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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| -45.00 | -0.82% | 5,420.00 | 5,420.00 | 5,425.00 | 5,480.00 | 5,395.00 | 5,430.00 | 51,541 | 15:37:03 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Offices-holdng Companies,nec | 22.2B | 334.02M | 3.3818 | 16.01 | 5.35B |
From Apr 2021 to Apr 2024
TIDMDCC
RNS Number : 9121Y
DCC PLC
18 May 2021
18 May 2021
DCC Reports Very Strong Performance, Returns and Development
DCC, the leading international sales, marketing and support services group, is today announcing its results for the year ended 31 March 2021.
Hot Features
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2021 2020 % change
-------------------------------
Revenue GBP13.412bn GBP14.755bn -9.1%
------------ ------------ ---------
Adjusted operating profit(1) GBP530.2m GBP494.3m +7.3%
------------ ------------ ---------
DCC LPG GBP231.3m GBP228.2m +1.3%
------------ ------------ ---------
DCC Retail & Oil GBP144.8m GBP140.3m +3.3%
------------ ------------ ---------
DCC Healthcare GBP81.7m GBP60.5m +35.0%
------------ ------------ ---------
DCC Technology GBP72.4m GBP65.3m +11.0%
------------ ------------ ---------
Adjusted earnings per share
(1) 386.6p 362.6p +6.6%
------------ ------------ ---------
Dividend per share 159.80p 145.27p +10.0%
------------ ------------ ---------
Free cash flow(2) GBP687.8m GBP492.3m
------------ ------------ ---------
Return on capital employed(3) 17.1% 16.5%
------------ ------------ ---------
-- Strong growth in Group adjusted operating profit, up 7.3% (6.6% on a constant currency basis) to GBP530.2 million, ahead of market expectations. Approximately half of the constant currency growth was organic.
-- All divisions of DCC recorded growth in operating profit, despite the challenging trading environment.
-- A very strong working capital performance resulted in excellent free cash flow of GBP687.8 million and free cash flow conversion of 130%.
-- Return on capital employed, the Group's key metric, increased to 17.1%.
-- A proposed 12.6% increase in the final dividend will see the total dividend for the year increase by 10.0%, DCC's 27(th) consecutive year of dividend growth.
-- DCC remains very active from a development perspective. The Group committed approximately GBP375 million to acquisitions in the period, including further bolt-on acquisitions announced today of GBP55 million. Each division was acquisitive during the year, including the significant expansion of DCC LPG's business in the US with the acquisition of UPG and the initial entry by DCC Healthcare into the German and Swiss primary care markets through the acquisition of Wörner .
-- DCC is committed to sustainability and leading by example in energy transition. The Group recently adopted a Net Zero 2050 (or sooner) target for its Group scope 1 and scope 2 emissions with an interim target of a 20% reduction by 2025 4 .
-- DCC also continues to make good progress in enabling its customers to transition to cleaner energy solutions. Amongst other initiatives, during the year the Group expanded its EV fast-charging infrastructure by 50%, increased biofuel penetration to 11% of transport fuel volumes, acquired two solar businesses in France to add further capability to its strong platform in the market, transitioned all of DCC's growing power customer base in Ireland to renewable power and continued to convert customers to LPG, significantly reducing the carbon emissions of the customer.
-- Although the uncertainty created by the Covid-19 pandemic continues, DCC expects that the year ending 31 March 2022 will be another year of profit growth and development.
1 Excluding net exceptionals and amortisation of intangible assets
2 After net working capital and net capital expenditure and before net exceptionals, interest and tax payments
3 Excluding the impact of IFRS 16 Leases. Current year ROCE including the impact of IFRS 16 Leases is 15.7%
4 The base year for the interim target is 2019
Commenting on the results, Donal Murphy, Chief Executive, said:
"I am delighted to report that DCC has continued its excellent track record of growth and development, despite the unprecedented challenges during the year. The performance is testament to our 13,700 colleagues who worked tirelessly this year to ensure DCC's essential products and services were supplied to the millions of customers and end users who rely on us. A strong trading performance, excellent cash generation, very strong returns on capital employed and continued development activity are hallmarks of DCC's resilient business model. DCC has always put sustainability at the heart of our strategy. During the year, we committed both to interim targets and to ultimately reach net zero emissions from the Group's own operations by 2050 or sooner.
We remain active from a development perspective and are ambitious to build DCC into a global leader in our chosen sectors. We continue to have the platforms, opportunities and capability to do so. The Group is well placed to navigate the ongoing uncertainty, build on our momentum and continue DCC's growth and development into the future."
For reference, please contact:
Donal Murphy, Chief Executive Tel: +353 1 2799 400
Kevin Lucey, Chief Financial Officer Email: investorrelations@dcc.ie
Rossa White, Head of Group Investor Relations Web: www.dcc.ie
Media enquiries: Powerscourt (Lisa Kavanagh/Eavan Tel: +44 20 7250 1446
Gannon)
Email: DCC@powerscourt--group.com
Presentation of results - audio webcast and conference call details
DCC will host a live audio webcast and conference call of the presentation at 09.00 today. The slides for this presentation can be downloaded from DCC's website, www.dcc.ie . The access details for the live presentation are as follows:
Ireland: +353 (0) 1 506 0650 UK: +44 (0) 2071 928 338 International: +44 (0) 2071 928 338 Passcode: 2797323 Webcast Link: https://edge.media-server.com/mmc/p/rnddnak7
This report, presentation slides and a replay of the audio will be made available at www.dcc.ie.
Document contents Pages Divisional Performance Reviews 4 - 7 Group Financial Review 8 Income Statement Review 9 - 12 Cash Flow, Development and Financial Position 13 - 17 Condensed Financial Statements 18 - 34 Alternative Performance Measures 35 - 40
Divisional Performance Reviews
DCC LPG 2021 2020 % change
----------------------------------
Volumes (thousand tonnes) 2,259.3kT 2,176.3kT +3.8%
---------- ---------- ---------
Operating profit GBP231.3m GBP228.2m +1.3%
---------- ---------- ---------
Operating profit per tonne GBP102.36 GBP104.87
---------- ---------- ---------
Return on capital employed excl.
IFRS 16 17.4% 18.4%
---------- ---------- ---------
Return on capital employed incl.
IFRS 16 16.6% 17.5%
---------- ---------- ---------
DCC LPG performed resiliently throughout the year, notwithstanding the difficult conditions within the commercial and industrial sectors resulting from the Covid-19 pandemic. Despite trading behind the prior year for the first half of the financial year, DCC LPG recovered well and delivered modest operating profit growth for the full year, benefiting from acquisitions in the US market and the gradual easing of Covid-19 restrictions. Operating profit increased by 1.3% (0.3% on a constant currency basis) to GBP231.3 million.
Volumes increased by 3.8% driven by acquisition activity in the US and Ireland. Organic volumes declined modestly (-2.1%) due to lower commercial and industrial demand, which particularly impacted the British and Irish businesses given their weighting towards these sectors. Operating profit per tonne reduced modestly due to the mix impact of acquisition activity. A very good procurement performance ensured that the rising cost of product throughout the year did not materially impact profitability.
The French business performed well, benefiting in particular from strong cylinder demand, good procurement and cost control. Leveraging its strong brand, operations and supply chain in cylinders, the business strengthened its market position during the year and benefited from the introduction of both home delivery and bioLPG cylinders, as well as the 'Click and Collect' offering launched previously. These innovations proved attractive during the Covid-19 restrictions. The business maintains a leading position in LPG in the French market and it also continues to broaden its energy product and service offering to customers. Having introduced natural gas, electricity, wood pellets and bioLPG in recent years, the French business recently acquired two modest businesses providing solar photovoltaic ('PV') design, build and maintenance solutions. These services will complement its strong position in the retail and domestic LPG segments and its increasing presence in the commercial LPG, natural gas and power markets, enabling the business to offer increased solutions to customers.
In Britain and Ireland, DCC LPG recorded good growth with domestic and cylinder customers. However, this was offset by a decline in demand in the commercial and industrial sectors which were most impacted by Covid-19 restrictions. The business continued to invest in its 'Oil2LPG' offering, as customers are attracted to the lower energy cost and carbon intensity of LPG. The conversion of an existing LNG facility in Avonmouth into a large LPG storage terminal has progressed in line with expectations and is targeted to become operational in 2022. Once operational, the facility will improve the supply position of the British business. In Ireland, the natural gas and power business performed well and successfully integrated the recently acquired Budget Energy, and its attractive renewable energy offering, into its existing operations.
The US business delivered strong volume and operating profit growth during the year. It benefited from its weighting towards domestic customers where demand was resilient during lockdown and from the acquisitions of NES (September 2020) and UPG (January 2021). These acquisitions have considerably expanded the scale of DCC LPG's market presence in the US with the business now operating in 21 states compared to 10 states a year ago. The business has almost doubled its customer base to over 230,000 during the year. The business in Hong Kong & Macau performed well during a difficult year for the region and continued to grow its customer base, adding several new large residential estates.
DCC Retail & Oil 2021 2020 % change
----------------------------------
Volumes (billion litres) 10.199bn 11.632bn -12.3%
---------- ---------- ---------
Operating profit GBP144.8m GBP140.3m +3.3%
---------- ---------- ---------
Operating profit per litre 1.42ppl 1.21ppl
---------- ---------- ---------
Return on capital employed excl.
IFRS 16 19.2% 18.5%
---------- ---------- ---------
Return on capital employed incl.
IFRS 16 16.9% 16.0%
---------- ---------- ---------
DCC Retail & Oil delivered good growth in operating profit and further improved its very strong return on capital employed, despite the disruption experienced across all economies during the year. Operating profit increased to GBP144.8 million, 3.3% ahead of the prior year (2.1% on a constant currency basis), almost all of which was organic. The good organic performance reflects the continuing focus on providing customers with essential liquid fuel products, increasing penetration of value-added products and services including lower emission fuels, and good cost control. The business continues to develop its customer offering, launching a number of digital initiatives in Scandinavia during the year designed to improve customer experience and also continued its successful roll out of EV charging. Across the division, DCC Retail & Oil grew fast charging points by 50% in the year.
DCC Retail & Oil sold 10.2 billion litres of product, a decline of 12.3% on the prior year (12.5% decline organically). Having been significantly adversely impacted in the first quarter by the Covid-19 restrictions, commercial and transport volumes improved steadily thereafter, reflecting the increased activity levels and mobility of customers, albeit mostly to lower levels than the prior year and variable by geography, depending on the severity of restrictions. The business experienced good demand in the domestic and agricultural sectors, particularly in Britain, Denmark, Austria and Ireland.
The business in Britain and Ireland performed robustly, given the material decline in volumes across the commercial, industrial and transport markets. The Covid-19 restrictions and related home working drove higher than typical domestic demand in the first quarter, including strong demand for premium products, which offer customers a cleaner alternative to standard heating fuels. The business continued to make good progress in developing its retail site network, increasing its in-store, non-fuel sales in Britain, acquiring seven retail sites in the North East of England and fully integrating 22 former Tesco sites in Ireland. The recent investments in broadening the product and service offering of the business continued to deliver, with profits increasing in truck-stop and roadside services. The business also completed further bolt-on acquisitions in lubricants in Britain and bulk distribution in Ireland.
The Scandinavian business performed strongly, driven by a very good performance in the retail sector, while also benefiting from strong demand from agricultural and commercial customers. Although all markets in Europe experienced volume disruption, Scandinavia, and Sweden in particular, experienced relatively less disruption. Across Scandinavia, the business continued to see momentum in assisting customers to lower their carbon emissions by increasing the penetration of bio products, including Hydrogenated Vegetable Oil ('HVO').
In France, the business experienced significant volume declines from Covid-19 restrictions in April and May. From that point, the business recovered steadily and although faced with further restrictions on mobility throughout the year, subsequent restrictions had a more modest impact. The unmanned network performed well, reflecting customer preference for the local, low-cost, pay-at-the-pump model and a reduced propensity to use public transport. During the year the business also made good progress in improving the offering in the network, rolling out both lower emission E85 fuel and Ad-Blue, a product that lowers nitrogen oxide emissions from diesel engines. The Austrian business recorded strong profit growth driven by higher domestic demand in the first half of the year and continued to benefit from its focus on offering premium, cleaner products to customers.
DCC Healthcare - reported 2021 2020 % change
----------------------------------
Revenue GBP655.4m GBP578.1m +13.4%
---------- ---------- ---------
Operating profit GBP81.7m GBP60.5m +35.0%
---------- ---------- ---------
Return on capital employed excl.
IFRS 16 18.7% 14.7%
---------- ---------- ---------
Return on capital employed incl.
IFRS 16 17.0% 13.7%
---------- ---------- ---------
The reported prior year figures include DCC Healthcare's UK generic pharmaceutical activities and related manufacturing facility in Ireland (Kent Pharma and Athlone Laboratories) which were disposed of in September 2019. Accordingly, the analysis and commentary below relate to the activities of DCC Healthcare which continue to be part of the Group .
DCC Healthcare - continuing basis 2021 2020 % change
-----------------------------------
Revenue GBP655.4m GBP549.5m +19.3%
---------- ---------- ---------
Operating profit GBP81.7m GBP56.0m +45.9%
---------- ---------- ---------
Operating margin 12.5% 10.2%
---------- ---------- ---------
DCC Healthcare delivered another strong performance, generating excellent operating profit growth of 45.9% on a continuing basis, more than half of which was organic. DCC Health & Beauty Solutions generated very strong organic growth in nutritional products and also benefited from the prior year acquisitions in the US. DCC Vital also generated good growth, benefiting from its rapid response to changes in the product and service needs of the healthcare systems of Britain and Ireland.
DCC Health & Beauty Solutions, which provides outsourced solutions to international nutrition and beauty brand owners, recorded excellent operating profit growth. The business benefited from its significantly expanded presence and enhanced capability in the US nutrition market, where the prior year acquisitions of Ion Labs (November 2019) and Amerilab Technologies (March 2020) each delivered very strong profit growth. The nutrition sector globally has seen increased focus from consumers on preventative healthcare, which is accelerating growth in both consumer penetration and consumption of nutritional products. DCC Health & Beauty Solutions responded quickly to increased demand from its customers in both Europe and the US, enabled by its high-quality facilities and agile business model. The business generated strong growth across the breadth of its product and form-factor offering, and in particular experienced increased demand for immunity-related products, with heightened consumer awareness of this product category post the onset of the Covid-19 pandemic. DCC Health & Beauty Solutions also performed very well in the beauty sector. The business continued to enhance its customer and product mix, moving the weighting further towards premium, complex products for leading cosmetic and consumer healthcare brands.
DCC Vital, which is focused on the sales and marketing of medical products to healthcare providers, generated strong revenue and operating profit growth. Activity in the British and Irish healthcare systems was significantly impacted by the Covid-19 pandemic and resulted in substantially lower routine hospital procedures and in-person GP consultations. Despite these challenges, DCC Vital delivered good growth as it leveraged the breadth of its product range, its robust supply chain and extensive market reach to respond quickly and effectively to Covid-19 driven demand for PPE, ICU-related medical devices and other healthcare products. The business also benefited from the modest bolt-on acquisitions completed during the prior year and improved its operating margin as it exited a number of lower margin logistics services contracts in the UK. Importantly, DCC Vital has also now expanded its activities into continental Europe with the completion in April 2021 of the acquisition of Worner, a leading primary care supplier in Germany and Switzerland. The acquisition provides DCC Vital with another growth platform in primary care and provides an opportunity to expand DCC Vital's broader activities into Continental Europe.
DCC Technology 2021 2020 % change
----------------------------------
Revenue GBP4.483bn GBP3.913bn +14.6%
----------- ----------- ---------
Operating profit GBP72.4m GBP65.3m +11.0%
----------- ----------- ---------
Operating margin 1.6% 1.7%
----------- ----------- ---------
Return on capital employed excl.
IFRS 16 12.3% 11.0%
----------- ----------- ---------
Return on capital employed incl.
IFRS 16 11.0% 10.0%
----------- ----------- ---------
DCC Technology delivered very strong operating profit growth of 11.0% (11.8% on a constant currency basis), approximately three quarters of which was organic. Although the Covid-19 pandemic created significant uncertainty across both retail and B2B markets, DCC Technology responded well to this uncertainty and benefited from the breadth of its customer base and product and service offering.
The significant impact of the pandemic on customer behaviour saw strong demand throughout the year for higher volume, lower margin consumer and working-from-home products, particularly through etail and non-traditional retail channels. Trading conditions in the higher margin B2B sectors, such as the Pro AV product category, remained challenging through the year. Given the difficult market conditions in the first half of the year and changing demand patterns, DCC Technology delivered a good cost control performance. As the year progressed, the business resumed investment in its product and service offering generally.
The North American business performed very well, delivering strong organic revenue and operating profit growth. Sales of 'entertainment at-home' products, including consumer electronics, Pro Audio and music products, grew very strongly and the mobile living products introduced in the prior year also performed well. As in other markets, the business in North America experienced significantly lower demand in the Pro AV sector, where spend across large event, conference, and other 'at-work' locations was postponed. Despite the impact of the pandemic, the business remained active from a development perspective in North America and completed two complementary bolt-on acquisitions (The Music People and JB&A) which have strengthened DCC Technology's developing market presence and product portfolio.
In the UK, the business experienced strong demand for lower margin consumer products from etailers, grocers and non-traditional retailers and from B2B customers offering mobility and working-from-home products. This strong demand was more than offset by a reduction in sales of higher margin Pro AV, enterprise and other B2B categories and as a result, operating profit was modestly behind the prior year. Despite the challenges of remote working, the business successfully transitioned to its new ERP system (SAP) during the first half of the year and this significant investment will enhance the service offering to all customers and suppliers. The business in Ireland performed strongly, with good organic revenue and operating profit growth driven by demand for consumer and mobile products which more than offset reduced demand in the B2B sectors.
In Continental Europe, the business generated good organic revenue and operating profit growth. Sales of consumer and working-from-home products grew strongly, while the trading environment for B2B products remained challenging, particularly in the DACH region. In France, the consumer business benefited from operational improvements and a significant increase in sales of products from key vendors. The French B2B business also performed well, driven by strong growth in its range of own-brand accessories. In April 2021, the business completed the acquisition of Azenn, which will complement and enhance the product and service offering to DCC Technology's B2B customers in France. The business in the Benelux region also performed well, leveraging its technology-enabled services and customer integration capability, which particularly benefited e-tailers and retailers during the challenging pandemic trading environment. In Scandinavia, the business also reported strong revenue and profit growth, particularly in the consumer category.
Group Financial Review
A summary of the Group's results for the year ended 31 March 2021 is as follows:
2021 2020
GBP'm GBP'm % change
Revenue 13,412 14,755 -9.1%
Adjusted operating profit(1)
DCC LPG 231.3 228.2 +1.3%
DCC Retail & Oil 144.8 140.3 +3.3%
DCC Healthcare 81.7 60.5 +35.0%
DCC Technology 72.4 65.3 +11.0%
Group adjusted operating profit(1) 530.2 494.3 +7.3%
Finance costs (net) and other (59.1) (54.3)
Profit before net exceptionals, amortisation of intangible assets and tax 471.1 440.0 +7.1%
Net exceptional charge before tax and non-controlling interests (39.1) (66.4)
Amortisation of intangible assets (66.9) (62.1)
Profit before tax 365.1 311.5 +17.2%
Taxation (62.3) (57.3)
Profit after tax 302.8 254.2
Non-controlling interests (10.2) (8.7)
Attributable profit 292.6 245.5
Adjusted earnings per share(1) 386.6p 362.6p +6.6%
Dividend per share 159.80p 145.27p 10 .0%
Operating cash flow 842.3 665.8
Free cash flow (2) 687.8 492.3
Net cash/(debt) at 31 March (excl. lease creditors) 165.0 (60.2)
Lease creditors (315.2) (306.9)
Net debt at 31 March (including lease creditors) (150.2) (367.1)
Total equity at 31 March 2,705.6 2,541.5
Return on capital employed (excl. IFRS 16) 17.1% 16.5%
Return on capital employed (incl. IFRS 16) 15.7% 15.1%
(1) Excluding net exceptionals and amortisation of intangible assets
(2) After net working capital and net capital expenditure and before net exceptionals, interest
and tax payments
Income Statement Review
Reporting currency
The Group's financial statements are presented in sterling, denoted by the symbol 'GBP'. The principal exchange rates used for the translation of results into sterling are set out in note 3, Reporting Currency, on page 24. The net impact of currency translation on the Group Income Statement versus the prior year was modest, with average sterling exchange rates marginally weakening against euro.
Revenue
Overall, Group revenue decreased by 9.1% to GBP13.4 billion primarily driven by lower activity levels in DCC Retail & Oil and the lower oil price that prevailed during the year.
Volumes in DCC LPG increased by 3.8% to 2.3 million tonnes, driven by acquisitions completed during the year in the US and Ireland. Organically, volumes declined by 2.1% as lower commercial and industrial demand during Covid-19 restrictions was somewhat offset by good demand from cylinder and domestic heating customers.
DCC Retail & Oil volumes of 10.2 billion litres were 12.3% behind the prior year (a decline of 12.5% organically) reflecting lower demand for transport and commercial fuels during Covid-19 restrictions.
Combined revenue in DCC Healthcare and DCC Technology was GBP5.1 billion, an increase of 14.4%, driven by strong organic revenue growth in DCC Technology and the first-time contributions of acquisitions.
Group adjusted operating profit
Group adjusted operating profit increased by 7.3% (6.6% on a constant currency basis) to GBP530.2 million and approximately half of the constant currency growth was organic. The growth was driven by the excellent organic performance in DCC Healthcare and the strong organic growth in DCC Technology, along with the contribution from acquisitions completed in the current and prior year.
The strong growth in Group adjusted operating profit was achieved in uncertain and difficult trading conditions throughout the year. In particular, the first quarter of the financial year was difficult, given the first-time imposition of Covid-19 restrictions across all economies where the Group operates. The Group responded well to these challenges and continued to meet the needs of customers. During this time, the Group initiated cost management initiatives including cessation of all discretionary or nonessential expenditure and certain of the Group's operations placed employees on temporary working arrangements and utilised government schemes to support the continued employment of staff in those parts of their businesses that experienced much reduced activity levels. All furlough or similar employee related government supports received during the year have now been repaid. Whilst uncertainty prevailed throughout the year, as demand began to recover during the second quarter and trading conditions improved, DCC again adapted, recommencing expenditures in areas that had been curtailed, including development capital expenditure, and delivered strong growth in operating profit in the remainder of the financial year.
Although behind for the first half of the financial year, DCC LPG recovered during the second half and delivered modest growth for the full year. Operating profit increased by 1.3% (0.3% on a constant currency basis) to GBP231.3 million and declined modestly organically, with the recovery in the second half benefiting from the gradual easing of Covid-19 restrictions and the acquisitions completed in the US.
Operating profit in DCC Retail & Oil increased to GBP144.8 million, 3.3% ahead of the prior year (2.1% ahead on a constant currency basis) almost all of which was organic. The good organic performance reflects the continuing focus in providing customers with essential liquid fuel products, increasing penetration of value-added products and services including lower emission fuels, and good cost control.
DCC Healthcare generated strong profit growth on its continuing activities (i.e. excluding the UK generic pharma activities disposed of in September 2019 of 45.9%, two thirds of which was organic, reflecting strong organic growth in nutritional products in DCC Health & Beauty Solutions and the benefit of the prior year acquisitions in the US. DCC Vital also generated good growth, benefiting from its rapid response to changes in the product and service needs of the healthcare systems in Britain and Ireland.
DCC Technology delivered very strong operating profit growth of 11.0% (11.8% on a constant currency basis) during the year, approximately three quarters of which was organic. Although the pandemic created significant uncertainty across both retail and B2B markets, DCC Technology responded well to this uncertainty and benefited from the breadth of its customer base and product and service offering.
FY21 FY20 % 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 45.6 185.7 231.3 49.0 179.2 228.2 -7.1% +3.6% +1.3%
DCC Retail
& Oil 65.2 79.6 144.8 59.7 80.6 140.3 +9.2% -1.1% +3.3%
DCC Healthcare 39.8 41.9 81.7 28.5 32.0 60.5 +39.7% +30.9% +35.0%
DCC Technology 25.5 46.9 72.4 25.4 39.9 65.3 +0.7% +17.5% +11.0%
Group 176.1 354.1 530.2 162.6 331.7 494.3 +8.3% +6.8% +7.3%
Adjusted
EPS* (pence) 117.9 268.7 386.6 110.2 252.4 362.6 +7.0% +6.4% +6.6%
* Excluding net exceptionals and amortisation of intangible assets
Finance costs (net) and other
Net finance costs and other increased to GBP59.1 million (2020: GBP54.3 million). The increase reflects the interest charge associated with higher average lease creditors due to the growth of the Group, a reduction in interest earned on deposits given lower base rates, a higher average gross debt balance during the year and a lower contribution from the Group's modest joint venture arrangements. The average net debt, excluding lease creditors, was GBP215 million, compared to an average net debt of GBP342 million in the prior year, and reflects the excellent working capital performance throughout the year. The Group's private placement debt, which is the primary driver of finance costs, decreased modestly by year end versus the prior year reflecting the repayment of private placement debt and the strengthening of sterling against the euro and US dollar. Interest was covered 13.2 times(1) by Group adjusted operating profit before depreciation and amortisation of intangible assets (2020: 13.0 times).
(1) Using the definitions contained in the Group's lending agreements
Profit before net exceptional items, amortisation of intangible assets and tax
Profit before net exceptional items, amortisation of intangible assets and tax increased by 7.1% to GBP471.1 million.
Net exceptional charge and amortisation of intangible assets
The Group incurred a net exceptional charge after tax and non-controlling interests of GBP35.0 million (2020: net exceptional charge of GBP63.0 million) as follows:
GBP'm
Restructuring and integration costs and other (26.9)
Acquisition and related costs (13.6)
IAS 39 mark-to-market gain 1.4
(39.1)
Tax attaching to exceptional items 4.1
Net exceptional charge (35.0)
----------------------------------------------- -------
There was a net cash outflow of GBP29.4 million relating to exceptional items.
Restructuring and integration costs and other of GBP26.9 million relates to restructuring of operations as part of the integration of completed acquisitions across a small number of businesses. It includes the costs related to the restructuring of DCC LPG's consumer gas and power business in France where a new partnership with a third party has been created to better leverage the strong brand presence while reducing risk associated with this market in France. It also includes the reducing dual running costs relating to the DCC Technology's UK SAP implementation which went live during the summer in the majority of the UK business. DCC Technology also incurred restructuring costs across a number of businesses where some right-sizing was required given the change in mix in the business as a result of the pandemic.
Acquisition and related costs include the professional fees and tax costs relating to the evaluation and completion of acquisition opportunities and amounted to GBP13.6 million.
The level of ineffectiveness calculated under IAS 39 on the Group's US private placement market debt and related hedging instruments is charged or credited as an exceptional item. In the year ended 31 March 2021, this amounted to an exceptional non-cash gain of GBP1.4 million. The cumulative net exceptional charge taken in respect IAS 39 ineffectiveness is GBP0.7 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 charge for the amortisation of acquisition-related intangible assets increased to GBP66.9 million from GBP62.1 million in the prior year reflecting acquisitions completed in the current and prior year.
Profit before tax
Profit before tax increased by 17.2% to GBP365.1 million.
Taxation
The effective tax rate for the Group was consistent with the prior year at 17.0%. The Group's effective tax rate is influenced by the geographical mix of profits arising in any year and the tax rates attributable to the individual territories.
Adjusted earnings per share
Adjusted earnings per share increased by 6.6% to 386.62 pence, reflecting the increase in profit before exceptional items and goodwill amortisation.
Dividend
The Board is proposing a 12.6% increase in the final dividend to 107.85 pence per share, which, when added to the interim dividend of 51.95 pence per share, gives a total dividend for the year of 159.80 pence per share. This represents a 10.0% increase over the total prior year dividend of 145.27 pence per share. The dividend is covered 2.4 times by adjusted earnings per share (2020: 2.5 times). It is proposed to pay the final dividend on 22 July 2021 to shareholders on the register at the close of business on 28 May 2021.
Over its 27 years as a listed company, DCC has an unbroken record of dividend growth at a compound annual rate of 13.9%.
Return on capital employed
The creation of shareholder value through the delivery of consistent, sustainable 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:
2021 2020 2021 2020
excl. IFRS 16 excl. IFRS 16 incl. IFRS 16 incl. IFRS 16
DCC LPG 17.4% 18.4% 16.6% 17.5%
DCC Retail & Oil 19.2% 18.5% 16.9% 16.0%
DCC Healthcare 18.7% 14.7% 17.0% 13.7%
DCC Technology 12.3% 11.0% 11.0% 10.0%
Group 17.1% 16.5% 15.7% 15.1%
------------------ -------------- -------------- -------------- --------------
The Group continued to generate very strong returns on capital employed, notwithstanding the substantial increase in the scale of the Group in recent years. The increase in return on capital employed versus the prior year reflects the good organic operating profit performance and excellent working capital management across each division of DCC.
The adoption of IFRS 16 on 1 April 2019 had a material impact on the Group's financial statements, creating a significant right-of-use leased asset and corresponding lease creditor. The net impact on the Group's current year return on capital employed was, as anticipated, a reduction of 1.4%.
Cash Flow, Development and Financial Position
Cash flow
The Group generated excellent operating and free cash flow during the year as set out below:
Year ended 31 March 2021 2020
GBP'm GBP'm
Group operating profit 530.2 494.3
Decrease in working capital 177.7 49.2
Depreciation (excluding ROU leased assets) and other 134.4 122.3
Operating cash flow (pre add-back for depreciation on ROU leased assets) 842.3 665.8
Capital expenditure (net) (146.9) (167.8)
695.4 498.0
Depreciation on ROU leased assets 61.4 58.2
Repayment of lease creditors (69.0) (63.9)
Free cash flow 687.8 492.3
Interest and tax paid, net of dividend from equity accounted investments (108.9) (116.2)
Free cash flow (after interest and tax) 578.9 376.1
Acquisitions (272.6) (227.5)
Disposals - 36.7
Dividends (148.3) (139.2)
Exceptional items (29.4) (30.9)
Share issues - 0.3
Net inflow 128.6 15.5
Opening net debt (367.1) (18.4)
Translation and other 88.3 (70.1)
(150.2) (73.0)
IFRS 16 transition adjustment at 1 April 2019 - (294.1)
Closing net debt (including lease creditors) (150.2) (367.1)
Analysis of closing net debt (including lease creditors) :
Net cash/(debt) at 31 March (excluding lease creditors) 165.0 (60.2)
Lease creditors at 31 March (315.2) (306.9)
(150.2) (367.1)
The Group's operating cash flow amounted to GBP842.3 million, compared to GBP665.8 million in the prior year, an increase of 26.5%.
Working capital decreased by GBP177.7 million. Each division of DCC delivered an excellent underlying working capital performance throughout the year . Both energy divisions achieved improved terms in some material supply contracts during the year, while DCC Healthcare and DCC Technology both achieved stock efficiencies. The year-end working capital position benefited from the timing of the year end just prior to the Easter holiday period, which resulted in very strong cash collections and from relatively higher utilisation of supply chain financing. 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 2021 was GBP25 million higher than the prior year, consistent with the increased sales to very large etail and retail customers. Supply chain financing had a positive impact on Group working capital days of 4.9 days (31 March 2020: 5.1 days) or GBP232.6 million (2020: GBP207.8 million).
Overall working capital days were negative 4.3 days sales, compared to negative 0.6 days sales in the prior year.
As illustrated in the table below, net capital expenditure amounted to GBP146.9 million for the year (2020: GBP167.8 million) and was net of disposal proceeds of GBP15.9 million (2020: GBP13.2 million). The level of net capital expenditure reflects continued investment in organic initiatives across the Group, supporting the Group's continued growth and development.
Capital expenditure in DCC LPG primarily comprised investment in relation to the Avonmouth LPG storage facility in the UK and further development expenditure to support the continued growth of the business, primarily in tanks (supporting the conversion of oil customers to LPG) and cylinders (including for bioLPG cylinders and the continued rollout of 'Click and Collect'). In the Retail & Oil division, there was continued investment in new retail sites and site upgrades, including adding further lower emission product capability, AdBlue and EV fast charging. It also included capital expenditure in relation to the ongoing project to optimise the depot network in the UK to bring greater network and capital efficiency over time. In DCC Healthcare, the capital expenditure primarily related to increased manufacturing capacity and additional product capability across DCC Health & Beauty Solutions, both in Europe and the US, to facilitate the strong growth in customer demand. The majority of capital expenditure in DCC Technology related to the SAP implementation which is now live in the UK business. Net capital expenditure for the Group exceeded the depreciation charge (excluding depreciation on right-of-use leased assets) in the year by GBP15.7 million.
The Group's free cash flow amounted to GBP687.8 million, representing an excellent 130% conversion of operating profit into free cash flow.
Committed acquisition and net capital expenditure
Committed acquisition spend since the prior year preliminary results statement and net capital expenditure in the current year amounted to GBP521.5 million. An analysis by division is shown below:
Acquisitions Capex Total
GBP'm GBP'm GBP'm
DCC LPG 214.5 76.0 290.5
DCC Retail & Oil 36.6 34.2 70.8
DCC Healthcare 79.3 18.6 97.9
DCC Technology 44.2 18.1 62.3
Total 374.6 146.9 521.5
------------------- ------------- ------ ------
Throughout the year, DCC has remained very active from a development perspective, notwithstanding the difficulties caused by the pandemic. Since the results announcement for the year ended 31 March 2020 in May 2020, DCC has committed approximately GBP375 million to new acquisitions across Europe and North America. The Group has the platforms, opportunities and capability to build the Group into a global leader in its chosen sectors. Recent acquisition activity of the Group includes:
DCC LPG
France solar acquisitions
In recent months the French LPG business has acquired two modest solar photovoltaic ('PV') businesses in France. The acquisitions further extend DCC LPG's product and service offering in the French energy market. The acquired businesses help customers design, build and manage their solar installations and provide energy management services. The businesses are based in west and south west France and mostly serve a commercial customer base of agricultural, manufacturing and public sector customers. Integrating the acquisitions into the broader product offering in France will allow DCC LPG to cross-sell the offering to new and existing customers. Following the acquisitions, DCC LPG now provides LPG, bioLPG, natural gas, power, solar and wood pellet offerings to its customer base in France.
United Propane Gas ('UPG')
In January 2021, DCC LPG completed the acquisition of UPG, materially expanding its presence in the US LPG market. Headquartered in Paducah, Kentucky, the business employs approximately 360 people, has over 110,000 active customers and sells approximately 120,000 tonnes of LPG annually from 80 operating locations. Together with a smaller bolt-on acquisition completed in Colorado in December 2020, the combined enterprise value of the transactions was $145 million (GBP106 million). UPG is DCC LPG's largest acquisition since initially entering the US market in April 2018 and follows the material bolt-on acquisitions of NES Group in September 2020 and Pacific Coast Energy in April 2019. It is a further significant step in the execution of the strategy to build a business of scale in the highly attractive and growing US LPG market. The acquisition will considerably expand DCC LPG's geographic presence from 14 to 21 states, will almost double its customer base to over 230,000 customers and the combination will create the sixth largest business in the highly fragmented US LPG market.
NES Group
In September 2020, DCC LPG completed the acquisition of NES Group in the US market. Headquartered in Brooklyn, Connecticut, the business employs approximately 70 people, has over 22,000 active customers and sells approximately 40,000 tonnes equivalent of product annually.
Primagaz
During September 2020, DCC LPG agreed to acquire Primagaz from SHV Energy, subject to competition authority approval. The business is highly complementary to DCC LPG's existing business in the Benelux region. Primagaz, which focuses on the bulk and cylinder LPG markets, serves approximately 10,000 customers and supplies over 28,000 tonnes of LPG annually. The transaction is expected to complete during the first quarter of the current financial year.
DCC LPG also completed a number of other small bolt-on acquisitions during the year in the US, Germany and Austria.
DCC Retail & Oil
In April 2021, DCC Retail & Oil agreed to acquire Jones Oil in Ireland, subject to competition authority approval. The business distributes liquid fuels across the domestic, agricultural, commercial, industrial, and marine markets throughout Ireland. In December 2020, DCC Retail & Oil acquired Campus Oil Ireland ('Campus'). The acquisition of both Jones Oil and Campus are complementary to DCC's existing liquid fuels distribution business in Ireland. DCC Retail & Oil also recently completed the acquisition of a small bolt-on acquisition in the lubricants sector in the UK, building further scale in this growing business area. In addition, DCC Retail & Oil recently agreed to acquire a small portfolio of convenience service stations in the north of England and a small bolt-on acquisition in the retail market in Austria.
DCC Healthcare
Wörner
In April 2021, DCC Healthcare acquired Wörner Medizinprodukte Holding GmbH ('Wörner'), a leading supplier of medical and laboratory products to the primary care sector in Germany and Switzerland. Wörner sells a broad product range to approximately 20,000 customers annually, including general practitioners, primary care centres, specialist medical centre and laboratories. The business recorded revenue of approximately EUR70 million in 2020 and employs 158 people. Joining the DCC Vital group, Wörner will provide a platform for the expansion of DCC Vital's broader activities into Continental Europe, particularly in Germany, which is a large, well-funded and growing healthcare market. DCC acquired Wörner based on an initial enterprise value of approximately EUR80 million.
DCC Technology
Azenn
DCC Technology agreed to acquire Azenn Holding Développement ('Azenn'), a French valued added distributor in April 2021, subject to regulatory approval. Azenn is a leading distributor of structured cabling solutions and provision of logistics, refurbishment and staging services for network devices. The acquisition of Azenn will complement, enhance and extend the service offerings of DCC Technology's existing Exertis Connect business in France, and allow the expansion of Azenn's cabling and network device offerings to new customers. The business employs approximately 200 staff across five locations throughout France and had revenues of approximately EUR60 million in its most recent financial year.
JB&A and The Music People
In December 2020, DCC Technology agreed to acquire JB&A, a leading North American distributor of broadcast, post-production and Pro AV technologies, to system integrators and B2B resellers. Located in San Rafael, California, the business recorded revenues of $80 million in its most recent financial year and employs approximately 30 people. DCC Technology also completed the acquisition of The Music People in the US in November 2020. The acquisition of JB&A and The Music People continues DCC Technology's strategy of building a leading Pro AV, Pro Audio and consumer value-added distribution business in North America.
Total cash spend on acquisitions for the year ended 31 March 2021
The total cash spend on acquisitions completed in the year was GBP272.6 million. The spend primarily reflects acquisitions committed and completed during the current year, but also includes the acquisition of Budget Energy, announced in the prior year's results in May 2020. Payment of deferred and contingent acquisition consideration previously provided amounted to GBP36.3 million.
Financial strength
An integral part of the Group's strategy remains the maintenance of a strong and liquid balance sheet which, amongst other benefits, enables it to take advantage of development opportunities as they arise. The increasing scale and geographic diversity of DCC will enable the Group to evolve its approach somewhat into the future, leveraging a broader array of funding options and, over time, reducing the relative level of gross cash held on the balance sheet. At 31 March 2021, the Group had: net debt (including lease creditors) of GBP150.2 million; net cash (excluding lease creditors) of GBP165.0 million; cash resources (net of overdrafts) of GBP1.7 billion; undrawn, committed debt facilities of GBP400 million and total equity of GBP2.7 billion.
The strong cash flow performance at year-end resulted in the Group reporting a modest net debt position of GBP150.2 million, or excluding lease creditors, a net cash position of GBP165.0 million. This modest net cash position (excluding lease creditors) is before acquisition expenditure committed during the year but not yet deployed at the balance sheet date of GBP152.0 million (i.e. the acquisition of Wörner ). As such, on a pro-forma basis, the Group had a modest net cash position at year end of GBP13.0 million.
The Group's outstanding term debt had an average maturity of 5.2 years. Substantially all of the Group's debt has been raised in the US private placement market with an average credit margin of 1.65% over floating Euribor/Libor.
Outlook
Although the uncertainty created by the Covid-19 pandemic continues, DCC expects that the year ending 31 March 2022 will be another year of profit growth and development.
Annual General Meeting
Due to the potential continuation of Covid-19 restrictions in relation to public gatherings and to prioritise the health and safety of our shareholders, employees and other stakeholders, the Annual General Meeting is likely to be held at 11.00 am on 16 July 2021 at DCC House, Leopardstown Road, Foxrock, Dublin 18, with the minimum necessary quorum of two shareholders.
An audio webcast and conference call facility will be provided to allow shareholders to listen live to the meeting. Shareholders will be able to submit questions in advance of the meeting or via the webcast.
Further details on the Annual General Meeting will be published in due course. Shareholders should monitor the Company's website for information in this regard.
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 2021
2021 2020
-------------------------------------------- ----------------------------------------------------------
Pre Exceptionals Pre Exceptionals
exceptionals (note 5) Total exceptionals (note 5) Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 4 13,412,450 - 13,412,450 14,755,393 - 14,755,393
Cost of sales (11,592,970) - (11,592,970) (13,015,419) - (13,015,419)
------------- ------------- -------------- -------------- -------------------------- --------------
Gross profit 1,819,480 - 1,819,480 1,739,974 - 1,739,974
Administration
expenses (499,812) - (499,812) (457,722) - (457,722)
Selling and
distribution
expenses (814,758) - (814,758) (813,326) - (813,326)
Other operating
income/(expenses) 25,333 (40,495) (15,162) 25,342 (65,486) (40,144)
------------- ------------- -------------- -------------- -------------------------- --------------
Adjusted operating profit 530,243 (40,495) 489,748 494,268 (65,486) 428,782
Amortisation of intangible
assets (66,898) - (66,898) (62,138) - (62,138)
-------------- -------------------------- --------------
Operating profit 4 463,345 (40,495) 422,850 432,130 (65,486) 366,644
Finance costs (85,639) - (85,639) (94,824) (860) (95,684)
Finance income 26,253 1,384 27,637 39,510 - 39,510
Equity accounted investments'
profit after tax 233 - 233 1,015 - 1,015
-------------- -------------------------- --------------
Profit before tax 404,192 (39,111) 365,081 377,831 (66,346) 311,485
( 62,278 ( 57,335
Income tax expense (66,382) 4,104 ) (60,625) 3,290 )
------------- ------------- -------------- -------------- -------------------------- --------------
Profit after tax
for
the financial year 337,810 (35,007) 302,803 317,206 (63,056) 254,150
------------- ------------- -------------- -------------- -------------------------- --------------
Profit attributable
to:
Owners of the
Parent 327,626 (35,007) 292,619 308,500 (62,991) 245,509
Non-controlling
interests 10,184 - 10,184 8,706 (65) 8,641
------------- ------------- -------------- -------------- -------------------------- --------------
337,810 (35,007) 302,803 317,206 (63,056) 254,150
------------- ------------- -------------- -------------- -------------------------- --------------
Earnings per
ordinary share
Basic earnings
per share 6 297.04p 249.64p
Diluted earnings
per share 6 296.62p 249.21p
Basic adjusted
earnings per
share 6 386.62p 362.64p
Diluted adjusted
earnings per
share 6 386.07p 362.02p
-------------- --------------
Group Statement of Comprehensive Income
For the year ended 31 March 2021
2021 2020
GBP'000 GBP'000
Group profit for the financial
year 302,803 254,150
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss
Currency translation:
- arising in the year (53,527) 5,763
- recycled to the Income Statement
on disposal - (397)
Movements relating to cash flow
hedges 67,961 (34,206)
Movement in deferred tax liability
on cash flow hedges (11,554) 5,816
--------- ---------
2,880 (23,024)
--------- ---------
Items that will not be reclassified
to profit or loss
Group defined benefit pension obligations:
- remeasurements 254 4,132
- movement in deferred tax asset 159 (560)
--------- ---------
413 3,572
--------- ---------
Other comprehensive income for the
financial year, net of tax 3,293 (19,452)
--------- ---------
Total comprehensive income for
the financial year 306,096 234,698
--------- ---------
Attributable to:
Owners of the Parent 298,172 224,496
Non-controlling interests 7,924 10,202
--------- ---------
306,096 234,698
--------- ---------
Group Balance Sheet
As at 31 March 2021
2021 2020
Notes GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 1,137,634 1,089,027
Right-of-use leased assets 308,863 304,097
Intangible assets and goodwill 2,206,735 2,126,892
Equity accounted investments 27,134 27,729
Deferred income tax assets 30,706 35,362
Derivative financial instruments 9 121,671 232,766
3,832,743 3,815,873
---------- ----------
Current assets
Inventories 685,950 630,996
Trade and other receivables 1,689,372 1,647,117
Derivative financial instruments 9 40,181 32,656
Cash and cash equivalents 9 1,786,556 1,794,467
---------- ----------
4,202,059 4,105,236
Total assets 8,034,802 7,921,109
---------- ----------
EQUITY
Capital and reserves attributable to owners
of the Parent
Share capital 17,422 17,422
Share premium 882,924 882,887
Share based payment reserve 8 40,969 34,914
Cash flow hedge reserve 8 13,130 (43,277)
Foreign currency translation reserve 8 60,260 111,527
Other reserves 8 932 932
Retained earnings 1,631,797 1,482,288
---------- ----------
Equity attributable to owners
of the Parent 2,647,434 2,486,693
Non-controlling interests 58,210 54,765
---------- ----------
Total equity 2,705,644 2,541,458
---------- ----------
LIABILITIES
Non-current liabilities
Borrowings 9 1,553,200 1,856,004
Lease creditors 9 261,617 259,456
Derivative financial instruments 9 652 3,729
Deferred income tax liabilities 183,220 179,959
Post employment benefit obligations 10 (8,024) (7,315)
Provisions for liabilities 279,492 264,208
Acquisition related liabilities 62,549 77,381
Government grants 373 331
---------- ----------
2,333,079 2,633,753
---------- ----------
Current liabilities
Trade and other payables 2,604,177 2,318,758
Current income tax liabilities 44,081 36,487
Borrowings 219,659 230,264
Lease creditors 9 53,607 47,411
Derivative financial instruments 9 9,843 30,144
Provisions for liabilities 42,859 46,581
Acquisition related liabilities 21,853 36,253
---------- ----------
2,996,079 2,745,898
Total liabilities 5,329,158 5,379,651
---------- ----------
Total equity and liabilities 8,034,802 7,921,109
---------- ----------
Net cash/(debt) included above
(excluding lease creditors) 9 165,054 (60,252)
---------- ----------
Group Statement of Changes in Equity
For the year Attributable to owners of the
ended 31 March Parent
2021
------------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
8)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2020 17,422 882,887 1,482,288 104,096 2,486,693 54,765 2,541,458
Profit for the
financial year - - 292,619 - 292,619 10,184 302,803
Other
comprehensive
income:
Currency
translation - - - (51,267) (51,267) (2,260) (53,527)
Group defined
benefit pension
obligations:
- remeasurements - - 254 - 254 - 254
- movement in
deferred tax
asset - - 159 - 159 - 159
Movements
relating to
cash
flow hedges - - - 67,961 67,961 - 67,961
Movement in
deferred tax
liability
on cash flow
hedges - - - (11,554) (11,554) - (11,554)
Total
comprehensive
income - - 293,032 5,140 298,172 7,924 306,096
Re-issue of
treasury shares - 37 - - 37 - 37
Share based
payment - - - 6,055 6,055 - 6,055
Non-controlling
interest
arising
on acquisition - - - - - 323 323
Dividends - - (143,523) - (143,523) (4,802) (148,325)
At 31 March 2021 17,422 882,924 1,631,797 115,291 2,647,434 58,210 2,705,644
--------------- ------------------ --------------- ------------- --------------- ---------------- -------------
For the year Attributable to owners of the
ended 31 March Parent
2020
----------------------------------------------------------------------------------
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note Total interests equity
8)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2019 17,422 882,561 1,368,250 122,473 2,390,706 42,821 2,433,527
Profit for the
financial year - - 245,509 - 245,509 8,641 254,150
Other
comprehensive
income:
Currency
translation:
- arising in the
year - - - 4,202 4,202 1,561 5,763
- recycled to
the Income
Statement
on disposal - - - (397) (397) - (397)
Group defined
benefit pension
obligations:
- remeasurements - - 4,132 - 4,132 - 4,132
- movement in
deferred tax
asset - - (560) - (560) - (560)
Movements
relating to
cash
flow hedges - - - (34,206) (34,206) - (34,206)
Movement in
deferred tax
liability
on cash flow
hedges - - - 5,816 5,816 - 5,816
Total
comprehensive
income - - 249,081 (24,585) 224,496 10,202 234,698
Re-issue of
treasury shares - 326 - - 326 - 326
Share based
payment - - - 6,208 6,208 - 6,208
Sale of equity
interest to
non-controlling
interest - - 4,169 - 4,169 1,742 5,911
Dividends - - (139,212) - (139,212) - (139,212)
At 31 March 2020 17,422 882,887 1,482,288 104,096 2,486,693 54,765 2,541,458
--------------- ------------------ --------------- ------------- ------------- ---------------- -------------
Group Cash Flow Statement
For the year ended 31 March 2021
2021 2020
Notes GBP'000 GBP'000
Cash flows from operating activities
Profit for the financial year 302,803 254,150
Add back non-operating expenses/(income):
- tax 62,278 57,335
- share of equity accounted investments'
profit (233) (1,015)
- net operating exceptionals 40,495 65,486
- net finance costs 58,002 56,174
---------- ----------
Group operating profit before
exceptionals 463,345 432,130
Share-based payments expense 6,055 6,208
Depreciation (including right-of-use
leased assets) 192,572 176,734
Amortisation of intangible assets 66,898 62,138
Profit on disposal of property,
plant and equipment (5,263) (5,604)
Amortisation of government grants (36) (11)
Other 2,418 3,180
Decrease in working capital 177,670 49,190
---------- ----------
Cash generated from operations
before exceptionals 903,659 723,965
Exceptionals (29,358) (30,922)
---------- ----------
Cash generated from operations 874,301 693,043
Interest paid (including lease
interest) (84,342) (84,975)
Income tax paid (62,191) (78,961)
---------- ----------
Net cash flows from operating
activities 727,768 529,107
---------- ----------
Investing activities
Inflows:
Proceeds from disposal of property,
plant and equipment 15,898 13,166
Government grants received in relation to 89 -
property, plant and equipment
Disposal of subsidiaries - 36,688
Interest received 27,930 39,188
43,917 89,042
---------- ----------
Outflows:
Purchase of property, plant and
equipment (162,879) (181,014)
Acquisition of subsidiaries 11 (236,232) (192,189)
Payment of accrued acquisition
related liabilities (36,330) (35,339)
---------- ----------
(435,441) (408,542)
---------- ----------
Net cash flows from investing
activities (391,524) (319,500)
---------- ----------
Financing activities
Inflows:
Proceeds from issue of shares 37 326
Net cash inflow on derivative
financial instruments 68,554 18,574
Increase in interest-bearing loans
and borrowings 320,000 408,095
388,591 426,995
---------- ----------
Outflows:
Repayment of interest-bearing
loans and borrowings (437,612) (248,017)
Repayment of lease creditors (59,279) (55,225)
Dividends paid to owners of the
Parent 7 (143,523) (139,212)
Dividends paid to non-controlling (4,802) -
interests
(645,216) (442,454)
---------- ----------
Net cash flows from financing
activities (256,625) (15,459)
---------- ----------
Change in cash and cash equivalents 79,619 194,148
Translation adjustment (47,496) 24,597
Cash and cash equivalents at beginning
of year 1,684,773 1,466,028
---------- ----------
Cash and cash equivalents at end
of year 1,716,896 1,684,773
---------- ----------
Cash and cash equivalents consists
of:
Cash and short-term bank deposits 1,786,556 1,794,467
Overdrafts (69,660) (109,694)
1,716,896 1,684,773
---------- ----------
Notes to the Condensed Financial Statements
For the year ended 31 March 2021
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 2021 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 2021 and their report was unqualified. The financial information for the year ended 31 March 2020 represents an abbreviated 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 the year ended 31 March 2021.
2. Accounting Policies
The following changes to IFRS became effective for the Group during the year but did not result in material changes to the Group's consolidated financial statements:
-- Covid-19-Related Rent Concessions (Amendment to IFRS 16) -- Amendments to References to Conceptual Framework in IFRS Standards -- Definition of Material (Amendments to IAS 1 and IAS 8) -- Definition of a Business (Amendments to IFRS 3)
Standards, interpretations and amendments to published standards that are not yet effective
The Group has not applied certain new standards, amendments and interpretations to existing standards that have been issued but are not yet effective. These include:
-- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
-- Annual Improvements to IFRS Standards 2018-2020 which contained the following amendments: IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture
-- Property, Plant and Equipment - Proceeds before Intended Use (Amendments to IAS 16) -- Reference to the Conceptual Framework (Amendments to IFRS 3) -- Classification of Liabilities as Current or Non-current (Amendments to IAS 1) -- IFRS 17 Insurance Contracts and Amendments to IFRS 17 Insurance Contracts 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
---------------------------- ----------------------------
2021 2020 2021 2020
StgGBP1= StgGBP1= StgGBP1= StgGBP1=
Euro 1.1182 1.1460 1.1736 1.1282
Danish Krone 8.3295 8.5639 8.7282 8.4244
Swedish Krona 11.6205 12.1816 12.0154 12.4789
Norwegian Krone 12.0742 11.4062 11.7304 12.9851
US Dollar 1.3036 1.2754 1.3760 1.2360
Hong Kong Dollar 10.1056 9.9760 10.6975 9.5831
4. Segmental Reporting
DCC is an 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. The Group is organised into four operating
segments (as identified under IFRS 8 Operating Segments) and generates
revenue through the following activities:
DCC LPG is a leading liquid petroleum gas ('LPG') sales and marketing
business, supplying LPG in cylinder and bulk format to residential,
commercial and industrial customers. In addition, DCC LPG is developing
a broader customer offering through the supply of natural gas, power
and renewables products, plus a range of specialty gases such as
refrigerants and medical gases.
DCC Retail & Oil is a leading provider of transport and heating
energy, lower emission fuels and biofuels, and related services to
consumers and SME businesses across Europe and has a key focus on
being a market leader in providing sustainable energy solutions to
consumers.
DCC Healthcare is a leading healthcare business, providing products
and services to health and beauty brand owners and healthcare providers.
DCC Technology is a leading route-to-market and supply chain partner
for global technology brands and customers.
The chief operating decision maker monitors the operating results
of segments separately in order to allocate resources between segments
and to assess performance. Segment performance is predominantly evaluated
based on operating profit before amortisation of intangible assets
and net operating exceptional items. 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. 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 2021
---------------------------------------------------------------------
DCC DCC DCC DCC
LPG Retail & Oil Healthcare Technology Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 1,685,570 6,588,186 655,364 4,483,330 13,412,450
--------- ----------- ---------------- --------- --------------
Adjusted operating profit 231,253 144,824 81,721 72,445 530,243
Amortisation of intangible
assets (37,829) (4,926) (5,504) (18,639) (66,898)
Net operating exceptionals
(note 5) (17,732) (5,261) (4,229) (13,273) (40,495)
--------- ----------- ---------------- --------- --------------
Operating profit 175,692 134,637 71,988 40,533 422,850
--------- ----------- ---------------- --------- --------------
Year ended 31 March 2020
---------------------------------------------------------------------
DCC DCC DCC DCC
LPG Retail & Oil Healthcare Technology Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 1,657,341 8,607,302 578,098 3,912,652 14,755,393
--------- ----------- ---------------- --------- --------------
Adjusted operating profit 228,230 140,240 60,518 65,280 494,268
Amortisation of intangible
assets (32,719) (5,386) (4,596) (19,437) (62,138)
Net operating exceptionals
(note 5) (6,030) (3,281) (40,771) (15,404) (65,486)
--------- ----------- ---------------- --------- --------------
Operating profit 189,481 131,573 15,151 30,439 366,644
--------- ----------- ---------------- --------- --------------
(b) By geography
The Group has a presence in 20 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 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*
------------------------ ------------------------
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Republic of Ireland 901,802 842,680 180,635 155,712
United Kingdom 5,932,234 6,818,145 1,253,059 1,229,019
France 2,442,082 2,875,390 918,853 952,818
Other 4,136,332 4,219,178 1,327,819 1,210,196
----------- ----------- ----------- -----------
13,412,450 14,755,393 3,680,366 3,547,745
----------- ----------- ----------- -----------
* Non-current assets comprise property, plant and equipment, right-of-use leased assets, intangible assets and goodwill and equity accounted investments
Disaggregation of revenue
The following table disaggregates revenue by primary geographical market, major revenue lines and timing of revenue recognition. The use of revenue as a metric of performance in the Group's LPG and Retail & Oil segments is of limited relevance due to the influence of changes in underlying oil product costs on absolute revenues. Whilst changes in underlying oil product costs will change percentage operating margins, this has little relevance in the downstream energy distribution market in which these two segments operate where profitability is driven by absolute contribution per tonne/litre of product sold, and not a percentage margin. Accordingly, management review geographic volume performance rather than geographic revenue performance for these two segments as country-specific GDP and weather patterns can influence volumes. The disaggregated revenue information presented below for DCC Healthcare and Technology, which can also be influenced by country-specific GDP movements, is consistent with how revenue is reported and reviewed internally.
Year ended 31 March 2021
---------------------------------------------------------------------
DCC DCC DCC DCC
LPG Retail & Oil Healthcare Technology Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Republic of Ireland (country
of domicile) 130,842 340,285 103,364 327,311 901,802
United Kingdom 330,907 2,699,344 373,413 2,528,570 5,932,234
France 767,199 1,348,429 - 326,454 2,442,082
Other 456,622 2,200,128 178,587 1,300,995 4,136,332
--------- --------- ---------------- ------------ ------------
Revenue 1,685,570 6,588,186 655,364 4,483,330 13,412,450
--------- --------- ---------------- ------------ ------------
Products transferred at
point in time 1,685,570 6,588,186 655,364 4,483,330 13,412,450
--------- --------- ------- ----------- ----------
LPG and related products 1,685,570 - - - 1,685,570
Oil and related products - 6,588,186 - - 6,588,186
Nutrition and health &
beauty products - - 373,824 - 373,824
Medical and pharmaceutical
products - - 281,540 - 281,540
Technology products and
services - - - 4,483,330 4,483,330
Revenue 1,685,570 6,588,186 655,364 4,483,330 13,412,450
--------- --------- ------- ------------------ ------------
Year ended 31 March 2020
---------------------------------------------------------------------
DCC DCC DCC DCC
LPG Retail & Oil Healthcare Technology Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Republic of Ireland (country
of domicile) 116,161 356,382 92,905 277,232 842,680
United Kingdom 299,645 3,753,823 417,201 2,347,476 6,818,145
France 843,974 1,786,321 - 245,095 2,875,390
Other 397,561 2,710,776 67,992 1,042,849 4,219,178
--------- --------- ---------------- ------------ ------------
Revenue 1,657,341 8,607,302 578,098 3,912,652 14,755,393
--------- --------- ---------------- ------------ ------------
Products transferred at
point in time 1,657,341 8,607,302 578,098 3,912,652 14,755,393
--------- --------- ------- ----------- ----------
LPG and related products 1,657,341 - - - 1,657,341
Oil and related products - 8,607,302 - - 8,607,302
Nutrition and health &
beauty products - - 249,501 - 249,501
Medical and pharmaceutical
products - - 328,597 - 328,597
Technology products and
services - - - 3,912,652 3,912,652
Revenue 1,657,341 8,607,302 578,098 3,912,652 14,755,393
--------- --------- ------- ------------------ ------------
5. Exceptionals
2021 2020
GBP'000 GBP'000
Restructuring and integration costs (26,724) (22,011)
Acquisition and related costs (13,604) (8,286)
Adjustments to contingent acquisition
consideration 27 673
Loss on disposal - (34,709)
Other operating exceptional items (194) (1,153)
Net operating exceptional items (40,495) (65,486)
Mark to market of swaps and related
debt 1,384 (860)
--------- -----------
Net exceptional items before taxation (39,111) (66,346)
Income tax credit attaching to exceptional
items 4,104 3,290
--------- -----------
Net exceptional items after taxation (35,007) (63,056)
Non-controlling interest share of
net exceptional items after taxation - 65
--------- -----------
Net exceptional items attributable
to owners of the Parent (35,007) (62,991)
--------- -----------
Restructuring and integration costs of GBP26.724 million primarily relates to restructuring of operations as part of the integration of completed acquisitions across a small number of businesses. It includes the costs related to the restructuring of DCC LPG's consumer gas and power business in France where a new partnership with a third party has been created to better leverage the strong brand presence while reducing risk associated with this market in France. It also includes the reducing dual running costs relating to DCC Technology's UK SAP implementation which went live during the summer in the majority of the UK business. DCC Technology also incurred restructuring costs across a number of businesses where some right-sizing was required given the change in mix in the business as a result of the pandemic .
Acquisition and related costs include the professional fees and tax costs relating to the evaluation and completion of acquisition opportunities and amounted to GBP13.604 million.
Most of the Group's debt has been raised in the US private placement market, denominated in US dollars, euro and sterling. Long-term interest and cross currency interest rate derivatives have been utilised to achieve an appropriate mix of fixed and floating rate debt across the three currencies. The level of ineffectiveness calculated under IAS 39 on the fair value and cash flow hedge relationships relating to this debt is charged or credited as an exceptional item. In the year ended 31 March 2021, this amounted to an exceptional non-cash gain of GBP1.384 million. Following this gain, the cumulative net exceptional charge taken in respect of the Group's outstanding US Private Placement debt and related hedging instruments is GBP0.750 million. This, or any subsequent similar non-cash charges or gains, will net to zero over the remaining term of this debt and the related hedging instruments.
There was a related income tax credit of GBP4.104 million in relation to certain exceptional charges.
The net cash flow impact in the current year for exceptional items was an outflow of GBP29.358 million (2020: an inflow of GBP5.766 million).
The loss on disposal in the comparative year related to DCC Healthcare's disposal of DCC Vital's UK generic pharma activities and related manufacturing facility in Ireland (Kent Pharma and Athlone Laboratories). Whilst part of the DCC Group, the cash flows generated by the disposed business more than recovered its acquisition cost, however, the transaction resulted in a loss on disposal of GBP34.709 million.
6. Earnings per Ordinary Share
2021 2020
GBP'000 GBP'000
Profit attributable to
owners of the Parent 292,619 245,509
Amortisation of intangible
assets after tax 53,234 48,141
Exceptionals after tax
(note 5) 35,007 62,991
---------- ------------------
Adjusted profit after taxation
and non-controlling interests 380,860 356,641
---------- ------------------
2021 2020
Basic earnings per ordinary pence pence
share
Basic earnings per ordinary
share 297.04p 249.64p
Amortisation of intangible
assets after tax 54.04p 48.95p
Exceptionals after tax 35.54p 64.05p
---------- ------------------
Adjusted basic earnings
per ordinary share 386.62p 362.64p
---------- ------------------
Weighted average number of ordinary
shares in issue (thousands) 98,510 98,345
---------- ------------------
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.
2021 2020
Diluted earnings per ordinary share pence pence
Diluted earnings per ordinary share 296.62p 249.21p
Amortisation of intangible assets after tax 53.96p 48.87p
Exceptionals after tax 35.49p 63.94
------- ------------
Adjusted diluted earnings per ordinary share 386.07p 362.02p
------- ------------
Weighted average number of ordinary shares
in issue (thousands) 98,650 98,514
------- ------------
The earnings used for the purposes of the diluted earnings per ordinary share calculations were GBP292.619 million (2020: GBP245.509 million) and GBP380.860 million (2020: GBP356.641 million) for the purposes of the 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 2021 was 98.650 million (2020: 98.514 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:
2021 2020
'000 '000
Weighted average number of ordinary shares in
issue 98,510 98,345
Dilutive effect of options and awards 140 169
------ ------
Weighted average number of ordinary shares for
diluted earnings per share 98,650 98,514
------ ------
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. 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.
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.
7. Dividends
2021 2020
GBP'000 GBP'000
Final - paid 95.79 pence per share
on 23 July 2020
(2020: paid 93.37 pence per share
on 18 July 2019) 92,478 89,424
Interim - paid 51.95 pence per
share on 9 December 2020 (2020:
paid 49.48 pence per share on
11 December 2019) 51,045 49,788
143,523 139,212
--------------------- ------------------
The Directors are proposing a final dividend in respect of the year ended 31 March 2021 of 107.85 pence per ordinary share (GBP106.303 million). This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.
8. Other Reserves
For the year ended 31 March
2021
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 2020 34,914 (43,277) 111,527 932 104,096
Currency translation - - (51,267) - (51,267)
Movements relating to cash
flow hedges - 67,961 - - 67,961
Movement in deferred tax liability
on cash flow hedges - (11,554) - - (11,554)
Share based payment 6,055 - - - 6,055
At 31 March 2021 40,969 13,130 60,260 932 115,291
------------------- --------- ----------- -------- --------
For the year ended 31 March
2020
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 2019 28,706 (14,887) 107,722 932 122,473
Currency translation:
- arising in the year - - 4,202 - 4,202
- recycled to the Income
Statement on disposal - - (397) - (397)
Movements relating to cash
flow hedges - (34,206) - - (34,206)
Movement in deferred tax liability
on cash flow hedges - 5,816 - - 5,816
Share based payment 6,208 - - - 6,208
At 31 March 2020 34,914 (43,277) 111,527 932 104,096
------------------- --------- ----------- -------- --------
9. Analysis of Net Cash/(Debt)
2021 2020
GBP'000 GBP'000
Non-current assets
Derivative financial instruments 121,671 232,766
------------ ------------
Current assets
Derivative financial instruments 40,181 32,656
Cash and cash equivalents 1,786,556 1,794,467
------------ ------------
1,826,737 1,827,123
------------ ------------
Non-current liabilities
Derivative financial instruments (652) (3,729)
Unsecured Notes (1,553,200) (1,856,004)
------------ ------------
(1,553,852) (1,859,733)
------------ ------------
Current liabilities
Bank borrowings (69,660) (166,328)
Derivative financial instruments (9,843) (30,144)
Unsecured Notes (149,999) (63,936)
------------ ------------
(229,502) (260,408)
------------ ------------
Net cash/(debt) (excluding lease creditors) 165,054 (60,252)
------------ ------------
Lease creditors (non-current) (261,617) (259,456)
Lease creditors (current) (53,607) (47,411)
------------ ------------
Total lease creditors (315,224) (306,867)
------------ ------------
Net debt (including lease creditors) (150,170) (367,119)
------------ ------------
An analysis of the maturity profile of the Group's net cash/(debt) (including lease creditors) at 31 March 2021 is as follows:
Between Between
Less than 1 and 2 and Over
2 5
1 year years years 5 years Total
At 31 March 2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and short-term deposits 1, 786,556 - - - 1,786,556
Overdrafts (69,660) - - - (69,660)
---------- -------- ------------- --------- -----------
Cash and cash equivalents 1,716,896 - - - 1,716,896
Unsecured Notes (149,999) - (669,204) (883,996) (1,703,199)
Derivative financial instruments
- Unsecured Notes 16,919 - 87,995 32,971 137,885
Derivative financial instruments
- other 13,419 497 (444) - 13,472
---------- -------- ------------- --------- -----------
Net cash/(debt) (excluding lease
creditors) 1,597,235 497 (581,653) (851,025) 165,054
Lease creditors (53,607) (46,664) (97,973) (116,980) (315,224)
---------- -------- ------------- --------- -----------
Net debt (including lease
creditors) 1,543,628 (46,167) (679,626) (968,005) (150,170)
---------- -------- ------------- --------- -----------
The Group's Unsecured Notes fall due between 21 May 2021 and 4 April 2034 with an average maturity of 5.2 years at 31 March 2021. The full fair value of a hedging derivative is allocated to the time period corresponding to the maturity of the hedged item.
10. Post Employment Benefit Obligations
The Group's defined benefit pension schemes' assets were measured at fair value at 31 March 2021. The defined benefit pension schemes' liabilities at 31 March 2021 were updated to reflect material movements in underlying assumptions.
The Group's post employment benefit obligations moved from a net asset of GBP7.315 million at 31 March 2020 to a net asset of GBP8.024 million at 31 March 2021. The movement in the net asset position primarily reflects contributions in excess of the current service cost and a good investment performance in the year offset by an increase in liabilities arising from an increase in inflation rates and a decrease in discount rates.
11. 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 period, together with percentages acquired, were as follows:
-- The acquisition by DCC LPG of 100% of NES Group in September 2020. NES Group markets, sells and delivers propane and other related products and services to residential and commercial customers in the north-east of the USA; and
-- The acquisition by DCC LPG in January 2021 of 100% of United Propane Gas ('UPG'). UPG markets, sells and delivers LPG and related products and services to residential, agricultural and commercial customers in 13 midwest and southern states.
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.
Total Total
2021 2020
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 41,868 34,276
Right-of-use leased assets 9,144 17,715
Intangible assets 124,014 78,991
Equity accounted investments - 1,646
Deferred income tax assets 15 120
-------- --------
Total non-current assets 175,041 132,748
-------- --------
Current assets
Inventories 18,209 44,307
Trade and other receivables 30,640 65,888
-------- --------
Total current assets 48,849 110,195
-------- --------
Liabilities
Non-current liabilities
Deferred income tax liabilities (10,981) (5,443)
Provisions for liabilities (659) (588)
Lease creditors (7,350) (16,403)
Total non-current liabilities (18,990) (22,434)
-------- --------
Current liabilities
Trade and other payables (48,955) (59,626)
Provisions for liabilities (69) (621)
Current income tax liabilities (880) (342)
Lease creditors (1,794) (3,063)
--------
Total current liabilities (51,698) (63,652)
-------- --------
Identifiable net assets acquired 153,202 156,857
Non-controlling interests arising
on acquisition (323) -
Goodwill 92,674 78,376
-------- --------
Total consideration 245,553 235,233
-------- --------
Satisfied by:
Cash 248,694 186,324
Net (cash and cash equivalents)/debt
acquired (12,462) 5,865
-------- --------
Net cash outflow 236,232 192,189
Acquisition related liabilities 9,321 43,044
-------- --------
Total consideration 245,553 235,233
-------- --------
None of the 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
Total GBP'000 GBP'000 GBP'000
Non-current assets (excluding goodwill) 53,473 121,568 175,041
Current assets 50,188 (1,339) 48,849
Non-current liabilities (7,817) (11,173) (18,990)
Current liabilities (51,698) - (51,698)
-------- ----------- --------
Identifiable net assets acquired 44,146 109,056 153,202
Non-controlling interests arising on acquisition (323) - (323)
Goodwill arising on acquisition 201,730 (109,056) 92,674
-------- ----------- --------
Total consideration 245,553 - 245,553
-------- ----------- --------
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect of a number of the business combinations above given the timing of closure of these transactions. Any amendments to fair values within the twelve month timeframe from the date of acquisition will be disclosable in the 2022 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.
GBP52.7 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 GBP13.604 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 GBP31.404 million. The fair value of these receivables is GBP30.640 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance for impairment of GBP0.764 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 nil to GBP15.982 million.
The acquisitions during the year contributed GBP168.613 million to revenues and GBP9.005 million to profit after tax. Had all the business combinations effected during the year occurred at the beginning of the year, total Group revenue for the year ended 31 March 2021 would have been GBP13.707 billion and total Group profit after tax would have been GBP304.712 million.
12. 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.
13. 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 2021 financial year.
14. Events after the Balance Sheet Date
In April 2021, DCC Healthcare acquired Wörner Medizinprodukte Holding GmbH ('Wörner'), a leading supplier of medical and laboratory products to the primary care sector in Germany and Switzerland. Wörner sells a broad product range to approximately 20,000 customers annually, including general practitioners, primary care centres, specialist medical centre and laboratories. DCC acquired Wörner based on an initial enterprise value of approximately EUR80 million. An initial assignment of fair values to identifiable net assets acquired has not been completed given the timing of the closure of the transaction.
The Group also completed a number of other, smaller acquisitions since the balance sheet date (including the acquisition of Solewa in DCC LPG) and agreed to acquire Jones Oil in DCC Retail & Oil and Azenn in DCC Technology, amongst others. As with Wörner, an initial assignment of fair values to identifiable net assets acquired has not been completed given the timing of the closure of the transactions.
15. Board Approval
This report was approved by the Board of Directors of DCC plc on 17 May 2021.
Supplementary Financial Information
For the year ended 31 March 2021
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.
2021 2020
Calculation GBP'000 GBP'000
==================================== ======== ========
Operating profit 422,850 366,644
Net operating exceptional items 40,495 65,486
Amortisation of intangible assets 66,898 62,138
==================================== ======== ========
Adjusted operating profit ('EBITA') 530,243 494,268
==================================== ======== ========
Adjusted operating profit before depreciation ('EBITDA')
Definition
EBITDA represents earnings before net interest, tax, depreciation on property, plant and equipment, amortisation of intangible assets, share of equity accounted investments' profit after tax and net exceptional items. This metric is used to compare profitability between companies by eliminating the effects of financing, tax environments, asset bases and business combinations history. It is also utilised as a proxy for a company's cash flow.
2021 2020
Calculation GBP'000 GBP'000
============================================== ======== ========
Adjusted operating profit ('EBITA') 530,243 494,268
Depreciation of property, plant and equipment 131,199 118,545
============================================== ======== ========
EBITDA 661,442 612,813
============================================== ======== ========
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.
2021 2020
Calculation GBP'000 GBP'000
======================================== =========== ===============
Finance costs before exceptional items (85,639) (94,824)
Finance income before exceptional items 26,253 39,510
======================================== =========== ===============
Net interest (59,386) (55,314)
======================================== =========== ===============
Interest cover - EBITDA Interest Cover
Definition
The EBITDA interest cover ratio measures the Group's ability to pay interest charges on debt from cash flows. In order to maintain comparability with the definitions contained in the Group's lending arrangements, EBITDA and net interest exclude the impact arising from the adoption of IFRS 16.
2021 2020
Calculation GBP'000 GBP'000
======================================================== ============ ===============
EBITDA 661,442 612,813
Less: impact of adoption of IFRS 16 in the current year (5,563) (4,999)
======================================================== ============ ===============
655,879 607,814
======================================================== ============ ===============
Net interest (59,386) (55,314)
Less: impact of adoption of IFRS 16 in the current year 9,707 8,635
======================================================== ============ ===============
(49,679) (46,679)
EBITDA interest cover (times) 13.2x 13.0x
======================================================== ============ ===============
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.
2021 2020
Calculation GBP'000 GBP'000
========================================================== =============== ==================
Adjusted operating profit 530,243 494,268
Net interest (59,386) (55,314)
========================================================== =============== ==================
Earnings before taxation 470,857 438,954
========================================================== =============== ==================
Income tax expense 62,278 57,335
Income tax attaching to net exceptionals 4,104 3,290
Deferred tax attaching to amortisation of intangible
assets 13,664 13,997
========================================================== =============== ==================
Total income tax expense before exceptionals and deferred
tax attaching to
amortisation of intangible assets 80,046 74,622
========================================================== =============== ==================
Effective tax rate (%) 17.0% 17.0%
========================================================== =============== ==================
Dividend cover
Definition
The dividend cover ratio measures the Group's ability to pay dividends from earnings.
2021 2020
Calculation pence pence
============================ =============== =================
Adjusted earnings per share 386.62 362.64
Dividend 159.80 145.27
============================ =============== =================
Dividend cover (times) 2.4x 2.5x
============================ =============== =================
Net capital expenditure
Definition
Net capital expenditure comprises purchases of property, plant and equipment, proceeds from the disposal of property, plant and equipment and government grants received in relation to property, plant and equipment.
2021 2020
Calculation GBP'000 GBP'000
======================================================== =============== ==================
Purchase of property, plant and equipment 162,879 181,014
Government grants received in relation to property,
plant and equipment (89) -
Proceeds from disposal of property, plant and equipment (15,898) (13,166)
======================================================== =============== ==================
Net capital expenditure 146,892 167,848
======================================================== =============== ==================
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 repayment of lease creditors (including interest) and net capital expenditure.
2021 2020
Calculation GBP'000 GBP'000
=================================================== =============== ==================
Cash generated from operations before exceptionals 903,659 723,965
Repayment of lease creditors (68,986) (63,860)
Net capital expenditure (146,892) (167,848)
=================================================== =============== ==================
Free cash flow 687,781 492,257
=================================================== =============== ==================
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 (excluding interest relating to lease creditors), income tax paid, dividends received from equity accounted investments and interest received. As noted in the definition of free cash flow, interest amounts relating to the repayment of lease creditors has been deducted in arriving at the Group's free cash flow and are therefore excluded from the interest paid figure in arriving at the Group's free cash flow (after interest and tax payments).
2021 2020
Calculation GBP'000 GBP'000
==================================================== ============== ====================
Free cash flow 687,781 492,257
Interest paid (excluding interest relating to lease
creditors) (74,635) (76,340)
Income tax paid (62,191) (78,961)
Interest received 27,930 39,188
==================================================== ============== ====================
Free cash flow (after interest and tax payments) 578,885 376,144
==================================================== ============== ====================
Cash conversion ratio
Definition
The cash conversion ratio expresses free cash flow as a percentage of adjusted operating profit.
2021 2020
Calculation GBP'000 GBP'000
========================== =============== ===================
Free cash flow 687,781 492,257
Adjusted operating profit 530,243 494,268
========================== =============== ===================
Cash conversion ratio (%) 130% 100%
========================== =============== ===================
Return on capital employed ('ROCE')
Definition
ROCE represents adjusted operating profit expressed as a percentage of the average total capital employed.
The Group adopted IFRS 16 Leases on the transition date of 1 April 2019 using the modified retrospective approach, meaning that comparatives were not restated. To assist comparability with prior years, the Group presents ROCE excluding the impact of IFRS 16 ('ROCE excl. IFRS 16') as well as ROCE including the impact of IFRS 16 ('ROCE incl. IFRS 16'). Total capital employed (excl. IFRS 16) represents total equity adjusted for net debt/cash (including lease creditors), goodwill and intangibles written off, right-of-use leased assets, acquisition related liabilities and equity accounted investments whilst total capital employed (incl. IFRS 16) includes right-of-use leased assets.
Similarly, adjusted operating profit is presented both excluding and including the impact of IFRS 16. 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.
ROCE (excl. IFRS 16)
2021 2020
Calculation GBP'000 GBP'000
========================================================== ================== ===============================
Total equity 2,705,644 2,541,458
Net debt (including lease creditors) 150,170 367,119
Goodwill and intangibles written off 462,473 395,577
Right-of-use leased assets (308,863) (304,097)
Equity accounted investments (27,134) (27,729)
Acquisition related liabilities (current and non-current) 84,402 113,634
3,066,692 3,085,962
========================================================== ================== ===============================
Average total capital employed (excl. IFRS 16) 3,076,327 2,974,265
Adjusted operating profit 530,243 494,268
Less: impact of adoption of IFRS 16 Leases on operating
profit (5,563) (4,999)
========================================================== ================== ===============================
Adjusted operating profit 524,680 489,269
========================================================== ================== ===============================
Return on capital employed (excl. IFRS 16) 17.1% 16.5%
========================================================== ================== ===============================
ROCE (incl. IFRS 16)
2021 2020
Calculation GBP'000 GBP'000
=============================================== ================ ====================
Total capital employed 3,066,692 3,085,962
Right-of-use leased assets 308,863 304,097
3,375,555 3,390,059
=============================================== ================ ====================
Average total capital employed (incl. IFRS 16) 3,382,807 3,274,204
Adjusted operating profit 530,243 494,268
Return on capital employed (incl. IFRS 16) 15.7% 15.1%
=============================================== ================ ====================
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.
2021 2020
Calculation GBP'000 GBP'000
======================================================== ============ ========
Net cash outflow on acquisitions during the year 236,232 192,189
Cash outflow on acquisitions which were committed
to in the previous year (22,388) (75,365)
Acquisition related liabilities arising on acquisitions
during the year 9,321 43,044
Acquisition related liabilities which were committed
to in the previous year (539) (10,768)
Amounts committed in the current year 152,000 19,500
======================================================== ============ ========
Committed acquisition expenditure 374,626 168,600
======================================================== ============ ========
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).
2021 2020
Calculation GBP'000 GBP'000
================================================ =========== ===========
Inventories 685,950 630,996
Trade and other receivables 1,689,372 1,647,117
Less: interest receivable (16) (428)
Trade and other payables (2,604,177) (2,318,758)
Less: interest payable 11,668 11,963
Less: amounts due in respect of property, plant
and equipment 13,554 6,284
Less: government grants 20 11
================================================ =========== ===========
Net working capital (203,629) (22,815)
================================================ =========== ===========
Working capital (days)
Definition
Working capital days measures how long it takes in days for the Group to convert working capital into revenue.
2021 2020
Calculation GBP'000 GBP'000
======================= ========= =============
Net working capital (203,629) (22,815)
March revenue 1,468,052 1,279,731
======================= ========= =============
(4.3 (0.6
Working capital (days) days) days)
======================= ========= =============
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