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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 25.00 | 0.46% | 5,445.00 | 5,450.00 | 5,455.00 | 5,470.00 | 5,385.00 | 5,465.00 | 86,766 | 16:35:11 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Offices-holdng Companies,nec | 22.2B | 334.02M | 3.3818 | 16.12 | 5.38B |
From Apr 2019 to Apr 2024
TIDMDCC
RNS Number : 0389O
DCC PLC
15 May 2018
15 May 2018
DCC Reports Strong Growth and Record Development Spend
DCC, the leading international sales, marketing and support services group, today announced its results for the year ended 31 March 2018.
Highlights 2018 2017 % change --------------------------------------------- ----------- ----------- --------- DCC LPG volumes (thousand tonnes)(1) 1,876.2kT 1,565.6kT +19.8% --------------------------------------------- ----------- ----------- --------- DCC Retail & Oil volumes (billion litres) 12.308bn 11.572bn +6.4% --------------------------------------------- ----------- ----------- --------- Revenue - continuing(2) (excl. DCC LPG and DCC Retail & Oil) GBP3.598bn GBP3.196bn +12.6% --------------------------------------------- ----------- ----------- --------- Adjusted operating profit - continuing(2,3) GBP383.4m GBP345.0m +11.1% --------------------------------------------- ----------- ----------- --------- Adjusted earnings per share - continuing(2,3) 317.5p 286.6p +10.8% --------------------------------------------- ----------- ----------- --------- Dividend per share 122.98p 111.80p +10.0% --------------------------------------------- ----------- ----------- --------- Free cash flow(4) GBP328.1m GBP415.5m --------------------------------------------- ----------- ----------- --------- Return on capital employed - continuing(2) 17.5% 20.3% --------------------------------------------- ----------- ----------- ---------
-- Strong performance for the year with all divisions recording good profit growth and Group adjusted operating profit on continuing operations increasing by 11.1% (8.6% ahead on a constant currency basis) to GBP383.4 million.
-- Adjusted earnings per share on continuing activities up 10.8% (8.3% ahead on a constant currency basis) to 317.5 pence.
-- Proposed 10.0% increase in the final dividend will see the total dividend for the year increase by 10.0%, the 24(th) consecutive year of dividend growth since DCC listed in 1994.
-- Good cash flow performance with free cash flow conversion of approximately 85% and a return on capital employed of 17.5%.
-- Record year of corporate development spend with approximately GBP670 million of acquisition capital deployed.
-- Acquisitions completed across all divisions, including the acquisitions of Retail West and Elite One Source, DCC's first entry into the large US markets for LPG and for Health & Beauty Solutions.
-- The Group expects that the year ending 31 March 2019 will be another year of profit growth and development.
(1) 1 tonne of LPG equivalent to 1,969 litres of oil
(2) Continuing operations exclude DCC Environmental which was disposed of in May 2017
(3) Excluding net exceptionals and amortisation of intangible assets
(4) After net capital expenditure and before net exceptionals, interest and tax payments
Commenting on the results, Donal Murphy, Chief Executive, said:
"It is pleasing to report that the year ended 31 March 2018 has been another year of strong growth for DCC, with each division recording good growth in operating profit.
It was also a record year of development for the Group, with approximately GBP670 million of capital spent on acquisitions, the highest level of spend in DCC's history. The acquisition activity during the year again demonstrates DCC's ability to acquire and integrate businesses in our existing markets to strengthen our market positions, build scale and increase our relevance and service offerings to customers and suppliers. Importantly, it also reflects our strategy to extend our geographic footprint over time, as evidenced by DCC LPG's first acquisitions in the US and Asia and DCC Healthcare's first acquisition in the US. These acquisitions in new markets will provide further opportunities for both organic and acquisitive growth for the Group.
The Group continues to have the opportunity, ambition and capacity for further development across each of our divisions, supported by a strong and liquid balance sheet.
We expect that the year to 31 March 2019 will be another year of profit growth and development for the Group."
Presentation of results and dial-in / webcast facility
There will be a presentation of these results to analysts and fund managers at 9.00 am today in the London Stock Exchange. The slides for this presentation can be downloaded from DCC's website, www.dcc.ie.
There will also be audio conference access to, and a live webcast of, the presentation. The access details for the presentation are:
Ireland: +353 (0)1 246 5621 UK / International: +44 (0)330 336 9411 Passcode: 5200365 Webcast Link: https://edge.media-server.com/m6/p/g6h5bc8u
This report, a webcast of the presentation and further information on DCC is available at www.dcc.ie.
For reference, please contact:
Donal Murphy, Chief Executive Tel: +353 1 2799 400 Fergal O'Dwyer, Chief Financial Officer Email: investorrelations@dcc.ie Kevin Lucey, Head of Capital Markets Web: www.dcc.ie For media enquiries: Powerscourt (Lisa Tel: +44 20 7250 1446 Kavanagh)
Group Results
A summary of the Group's results for the year ended 31 March 2018 is as follows:
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2018 2017
GBP'm GBP'm % change
Revenue - continuing(1) 14,265 12,270 +16.3%
Operating profit(2)
DCC LPG 167.5 160.4 +4.4%
DCC Retail & Oil 113.8 94.5 +20.4%
DCC Healthcare 54.3 49.0 +11.0%
DCC Technology 47.8 41.1 +16.3%
Group adjusted operating profit(2) - continuing(1) 383.4 345.0 +11.1%
Finance costs (net) and other (35.4) (31.2)
Profit before net exceptionals, amortisation of intangible assets and
tax 348.0 313.8 +10.9%
Net exceptional credit/(charge) after tax and non-controlling interests 11.4 (24.8)
Amortisation of intangible assets (43.0) (39.2)
Profit before tax 316.4 249.8 +26.6%
Taxation (49.3) (44.1)
Profit after tax 267.1 205.7 +29.8%
Profit after tax - discontinued operations 0.8 15.2
Non-controlling interests (6.1) (4.7)
Attributable profit 261.8 216.2 +21.1%
Adjusted earnings per share(2) - continuing(1) 317.5p 286.6p +10.8%
Adjusted earnings per share(2) 318.4p 303.7p +4.8%
Dividend per share 122.98p 111.80p +10.0%
Operating cash flow 473.4 546.9
Free cash flow(3) 328.1 415.5
Net debt at 31 March 542.7 121.9
Total equity at 31 March 1,677.9 1,507.7
Return on capital employed - continuing(1) 17.5% 20.3%
(1) Continuing operations exclude DCC Environmental which was disposed of in May 2017
(2) Excluding net exceptionals and amortisation of intangible assets
(3) After net capital expenditure and before net exceptionals, interest and tax payments
----------------------------------------------------------------------------------------------------------------------
Revenue - continuing operations
Revenue from continuing operations increased by 16.3% (13.8% ahead on a constant currency basis) to GBP14.3 billion.
DCC LPG volumes increased by 19.8% to 1.9 million tonnes, driven by the acquisitions of Gaz Européen in the prior year and Shell Hong Kong & Macau in January 2018. On a like-for-like basis, volumes were 4.7% ahead of the prior year. DCC LPG's revenue increased by 30.8% (26.2% ahead on a constant currency basis).
Volumes in DCC Retail & Oil increased by 6.4% to 12.3 billion litres, reflecting the acquisitions of Dansk Fuels in the prior year and Esso Retail Norway in October 2017. Volumes were in line with the prior year on an organic basis. DCC Retail & Oil's revenues increased by 15.8% (13.3% ahead on a constant currency basis).
Revenue excluding DCC LPG and DCC Retail & Oil increased by 12.6% (11.1% ahead on a constant currency basis) to GBP3.6 billion, approximately half of which was organic.
Group adjusted operating profit - continuing operations
Group adjusted operating profit from continuing operations increased by 11.1% to GBP383.4 million (8.6% ahead on a constant currency basis); approximately one third of the constant currency operating profit growth was organic. The average sterling/euro translation rate for the year of 1.1366 was 4.9% weaker than the average of 1.1956 in the prior year.
Operating profit in DCC LPG was 4.4% ahead of the prior year (1.0% ahead on a constant currency basis), despite the anticipated headwind of a rising cost of product and continued organic investment in its B2C natural gas and electricity offering in France. DCC LPG benefited from the acquisition of Shell Hong Kong & Macau and strong organic growth from the business in Britain, where further progress was achieved in converting oil customers to LPG in the commercial and industrial sectors.
In DCC Retail & Oil, operating profit was 20.4% ahead of the prior year (18.0% ahead on a constant currency basis). Approximately half of the constant currency growth was organic and broadly based, with good profit growth across the division. The business in Britain benefited from a marginally colder than average winter, which drove a modest increase in heating demand. In Denmark, the business delivered strong organic growth and also benefited from the integration of the Dansk Fuels acquisition, completed in the prior year.
Operating profit in DCC Healthcare was 11.0% ahead of the prior year (10.6% ahead on a constant currency basis) and approximately half of the constant currency growth was organic. DCC Vital performed strongly, driven by the first full year contribution from Medisource, which completed in January 2017, as well as good organic growth in medical devices. DCC Health & Beauty Solutions benefited modestly from the acquisition of Elite One Source in January 2018 and continued to deliver strong organic growth in nutritional products.
In DCC Technology, operating profit was 16.3% ahead of the prior year (15.5% ahead on a constant currency basis), reflecting a very strong organic performance in the UK and Ireland, particularly in audio visual, components and gaming, and the benefit of the acquisitions of Hammer and MTR. In France, the B2B business again delivered good growth. The French consumer products business remained very challenging and a programme to significantly reduce costs while improving its logistics and operational efficiency is being implemented. The Nordics business again delivered strong growth in IT and audio visual products and benefited in particular from continued investment in building out its presence in Norway.
An analysis of the divisional performance in each half of the year, for the Group's continuing operations, is set out below:
2017/18 2016/17 % change
---------------------- ---------------------- -------------------------
H1 H2 FY H1 H2 FY H1 H2 FY
Adjusted operating GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
profit*
DCC LPG 44.1 123.4 167.5 37.0 123.4 160.4 +19.2% +0.0% +4.4%
DCC Retail &
Oil 42.2 71.6 113.8 39.0 55.5 94.5 +8.0% +29.0% +20.4%
DCC Healthcare 22.0 32.3 54.3 19.8 29.2 49.0 +11.6% +10.6% +11.0%
DCC Technology 14.2 33.6 47.8 11.3 29.8 41.1 +25.8% +12.8% +16.3%
Group 122.5 260.9 383.4 107.1 237.9 345.0 +14.4% +9.7% +11.1%
Adjusted EPS*
(pence) 95.5 222.0 317.5 82.2 204.4 286.6 +16.1% +8.6% +10.8%
*Excluding net exceptionals and amortisation of intangible assets
Finance costs (net) and other
Net finance costs and other increased to GBP35.4 million (2017: GBP31.2 million) and reflects an increase in the Group's gross debt due primarily to the drawdown in September 2017 of a new GBP450 million US private placement debt issuance. It also reflects the higher average net debt during the year of GBP467 million compared to GBP301 million during the prior year. The average net debt increased due to the record level of acquisition spend of approximately GBP670 million during the year.
Profit before net exceptional items, amortisation of intangible assets and tax
Profit before net exceptional items, amortisation of intangible assets and tax increased by 10.9% to GBP348.0 million (8.4% ahead on a constant currency basis).
Net exceptional credit and amortisation of intangible assets
The Group incurred a net exceptional credit after tax and non-controlling interests of GBP11.4 million as follows:
GBP'm
Profit on disposal of discontinued operations 29.8
Acquisition and related costs (12.8)
Restructuring costs (33.2)
IAS 39 mark-to-market gain and other 1.2
Tax and non-controlling interests 26.4
Net exceptional credit 11.4
----------------------------------------------- ------------
The profit on disposal of discontinued operations relates to the gain recorded on the profitable sale of DCC's environmental division, which completed on 31 May 2017.
Acquisition costs include the professional fees and tax costs (such as stamp duty) relating to the evaluation and completion of acquisition opportunities and amounted to GBP12.8 million.
Restructuring costs amounted to GBP33.2 million and principally reflect the costs associated with the Group's focus on increasing the efficiency of its operating infrastructure and sales platforms. The majority of the charge relates to the Retail & Oil division where a large project to bring greater efficiency and reduced capital expenditure over time to the UK business' nationwide depot network infrastructure is underway and the project will result in a material reduction in the number of depot locations. An element of the charge also relates to the integration and restructuring costs associated with the prior year acquisition of Dansk Fuels in Denmark.
The other material element of the restructuring charge relates to the ongoing optimisation of DCC Technology's logistics and related infrastructure. In the UK, the new national distribution centre is now operational and a number of the existing locations have transferred into the new infrastructure. The remaining existing locations will transition during the coming year and the majority of the legacy locations have now been sold successfully. A programme to significantly reduce costs, whilst improving the logistics and operational efficiency of DCC Technology's French consumer business is ongoing. This project will also deliver a consolidation of two existing warehouses into one new facility. Finally, the business in the Nordics has recently commissioned its new national distribution centre and it is now operational.
Most of the Group's debt has been raised in the US Private Placement market and swapped, using long term interest and cross currency interest rate derivatives, to both fixed and floating rate sterling and euro. The level of ineffectiveness calculated under IAS 39 on the fair value and cash flow hedge relationships relating to fixed rate debt is charged or credited as an exceptional item. In the year ended 31 March 2018, this amounted to an exceptional non-cash gain of GBP0.3 million. Following this credit, the cumulative net exceptional charge taken in respect of the Group's outstanding US Private Placement debt and related hedging instruments is GBP5.3 million. This, or any subsequent similar non-cash charges or gains, will net to zero over the remaining term of this debt and the related hedging instruments.
The tax and non-controlling interests credit of GBP26.4 million principally reflects the impact of the recent reduction of the statutory corporation tax rate in France and corresponding reduction in the Group's deferred tax liabilities associated with the Group's brand and other intangible assets in France.
The charge for the amortisation of acquisition related intangible assets increased to GBP43.0 million from GBP39.2 million in the prior year, with the increase principally reflecting acquisitions completed in the current and prior year.
Profit before tax
Profit before tax increased by 26.6% to GBP316.4 million.
Taxation
The effective tax rate for the Group decreased to 17.0% from 17.5% in the prior year. The decrease primarily reflects reductions in certain territorial tax rates and the change in the geographical mix of the Group's earnings.
Discontinued operations
The Group's discontinued operations represent the activities of DCC Environmental which was disposed of in May 2017.
Adjusted earnings per share
Adjusted earnings per share on a continuing basis increased by 10.8% (8.3% ahead on a constant currency basis) to 317.5 pence.
Total adjusted earnings per share also increased by 4.8% (2.5% ahead on a constant currency basis) to 318.4 pence.
Dividend
The Board is recommending an increase of 10.0% in the final dividend to 82.09 pence per share, which, when added to the interim dividend of 40.89 pence per share, gives a total dividend for the year of 122.98 pence per share. This represents a 10.0% increase over the total prior year dividend of 111.80 pence per share. The dividend is covered 2.6 times by adjusted earnings per share on a continuing basis (2.6 times in 2017). It is proposed to pay the final dividend on 19 July 2018 to shareholders on the register at the close of business on 25 May 2018.
Over its 24 years as a listed company, DCC has an unbroken record of dividend growth at a compound annual rate of 14.5%.
Cash flow
The Group generated good operating and free cash flow during the year as set out below:
Year ended 31 March 2018 2017
GBP'm GBP'm
Group operating profit 384.4 363.6
(Increase)/decrease in working capital (13.8) 84.0
Depreciation and other 102.8 99.3
Operating cash flow 473.4 546.9
Capital expenditure (net) (145.3) (131.4)
Free cash flow 328.1 415.5
Interest and tax paid, net of dividend from equity accounted investments (96.0) (91.2)
Free cash flow after interest and tax 232.1 324.3
Acquisitions (691.0) (262.4)
Disposals 160.1 -
Dividends (102.9) (90.1)
Dividends paid to non-controlling interests - (5.2)
Exceptional items (12.6) (31.5)
Share issues 3.3 2.6
Net outflow (411.0) (62.3)
Opening net debt (121.9) (54.5)
Translation and other (9.8) (5.1)
Closing net debt (542.7) (121.9)
--------------------------------------------------------------------------- ------------ ------------
Operating cash flow in 2018 was GBP473.4 million compared to GBP546.9 million in the prior year. Working capital increased by GBP13.8 million (GBP7.3m increase on a continuing basis). Overall working capital days were negative 2.0 days sales, compared to negative 3.3 days sales in the prior year, reflecting the acquisition during the year of businesses with positive working capital characteristics. DCC Technology selectively uses supply chain financing solutions to sell, on a non-recourse basis, a portion of its receivables relating to certain larger supply chain/sales and marketing activities. The level of supply chain financing at 31 March 2018 increased on the prior year and supply chain financing had a positive impact on Group working capital days of 4.0 days (31 March 2017: 4.2 days) or GBP202.2 million (2017: GBP165.6 million).
Net capital expenditure amounted to GBP145.3 million for the year (2017: GBP131.4 million) and was net of disposal proceeds of GBP7.6 million. The increased level of gross capital expenditure reflects the increased scale of the Group and a number of investments being undertaken to support its continued growth and development. In the current year, the principal items included ongoing investment in new retail sites and site upgrades in the Retail & Oil division, investment to support the organic volume growth being achieved in the LPG division, and the completion of the new national distribution centres and related infrastructure in the Technology division. The net capital expenditure exceeded the depreciation charge in the year by GBP51.7 million.
The Group's free cash flow amounted to GBP328.1 million, representing an 85% conversion of operating profit into free cash flow.
Return on capital employed
The creation of shareholder value through the delivery of consistent, long-term returns well in excess of its cost of capital is one of DCC's core strategic aims. The return on capital employed by division was as follows:
2018 2017
DCC LPG 17.4% 22.9%
DCC Retail & Oil 18.7% 19.8%
DCC Healthcare 16.7% 17.5%
DCC Technology 16.1% 17.1%
Group - continuing 17.5% 20.3%
-------------------- ------ ------
The decrease in the return on capital employed versus the prior year principally reflects the impact of the substantial acquisition spend during the year as the Group entered new geographies.
Total cash spend on acquisitions for the year ended 31 March 2018
The total cash spend on acquisitions completed in the year was GBP691.0 million and included the payment of deferred and contingent acquisition consideration previously provided of GBP26.9 million.
Committed acquisitions
Committed acquisition expenditure in the period amounted to GBP355.3 million. An analysis by division is shown below:
GBP'm
DCC LPG 250.8
DCC Retail & Oil 27.9
DCC Healthcare 43.7
DCC Technology 32.9
Total 355.3
-------------------- -----------------
DCC LPG
Retail West
On 7 November 2017, DCC LPG announced that it had reached agreement with NGL Energy Partners LP ("NGL") to acquire its Retail West LPG division, Hicksgas LLC ("Retail West"). The acquisition completed on 31 March 2018.
Headquartered in Illinois, Retail West has been in business for over 70 years and employs 390 people. It sells approximately 130,000 tonnes (assuming normal winter weather conditions) of LPG annually from 43 customer service locations and 58 satellite facilities. The business trades under three prominent regional brands, Hicksgas, Pacer Propane and Propane Central, and a number of smaller, local brands. Retail West has leading market positions in Illinois, Indiana and Kansas and also operates in seven other states across the Mid-West and North-West regions. The acquisition represents DCC LPG's entry into the US market and is a further significant step in DCC's strategy to build a global LPG business over time. The US is one of the world's largest LPG markets and is an attractive and growing market. It is also highly fragmented, with over 4,000 LPG distribution businesses operating in the market. The acquisition of Retail West will provide DCC with a substantial, high-quality presence in the US with leading market positions in a number of states. The business has an excellent customer base, a strong and well-invested operational infrastructure and an experienced management team.
TEGA
On 4 January 2018, DCC LPG announced it had reached agreement with Linde AG to acquire Tega-Technische Gase und Gasetechnik GmbH, its LPG and refrigerant gas distribution business in Germany ("TEGA"). The transaction completed on 31 March 2018.
TEGA, headquartered in Würzburg, employs approximately 100 people across five operating sites, largely in southern Germany. TEGA has revenue of approximately EUR75 million evenly split between LPG and refrigerants. The business supplies approximately 35,000 tonnes of LPG annually to approximately 15,000 domestic and commercial customers. It also supplies refrigerant gases to wholesalers and end-users for use in air-conditioning, commercial cooling systems and refrigerators. The business has operated on a standalone basis within The Linde Group and continues to be led by its existing, highly experienced management team.
The acquisition of TEGA provides DCC LPG with a platform in the large, relatively fragmented German LPG market and further strengthens its position in the LPG market in Europe. In addition, it provides an entry into the refrigerant gas market, further enhancing the service capability of the LPG business, following the expansion into medical and aerosol gases in recent years.
Countrywide LPG
On 11 January 2018, DCC LPG announced it had reached agreement with Countrywide Farmers plc to acquire the trade and assets of its LPG distribution business in Britain ("Countrywide LPG"). Countrywide LPG supplies bulk and cylinder LPG to domestic, agricultural and commercial customers in Britain. The business sells approximately 20,000 tonnes of LPG annually. The transaction completed on 28 February 2018 and is currently being held separate, pending merger clearance.
DCC Retail & Oil
SNAP
In May 2018, DCC Retail & Oil acquired SNAP, an end-to-end transaction processing and payment system for HGV fleets. The business facilitates cashless payments through licence plate recognition for services to HGV fleets at truck stops. The business, although modest, is growing strongly and will be complementary to the existing retail and oil businesses.
DCC Healthcare
Elite One Source
On 7 February 2018, DCC Health & Beauty Solutions announced the acquisition of Elite One Source Nutritional Services, Inc ("Elite One Source"), a provider of contract manufacturing and related services to the growing healthcare and dietary supplements market in the US.
Elite One Source focuses on complex-formulation nutritional products in tablet and capsule dosage forms, including organic and probiotic products, across a variety of packaging formats. Its service offering encompasses product development, formulation, manufacturing, packaging and regulatory services. Its customer base includes some of the leading specialist brands in the US consumer healthcare market. Elite One Source's facilities in Missoula, Montana are well-invested with significant scope to expand capacity to meet its organic growth plans. The facilities comply with FDA cGMP (current Good Manufacturing Practices) and Health Canada standards and are certified by leading third party regulatory bodies including NSF and USDA Organic. The business is led by an experienced management team and employs 180 people.
The acquisition of Elite One Source provides an entry into the US market, the world's largest healthcare and dietary supplements market. The US is an innovative, high-growth market, with a fragmented contract manufacturing base, which offers DCC significant opportunities for organic and acquisitive growth.
DCC Technology
MTR
In July 2017, DCC Technology acquired MTR Group Ltd ("MTR"), a fast-growing UK-based provider of second lifecycle solutions for mobile and tablet devices.
Based in Harlow, Essex and employing 60 people, MTR provides a broad range of services to retailers, mobile handset manufacturers and insurance companies to source and refurbish mobile phones and tablets for resale to customers in the UK and abroad. In the year ended 30 November 2016, MTR generated service revenues of GBP11 million. The acquisition of MTR advances the DCC Technology strategy of expanding its service proposition to vendors and customers and provides access to the high growth second lifecycle solutions market.
Hypertec
In March 2018, DCC Technology acquired Hypertec Ltd, a small UK-based distributor of third party and own-brand memory and accessory products. The business generated revenues of GBP28.3 million in its most recent financial year and employs approximately 50 people.
Disposals
The cash flow on disposals relates to the disposal of DCC's Environmental division on 31 May 2017. Full details of the disposal were set out in DCC's Stock Exchange announcement of 5 April 2017.
Since the year end, DCC Retail & Oil has completed the disposal of both its fuel storage terminal in Belfast to Valero Logistics UK Ltd, a subsidiary of Valero Energy Corporation, and its distribution business in Northern Ireland to Nicholl Fuel Oils Ltd. The distribution business sold approximately 250 million litres of product in the year to 31 March 2018. The sale excludes the retail business in Northern Ireland.
Financial strength
An integral part of the Group's strategy is the maintenance of a strong and liquid balance sheet to enable it to take advantage of development opportunities as they arise. As a result of the continued strong cash flow performance, DCC's financial position remains very strong. At 31 March 2018, the Group had net debt of GBP542.7 million, total equity of GBP1.7 billion, cash resources, net of overdrafts, of GBP964.3 million and a further GBP400 million of undrawn committed debt facilities. The Group's outstanding term debt at 31 March 2018 had an average maturity of 6.3 years. Substantially all of the Group's debt has been raised in the US Private Placement market with an average credit margin of 1.6% over floating Euribor/Libor.
At 31 March 2018, the Group's Net Debt: EBITDA was 1.1 times, reflecting the large acquisition spend in the second half of the financial year.
Outlook
The Group expects that the year ending 31 March 2019 will be another year of profit growth and development.
Annual Report and Annual General Meeting
DCC's 2018 Annual Report will be published in June 2018. The Company's Annual General Meeting will be held at 11.00 am on Friday 13 July 2018 in The InterContinental Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.
Performance Review - Divisional Analysis
DCC LPG 2018 2017 % change ---------------------------- ---------- ---------- --------- Volumes (thousand tonnes) 1,876.2kT 1,565.6kT +19.8% ---------------------------- ---------- ---------- --------- Operating profit GBP167.5m GBP160.4m +4.4% ---------------------------- ---------- ---------- --------- Operating profit per tonne GBP89.27 GBP102.49 ---------------------------- ---------- ---------- --------- Return on capital employed 17.4% 22.9% ---------------------------- ---------- ---------- ---------
DCC LPG recorded a good performance, with operating profit increasing by 4.4% (1.0% ahead on a constant currency basis), despite the anticipated headwind of an increasing cost of product and continued organic investment in its B2C natural gas and electricity offering in France. DCC LPG also made excellent progress in expanding its geographic presence, completing the acquisitions of Shell Hong Kong & Macau in January 2018, as well as TEGA in Germany and Retail West in the US, both on 31 March 2018.
The volume growth of 19.8% was driven by the prior year acquisition of Gaz Européen and the acquisition of Shell Hong Kong & Macau. Volumes grew 4.7% on a like-for-like basis, primarily reflecting strong growth in natural gas volumes and continued growth in sales of LPG to industrial and commercial customers.
As anticipated, the operating profit per tonne declined versus the prior year due to a significantly higher cost of product and the mix impact of lower margin natural gas volumes becoming more material.
The French business performed in line with expectations, benefiting from strong cost control and good margin management and the business continues to progress organic new product development and efficiency opportunities. The 'Click & Collect' concept, allowing 24/7 order and collection of cylinders using a mobile application, is being expanded to an increasing number of locations. The business also continues to invest in its B2C offering in natural gas and electricity, launched in the second half of the year, which leverages the existing B2B natural gas operating platform as well as the Butagaz brand, the most recognised gas brand in France.
In Britain, the business delivered strong organic profit growth, despite the impact of supply constraints across the industry in the peak winter season. The business delivered strong volume growth, reflecting its continued focus on converting industrial and commercial users of oil to LPG. In Ireland, the business also benefited from growth in commercial volumes, reflecting continued strong demand from existing and new customers in the sector.
In Asia, Shell Hong Kong & Macau has been successfully integrated into DCC LPG's operations and has performed in line with expectations since acquisition.
Following the completion of recent acquisitions, DCC LPG has operations across ten countries and is very well placed to continue its development in existing territories, in both LPG and related adjacencies, as well as further developing its geographic footprint.
DCC Retail & Oil 2018 2017 % change ---------------------------- ---------- --------- --------- Volumes (litres) 12.308bn 11.572bn +6.4% ---------------------------- ---------- --------- --------- Operating profit GBP113.8m GBP94.5m +20.4% ---------------------------- ---------- --------- --------- Operating profit per litre 0.92ppl 0.82ppl ---------------------------- ---------- --------- --------- Return on capital employed 18.7% 19.8% ---------------------------- ---------- --------- ---------
DCC Retail & Oil had an excellent year, with operating profit increasing to GBP113.8 million, 20.4% ahead of the prior year (18.0% ahead on a constant currency basis). The strong performance reflects organic profit growth across all territories and acquisitions completed in the current and prior year.
DCC Retail & Oil sold 12.3 billion litres of product during the year, an increase of 6.4% over the prior year, driven by the prior year acquisition of Dansk Fuels and the acquisition of Esso Retail Norway in October 2017. Organic volumes were in line with the prior year.
In the UK and Ireland, the business delivered strong organic profit growth and benefited modestly from good heating oil demand following a marginally colder than average winter. The business continues to make good progress in developing its business in differentiated premium products, cross-selling value added products and services, such as telemetry, and developing in adjacent product areas such as lubricants and aviation. The business also continued its plans to organically invest in developing an unmanned retail network in the UK and Ireland and now has 39 unmanned sites, with a pipeline of further sites under consideration.
The Fuel Card business performed well, delivering organic profit growth whilst also expanding its operations organically into the German and French markets during the year.
In May 2018, DCC Retail & Oil acquired SNAP, an end-to-end transaction processing and payment system for HGV fleets. The business facilitates cashless payments through licence plate recognition for services to HGV fleets at truck stops. The business, although modest, is growing strongly and will be complementary to the existing retail and oil businesses.
A strong performance in the Danish business reflected organic growth in commercial, agricultural and domestic volumes and a full year's contribution from Dansk Fuels, which has been fully integrated. The Danish business now has leading market positions across the domestic, agricultural, commercial and aviation markets, in addition to operating 144 retail sites under the Shell brand. In France, the business delivered good profit growth while operating in a more competitive environment and continued to invest in both its customer proposition and upgrading its sites. In October 2017, DCC Retail & Oil completed, ahead of schedule, the acquisition of Esso's retail network in Norway. The business has now been integrated into DCC Retail & Oil's retail operating infrastructure, enabling management to commence driving improvements in what is a difficult market environment. The businesses in both Sweden and Austria performed well during the year.
Following a strategic review of the market position and invested capital of the business in Northern Ireland, DCC Retail & Oil completed the sale of its fuel storage terminal and distribution business in Northern Ireland in April 2018. The business sold approximately 250 million litres of volume in the year ended 31 March 2018.
Following completion of the acquisition of Esso Retail Norway, DCC Retail & Oil now has substantial operations in eight countries and has developed a scalable platform to grow the business in existing and new territories across its distribution, retail and fuel card activities.
DCC Healthcare 2018 2017 % change ---------------------------- ---------- ---------- --------- Revenue GBP514.6m GBP506.5m +1.6% ---------------------------- ---------- ---------- --------- Operating profit GBP54.3m GBP49.0m +11.0% ---------------------------- ---------- ---------- --------- Operating margin 10.6% 9.7% ---------------------------- ---------- ---------- --------- Return on capital employed 16.7% 17.5% ---------------------------- ---------- ---------- ---------
DCC Healthcare again delivered strong growth, with operating profit increasing by 11.0% (10.6% ahead on a constant currency basis), with approximately half of the growth being organic. The business continued to improve its operating margin and also completed the acquisition of Elite One Source in January 2018, its first acquisition in the large and growing health supplements market in the US.
DCC Vital, which is focused on the sales and marketing of medical devices and pharmaceuticals to healthcare providers in Britain and Ireland, performed very strongly and benefited from the prior year acquisition of Medisource and good organic growth in medical devices. In the British primary care sector, DCC Vital enhanced its position as the market leader in the supply of medical consumables and equipment to GP surgeries with the completion of two small complementary bolt-on acquisitions. The integration of both acquisitions into DCC Vital's existing infrastructure is progressing to plan. DCC Vital's pharma activities also performed well, benefiting from the strength of its supply chain for certain essential medicines. A strong performance in the Irish business reflected a full year contribution from Medisource, acquired in January 2017, and continued strong growth in the supply of medical devices to the hospital and community care sectors. DCC Vital's operating margin was further enhanced by exiting the supply of certain low value commodity products into hospitals in Britain, continuing the product portfolio streamlining of prior years.
DCC Health & Beauty Solutions, which provides outsourced solutions to international nutrition and beauty brand owners, generated excellent organic growth in the nutrition sector and benefited from the acquisition of Elite One Source in January 2018, which has performed in line with expectations since acquisition. The organic growth was driven by the continued focus on complex product formulations, particularly soft gels, and benefited from increasing end-user demand for nutritional products in DCC Health & Beauty Solutions' key markets of Europe, the US and Asia. In the beauty sector, while the overall performance was held back somewhat due to destocking by certain customers, the business benefited from excellent growth in sachet filling and also generated a number of new business development opportunities during the second half of the year.
DCC Health & Beauty Solutions is continuing to progress a number of investment projects across its manufacturing facilities in Britain and in its recently acquired facilities in the US, which will add new capacity and product capability, enhancing its ability to meet the growing market demand for its services.
DCC Technology 2018 2017 % change ---------------------------- ----------- ----------- --------- Revenue GBP3.083bn GBP2.689bn +14.7% ---------------------------- ----------- ----------- --------- Operating profit GBP47.8m GBP41.1m +16.3% ---------------------------- ----------- ----------- --------- Operating margin 1.6% 1.5% ---------------------------- ----------- ----------- --------- Return on capital employed 16.1% 17.1% ---------------------------- ----------- ----------- ---------
DCC Technology achieved very strong operating profit growth of 16.3% (15.5% ahead on a constant currency basis), reflecting acquisitions completed in the current and prior year and organic profit growth in the UK, Ireland and the Nordics.
In the UK, DCC Technology's largest market, the business achieved very strong revenue and profit growth, driven by market share gains and growth in key product categories including audio visual, components and gaming. The business continued to invest in both its product and service capability to allow it to take advantage of growth opportunities in audio visual, home automation, enterprise software and consumer product solutions.
Hammer, acquired in December 2016, achieved strong growth in sales of server and storage products into key markets, including the datacentre market. The acquisition of MTR, in July 2017, has allowed DCC Technology to enhance its service offering in the mobile market, strengthening its relationships with key vendor and retail partners. The business has performed very strongly since acquisition and provides a platform to extend its service offering outside of the UK. In February 2018, DCC Technology acquired Hypertec, a small specialist distributor of own-brand and third party memory and accessory products to reseller customers in the UK.
The new UK national distribution centre is now operational and the business has successfully disposed of most of its original warehousing. The associated project to upgrade its enterprise management system, which will significantly enhance the capability of the business to service its customers and suppliers, is progressing well and is scheduled to be completed by the end of the year.
The Irish business delivered strong organic profit growth as it benefited from a good performance in the enterprise segment and the continued development of its service proposition, including device life cycle management.
In France, the B2B segment performed strongly as it benefited from expansion of its audio visual offering and strong organic growth in its core cabling business. The French consumer products business remained very challenging and a programme to significantly reduce costs, while improving its logistics and operational efficiency, has been implemented. In the Nordics, the business experienced very strong organic growth and continues to benefit from investments made to broaden the reach of the business in Norway, Denmark and Finland. The business is making a significant investment in warehousing capacity to support future growth, in particular in audio visual and IT products.
The business in the Middle East generated very strong revenue and profit growth reflecting further development of its relationships with key retailers in the region. Supply Chain Services continues to invest in its global service offering and also acts as an essential centre of expertise, supporting the broader DCC Technology business.
The performance in the current year, together with recent investments made in its service offering and infrastructure, leaves DCC Technology well positioned to drive further growth in both its existing and new markets.
Forward-looking statements
This announcement contains some forward-looking statements that represent DCC's expectations for its business, based on current expectations about future events, which by their nature involve risk and uncertainty. DCC believes that its expectations and assumptions with respect to these forward-looking statements are reasonable, however because they involve risk and uncertainty as to future circumstances, which are in many cases beyond DCC's control, actual results or performance may differ materially from those expressed in or implied by such forward-looking statements.
Group Income Statement
For the year ended 31 March 2018
2018 2017
-------------------------------------------- ---------------------------------------------------------
Pre Exceptionals Pre Exceptionals
exceptionals (note 5) Total exceptionals (note 5) Total
Continuing Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
operations
Revenue 4 14,264,639 - 14,264,639 12,269,802 - 12,269,802
Cost of sales (12,857,814) - (12,857,814) (11,006,805) - (11,006,805)
------------- ------------- -------------- -------------- -------------------------- -------------
Gross profit 1,406,825 - 1,406,825 1,262,997 - 1,262,997
Administration
expenses (384,701) - (384,701) (323,320) - (323,320)
Selling and
distribution
expenses (652,636) - (652,636) (605,182) - (605,182)
Other operating
income 28,652 1,156 29,808 28,297 1,879 30,176
Other operating
expenses (14,740) (46,269) (61,009) (17,787) (38,176) (55,963)
------------- ------------- -------------- -------------- -------------------------- -------------
Adjusted operating profit 383,400 (45,113) 338,287 345,005 (36,297) 308,708
Amortisation of intangible
assets (43,059) - (43,059) (39,130) - (39,130)
-------------- -------------------------- -------------
Operating profit 4 340,341 (45,113) 295,228 305,875 (36,297) 269,578
Finance costs (73,156) - (73,156) (72,910) - (72,910)
Finance income 37,421 299 37,720 40,973 10,101 51,074
Equity accounted investments'
profit after tax 368 - 368 712 - 712
-------------- -------------------------- -------------
Profit before tax 304,974 (44,814) 260,160 274,650 (26,196) 248,454
Income tax
expense (49,289) 25,407 (23,882) (44,113) (1,756) (45,869)
------------- ------------- -------------- -------------- -------------------------- -------------
Profit for the year (continuing
operations) 255,685 (19,407) 236,278 230,537 (27,952) 202,585
Profit for the
year
from
discontinued
operations 8 801 29,842 30,643 15,160 - 15,160
------------- ------------- -------------- -------------- -------------------------- -------------
Profit after tax
for
the financial
year 256,486 10,435 266,921 245,697 (27,952) 217,745
------------- ------------- -------------- -------------- -------------------------- -------------
Profit
attributable to:
Owners of the
Parent 250,420 11,404 261,824 241,011 (24,814) 216,197
Non-controlling
interests 6,066 (969) 5,097 4,686 (3,138) 1,548
------------- ------------- -------------- -------------- -------------------------- -------------
256,486 10,435 266,921 245,697 (27,952) 217,745
------------- ------------- -------------- -------------- -------------------------- -------------
Earnings per
ordinary
share
Basic earnings
per
share 6 293.83p 243.64p
Diluted earnings
per
share 6 292.79p 242.00p
Basic adjusted
earnings
per share 6 318.35p 303.68p
Diluted adjusted
earnings
per share 6 317.21p 301.63p
-------------- -------------
Earnings per ordinary share -
continuing operations
Basic earnings
per
share 6 259.44p 226.56p
Diluted earnings
per
share 6 258.52p 225.04p
Basic adjusted
earnings
per share 6 317.45p 286.59p
Diluted adjusted
earnings
per share 6 316.31p 284.66p
-------------- -------------
Group Statement of Comprehensive Income
For the year ended 31 March 2018
2018 2017
GBP'000 GBP'000
Group profit for the financial
year 266,921 217,745
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss
Currency translation:
- arising in the year 682 37,084
- recycled to the Income Statement (4,548) -
on disposal
Movements relating to cash flow
hedges (3,030) (6,803)
Movement in deferred tax liability
on cash flow hedges 433 1,334
-------- --------
(6,463) 31,615
-------- --------
Items that will not be reclassified
to profit or loss
Group defined benefit pension obligations:
- remeasurements 5,215 (3,056)
- movement in deferred tax asset (665) 413
-------- --------
4,550 (2,643)
-------- --------
Other comprehensive income for the
financial year, net of tax (1,913) 28,972
-------- --------
Total comprehensive income for
the financial year 265,008 246,717
-------- --------
Attributable to:
Owners of the Parent 259,336 242,735
Non-controlling interests 5,672 3,982
-------- --------
265,008 246,717
-------- --------
Attributable to:
Continuing operations 234,365 230,199
Discontinued operations 30,643 16,518
-------- --------
265,008 246,717
-------- --------
Group Balance Sheet
As at 31 March 2018
2018 2017
Notes GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 933,038 750,020
Intangible assets and goodwill 1,936,962 1,422,572
Equity accounted investments 24,461 24,938
Deferred income tax assets 26,154 22,619
Derivative financial instruments 103,085 273,767
3,023,700 2,493,916
------------ ------------
Current assets
Inventories 530,473 456,395
Trade and other receivables 1,426,217 1,222,597
Derivative financial instruments 8,050 18,233
Cash and cash equivalents 1,038,827 1,048,064
------------ ------------
3,003,567 2,745,289
Assets classified as held for
sale - 193,170
3,003,567 2,938,459
Total assets 6,027,267 5,432,375
------------ ------------
EQUITY
Capital and reserves attributable to owners
of the Parent
Share capital 15,455 15,455
Share premium 280,533 277,211
Share based payment reserve 9 22,883 18,146
Cash flow hedge reserve 9 (16,178) (13,581)
Foreign currency translation reserve 9 101,096 105,537
Other reserves 9 932 932
Retained earnings 1,237,937 1,074,434
------------ ------------
Equity attributable to owners
of the Parent 1,642,658 1,478,134
Non-controlling interests 35,259 29,587
------------ ------------
Total equity 1,677,917 1,507,721
------------ ------------
LIABILITIES
Non-current liabilities
Borrowings 1,598,521 1,319,967
Derivative financial instruments 10,732 506
Deferred income tax liabilities 152,552 155,297
Post employment benefit obligations 11 (286) 29
Provisions for liabilities 278,890 255,650
Acquisition related liabilities 71,454 66,617
Government grants 237 261
------------ ------------
2,112,100 1,798,327
------------ ------------
Current liabilities
Trade and other payables 2,063,260 1,820,517
Current income tax liabilities 19,769 25,051
Borrowings 74,897 148,445
Derivative financial instruments 8,474 5,894
Provisions for liabilities 44,451 31,022
Acquisition related liabilities 26,399 28,300
------------ ------------
2,237,250 2,059,229
Liabilities associated with assets
classified as held for sale - 67,098
2,237,250 2,126,327
Total liabilities 4,349,350 3,924,654
------------ ------------
Total equity and liabilities 6,027,267 5,432,375
------------ ------------
Net debt included above (including
cash attributable to assets held
for sale) 10 (542,662) (121,949)
------------ ------------
Group Statement of Changes in Equity
For the year Attributable to owners of the
ended 31 March Parent
2018
----------------------------------------------------------------------------------
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 2017 15,455 277,211 1,074,434 111,034 1,478,134 29,587 1,507,721
Profit for the
financial year - - 261,824 - 261,824 5,097 266,921
Currency
translation:
- arising in
the year - - - 107 107 575 682
- recycled to
the Income
Statement
on disposal - - - (4,548) (4,548) - (4,548)
Group defined
benefit pension
obligations:
-
remeasurements - - 5,215 - 5,215 - 5,215
- movement in
deferred tax
asset - - (665) - (665) - (665)
Movements
relating to
cash
flow hedges - - - (3,030) (3,030) - (3,030)
Movement in
deferred tax
liability
on cash flow
hedges - - - 433 433 - 433
Total
comprehensive
income - - 266,374 (7,038) 259,336 5,672 265,008
Re-issue of
treasury
shares - 3,322 - - 3,322 - 3,322
Share based
payment - - - 4,737 4,737 - 4,737
Dividends - - (102,871) - (102,871) - (102,871)
At 31 March
2018 15,455 280,533 1,237,937 108,733 1,642,658 35,259 1,677,917
--------------- ------------------ --------------- ------------- ------------- ---------------- -------------
For the year Attributable to owners of the
ended 31 March Parent
2017
---------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
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
--------------- ------------------ --------------- ------------- ------------ ---------------- ------------
Group Cash Flow Statement
For the year ended 31 March 2018
2018 2017
Note GBP'000 GBP'000
Cash flows from operating activities
Profit for the financial year 266,921 217,745
Add back non-operating expenses/(income):
- tax 24,046 49,054
- share of equity accounted investments'
profit (368) (712)
- net operating exceptionals 15,271 36,297
- net finance costs 35,452 21,999
---------- ----------
Group operating profit before
exceptionals 341,322 324,383
Share-based payments expense 4,737 3,192
Depreciation 93,722 92,015
Amortisation of intangible assets 43,059 39,168
Profit on disposal of property,
plant and equipment (167) (173)
Amortisation of government grants (36) (235)
Other 4,555 4,571
Decrease in working capital (13,758) 83,949
---------- ----------
Cash generated from operations
before exceptionals 473,434 546,870
Exceptionals (12,602) (31,269)
---------- ----------
Cash generated from operations 460,832 515,601
Interest paid (69,900) (70,108)
Income tax paid (65,437) (62,180)
---------- ----------
Net cash flows from operating
activities 325,495 383,313
---------- ----------
Investing activities
Inflows:
Proceeds from disposal of property,
plant and equipment 7,617 12,315
Dividends received from equity
accounted investments 1,980 125
Disposal of subsidiaries 8 160,063 -
Interest received 37,399 40,966
207,059 53,406
---------- ----------
Outflows:
Purchase of property, plant and
equipment (152,997) (143,698)
Acquisition of subsidiaries 12 (664,109) (203,327)
Payment of accrued acquisition
related liabilities (26,910) (59,069)
---------- ----------
(844,016) (406,094)
---------- ----------
Net cash flows from investing
activities (636,957) (352,688)
---------- ----------
Financing activities
Inflows:
Proceeds from issue of shares 3,322 2,600
Net cash inflow on derivative
financial instruments 11,275 14,212
Increase in interest-bearing loans 458,593 -
and borrowings
Increase in finance lease liabilities 766 -
473,956 16,812
---------- ----------
Outflows:
Repayment of interest-bearing
loans and borrowings (58,130) (108,140)
Repayment of finance lease liabilities (4) (177)
Dividends paid to owners of the
Parent 7 (102,871) (90,036)
Dividends paid to non-controlling
interests - (5,228)
(161,005) (203,581)
---------- ----------
Net cash flows from financing
activities 312,951 (186,769)
---------- ----------
Change in cash and cash equivalents 1,489 (156,144)
Translation adjustment (10,018) 38,929
Cash and cash equivalents at beginning
of year 972,822 1,090,037
---------- ----------
Cash and cash equivalents at end
of year 964,293 972,822
---------- ----------
Cash and cash equivalents consists
of:
Cash and short term bank deposits 1,038,827 1,048,064
Overdrafts (74,534) (88,041)
Cash and short term deposits attributable
to assets held for sale - 12,799
964,293 972,822
---------- ----------
Notes to the Condensed Financial Statements
For the year ended 31 March 2018
1. Basis of Preparation
The financial information, from the Group Income Statement to note 15, contained in this preliminary results statement has been derived from the Group financial statements for the year ended 31 March 2018 and is presented in sterling, rounded to the nearest thousand. The financial information does not include all the information and disclosures required in the annual financial statements. The Annual Report will be distributed to shareholders and made available on the Company's website www.dcc.ie. It will also be filed with the Companies Registration Office. The auditors have reported on the financial statements for the year ended 31 March 2018 and their report was unqualified. The financial information for the year ended 31 March 2017 represents an abbreviated, restated (see note 4) version of the Group's statutory financial statements on which an unqualified audit report was issued and which have been filed with the Companies Registration Office. The financial information presented in this report has been prepared in accordance with the Listing Rules of the Financial Services Authority and the accounting policies that the Group has adopted for 2018 which are consistent with those applied in the prior year.
2. Accounting Policies
The Group has adopted the following standards, interpretations and amendments to existing standards during the financial year:
-- Amendments to IAS 7 Statement of Cash Flows - Disclosure Initiative. These amendments are intended to improve the information provided to users of financial statements regarding the entity's financing activities. This amendment, which was EU endorsed in November 2017, did not have a significant impact on the Group's consolidated financial statements; and
-- Amendments to IAS 12 Income Taxes - Recognition of Deferred Tax Assets for Unrealised Losses. These amendments clarify, inter alia, that unrealised losses on debt instruments measured at fair value (and measured at cost for tax purposes) give rise to a deductible temporary difference regardless of whether the instrument is recovered through sale or by holding it to maturity or whether it is probable that the issuer will pay all contractual cash flows. Entities are therefore required to recognise deferred taxes for temporary differences from unrealised losses of debt instruments measured at fair value if all other recognition criteria for deferred taxes are met. This amendment, which was EU endorsed in November 2017, did not have a significant impact on the Group's consolidated financial statements.
There are other changes to IFRS which became effective for the Group during the financial year but did not result in material changes to the Group's consolidated financial statements.
3. Reporting Currency
The Group's financial statements are presented in sterling, denoted by the symbol '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
---------------------- --------------------
2018 2017 2018 2017
StgGBP1= StgGBP1= StgGBP1= StgGBP1=
Euro 1.1366 1.1956 1.1430 1.1689
Danish Krone 8.4603 8.9150 8.5187 8.6942
Swedish Krona 11.0482 11.3729 11.7548 11.1423
Norwegian Krone 10.7901 10.9811 11.0607 10.7169
US Dollar 1.3236 1.3181 1.4083 1.2497
Hong Kong Dollar 10.3312 10.2260 11.0522 9.7106
4. Segmental Reporting
DCC is a leading international sales, marketing and support services
group headquartered in Dublin, Ireland. Operating segments are reported
in a manner consistent with the internal reporting provided to the
chief operating decision maker. The chief operating decision maker
has been identified as Mr. Donal Murphy, Chief Executive and his
executive management team.
As noted in the Group's Annual Report for the year ended 31 March
2017, DCC is presenting DCC LPG and DCC Retail & Oil as separate
reportable segments from 1 April 2017, in line with the revised management
and organisational structures of the businesses. Previously, these
two segments comprised the Group's former DCC Energy segment. Following
these changes in the composition of operating segments, segmental
reporting has been revised and the comparative disclosures have been
restated as required under IFRS 8.
The Group is organised into four operating segments: DCC LPG, DCC
Retail & Oil, DCC Healthcare and DCC Technology.
DCC LPG is a leading liquefied petroleum gas ('LPG') sales and marketing
business with operations in Europe, Asia and the US with a developing
business in the retailing of natural gas and electricity;
DCC Retail & Oil is a leader in the sales, marketing and retailing
of transport and commercial fuels, heating oils and related products
and services in Europe;
DCC Healthcare is a leading healthcare business, providing products
and services to healthcare providers and health and beauty brand
owners; and
DCC Technology is a leading route-to-market and supply chain partner
for global technology brands.
Net finance costs and income tax are managed on a centralised basis
and therefore these items are not allocated between operating segments
for the purpose of presenting information to the chief operating
decision maker and accordingly are not included in the detailed segmental
analysis below. Intersegment revenue is not material and thus not
subject to separate disclosure.
An analysis of the Group's performance by segment and geographic location is as follows:
(a) By operating segment
Year ended 31 March 2018
---------------------------------------------------------------------
DCC Retail
DCC LPG & Oil DCC Healthcare DCC Technology Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 1,403,779 9,262,836 514,564 3,083,460 14,264,639
--------- ----------- ---------------- -------------- --------------
Adjusted operating profit 167,485 113,757 54,318 47,840 383,400
Amortisation of intangible
assets (21,312) (8,983) (7,198) (5,566) (43,059)
Net operating exceptionals
(note 5) (8,127) (21,788) (3,034) (12,164) (45,113)
--------- ----------- ---------------- -------------- --------------
Operating profit 138,046 82,986 44,086 30,110 295,228
--------- ----------- ---------------- -------------- --------------
Year ended 31 March 2017
------------------------------------------------------------------------
DCC Retail
DCC LPG & Oil DCC Healthcare DCC Technology Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 1,073,212 8,000,923 506,562 2,689,105 12,269,802
--------- ----------- ---------------- --------------- -------------
Adjusted operating profit 160,462 94,479 48,944 41,120 345,005
Amortisation of intangible
assets (18,277) (9,962) (7,258) (3,633) (39,130)
Net operating exceptionals
(note 5) (6,854) (13,633) (2,695) (13,115) (36,297)
--------- ----------- ---------------- --------------- -------------
Operating profit 135,331 70,884 38,991 24,372 269,578
--------- ----------- ---------------- --------------- -------------
(b) By geography
The Group has a presence in 15 countries worldwide. The following represents a geographical analysis of revenue and non-current assets in accordance with IFRS 8, which requires disclosure of information about the country of domicile (Republic of Ireland) and countries with material revenue and non-current assets.
Revenue from continuing operations is derived almost entirely from the sale of goods and is disclosed based on the location of the entity selling the goods. The analysis of non-current assets is based on the location of the assets. There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8.
Revenue Non-current assets*
------------------------ ------------------------
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
Republic of Ireland 927,133 759,439 129,050 123,348
United Kingdom 7,741,143 7,239,193 1,050,804 985,717
France 2,712,240 2,402,290 882,276 869,895
Other 2,884,123 1,868,880 832,331 218,570
----------- ----------- ----------- -----------
14,264,639 12,269,802 2,894,461 2,197,530
----------- ----------- ----------- -----------
* Non-current assets comprise intangible assets, property, plant and equipment and equity accounted investments
5. Exceptionals
2018 2017
GBP'000 GBP'000
Restructuring costs (29,419) (19,345)
Acquisition and related costs (12,789) (10,308)
Impairment of property, plant and equipment (3,735) (1,164)
Adjustments to contingent acquisition
consideration 477 (5,114)
Other operating exceptional items 353 (366)
Net operating exceptional items (45,113) (36,297)
Mark to market of swaps and related debt 299 10,101
--------- ---------
Net exceptional items before taxation (44,814) (26,196)
Deferred tax 25,407 (1,756)
--------- ---------
Net exceptional items after taxation
(continuing operations) (19,407) (27,952)
Profit on disposal of discontinued operations 29,842 -
(note 8)
--------- ---------
Net exceptional items after taxation 10,435 (27,952)
Non-controlling interest share of net
exceptional items after taxation 969 3,138
--------- ---------
Net exceptional items attributable to
owners of the Parent 11,404 (24,814)
--------- ---------
The profit on disposal of discontinued operations relates to the gain recorded on the profitable sale of DCC's environmental division, which completed on 31 May 2017.
Acquisition costs include the professional fees and tax costs (such as stamp duty) relating to the evaluation and completion of acquisition opportunities and amounted to GBP12.789 million.
Restructuring costs amounted to GBP29.419 million and principally reflect the costs associated with the Group's focus on increasing the efficiency of its operating infrastructure and sales platforms. The majority of the charge relates to the Retail & Oil division where a large project to bring greater efficiency and reduced capital expenditure over time to the UK business' nationwide depot network infrastructure is underway and the project will result in a material reduction in the number of depot locations. The Group incurred a related impairment charge on property, plant and equipment of GBP3.735 million on this project. An element of the overall charge also relates to the integration and restructuring costs associated with the prior year acquisition of Dansk Fuels in Denmark.
The other material element of the restructuring charge relates to the ongoing optimisation of DCC Technology's logistics and related infrastructure. In the UK, the new national distribution centre is now operational and a number of the existing locations have transferred into the new infrastructure. The remaining existing locations will transition during the coming year and the majority of the existing locations have now been sold successfully. A programme to significantly reduce costs while improving the logistics and operational efficiency of DCC Technology's French consumer business is ongoing. This project will also deliver a consolidation of two existing warehouses into one new facility. Finally, the business in the Nordics has recently commissioned its new national distribution centre and it is now operational.
Most of the Group's debt has been raised in the US Private Placement market and swapped, using long term interest and cross currency interest rate derivatives, to both fixed and floating rate sterling and euro. The level of ineffectiveness calculated under IAS 39 on the fair value and cash flow hedge relationships relating to fixed rate debt is charged or credited as an exceptional item. In the year ended 31 March 2018, this amounted to an exceptional non-cash gain of GBP0.299 million. Following this credit, the cumulative net exceptional charge taken in respect of the Group's outstanding US Private Placement debt and related hedging instruments is GBP5.3 million. This, or any subsequent similar non-cash charges or gains, will net to zero over the remaining term of this debt and the related hedging instruments.
The deferred tax credit of GBP25.407 million principally reflects the impact of the recent reduction of the statutory corporation tax rate in France and the corresponding reduction in the Group's deferred tax liabilities associated with the Group's brand and other intangible assets in France.
There was a non controlling interest credit of GBP0.969 million in relation to certain of the above exceptional charges.
6. Earnings per Ordinary Share
Discontinued Discontinued
Continuing operations Continuing operations
operations (note 8) Total operations (note 8) Total
2018 2018 2018 2017 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit
attributable to
owners of the
Parent 231,181 30,643 261,824 201,037 15,160 216,197
Amortisation of
intangible
assets after
tax 33,245 - 33,245 28,456 6 28,462
Exceptionals
after tax
(note 5) 18,438 (29,842) (11,404) 24,814 - 24,814
---------- ----------------- ----------------- --------------- ------------ ----------
Adjusted profit
after
taxation and
non-controlling 269,473
interests 282,864 801 283,665 254,307 15,166
---------- ----------------- ----------------- --------------- ------------ ----------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
2018 2018 2018 2017 2017 2017
Basic earnings pence pence pence pence
per ordinary
share pence pence
Basic earnings
per ordinary
share 259.44p 34.39p 293.83p 226.56p 17.08p 243.64p
Amortisation of
intangible
assets after
tax 37.31p - 37.31p 32.07p 0.01p 32.08p
Exceptionals
after tax 20.70p (33.49p) (12.79p) 27.96p - 27.96p
---------- ----------------- ----------------- --------------- ------------ ----------
Adjusted basic
earnings
per 303.68p
ordinary share 317.45p 0.90p 318.35p 286.59p 17.09p
---------- ----------------- ----------------- --------------- ------------ ----------
Weighted average
number
of ordinary
shares in
issue
(thousands) 89,106 88,735
----------------- ----------
Basic earnings per share is calculated by dividing the profit attributable to owners of the Parent by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares. The adjusted figures for basic earnings per ordinary share (a non-GAAP financial measure) are intended to demonstrate the results of the Group after eliminating the impact of amortisation of intangible assets and net exceptionals.
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
2018 2018 2018 2017 2017 2017
Diluted pence pence pence pence
earnings per
ordinary share pence pence
Basic earnings
per ordinary
share 258.52p 34.27p 292.79p 225.04p 16.96p 242.00p
Amortisation of
intangible
assets after
tax 37.18p - 37.18p 31.84p 0.01p 31.85p
Exceptionals
after tax 20.61p (33.37p) (12.76p) 27.78p - 27.78p
---------- -------------------- ----------------- ---------- -------------------- ------------
Adjusted basic
earnings
per
ordinary share 316.31p 0.90p 317.21p 284.66p 16.97p 301.63p
---------- -------------------- ----------------- ---------- -------------------- ------------
Weighted
average number
of ordinary
shares in
issue
(thousands) 89,425 89,338
----------------- ------------
The earnings used for the purposes of the continuing diluted earnings per ordinary share calculations were GBP231.181 million (2017: GBP201.037 million) and GBP282.864 million (2017: GBP254.307 million) for the purposes of the continuing adjusted diluted earnings per ordinary share calculations.
The earnings used for the purposes of the discontinued diluted earnings per ordinary share calculations were GBP30.643 million (2017: GBP15.160 million) and GBP0.801 million (2017: GBP15.166 million) for the purposes of the discontinued adjusted diluted earnings per ordinary share calculations.
The weighted average number of ordinary shares used in calculating the diluted earnings per ordinary share for the year ended 31 March 2018 was 89.425 million (2017: 89.338 million). A reconciliation of the weighted average number of ordinary shares used for the purposes of calculating the diluted earnings per ordinary share amounts is as follows:
2018 2017
'000 '000
Weighted average number of ordinary shares in
issue 89,106 88,735
Dilutive effect of options and awards 319 603
------ ------
Weighted average number of ordinary shares for
diluted earnings per share 89,425 89,338
------ ------
Diluted earnings per ordinary share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. Share options and awards are the Company's only category of dilutive potential ordinary shares.
Employee share options and awards, which are performance-based, are treated as contingently issuable shares because their issue is contingent upon satisfaction of specified performance conditions in addition to the passage of time. These contingently issuable shares are excluded from the computation of diluted earnings per ordinary share where the conditions governing exercisability would not have been satisfied as at the end of the reporting period if that were the end of the vesting period.
The adjusted figures for diluted earnings per ordinary share (a non-GAAP financial measure) are intended to demonstrate the results of the Group after eliminating the impact of amortisation of intangible assets and net exceptionals.
7. Dividends
2018 2017
GBP'000 GBP'000
Final - paid 74.63 pence per share
on 20 July 2017
(2017: paid 64.18 pence per share
on 21 July 2016) 66,520 57,621
Interim - paid 40.89 pence per
share on 11 December 2017 (2017:
paid 37.17 pence per share on
12 December 2016) 36,351 32,415
102,871 90,036
--------------------- -----------------
The Directors are proposing a final dividend in respect of the year ended 31 March 2018 of 82.09 pence per ordinary share (GBP73.242 million). This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.
8. Discontinued Operations
As announced on 31 May 2017, the Group completed the disposal of the Environmental division. The proceeds on disposal will be used to fund the continued development of DCC's continuing operations. The conditions for the segment to be classified as a discontinued operation were satisfied during the year ended 31 March 2017 and the results of the Environmental segment were presented separately in the 2017 Annual Report as discontinued operations in the Group Income Statement and the assets and liabilities of this segment were classified as an asset held for sale at the reporting date.
The following table summarises the consideration received, the profit on disposal of discontinued operations and the net cash flow arising on the disposal of this segment:
2018
GBP'000
Net consideration
Net proceeds received 164,526
Costs of disposal (4,463)
---------
Total net consideration 160,063
---------
Assets and liabilities disposed of
Non-current assets 145,675
Current assets 34,198
Non-current liabilities (4,358)
Current liabilities (40,746)
---------
Net identifiable assets and liabilities
disposed of 134,769
Recycling of foreign exchange gain previously recognised
in foreign currency translation reserve (4,548)
---------
130,221
---------
Profit on disposal of discontinued operations 29,842
---------
Net cash flow on disposal of discontinued
operations
Total proceeds received 174,321
Cash and cash equivalents disposed of (9,795)
---------
Net cash inflow on disposal of discontinued
operations 164,526
Disposal costs paid (4,463)
---------
Net cash flow on disposal of discontinued
operations 160,063
---------
The following table details the results of discontinued operations included in the Group Income Statement:
2018 2017
GBP'000 GBP'000
Revenue 29,614 175,232
Cost of sales (20,292) (119,654)
--------- ----------
Gross profit 9,322 55,578
Operating expenses (8,341) (37,032)
--------- ----------
Adjusted operating profit 981 18,546
Amortisation of intangible assets - (38)
Operating profit 981 18,508
Net finance costs (16) (163)
--------- ----------
Profit before tax 965 18,345
Income tax expense (164) (3,185)
--------- ----------
801 15,160
Profit on disposal of discontinued operations 29,842 -
--------- ----------
Profit from discontinued operations after
tax 30,643 15,160
--------- ----------
The following table details the cash flow from discontinued operations included in the Group Cash Flow Statement:
2018 2017
GBP'000 GBP'000
Net cash flow from operating activities (5,602) 22,461
Net cash flow from investing activities (1,332) (6,661)
Net cash flow from discontinued operations (6,934) 15,800
-------- --------
9. Other Reserves
For the year ended 31 March
2018
Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2017 18,146 (13,581) 105,537 932 111,034
Currency translation:
- arising in the year - - 107 - 107
- recycled to the Income
Statement on disposal - - (4,548) - (4,548)
Movements relating to cash
flow hedges - (3,030) - - (3,030)
Movement in deferred tax liability
on cash flow hedges - 433 - - 433
Share based payment 4,737 - - - 4,737
At 31 March 2018 22,883 (16,178) 101,096 932 108,733
------------------- --------- ----------- -------- -------
For the year ended 31 March
2017
Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
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
------------------- --------- ----------- -------- -------
10. Analysis of Net Debt
2018 2017
GBP'000 GBP'000
Non-current assets
Derivative financial instruments 103,085 273,767
------------ ------------
Current assets
Derivative financial instruments 8,050 18,233
Cash and cash equivalents 1,038,827 1,048,064
------------ ------------
1,046,877 1,066,297
------------ ------------
Non-current liabilities
Finance leases (692) (165)
Derivative financial instruments (10,732) (506)
Unsecured Notes (1,597,829) (1,319,802)
------------ ------------
(1,609,253) (1,320,473)
------------ ------------
Current liabilities
Bank borrowings (74,534) (88,041)
Finance leases (363) (190)
Derivative financial instruments (8,474) (5,894)
Unsecured Notes - (60,214)
------------ ------------
(83,371) (154,339)
------------ ------------
Net debt excluding cash attributable to
assets held for sale (542,662) (134,748)
Cash and short-term deposits attributable
to assets held for sale - 12,799
------------ ------------
Net debt including cash attributable to assets
held for sale (542,662) (121,949)
------------ ------------
11. Post Employment Benefit Obligations
The Group's defined benefit pension schemes' assets were measured at fair value at 31 March 2018. The defined benefit pension schemes' liabilities at 31 March 2018 were updated to reflect material movements in underlying assumptions.
The Group's post employment benefit obligations moved from a net deficit of GBP0.029 million at 31 March 2017 to a net asset of GBP0.286 million at 31 March 2018. The movement in the deficit primarily reflects the inclusion of post employment benefit obligations arising on the TEGA acquisition, offset by actuarial gains on liabilities and contributions in excess of the current service cost.
12. Business Combinations
A key strategy of the Group is to create and sustain market leadership positions through acquisitions in markets it currently operates in, together with extending the Group's footprint into new geographic markets. In line with this strategy, the principal acquisitions completed by the Group during the year, together with percentages acquired were as follows:
-- the acquisition on 31 March 2018 of 100% of NGL Energy Partners LP's Retail West LPG division, Hicksgas LLC ('Retail West'). Retail West is a US based LPG distributor with leading market positions in Illinois, Indiana and Kansas and also operates in seven other states across the Mid-West and North-West regions;
-- the acquisition on 31 March 2018 of 100% of Tega-Technische Gase und Gasetechnik GmbH ('TEGA'). TEGA is an LPG and refrigerant gas distribution business and operates across five sites largely based in southern Germany;
-- the acquisition in February 2018 of 100% of the trade and assets of the British LPG distribution business ('Countrywide LPG') of Countrywide Farmers plc. Countrywide LPG supplies bulk and cylinder LPG to domestic, agricultural and commercial customers in Britain;
-- the acquisition of 100% of Elite One Source Nutritional Services Inc ('Elite') in February 2018. Elite is a US based provider of contract manufacturing and related services to the growing healthcare and dietary supplements market in the US;
-- the completion of the acquisition of Shell Gas (LPG) Holdings BV's LPG business in Hong Kong and Macau ('Shell HK&M'), as announced in January 2018. The business provides LPG in bulk, cylinder and autogas formats to domestic, commercial and industrial customers in the region;
-- the completion of the acquisition of Esso's retail petrol station network in Norway, as announced in October 2017, comprising a national network of company-operated sites and contracts to supply Esso-branded dealer owned stations (together referred to as 'Esso Retail Norway'); and
-- the acquisition of 100% of MTR Group Ltd ('MTR') in July 2017. MTR is a UK based provider of second lifecycle solutions for mobile and tablet devices.
The acquisition data presented below reflects the fair value of the identifiable net assets acquired (excluding net cash/debt acquired) in respect of acquisitions completed during the year.
Esso Retail
Norway Others Total Total
2018 2018 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 63,822 78,610 142,432 8,265
Intangible assets - other intangible
assets 55,885 87,728 143,613 68,513
Equity accounted investments - 497 497 404
Deferred income tax assets 6,047 362 6,409 60
----------- -------- -------- ---------
Total non-current assets 125,754 167,197 292,951 77,242
----------- -------- -------- ---------
Current assets
Inventories 6,587 28,545 35,132 32,207
Trade and other receivables 6,945 45,039 51,984 206,528
----------- -------- -------- ---------
Total current assets 13,532 73,584 87,116 238,735
----------- -------- -------- ---------
Liabilities
Non-current liabilities
Deferred income tax liabilities (12,853) (15,355) (28,208) (19,902)
Post employment benefit obligations - (9,636) (9,636) -
Provisions for liabilities (6,042) (4,674) (10,716) (11,129)
Acquisition related liabilities - (102) (102) -
Total non-current liabilities (18,895) (29,767) (48,662) (31,031)
----------- -------- -------- ---------
Current liabilities
Trade and other payables (798) (37,202) (38,000) (164,777)
Provisions for liabilities - (4,271) (4,271) (5,317)
Current income tax (liability)/asset - (2,629) (2,629) 12,341
Acquisition related liabilities - (57) (57) (13,522)
----------- -------- --------
Total current liabilities (798) (44,159) (44,957) (171,275)
----------- -------- -------- ---------
Identifiable net assets acquired 119,593 166,855 286,448 113,671
Goodwill 120,925 284,417 405,342 117,175
----------- -------- -------- ---------
Total consideration 240,518 451,272 691,790 230,846
----------- -------- -------- ---------
Satisfied by:
Cash 240,518 441,943 682,461 242,018
Cash and cash equivalents acquired - (18,352) (18,352) (38,691)
----------- -------- -------- ---------
Net cash outflow 240,518 423,591 664,109 203,327
Acquisition related liabilities - 27,681 27,681 27,519
----------- -------- -------- ---------
Total consideration 240,518 451,272 691,790 230,846
----------- -------- -------- ---------
The acquisition of Esso Retail Norway has been deemed to be a substantial transaction and separate disclosure of the fair values of the identifiable assets and liabilities has therefore been made. None of the remaining business combinations completed during the year were considered sufficiently material to warrant separate disclosure of the fair values attributable to those combinations. The carrying amounts of the assets and liabilities acquired, determined in accordance with IFRS, before completion of the combination together with the adjustments made to those carrying values disclosed above were as follows:
Book Fair value Fair
value adjustments value
Esso Retail Norway GBP'000 GBP'000 GBP'000
Non-current assets (excluding goodwill) 69,869 55,885 125,754
Current assets 13,532 - 13,532
Non-current liabilities (6,042) (12,853) (18,895)
Current liabilities (520) (278) (798)
------- ----------- --------
Identifiable net assets acquired 76,839 42,754 119,593
Goodwill arising on acquisition 163,679 (42,754) 120,925
------- ----------- --------
Total consideration 240,518 - 240,518
------- ----------- --------
Book Fair value Fair
value adjustments value
Others GBP'000 GBP'000 GBP'000
Non-current assets (excluding goodwill) 80,296 86,901 167,197
Current assets 73,977 (393) 73,584
Non-current liabilities (14,623) (15,144) (29,767)
Current liabilities (43,953) (206) (44,159)
-------- ----------- --------
Identifiable net assets acquired 95,697 71,158 166,855
Goodwill arising on acquisition 355,575 (71,158) 284,417
-------- ----------- --------
Total consideration 451,272 - 451,272
-------- ----------- --------
Book Fair value Fair
value adjustments value
Total GBP'000 GBP'000 GBP'000
Non-current assets (excluding goodwill) 150,165 142,786 292,951
Current assets 87,509 (393) 87,116
Non-current liabilities (20,665) (27,997) (48,662)
Current liabilities (44,473) (484) (44,957)
-------- ----------- --------
Identifiable net assets acquired 172,536 113,912 286,448
Goodwill arising on acquisition 519,254 (113,912) 405,342
-------- ----------- --------
Total consideration 691,790 - 691,790
-------- ----------- --------
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect of a number of the business combinations above given the timing of closure of these transactions. The acquisitions of Retail West and TEGA both completed on 31 March 2018 and, as such, it has not yet been feasible to perform a preliminary assignment of fair values to identifiable net assets. Any amendments to fair values within the twelve month timeframe from the date of acquisition will be disclosable in the 2019 Annual Report as stipulated by IFRS 3.
The principal factors contributing to the recognition of goodwill on business combinations entered into by the Group are the expected profitability of the acquired business and the realisation of cost savings and synergies with existing Group entities.
GBP101.086 million of the goodwill recognised in respect of acquisitions completed during the financial year is expected to be deductible for tax purposes.
Acquisition related costs included in other operating expenses in the Group Income Statement amounted to GBP12.789 million.
No contingent liabilities were recognised on the acquisitions completed during the year or the prior financial years.
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to GBP53.056 million. The fair value of these receivables is GBP51.984 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance for impairment of GBP1.072 million. In relation to the acquisition of Esso Retail Norway, the gross contractual value of trade and other receivables as at the date of acquisition amounted to GBP7.223 million. The fair value of these receivables is GBP6.945 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance for impairment of GBP0.278 million.
The fair value of contingent consideration recognised at the date of acquisition is calculated by discounting the expected future payment to present value at the acquisition date. In general, for contingent consideration to become payable, pre-defined profit thresholds must be exceeded. On an undiscounted basis, the future payments for which the Group may be liable for acquisitions completed during the year range from GBP15.346 million to GBP51.737 million.
The acquisitions during the year contributed GBP347.4 million to revenues and GBP11.5 million to profit after tax. The acquisition of Esso Retail Norway during the year contributed GBP263.4 million to revenues and GBP2.6 million to profit after tax. Had all the business combinations effected during the year occurred at the beginning of the year, total Group revenue (continuing) for the year ended 31 March 2018 would have been GBP14,977.9 million and total Group profit after tax (continuing) would be GBP274.5 million.
13. Seasonality of Operations
The Group's operations are significantly second-half weighted primarily due to a portion of the demand for DCC's LPG and Retail & Oil products being weather dependent and seasonal buying patterns in DCC Technology.
14. Related Party Transactions
There have been no related party transactions or changes in related party transactions that could have a material impact on the financial position or performance of the Group during the 2018 financial year.
15. Board Approval
This report was approved by the Board of Directors of DCC plc on 14 May 2018.
Supplementary Financial Information
For the year ended 31 March 2018
Alternative Performance Measures
The Group reports certain alternative performance measures ('APMs') that are not required under International Financial Reporting Standards ('IFRS') which represent the generally accepted accounting principles ('GAAP') under which the Group reports. The Group believes that the presentation of these APMs provides useful supplemental information which, when viewed in conjunction with our IFRS financial information, provides investors with a more meaningful understanding of the underlying financial and operating performance of the Group and its divisions.
These APMs are primarily used for the following purposes:
- to evaluate the historical and planned underlying results of our operations;
- to set director and management remuneration; and
- to discuss and explain the Group's performance with the investment analyst community.
None of the APMs should be considered as an alternative to financial measures derived in accordance with GAAP. The APMs can have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. These performance measures may not be calculated uniformly by all companies and therefore may not be directly comparable with similarly titled measures and disclosures of other companies.
The principal APMs used by the Group, together with reconciliations where the non-GAAP measures are not readily identifiable from the financial statements, are as follows:
Adjusted operating profit ('EBITA')
Definition
This comprises operating profit as reported in the Group Income Statement before net operating exceptional items and amortisation of intangible assets. Net operating exceptional items and amortisation of intangible assets are excluded in order to assess the underlying performance of our operations. In addition, neither metric forms part of Director or management remuneration targets.
2018 2017
Calculation GBP'000 GBP'000
========================================= ======== ========
Operating profit 295,228 269,578
Net operating exceptional items 45,113 36,297
Amortisation of intangible assets 43,059 39,130
========================================= ======== ========
Adjusted operating profit - continuing 383,400 345,005
Adjusted operating profit - discontinued 981 18,546
========================================= ======== ========
Adjusted operating profit ('EBITA') 384,381 363,551
========================================= ======== ========
Adjusted operating profit before depreciation ('EBITDA')
Definition
EBITDA represents earnings before net interest, tax, depreciation, amortisation of intangible assets, share of equity accounted investments' profit after tax and net exceptional items.
2018 2017
Calculation GBP'000 GBP'000
==================================== ======== ========
Adjusted operating profit ('EBITA') 384,381 363,551
Depreciation 93,722 92,015
==================================== ======== ========
EBITDA 478,103 455,566
==================================== ======== ========
Net interest
Definition
The Group defines net interest as the net total of finance costs and finance income before interest related exceptional items as presented in the Group Income Statement.
2018 2017
Calculation GBP'000 GBP'000
======================================== ======== ========
Finance costs before exceptional items (73,156) (72,910)
Finance income before exceptional items 37,421 40,973
======================================== ======== ========
Net interest - continuing (35,735) (31,937)
Net interest - discontinued (16) (163)
======================================== ======== ========
Net interest (35,751) (32,100)
======================================== ======== ========
Effective tax rate
Definition
The Group's effective tax rate expresses the income tax expense before exceptionals and deferred tax attaching to the amortisation of intangible assets as a percentage of EBITA less net interest.
2018 2017
Calculation GBP'000 GBP'000
========================================================== ======== ========
Adjusted operating profit 384,381 363,551
Net interest (35,751) (32,100)
========================================================== ======== ========
Earnings before taxation 348,630 331,451
========================================================== ======== ========
Income tax expense 23,882 45,869
Exceptional deferred tax 25,407 (1,756)
Deferred tax attaching to amortisation of intangible
assets 9,814 10,674
========================================================== ======== ========
Income tax expense before exceptionals and deferred
tax attaching to
amortisation of intangible assets - continuing 59,103 54,787
Income tax expense before exceptionals and deferred
tax attaching to
amortisation of intangible assets - discontinued 164 3,217
========================================================== ======== ========
Total income tax expense before exceptionals and deferred
tax attaching to
amortisation of intangible assets 59,267 58,004
========================================================== ======== ========
Effective tax rate (%) 17.0% 17.5%
========================================================== ======== ========
Adjusted earnings per share
Definition
The Group defines adjusted earnings per share as basic earnings per share adjusted for the impact of net exceptional items and amortisation of intangible assets.
2018 2017
Calculation pence pence
=========================================== ====== ======
Adjusted earnings per share - continuing 317.45 286.59
Adjusted earnings per share - discontinued 0.90 17.09
=========================================== ====== ======
Adjusted earnings per share 318.35 303.68
=========================================== ====== ======
Constant currency
Definition
The translation of foreign denominated earnings can be impacted by movements in foreign exchange rates versus sterling, the Group's presentation currency. In order to present a better reflection of underlying performance in the period, the Group retranslates foreign denominated current year earnings at prior year exchange rates.
2018 2017
Revenue - continuing, constant currency GBP'000 GBP'000
========================================================== ========== ==========
Revenue - continuing 14,264,639 12,269,802
Currency impact (296,654) -
========================================================== ========== ==========
Revenue - continuing, constant currency 13,967,985 12,269,802
========================================================== ========== ==========
Adjusted operating profit - continuing, constant currency
========================================================== ========== ==========
Adjusted operating profit - continuing 383,400 345,005
Currency impact (8,890) -
========================================================== ========== ==========
Adjusted operating profit - continuing, constant currency 374,510 345,005
========================================================== ========== ==========
Adjusted earnings per share - continuing, constant
currency
===================================================== ======= =======
Adjusted earnings - continuing 282,864 254,307
Currency impact (6,280) -
===================================================== ======= =======
Adjusted earnings - continuing, constant currency 276,584 254,307
Weighted average number of ordinary shares in issue
('000) 89,106 88,735
===================================================== ======= =======
Adjusted earnings per share - continuing, constant
currency 310.40p 286.59p
===================================================== ======= =======
Dividend cover
Definition
The dividend cover ratio measures the Group's ability to pay dividends from earnings.
2018 2017
Calculation pence pence
========================================= ====== ======
Adjusted earnings per share - continuing 317.45 286.59
Dividend 122.98 111.80
========================================= ====== ======
Dividend cover (times) 2.6x 2.6x
========================================= ====== ======
Net capital expenditure
Definition
Net capital expenditure comprises purchases of property, plant and equipment, proceeds from the disposal of property, plant and equipment and government grants received in relation to property, plant and equipment.
2018 2017
Calculation GBP'000 GBP'000
======================================================== ======== ========
Purchase of property, plant and equipment 152,997 143,698
Proceeds from disposal of property, plant and equipment (7,617) (12,315)
======================================================== ======== ========
Net capital expenditure 145,380 131,383
======================================================== ======== ========
Free cash flow
Definition
Free cash flow is defined by the Group as cash generated from operations before exceptional items as reported in the Group Cash Flow Statement after net capital expenditure.
2018 2017
Calculation GBP'000 GBP'000
=================================================== ========= =========
Cash generated from operations before exceptionals 473,434 546,870
Net capital expenditure (145,380) (131,383)
=================================================== ========= =========
Free cash flow 328,054 415,487
=================================================== ========= =========
Free cash flow (after interest and tax payments)
Definition
Free cash flow (after interest and tax payments) is defined by the Group as free cash flow after interest paid, income tax paid, dividends received from equity accounted investments and interest received.
2018 2017
Calculation GBP'000 GBP'000
===================================================== ======== ========
Free cash flow 328,054 415,487
Interest paid (69,900) (70,108)
Income tax paid (65,437) (62,180)
Dividends received from equity accounted investments 1,980 125
Interest received 37,399 40,966
===================================================== ======== ========
Free cash flow (after interest and tax payments) 232,096 324,290
===================================================== ======== ========
Cash conversion ratio
Definition
The cash conversion ratio expresses free cash flow as a percentage of adjusted operating profit.
2018 2017
Calculation GBP'000 GBP'000
========================== ======== ========
Free cash flow 328,054 415,487
Adjusted operating profit 384,381 363,551
========================== ======== ========
Cash conversion ratio (%) 85% 114%
========================== ======== ========
Net debt/EBITDA
Definition
The net debt to earnings before net interest, tax, depreciation, amortisation of intangible assets, share of equity accounted investments' profit after tax and net exceptional items ('EBITDA') ratio is a measurement of leverage, and shows how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant.
2018 2017
Calculation GBP'000 GBP'000
======================== ======== ========
Net debt 542,662 121,949
EBITDA 478,103 455,566
======================== ======== ========
Net debt/EBITDA (times) 1.1x 0.3x
======================== ======== ========
Return on capital employed ('ROCE') - continuing
Definition
ROCE represents adjusted operating profit (continuing) expressed as a percentage of the average total continuing capital employed. Total continuing capital employed represents total equity adjusted for net debt/cash, goodwill and intangibles written off, acquisition related liabilities and equity accounted investments.
2018 2017
Calculation GBP'000 GBP'000
===================================================== ========= =========
Total equity 1,677,917 1,507,721
Net debt (continuing) 542,662 134,748
Goodwill and intangibles written off (continuing) 271,399 228,340
Equity accounted investments (continuing) (24,461) (24,938)
Acquisition related liabilities (continuing, current
and non-current) 97,853 94,917
Net assets of the disposal group - (126,072)
===================================================== ========= =========
2,565,370 1,814,716
===================================================== ========= =========
Average total capital employed - continuing 2,190,043 1,698,240
Adjusted operating profit - continuing 383,400 345,005
===================================================== ========= =========
Return on capital employed (%) - continuing 17.5% 20.3%
===================================================== ========= =========
Committed acquisition expenditure
Definition
The Group defines committed acquisition expenditure as the total acquisition cost of subsidiaries as presented in the Group Cash Flow Statement (excluding amounts related to acquisitions which were committed to in previous years) and future acquisition related liabilities for acquisitions committed to during the year.
2018 2017
Calculation GBP'000 GBP'000
======================================================== ========= ========
Net cash outflow on acquisitions during the year 664,109 203,327
Cash outflow on acquisitions which were committed
to in the previous year (341,253) (34,372)
Acquisition related liabilities arising on acquisitions
during the year 27,840 41,041
Acquisition related liabilities which were committed
to in the previous year (13,404) (14,082)
Amounts committed in the current year 18,000 358,000
======================================================== ========= ========
Committed acquisition expenditure 355,292 553,914
======================================================== ========= ========
Net working capital
Definition
Net working capital represents the net total of inventories, trade and other receivables (excluding interest receivable), and trade and other payables (excluding interest payable, amounts due in respect of property, plant and equipment and government grants).
2018 2017
Calculation GBP'000 GBP'000
==================================================== =========== ===========
Inventories 530,473 456,395
Add: inventories of the disposal group - 1,922
Trade and other receivables 1,426,217 1,222,597
Add: trade and other receivables of the disposal
group - 33,264
Less: interest receivable (126) (223)
Trade and other payables (2,063,260) (1,820,517)
Add: trade and other payables of the disposal group - (35,741)
Less: interest payable 4,775 4,534
Less: amounts due in respect of property, plant
and equipment 10,671 6,349
Less: government grants 9 9
==================================================== =========== ===========
Net working capital (91,241) (131,411)
==================================================== =========== ===========
Working capital (days)
Definition
Working capital days measures how long it takes in days for the Group to convert working capital into revenue.
2018 2017
Calculation GBP'000 GBP'000
======================= ========= ==========
Net working capital (91,241) (131,411)
March revenue 1,418,988 1,223,575
======================= ========= ==========
(2.0
Working capital (days) days) (3.3 days)
======================= ========= ==========
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZMGMKRDGGRZM
(END) Dow Jones Newswires
May 15, 2018 02:00 ET (06:00 GMT)
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