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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Dcc Plc | LSE:DCC | London | Ordinary Share | IE0002424939 | ORD EUR0.25 (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -15.00 | -0.27% | 5,450.00 | 5,435.00 | 5,440.00 | 5,480.00 | 5,395.00 | 5,430.00 | 165,015 | 16:35:06 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Offices-holdng Companies,nec | 22.2B | 334.02M | 3.3818 | 16.07 | 5.37B |
From Apr 2019 to Apr 2024
TIDMDCC
RNS Number : 1983F
DCC PLC
16 May 2017
16 May 2017
DCC Reports a Year of Strong Growth and Development
DCC, the leading international sales, marketing and business support services group, today announced its results for the year ended 31 March 2017.
Highlights 2017 2016 % change ----------------------------- ----------- ----------- --------- DCC Energy volumes (litres) 14.649bn 13.021bn +12.5% ----------------------------- ----------- ----------- --------- Revenue - continuing(1) (excl. DCC Energy) GBP3.196bn GBP2.932bn +9.0% ----------------------------- ----------- ----------- --------- Operating profit(2) - continuing1 GBP345.0m GBP285.3m +20.9% ----------------------------- ----------- ----------- --------- Total operating profit2 GBP363.6m GBP300.5m +21.0% ----------------------------- ----------- ----------- --------- Adjusted earnings per share2 - continuing1 286.6p 242.8p +18.1% ----------------------------- ----------- ----------- --------- Total adjusted earnings per share2 303.7p 257.1p +18.1% ----------------------------- ----------- ----------- --------- Dividend per share 111.80p 97.22p +15.0% ----------------------------- ----------- ----------- --------- Free cash flow 3 GBP415.5m GBP291.1m +42.7% ----------------------------- ----------- ----------- --------- Return on capital employed - continuing1 20.3% 21.9% ----------------------------- ----------- ----------- ---------
-- All divisions of DCC recorded strong profit growth, with Group operating profit on a continuing basis increasing by 20.9% (12.8% on a constant currency basis) to GBP345.0 million.
-- Adjusted earnings per share on a continuing basis up 18.1% (10.3% on a constant currency basis) to 286.6 pence.
-- Proposed 16.3% increase in the final dividend, which, together with the interim dividend increase of 12.5%, will see the total dividend for the year increase by 15.0%, the 23(rd) consecutive year of dividend growth since DCC listed in 1994.
-- Excellent cash flow performance, with free cash flow conversion of 114% and a return on total capital employed of 20.3%.
-- Very active period of corporate development, with over GBP550 million committed to acquisitions, including the agreed acquisition of Esso's retail network in Norway, the agreed acquisition of Shell's LPG business in Hong Kong & Macau, DCC's first material step beyond Europe, and further acquisition activity across DCC Energy, DCC Healthcare and DCC Technology.
-- The agreed disposal of DCC's environmental division for an enterprise value of GBP219 million brings increased strategic focus to the Group.
-- The Group expects that the year ending 31 March 2018 will be another year of profit growth and development.
(1) Excluding DCC Environmental, the agreed disposal of which was announced on 5 April 2017
(2) Excluding net exceptionals and amortisation of intangible assets
(3) After net capital expenditure and before net exceptionals, interest and tax payments
Commenting on the results, Tommy Breen, Chief Executive, said:
"I am very pleased to report that the year ended 31 March 2017 has been a strong year of growth and development for DCC. The results reflect the continued successful execution of our strategy in significantly growing our operating profits, converting those profits into cash and re-deploying capital into our Energy, Healthcare and Technology businesses.
The Group continues to have the ambition, capacity and opportunity for further development. We expect that the coming year will be another year of profit growth and development for DCC."
Presentation of results and dial-in / webcast facility
There will be a presentation of these results to analysts and fund managers at 9.00 am today in the London Stock Exchange. The slides for this presentation can be downloaded from DCC's website, www.dcc.ie.
There will also be audio conference access to, and a live webcast of, the presentation. The access details for the presentation are:
Ireland: 1800 992 778 UK / International: +44 (0)203 427 1905 Passcode: 4979141 Webcast Link: https://edge.media-server.com/m6/p/q6eq9non
This report, a webcast of the presentation and further information on DCC is available at www.dcc.ie.
For reference, please contact:
Hot Features
Premium
Tommy Breen, Chief Executive Tel: +353 1 2799
400
Fergal O'Dwyer, Chief Financial Email: investorrelations@dcc.ie
Officer
Kevin Lucey, Head of Capital Web: www.dcc.ie
Markets
For media enquiries: Powerscourt Tel: +44 20 7250
(Lisa Kavanagh) 1446
Group Results
A summary of the Group's results for the year ended 31 March 2017 is as follows:
2017 2016
GBP'm GBP'm % change
Revenue - continuing(1) 12,270 10,448 +17.4%
Operating profit(2)
DCC Energy 254.9 205.2 +24.3%
DCC Healthcare 49.0 45.0 +8.7%
DCC Technology 41.1 35.1 +17.1%
Operating profit(2) - continuing(1) 345.0 285.3 +20.9%
Operating profit(2) - discontinued operations 18.6 15.2 +22.2%
Group operating profit(2) 363.6 300.5 +21.0%
Equity accounted investments' profit after tax 0.7 0.5
Finance costs (net) (32.1) (29.0)
Profit before net exceptionals, amortisation of intangible
assets and tax 332.2 272.0 +22.1%
Net exceptional charge after tax and non-controlling
interests (24.8) (23.7)
Amortisation of intangible assets (39.2) (31.6)
Profit before tax 268.2 216.7 +23.7%
Taxation (47.3) (36.0)
Profit after tax 220.9 180.7 +22.2%
Non-controlling interests (4.7) (2.7)
Attributable profit 216.2 178.0 +21.4%
Adjusted earnings per share(2) - continuing(1) 286.6p 242.8p +18.1%
Total adjusted earnings per share(2) 303.7p 257.1p +18.1%
Dividend per share 111.80p 97.22p +15.0%
Operating cash flow 546.9 411.7 +32.8%
Free cash flow(3) 415.5 291.1 +42.7%
Net debt at 31 March 121.9 54.5
Total equity at 31 March 1,507.7 1,350.5
Return on capital employed - continuing(1) 20.3% 21.9%
(1) Excluding DCC Environmental, the agreed disposal of which was announced on 5 April 2017
(2) Excluding net exceptionals and amortisation of intangible assets
(3) After net capital expenditure and before net exceptionals, interest and tax payments
----------------------------------------------------------------------------------------------------------------------
Revenue - continuing operations
Revenue from continuing operations increased by 17.4% (11.5% on a constant currency basis) to GBP12.3 billion.
Overall volumes in DCC Energy increased by 12.5% to 14.6 billion litres, driven by the full year impact of the acquisition of the Esso Retail business in France and by the first time contribution of the acquisitions of Gaz Européen and Dansk Fuels. On a like-for-like basis, volumes were 1.0% ahead of the prior year. DCC Energy's revenue increased by 20.7% (14.0% on a constant currency basis).
Excluding DCC Energy, revenue from continuing operations was up 9.0% (5.0% on a constant currency basis), with revenue in DCC Technology increasing by 10.1% (5.8% on a constant currency basis) and revenue in DCC Healthcare increasing by 3.2% (1.3% on a constant currency basis).
Operating profit - continuing operations
Operating profit from continuing operations increased by 20.9% to GBP345.0 million (12.8% on a constant currency basis); approximately one third of the constant currency operating profit growth was organic. The Group also benefited from the full year impact of the acquisitions completed during the prior year. The average sterling/euro translation rate for the year of 1.1956 was 12.7% weaker than the average of 1.3697 in the prior year.
Operating profit in DCC Energy, the Group's largest division, was 24.3% ahead of the prior year and 13.9% ahead of the prior year on a constant currency basis. DCC Energy benefited from the full year impact of the acquisitions of Butagaz and Esso Retail France in the prior year. Over one third of the constant currency profit growth was organic and was driven by a strong performance from the LPG business, despite the headwind of rising product prices.
Operating profit in DCC Healthcare was 8.7% ahead of the prior year (8.0% on a constant currency basis); approximately two thirds of the constant currency growth was organic. The business benefited from a strong organic performance from DCC Health & Beauty Solutions, although DCC Vital was, as anticipated, impacted somewhat by the weakness of sterling, particularly in pharma products. Medisource, acquired by DCC Vital in January 2017, has traded in line with expectations.
Operating profit in DCC Technology increased by 17.1% (12.5% on a constant currency basis), benefiting from the contributions from acquisitions completed in the current and prior year. Approximately one third of the constant currency operating profit growth was organic and was driven by a good performance from the UK and Irish business. A weaker demand environment impacted trading in the French retail-focused business, although the Swedish and supply chain businesses experienced better trading conditions and achieved good organic growth.
An analysis of the divisional performance in each half of the year, for the Group's continuing operations, is set out below:
2016/17 2015/16 % change
---------------------- ---------------------- -------------------------
H1 H2 FY H1 H2 FY H1 H2 FY
Operating GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
profit*
DCC Energy 76.0 178.9 254.9 52.9 152.3 205.2 +43.8% +17.5% +24.3%
DCC Healthcare 19.8 29.2 49.0 18.4 26.6 45.0 +7.0% +9.8% +8.7%
DCC Technology 11.3 29.8 41.1 8.6 26.5 35.1 +31.9% +12.2% +17.1%
Group 107.1 237.9 345.0 79.9 205.4 285.3 +34.0% +15.8% +20.9%
Adjusted
EPS* (pence) 82.2 204.4 286.6 62.1 180.7 242.8 +32.2% +13.1% +18.1%
* Excluding net exceptionals and amortisation of
intangible assets
Operating profit - discontinued operations
The Group's discontinued operations represent the operations of DCC Environmental, the disposal of which was announced on 5 April 2017. The disposal is expected to complete during the first quarter of the Group's financial year ending 31 March 2018.
DCC Environmental achieved very strong organic profit growth, with operating profit increasing to GBP18.6 million, 22.2% ahead of the prior year.
Finance costs (net)
Net finance costs increased to GBP32.1 million (2016: GBP29.0 million) primarily due to the non-cash partial unwind of discounted acquisition related liabilities acquired in the Butagaz transaction. The underlying finance costs of the Group were broadly in line with the prior year as they are principally driven by the level of the Group's gross private placement debt, which remained largely unchanged. Average net debt during the year was GBP301 million compared to GBP185 million during the year ended 31 March 2016, with the increase reflecting the full year impact of the completion of the acquisitions of Butagaz and Esso Retail France during the prior year and the aggregate spend of GBP394 million on acquisitions and net capital expenditure in the current year.
Profit before net exceptional items, amortisation of intangible assets and tax
Profit before net exceptional items, amortisation of intangible assets and tax increased by 22.1% to GBP332.2 million (14.4% on a constant currency basis).
Net exceptional charge and amortisation of intangible assets
The Group incurred a net exceptional charge after tax and non-controlling interests of GBP24.8 million as follows:
GBP'm
Restructuring costs 19.3
Acquisition related costs 10.3
Adjustments to contingent acquisition consideration 5.1
IAS39 mark-to-market gain (10.1)
Other 1.6
26.2
Tax and non-controlling interest (1.4)
Net exceptional charge 24.8
----------------------------------------------------- -------
The Group has focused on the efficiency of its operating infrastructures and sales platforms, particularly in areas where it has been acquisitive in recent years. The Group incurred an exceptional charge of GBP19.3 million in relation to restructuring of existing and acquired businesses. The majority of the charge relates to restructuring and integration in the Energy division where the Group has been most acquisitive. The charge also includes integration costs related to acquisition activity and costs in respect of the pre-operating period of the new UK national distribution centre in the Technology division.
Acquisition costs, which include professional fees and tax costs (such as stamp duty) incurred in evaluating and completing acquisitions, amounted to GBP10.3 million and reflect the significant level of development activity undertaken by the Group during the year.
Most of the Group's debt has been raised in the US Private Placement market and swapped, using long term interest, currency and cross currency interest rate derivatives, to both fixed and floating rate sterling and euro. The level of ineffectiveness calculated under IAS 39 on the fair value and cash flow hedge relationships relating to fixed rate debt, together with gains or losses arising from marking to market swaps not designated as hedges, offset by foreign exchange translation gains or losses on the related fixed rate debt, is charged or credited as an exceptional item. In the year ended 31 March 2017, this amounted to an exceptional non-cash gain of GBP10.1 million. Following this credit, the cumulative net exceptional charge taken in respect of the Group's outstanding US Private Placement debt and related hedging instruments is GBP5.6 million. This, or any subsequent similar non-cash charges or gains, will net to zero over the remaining term of this debt and the related hedging instruments.
The net increase in the provision for contingent acquisition consideration is due to the stronger than anticipated trading performance of a small number of businesses acquired during the last three years, where earn-out arrangements are in place.
There was a net tax charge of GBP1.7 million and a non-controlling interest credit of GBP3.1 million in relation to the above net exceptional charge.
The charge for the amortisation of acquisition related intangible assets increased to GBP39.2 million from GBP31.6 million, principally reflecting acquisitions completed in the current and prior year.
Profit before tax
Profit before tax increased by 23.7% to GBP268.2 million.
Taxation
The effective tax rate for the Group increased to 17.5% from 16% in the prior year. The increase is primarily due to the larger proportion of the Group's profits now generated in Continental Europe.
Adjusted earnings per share
Adjusted earnings per share on a continuing basis increased by 18.1% (10.3% on a constant currency basis) to 286.6 pence.
Total adjusted earnings per share also increased by 18.1% (10.8% on a constant currency basis) to 303.7 pence.
Dividend
The Board is recommending an increase of 16.3% in the final dividend to 74.63 pence per share, which, when added to the interim dividend of 37.17 pence per share, gives a total dividend for the year of 111.80 pence per share. This represents a 15% increase over the total prior year dividend of 97.22 pence per share. The dividend is covered 2.6 times by adjusted earnings per share on a continuing basis (2.5 times in 2016). It is proposed to pay the final dividend on 20 July 2017 to shareholders on the register at the close of business on 26 May 2017.
Over its 23 years as a listed company, DCC has an unbroken record of dividend growth at a compound annual rate of 14.7%.
Cash flow
The Group generated excellent operating and free cash flow during the year as set out below:
Year ended 31 March 2017 2016
GBP'm GBP'm
Group operating profit 363.6 300.5
Decrease in working capital 84.0 37.6
Depreciation and other 99.3 73.6
Operating cash flow 546.9 411.7
Capital expenditure (net) (131.4) (120.6)
Free cash flow 415.5 291.1
Interest and tax paid, net of dividend from equity accounted investments (91.2) (63.4)
Free cash flow after interest and tax 324.3 227.7
Acquisitions (262.4) (394.0)
Dividends (incl. dividends paid to non-controlling interests) (95.3) (80.9)
Exceptional items/disposals (net) (31.5) (15.4)
Share issues 2.6 197.7 Net outflow (62.3) (64.9) Opening net (debt)/cash (54.5) 30.0 Translation and other (5.1) (19.6) Closing net debt (121.9) (54.5) --------------------------------------------------------------------------- ------------- -------------
Operating cash flow in 2017 was GBP546.9 million compared to GBP411.7 million in the prior year. Working capital reduced by GBP84.0 million, with the inflow driven by the increase in the oil price during the year and a seasonal reduction in working capital in a number of businesses acquired in the second half of the year. Overall working capital days were negative 3.3 days sales, compared to negative 3.9 days sales in the prior year, reflecting the acquisition during the year of businesses with positive working capital characteristics. DCC Technology selectively uses supply chain financing solutions to sell, on a non-recourse basis, a portion of its receivables relating to certain larger supply chain/sales and marketing activities. The level of supply chain financing at 31 March 2017 increased modestly on the prior year and supply chain financing had a positive impact on Group working capital days of 4.2 days (31 March 2016: 4.9 days).
Net capital expenditure amounted to GBP131.4 million for the year (2016: GBP120.6 million) and was net of disposal proceeds of GBP12.3 million. The increased level of gross capital expenditure reflects the increasing scale of the Group and also an increase in development capital expenditure in the Energy division's Retail business. The net capital expenditure exceeded the depreciation charge in the year by GBP39.4 million.
The Group's free cash flow amounted to GBP415.5 million, an excellent 114% conversion of operating profit into cash.
Return on capital employed
The creation of shareholder value through the delivery of consistent, long-term returns well in excess of its cost of capital is one of DCC's core strategic aims. The increase in the Group's operating profit and strong working capital management resulted in a Group return on capital employed from continuing operations of 20.3%. The return on capital employed by division was as follows:
2017 2016
DCC Energy 21.6% 24.4%
DCC Healthcare 17.5% 17.1%
DCC Technology 17.1% 17.8%
Group - continuing 20.3% 21.9%
-------------------- ------ ------
As previously reported, in the prior year the overall Group return and that of DCC Energy was flattered somewhat by the acquisitions of Butagaz and Esso Retail France which were completed during the prior year. The pro-forma return for DCC Energy and the Group for the prior year (i.e. including these acquisitions as if they had been in place for the full year ended 31 March 2016) would have been approximately 21% and 20% respectively.
Committed acquisitions, disposal and capital expenditure
Committed acquisition and capital expenditure in the current year amounted to GBP685.3 million as follows:
Acquisitions Capex Total
GBP'm GBP'm GBP'm
DCC Energy 461.3 79.9 541.2
DCC Healthcare 28.4 8.0 36.4
DCC Technology 64.2 36.9 101.1
DCC Environmental - 6.6 6.6
Total 553.9 131.4 685.3
------------------- ------------------- ----------- -----------------
Acquisition activity
Committed acquisition expenditure amounted to GBP553.9 million and included:
DCC Energy
Shell LPG Hong Kong & Macau
On 5 April 2017, DCC announced that DCC Energy had reached agreement with Shell Gas (LPG) Holdings BV to acquire its liquefied petroleum gas ("LPG") business in Hong Kong and Macau ("Shell HK&M") based on an enterprise value of HK$1.165 billion (c. GBP120 million). The business is one of the leading LPG businesses in Hong Kong and is the market leader in Macau. The business is required to be separated from the broader Shell Hong Kong operations and the transaction requires certain regulatory consents and operating licence approvals. The acquisition is expected to complete before the end of DCC's financial year ending 31 March 2018.
Shell HK&M is one of the leading LPG sales and marketing businesses in Hong Kong and Macau, where it has been selling LPG for almost sixty years. The business provides LPG in bulk, cylinder and autogas formats to domestic, commercial and industrial customers. In Hong Kong it is the market leader in supplying piped LPG to the very large apartment complexes common in the territory. Shell HK&M supplies the complexes through its infrastructure of bulk tanks and piping to service the energy needs of over 100,000 households. Shell HK&M is the number three player in the cylinder market and also supplies autogas to Shell's retail network. The business is the market leader in the smaller Macau market. Shell HK&M is headquartered in Kowloon and operates a terminal and filling plant on Tsing Yi Island.
In the year ended 31 December 2016, the business supplied approximately 74,000 tonnes of LPG and under DCC's ownership is expected to deliver an annual operating profit of c. HK$145 million (c. GBP15 million). Following the completion of the acquisition, the business will continue to operate under the Shell brand in both Hong Kong and Macau, based on a long term brand licence agreement.
The acquisition is consistent with DCC Energy's ambition to build a substantial presence in the global LPG market. The acquisition represents a further strengthening of DCC's relationship with Shell and gives DCC a strong market position in Hong Kong and Macau. It is also DCC's first material step in building its business beyond Europe and gives DCC a platform for development in the growing LPG market in Asia.
Esso Retail Norway
On 7 February 2017, DCC Energy announced the acquisition of Esso Retail Norway. The acquisition is another significant step for DCC in building its retail petrol station business in Europe. The national network sells c. 600 million litres of fuel annually and is the third largest in Norway with approximately 20%(3) of retail volumes. It comprises 142 company-operated sites (127 retail service stations and 15 unmanned stations) and has contracts to supply 108 Esso-branded dealer owned stations. The total consideration will be NOK 2.43 billion (c. GBP235 million), plus the value of stock in tank at the date of acquisition, all payable in cash on completion. The acquired business, which is substantially asset backed, is expected to generate a return on invested capital employed of approximately 15% in the first full year of ownership.
The transaction is subject to customary regulatory approvals and closing conditions and is expected to complete in the final calendar quarter of 2017.
(3) Estimate based on Wood MacKenzie market data
Gaz Européen
In January 2017, DCC Energy acquired Gaz Européen Holdings SAS ("Gaz Européen"), a natural gas retail and marketing business which supplies business and public sector customers in France. DCC acquired 97% of the share capital of Gaz Européen on completion, based on an initial enterprise value of EUR110 million (GBP96 million). The remaining shares, which are held by members of Gaz Européen's management team, will be acquired based on Gaz Européen's results for the three years ending 31 March 2021, 2022 and 2023.
Gaz Européen is a specialist retailer of natural gas and focuses on supplying energy management companies, apartment blocks (with collective heating systems), public authorities and the service sector in France. In its financial year ended 31 December 2015, the company supplied c. 5.1 TWh of natural gas (equivalent to approximately 390,000 tonnes of LPG) and currently supplies c. 10,000 sites. The company is headquartered in Paris and employs 31 staff; it has an experienced and ambitious management team with a track record of delivering strong growth. In its financial year ended 31 December 2015, Gaz Européen generated revenue of EUR205 million (GBP178 million) and normalised operating profit of EUR15.7 million (GBP13.7 million).
DCC Energy has, for some time, been developing its presence in natural gas organically in selected geographies as it believes that there is a significant opportunity to leverage its sales and marketing expertise, customer reach and brand recognition in the LPG and oil distribution markets into complementary adjacencies, including the natural gas sector. Gaz Européen is DCC Energy's first major acquisition in natural gas and complements Butagaz's leading position in LPG in France. One of the key strengths identified during the acquisition of Butagaz was its brand recognition amongst French gas consumers generally. The combination of Butagaz's marketing and brand strength and Gaz Européen's expertise in the natural gas market will provide an excellent platform for growth in the French natural gas market.
DCC Healthcare
Medisource
In January 2017, DCC Healthcare strengthened its position in the procurement, sales and marketing of pharmaceutical products in Ireland when it completed the acquisition of Medisource Ireland Limited ("Medisource") for an initial enterprise valuation of EUR31.5 million (GBP27.4 million).
Medisource is a specialist in the procurement and sale of exempt medicinal products ("EMPs"). EMPs are pharmaceutical products which are imported into a market with the authorisation of the relevant regulatory authority (the Health Products Regulatory Authority in Ireland) in order to meet requirements of specific patients where no suitable licenced product is available in that market. The products are typically licenced in another jurisdiction. Medisource has a market leadership position in EMPs in Ireland based on excellent customer service and a strong network of international suppliers. The acquisition complements DCC Vital's current pharma product offering in Ireland, strengthens DCC Vital's access to the hospital and retail pharmacy channel and will provide further insight into potential pharma product development opportunities. DCC Healthcare expects to generate a return on its investment in Medisource in line with the divisional return on capital employed in its first full year of ownership.
DCC Technology
Hammer
In December 2016, DCC Technology completed the acquisition of Hammer Consolidated Holdings Limited ("Hammer"), a specialist distributor of server and storage solutions to resellers in the UK and Continental Europe. Employing 165 people and based in Basingstoke, Hampshire, Hammer distributes products for a range of leading suppliers and also provides product design and build solutions tailored to the requirements of customers in specific industries. The business is complementary to DCC Technology's existing server and storage business and has added almost 1,000 new reseller customers. In its most recent financial year, Hammer recorded sales of GBP155.0 million and operating profit of GBP6.3 million. The acquisition was based on an initial enterprise value of GBP38.3 million and was structured as an initial payment at completion, followed by earn out payments over three years based on Hammer's future trading results.
Medium
In November 2016, DCC Technology acquired Medium (U.K.) Limited ("Medium"), a distributor of professional audio visual equipment to resellers in the UK. Medium, which partners with a number of leading brands in the market including CTouch, LG, NEC and Samsung, is complementary to DCC Technology's developing position in professional audio visual products in the UK market. The consideration for the acquisition was based on an enterprise valuation of GBP8.3 million.
DCC also acquired a number of other small businesses during the year in the Energy, Healthcare and Technology sectors.
Total cash spend on acquisitions for the year ended 31 March 2017
The total cash spend on acquisitions in the year was GBP262.4 million. This included the payment of deferred and contingent acquisition consideration previously provided of GBP59.1 million.
Disposal
DCC Environmental
On 5 April 2017, DCC announced that it had agreed to sell its Environmental division to Exponent for an enterprise value of GBP219 million, on a debt-free, cash-free basis. The Environmental division, which is active in the treatment and recycling of non-hazardous and hazardous waste in Britain and Ireland, comprises the British businesses, William Tracey Group, Oakwood Fuels and Wastecycle, and Enva in Ireland.
DCC expects to receive cash proceeds on completion of approximately GBP170 million (25% of the British businesses are owned by DCC's long-standing minority partner). The transaction is expected to complete in the first quarter of DCC's financial year ending 31 March 2018. The transaction is expected to give rise to an exceptional profit in the year ending 31 March 2018 of approximately GBP30 million.
Capital expenditure
Net capital expenditure for the year of GBP131.4 million (2016: GBP120.6 million) compares to a depreciation charge of GBP92.0 million (2016: GBP74.8 million). The capital expenditure is net of GBP12.3 million of proceeds on disposal of fixed assets.
DCC Technology has now successfully completed the construction and commissioning of a new, purpose built, 450,000 sq. ft. UK national distribution centre in the north of England, close to the majority of its existing facilities. The facility is now operational, with activity being transitioned from the existing warehousing infrastructure on a phased basis. The transition will be fully completed by the end of the year ending 31 March 2018.
Financial strength
An integral part of the Group's strategy is the maintenance of a strong and liquid balance sheet to enable it to take advantage of development opportunities as they arise. As a result of the operating cash flow in the year, DCC's financial position remains very strong. At 31 March 2017, the Group had net debt of GBP121.9 million, total equity of GBP1.5 billion, cash resources, net of overdrafts, of GBP973 million and a further GBP400 million of undrawn committed debt facilities. The Group's outstanding term debt at 31 March 2017 had an average maturity of 5.6 years. Substantially all of the Group's debt has been raised in the US Private Placement market with an average credit margin of 1.69% over floating Euribor/Libor.
At 31 March 2017, the Group's Net Debt: EBITDA was 0.3 times. As referred to above, the Group has committed to acquire Shell HK&M and Esso Retail Norway and also to dispose of its Environmental Division. The pro-forma net impact of these transactions would be to increase the Group's net debt at 31 March 2017 by approximately GBP185 million equating to a pro-forma Net Debt: EBITDA of 0.6 times.
Management and organisational changes
As announced on 5 April 2017, Tommy Breen, Chief Executive, will retire from the Group after over 30 years of service. He will stand down from his position and from the Board following the conclusion of the Group's Annual General Meeting on 14 July 2017. He will be succeeded by Donal Murphy, Executive Director and Managing Director of DCC Energy. Donal joined DCC in 1998 and has led the growth and development of the Energy division as Managing Director since 2006. Prior to his current role he was Managing Director of the Technology division.
For the year ending 31 March 2018 DCC will report LPG and Retail & Oil as two separate divisions, consistent with the revised management and organisational structure of the Group. Henry Cubbon will continue to lead DCC's LPG business. Eddie O'Brien, previously Managing Director of DCC's Retail and Fuelcard activities, will assume responsibility for all Retail & Oil activities. The four divisional Managing Directors of LPG, Retail & Oil, Healthcare and Technology will report to the Chief Executive.
Outlook
The Group expects that the year ending 31 March 2018 will be another year of profit growth and development.
Annual Report and Annual General Meeting
DCC's 2017 Annual Report will be published in June 2017. The Company's Annual General Meeting will be held at 11.00 am on Friday 14 July 2017 in The InterContinental Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.
Performance Review - Divisional Analysis
DCC Energy 2017 2016 % change ---------------------------- ----------- ------------ --------- Volumes (litres) 14.649b 13.021b +12.5% ---------------------------- ----------- ------------ --------- Revenue GBP9,074.1 GBP7,515.3m +20.7% ---------------------------- ----------- ------------ --------- Operating profit GBP254.9m GBP205.2m +24.3% ---------------------------- ----------- ------------ --------- Operating profit per litre 1.74p 1.58p ---------------------------- ----------- ------------ --------- Return on capital employed 21.6% 24.4% ---------------------------- ----------- ------------ ---------
DCC Energy had an excellent year, with operating profit increasing to GBP254.9m, 24.3% ahead of the prior year (13.9% ahead on a constant currency basis) and generating a return on capital employed of 21.6%. The business benefited from the full year contribution of acquisitions completed in the prior year and strong organic growth in the LPG business. In addition, it was another year of significant development activity for DCC Energy.
DCC Energy sold 14.6 billion litres of product during the year, an increase of 12.5% over the prior year. Volumes were 1.0% ahead of the prior year on a like-for-like basis, with the LPG business achieving strong organic volume growth with commercial and industrial customers.
DCC will present LPG and Retail & Oil as two separate divisions from 1 April 2017, in line with the revised management and organisational structure of the business.
DCC Energy - LPG 2017 2016 % change ---------------------- ---------- ---------- --------- Volumes (litres) 3.077b 2.295b +34.1% ---------------------- ---------- ---------- --------- Operating profit GBP160.4m GBP116.8m +37.4% ---------------------- ---------- ---------- --------- Operating profit per litre 5.21p 5.08p ---------------------- ---------- ---------- ---------
The LPG business had an excellent year achieving operating profit growth of 37.4%, 23.9% on a constant currency basis. Approximately half of the constant currency operating profit growth was organic. The very strong volume growth of 34.1% included the benefit of a full year's volumes from Butagaz, acquired in the prior year, and also from the acquisition of the Gaz Européen natural gas business in France, acquired in January 2017. The like-for-like volume growth was 6.1%. This strong organic volume performance was broadly based, with good growth in Britain, Ireland and France. The LPG business has continued to focus on growing its sales to industrial and commercial customers, with the commercial and environmental benefits of LPG continuing to attract new customers to the segment.
The operating margin per litre was modestly ahead of the prior year and declined, as anticipated, on a constant currency basis due to the impact on mix of lower margin natural gas volumes becoming more material during the year and a significantly higher product price environment relative to the prior year.
In recent years, the LPG business has organically developed its natural gas offering in Ireland and now has a substantial market share in the commercial sector of the market. In January 2017, DCC completed the acquisition of Gaz Européen, a specialist retailer of natural gas to business customers in France, principally co-ownership housing. The business has performed in line with expectation since acquisition. It is intended to launch a start-up consumer offering in natural gas during the coming year, which will require investment in sales and marketing, but importantly, will leverage the natural gas operations and expertise of Gaz Europeén and the Butagaz brand, France's most-recognised gas brand.
On 5 April 2017, DCC announced that agreement had been reached with Shell Gas (LPG) Holdings BV to acquire its liquefied petroleum gas business in Hong Kong and Macau ("Shell HK&M"). The business is one of the leading LPG businesses in Hong Kong and is the market leader in Macau. In its most recent financial year to 31 December 2016, Shell HK&M distributed approximately 74,000 tonnes of LPG to its customers and under DCC's ownership is expected to achieve operating profit of HK$145 million (c. GBP15 million). The acquisition gives DCC a strong market position in Hong Kong and Macau and provides a platform for development in the growing LPG market in Asia.
Following the completion of the acquisition of Shell HK&M, the LPG business will have strong market leadership positions in eight countries and is well placed to continue its development in existing territories, build on its emerging position in natural gas and, over time, further develop its geographic footprint.
DCC Energy - Retail & 2017 2016 % change Oil ----------------------- --------- --------- --------- Volumes (litres) 11.572b 10.726b +7.9% ----------------------- --------- --------- --------- Operating profit GBP94.5m GBP88.4m +6.9% ----------------------- --------- --------- --------- Operating profit per litre 0.82p 0.82p ----------------------- --------- --------- ---------
DCC Energy Retail & Oil had a good year, with operating profit growth of 6.9% (1.2% on a constant currency basis). The volume growth of 7.9% was driven by the inclusion for the full year of the Esso Retail business in France and the acquisition of Dansk Fuels in Denmark in November 2016. Organically, volumes and operating profits were in line with the prior year.
The Retail businesses achieved good growth during the year, benefiting from the full year contribution from the Esso Retail business in France and good performances from the Swedish and Fuelcard businesses. The Retail business continues to invest in building its network of sites and leveraging its strong sales offering in fuel cards in Britain. The Oil business continued to experience difficult trading conditions in Britain and Ireland, however good progress was made in the development of the business in adjacent areas, such as aviation and lubricants. The restructuring and integration of Dansk Fuels, Shell's Danish commercial, aviation and retail business acquired in November 2016, is progressing in line with expectations.
On 7 February 2017, DCC announced that agreement had been reached with Esso Norges AS to acquire its retail petrol station network in Norway. The retail network is the third largest in Norway with approximately 20% of retail volumes and comprises a national network of 142 company-operated sites (127 retail service stations and 15 unmanned stations) and contracts to supply 108 Esso-branded dealer owned stations (together referred to as "Esso Retail Norway"). Esso Retail Norway sells c. 600 million litres of fuel annually. The majority of the stations are in the more populous south of the country and, of the 142 company-operated sites, 110 are held freehold, with 32 being leasehold.
The agreement to acquire Esso Retail Norway will see DCC Energy's Retail & Oil business operate in eight countries in Europe, supplying commercial, industrial, domestic and retail customers. The business will operate a retail network of c. 1,000 sites and supply an additional 2,000 dealer-owned stations.
DCC Healthcare 2017 2016 % change ---------------------------- ---------- ---------- --------- Revenue GBP506.5m GBP490.7m +3.2% ---------------------------- ---------- ---------- --------- Operating profit GBP49.0m GBP45.0m +8.7% ---------------------------- ---------- ---------- --------- Operating margin 9.7% 9.2% ---------------------------- ---------- ---------- --------- Return on capital employed 17.5% 17.1% ---------------------------- ---------- ---------- ---------
DCC Healthcare performed strongly during the year, generating operating profit growth of 8.7% (8.0% on a constant currency basis) and approximately two thirds of the constant currency profit growth was organic. The business again improved its operating margin and continues to generate excellent returns on capital employed.
DCC Vital, which is focused on the sales and marketing of medical devices and pharmaceuticals to healthcare providers in Britain and Ireland, generated good operating profit growth.
In Britain, DCC Vital generated strong profit growth in the supply of products and services to general practitioners ("GP's"), enhancing its market leadership position in that sector. The business also grew its sales of medical devices into hospitals, particularly in the areas of laparoscopic surgery and anaesthesia. As reported previously, pharma margins were impacted by the weaker sterling exchange rate. In Ireland, DCC Vital grew its pharma sales both organically and by acquisition. In January 2017, it enhanced its offering to Irish hospital and retail pharmacy customers with the acquisition of Medisource, the market leader in the sourcing and supply of exempt medicinal products. Medisource has performed well since acquisition. DCC Vital also grew its sales of medical devices to hospitals in Ireland, with particularly good growth in the diagnostics area. In addition, the business successfully launched a range of products for the Irish GP market, leveraging its existing GP supplies portfolio and infrastructure in Britain.
DCC Health & Beauty Solutions, which provides outsourced solutions to international nutrition and beauty brand owners, continued its track record of very strong organic revenue and profit growth, benefiting from further investment in sales and product development resources. The business generated strong sales growth in nutrition across all of its product formats - tablets, capsules, soft gels and liquids - with particularly strong growth in soft gels and liquids. The sales growth was achieved with customers across its key markets of Britain, Scandinavia and continental Europe. The business's activities in the beauty sector also performed very well with strong sales growth across a range of customers, particularly in the premium skincare area. Design Plus, acquired in September 2015, generated very strong organic sales and profit growth, benefiting from sales growth into the US market and cross-selling into existing DCC Health & Beauty customers.
DCC Healthcare is well placed to continue to build on its track record of organic and acquisitive growth. The business is ambitious to expand its geographic footprint and to enhance its product and service offering to healthcare providers and health and beauty brand owners.
DCC Technology 2017 2016 % change ---------------------------- ----------- ---------- --------- Revenue GBP2.689bn GBP2.442b +10.1% ---------------------------- ----------- ---------- --------- Operating profit GBP41.1m GBP35.1m +17.1% ---------------------------- ----------- ---------- --------- Operating margin 1.5% 1.4% ---------------------------- ----------- ---------- --------- Return on capital employed 17.1% 17.8% ---------------------------- ----------- ---------- ---------
DCC Technology, which trades as Exertis, achieved strong operating profit growth of 17.1% (12.5% on a constant currency basis), reflecting organic profit growth in the UK and Ireland and the benefit of the acquisitions of Hammer and CUC completed in the current and prior year respectively.
The UK business generated strong growth. The business benefited from the acquisition of Hammer and good organic growth in audio visual, print and office supplies, smart technology and security products, which more than offset the continued weak market for computing and mobile products. Hammer, acquired in December 2016, has performed well since acquisition and has significantly strengthened the server and storage offering of Exertis, particularly in the provision of products and services to the growing application and cloud-service provider market. The acquisition, together with recent investments in the wireless networking, security and audio visual business units, have enabled the UK business to further develop its vendor portfolio and identify opportunities to extend its enterprise solutions offering.
The UK business has completed and commissioned its new national distribution centre in Lancashire. The centre is now operational and the transition from the business' existing facilities will be completed by the end of the financial year ending 31 March 2018. The upgrade of the business' technology platform is also being implemented on a phased basis and is progressing in line with expectations.
The business in Ireland achieved strong organic growth, driven by good business development in the mobile and retail sectors and growth in the sales of networking and security products. The business in the Middle East, although modest, achieved very strong organic growth as it continues to expand its supplier relationships and customer reach in the region.
DCC Technology's business in Continental Europe recorded a mixed performance. CUC, now renamed Exertis Connect, which was acquired in December 2015, performed well and has successfully extended its cable and connector product range into the UK and Sweden. Operating profit declined in the French consumer products business reflecting a weak demand environment, particularly for consumer storage and navigation products, which resulted in margin pressure. The business in the Nordic region generated good growth, driven by continued growth in audio visual products and the organic expansion of its operations into Norway.
The Supply Chain Services business continues to invest in its global service offering and achieved good organic profit growth as it benefited from new contract wins.
Forward-looking statements
This announcement contains some forward-looking statements that represent DCC's expectations for its business, based on current expectations about future events, which by their nature involve risk and uncertainty. DCC believes that its expectations and assumptions with respect to these forward-looking statements are reasonable, however because they involve risk and uncertainty as to future circumstances, which are in many cases beyond DCC's control, actual results or performance may differ materially from those expressed in or implied by such forward-looking statements.
Group Income Statement
For the year ended 31 March 2017
2017 Restated 2016
-------------------------------------------- --------------------------------------------
Pre Exceptionals Pre Exceptionals
exceptionals (note 5) Total exceptionals (note Total
5)
Continuing Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
operations
Revenue 4 12,269,802 - 12,269,802 10,447,630 - 10,447,630
Cost of sales (11,006,805) - (11,006,805) (9,437,643) - (9,437,643)
------------- ------------- -------------- -------------- ------------- -------------
Gross profit 1,262,997 - 1,262,997 1,009,987 - 1,009,987
Administration
expenses (323,320) - (323,320) (280,541) - (280,541)
Selling and
distribution
expenses (605,182) - (605,182) (455,769) - (455,769)
Other operating
income 28,297 1,879 30,176 25,124 13,609 38,733
Other operating
expenses (17,787) (38,176) (55,963) (13,456) (27,261) (40,717)
------------- ------------- -------------- -------------- ------------- -------------
Operating profit before
amortisation
of intangible assets 345,005 (36,297) 308,708 285,345 (13,652) 271,693
Amortisation of intangible
assets (39,130) - (39,130) (31,146) - (31,146)
-------------- ------------- -------------
Operating profit 4 305,875 (36,297) 269,578 254,199 (13,652) 240,547
Finance costs (72,910) - (72,910) (64,790) (9,419) (74,209)
Finance income 40,973 10,101 51,074 35,962 - 35,962
Equity accounted investments'
profit after tax 712 - 712 504 - 504
-------------- ------------- -------------
Profit before tax 274,650 (26,196) 248,454 225,875 (23,071) 202,804
Income tax
expense (44,113) (1,756) (45,869) (33,707) 710 (32,997)
------------- ------------- -------------- -------------- ------------- -------------
Profit for the year
(continuing operations) 230,537 (27,952) 202,585 192,168 (22,361) 169,807
Profit for the
year from
discontinued
operations 8 15,160 - 15,160 12,224 (988) 11,236
------------- ------------- -------------- -------------- ------------- -------------
Profit after tax
for the
financial
year 1 245,697 (27,952) 217,745 204,392 (23,349) 181,043
------------- ------------- -------------- -------------- ------------- -------------
Profit
attributable
to:
Owners of the
Parent 216,197 178,031
Non-controlling
interests 1,548 3,012
-------------- -------------
217,745 181,043
-------------- -------------
Earnings per
ordinary
share
Basic earnings
per share 6 243.64p 202.64p
Diluted earnings
per share 6 242.00p 201.02p
Basic adjusted
earnings per
share 6 303.68p 257.14p
Diluted adjusted
earnings per
share 6 301.63p 255.07p
-------------- -------------
Earnings per ordinary share
- continuing operations
Basic earnings
per share 6 226.56p 189.85p
Diluted earnings
per share 6 225.04p 188.33p
Basic adjusted
earnings per
share 6 286.59p 242.78p
Diluted adjusted
earnings per
share 6 284.66p 240.83p
-------------- -------------
Group Statement of Comprehensive Income
For the year ended 31 March 2017
Restated
2017 2016
GBP'000 GBP'000
Group profit for the financial
year 217,745 181,043
Other comprehensive income:
Items that may be reclassified
subsequently to profit or
loss
Currency translation 37,084 37,971
Movements relating to
cash flow hedges (6,803) 2,230
Movement in deferred tax
liability on cash flow
hedges 1,334 120
-------- ---------
31,615 40,321
-------- ---------
Items that will not be reclassified
to profit or loss
Group defined benefit pension
obligations:
- remeasurements (3,056) 4,894
- movement in deferred tax
asset 413 (570)
-------- ---------
(2,643) 4,324
-------- ---------
Other comprehensive income
for the financial year, net
of tax 28,972 44,645
-------- ---------
Total comprehensive income
for the financial year 246,717 225,688
-------- ---------
Attributable to:
Owners of the Parent 242,735 220,411
Non-controlling interests 3,982 5,277
-------- ---------
246,717 225,688
-------- ---------
Attributable to:
Continuing operations 230,199 212,978
Discontinued operations 16,518 12,710
-------- ---------
246,717 225,688
-------- ---------
Group Balance Sheet
As at 31 March 2017
2017 2016
Notes GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 750,020 739,503
Intangible assets 1,422,572 1,297,065
Equity accounted investments 24,938 22,139
Deferred income tax assets 22,619 21,285
Derivative financial instruments 273,767 209,518
2,493,916 2,289,510
------------ -----------
Current assets
Inventories 456,395 393,948
Trade and other receivables 1,222,597 916,069
Derivative financial instruments 18,233 15,915
Cash and cash equivalents 1,048,064 1,182,034
------------ -----------
2,745,289 2,507,966
Assets classified as held
for sale 8 193,170 -
2,938,459 2,507,966
Total assets 5,432,375 4,797,476
------------ -----------
EQUITY
Capital and reserves attributable
to owners of the Parent
Share capital 15,455 15,455
Share premium 277,211 277,211
Share based payment reserve 9 18,146 14,954
Cash flow hedge reserve 9 (13,581) (8,112)
Foreign currency translation
reserve 9 105,537 70,887
Other reserves 9 932 932
Retained earnings 1,074,434 948,316
------------ -----------
Equity attributable to
owners of the Parent 1,478,134 1,319,643
Non-controlling interests 29,587 30,833
------------ -----------
Total equity 1,507,721 1,350,476
------------ -----------
LIABILITIES
Non-current liabilities
Borrowings 1,319,967 1,260,421
Derivative financial instruments 506 343
Deferred income tax liabilities 155,297 133,646
Post employment benefit
obligations 11 29 347
Provisions for liabilities 255,650 213,115
Acquisition related liabilities 66,617 81,411
Government grants 261 904
------------ -----------
1,798,327 1,690,187
------------ -----------
Current liabilities
Trade and other payables 1,820,517 1,437,832
Current income tax liabilities 25,051 45,172
Borrowings 148,445 192,804
Derivative financial instruments 5,894 8,401
Provisions for liabilities 31,022 31,373
Acquisition related liabilities 28,300 41,231
------------ -----------
2,059,229 1,756,813
Liabilities associated
with assets classified
as held for sale 8 67,098 -
2,126,327 1,756,813
Total liabilities 3,924,654 3,447,000
------------ -----------
Total equity and liabilities 5,432,375 4,797,476
------------ -----------
Net debt included above
(including cash attributable
to assets held for sale) 10 (121,949) (54,502)
------------ -----------
Group Statement of Changes in Equity
For the year Attributable to owners
ended 31 of the Parent
March 2017
---------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
9)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2016 15,455 277,211 948,316 78,661 1,319,643 30,833 1,350,476
Profit for the
financial
year - - 216,197 - 216,197 1,548 217,745
Currency
translation - - - 34,650 34,650 2,434 37,084
Group defined
benefit
pension
obligations:
-
remeasurements - - (3,056) - (3,056) - (3,056)
- movement in
deferred
tax asset - - 413 - 413 - 413
Movements
relating to
cash flow
hedges - - - (6,803) (6,803) - (6,803)
Movement in
deferred
tax liability
on cash
flow hedges - - - 1,334 1,334 - 1,334
Total
comprehensive
income - - 213,554 29,181 242,735 3,982 246,717
Re-issue of
treasury
shares - - 2,600 - 2,600 - 2,600
Share based
payment - - - 3,192 3,192 - 3,192
Dividends - - (90,036) - (90,036) (5,228) (95,264)
At 31 March
2017 15,455 277,211 1,074,434 111,034 1,478,134 29,587 1,507,721
--------------- ------------------ --------------- ------------- ------------ ---------------- ------------
For the year Attributable to owners
ended 31 of the Parent
March 2016
----------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
9)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2015 14,688 83,032 849,119 35,909 982,748 4,245 986,993
Profit for the
financial
year - - 178,031 - 178,031 3,012 181,043
Currency
translation - - - 35,706 35,706 2,265 37,971
Group defined
benefit
pension
obligations:
- remeasurements - - 4,894 - 4,894 - 4,894
- movement in
deferred
tax asset - - (570) - (570) - (570)
Movements
relating to
cash flow
hedges - - - 2,230 2,230 - 2,230
Movement in
deferred
tax liability
on cash
flow hedges - - - 120 120 - 120
Total
comprehensive
income - - 182,355 38,056 220,411 5,277 225,688
Issue of share
capital 767 194,179 - - 194,946 - 194,946
Re-issue of
treasury
shares - - 2,781 - 2,781 - 2,781
Share based
payment - - - 2,198 2,198 - 2,198
Dividends - - (80,938) - (80,938) - (80,938)
Non-controlling
interest
arising on
acquisition - - (5,001) 2,498 (2,503) 21,311 18,808
At 31 March 2016 15,455 277,211 948,316 78,661 1,319,643 30,833 1,350,476
--------------- ------------------ --------------- ------------- ------------- ---------------- -------------
Group Cash Flow Statement
For the year ended 31
March 2017
2017 2016
Note GBP'000 GBP'000
Cash flows from operating
activities
Profit for the financial
year 217,745 181,043
Add back non-operating
expenses/(income)
- tax 49,054 35,314
- share of equity accounted
investments' profit (712) (504)
- net operating exceptionals 36,297 14,640
- net finance costs 21,999 38,408
---------- ----------
Group operating profit
before exceptionals 324,383 268,901
Share-based payments expense 3,192 2,198
Depreciation 92,015 74,822
Amortisation of intangible
assets 39,168 31,622
(Profit)/loss on disposal
of property, plant and
equipment (173) 415
Amortisation of government
grants (235) (419)
Other 4,571 (3,412)
Decrease in working capital 83,949 37,585
---------- ----------
Cash generated from operations
before exceptionals 546,870 411,712
Exceptionals (31,269) (19,567)
---------- ----------
Cash generated from operations 515,601 392,145
Interest paid (70,108) (64,432)
Income tax paid (62,180) (35,346)
---------- ----------
Net cash flows from operating
activities 383,313 292,367
---------- ----------
Investing activities
Inflows:
Proceeds from disposal
of property, plant and
equipment 12,315 13,523
Dividends received from
equity accounted investments 125 365
Disposal of subsidiaries
and equity accounted investments - 4,173
Interest received 40,966 36,004
53,406 54,065
---------- ----------
Outflows:
Purchase of property,
plant and equipment (143,698) (134,172)
Acquisition of subsidiaries 12 (203,327) (390,042)
Payment of accrued acquisition
related liabilities (59,069) (3,913)
---------- ----------
(406,094) (528,127)
---------- ----------
Net cash flows from investing
activities (352,688) (474,062)
---------- ----------
Financing activities
Inflows:
Proceeds from issue of
shares 2,600 197,727
Net cash inflow on derivative
financial instruments 14,212 1,953
Increase in finance lease
liabilities - 59
16,812 199,739
---------- ----------
Outflows:
Repayment of interest-bearing
loans and borrowings (108,140) (14,832)
Repayment of finance lease
liabilities (177) (151)
Dividends paid to owners
of the Parent 7 (90,036) (80,938)
Dividends paid to non-controlling (5,228) -
interests
(203,581) (95,921)
---------- ----------
Net cash flows from financing
activities (186,769) 103,818
---------- ----------
Change in cash and cash
equivalents (156,144) (77,877)
Translation adjustment 38,929 38,249
Cash and cash equivalents
at beginning of year 1,090,037 1,129,665
---------- ----------
Cash and cash equivalents
at end of year 972,822 1,090,037
---------- ----------
Cash and cash equivalents
consists of:
Cash and short term bank
deposits 1,048,064 1,182,034
Overdrafts (88,041) (91,997)
Cash and short term deposits 12,799 -
attributable to assets held
for sale
972,822 1,090,037
---------- ----------
Notes to the Condensed Financial Statements
For the year ended 31 March 2017
1. Basis of Preparation
The financial information, from the Group Income Statement to note 16, contained in this preliminary results statement has been derived from the Group financial statements for the year ended 31 March 2017 and is presented in sterling, rounded to the nearest thousand. The financial information does not include all the information and disclosures required in the annual financial statements. The Annual Report will be distributed to shareholders and made available on the Company's website www.dcc.ie. It will also be filed with the Companies Registration Office. The auditors have reported on the financial statements for the year ended 31 March 2017 and their report was unqualified. The financial information for the year ended 31 March 2016 represents an abbreviated, restated (see note 8) version of the Group's statutory financial statements on which an unqualified audit report was issued and which have been filed with the Companies Registration Office.
The financial information presented in this report has been prepared in accordance with the Listing Rules of the Financial Services Authority and the accounting policies that the Group has adopted for 2017 which are consistent with those applied in the prior year.
2. Accounting Policies
There were no changes to IFRS which became effective for the Group during the financial year which resulted in material changes to the Group's consolidated financial statements.
3. Reporting Currency
The Group's financial statements are presented in sterling, denoted by the symbol 'GBP'. Results and cash flows of operations based in non-sterling countries have been translated into sterling at average rates for the year, and the related balance sheets have been translated at the rates of exchange ruling at the balance sheet date. The principal exchange rates used for translation of results and balance sheets into sterling were as follows:
Average rate Closing
rate
---------------------- --------------------
2017 2016 2017 2016
StgGBP1= StgGBP1= StgGBP1= StgGBP1=
Euro 1.1956 1.3697 1.1689 1.2633
Swedish Krona 11.3729 12.7937 11.1423 11.6547
Danish Krone 8.9150 10.2297 8.6942 9.4134
Norwegian Krone 10.9811 12.4995 10.7169 11.8938
4. Segmental Reporting
DCC is an international sales, marketing and business support services group headquartered in Dublin, Ireland. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as Mr. Tommy Breen, Chief Executive and his executive management team.
As announced on 5 April 2017, the Group entered into an agreement to dispose of its Environmental division. Following this change in the composition of operating segments, segmental reporting has been revised and the prior year segmental disclosures have been restated as required under IFRS 8.
The Group is organised into three operating segments: DCC Energy, DCC Healthcare and DCC Technology.
DCC Energy is the leading liquefied petroleum gas ('LPG') and oil sales and marketing business in Europe with a growing position in the retail petrol station market.
DCC Healthcare is a leading healthcare business, providing products and services to healthcare providers and health and beauty brand owners.
DCC Technology is a leading European sales, marketing and services partner for global technology brands.
Net finance costs and income tax are managed on a centralised basis and therefore these items are not allocated between operating segments for the purpose of presenting information to the chief operating decision maker and accordingly are not included in the detailed segmental analysis below. Intersegment revenue is not material and thus not subject to separate disclosure.
An analysis of the Group's performance, based on continuing
operations, by operating segment and geographic location
is as follows:
(a) By operating segment
Year ended 31
March 2017
-----------------------------------------------------------
DCC DCC DCC
Continuing operations Energy Healthcare Technology Total
GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 9,074,135 506,562 2,689,105 12,269,802
--------- ---------------- --------------- -------------
Operating profit* 254,941 48,944 41,120 345,005
Amortisation of intangible
assets (28,239) (7,258) (3,633) (39,130)
Net operating exceptionals
(note 5) (20,487) (2,695) (13,115) (36,297)
--------- ---------------- --------------- -------------
Operating profit 206,215 38,991 24,372 269,578
--------- ---------------- --------------- -------------
Year ended 31 March 2016
(restated)
-------------------------------------------------------------------
DCC DCC DCC
Continuing operations
Energy Healthcare Technology Total
GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 7,515,308 490,617 2,441,705 10,447,630
--------- ---------------- --------------- -------------
Operating profit* 205,181 45,039 35,125 285,345
Amortisation of intangible
assets (21,381) (7,138) (2,627) (31,146)
Net operating exceptionals
(note 5) (9,057) 5,859 (10,454) (13,652)
--------- ---------------- --------------- -------------
Operating profit 174,743 43,760 22,044 240,547
--------- ---------------- --------------- -------------
(b) By geography
The Group has a presence in 15 countries worldwide. The following represents a geographical analysis of revenue and non-current assets in accordance with IFRS 8, which requires disclosure of information about the country of domicile (Republic of Ireland) and countries with material revenue and non-current assets.
Revenue from continuing operations is derived almost entirely from the sale of goods and is disclosed based on the location of the entity selling the goods. The analysis of non-current assets is based on the location of the assets. There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8.
Non-current
Revenue assets**
------------------------ --------------------
Restated
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Republic of Ireland 759,439 639,149 123,348 132,892
United Kingdom 7,239,193 6,852,640 985,717 1,010,908
France 2,402,290 1,487,875 869,895 733,287
Other 1,868,880 1,467,966 218,570 181,620
----------- ----------- --------- ---------
12,269,802 10,447,630 2,197,530 2,058,707
----------- ----------- --------- ---------
* Operating profit before amortisation of intangible assets and net operating exceptionals
** Non-current assets comprise intangible assets, property, plant and equipment and equity accounted investments
5. Exceptionals
Restated
2017 2016
GBP'000 GBP'000
Restructuring costs (19,345) (15,777)
Acquisition and related costs (10,308) (7,226)
Adjustments to contingent acquisition
consideration (5,114) 6,290
Impairment of property, plant
and equipment (1,164) (947)
Gain arising from legal case
settlements - 4,291
Legal and other operating exceptional
items (366) (283)
Net operating exceptional items (36,297) (13,652)
Mark to market of swaps and
related debt 10,101 (9,419)
--------- ---------
Net exceptional items before
taxation (26,196) (23,071)
Tax attributable to net exceptional
items (1,756) 710
--------- ---------
Net exceptional items after
taxation (continuing operations) (27,952) (22,361)
Net exceptional items relating
to discontinued operations - (988)
--------- ---------
Net exceptional items after
taxation (27,952) (23,349)
Non-controlling interest share
of net exceptional items after
taxation 3,138 (323)
--------- ---------
Net exceptional items attributable
to owners of the Parent (24,814) (23,672)
--------- ---------
The Group has focused on the efficiency of its operating infrastructures and sales platforms, particularly in areas where it has been acquisitive in recent years. The Group incurred an exceptional charge of GBP19.345 million (2016: GBP15.777 million) in relation to restructuring of existing and acquired businesses. The majority of the charge relates to restructuring and integration in the Energy division where the Group has been most acquisitive. The charge also includes integration costs related to acquisition activity and costs in respect of the pre-operating period of the new UK national distribution centre in the Technology division.
Acquisition costs, which include professional fees and tax costs (such as stamp duty) incurred in evaluating and completing acquisitions, amounted to GBP10.308 million (2016: GBP7.226 million) and reflect the significant level of development activity undertaken by the Group during the year.
The net increase in the provision for contingent acquisition consideration of GBP5.114 million (2016: decrease of GBP6.290 million) is due to the stronger than anticipated trading performance of a small number of businesses acquired during the last three years, where earn-out arrangements are in place.
Most of the Group's debt has been raised in the US Private Placement market and swapped, using long term interest, currency and cross currency interest rate derivatives, to both fixed and floating rate sterling and euro. The level of ineffectiveness calculated under IAS 39 on the fair value and cash flow hedge relationships relating to fixed rate debt, together with gains or losses arising from marking to market swaps not designated as hedges, offset by foreign exchange translation gains or losses on the related fixed rate debt, is charged or credited as an exceptional item. In the year ended 31 March 2017, this amounted to an exceptional non-cash gain of GBP10.101 million (2016: charge of GBP9.419 million). Following this credit, the cumulative net exceptional charge taken in respect of the Group's outstanding US Private Placement debt and related hedging instruments is GBP5.6 million. This, or any subsequent similar non-cash charges or gains, will net to zero over the remaining term of this debt and the related hedging instruments.
There was a net tax charge of GBP1.756 million (2016: credit of GBP0.710 million) and a non-controlling interest credit of GBP3.138 million (2016: charge of GBP0.323 million) in relation to the above net exceptional charge.
The gain arising from legal case settlements in the prior year of GBP4.291 million was primarily due to a final cash recovery in respect of the Pihsiang legal claim.
6. Earnings per Ordinary Share
Discontinued Discontinued
Continuing operations Continuing operations
operations (note Total operations (note Total
8) 8)
2017 2017 2017 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit attributable
to owners of the
Parent 201,037 15,160 216,197 166,795 11,236 178,031
Amortisation of
intangible assets
after tax 28,456 6 28,462 23,811 390 24,201
Exceptionals after
tax (note 5) 24,814 - 24,814 22,684 988 23,672
---------- ------------ --------- ---------- ---------------- -----------
Adjusted profit
after taxation and
non-controlling
interests 254,307 15,166 269,473 213,290 12,614 225,904
---------- ------------ --------- ---------- ---------------- -----------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
2017 2017 2017 2016 2016 2016
Basic earnings per pence pence pence pence
ordinary share pence pence
Basic earnings per
ordinary share 226.56p 17.08p 243.64p 189.85p 12.79p 202.64p
Amortisation of
intangible assets
after tax 32.07p 0.01p 32.08p 27.11p 0.44p 27.55p
Exceptionals after
tax 27.96p - 27.96p 25.82p 1.13p 26.95p
---------- ------------ --------- ---------- ---------------- -----------
Adjusted basic earnings
per
ordinary share 286.59p 17.09p 303.68p 242.78p 14.36p 257.14p
---------- ------------ --------- ---------- ---------------- -----------
Weighted average
number of ordinary
shares in issue
(thousands) 88,735 87,854
--------- -----------
Basic earnings per share is calculated by dividing the profit attributable to owners of the Parent by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares. The adjusted figures for basic earnings per ordinary share (a non-GAAP financial measure) are intended to demonstrate the results of the Group after eliminating the impact of amortisation of intangible assets and net exceptionals.
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
2017 2017 2017 2016 2016 2016
Diluted earnings pence pence pence pence
per ordinary share pence pence
Basic earnings per
ordinary share 225.04p 16.96p 242.00p 188.33p 12.69p 201.02p
Amortisation of
intangible assets
after tax 31.84p 0.01p 31.85p 26.89p 0.43p 27.32p
Exceptionals after
tax 27.78p - 27.78p 25.61p 1.12p 26.73p
---------- -------------------- --------- ---------- ------------ -----------
Adjusted basic earnings
per
ordinary share 284.66p 16.97p 301.63p 240.83p 14.24p 255.07p
---------- -------------------- --------- ---------- ------------ -----------
Weighted average
number of ordinary
shares in issue
(thousands) 89,338 88,564
--------- -----------
The earnings used for the purposes of the continuing diluted earnings per ordinary share calculations were GBP201.037 million (2016: GBP166.795 million) and GBP254.307 million (2016: GBP213.290 million) for the purposes of the continuing adjusted diluted earnings per ordinary share calculations.
The earnings used for the purposes of the discontinued diluted earnings per ordinary share calculations were GBP15.160 million (2016: GBP11.236 million) and GBP15.166 million (2016: GBP12.614 million) for the purposes of the discontinued adjusted diluted earnings per ordinary share calculations.
The weighted average number of ordinary shares used in calculating the diluted earnings per ordinary share for the year ended 31 March 2017 was 89.338 million (2016: 88.564 million). A reconciliation of the weighted average number of ordinary shares used for the purposes of calculating the diluted earnings per ordinary share amounts is as follows:
2017 2016
'000 '000
Weighted average number of ordinary
shares in issue 88,735 87,854
Dilutive effect of options and awards 603 710
------ ------
Weighted average number of ordinary
shares for diluted earnings per share 89,338 88,564
------ ------
Diluted earnings per ordinary share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. Share options and awards are the Company's only category of dilutive potential ordinary shares.
Employee share options and awards, which are performance-based, are treated as contingently issuable shares because their issue is contingent upon satisfaction of specified performance conditions in addition to the passage of time. These contingently issuable shares are excluded from the computation of diluted earnings per ordinary share where the conditions governing exercisability would not have been satisfied as at the end of the reporting period if that were the end of the vesting period.
The adjusted figures for diluted earnings per ordinary share (a non-GAAP financial measure) are intended to demonstrate the results of the Group after eliminating the impact of amortisation of intangible assets and net exceptionals.
7. Dividends
2017 2016
GBP'000 GBP'000
Final - paid 64.18 pence
per share on 21 July 2016
(2016: paid 55.81 pence
per share on 23 July 2015) 57,621 50,646
Interim - paid 37.17 pence
per share on 12 December
2016
(2016: paid 33.04 pence
per share on 7 December
2015) 32,415 30,292
90,036 80,938
--------------------- ---------
The Directors are proposing a final dividend in respect of the year ended 31 March 2017 of 74.63 pence per ordinary share (GBP66.284 million). This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.
8. Discontinued Operations
As announced on 5 April 2017, the Group entered into an agreement to dispose of the Environmental segment. The proceeds on disposal will be used to fund the continued development of DCC's Energy, Healthcare and Technology divisions. The disposal is expected to complete in the quarter to 30 June 2017 at which time control of the Environmental businesses will pass to the acquirer. The transaction is expected to give rise to an exceptional profit in the year ending 31 March 2018 of approximately GBP30 million.
The conditions for the segment to be classified as a discontinued operation have been satisfied, and, accordingly, the results of the Environmental segment are presented separately as discontinued operations in the Group Income Statement and the assets and liabilities of this segment are classified as an asset held for sale at the balance sheet date.
The following table details the results of discontinued operations included in the Group Income Statement:
2017 2016
GBP'000 GBP'000
Revenue 175,232 153,455
Cost of sales (119,654) (107,551)
---------- ----------
Gross profit 55,578 45,904
Operating expenses (37,032) (30,726)
---------- ----------
Operating profit before amortisation
of intangible assets and exceptional
items 18,546 15,178
Amortisation of intangible
assets (38) (476)
Net operating exceptionals - (988)
---------- ----------
Operating profit 18,508 13,714
Net finance costs (163) (161)
---------- ----------
Profit before tax 18,345 13,553
Income tax expense (3,185) (2,317)
---------- ----------
Profit from discontinued operations
after tax 15,160 11,236
---------- ----------
The following table details the cash flow from discontinued operations included in the Group Cash Flow Statement:
2017 2016
GBP'000 GBP'000
Net cash flow from operating
activities 22,461 19,153
Net cash flow from investing
activities (6,661) (12,389)
Net cash flow from discontinued
operations 15,800 6,764
-------- ---------
The fair value less costs to sell of the major classes of assets and liabilities held for sale as at 31 March 2017 are as follows:
2017
GBP'000
Assets
Property, plant and equipment 65,551
Intangible assets 79,335
Deferred income tax assets 298
Inventories 1,922
Trade and other receivables 33,264
Interest receivable 1
Cash and cash equivalents 12,799
---------
Assets classified as held for
sale 193,170
---------
Liabilities
Trade and other payables (35,741)
Amounts due in respect of property,
plant and equipment (32)
Current income tax liabilities (3,533)
Deferred income tax liabilities (357)
Provisions for liabilities
and charges (3,800)
Acquisition related liabilities (23,204)
Government grants (431)
---------
Liabilities associated with
assets classified as held for
sale (67,098)
---------
Net assets of the disposal
group 126,072
---------
The proceeds on disposal are expected to exceed the carrying value of the related net assets and accordingly no impairment losses have been recognised on the classification of these operations as held for sale.
9. Other Reserves
For the year ended 31
March 2017
Foreign
Share Cash currency
based flow
payment hedge translation Other
reserve reserve reserve reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2016 14,954 (8,112) 70,887 932 78,661
Currency translation - - 34,650 - 34,650
Movements relating
to cash flow hedges - (6,803) - - (6,803)
Movement in deferred tax
liability on cash flow hedges
- 1,334 - - 1,334
Share based payment 3,192 - - - 3,192
At 31 March 2017 18,146 (13,581) 105,537 932 111,034
------------------- -------- ----------- -------- -------
For the year ended 31
March 2016
Foreign
Share Cash currency
based flow
payment hedge translation Other
reserve reserve reserve reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2015 12,756 (10,462) 32,683 932 35,909
Currency translation - - 35,706 - 35,706
Movements relating
to cash flow hedges - 2,230 - - 2,230
Movement in deferred tax
liability on cash flow hedges
- 120 - - 120
Transfer to non-controlling
interests - - 2,498 - 2,498
Share based payment 2,198 - - - 2,198
At 31 March 2016 14,954 (8,112) 70,887 932 78,661
------------------- -------- ----------- -------- -------
10. Analysis of Net Debt
2017 2016
GBP'000 GBP'000
Non-current assets:
Derivative financial instruments 273,767 209,518
------------ ------------
Current assets:
Derivative financial instruments 18,233 15,915
Cash and cash equivalents 1,048,064 1,182,034
------------ ------------
1,066,297 1,197,949
------------ ------------
Non-current liabilities:
Finance leases (165) (127)
Derivative financial instruments (506) (343)
Unsecured Notes (1,319,802) (1,260,294)
------------ ------------
(1,320,473) (1,260,764)
------------ ------------
Current liabilities:
Bank borrowings (88,041) (91,997)
Finance leases (190) (379)
Derivative financial instruments (5,894) (8,401)
Unsecured Notes (60,214) (100,428)
------------ ------------
(154,339) (201,205)
------------ ------------
Net debt excluding cash attributable
to assets held for sale (134,748) (54,502)
Cash and short-term deposits attributable 12,799 -
to assets held for sale (note 8)
------------ ------------
Net debt including cash attributable
to assets held for sale (121,949) (54,502)
------------ ------------
11. Post Employment Benefit Obligations
The Group's defined benefit pension schemes' assets were measured at fair value at 31 March 2017. The defined benefit pension schemes' liabilities at 31 March 2017 were updated to reflect material movements in underlying assumptions.
The net deficit on the Group's post employment benefit obligations decreased from GBP0.347 million at 31 March 2016 to GBP0.029 million at 31 March 2017. The movement in the deficit primarily reflects contributions in excess of the current service cost offset by an actuarial loss on liabilities arising from a decrease in the discount rate used to value these liabilities.
12. Business Combinations
A key strategy of the Group is to create and sustain market leadership positions through acquisitions in markets it currently operates in, together with extending the Group's footprint into new geographic markets. In line with this strategy, the principal acquisitions completed by the Group during the year, together with percentages acquired were as follows:
-- the acquisition in November 2016 of 100% of Shell's commercial, aviation and retail fuels business in Denmark ('Dansk Fuels');
-- the acquisition of 100% of Medium (U.K.) ('Medium') in November 2016. Medium is a distributor of professional audio visual equipment to resellers in the UK;
-- the acquisition in December 2016 of 100% of Hammer Consolidated Holdings Limited ('Hammer'), a UK based specialist distributor of server and storage solutions to resellers in the UK and Continental Europe;
-- the acquisition in January 2017 of 79% of Medisource Ireland Limited, a specialist in the procurement and sale of Exempt Medicinal Products, based in Ireland; and
-- the acquisition of 97% of Gaz Européen Holdings SAS ('Gaz Européen') in January 2017. Gaz Européen, which is based in France, is a natural gas retail and marketing business which supplies business and public sector customers.
The acquisition data presented below reflects the fair value of the identifiable net assets acquired (excluding net cash/debt acquired) in respect of acquisitions completed during the year, together with measurement period adjustments made to the provisional fair values in respect of the acquisition of Butagaz S.A.S. which was completed during the year ended 31 March 2016. These measurement period adjustments, which have no net cash impact, resulted in an increase in goodwill of GBP0.986 million and primarily comprise reclassifications between categories of assets and liabilities.
Gaz Européen Others Total Total
2017 2017 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 468 7,797 8,265 204,605
Intangible assets - other
intangible assets 48,595 19,918 68,513 298,014
Equity accounted investments - 404 404 15,292
Deferred income tax assets - 60 60 11,605
----------------- --------- --------- ---------
Total non-current assets 49,063 28,179 77,242 529,516
----------------- --------- --------- ---------
Current assets
Inventories 9,287 22,920 32,207 52,339
Trade and other receivables 61,627 144,901 206,528 97,904
----------------- --------- --------- ---------
Total current assets 70,914 167,821 238,735 150,243
----------------- --------- --------- ---------
Liabilities
Non-current liabilities
Deferred income tax liabilities (16,731) (3,171) (19,902) (101,174)
Provisions for liabilities - (11,129) (11,129) (169,894)
Government grants - - - (46)
Total non-current liabilities (16,731) (14,300) (31,031) (271,114)
----------------- --------- --------- ---------
Current liabilities
Trade and other payables (46,539) (118,238) (164,777) (95,423)
Provisions for liabilities (102) (5,215) (5,317) (18,604)
Current income tax asset/(liability) 29 12,312 12,341 (18,719)
Acquisition related liabilities - (13,522) (13,522) -
----------------- --------- ---------
Total current liabilities (46,612) (124,663) (171,275) (132,746)
----------------- --------- --------- ---------
Identifiable net assets
acquired 56,634 57,037 113,671 275,899
Non-controlling interest
arising on acquisition - - - (21,311)
Other reserve movements
arising on acquisition - - - 2,503
Intangible assets - goodwill 44,328 72,847 117,175 214,470
----------------- --------- --------- ---------
Total consideration 100,962 129,884 230,846 471,561
----------------- --------- --------- ---------
Satisfied by:
Cash 109,736 132,282 242,018 500,492
Cash and cash equivalents
acquired (11,158) (27,533) (38,691) (110,450)
----------------- --------- --------- ---------
Net cash outflow 98,578 104,749 203,327 390,042
Acquisition related liabilities 2,384 25,135 27,519 81,519
----------------- --------- --------- ---------
Total consideration 100,962 129,884 230,846 471,561
----------------- --------- --------- ---------
The acquisition of Gaz Européen has been deemed to be a substantial transaction and separate disclosure of the fair values of the identifiable assets and liabilities has therefore been made. None of the remaining business combinations completed during the year were considered sufficiently material to warrant separate disclosure of the fair values attributable to those combinations. The carrying amounts of the assets and liabilities acquired, determined in accordance with IFRS, before completion of the combination together with the adjustments made to those carrying values disclosed above were as follows:
Book Fair value Fair
value adjustments value
Gaz Européen GBP'000 GBP'000 GBP'000
Non-current assets (excluding
goodwill) 590 48,473 49,063
Current assets 71,103 (189) 70,914
Non-current liabilities - (16,731) (16,731)
Current liabilities (45,816) (796) (46,612)
-------- ----------- --------
Identifiable net assets acquired 25,877 30,757 56,634
Goodwill arising on acquisition 75,085 (30,757) 44,328
-------- ----------- --------
Total consideration 100,962 - 100,962
-------- ----------- --------
Book Fair value Fair
value adjustments value
Others GBP'000 GBP'000 GBP'000
Non-current assets (excluding
goodwill) 30,105 (1,926) 28,179
Current assets 168,343 (522) 167,821
Non-current liabilities (1,470) (12,830) (14,300)
Current liabilities (123,184) (1,479) (124,663)
--------- ----------- ---------
Identifiable net assets acquired 73,794 (16,757) 57,037
Goodwill arising on acquisition 56,090 16,757 72,847
--------- ----------- ---------
Total consideration 129,884 - 129,884
--------- ----------- ---------
Book Fair value Fair
value adjustments value
Total GBP'000 GBP'000 GBP'000
Non-current assets (excluding
goodwill) 30,695 46,547 77,242
Current assets 239,446 (711) 238,735
Non-current liabilities (1,470) (29,561) (31,031)
Current liabilities (169,000) (2,275) (171,275)
--------- ----------- ---------
Identifiable net assets acquired 99,671 14,000 113,671
Goodwill arising on acquisition 131,175 (14,000) 117,175
--------- ----------- ---------
Total consideration 230,846 - 230,846
--------- ----------- ---------
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect of a number of the business combinations above given the timing of closure of these transactions. Any amendments to these fair values within the twelve month timeframe from the date of acquisition will be disclosable in the 2018 Annual Report as stipulated by IFRS 3.
The principal factors contributing to the recognition of goodwill on business combinations entered into by the Group are the expected profitability of the acquired business and the realisation of cost savings and synergies with existing Group entities.
None of the goodwill recognised in respect of acquisitions completed during the financial year is expected to be deductible for tax purposes.
Acquisition related costs included in other operating expenses in the Group Income Statement amounted to GBP10.308 million.
No contingent liabilities were recognised on the acquisitions completed during the year or the prior financial years.
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to GBP210.874 million. The fair value of these receivables is GBP206.528 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance for impairment of GBP4.346 million.
The fair value of contingent consideration recognised at the date of acquisition is calculated by discounting the expected future payment to present value at the acquisition date. In general, for contingent consideration to become payable, pre-defined profit thresholds must be exceeded. On an undiscounted basis, the future payments for which the Group may be liable for acquisitions completed during the year range from GBP2.630 million to GBP56.697 million.
The acquisitions during the year contributed GBP318.4 million to revenues and GBP6.8 million to profit after tax and non-controlling interests. Had all the business combinations effected during the year occurred at the beginning of the year, total Group revenue (continuing) for the year ended 31 March 2017 would have been GBP12,843.3 million and total Group profit after tax (continuing) would be GBP211.3 million.
13. Seasonality of Operations
The Group's operations are significantly second-half weighted primarily due to a portion of the demand for DCC Energy's products being weather dependent and seasonal buying patterns in DCC Technology.
14. Related Party Transactions
There have been no related party transactions or changes in related party transactions that could have a material impact on the financial position or performance of the Group during the 2017 financial year.
15. Events after the Balance Sheet Date
As announced on 5 April 2017, the Group reached agreement to dispose of its Environmental division. The transaction is expected to complete in the quarter to 30 June 2017, following receipt of competition clearance from the Irish competition authority. The Group expects to receive cash proceeds on completion of approximately GBP170 million (25% of the British businesses are owned by DCC's long-standing minority partner) and the transaction is expected to give rise to an exceptional profit in the year ending 31 March 2018 of approximately GBP30 million.
The Group also announced on 5 April 2017 that it has reached agreement with Shell Gas (LPG) Holdings BV to acquire its liquefied petroleum gas ('LPG') business in Hong Kong and Macau based on an enterprise value of HK$1.165 billion (c. GBP120 million). The business is one of the leading LPG businesses in Hong Kong and is the market leader in Macau. The business is required to be separated from the broader Shell Hong Kong operations and the transaction requires certain regulatory consents and operating licence approvals. The acquisition is expected to complete before the end of DCC's financial year ending 31 March 2018.
16. Board Approval
This report was approved by the Board of Directors of DCC plc on 15 May 2017.
Supplementary Financial Information
For the year ended 31 March 2017
Alternative Performance Measures
The Group reports certain alternative performance measures ('APMs') that are not required under International Financial Reporting Standards ('IFRS') which represent the generally accepted accounting principles ('GAAP') under which the Group reports. The Group believes that the presentation of these APMs provides useful supplemental information which, when viewed in conjunction with our IFRS financial information, provides investors with a more meaningful understanding of the underlying financial and operating performance of the Group and its divisions.
These APMs are primarily used for the following purposes:
- to evaluate the historical and planned underlying results of our operations;
- to set director and management remuneration; and
- to discuss and explain the Group's performance with the investment analyst community.
None of the APMs should be considered as an alternative to financial measures derived in accordance with GAAP. The APMs can have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. These performance measures may not be calculated uniformly by all companies and therefore may not be directly comparable with similarly titled measures and disclosures of other companies.
The principal APMs used by the Group, together with reconciliations where the non-GAAP measures are not readily identifiable from the financial statements, are as follows:
Operating profit before net exceptionals and amortisation of intangible assets ('EBITA')
Definition
This comprises operating profit as reported in the Group Income Statement before net operating exceptional items and amortisation of intangible assets.
2017 2016
Calculation GBP'000 GBP'000
=============================================== ======== ========
Operating profit before net exceptionals
and amortisation
of intangible assets ('EBITA') - continuing 345,005 285,345
Operating profit before net exceptionals
and amortisation
of intangible assets ('EBITA') - discontinued 18,546 15,178
=============================================== ======== ========
Operating profit before net exceptionals
and amortisation of intangible assets
('EBITA') 363,551 300,523
=============================================== ======== ========
Operating profit before net exceptionals, depreciation and amortisation of intangible assets ('EBITDA')
Definition
EBITDA represents earnings before net interest, tax, depreciation, amortisation of intangible assets, share of equity accounted investments' profit after tax and net exceptional items.
2017 2016
Calculation GBP'000 GBP'000
============= ======== ========
EBITA 363,551 300,523
Depreciation 92,015 74,822
============= ======== ========
EBITDA 455,566 375,345
============= ======== ========
Net interest
Definition
The Group defines net interest as the net total of finance costs and finance income before interest related exceptional items as presented in the Group Income Statement.
2017 2016
Calculation GBP'000 GBP'000
======================================== ======== ========
Finance costs before exceptional items (72,910) (64,790)
Finance income before exceptional items 40,973 35,962
======================================== ======== ========
Net interest - continuing (31,937) (28,828)
Net interest - discontinued (163) (161)
======================================== ======== ========
Net interest (32,100) (28,989)
======================================== ======== ========
Effective tax rate
Definition
The Group's effective tax rate expresses the income tax expense before exceptionals and deferred tax attaching to the amortisation of intangible assets as a percentage of EBITA less net interest.
2017 2016
Calculation GBP'000 GBP'000
================================================== ======== ========
EBITA 363,551 300,523
Net interest (32,100) (28,989)
================================================== ======== ========
EBT 331,451 271,534
================================================== ======== ========
Income tax expense before exceptionals
and deferred tax attaching to
amortisation of intangible assets - continuing 54,787 41,042
Income tax expense before exceptionals
and deferred tax attaching to
amortisation of intangible assets - discontinued 3,217 2,403
================================================== ======== ========
Total income tax expense before exceptionals
and deferred tax attaching to
amortisation of intangible assets 58,004 43,445
================================================== ======== ========
Effective tax rate (%) 17.5% 16.0%
================================================== ======== ========
Adjusted earnings per share
Definition
The Group defines adjusted earnings per share as basic earnings per share adjusted for the impact of net exceptional items and amortisation of intangible assets.
2017 2016
Calculation pence pence
=========================================== ====== ======
Adjusted earnings per share - continuing 286.59 242.78
Adjusted earnings per share - discontinued 17.09 14.36
=========================================== ====== ======
Adjusted earnings per share 303.68 257.14
=========================================== ====== ======
Constant currency
Definition
The translation of foreign denominated earnings can be impacted by movements in foreign exchange rates versus sterling, the Group's presentation currency. In order to present a better reflection of underlying performance in the period, the Group retranslates foreign denominated current year earnings at prior year exchange rates.
2017 2016
Revenue - continuing, constant currency GBP'000 GBP'000
======================================== ========== ==========
Revenue - continuing 12,269,802 10,447,630
Currency impact (622,001) -
======================================== ========== ==========
Revenue - continuing, constant currency 11,647,801 10,447,630
======================================== ========== ==========
EBITA - continuing, constant currency
======================================== ========== ==========
EBITA - continuing 345,005 285,345
Currency impact (23,084) -
======================================== ========== ==========
EBITA - continuing, constant currency 321,921 285,345
======================================== ========== ==========
Adjusted earnings per share - continuing,
constant currency
============================================ ======== =======
Adjusted earnings - continuing 254,307 213,290
Currency impact (16,677) -
============================================ ======== =======
EBITA - continuing, constant currency 237,630 213,290
Weighted average number of ordinary shares
in issue ('000) 88,735 87,854
============================================ ======== =======
Adjusted earnings per share - continuing,
constant currency 267.80p 242.78p
============================================ ======== =======
Dividend cover
Definition
The dividend cover ratio measures the Group's ability to pay dividends from earnings.
2017 2016
Calculation pence pence
========================================= ====== ======
Adjusted earnings per share - continuing 286.59 242.78
Dividend 111.80 97.22
========================================= ====== ======
Dividend cover (times) 2.6x 2.5x
========================================= ====== ======
Net capital expenditure
Definition
Net capital expenditure comprises purchases of property, plant and equipment, proceeds from the disposal of property, plant and equipment and government grants received in relation to property, plant and equipment.
2017 2016
Calculation GBP'000 GBP'000
========================================== ======== ========
Purchase of property, plant and equipment 143,698 134,172
Proceeds from disposal of property, plant
and equipment (12,315) (13,523)
========================================== ======== ========
Net capital expenditure 131,383 120,649
========================================== ======== ========
Free cash flow
Definition
Free cash flow is defined by the Group as cash generated from operations before exceptional items as reported in the Group Cash Flow Statement after net capital expenditure.
2017 2016
Calculation GBP'000 GBP'000
====================================== ========= =========
Cash generated from operations before
exceptionals 546,870 411,712
Net capital expenditure (131,383) (120,649)
====================================== ========= =========
Free cash flow 415,487 291,063
====================================== ========= =========
Free cash flow (after interest and tax payments)
Definition
Free cash flow (after interest and tax payments) is defined by the Group as free cash flow after interest paid, income tax paid, dividends received from equity accounted investments and interest received.
2017 2016
Calculation GBP'000 GBP'000
========================================= ======== ========
Free cash flow 415,487 291,063
Interest paid (70,108) (64,432)
Income tax paid (62,180) (35,346)
Dividends received from equity accounted
investments 125 365
Interest received 40,966 36,004
========================================= ======== ========
Free cash flow (after interest and tax
payments) 324,290 227,654
========================================= ======== ========
Cash conversion ratio
Definition
The cash conversion ratio expresses free cash flow as a percentage of EBITA.
2017 2016
Calculation GBP'000 GBP'000
========================== ======== ========
Free cash flow 415,487 291,063
EBITA 363,551 300,523
========================== ======== ========
Cash conversion ratio (%) 114% 97%
========================== ======== ========
Net debt/EBITDA
Definition
The net debt to earnings before net interest, tax, depreciation, amortisation of intangible assets, share of equity accounted investments' profit after tax and net exceptional items ('EBITDA') ratio is a measurement of leverage, and shows how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant.
2017 2016
Calculation GBP'000 GBP'000
================ ======== ========
Net debt 121,949 54,502
EBITDA 455,566 375,345
================ ======== ========
Net debt/EBITDA 0.3 0.2
================ ======== ========
Return on capital employed ('ROCE') - continuing
Definition
ROCE represents operating profit (continuing) before net operating exceptional items and amortisation of intangible assets expressed as a percentage of the average total continuing capital employed. Total continuing capital employed represents total equity adjusted for net debt/cash, goodwill and intangibles written off, acquisition related liabilities and equity accounted investments.
2017 2016
Calculation GBP'000 GBP'000
============================================= ========= =========
Total equity 1,507,721 1,350,476
Net debt (continuing) 134,748 69,473
Goodwill and intangibles written off
(continuing) 228,340 189,210
Equity accounted investments (continuing) (24,938) (22,139)
Acquisition related liabilities (continuing,
current and non-current) 94,917 99,438
Net assets of the disposal group (126,072) (104,694)
============================================= ========= =========
1,814,716 1,581,764
============================================= ========= =========
Average total capital employed - continuing 1,698,240 1,301,757
EBITA - continuing 345,005 285,345
============================================= ========= =========
Return on capital employed (%) - continuing 20.3% 21.9%
============================================= ========= =========
Committed acquisition expenditure
Definition
The Group defines committed acquisition expenditure as the total acquisition cost of subsidiaries as presented in the Group Cash Flow Statement (excluding amounts related to acquisitions which were committed to in previous years) and future acquisition related liabilities for acquisitions committed to during the year.
2017 2016
Calculation GBP'000 GBP'000
======================================== ======== =========
Net cash outflow on acquisitions during
the year 203,327 390,042
Cash outflow on acquisitions which were
committed to in the previous year (34,372) (351,045)
Acquisition related liabilities arising
on acquisitions during the year 41,041 81,519
Acquisition related liabilities which
were committed to in the previous year (14,082) (79,288)
Amounts committed in the current year 358,000 39,000
======================================== ======== =========
Committed acquisition expenditure 553,914 80,228
======================================== ======== =========
Net working capital
Definition
Net working capital represents the net total of inventories, trade and other receivables (excluding interest receivable), and trade and other payables (excluding interest payable, amounts due in respect of property, plant and equipment and government grants).
2017 2016
Calculation GBP'000 GBP'000
======================================== =========== ===========
Inventories 456,395 393,948
Inventories (asset classified as held
for sale) 1,922 -
Trade and other receivables 1,222,597 916,069
Trade and other receivables (asset held
for sale) 33,264 -
Interest receivable (included in trade
and other receivables) (223) (230)
Trade and other payables (1,820,517) (1,437,832)
Trade and other payables (asset held
for sale) (35,741) -
Interest payable (included in trade
and other payables) 4,534 3,967
Amounts due in respect of property,
plant and equipment (included in trade
and other payables) 6,349 2,967
Government grants (included in trade
and other payables) 9 26
======================================== =========== ===========
Net working capital (131,411) (121,085)
======================================== =========== ===========
Working capital (days)
Definition
Working capital days measures how long it takes in days for the Group to convert working capital into revenue.
2017 2016
Calculation GBP'000 GBP'000
======================= ========= =========
Net working capital (131,411) (121,085)
March revenue 1,223,575 967,014
======================= ========= =========
(3.3 (3.9
Working capital (days) days) days)
======================= ========= =========
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZMGMKNKKGNZM
(END) Dow Jones Newswires
May 16, 2017 02:00 ET (06:00 GMT)
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