing operations exclude DCC Environmental which was disposed of in May 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 16.3% (13.8% ahead on a constant currency basis) to £14.3 billion.

 

DCC LPG volumes increased by 19.8% to 1.9 million tonnes, driven by the acquisitions of Gaz Européen in the prior year and Shell Hong Kong & Macau in January 2018. On a like-for-like basis, volumes were 4.7% ahead of the prior year. DCC LPG's revenue increased by 30.8% (26.2% ahead on a constant currency basis).

 

Volumes in DCC Retail & Oil increased by 6.4% to 12.3 billion litres, reflecting the acquisitions of Dansk Fuels in the prior year and Esso Retail Norway in October 2017. Volumes were in line with the prior year on an organic basis.  DCC Retail & Oil's revenues increased by 15.8% (13.3% ahead on a constant currency basis).

 

Revenue excluding DCC LPG and DCC Retail & Oil increased by 12.6% (11.1% ahead on a constant currency basis) to £3.6 billion, approximately half of which was organic.

 

Group adjusted operating profit - continuing operations

Group adjusted operating profit from continuing operations increased by 11.1% to £383.4 million (8.6% ahead on a constant currency basis); approximately one third of the constant currency operating profit growth was organic. The average sterling/euro translation rate for the year of 1.1366 was 4.9% weaker than the average of 1.1956 in the prior year.

 

Operating profit in DCC LPG was 4.4% ahead of the prior year (1.0% ahead on a constant currency basis), despite the anticipated headwind of a rising cost of product and continued organic investment in its B2C natural gas and electricity offering in France.  DCC LPG benefited from the acquisition of Shell Hong Kong & Macau and strong organic growth from the business in Britain, where further progress was achieved in converting oil customers to LPG in the commercial and industrial sectors. 

 

In DCC Retail & Oil, operating profit was 20.4% ahead of the prior year (18.0% ahead on a constant currency basis).  Approximately half of the constant currency growth was organic and broadly based, with good profit growth across the division. The business in Britain benefited from a marginally colder than average winter, which drove a modest increase in heating demand. In Denmark, the business delivered strong organic growth and also benefited from the integration of the Dansk Fuels acquisition, completed in the prior year.  

 

Operating profit in DCC Healthcare was 11.0% ahead of the prior year (10.6% ahead on a constant currency basis) and approximately half of the constant currency growth was organic. DCC Vital performed strongly, driven by the first full year contribution from Medisource, which completed in January 2017, as well as good organic growth in medical devices. DCC Health & Beauty Solutions benefited modestly from the acquisition of Elite One Source in January 2018 and continued to deliver strong organic growth in nutritional products. 

 

In DCC Technology, operating profit was 16.3% ahead of the prior year (15.5% ahead on a constant currency basis), reflecting a very strong organic performance in the UK and Ireland, particularly in audio visual, components and gaming, and the benefit of the acquisitions of Hammer and MTR. In France, the B2B business again delivered good growth. The French consumer products business remained very challenging and a programme to significantly reduce costs while improving its logistics and operational efficiency is being implemented. The Nordics business again delivered strong growth in IT and audio visual products and benefited in particular from continued investment in building out its presence in Norway.

 

An analysis of the divisional performance in each half of the year, for the Group's continuing operations, is set out below:

 

 

2017/18

 

2016/17

 

% change

 

 

H1

H2

FY

 

H1

H2

FY

 

H1

H2

FY

 

Adjusted operating profit*

£'m

£'m

£'m

 

£'m

£'m

£'m

 

 

 

 

 

DCC LPG

44.1

123.4

167.5

 

37.0

123.4

160.4

 

+19.2%

+0.0%

+4.4%

 

DCC Retail & Oil

42.2

71.6

113.8

 

39.0

55.5

94.5

 

+8.0%

+29.0%

+20.4%

 

DCC Healthcare

22.0

32.3

54.3

 

19.8

29.2

49.0

 

+11.6%

+10.6%

+11.0%

 

DCC Technology

14.2

33.6

47.8

 

11.3

29.8

41.1

 

+25.8%

+12.8%

+16.3%

 

Group

122.5

260.9

383.4

 

107.1

237.9

345.0

 

+14.4%

+9.7%

+11.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EPS* (pence)

95.5

222.0

317.5

 

82.2

204.4

286.6

 

+16.1%

+8.6%

+10.8%

 

*Excluding net exceptionals and amortisation of intangible assets

 

 

 

 

 

Finance costs (net) and other

Net finance costs and other increased to £35.4 million (2017: £31.2 million) and reflects an increase in the Group's gross debt due primarily to the drawdown in September 2017 of a new £450 million US private placement debt issuance. It also reflects the higher average net debt during the year of £467 million compared to £301 million during the prior year. The average net debt increased due to the record level of acquisition spend of approximately £670 million during the 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 10.9% to £348.0 million (8.4% ahead on a constant currency basis). 

 

Net exceptional credit and amortisation of intangible assets

The Group incurred a net exceptional credit after tax and non-controlling interests of £11.4 million as follows:

 

 

       £'m

Profit on disposal of discontinued operations

         29.8

Acquisition and related costs

        (12.8)

Restructuring costs

(33.2)

IAS 39 mark-to-market gain and other

1.2

Tax and non-controlling interests

26.4

Net exceptional credit

11.4

 

The profit on disposal of discontinued operations relates to the gain recorded on the profitable sale of DCC's environmental division, which completed on 31 May 2017.

 

Acquisition costs include the professional fees and tax costs (such as stamp duty) relating to the evaluation and completion of acquisition opportunities and amounted to £12.8 million.

 

Restructuring costs amounted to £33.2 million and principally reflect the costs associated with the Group's focus on increasing the efficiency of its operating infrastructure and sales platforms. The majority of the charge relates to the Retail & Oil division where a large project to bring greater efficiency and reduced capital expenditure over time to the UK business' nationwide depot network infrastructure is underway and the project will result in a material reduction in the number of depot locations. An element of the charge also relates to the integration and restructuring costs associated with the prior year acquisition of Dansk Fuels in Denmark.

 

The other material element of the restructuring charge relates to the ongoing optimisation of DCC Technology's logistics and related infrastructure.  In the UK, the new national distribution centre is now operational and a number of the existing locations have transferred into the new infrastructure. The remaining existing locations will transition during the coming year and the majority of the legacy locations have now been sold successfully. A programme to significantly reduce costs, whilst improving the logistics and operational efficiency of DCC Technology's French consumer business is ongoing. This project will also deliver a consolidation of two existing warehouses into one new facility. Finally, the business in the Nordics has recently commissioned its new national distribution centre and it is now operational.

 

Most of the Group's debt has been raised in the US Private Placement market and swapped, using long term interest 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 is charged or credited as an exceptional item. In the year ended 31 March 2018, this amounted to an exceptional non-cash gain of £0.3 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 £5.3 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 tax and non-controlling interests credit of £26.4 million principally reflects the impact of the recent reduction of the statutory corporation tax rate in France and corresponding reduction in the Group's deferred tax liabilities associated with the Group's brand and other intangible assets in France.

 

The charge for the amortisation of acquisition related intangible assets increased to £43.0 million from £39.2 million in the prior year, with the increase principally reflecting acquisitions completed in the current and prior year.

 

Profit before tax

Profit before tax increased by 26.6% to £316.4 million.

 

Taxation

The effective tax rate for the Group decreased to 17.0% from 17.5% in the prior year. The decrease primarily reflects reductions in certain territorial tax rates and the change in the geographical mix of the Group's earnings.

 

Discontinued operations

The Group's discontinued operations represent the activities of DCC Environmental which was disposed of in May 2017.

 

Adjusted earnings per share

Adjusted earnings per share on a continuing basis increased by 10.8% (8.3% ahead on a constant currency basis) to 317.5 pence.

 

Total adjusted earnings per share also increased by 4.8% (2.5% ahead on a constant currency basis) to 318.4 pence.

 

Dividend

The Board is recommending an increase of 10.0% in the final dividend to 82.09 pence per share, which, when added to the interim dividend of 40.89 pence per share, gives a total dividend for the year of 122.98 pence per share. This represents a 10.0% increase over the total prior year dividend of 111.80 pence per share.  The dividend is covered 2.6 times by adjusted earnings per share on a continuing basis (2.6 times in 2017).  It is proposed to pay the final dividend on 19 July 2018 to shareholders on the register at the close of business on 25 May 2018. 

 

Over its 24 years as a listed company, DCC has an unbroken record of dividend growth at a compound annual rate of 14.5%.

 

Cash flow

The Group generated good operating and free cash flow during the year as set out below:

 

Year ended 31 March

 

 

2017

             £'m

 

 

 

 

 

Group operating profit

 
384.4
 
363.6
 
 
 
 
 
(Increase)/decrease in working capital
 
(13.8)
 
  84.0 
Depreciation and other
 
102.8
 
  99.3
 
 
 
 
 
Operating cash flow
 
473.4
 
546.9
 
 
 
 
 
Capital expenditure (net)
 
(145.3)
 
(131.4)
 
 
 
 
 
Free cash flow
 
328.1
 
415.5
 
 
 
 
 
Interest and tax paid, net of dividend from equity accounted investments
 
 
(96.0)
 
 
(91.2)
 
 
 
 
 
Free cash flow after interest and tax
 
232.1
 
324.3
 
 
 
 
 
Acquisitions
 
(691.0)
 
(262.4)
Disposals
 
160.1
 
-
Dividends
 
(102.9)
 
(90.1)
Dividends paid to non-controlling interests
 
-
 
(5.2)
Exceptional items
 
(12.6)
 
(31.5)
Share issues
 
3.3
 
2.6
 
 
 
 
 
Net outflow
 
(411.0)
 
(62.3)
 
 
 
 
 
Opening net debt
 
(121.9)
 
(54.5)
Translation and other
 
(9.8)
 
(5.1)
Closing net debt
 
(542.7)
 
(121.9)

 

Operating cash flow in 2018 was £473.4 million compared to £546.9 million in the prior year.  Working capital increased by £13.8 million (£7.3m increase on a continuing basis). Overall working capital days were negative 2.0 days sales, compared to negative 3.3 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 2018 increased on the prior year and supply chain financing had a positive impact on Group working capital days of 4.0 days (31 March 2017: 4.2 days) or £202.2 million (2017: £165.6 million).

 

Net capital expenditure amounted to £145.3 million for the year (2017: £131.4 million) and was net of disposal proceeds of £7.6 million. The increased level of gross capital expenditure reflects the increased scale of the Group and a number of investments being undertaken to support its continued growth and development. In the current year, the principal items included ongoing investment in new retail sites and site upgrades in the Retail & Oil division, investment to support the organic volume growth being achieved in the LPG division, and the completion of the new national distribution centres and related infrastructure in the Technology division. The net capital expenditure exceeded the depreciation charge in the year by £51.7 million.

 

The Group's free cash flow amounted to £328.1 million, representing an 85% conversion of operating profit into free cash flow.

 

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 return on capital employed by division was as follows:

 

 

2018

2017

DCC LPG

17.4%

22.9%

DCC Retail & Oil

18.7%

19.8%

DCC Healthcare

16.7%

17.5%

DCC Technology

16.1%

17.1%

Group - continuing

17.5%

20.3%

 

The decrease in the return on capital employed versus the prior year principally reflects the impact of the substantial acquisition spend during the year as the Group entered new geographies.

 

Total cash spend on acquisitions for the year ended 31 March 2018

The total cash spend on acquisitions completed in the year was £691.0 million and included the payment of deferred and contingent acquisition consideration previously provided of £26.9 million.

 

Committed acquisitions

Committed acquisition expenditure in the period amounted to £355.3 million.  An analysis by division is shown below:

 

 

 

 

            £'m

DCC LPG 

 

 

250.8

DCC Retail & Oil

 

 

27.9

DCC Healthcare

 

 

43.7

DCC Technology

 

 

32.9

Total

 

 

355.3

 

DCC LPG

Retail West

On 7 November 2017, DCC LPG announced that it had reached agreement with NGL Energy Partners LP ("NGL") to acquire its Retail West LPG division, Hicksgas LLC ("Retail West"). The acquisition completed on 31 March 2018.

 

Headquartered in Illinois, Retail West has been in business for over 70 years and employs 390 people. It sells approximately 130,000 tonnes (assuming normal winter weather conditions) of LPG annually from 43 customer service locations and 58 satellite facilities. The business trades under three prominent regional brands, Hicksgas, Pacer Propane and Propane Central, and a number of smaller, local brands. Retail West has leading market positions in Illinois, Indiana and Kansas and also operates in seven other states across the Mid-West and North-West regions. The acquisition represents DCC LPG's entry into the US market and is a further significant step in DCC's strategy to build a global LPG business over time. The US is one of the world's largest LPG markets and is an attractive and growing market. It is also highly fragmented, with over 4,000 LPG distribution businesses operating in the market. The acquisition of Retail West will provide DCC with a substantial, high-quality presence in the US with leading market positions in a number of states. The business has an excellent customer base, a strong and well-invested operational infrastructure and an experienced management team.

 

TEGA

On 4 January 2018, DCC LPG announced it had reached agreement with Linde AG to acquire Tega-Technische Gase und Gasetechnik GmbH, its LPG and refrigerant gas distribution business in Germany ("TEGA"). The transaction completed on 31 March 2018.

 

TEGA, headquartered in Würzburg, employs approximately 100 people across five operating sites, largely in southern Germany. TEGA has revenue of approximately €75 million evenly split between LPG and refrigerants. The business supplies approximately 35,000 tonnes of LPG annually to approximately 15,000 domestic and commercial customers. It also supplies refrigerant gases to wholesalers and end-users for use in air-conditioning, commercial cooling systems and refrigerators. The business has operated on a standalone basis within The Linde Group and continues to be led by its existing, highly experienced management team.

 

The acquisition of TEGA provides DCC LPG with a platform in the large, relatively fragmented German LPG market and further strengthens its position in the LPG market in Europe. In addition, it provides an entry into the refrigerant gas market, further enhancing the service capability of the LPG business, following the expansion into medical and aerosol gases in recent years.

 

Countrywide LPG

On 11 January 2018, DCC LPG announced it had reached agreement with Countrywide Farmers plc to acquire the trade and assets of its LPG distribution business in Britain ("Countrywide LPG"). Countrywide LPG supplies bulk and cylinder LPG to domestic, agricultural and commercial customers in Britain. The business sells approximately 20,000 tonnes of LPG annually.  The transaction completed on 28 February 2018 and is currently being held separate, pending merger clearance.

 

DCC Retail & Oil

SNAP

In May 2018, DCC Retail & Oil acquired SNAP, an end-to-end transaction processing and payment system for HGV fleets. The business facilitates cashless payments through licence plate recognition for services to HGV fleets at truck stops. The business, although modest, is growing strongly and will be complementary to the existing retail and oil businesses.

 

DCC Healthcare

Elite One Source

On 7 February 2018, DCC Health & Beauty Solutions announced the acquisition of Elite One Source Nutritional Services, Inc ("Elite One Source"), a provider of contract manufacturing and related services to the growing healthcare and dietary supplements market in the US.

 

Elite One Source focuses on complex-formulation nutritional products in tablet and capsule dosage forms, including organic and probiotic products, across a variety of packaging formats. Its service offering encompasses product development, formulation, manufacturing, packaging and regulatory services. Its customer base includes some of the leading specialist brands in the US consumer healthcare market. Elite One Source's facilities in Missoula, Montana are well-invested with significant scope to expand capacity to meet its organic growth plans. The facilities comply with FDA cGMP (current Good Manufacturing Practices) and Health Canada standards and are certified by leading third party regulatory bodies including NSF and USDA Organic. The business is led by an experienced management team and employs 180 people. 

 

The acquisition of Elite One Source provides an entry into the US market, the world's largest healthcare and dietary supplements market. The US is an innovative, high-growth market, with a fragmented contract manufacturing base, which offers DCC significant opportunities for organic and acquisitive growth.

 

DCC Technology

MTR

In July 2017, DCC Technology acquired MTR Group Ltd ("MTR"), a fast-growing UK-based provider of second lifecycle solutions for mobile and tablet devices.

 

Based in Harlow, Essex and employing 60 people, MTR provides a broad range of services to retailers, mobile handset manufacturers and insurance companies to source and refurbish mobile phones and tablets for resale to customers in the UK and abroad. In the year ended 30 November 2016, MTR generated service revenues of £11 million. The acquisition of MTR advances the DCC Technology strategy of expanding its service proposition to vendors and customers and provides access to the high growth second lifecycle solutions market. 

 

Hypertec

In March 2018, DCC Technology acquired Hypertec Ltd, a small UK-based distributor of third party and own-brand memory and accessory products. The business generated revenues of £28.3 million in its most recent financial year and employs approximately 50 people.

 

Disposals

The cash flow on disposals relates to the disposal of DCC's Environmental division on 31 May 2017. Full details of the disposal were set out in DCC's Stock Exchange announcement of 5 April 2017.

 

Since the year end, DCC Retail & Oil has completed the disposal of both its fuel storage terminal in Belfast to Valero Logistics UK Ltd, a subsidiary of Valero Energy Corporation, and its distribution business in Northern Ireland to Nicholl Fuel Oils Ltd. The distribution business sold approximately 250 million litres of product in the year to 31 March 2018. The sale excludes the retail business in Northern Ireland.

 

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 continued strong cash flow performance, DCC's financial position remains very strong. At 31 March 2018, the Group had net debt of £542.7 million, total equity of £1.7 billion, cash resources, net of overdrafts, of £964.3 million and a further £400 million of undrawn committed debt facilities. The Group's outstanding term debt at 31 March 2018 had an average maturity of 6.3 years. Substantially all of the Group's debt has been raised in the US Private Placement market with an average credit margin of 1.6% over floating Euribor/Libor.

 

At 31 March 2018, the Group's Net Debt: EBITDA was 1.1 times, reflecting the large acquisition spend in the second half of the financial year.

 

Outlook

The Group expects that the year ending 31 March 2019 will be another year of profit growth and development.

 
Annual Report and Annual General Meeting

DCC's 2018 Annual Report will be published in June 2018.  The Company's Annual General Meeting will be held at 11.00 am on Friday 13 July 2018 in The InterContinental Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland. 

 

Performance Review - Divisional Analysis

 

DCC LPG

2018

2017

% change

Volumes (thousand tonnes)

1,876.2kT

1,565.6kT

+19.8%

Operating profit

£167.5m

£160.4m

+4.4%

Operating profit per tonne

£89.27

£102.49

 

Return on capital employed

17.4%

22.9%

 

 

DCC LPG recorded a good performance, with operating profit increasing by 4.4% (1.0% ahead on a constant currency basis), despite the anticipated headwind of an increasing cost of product and continued organic investment in its B2C natural gas and electricity offering in France. DCC LPG also made excellent progress in expanding its geographic presence, completing the acquisitions of Shell Hong Kong & Macau in January 2018, as well as TEGA in Germany and Retail West in the US, both on 31 March 2018.  

 

The volume growth of 19.8% was driven by the prior year acquisition of Gaz Européen and the acquisition of Shell Hong Kong & Macau. Volumes grew 4.7% on a like-for-like basis, primarily reflecting strong growth in natural gas volumes and continued growth in sales of LPG to industrial and commercial customers.

 

As anticipated, the operating profit per tonne declined versus the prior year due to a significantly higher cost of product and the mix impact of lower margin natural gas volumes becoming more material.

 

The French business performed in line with expectations, benefiting from strong cost control and good margin management and the business continues to progress organic new product development and efficiency opportunities. The 'Click & Collect' concept, allowing 24/7 order and collection of cylinders using a mobile application, is being expanded to an increasing number of locations.  The business also continues to invest in its B2C offering in natural gas and electricity, launched in the second half of the year, which leverages the existing B2B natural gas operating platform as well as the Butagaz brand, the most recognised gas brand in France.

 

In Britain, the business delivered strong organic profit growth, despite the impact of supply constraints across the industry in the peak winter season. The business delivered strong volume growth, reflecting its continued focus on converting industrial and commercial users of oil to LPG. In Ireland, the business also benefited from growth in commercial volumes, reflecting continued strong demand from existing and new customers in the sector. 

 

In Asia, Shell Hong Kong & Macau has been successfully integrated into DCC LPG's operations and has performed in line with expectations since acquisition.

 

Following the completion of recent acquisitions, DCC LPG has operations across ten countries and is very well placed to continue its development in existing territories, in both LPG and related adjacencies, as well as further developing its geographic footprint.

 

 

DCC Retail & Oil

2018

2017

% change

Volumes (litres)

12.308bn

11.572bn

+6.4%

Operating profit

£113.8m

£94.5m

+20.4%

Operating profit per litre

0.92ppl

0.82ppl

 

Return on capital employed

18.7%

19.8%

 

 

DCC Retail & Oil had an excellent year, with operating profit increasing to £113.8 million, 20.4% ahead of the prior year (18.0% ahead on a constant currency basis). The strong performance reflects organic profit growth across all territories and acquisitions completed in the current and prior year.

 

DCC Retail & Oil sold 12.3 billion litres of product during the year, an increase of 6.4% over the prior year, driven by the prior year acquisition of Dansk Fuels and the acquisition of Esso Retail Norway in October 2017. Organic volumes were in line with the prior year.

 

In the UK and Ireland, the business delivered strong organic profit growth and benefited modestly from good heating oil demand following a marginally colder than average winter. The business continues to make good progress in developing its business in differentiated premium products, cross-selling value added products and services, such as telemetry, and developing in adjacent product areas such as lubricants and aviation. The business also continued its plans to organically invest in developing an unmanned retail network in the UK and Ireland and now has 39 unmanned sites, with a pipeline of further sites under consideration.

 

The Fuel Card business performed well, delivering organic profit growth whilst also expanding its operations organically into the German and French markets during the year.

 

In May 2018, DCC Retail & Oil acquired SNAP, an end-to-end transaction processing and payment system for HGV fleets. The business facilitates cashless payments through licence plate recognition for services to HGV fleets at truck stops. The business, although modest, is growing strongly and will be complementary to the existing retail and oil businesses.

 

A strong performance in the Danish business reflected organic growth in commercial, agricultural and domestic volumes and a full year's contribution from Dansk Fuels, which has been fully integrated. The Danish business now has leading market positions across the domestic, agricultural, commercial and aviation markets, in addition to operating 144 retail sites under the Shell brand. In France, the business delivered good profit growth while operating in a more competitive environment and continued to invest in both its customer proposition and upgrading its sites. In October 2017, DCC Retail & Oil completed, ahead of schedule, the acquisition of Esso's retail network in Norway. The business has now been integrated into DCC Retail & Oil's retail operating infrastructure, enabling management to commence driving improvements in what is a difficult market environment. The businesses in both Sweden and Austria performed well during the year.

 

Following a strategic review of the market position and invested capital of the business in Northern Ireland, DCC Retail & Oil completed the sale of its fuel storage terminal and distribution business in Northern Ireland in April 2018. The business sold approximately 250 million litres of volume in the year ended 31 March 2018.

 

Following completion of the acquisition of Esso Retail Norway, DCC Retail & Oil now has substantial operations in eight countries and has developed a scalable platform to grow the business in existing and new territories across its distribution, retail and fuel card activities.

 

 

DCC Healthcare

2018

2017

% change

Revenue

£514.6m

£506.5m

+1.6%

Operating profit

£54.3m

£49.0m

+11.0%

Operating margin

10.6%

9.7%

 

Return on capital employed

16.7%

17.5%

 

 

DCC Healthcare again delivered strong growth, with operating profit increasing by 11.0% (10.6% ahead on a constant currency basis), with approximately half of the growth being organic. The business continued to improve its operating margin and also completed the acquisition of Elite One Source in January 2018, its first acquisition in the large and growing health supplements market in the US.

 

DCC Vital, which is focused on the sales and marketing of medical devices and pharmaceuticals to healthcare providers in Britain and Ireland, performed very strongly and benefited from the prior year acquisition of Medisource and good organic growth in medical devices. In the British primary care sector, DCC Vital enhanced its position as the market leader in the supply of medical consumables and equipment to GP surgeries with the completion of two small complementary bolt-on acquisitions. The integration of both acquisitions into DCC Vital's existing infrastructure is progressing to plan. DCC Vital's pharma activities also performed well, benefiting from the strength of its supply chain for certain essential medicines. A strong performance in the Irish business reflected a full year contribution from Medisource, acquired in January 2017, and continued strong growth in the supply of medical devices to the hospital and community care sectors. DCC Vital's operating margin was further enhanced by exiting the supply of certain low value commodity products into hospitals in Britain, continuing the product portfolio streamlining of prior years.

 

DCC Health & Beauty Solutions, which provides outsourced solutions to international nutrition and beauty brand owners, generated excellent organic growth in the nutrition sector and benefited from the acquisition of Elite One Source in January 2018, which has performed in line with expectations since acquisition. The organic growth was driven by the continued focus on complex product formulations, particularly soft gels, and benefited from increasing end-user demand for nutritional products in DCC Health & Beauty Solutions' key markets of Europe, the US and Asia. In the beauty sector, while the overall performance was held back somewhat due to destocking by certain customers, the business benefited from excellent growth in sachet filling and also generated a number of new business development opportunities during the second half of the year.

 

DCC Health & Beauty Solutions is continuing to progress a number of investment projects across its manufacturing facilities in Britain and in its recently acquired facilities in the US, which will add new capacity and product capability, enhancing its ability to meet the growing market demand for its services.

 

 

DCC Technology

2018

2017

% change

Revenue

£3.083bn

£2.689bn

+14.7%

Operating profit

£47.8m

£41.1m

+16.3%

Operating margin

1.6%

1.5%

 

Return on capital employed

16.1%

17.1%

 

 

DCC Technology achieved very strong operating profit growth of 16.3% (15.5% ahead on a constant currency basis), reflecting acquisitions completed in the current and prior year and organic profit growth in the UK, Ireland and the Nordics.

 

In the UK, DCC Technology's largest market, the business achieved very strong revenue and profit growth, driven by market share gains and growth in key product categories including audio visual, components and gaming. The business continued to invest in both its product and service capability to allow it to take advantage of growth opportunities in audio visual, home automation, enterprise software and consumer product solutions.

 

Hammer, acquired in December 2016, achieved strong growth in sales of server and storage products into key markets, including the datacentre market. The acquisition of MTR, in July 2017, has allowed DCC Technology to enhance its service offering in the mobile market, strengthening its relationships with key vendor and retail partners. The business has performed very strongly since acquisition and provides a platform to extend its service offering outside of the UK. In February 2018, DCC Technology acquired Hypertec, a small specialist distributor of own-brand and third party memory and accessory products to reseller customers in the UK.

 

The new UK national distribution centre is now operational and the business has successfully disposed of most of its original warehousing. The associated project to upgrade its enterprise management system, which will significantly enhance the capability of the business to service its customers and suppliers, is progressing well and is scheduled to be completed by the end of the year.

 

The Irish business delivered strong organic profit growth as it benefited from a good performance in the enterprise segment and the continued development of its service proposition, including device life cycle management.

 

In France, the B2B segment performed strongly as it benefited from expansion of its audio visual offering and strong organic growth in its core cabling business. The French consumer products business remained very challenging and a programme to significantly reduce costs, while improving its logistics and operational efficiency, has been implemented. In the Nordics, the business experienced very strong organic growth and continues to benefit from investments made to broaden the reach of the business in Norway, Denmark and Finland. The business is making a significant investment in warehousing capacity to support future growth, in particular in audio visual and IT products. 

 

The business in the Middle East generated very strong revenue and profit growth reflecting further development of its relationships with key retailers in the region. Supply Chain Services continues to invest in its global service offering and also acts as an essential centre of expertise, supporting the broader DCC Technology business.

 

The performance in the current year, together with recent investments made in its service offering and infrastructure, leaves DCC Technology well positioned to drive further growth in both its existing and new markets.

 

 

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 2018                

 

 

2018

 

2017

 

 

 

Pre exceptionals

Exceptionals

(note 5)

 

Total

 

Pre exceptionals

Exceptionals

(note 5)

 

Total

 

Continuing operations

Notes

£'000

£'000

£'000

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

Revenue 

4

14,264,639

-

14,264,639

 

12,269,802

-

12,269,802

 

Cost of sales

 

(12,857,814)

-

(12,857,814)

 

(11,006,805)

-

(11,006,805)

 

Gross profit

 

1,406,825

-

1,406,825

 

1,262,997

-

1,262,997

 

Administration expenses

 

(384,701)

-

(384,701)

 

(323,320)

-

(323,320)

 

Selling and distribution expenses

 

(652,636)

-

(652,636)

 

(605,182)

-

(605,182)

Other operating income

 

28,652

1,156

29,808

 

28,297

1,879

30,176

 

Other operating expenses

 

(14,740)

(46,269)

(61,009)

 

(17,787)

(38,176)

(55,963)

 

Adjusted operating profit

383,400

(45,113)

338,287

 

345,005

              (36,297)

308,708

 

Amortisation of intangible assets

(43,059)

-

(43,059)

 

(39,130)

                         -

(39,130)

 

Operating profit

4

340,341

(45,113)

295,228

 

305,875

              (36,297)

269,578

 

Finance costs

 

(73,156)

-

(73,156)

 

(72,910)

                         -

(72,910)

 

Finance income

 

37,421

299

37,720

 

40,973

                10,101

51,074

 

Equity accounted investments' profit after tax

368

-

368

 

712

                         -

712

 

Profit before tax

304,974

(44,814)

260,160

 

274,650

             (26,196)

248,454

 

Income tax expense

 

(49,289)

25,407

(23,882)

 

(44,113)

                (1,756)

(45,869)

 

Profit for the year (continuing operations)

255,685

(19,407)

236,278

 

230,537

              (27,952)

202,585

 

Profit for the year from discontinued operations

 

8

 

801

 

29,842

 

30,643

 

 

15,160

 

                         -

 

15,160

 

Profit after tax for the financial year

          

256,486

10,435

266,921

 

245,697

              (27,952)

217,745

 

 

 

 

 

 

 

 

 

 

 

Profit attributable to:

 

 

 

 

 

 

 

 

 

Owners of the Parent

 

250,420

11,404

261,824

 

241,011

(24,814)

216,197

 

Non-controlling interests

 

6,066

(969)

5,097

 

4,686

(3,138)

1,548

 

 

 

256,486

10,435

266,921

 

245,697

(27,952)

217,745

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per ordinary share

 

 

 

 

 

 

 

 

 

Basic earnings per share

6

 

 

        293.83p

 

 

       243.64p

 

 

Diluted earnings per share

6

 

 

        292.79p

 

 

       242.00p

 

 

Basic adjusted earnings per share

6

 

 

        318.35p

 

 

       303.68p

 

 

Diluted adjusted earnings per share

6

 

 

        317.21p

 

 

       301.63p

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per ordinary share - continuing operations

 

 

 

 

 

 

 

Basic earnings per share

6

 

 

        259.44p

 

 

       226.56p

 

 

Diluted earnings per share

6

 

 

        258.52p

 

 

       225.04p

 

 

Basic adjusted earnings per share

6

 

 

        317.45p

 

 

       286.59p

 

 

Diluted adjusted earnings per share

6

 

 

        316.31p

 

 

       284.66p

 

                                       

 

Group Statement of Comprehensive Income

For the year ended 31 March 2018

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

2017

 

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

Group profit for the financial year

 

 

 

266,921

 

217,745

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

Currency translation:

 

 

 

 

 

 

 

- arising in the year

 

 

 

682

 

37,084

 

- recycled to the Income Statement on disposal

 

 

 

(4,548)

 

-

 

Movements relating to cash flow hedges

 

 

 

(3,030)

 

(6,803)

 

Movement in deferred tax liability on cash flow hedges

 

 

 

433

 

1,334

 

 

 

 

(6,463)

 

31,615

 

Items that will not be reclassified to profit or loss

 

 

 

 

 

 

Group defined benefit pension obligations:

 

 

 

 

 

 

- remeasurements

 

 

5,215

 

(3,056)

 

- movement in deferred tax asset

 

 

(665)

 

413

 

 

 

 

4,550

 

(2,643)

 

 

 

 

 

 

 

 

Other comprehensive income for the financial year, net of tax

 

 

(1,913)

 

28,972

 

 

 

 

 

 

 

 

 

Total comprehensive income for the financial year

 

 

 

265,008

 

246,717

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Owners of the Parent

 

 

 

259,336

 

242,735

 

Non-controlling interests

 

 

 

5,672

 

3,982

 

 

 

 

 

 

 

 

 

 

 

 

 

265,008

 

246,717

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Continuing operations

 

 

 

234,365

 

230,199

 

Discontinued operations

 

 

 

30,643

 

16,518

 

 

 

 

 

 

 

 

 

 

 

 

 

265,008

 

246,717

 

                           
 

Group Balance Sheet

As at 31 March 2018

 

 

 

 

 

 

 

 

 

 

2018

 

2017

 

Notes

 

 

£'000

 

£'000

ASSETS

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

 

 

933,038

 

750,020

Intangible assets and goodwill

 

 

 

1,936,962

 

1,422,572

Equity accounted investments

 

 

 

24,461

 

24,938

Deferred income tax assets

 

 

 

26,154

 

22,619

Derivative financial instruments

 

 

 

103,085

 

273,767

 

 

 

 

3,023,700

 

2,493,916

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Inventories

 

 

 

530,473

 

456,395

Trade and other receivables

 

 

 

1,426,217

 

1,222,597

Derivative financial instruments

 

 

 

8,050

 

18,233

Cash and cash equivalents

 

 

 

1,038,827

 

1,048,064

 

 

 

 

3,003,567

 

2,745,289

Assets classified as held for sale

 

 

 

-

 

193,170

 

 

 

 

3,003,567

 

2,938,459

 

 

 

 

 

 

 

Total assets

 

 

 

6,027,267

 

5,432,375

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

Capital and reserves attributable to owners of the Parent

 

 

 

 

Share capital

 

 

 

15,455

 

15,455

Share premium

 

 

 

280,533

 

277,211

Share based payment reserve

9

 

 

22,883

 

18,146

Cash flow hedge reserve

9

 

 

(16,178)

 

(13,581)

Foreign currency translation reserve

9

 

 

101,096

 

105,537

Other reserves

9

 

 

932

 

932

Retained earnings

 

 

 

1,237,937

 

1,074,434

Equity attributable to owners of the Parent

 

 

 

1,642,658

 

1,478,134

Non-controlling interests

 

 

 

35,259

 

29,587

Total equity

 

 

 

1,677,917

 

1,507,721

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Borrowings

 

 

 

1,598,521

 

1,319,967

Derivative financial instruments

 

 

 

10,732

 

506

Deferred income tax liabilities

 

 

 

152,552

 

155,297

Post employment benefit obligations

11

 

 

(286)

 

29

Provisions for liabilities

 

 

 

278,890

 

255,650

Acquisition related liabilities

 

 

 

71,454

 

66,617

Government grants

 

 

 

237

 

261

 

 

 

 

2,112,100

 

1,798,327

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

 

 

2,063,260

 

1,820,517

Current income tax liabilities

 

 

 

19,769

 

25,051

Borrowings

 

 

 

74,897

 

148,445

Derivative financial instruments

 

 

 

8,474

 

5,894

Provisions for liabilities

 

 

 

44,451

 

31,022

Acquisition related liabilities

 

 

 

26,399

 

28,300

 

 

 

 

2,237,250

 

2,059,229

Liabilities associated with assets classified as held for sale

 

 

 

-

 

67,098

 

 

 

 

2,237,250

 

2,126,327

Total liabilities

 

 

 

4,349,350

 

3,924,654

 

 

 

 

 

 

 

Total equity and liabilities

 

 

 

6,027,267

 

5,432,375

 

 

 

 

 

 

 

Net debt included above (including cash attributable to assets held for sale)

 

10

 

 

 

(542,662)

 

 

(121,949)

 

Group Statement of Changes in Equity

 

 

For the year ended 31 March 2018

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 2017

15,455

277,211

1,074,434

111,034

1,478,134

29,587

1,507,721

 

 

 

 

 

 

 

 

Profit for the financial year

-

-

   261,824

             -

   261,824

        5,097

   266,921

 

 

 

 

 

 

 

 

Currency translation:

 

 

 

 

 

 

 

- arising in the year

               -

                  -

               -

        107

          107

           575

          682

- recycled to the Income Statement on disposal

               -

                  -

               -

    (4,548)

     (4,548)

                -

     (4,548)

Group defined benefit pension obligations:

               

                  

               

 

               

 

 

- remeasurements

               -

-

       5,215

             -

       5,215

                -

       5,215

- movement in deferred tax asset

               -

-

        (665)

             -

        (665)

                -

        (665)

Movements relating to cash flow hedges

               -

-

               -

    (3,030)

     (3,030)

                -

     (3,030)

Movement in deferred tax liability on cash flow hedges

               -

-

               -

        433

          433

                -

          433

Total comprehensive income

               -

-

   266,374

    (7,038)

   259,336

        5,672

   265,008

 

 

 

 

 

 

 

 

Re-issue of treasury shares

               -

3,322

               -

             -

       3,322

                -

       3,322

Share based payment

               -

-

               -

     4,737

       4,737

                -

       4,737

Dividends

               -

-

 (102,871)

             -

 (102,871)

                -

 (102,871)

 

 

 

 

 

 

 

 

At 31 March 2018

15,455

280,533

1,237,937

108,733

1,642,658

35,259

1,677,917

 

 

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

 

Group Cash Flow Statement

For the year ended 31 March 2018

 

 

 

 

 

 

 

 

 

 

2018

 

2017

 

 

Note

 

£'000

 

£'000

Cash flows from operating activities

 

 

 

 

 

 

Profit for the financial year

 

 

 

266,921

 

217,745

Add back non-operating expenses/(income):

 

 

 

 

 

 

-  tax

 

 

 

24,046

 

49,054

-  share of equity accounted investments' profit

 

 

 

(368)

 

(712)

-  net operating exceptionals

 

 

 

15,271

 

36,297

-  net finance costs

 

 

 

35,452

 

21,999

Group operating profit before exceptionals

 

 

 

341,322

 

324,383

Share-based payments expense

 

 

 

4,737

 

3,192

Depreciation

 

 

 

93,722

 

92,015

Amortisation of intangible assets

 

 

 

43,059

 

39,168

Profit on disposal of property, plant and equipment

 

 

 

(167)

 

(173)

Amortisation of government grants

 

 

 

(36)

 

(235)

Other

 

 

 

4,555

 

4,571

Decrease in working capital

 

 

 

(13,758)

 

83,949

Cash generated from operations before exceptionals

 

 

 

473,434

 

546,870

Exceptionals

 

 

 

(12,602)

 

(31,269)

Cash generated from operations

 

 

 

460,832

 

515,601

Interest paid

 

 

 

(69,900)

 

(70,108)

Income tax paid

 

 

 

(65,437)

 

(62,180)

Net cash flows from operating activities

 

 

 

325,495

 

383,313

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Inflows:

 

 

 

 

 

 

Proceeds from disposal of property, plant and equipment

 

 

 

7,617

 

12,315

Dividends received from equity accounted investments

 

 

 

1,980

 

125

Disposal of subsidiaries

 

8

 

160,063

 

-

Interest received

 

 

 

37,399

 

40,966

 

 

 

 

207,059

 

53,406

Outflows:

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

 

(152,997)

 

(143,698)

Acquisition of subsidiaries

 

12

 

(664,109)

 

(203,327)

Payment of accrued acquisition related liabilities

 

 

 

(26,910)

 

(59,069)

 

 

 

 

(844,016)

 

(406,094)

Net cash flows from investing activities

 

 

 

(636,957)

 

(352,688)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Inflows:

 

 

 

 

 

 

Proceeds from issue of shares

 

 

 

3,322

 

2,600

Net cash inflow on derivative financial instruments

 

 

 

11,275

 

14,212

Increase in interest-bearing loans and borrowings

 

 

 

458,593

 

-

Increase in finance lease liabilities

 

 

 

766

 

-

 

 

 

 

473,956

 

16,812

Outflows:

 

 

 

 

 

 

Repayment of interest-bearing loans and borrowings

 

 

 

(58,130)

 

(108,140)

Repayment of finance lease liabilities

 

 

 

(4)

 

(177)

Dividends paid to owners of the Parent

 

7

 

(102,871)

 

(90,036)

Dividends paid to non-controlling interests

 

 

 

-

 

(5,228)

 

 

 

 

(161,005)

 

(203,581)

Net cash flows from financing activities

 

 

 

312,951

 

(186,769)

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

 

 

1,489

 

(156,144)

Translation adjustment

 

 

 

(10,018)

 

38,929

Cash and cash equivalents at beginning of year

 

 

 

972,822

 

1,090,037

Cash and cash equivalents at end of year

 

 

 

964,293

 

972,822

 

 

 

 

 

 

 

Cash and cash equivalents consists of:

 

 

 

 

 

 

Cash and short term bank deposits

 

 

 

1,038,827

 

1,048,064

Overdrafts

 

 

 

(74,534)

 

(88,041)

Cash and short term deposits attributable to assets held for sale

 

 

 

-

 

12,799

 

 

 

 

964,293

 

972,822

 

 

 

 

 

 

 

               
 

Notes to the Condensed Financial Statements

For the year ended 31 March 2018

 

 

1.             Basis of Preparation

 

The financial information, from the Group Income Statement to note 15, contained in this preliminary results statement has been derived from the Group financial statements for the year ended 31 March 2018 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 2018 and their report was unqualified. The financial information for the year ended 31 March 2017 represents an abbreviated, restated (see note 4) 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 2018 which are consistent with those applied in the prior year.

 

 

2.             Accounting Policies

 

The Group has adopted the following standards, interpretations and amendments to existing standards during the financial year:

 

·     Amendments to IAS 7 Statement of Cash Flows - Disclosure Initiative. These amendments are intended to improve the information provided to users of financial statements regarding the entity's financing activities. This amendment, which was EU endorsed in November 2017, did not have a significant impact on the Group's consolidated financial statements; and

·     Amendments to IAS 12 Income Taxes - Recognition of Deferred Tax Assets for Unrealised Losses. These amendments clarify, inter alia, that unrealised losses on debt instruments measured at fair value (and measured at cost for tax purposes) give rise to a deductible temporary difference regardless of whether the instrument is recovered through sale or by holding it to maturity or whether it is probable that the issuer will pay all contractual cash flows. Entities are therefore required to recognise deferred taxes for temporary differences from unrealised losses of debt instruments measured at fair value if all other recognition criteria for deferred taxes are met. This amendment, which was EU endorsed in November 2017, did not have a significant impact on the Group's consolidated financial statements.

 

There are other changes to IFRS which became effective for the Group during the financial year but did not result 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

 

2018

2017

2018

2017

 

Stg£1=

Stg£1=

Stg£1=

Stg£1=

 

 

 

 

 

Euro

1.1366

1.1956

1.1430

1.1689

Danish Krone

8.4603

8.9150

8.5187

8.6942

Swedish Krona

11.0482

11.3729

11.7548

11.1423

Norwegian Krone

10.7901

10.9811

11.0607

10.7169

US Dollar

1.3236

1.3181

1.4083

1.2497

Hong Kong Dollar

10.3312

10.2260

11.0522

9.7106

 

 

 

4.             Segmental Reporting

 

DCC is a leading international sales, marketing and support services group headquartered in Dublin, Ireland.  Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.  The chief operating decision maker has been identified as Mr. Donal Murphy, Chief Executive and his executive management team. 

 

As noted in the Group's Annual Report for the year ended 31 March 2017, DCC is presenting DCC LPG and DCC Retail & Oil as separate reportable segments from 1 April 2017, in line with the revised management and organisational structures of the businesses. Previously, these two segments comprised the Group's former DCC Energy segment. Following these changes in the composition of operating segments, segmental reporting has been revised and the comparative disclosures have been restated as required under IFRS 8.

 

The Group is organised into four operating segments: DCC LPG, DCC Retail & Oil, DCC Healthcare and DCC Technology.

 

DCC LPG is a leading liquefied petroleum gas ('LPG') sales and marketing business with operations in Europe, Asia and the US with a developing business in the retailing of natural gas and electricity;

 

DCC Retail & Oil is a leader in the sales, marketing and retailing of transport and commercial fuels, heating oils and related products and services in Europe;

 

DCC Healthcare is a leading healthcare business, providing products and services to healthcare providers and health and beauty brand owners; and

 

DCC Technology is a leading route-to-market and supply chain 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 by segment and geographic location is as follows:

 

(a)           By operating segment

 

 

                                             Year ended 31 March 2018

                                                                                          

  DCC LPG   DCC Retail & Oil   DCC Healthcare   DCC Technology   Total 

 

£'000

 

£'000

 

          £'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

Segment revenue

1,403,779

 

   9,262,836

 

      514,564

 

3,083,460

 

14,264,639

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit

167,485

 

113,757

 

        54,318

 

47,840

 

      383,400

Amortisation of intangible assets

(21,312)

 

(8,983)

 

         (7,198)

 

(5,566)

 

       (43,059)

Net operating exceptionals (note 5)

(8,127)

 

(21,788)

 

         (3,034)

 

(12,164)

 

       (45,113)

Operating profit

138,046

 

82,986

 

        44,086

 

30,110

 

      295,228

                                                                                                                                                                                                     

 

 

 

 

 

 

                                          Year ended 31 March 2017

                                                               

  DCC LPG   DCC Retail & Oil   DCC Healthcare   DCC Technology   Total

 

£'000

 

£'000

 

          £'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

Segment revenue

1,073,212

 

   8,000,923

 

      506,562

 

   2,689,105

 

12,269,802

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit

160,462

 

94,479

 

48,944

 

        41,120

 

      345,005

Amortisation of intangible assets

(18,277)

 

(9,962)

 

(7,258)

 

         (3,633)

 

      (39,130)

Net operating exceptionals (note 5)

(6,854)

 

(13,633)

 

(2,695)

 

       (13,115)

 

      (36,297)

Operating profit

135,331

 

70,884

 

38,991

 

        24,372

 

      269,578

 

                                                                                                                

(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*

 

 

2018

2017

 

2018

2017

 

 

£'000

£'000

 

£'000

£'000

 

 

 

 

 

 

 

 

Republic of Ireland

927,133

759,439

 

129,050

123,348

 

United Kingdom

7,741,143

7,239,193

 

1,050,804

985,717

 

France

2,712,240

2,402,290

 

882,276

869,895

 

Other

2,884,123

1,868,880

 

832,331

218,570

 

 

14,264,639

12,269,802

 

2,894,461

2,197,530

 

 

 

 

 

 

 

 

 * Non-current assets comprise intangible assets, property, plant and equipment and equity accounted investments

 

 

 

5.             Exceptionals

 

 

 

 

 

 

 

 

 

2018

 

2017

 

 

 

£'000

 

£'000

 

 

 

 

 

 

Restructuring costs

 

 

(29,419)

 

(19,345)

Acquisition and related costs

 

 

(12,789)

 

(10,308)

Impairment of property, plant and equipment

 

 

(3,735)

 

(1,164)

Adjustments to contingent acquisition consideration

 

 

477

 

(5,114)

Other operating exceptional items

 

 

353

 

(366)

Net operating exceptional items

 

 

(45,113)

 

(36,297)

 

 

 

 

 

 

Mark to market of swaps and related debt

 

 

299

 

10,101

Net exceptional items before taxation

 

 

(44,814)

 

(26,196)

 

 

 

 

 

 

Deferred tax

 

 

25,407

 

(1,756)

Net exceptional items after taxation (continuing operations)

 

 

(19,407)

 

(27,952)

 

 

 

 

 

 

Profit on disposal of discontinued operations (note 8)

 

 

29,842

 

-

Net exceptional items after taxation

 

 

10,435

 

(27,952)

 

 

 

 

 

 

Non-controlling interest share of net exceptional items after taxation

 

 

969

 

3,138

Net exceptional items attributable to owners of the Parent

 

 

11,404

 

(24,814)

 

The profit on disposal of discontinued operations relates to the gain recorded on the profitable sale of DCC's environmental division, which completed on 31 May 2017.

 

Acquisition costs include the professional fees and tax costs (such as stamp duty) relating to the evaluation and completion of acquisition opportunities and amounted to £12.789 million.

 

Restructuring costs amounted to £29.419 million and principally reflect the costs associated with the Group's focus on increasing the efficiency of its operating infrastructure and sales platforms. The majority of the charge relates to the Retail & Oil division where a large project to bring greater efficiency and reduced capital expenditure over time to the UK business' nationwide depot network infrastructure is underway and the project will result in a material reduction in the number of depot locations. The Group incurred a related impairment charge on property, plant and equipment of £3.735 million on this project. An element of the overall charge also relates to the integration and restructuring costs associated with the prior year acquisition of Dansk Fuels in Denmark.

 

The other material element of the restructuring charge relates to the ongoing optimisation of DCC Technology's logistics and related infrastructure.  In the UK, the new national distribution centre is now operational and a number of the existing locations have transferred into the new infrastructure. The remaining existing locations will transition during the coming year and the majority of the existing locations have now been sold successfully. A programme to significantly reduce costs while improving the logistics and operational efficiency of DCC Technology's French consumer business is ongoing. This project will also deliver a consolidation of two existing warehouses into one new facility. Finally, the business in the Nordics has recently commissioned its new national distribution centre and it is now operational.

 

Most of the Group's debt has been raised in the US Private Placement market and swapped, using long term interest 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 is charged or credited as an exceptional item. In the year ended 31 March 2018, this amounted to an exceptional non-cash gain of £0.299 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 £5.3 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 deferred tax credit of £25.407 million principally reflects the impact of the recent reduction of the statutory corporation tax rate in France and the corresponding reduction in the Group's deferred tax liabilities associated with the Group's brand and other intangible assets in France.

 

There was a non controlling interest credit of £0.969 million in relation to certain of the above exceptional charges.

 

 

 

6.             Earnings per Ordinary Share

 

 

 

Discontinued

 

 

 

   Discontinued

 

 

 

Continuing

  operations

 

 

Continuing

 operations

 

 

operations

(note 8)

Total

 

operations

(note 8)

Total

 

2018

2018

2018

 

2017

2017

2017

 

£'000

£'000

£'000

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Profit attributable to owners of the Parent

231,181

30,643

261,824

 

201,037

15,160

216,197

Amortisation of intangible assets after tax

33,245

-

33,245

 

28,456

6

28,462

Exceptionals after tax (note 5)

18,438

(11,404)

 

          24,814

-

24,814

Adjusted profit after taxation and

non-controlling interests

 

282,864

 

801

 

283,665

 

 

        254,307

 

15,166

 

269,473

 

 

 

 

 

 

 

 

 

Continuing

Discontinued

 

 

Continuing

Discontinued

 

 

 

operations

operations

Total

 

operations

operations

Total

 

2018

2018

2018

 

2017

2017

2017

Basic earnings per ordinary share

pence

pence

pence

 

pence

pence

pence

 

 

 

 

 

 

 

 

Basic earnings per ordinary share

259.44p

34.39p

293.83p

 

226.56p

17.08p

243.64p

Amortisation of intangible assets after tax

37.31p

-

37.31p

 

32.07p

0.01p

32.08p

Exceptionals after tax

     20.70p

          (12.79p)

 

27.96p

          -

27.96p

Adjusted basic earnings per

ordinary share

 

317.45p

 

0.90p

 

318.35p

 

 

286.59p

 

17.09p

 

303.68p

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares in issue (thousands)

 

 

 

89,106

 

 

 

    88,735

 

 

 

 

 

 

 

 

                             

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

 

 

2018

2018

2018

 

2017

2017

2017

Diluted earnings per ordinary share

pence

pence

pence

 

pence

pence

pence

 

 

 

 

 

 

 

 

Basic earnings per ordinary share

258.52p

          34.27p

292.79p

 

225.04p

          16.96p

242.00p

Amortisation of intangible assets after tax

37.18p

                    -

37.18p

 

31.84p

            0.01p

31.85p

Exceptionals after tax

20.61p

          (33.37p)

          (12.76p)

 

27.78p

                    -

27.78p

Adjusted basic earnings per

ordinary share

 

316.31p

 

            0.90p

 

317.21p

 

 

284.66p

 

          16.97p

 

301.63p

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares in issue (thousands)

 

 

 

89,425

 

 

 

     89,338

                       

 

The earnings used for the purposes of the continuing diluted earnings per ordinary share calculations were £231.181 million (2017: £201.037 million) and £282.864 million (2017: £254.307 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 £30.643 million (2017: £15.160 million) and £0.801 million (2017: £15.166 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 2018 was 89.425 million (2017: 89.338 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:

 

 

2018

 

2017

 

'000

 

'000

 

 

 

 

Weighted average number of ordinary shares in issue

89,106

 

88,735

Dilutive effect of options and awards

319

 

603

Weighted average number of ordinary shares for diluted earnings per share

89,425

 

89,338

 

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

 

 

 

 

2018

 

2017

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

Final - paid 74.63 pence per share on 20 July 2017

(2017: paid 64.18 pence per share on 21 July 2016)

 

 

              66,520

 

           57,621

Interim - paid 40.89 pence per share on 11 December 2017    (2017: paid 37.17 pence per share on 12 December 2016)

 

 

 

36,351

 

 

32,415

 

 

 

 

                         

 

102,871

 

 

90,036

               

 

The Directors are proposing a final dividend in respect of the year ended 31 March 2018 of 82.09 pence per ordinary share (£73.242 million). This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.

  

 

8.             Discontinued Operations

 

As announced on 31 May 2017, the Group completed the disposal of the Environmental division. The proceeds on disposal will be used to fund the continued development of DCC's continuing operations. The conditions for the segment to be classified as a discontinued operation were satisfied during the year ended 31 March 2017 and the results of the Environmental segment were presented separately in the 2017 Annual Report as discontinued operations in the Group Income Statement and the assets and liabilities of this segment were classified as an asset held for sale at the reporting date.

 

The following table summarises the consideration received, the profit on disposal of discontinued operations and the net cash flow arising on the disposal of this segment:

 

 

 

 

 

2018

 

 

 

 

 

£'000

 

 

 

 

 

 

Net consideration

 

 

 

 

 

Net proceeds received

 

 

 

 

164,526

Costs of disposal

 

 

 

 

(4,463)

Total net consideration

 

 

 

 

160,063

 

 

 

 

 

 

Assets and liabilities disposed of

 

 

 

 

 

Non-current assets

 

 

 

 

145,675

Current assets

 

 

 

 

34,198

Non-current liabilities

 

 

 

 

(4,358)

Current liabilities

 

 

 

 

(40,746)

Net identifiable assets and liabilities disposed of

 

 

 

 

134,769

Recycling of foreign exchange gain previously recognised in foreign currency translation reserve

 

(4,548)

 

 

130,221

Profit on disposal of discontinued operations

 

29,842

 

 

 

 

 

 

 

 

 

 

 

 

Net cash flow on disposal of discontinued operations

 

 

 

 

 

Total proceeds received

 

 

 

 

174,321

Cash and cash equivalents disposed of

 

 

 

 

(9,795)

Net cash inflow on disposal of discontinued operations

 

 

 

 

164,526

Disposal costs paid

 

 

 

 

(4,463)

Net cash flow on disposal of discontinued operations

 

 

 

 

160,063

 

 

 

 

 

 

 

The following table details the results of discontinued operations included in the Group Income Statement:

 

 

 

 

2018

 

2017

 

 

 

£'000

 

£'000

 

 

 

 

 

 

Revenue

 

 

29,614

 

175,232

Cost of sales

 

 

(20,292)

 

(119,654)

Gross profit

 

 

9,322

 

55,578

Operating expenses

 

 

(8,341)

 

(37,032)

Adjusted operating profit

 

 

981

 

18,546

Amortisation of intangible assets

 

 

-

 

(38)

Operating profit

 

 

981

 

18,508

Net finance costs

 

 

(16)

 

(163)

Profit before tax

 

 

965

 

18,345

Income tax expense

 

 

(164)

 

(3,185)

 

 

 

801

 

15,160

Profit on disposal of discontinued operations

 

 

29,842

 

-

 

 

 

 

 

 

Profit from discontinued operations after tax

 

 

30,643

 

15,160

 

 

 

 

 

 

 

   

The following table details the cash flow from discontinued operations included in the Group Cash Flow Statement:

 

 

 

 

2018

 

2017

 

 

 

£'000

 

£'000

 

 

 

 

 

 

Net cash flow from operating activities

 

 

(5,602)

 

22,461

Net cash flow from investing activities

 

 

(1,332)

 

(6,661)

 

 

 

 

 

 

Net cash flow from discontinued operations

 

 

(6,934)

 

15,800

 

 

 

 

 

 

 

 

9.             Other Reserves

 

 

 

 

 

 

For the year ended 31 March 2018

 

 

 

 

 

 

 

 

Foreign

 

 

 

Share based

Cash flow

currency

 

 

 

payment

hedge

translation

Other

 

 

reserve

reserve

reserve

reserves

Total

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

                   

                   

 

 

 

At 1 April 2017

18,146

(13,581)

105,537

932

111,034

 

 

 

 

 

 

Currency translation:

 

 

 

 

 

- arising in the year

-

-

107

-

107

- recycled to the Income Statement on disposal

-

-

(4,548)

-

(4,548)

Movements relating to cash flow hedges

-

(3,030)

-

-

(3,030)

Movement in deferred tax liability on cash flow hedges                   -

433

-

-

433

Share based payment

4,737

-

-

-

4,737

 

 

 

 

 

 

At 31 March 2018

22,883

(16,178)

101,096

932

108,733

 

 

 

 

 

 

               

 

 

 

 

 

 

 

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

 

 

 

 

 

 

               
  

 

10.          Analysis of Net Debt

 

 

 

2018

 

2017

 

 

 

£'000

 

£'000

Non-current assets

 

 

 

 

 

Derivative financial instruments

 

 

103,085

 

273,767

 

 

 

 

 

 

Current assets

 

 

 

 

 

Derivative financial instruments

 

 

8,050

 

18,233

Cash and cash equivalents

 

 

1,038,827

 

1,048,064

 

 

 

1,046,877

 

1,066,297

Non-current liabilities

 

 

 

 

 

Finance leases

 

 

(692)

 

(165)

Derivative financial instruments

 

 

(10,732)

 

(506)

Unsecured Notes

 

 

(1,597,829)

 

(1,319,802)

 

 

 

(1,609,253)

 

(1,320,473)

Current liabilities

 

 

 

 

 

Bank borrowings

 

 

(74,534)

 

(88,041)

Finance leases

 

 

(363)

 

(190)

Derivative financial instruments

 

 

(8,474)

 

(5,894)

Unsecured Notes

 

 

-

 

(60,214)

 

 

 

(83,371)

 

(154,339)

 

Net debt excluding cash attributable to assets held for sale

 

 

(542,662)

 

 

(134,748)

Cash and short-term deposits attributable to assets held for sale

 

-

 

12,799

 

Net debt including cash attributable to assets held for sale

 

 

(542,662)

 

 

(121,949)

 

 

 

 

 

 

 

11.          Post Employment Benefit Obligations

 

The Group's defined benefit pension schemes' assets were measured at fair value at 31 March 2018.  The defined benefit pension schemes' liabilities at 31 March 2018 were updated to reflect material movements in underlying assumptions.

 

The Group's post employment benefit obligations moved from a net deficit of £0.029 million at 31 March 2017 to a net asset of £0.286 million at 31 March 2018. The movement in the deficit primarily reflects the inclusion of post employment benefit obligations arising on the TEGA acquisition, offset by actuarial gains on liabilities and contributions in excess of the current service cost.

 

 

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 on 31 March 2018 of 100% of NGL Energy Partners LP's Retail West LPG division, Hicksgas LLC ('Retail West'). Retail West is a US based LPG distributor with leading market positions in Illinois, Indiana and Kansas and also operates in seven other states across the Mid-West and North-West regions;

·      the acquisition on 31 March 2018 of 100% of Tega-Technische Gase und Gasetechnik GmbH ('TEGA'). TEGA is an LPG and refrigerant gas distribution business and operates across five sites largely based in southern Germany;

·      the acquisition in February 2018 of 100% of the trade and assets of the British LPG distribution business ('Countrywide LPG') of Countrywide Farmers plc. Countrywide LPG supplies bulk and cylinder LPG to domestic, agricultural and commercial customers in Britain;

·      the acquisition of 100% of Elite One Source Nutritional Services Inc ('Elite') in February 2018. Elite is a US based provider of contract manufacturing and related services to the growing healthcare and dietary supplements market in the US;

·      the completion of the acquisition of Shell Gas (LPG) Holdings BV's LPG business in Hong Kong and Macau ('Shell HK&M'), as announced in January 2018. The business provides LPG in bulk, cylinder and autogas formats to domestic, commercial and industrial customers in the region;

·      the completion of the acquisition of Esso's retail petrol station network in Norway, as announced in October 2017, comprising a national network of company-operated sites and contracts to supply Esso-branded dealer owned stations (together referred to as 'Esso Retail Norway'); and

·      the acquisition of 100% of MTR Group Ltd ('MTR') in July 2017. MTR is a UK based provider of second lifecycle solutions for mobile and tablet devices.

 

 

 

  

The acquisition data presented below reflects the fair value of the identifiable net assets acquired (excluding net cash/debt acquired) in respect of acquisitions completed during the year.

 

 

 

 

 

 

 

 

Esso Retail

Norway

Others

Total

Total

 

 

2018

2018

2018

2017

 

 

£'000

£'000

£'000

£'000

 

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Property, plant and equipment

63,822

78,610

142,432

8,265

 

Intangible assets - other intangible assets

55,885

87,728

143,613

68,513

 

Equity accounted investments

-

497

497

404

 

Deferred income tax assets

6,047

362

6,409

60

 

Total non-current assets

125,754

167,197

292,951

77,242

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Inventories

6,587

28,545

35,132

32,207

 

Trade and other receivables

6,945

45,039

51,984

206,528

 

Total current assets

13,532

73,584

87,116

238,735

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Deferred income tax liabilities

(12,853)

(15,355)

(28,208)

(19,902)

 

Post employment benefit obligations

-

(9,636)

(9,636)

-

 

Provisions for liabilities

(6,042)

(4,674)

(10,716)

(11,129)

 

Acquisition related liabilities

-

(102)

(102)

-

 

Total non-current liabilities

(18,895)

(29,767)

(48,662)

(31,031)

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

(798)

(37,202)

(38,000)

(164,777)

 

Provisions for liabilities

-

(4,271)

(4,271)

(5,317)

 

Current income tax (liability)/asset

-

(2,629)

(2,629)

12,341

 

Acquisition related liabilities

-

(57)

(57)

(13,522)

 

Total current liabilities

(798)

(44,159)

(44,957)

(171,275)

 

 

 

 

 

 

 

Identifiable net assets acquired

119,593

166,855

286,448

113,671

 

Goodwill

120,925

284,417

405,342

117,175

 

Total consideration

240,518

451,272

691,790

230,846

 

 

 

 

 

 

 

Satisfied by:

 

 

 

 

 

Cash

240,518

441,943

682,461

242,018

 

Cash and cash equivalents acquired

-

(18,352)

(18,352)

(38,691)

 

Net cash outflow

240,518

423,591

664,109

203,327

 

Acquisition related liabilities

-

27,681

27,681

27,519

 

Total consideration

240,518

451,272

691,790

230,846

 

 

  

The acquisition of Esso Retail Norway 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

Esso Retail Norway

£'000

£'000

£'000

 

 

 

 

Non-current assets (excluding goodwill)

69,869

55,885

125,754

Current assets

13,532

-

13,532

Non-current liabilities

(6,042)

(12,853)

(18,895)

Current liabilities

(520)

(278)

(798)

Identifiable net assets acquired

76,839

42,754

119,593

Goodwill arising on acquisition

163,679

(42,754)

120,925

Total consideration

240,518

-

240,518

 

 

 

Book

Fair value

Fair

 

value

adjustments

value

Others

£'000

£'000

£'000

 

 

 

 

Non-current assets (excluding goodwill)

80,296

86,901

167,197

Current assets

73,977

(393)

73,584

Non-current liabilities

(14,623)

(15,144)

(29,767)

Current liabilities

(43,953)

(206)

(44,159)

Identifiable net assets acquired

95,697

71,158

166,855

Goodwill arising on acquisition

355,575

(71,158)

284,417

Total consideration

451,272

-

451,272

 

 

 

Book

Fair value

Fair

 

value

adjustments

value

Total

£'000

£'000

£'000

 

 

 

 

Non-current assets (excluding goodwill)

150,165

142,786

292,951

Current assets

87,509

(393)

87,116

Non-current liabilities

(20,665)

(27,997)

(48,662)

Current liabilities

(44,473)

(484)

(44,957)

Identifiable net assets acquired

172,536

113,912

286,448

Goodwill arising on acquisition

519,254

(113,912)

405,342

Total consideration

691,790

-

691,790

 

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. The acquisitions of Retail West and TEGA both completed on 31 March 2018 and, as such, it has not yet been feasible to perform a preliminary assignment of fair values to identifiable net assets. Any amendments to fair values within the twelve month timeframe from the date of acquisition will be disclosable in the 2019 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.

 

£101.086 million of the goodwill recognised in respect of acquisitions completed during the financial year is expected to be deductible for tax purposes.

 

Acquisition related costs included in other operating expenses in the Group Income Statement amounted to £12.789 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 £53.056 million.  The fair value of these receivables is £51.984 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance for impairment of £1.072 million. In relation to the acquisition of Esso Retail Norway, the gross contractual value of trade and other receivables as at the date of acquisition amounted to £7.223 million. The fair value of these receivables is £6.945 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance for impairment of £0.278 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 £15.346 million to £51.737 million.

 

The acquisitions during the year contributed £347.4 million to revenues and £11.5 million to profit after tax. The acquisition of Esso Retail Norway during the year contributed £263.4 million to revenues and £2.6 million to profit after tax. 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 2018 would have been £14,977.9 million and total Group profit after tax (continuing) would be £274.5 million.

 

 

13.          Seasonality of Operations

 

The Group's operations are significantly second-half weighted primarily due to a portion of the demand for DCC's LPG and Retail & Oil products being weather dependent and seasonal buying patterns in DCC Technology.

 

 

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 2018 financial year.

 

 

15.          Board Approval

 

This report was approved by the Board of Directors of DCC plc on 14 May 2018.

 

 

 

Supplementary Financial Information

For the year ended 31 March 2018

 

 

Alternative Performance Measures

 

The Group reports certain alternative performance measures ('APMs') that are not required under International Financial Reporting Standards ('IFRS') which represent the generally accepted accounting principles ('GAAP') under which the Group reports. The Group believes that the presentation of these APMs provides useful supplemental information which, when viewed in conjunction with our IFRS financial information, provides investors with a more meaningful understanding of the underlying financial and operating performance of the Group and its divisions.

 

These APMs are primarily used for the following purposes:

- to evaluate the historical and planned underlying results of our operations;

- to set director and management remuneration; and

- to discuss and explain the Group's performance with the investment analyst community.

 

None of the APMs should be considered as an alternative to financial measures derived in accordance with GAAP. The APMs can have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. These performance measures may not be calculated uniformly by all companies and therefore may not be directly comparable with similarly titled measures and disclosures of other companies.

 

The principal APMs used by the Group, together with reconciliations where the non-GAAP measures are not readily identifiable from the financial statements, are as follows:

 

 

Adjusted operating profit ('EBITA')

Definition

This comprises operating profit as reported in the Group Income Statement before net operating exceptional items and amortisation of intangible assets. Net operating exceptional items and amortisation of intangible assets are excluded in order to assess the underlying performance of our operations. In addition, neither metric forms part of Director or management remuneration targets.

 

Calculation

2018

£'000

2017

£'000

Operating profit

295,228

269,578

Net operating exceptional items

45,113

36,297

Amortisation of intangible assets

43,059

39,130

Adjusted operating profit - continuing

383,400

345,005

Adjusted operating profit - discontinued

981

18,546

Adjusted operating profit ('EBITA')

384,381

363,551

 

 

Adjusted operating profit before depreciation ('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

2018

£'000

2017

£'000

Adjusted operating profit ('EBITA')

384,381

363,551

Depreciation

93,722

92,015

EBITDA

478,103

455,566

 

 

  

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

2018

£'000

2017

£'000

Finance costs before exceptional items

(73,156)

(72,910)

Finance income before exceptional items

37,421

40,973

Net interest - continuing

(35,735)

(31,937)

Net interest - discontinued

(16)

(163)

Net interest

(35,751)

(32,100)

 

 

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

2018

£'000

2017

£'000

Adjusted operating profit

384,381

363,551

Net interest

(35,751)

(32,100)

Earnings before taxation

348,630

331,451

 

Income tax expense

23,882

45,869

Exceptional deferred tax

25,407

(1,756)

Deferred tax attaching to amortisation of intangible assets

9,814

10,674

Income tax expense before exceptionals and deferred tax attaching to

amortisation of intangible assets - continuing

59,103

54,787

Income tax expense before exceptionals and deferred tax attaching to

amortisation of intangible assets - discontinued

164

3,217

Total income tax expense before exceptionals and deferred tax attaching to

amortisation of intangible assets

59,267

58,004

Effective tax rate (%)

17.0%

17.5%

 

 

  

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

2018

pence

2017

pence

Adjusted earnings per share - continuing

317.45

286.59

Adjusted earnings per share - discontinued

0.90

17.09

Adjusted earnings per share

318.35

303.68

 

 

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

2018

£'000

2017

£'000

Revenue - continuing

14,264,639

12,269,802

Currency impact

(296,654)

-

Revenue - continuing, constant currency

13,967,985

12,269,802

 

 

 

Adjusted operating profit - continuing, constant currency

 

 

Adjusted operating profit - continuing

383,400

345,005

Currency impact

(8,890)

-

Adjusted operating profit - continuing, constant currency

374,510

345,005

 

 

Adjusted earnings per share - continuing, constant currency

 

 

Adjusted earnings - continuing

282,864

254,307

Currency impact

(6,280)

-

Adjusted earnings - continuing, constant currency

276,584

254,307

Weighted average number of ordinary shares in issue ('000)

89,106

88,735

Adjusted earnings per share - continuing, constant currency

310.40p

286.59p

 

 

Dividend cover

Definition

The dividend cover ratio measures the Group's ability to pay dividends from earnings.

 

Calculation

2018

pence

2017

 pence

Adjusted earnings per share - continuing

317.45

286.59

Dividend

122.98

111.80

Dividend cover (times)

2.6x

2.6x

 

 

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

2018

£'000

2017

£'000

Purchase of property, plant and equipment

152,997

143,698

Proceeds from disposal of property, plant and equipment

(7,617)

(12,315)

Net capital expenditure

145,380

131,383

 

 

Free cash flow

Definition

Free cash flow is defined by the Group as cash generated from operations before exceptional items as reported in the Group Cash Flow Statement after net capital expenditure.

 

Calculation

2018

£'000

2017

£'000

Cash generated from operations before exceptionals

473,434

546,870

Net capital expenditure

(145,380)

(131,383)

Free cash flow

328,054

415,487

 

 

Free cash flow (after interest and tax payments)

Definition

Free cash flow (after interest and tax payments) is defined by the Group as free cash flow after interest paid, income tax paid, dividends received from equity accounted investments and interest received.

Calculation

2018

£'000

2017

£'000

Free cash flow

328,054

415,487

Interest paid

(69,900)

(70,108)

Income tax paid

(65,437)

(62,180)

Dividends received from equity accounted investments

1,980

125

Interest received

37,399

40,966

Free cash flow (after interest and tax payments)

232,096

324,290

 

 

 

Cash conversion ratio

Definition

The cash conversion ratio expresses free cash flow as a percentage of adjusted operating profit.

 

Calculation

2018

£'000

2017

£'000

Free cash flow

328,054

415,487

Adjusted operating profit

384,381

363,551

Cash conversion ratio (%)

85%

114%

 

 

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

2018

£'000

2017

£'000

Net debt

542,662

121,949

EBITDA

478,103

455,566

Net debt/EBITDA (times)

1.1x

0.3x

 

 

Return on capital employed ('ROCE') - continuing

Definition

ROCE represents adjusted operating profit (continuing) 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

2018

£'000

2017

£'000

Total equity

1,677,917

1,507,721

Net debt (continuing)

542,662

134,748

Goodwill and intangibles written off (continuing)

271,399

228,340

Equity accounted investments (continuing)

(24,461)

(24,938)

Acquisition related liabilities (continuing, current and non-current)

97,853

94,917

Net assets of the disposal group

-

(126,072)

 

2,565,370

1,814,716

Average total capital employed - continuing

2,190,043

1,698,240

Adjusted operating profit - continuing

383,400

345,005

Return on capital employed (%) - continuing

17.5%

20.3%

 

 

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

2018

£'000

2017

£'000

Net cash outflow on acquisitions during the year

664,109

203,327

Cash outflow on acquisitions which were committed to in the previous year

(341,253)

(34,372)

Acquisition related liabilities arising on acquisitions during the year

27,840

41,041

Acquisition related liabilities which were committed to in the previous year

(13,404)

(14,082)

Amounts committed in the current year

18,000

358,000

Committed acquisition expenditure

355,292

553,914

 

 

Net working capital

Definition

Net working capital represents the net total of inventories, trade and other receivables (excluding interest receivable), and trade and other payables (excluding interest payable, amounts due in respect of property, plant and equipment and government grants).

 

Calculation

2018

£'000

2017

£'000

Inventories

530,473

456,395

Add: inventories of the disposal group

-

1,922

Trade and other receivables

1,426,217

1,222,597

Add: trade and other receivables of the disposal group

-

33,264

Less: interest receivable

(126)

(223)

Trade and other payables

(2,063,260)

(1,820,517)

Add: trade and other payables of the disposal group

-

(35,741)

Less: interest payable

4,775

4,534

Less: amounts due in respect of property, plant and equipment

10,671

6,349

Less: government grants

9

9

Net working capital

(91,241)

(131,411)

 

 

Working capital (days)

Definition

Working capital days measures how long it takes in days for the Group to convert working capital into revenue.

 

Calculation

2018

£'000

2017

£'000

Net working capital

(91,241)

(131,411)

March revenue

1,418,988

1,223,575

Working capital (days)

(2.0 days)

(3.3 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 2018 - RNS