REG - DCC PLC - Results for the year ended 31 March 2024
14/05/2024 07:00
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RNS Number : 2508O DCC PLC 14 May 2024
14 May 2024
Preliminary statement of results for the year ended 31 March 2024
Growth, Development and Strategic Momentum in DCC's 30(th) Year as a Public
Company
· Adjusted operating profit up 4.1% (5.3% on a constant currency basis) to
£682.8 million, driven by very strong growth in DCC Energy. DCC Healthcare
returned to organic growth in the second half of the year.
· Excellent cash generation, with free cash flow conversion of 100%.
· Proposed increase of 5.0% in annual dividend, marking 30 consecutive years
of dividend growth.
· Committed c.£490 million to acquisitions which accelerate the Group's
growth and development.
· Acquisition commitments announced today include Next Energy, which
materially enhances DCC Energy's energy transition capability in the domestic
sector in the UK. This acquisition will add to DCC Energy's share of profits
from services, renewable and other products ("SRO")(1), which reached 35% this
year (2023: 28%, 2022: 22%), demonstrating progress and momentum in executing
DCC Energy's Cleaner Energy in Your Power strategy.
· DCC expects that the year ending 31 March 2025 will be a year of strong
operating profit growth and continued development activity.
Donal Murphy, Chief Executive, commented:
"We are pleased to announce that we delivered a year of growth, development
and strategic progress - in our 30(th) year as a public company. The very
strong growth delivered by DCC Energy was the highlight of the year, and it is
also encouraging that DCC Healthcare returned to organic growth in the second
half of the year. We are executing our Cleaner Energy in Your Power strategy
in DCC Energy and have real momentum as we build the offerings that enable
customers to make cleaner energy choices. Our growth this year is again
testament to our 16,600 people who continue to go above and beyond. As we
reflect on three decades of growth, we're excited about what lies ahead: the
growing need for cleaner energy, lifelong health and progressive technology."
Financial Highlights 2024 2023 % change % change CC(2)
Revenue £19.859bn £22.205bn -10.6% -9.6%
Adjusted operating profit(3) £682.8m £655.7m +4.1% +5.3%
DCC Energy £503.0m £457.8m +9.9% +10.8%
DCC Healthcare £88.1m £91.8m -4.0% -3.6%
DCC Technology £91.7m £106.1m -13.6% -10.7%
Adjusted earnings per share(3) 455.0p 456.3p -0.3% +0.9%
Dividend per share 196.57p 187.21p +5.0%
Free cash flow(3) £681.1m £570.4m
Return on capital employed(3) 14.3% 15.1%
(1) SRO = Services, Renewables and Other. Main elements include EMS (solar,
renewable electricity), digital fleet services (fuel cards), bio/renewable
fuels and non-fuel retail convenience profits
(2) Constant currency ('CC') represents the retranslation of foreign
denominated current year results at prior year exchange rates
(3) Refer to Alternative Performance Measures in Supplementary Financial
Information for further details
Contact information
Investor enquiries:
Kevin Lucey, Chief Financial Officer Tel: +353 1 2799 400
Rossa White, Head of Group Investor Relations Email: investorrelations@dcc.ie
Media enquiries:
Powerscourt (Eavan Gannon/Pete Lambie) Tel: +44 20 7250 1446
Email: DCC@powerscourt-group.com
Presentation of results - audio webcast and conference call details
Group and divisional management will host a live audio webcast and conference
call of the presentation at 09.00 am BST today. The access details are as
follows:
Ireland: +353 (0) 1 691 7842
UK: +44 (0) 20 3936 2999
International: +44 (0) 20 3936 2999
Passcode: 361826
Webcast link:
https://www.investis-live.com/dcc/662265a15f683912008965b5/wthbx
(https://www.investis-live.com/dcc/662265a15f683912008965b5/wthbx)
This report, presentation slides and a recording of the webcast will be made
available at www.dcc.ie (http://www.dcc.ie) .
About DCC plc
Invest in what the world needs
DCC is a leading international sales, marketing and support services group. We
provide solutions the world needs across three transformative sectors: energy,
healthcare and technology; where we acquire, improve and grow diverse
businesses. We bring our growth mindset to our businesses in 22 countries
across four continents, empowering our 16,600 employees to create long term
value - for our shareholders, customers, society and the planet.
Headquartered in Dublin, DCC plc is listed on the London Stock Exchange and is
a constituent of the FTSE 100. In our financial year ended 31 March 2024, DCC
generated revenues of £19.9 billion and adjusted operating profit
of £682.8 million. DCC has an excellent record, delivering compound annual
growth of 14% in adjusted operating profit and unbroken dividend growth of 13%
while maintaining high returns on capital employed over 30 years as a public
company.
Follow us on LinkedIn (https://www.linkedin.com/company/dcc-plc) .
www.dcc.ie (http://www.dcc.ie)
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 & DIVISIONAL PERFORMANCE Review
A summary of the Group's results for the year ended 31 March 2024 is as
follows:
2024 2023
£'m £'m % change
Revenue 19,859 22,205 -10.6%
Adjusted operating profit(1)
DCC Energy 503.0 457.8 +9.9%
DCC Healthcare 88.1 91.8 -4.0%
DCC Technology 91.7 106.1 -13.6%
Group adjusted operating profit(1) 682.8 655.7 +4.1%
Finance costs (net) and other (104.8) (81.4)
Profit before net exceptionals, amortisation of intangible assets and tax 578.0 574.3 +0.6%
Net exceptional charge before tax and non-controlling interests (40.2) (31.6)
Amortisation of intangible assets (114.1) (111.1)
Profit before tax 423.7 431.6 -1.8%
Taxation (83.2) (84.8)
Profit after tax 340.5 346.8
Non-controlling interests (14.2) (12.8)
Attributable profit 326.3 334.0
Adjusted earnings per share(1) 455.0p 456.3p -0.3%
Dividend per share 196.57p 187.21p +5.0%
Operating cash flow 913.0 785.5
Free cash flow(1) 681.1 570.4
Net debt at 31 March (excl. lease creditors) (784.7) (767.3)
Lease creditors (362.4) (346.6)
Net debt at 31 March (incl. lease creditors) (1,147.1) (1,113.9)
Total equity at 31 March 3,183.0 3,058.3
Return on capital employed (excl. IFRS 16) 14.3% 15.1%
Return on capital employed (incl. IFRS 16) 13.5% 14.2%
(1)( )Refer to Alternative Performance Measures in Supplementary Financial Information for further detail
Income Statement Review
Group revenue
Group revenue decreased by 10.6% (9.6% on a constant currency basis) to £19.9
billion, driven by the reduced wholesale cost of energy for DCC Energy.
Revenue in DCC Energy was £14.2 billion, a decrease of 11.8% (11.0% on a
constant currency basis). With like-for-like volumes modestly behind the prior
year (2.6%), the significant decrease in revenue was as a result of the lower
wholesale cost of energy commodities during the year.
DCC Healthcare recorded revenues of £859.4 million, an increase of 4.6% (5.2%
on a constant currency basis). The revenue growth was driven by the
acquisition of Medi-Globe completed in September 2023. Organically, revenue
declined by 0.3% as growth in DCC Vital was offset by reduced demand in DCC
Health & Beauty Solutions.
Revenue in DCC Technology was £4.8 billion, a decrease of 9.3% (7.8% on an
organic constant currency basis) driven by a weaker market for consumer
technology products.
Group adjusted operating profit
Group adjusted operating profit increased by 4.1% to £682.8 million. Strong
organic growth in DCC Energy was offset, as anticipated, by the more difficult
trading environment across DCC Healthcare and DCC Technology. The impact on
reported Group adjusted operating profit of foreign exchange (FX) translation,
M&A growth and organic growth was as follows:
Financial Year FX translation M&A Organic Reported growth
2024 -1.2% +4.5% +0.8% +4.1%
2023 +3.5% +7.6% +0.2% +11.3%
2022 -4.0% +9.0% +6.1% +11.1%
Average sterling exchange rates versus the euro were broadly consistent during
the year, but sterling strengthened against the US dollar and some Nordic
currencies, which led to negative FX translation overall for the Group. The
net impact of currency translation in the current year was a headwind of 1.2%,
or £7.9 million, in the reported growth in adjusted operating profit.
Acquisitions completed in the current and prior year contributed 4.5% of the
reported operating profit growth. The material contribution came from the
prior year acquisition of Medi-Globe and the current year acquisition of
Centreco.
Organic operating profit growth was modest at 0.8% and was driven by the
strong organic performance of DCC Energy. As reported during the year, DCC
Healthcare and DCC Technology experienced more difficult market conditions and
declined organically. The inflationary environment continued as a significant
feature of the year across each division, with the overall organic profit
growth achieved despite the 7.5% (or £131.2 million) increase in the Group's
like for like overhead cost base. Further commentary on the trading
performances of each of the three divisions is detailed below.
Divisional Performance Reviews
DCC Energy 2024 2023 % change % change CC
Volumes (billion litre equivalent)(1) 15.2bn 15.5bn -2.2%
Gross profit £1.757bn £1.566bn +12.2% +13.2%
Operating profit £503.0m £457.8m +9.9% +10.8%
Operating profit per litre(2) 3.31ppl 2.95ppl
Return on capital employed excl. IFRS 16 18.7% 19.0%
Return on capital employed incl. IFRS 16 17.4% 17.6%
· DCC Energy recorded operating profit of £503.0 million, up 9.9% (+10.8%
constant currency). Organic profit growth was 5.9%, driven by a very strong
Energy Solutions performance.
· In successfully executing our strategy, DCC Energy's share of operating
profit from services, renewables and other (SRO) products increased to 35%
from 28% in FY23 (FY22: 22%). DCC Energy's strong profit growth, together with
a reduction in Scope 3 carbon emissions of 3.1%, reduced the carbon intensity
of our profits further by 11.8%.
· We committed c.£485 million to 15 acquisitions in line with our Cleaner
Energy in Your Power strategy. In February 2024 we significantly expanded our
presence in the German liquid gas market by acquiring Progas. We completed
nine acquisitions which expand our energy management services ("EMS")
offering, including in solar (Centreco in the UK and Secundo in Austria),
combined heat & power units and back-up generation services (DTGen),
energy efficiency and procurement services (eEnergy) and in domestic energy
transition services (Next Energy, as announced today).
(1) Billion litres equivalent provides a standard metric for the different
products and solutions that DCC Energy sells. Metric tonnes and kilowatts of
power are converted to litres.
(2) c.25% (£124m) of DCC Energy's operating profit has no associated volumes
such as solar installations, heat pump solutions, fleet services, energy
efficiency services, lubricants, and refrigerants. Operating profit per litre
based on the remaining 75% is 2.49ppl (2023: 2.22ppl).
DCC Energy Solutions 2024 2023 % change % change CC
Volumes (billion litre equivalent) 10.7bn 10.9bn -2.4%
Operating profit £383.4m £335.7m +14.2% +15.0%
Operating profit per litre 3.60ppl 3.07ppl
DCC Energy Solutions had an excellent year, growing operating profit by 14.2%
(15.0% constant currency) to £383.4 million. Our Solutions business is
managed across four operating regions: continental Europe, UK & Ireland,
North America and the Nordics.
Our Solutions business in continental Europe delivered very strong growth
during the year. In France, our largest market, we delivered strong growth.
The natural gas and power sector recovered from difficult market conditions in
the prior year, and we also delivered very strong growth in our EMS
(particularly solar) offering. We continue to build a more integrated customer
offering in the French market and during the year we launched our umbrella
brand 'WeWise' to highlight our nationwide offering for French commercial and
industrial customers - a sector where we have built a market leadership
position. In Germany we also delivered good growth and in February 2024
acquired Progas, which when combined with our existing business, gives us
scale and a leading position in the liquid gas market. We plan to build on
this strong foundation in the market and add an EMS customer offering in
Germany in due course.
Our UK & Ireland business recorded strong growth during the year. The mild
winter conditions and cost of living concerns were a headwind for the
business, particularly in the domestic fuels sector. However, this was more
than offset by a recovery in the natural gas and power sector in Ireland,
increased market share in the liquid gas sector with commercial and industrial
customers and strong growth in our EMS offering to customers in both the UK
and Ireland. During the year we commissioned the Avonmouth storage facility
and recently added a new supply point in Teeside, both of which have improved
the robustness of our supply chain. In the Irish natural gas and power market,
we increased our customer numbers and the business benefited from our
procurement strategy. We completed five acquisitions in the UK and Ireland
which strengthen our offerings in EMS, energy transition services and
renewable fuels and these have performed well since acquisition.
While all regions saw mild winter weather conditions the impact was most
material in North America, where domestic heating constitutes a large
proportion of the business. This resulted in profits declining in North
America. We continue to make progress in developing our sales and marketing
capability in the region and completed a further bolt on acquisition in the
attractive Colorado market.
We achieved very strong profit growth in Scandinavia. The growth was driven by
a very strong performance by our liquid gas business in Sweden and Norway. The
business has grown market share and attracted large commercial and industrial
customers seeking greater energy independence, given the volatile energy
markets of recent years.
DCC Energy Mobility 2024 2023 % change % change CC
Volumes (billion litre equivalent) 4.5bn 4.6bn -1.6%
Operating profit £119.6m £122.1m -2.1% -0.7%
Operating profit per litre 2.64ppl 2.65ppl
Our Mobility business performed robustly and in line with expectations, with
operating profit broadly in line with the prior year on a constant currency
basis. Following a strong first half, the business was impacted, particularly
in the third quarter, by competitive headwinds in the French market. We
achieved good growth across the rest of the business. Our digital, truckstop
and other fleet services performed well during the year. We again delivered
strong growth in fuelcard and through our technology-enabled SNAP service
offering to fleet customers.
In France, where we have an extensive retail network, market conditions were
difficult during the second half of the year and particularly in the third
quarter. Very competitive promotional pricing in the market impacted volumes
and profitability. Our team responded well to this challenging environment and
both the volume and profit trajectory improved materially during the fourth
quarter of the year, as promotional pricing eased. We continued to invest in
the network in France, increasing our electric vehicle (EV) chargers to 134
across 28 sites.
In the Nordic region, the business performed strongly. We recorded very good
growth in Sweden, where the business recovered from a weaker performance in
the prior year. In Norway, the business also recorded strong growth. We
continued to invest in both our convenience and EV offering where we now have
EV charging capability on 25% of our Norwegian sites. Our 'mobility hub'
concept, where we offer traditional fuel, low carbon biofuel, as well as EV
charging, has attracted significant market attention. In May 2024, our site at
Mandal won 'Best EV Hub in the World' in an international industry
competition.
DCC Healthcare 2024 2023 % change % change CC
Revenue £859.4m £821.5m +4.6% +5.2%
Gross profit £244.6m £220.3m +11.0% +11.3%
Operating profit £88.1m £91.8m -4.0% -3.6%
Operating margin 10.3% 11.2%
Return on capital employed excl. IFRS 16 10.2% 13.0%
Return on capital employed incl. IFRS 16 9.9% 12.5%
· DCC Healthcare returned to organic profit growth in the second half of the
financial year, following a challenging first half. Operating profit for the
year declined by 4.0% (3.6% constant currency) to £88.1 million, a decline of
11.3% organically.
· DCC Vital recorded good profit growth. DCC Healthcare's operating profit
decline was driven by DCC Health & Beauty Solutions, where reduced demand
from customers was a feature of the first nine months of the year. Market
conditions for DCC Health & Beauty Solutions improved gradually during the
second half of the financial year, and the business returned to organic
growth.
· DCC Healthcare has made significant capital investment in recent years,
both in acquisitions (in DCC Vital) and capital expenditure (in DCC Health
& Beauty Solutions). We are well positioned to increase profitability and
returns in the coming years, given our investments in capacity and the
improved performance in the second half of the year, and attractive long-term
market growth fundamentals.
Divisional Revenue
DCC Healthcare recorded revenue of £859.4 million, an increase of 4.6%.
Organically, revenue declined by 0.3% as growth in DCC Vital was offset by
reduced demand in DCC Health & Beauty Solutions.
DCC Vital: Patient Health
DCC Vital delivered good operating profit growth, benefiting from the prior
year acquisition of Medi-Globe. The business performed well across most
regions, other than the UK, where difficult market conditions - NHS budgetary
constraints, clinical staff shortages and industrial action by front line
medical personnel - impacted activity levels.
Following the complementary acquisition of Medi-Globe, we now have a material
international growth platform in medical devices. DCC Vital enjoys strong
market positions in medical devices in Ireland, the UK, France and Germany, in
addition to a number of other markets. The business delivered good organic
growth in the year, with particularly good performances in Ireland, France and
Germany, including in the gastroenterology and urology product categories.
In primary care, we performed well in Germany, in line with expectations, and
generated very strong growth in Switzerland, driven by market share gains.
The British business experienced weaker demand as previously mentioned. We
continued our strategic investment in technology (ERP, digital sales and AI)
to provide an enhanced platform for growth in primary care, improved customer
experience and efficiency.
DCC Health & Beauty Solutions: Consumer Health
DCC Health & Beauty Solutions experienced a continuation of the
challenging market conditions seen in the prior year, especially during the
first half of the financial year. The exceptional surge in demand during the
pandemic led ultimately to an extended period of market destocking, which
persisted longer than market participants anticipated. Demand from our
brand-owner customers improved gradually as the second half of the year
progressed, albeit at a slower pace than we expected at the start of the year.
Given the market conditions, we focused on driving efficiency during the year
across the business, including the consolidation of our smallest US facility
into one of our larger sites in Florida.
DCC Health & Beauty Solutions addresses a market that is underpinned by
positive long-term consumer trends towards lifelong health. Nutritional
supplements has been a long-term growth market and industry analysts project
it to return to mid-single digit growth. We have invested with that positive
future in mind: completing two gummy manufacturing lines during the last 12
months and enhancing our capability in stick packs, a key packaging format for
the growing powder nutrition category. During the year, we also enhanced
our leadership and demand creation teams to leverage our enhanced product
format capability and expanded capacity.
DCC Technology 2024 2023 % change % change CC
Revenue £4.774bn £5.264bn -9.3% -7.8%
Gross profit £596.0m £618.4m -3.6% -1.7%
Operating profit £91.7m £106.1m -13.6% -10.7%
Operating margin 1.9% 2.0%
Return on capital employed excl. IFRS 16 7.6% 8.7%
Return on capital employed incl. IFRS 16 7.2% 8.3%
· DCC Technology recorded operating profit of £91.7 million, a decline of
13.6% (10.7% organic constant currency) principally due to the ongoing trend
of lower market demand for consumer technology products.
· Although operating in a challenging market, DCC Technology maintained
market share in key segments such as retail within Info Tech in the UK and AV
within Pro Tech in North America.
· A strong focus on operational improvements resulted in costs being below
prior year levels which limited the impact of negative operating leverage from
weak demand in most of our markets. Our transformation plan in the UK
delivered profit growth and created capability for the long term. DCC
Technology remains focused on operational improvement in the year ahead. We've
recently created a single North American leadership team and launched a
commercial and operational excellence programme to drive organic profit
growth.
Divisional revenue
Revenue declined by 9.3% (7.8% organic constant currency), driven by a weaker
market for consumer technology products. The UK and European regions were
weakest, with revenue delivery in North America impacted to a lesser extent.
Pro Tech
DCC Technology is the leading specialist distributor of AV products globally,
having a particularly strong presence in North America. Pro Tech performed
robustly, led by good growth in Pro Audio in North America. We continued to
make market share gains in core AV categories and experienced strong growth in
other specialist AV categories. In Europe, our performance was mixed. We
recorded good growth in Enterprise products, which was offset by a more
challenging market elsewhere in our European business. We completed two
bolt-on acquisitions in the year in North America and Europe, further
strengthening our existing specialisms within AV.
Info Tech
Our Info Tech business distributes high-volume consumer and business IT
products to the retail and reseller channels in Europe, with a particularly
strong presence in the UK, Ireland and the Nordics. Despite the challenging
consumer environment which saw revenue decline, our UK business delivered good
profit growth. We continued our optimisation programme, which has improved
performance: we increased our market share in the retail segment, reduced
costs and improved margins. As reported earlier in the year, we also
consolidated a secondary warehouse facility to optimise the output from our
National Distribution Centre. Our Irish business traded robustly and in line
with expectations. In Europe, operating profit declined as a result of weak
consumer demand for consumer technology products.
Life Tech
In Life Tech, we distribute consumer appliances and lifestyle technology
products to the retail and etail channels in North America. There was mixed
performance across our product categories. We increased market share in
consumer electronics, especially in audio categories. However, as reported
earlier in the year, we experienced weaker demand for music products and home
comfort appliances, where we also saw price discounting in certain overstocked
segments. We increased our investment in digital marketing and this led to
improved product visibility and market share on key etail platforms.
INCOME STATEMENT REVIEW (continued)
Finance costs (net) and other
Net finance costs and other, which includes the Group's net financing costs,
lease interest and the share of profit/loss of associated businesses,
increased to £104.8 million (2023: £81.4 million). The expected increase in
the year primarily reflects increased net financing costs due to the much
higher interest rate environment.
The substantial change in the global interest rate environment from summer
2022 onwards continued to impact the cost of the floating rate element of the
Group's gross debt, offset somewhat by an increased return on the Group's
gross cash. Approximately 40% of the Group's gross debt is at floating rates.
Average net debt, excluding lease creditors, was £1.2 billion, compared to an
average net debt of £1.0 billion in the prior year, and reflects the
substantial acquisition activity during year. Interest was covered 8.9
times(1) by Group adjusted operating profit before depreciation and
amortisation of intangible assets (2023: 11.2 times).
(1 )Using the definitions contained in the Group's lending agreements
Net exceptional charge and amortisation of intangible assets
The Group incurred a net exceptional charge after tax and non-controlling
interests of £33.3 million (2023: net exceptional charge of £28.7 million)
as follows:
£'m
Restructuring and integration costs and other (28.1)
Acquisition and related costs (14.4)
Adjustments to contingent acquisition consideration 3.2
IAS 39 mark-to-market charge (0.9)
(40.2)
Tax and non-controlling interest attaching to exceptional items 6.9
Net exceptional charge (33.3)
Restructuring and integration costs and other of £28.1 million relates to the
restructuring and integration of operations across a number of businesses and
acquisitions. Most of the cost relates to optimisation and integration of
operations in DCC Technology as well as costs incurred in DCC Healthcare to
merge operations in North America.
Acquisition and related costs include the professional fees and tax costs
relating to the evaluation and completion of acquisition opportunities and
amounted to £14.4 million.
Adjustments to contingent acquisition consideration of £3.2 million reflects
movements in provisions associated with the expected earn-out or other
deferred arrangements that arise through the Group's corporate development
activity. The credit in the year primarily reflects a decrease in contingent
consideration payable in respect of acquisitions in DCC Health & Beauty
Solutions where recent trading performance has been behind expectations.
The level of ineffectiveness calculated under IAS 39 on the hedging
instruments related to the Group's US private placement debt is charged or
credited as an exceptional item. In the year ended 31 March 2024, this
amounted to an exceptional non-cash charge of £0.9 million. The cumulative
net exceptional credit taken in respect of IAS 39 ineffectiveness is £0.5
million. This, or any subsequent similar non-cash charges or gains, will net
to zero over the remaining term of this debt and the related hedging
instruments.
There was a net cash outflow of £13.3 million relating to exceptional items.
The charge for the amortisation of acquisition-related intangible assets
increased to £114.1 million from £111.1 million in the prior year reflecting
acquisitions completed in the prior and current year.
Taxation
The effective tax rate for the Group increased to 19.7% (2023: 19.3%). 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
jurisdictions. The higher tax rate reflects corporation tax increases in a
number of jurisdictions, including the increase in the UK corporation tax rate
effective from 1 April 2023.
Adjusted earnings per share
Adjusted earnings per share decreased by 0.3% (+0.9% on a constant currency
basis) to 455.01 pence, reflecting the operating profit growth offset, as
expected, by higher financing costs and the increase in the effective tax rate
in the year.
Dividend
The Board is proposing a 5.0% increase in the final dividend to 133.53 pence
per share, which, when added to the interim dividend of 63.04 pence per share,
gives a total dividend for the year of 196.57 pence per share. This represents
a 5.0% increase over the total prior year dividend of 187.21 pence per share.
The dividend is covered 2.3 times by adjusted earnings per share (2023: 2.4
times). It is proposed to pay the final dividend on 18 July 2024 to
shareholders on the register at the close of business on 24 May 2024.
Over its 30 years as a listed company, DCC has an unbroken record of dividend
growth at a compound annual rate of 13.2%.
Cash Flow, CAPITAL DEPLOYMENT & RETURNS AND CAPITAL EMPLOYED ("RocE")
Cash flow
The Group generated excellent operating and free cash flow during the year as
set out below:
Year ended 31 March 2024 2023
£'m £'m
Group operating profit 682.8 655.7
Decrease/(increase) in working capital 56.6 (14.0)
Depreciation (excluding ROU leased assets) and other 173.6 143.8
Operating cash flow (pre add-back for depreciation on ROU leased assets) 913.0 785.5
Capital expenditure (net) (221.0) (206.6)
692.0 578.9
Depreciation on ROU leased assets 82.8 75.2
Repayment of lease creditors (93.7) (83.7)
Free cash flow 681.1 570.4
Interest and tax paid, net of dividend from equity accounted investments (214.8) (155.0)
Free cash flow (after interest and tax) 466.3 415.4
Acquisitions (338.5) (340.5)
Dividends (189.1) (178.0)
Exceptional items/disposals (13.3) (23.8)
Share issues 0.2 0.3
Net outflow (74.4) (126.6)
Opening net debt (1,113.9) (756.6)
Translation and other 41.2 (230.7)
Closing net debt (including lease creditors) (1,147.1) (1,113.9)
Analysis of closing net debt (including lease creditors):
Net debt at 31 March (excluding lease creditors) (784.7) (767.3)
Lease creditors at 31 March (362.4) (346.6)
(1,147.1) (1,113.9)
Free cash flow generation and conversion
The Group's free cash flow amounted to £681.1 million versus £570.4 million
in the prior year, representing an excellent 100% conversion of adjusted
operating profit into free cash flow.
The material components of the conversion of adjusted operating profit to free
cash flow are set out below.
Working capital
Working capital decreased by £56.6 million (2023: £14.0 million increase), a
very good performance given the continued volatile supply chain environment.
Working capital decreased in DCC Energy, reflecting, in particular, the
reduced wholesale cost of natural gas and power. There was a net investment in
working capital in certain newer product lines, such as renewable fuels, but
this was more than offset by a strong underlying performance across the
remainder of the Solutions and Mobility business units. DCC Technology also
recorded a good working capital performance, with reducing inventory levels a
particular area of focus for the business, given reduced market demand.
DCC Technology selectively uses supply chain financing solutions to sell, on a
non-recourse basis, a portion of its receivables relating to certain higher
volume supply chain/sales and marketing activities. The level of supply chain
financing at 31 March 2024 decreased by £5.7 million to £145.4 million
(2023: £151.1 million), due to the reduction in revenue year on year. Supply
chain financing had a positive impact on Group working capital days of 2.5
days (31 March 2023: 2.3 days).
The absolute value of working capital in the Group at 31 March 2024 was
£228.0 million. Overall working capital days were 4.0 days sales, compared to
4.1 days sales in the prior year.
Net capital expenditure
Net capital expenditure amounted to £221.0 million for the year (2023:
£206.6 million) and was net of disposal proceeds (£6.7 million) and
government grants received (£2.7 million). The level of net capital
expenditure reflects continued investment in organic initiatives across the
Group, supporting the Group's continued growth and development. Net capital
expenditure for the Group exceeded the depreciation charge of £157.4 million
(excluding right-of-use leased assets) in the period by £63.6 million.
2024 2023
£'m £'m
DCC Energy 177.6 173.1
DCC Healthcare 34.0 24.6
DCC Technology 9.4 8.9
Total 221.0 206.6
Capital expenditure in DCC Energy primarily comprised expenditure on tanks,
cylinders and installations, with a focus on supporting new and existing
liquid gas customers in Energy Solutions. In Mobility, there was investment to
maintain and upgrade our retail sites across the business, including adding
further lower emission product capability, EV fast charging and related
forecourt services in the Nordics and France in particular.
In DCC Healthcare, the spend primarily related to increased manufacturing
capability and capacity across DCC Health & Beauty Solutions. The business
commissioned its gummy line in Florida earlier this year and is in the latter
stages of a project to expand effervescent capacity at its Minnesota
operations with expected completion in the coming financial year.
DCC Technology capital expenditure included continued ERP investment in Europe
and ongoing maintenance spend.
Total cash spend on acquisitions for the year ended 31 March 2024
The total cash spend on acquisitions in the year was £288.2 million. The
spend primarily reflects acquisitions committed to and completed during the
current year, but also includes some smaller acquisitions in DCC Energy (AEI,
Hafod Renewables and O'sitoit) which were announced in the prior year Results
Announcement in May 2023. Payment of deferred and contingent acquisition
consideration previously provided amounted to £50.3 million.
Committed acquisitions
DCC has committed £489.6 million to new acquisitions since the prior year
Results Announcement.
2024 2023
£'m £'m
DCC Energy 485.8 137.3
DCC Healthcare - 224.4
DCC Technology 3.8 -
Total 489.6 361.7
DCC continues to be very active from a development perspective, committing
approximately £490 million to 17 new acquisitions during the period. Recent
acquisition activity of the Group includes:
DCC Energy
DCC Energy has committed approximately £485 million to 15 new acquisitions which support its strategy to build a leading energy management services business and further expand its offering in the distribution of lower-carbon liquid gas. The largest of these transactions was the previously announced acquisition of Progas, and the acquisition of Next Energy announced today.
Progas
In February 2024, DCC Energy completed the acquisition of Progas GmbH ("Progas"), a leading distributor of liquid gas in Germany, for an enterprise value of approximately £140 million. The synergistic acquisition represents DCC Energy's largest acquisition to date in Germany, Europe's largest energy market, and considerably expands DCC Energy's customer base in the market to over 100,000 customers. The acquisition is expected to generate a mid-teen return on capital employed in the first year of ownership. Further details on the acquisition can be found in DCC's stock exchange announcement of 14 November 2023.
Next Energy
In April 2024, DCC Energy acquired Next Energy for an initial enterprise value of approximately £90 million. Next Energy is an energy efficiency and renewable energy services provider focused on the UK domestic sector. Founded in 2016 and employing 120 people, Next Energy is a market-leading provider of retrofit energy transition solutions with an emphasis on the government funded market. The business supports domestic customers to improve the energy ratings of their houses. Next Energy has an addressable market of c.16m homes (more than half of the UK's housing stock), of which up to c.14.5m have either full or partial funding for retrofit. Services include the installation of heat pumps, heating controls, insulation, solar PV and battery. Next Energy accelerates DCC Energy's Cleaner Energy in Your Power strategy for UK domestic customers, complementing existing capability. The acquisition is expected to generate a mid-teen return on capital employed in the first year of ownership.
In addition, DCC Energy committed to the following acquisitions:
· In July 2023, DCC Energy acquired Centreco, a market-leading Solar PV and
energy consultancy business in the UK, which services commercial and
industrial customers nationally, and SLER40, a French Solar PV and heat pump
business servicing domestic and commercial customers with design,
installation, and maintenance services.
· In August 2023, DCC Energy acquired Isolatiespecialist, a leading provider
of energy efficiency and insulation services to domestic and commercial
customers in the Netherlands, and San Isabel Services Propane, a US liquid gas
distributor which services both domestic and commercial customers in Colorado.
· DCC Energy acquired Solcellekraft in September 2023, one of Norway's
largest Solar PV businesses, servicing commercial and domestic customers.
· In November 2023, DCC Energy acquired DTGen, a leading UK-based provider of
power solutions, with a particular focus on emergency power solutions. DTGen
offers a comprehensive service from design to supply, installation, and
continuous maintenance, catering to a diverse range of sectors, including data
centres, utilities, and healthcare.
· DCC Energy completed the acquisition of the Energy Management division of
eEnergy Group plc ("EML") in February 2024. EML provides energy management
services including energy procurement, market analysis, risk management and
net zero pathway consulting to industrial, commercial, and public sector
customers in the UK. EML's technology and services empowers customers to
identify and eliminate energy waste and reduce their carbon emissions.
· In April 2024, DCC Energy acquired Copropriétés Diagnostic, a French
energy management business providing energy efficiency and renovation
solutions to the multi-unit dwelling customer segment. Services include energy
audit and administrative project management for subsidies and financing.
· In May 2024, DCC Energy agreed to acquire Secundo Photovoltaik, one of
Austria's largest solar PV businesses serving commercial customers. The
transaction remains subject to approval of the Austrian competition authority.
· Complementary bolt-on acquisitions in Austria, Ireland and a renewable
fuels distributor in the UK.
DCC Technology
Recently DCC Technology completed two modest bolt-on acquisitions. The acquisitions, in France and the US, add complementary products and services in the professional AV and Audio markets.
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:
2024 2023 2024 2023
excl. IFRS 16 excl. IFRS 16 incl. IFRS 16 incl. IFRS 16
DCC Energy 18.7% 19.0% 17.4% 17.6%
DCC Healthcare 10.2% 13.0% 9.9% 12.5%
DCC Technology 7.6% 8.7% 7.2% 8.3%
Group 14.3% 15.1% 13.5% 14.2%
The Group continued to generate strong returns on capital employed,
notwithstanding the substantial increase in the scale of the Group in recent
years. The modest decrease in return on capital employed in DCC Energy
reflects the substantial acquisition spend during the year and the timing of
the acquisition of Progas, which occurred later in the year. Returns also
reflect the organic decline in operating profit in DCC Healthcare and DCC
Technology, which we expect will recover strongly in the coming years.
Financial strength
DCC has always maintained a strong balance sheet and it remains an important
enabler of the Group's strategy. A strong balance sheet provides many
strategic and commercial benefits, including enabling DCC to take advantage of
acquisitive or organic development opportunities as they arise. At 31 March
2024, the Group had net debt (including lease creditors) of £1.1 billion, net
debt (excluding lease creditors) of £784.7 million, cash resources (net of
overdrafts) of £1.1 billion and total equity of £3.2 billion.
Substantially all of the Group's term debt has been raised in the US private
placement market and has an average maturity of 4.5 years.
DCC has taken a pro-active approach to the credit markets since going public.
The Group has been active in the US private placement debt market since 1996
and has built up a robust and well diversified funding portfolio, with a
balanced maturity profile. DCC's long term banking partners, investors and
suppliers have always appreciated the strong credit quality of the Company. In
November 2023 S&P Global Ratings issued a BBB rating and Fitch issued a
BBB rating for DCC in the first public credit rating opinions of the Company.
These investment grade ratings combined with our strong balance sheet,
resilient business model, cashflow and a strong track record in the private
debt markets, gives access to an increased array of funding instruments to
enable the continued growth and development of the Group.
Sustainability
DCC's ambition is to reduce the carbon intensity of the Group and to make
progress across four sustainability pillars: climate change and energy
transition, safety and environmental protection, people and social, and
governance and compliance.
In 2022, the Group set a revised increased target to reduce Scope 1 and 2
carbon emissions by 50% by 2030, having achieved the previous interim target
ahead of expectations. During the current year DCC lowered its Scope 1 and 2
emissions by 13.6% and by 45.6% versus the 2019 baseline.
The vast majority of the Group's Scope 3 carbon emissions derive from DCC
Energy's sales of products to customers. In the year, DCC Energy reduced these
emissions by 3.1%, equating to a reduction of 1.2 million tons of CO(2)e in
the year. The Group retained its B rating with CDP reflecting its progress on
emissions reduction and delivering on DCC Energy's Cleaner Energy in Your
Power strategy.
Related to Scope 3, DCC Energy increased the renewable content of energy
supplied to customers (in Gigajoules (GJ)) to 6.7%, up from 5.7% in 2023 and
4.0% in 2022. This figure is a subset of the very low or zero carbon sales
(SRO) of DCC Energy.
DCC Energy's operating profit share of services and renewables, or SRO, (with
less than 10kg of CO(2)e per GJ sold) increased by seven percentage points to
35% from 28% in 2023. This broader category adds operating profit from
services such as solar installations and other very low or zero carbon
services to DCC Energy's profit from sales of renewable energy (viz. 6.7% GJ
share above). Due to strong growth in operating profit and the 3.1% reduction
in Scope 3 carbon emissions, the carbon intensity of DCC Energy's operating
profit reduced by 11.8%.
Looking at sustainability beyond climate change and energy transition, DCC
retained an AAA rating from MSCI, remaining among the top 10% of peer
companies.
% % change vs.
2024 2023 change 2019 baseline
Scope 1 & 2 (market based) carbon emissions 0.068 0.078 -13.6% -45.6%
(mtCO(2)e, Group)
Customer Scope 3 carbon emissions 37.9 39.1 -3.1% -8.7%
(mtCO(2)e, DCC Energy)
Renewable share of energy sold (GJ) 6.7% 5.7%
Annual General Meeting
The Company's Annual General Meeting will be held at 2.00pm on Thursday 11
July 2024 at the Powerscourt Hotel, Powerscourt Estate, Enniskerry, Co.
Wicklow, A98 DR12.
Group Income Statement
For the year ended 31 March 2024
2024 2023
Pre Exceptionals Pre Exceptionals
exceptionals (note 5) Total exceptionals (note 5) Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Revenue 4 19,858,763 - 19,858,763 22,204,846 - 22,204,846
Cost of sales (17,261,487) - (17,261,487) (19,800,114) - (19,800,114)
Gross profit 2,597,276 - 2,597,276 2,404,732 - 2,404,732
Administration expenses (673,676) - (673,676) (629,510) - (629,510)
Selling and distribution expenses (1,270,666) - (1,270,666) (1,157,642) - (1,157,642)
Other operating income/(expenses) 29,846 (39,309) (9,463) 38,082 (32,528) 5,554
Adjusted operating profit 682,780 (39,309) 643,471 655,662 (32,528) 623,134
Amortisation of intangible assets (114,075) - (114,075) (111,146) - (111,146)
Operating profit 4 568,705 (39,309) 529,396 544,516 (32,528) 511,988
Finance costs (121,888) (873) (122,761) (96,735) - (96,735)
Finance income 16,512 - 16,512 16,111 892 17,003
Share of equity accounted investments' profit/(loss) after tax
604 - 604 (692) - (692)
Profit before tax 463,933 (40,182) 423,751 463,200 (31,636) 431,564
Income tax expense (89,631) 6,418 (83,213) (87,526) 2,764 (84,762)
Profit after tax for the financial year
374,302 (33,764) 340,538 375,674 (28,872) 346,802
Profit attributable to:
Owners of the Parent 359,570 (33,315) 326,255 362,683 (28,661) 334,022
Non-controlling interests 14,732 (449) 14,283 12,991 (211) 12,780
374,302 (33,764) 340,538 375,674 (28,872) 346,802
Earnings per ordinary share
Basic earnings per share 6 330.24p 338.40p
Diluted earnings per share 6 329.85p 338.04p
Basic adjusted earnings per share 6 455.01p 456.27p
Diluted adjusted earnings per share 6 454.49p 455.79p
Group Statement of Comprehensive Income
For the year ended 31 March 2024
2024 2023
£'000 £'000
Group profit for the financial year 340,538 346,802
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Currency translation (66,207) 43,280
Movements relating to cash flow hedges 37,117 (164,422)
Movement in deferred tax on cash flow hedges (6,937) 30,374
(36,027) (90,768)
Items that will not be reclassified to profit or loss
Group defined benefit pension obligations:
- remeasurements 24 2,811
- movement in deferred tax (117) (800)
(93) 2,011
Other comprehensive income for the financial year, net of tax (36,120) (88,757)
Total comprehensive income for the financial year 304,418 258,045
Attributable to:
Owners of the Parent 292,686 243,242
Non-controlling interests 11,732 14,803
304,418 258,045
Group Balance Sheet
As at 31 March 2024
Note 2024 2023
£'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 1,430,513 1,354,806
Right-of-use leased assets 349,925 336,221
Intangible assets and goodwill 3,136,945 2,957,629
Equity accounted investments 32,825 47,789
Deferred income tax assets 81,258 69,053
Derivative financial instruments 9 42,760 89,199
5,074,226 4,854,697
Current assets
Inventories 1,072,061 1,192,803
Trade and other receivables 2,172,422 2,312,269
Derivative financial instruments 9 55,064 59,258
Cash and cash equivalents 9 1,109,446 1,421,749
4,408,993 4,986,079
Total assets 9,483,219 9,840,776
EQUITY
Capital and reserves attributable to owners of the Parent
Share capital 17,422 17,422
Share premium 883,890 883,669
Share based payment reserve 8 63,806 54,596
Cash flow hedge reserve 8 (18,100) (48,280)
Foreign currency translation reserve 8 64,873 128,529
Other reserves 8 932 932
Retained earnings 2,078,568 1,941,223
Equity attributable to owners of the Parent 3,091,391 2,978,091
Non-controlling interests 91,641 80,219
Total equity 3,183,032 3,058,310
LIABILITIES
Non-current liabilities
Borrowings 9 1,574,775 1,933,759
Lease creditors 9 284,856 275,388
Derivative financial instruments 9 27,536 40,585
Deferred income tax liabilities 286,217 263,623
Post employment benefit obligations 10 6,557 (11,721)
Provisions for liabilities 306,367 301,067
Acquisition related liabilities 72,009 86,172
Government grants 2,704 446
2,561,021 2,889,319
Current liabilities
Trade and other payables 3,054,108 3,279,898
Current income tax liabilities 81,095 85,324
Borrowings 9 368,743 320,856
Lease creditors 9 77,527 71,158
Derivative financial instruments 9 20,914 42,341
Provisions for liabilities 67,011 52,349
Acquisition related liabilities 69,768 41,221
3,739,166 3,893,147
Total liabilities 6,300,187 6,782,466
Total equity and liabilities 9,483,219 9,840,776
Net debt included above (excluding lease creditors) 9 (784,698) (767,335)
Group Statement of Changes in Equity
For the year ended 31 March 2024
Attributable to owners of the Parent
Share Share Retained Other Total Non- Total
capital premium earnings reserves £'000 controlling equity
£'000 £'000 £'000 (note 8) interests £'000
£'000 £'000
At 1 April 2023 17,422 883,669 1,941,223 135,777 2,978,091 80,219 3,058,310
Profit for the financial year - - 326,255 - 326,255 14,283 340,538
Other comprehensive income:
Currency translation - - - (63,656) (63,656) (2,551) (66,207)
Group defined benefit pension obligations:
- remeasurements - - 24 - 24 - 24
- movement in deferred tax - - (117) - (117) - (117)
Movements relating to cash flow hedges - - - 37,117 37,117 - 37,117
Movement in deferred tax on - - - (6,937) (6,937) - (6,937)
cash flow hedges
Total comprehensive income - - 326,162 (33,476) 292,686 11,732 304,418
Re-issue of treasury shares - 221 - - 221 - 221
Share based payment - - - 9,210 9,210 - 9,210
Dividends - - (188,817) - (188,817) (310) (189,127)
At 31 March 2024 17,422 883,890 2,078,568 111,511 3,091,391 91,641 3,183,032
Group Statement of Changes in Equity
For the year ended 31 March 2023
Attributable to owners of the Parent
Share Share Retained Other Total Non- Total
capital premium earnings reserves £'000 controlling equity
£'000 £'000 £'000 (note 8) interests £'000
£'000 £'000
At 1 April 2022 17,422 883,321 1,783,033 221,408 2,905,184 65,379 2,970,563
Profit for the financial year - - 334,022 - 334,022 12,780 346,802
Other comprehensive income:
Currency translation - - - 41,257 41,257 2,023 43,280
Group defined benefit pension obligations:
- remeasurements - - 2,811 - 2,811 - 2,811
- movement in deferred tax - - (800) - (800) - (800)
Movements relating to cash flow hedges - - - (164,422) (164,422) - (164,422)
Movement in deferred tax on - - - 30,374 30,374 - 30,374
cash flow hedges
Total comprehensive income - - 336,033 (92,791) 243,242 14,803 258,045
Re-issue of treasury shares - 348 - - 348 - 348
Share based payment - - - 7,160 7,160 - 7,160
Dividends - - (177,843) - (177,843) (129) (177,972)
Non-controlling interest arising on acquisition - - - - - 166 166
At 31 March 2023 17,422 883,669 1,941,223 135,777 2,978,091 80,219 3,058,310
Group Cash Flow Statement
For the year ended 31 March 2024
2024 2023
Note £'000 £'000
Cash flows from operating activities
Profit for the financial year 340,538 346,802
Add back non-operating expenses/(income):
- tax 83,213 84,762
- share of equity accounted investments' (profit)/loss (604) 692
- net operating exceptionals 39,309 32,528
- net finance costs 106,249 79,732
Group operating profit before exceptionals 568,705 544,516
Share-based payments expense 9,210 7,160
Depreciation (including right-of-use leased assets) 240,194 219,681
Amortisation of intangible assets 114,075 111,146
Profit on disposal of property, plant and equipment (1,148) (12,346)
Amortisation of government grants (376) (114)
Other 8,562 4,654
Decrease/(increase) in working capital 56,571 (13,951)
Cash generated from operations before exceptionals 995,793 860,746
Exceptionals (30,934) (23,780)
Cash generated from operations 964,859 836,966
Interest paid (including lease interest) (118,780) (82,576)
Income tax paid (124,057) (97,485)
Net cash flows from operating activities 722,022 656,905
Investing activities
Inflows:
Proceeds from disposal of property, plant and equipment 6,666 22,643
Dividends received from equity accounted investments 1,261 -
Government grants received in relation to property, plant and equipment 2,669 216
Disposal of equity accounted investments 17,668 -
Interest received 15,285 15,535
43,549 38,394
Outflows:
Purchase of property, plant and equipment (230,354) (229,440)
Acquisition of subsidiaries 11 (288,155) (318,486)
Payment of accrued acquisition related liabilities (50,334) (21,987)
(568,843) (569,913)
Net cash flows from investing activities (525,294) (531,519)
Financing activities
Inflows:
Proceeds from issue of shares 221 348
Net cash inflow on derivative financial instruments 69,182 -
Increase in interest-bearing loans and borrowings - 603,054
69,403 603,402
Outflows:
Repayment of interest-bearing loans and borrowings (270,836) (393,469)
Net cash outflow on derivative financial instruments - (57,902)
Repayment of lease creditors (82,187) (74,219)
Dividends paid to owners of the Parent 7 (188,817) (177,843)
Dividends paid to non-controlling interests (310) (129)
(542,150) (703,562)
Net cash flows from financing activities (472,747) (100,160)
Change in cash and cash equivalents (276,019) 25,226
Translation adjustment (22,341) 19,376
Cash and cash equivalents at beginning of year 1,371,206 1,326,604
Cash and cash equivalents at end of year 1,072,846 1,371,206
Cash and cash equivalents consists of:
Cash and short-term bank deposits 1,109,446 1,421,749
Overdrafts (36,600) (50,543)
1,072,846 1,371,206
Notes to the Condensed Financial Statements
For the year ended 31 March 2024
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 2024 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 2024 and their report was unqualified. The financial information for the
year ended 31 March 2023 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
2024.
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:
· Disclosure of Accounting Policies - Amendments to IAS 1
· Definition of Accounting Estimates - Amendments to IAS 8
· Insurance Contracts - IFRS 17
· Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to IAS 12
· International Tax Reform - Pillar Two Model Rules - Amendments to IAS 12
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:
· Classification of Liabilities as Current or Non-current - Amendments to IAS
1
· Lease Liability in a Sale and Leaseback - Amendments to IFRS 16
· Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7
· Lack of Exchangeability - Amendments to IAS 21
The impact of these new standards is not expected to result in a net material
change to the Group's consolidated financial statements.
3. Reporting Currency
The Group's financial statements are presented in sterling, denoted by the
symbol '£'. Results and cash flows of operations based in non-sterling
countries have been translated into sterling at average rates for the year,
and the related balance sheets have been translated at the rates of exchange
ruling at the balance sheet date. The principal exchange rates used for
translation of results and balance sheets into sterling were as follows:
Average rate Closing rate
2024 2023 2024 2023
Stg£1= Stg£1= Stg£1= Stg£1=
Euro 1.1563 1.1597 1.1695 1.1374
Danish krone 8.6183 8.6304 8.7218 8.4719
Swedish krona 13.2851 12.4772 13.4780 12.8304
Norwegian krone 13.3529 11.8985 13.6814 12.9595
US dollar 1.2541 1.2101 1.2643 1.2369
Canadian dollar 1.6932 1.5934 1.7158 1.6762
Hong Kong dollar 9.8172 9.4837 9.8929 9.7096
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 ('CODM'). The CODM has been identified as Mr. Donal Murphy,
Chief Executive and his Group Management Team.
The Group is organised into three operating segments (as identified under IFRS
8 Operating Segments) and generates revenue through the following activities:
DCC Energy is putting cleaner energy in the power of our customers by leading
the sales, marketing, and distribution of traditional, lower carbon, and zero
carbon energy solutions. DCC Energy comprises Energy Solutions and Energy
Mobility. Our Energy Solutions business makes energy transition less complex
for commercial and industrial customers. And we will make it simpler and more
affordable for domestic customers. Our Energy Mobility business is leading in
multi-energy networks and services for passenger cars and truck fleets. The
adjusted operating profit of Energy Solutions represents approximately 76% of
this segment's adjusted operating profit in the current year and Energy
Mobility represents approximately 24%.
DCC Healthcare comprises DCC Vital and DCC Health & Beauty Solutions. DCC
Vital helps to improve patient outcomes by providing medical products that
enable practitioners to diagnose and treat illness. DCC Health & Beauty
Solutions develop and manufacture nutritional supplements and beauty products
to help maintain consumers' everyday health and wellness.
DCC Technology acts as an enabler between global technology brands and the
people and businesses who use their products. DCC Technology comprises Pro
Tech, Life Tech and Info Tech. Through Pro Tech, we bring professional
technologies together to enhance audio and visual experiences. Through Life
Tech, we provide technology to make high-quality lifestyles happen. And
through Info Tech, we put the latest technology in people's hands to make
faster connections happen.
The chief operating decision maker monitors the operating results of segments
separately 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
('adjusted operating profit') and return on capital employed. 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 2024
DCC DCC DCC Total
Energy Healthcare Technology £'000
£'000 £'000 £'000
Segment revenue 14,224,938 859,379 4,774,446 19,858,763
Adjusted operating profit 502,961 88,099 91,720 682,780
Amortisation of intangible assets (77,236) (10,550) (26,289) (114,075)
Net operating exceptionals (note 5) (14,858) (5,087) (19,364) (39,309)
Operating profit 410,867 72,462 46,067 529,396
Year ended 31 March 2023
DCC DCC DCC Total
Energy Healthcare Technology £'000
£'000 £'000 £'000
Segment revenue 16,119,452 821,527 5,263,867 22,204,846
Adjusted operating profit 457,815 91,742 106,105 655,662
Amortisation of intangible assets (68,731) (9,318) (33,097) (111,146)
Net operating exceptionals (note 5) (21,603) (4,367) (6,558) (32,528)
Operating profit 367,481 78,057 66,450 511,988
(b) By geography
The Group has a presence in 22 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*
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Republic of Ireland (country of domicile) 2,082,413 2,255,595 230,348 230,304
United Kingdom 6,534,555 7,562,103 1,487,302 1,319,398
France 3,445,434 3,706,272 961,631 981,757
United States 1,965,614 2,189,358 860,514 939,232
Rest of World 5,830,747 6,491,518 1,410,413 1,225,754
19,858,763 22,204,846 4,950,208 4,696,445
* 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 Energy segment is of limited relevance
due to the influence of changes in underlying energy product costs on absolute
revenues. Whilst changes in underlying energy product costs will change
percentage operating margins, this has little relevance in the downstream
energy distribution market in which this segment operates where elements of
profitability are driven by absolute contribution per tonne/litre of product
sold, and not a percentage margin. Accordingly, management primarily review
geographic volume performance rather than geographic revenue performance for
this segment 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 2024
DCC DCC DCC Total
Energy Healthcare Technology £'000
£'000 £'000 £'000
Republic of Ireland (country of domicile) 1,591,561 119,323 371,529 2,082,413
United Kingdom 4,501,053 380,877 1,652,625 6,534,555
France 3,115,534 55,218 274,682 3,445,434
North America 254,370 159,427 1,721,283 2,135,080
Rest of World 4,762,420 144,534 754,327 5,661,281
Revenue 14,224,938 859,379 4,774,446 19,858,763
Products transferred at point in time 14,224,938 859,379 4,774,446 19,858,763
Energy solutions products and services 8,871,109 - - 8,871,109
Energy mobility products and services 5,353,829 - - 5,353,829
Medical and pharmaceutical products - 498,867 - 498,867
Nutrition and health & beauty products - 360,512 - 360,512
Technology products and services - - 4,774,446 4,774,446
Revenue 14,224,938 859,379 4,774,446 19,858,763
Year ended 31 March 2023
DCC DCC DCC Total
Energy Healthcare Technology £'000
£'000 £'000 £'000
Republic of Ireland (country of domicile) 1,688,901 110,766 455,928 2,255,595
United Kingdom 5,358,282 399,599 1,804,222 7,562,103
France 3,360,372 24,173 321,727 3,706,272
North America 311,521 175,757 1,875,842 2,363,120
Rest of World 5,400,376 111,232 806,148 6,317,756
Revenue 16,119,452 821,527 5,263,867 22,204,846
Products transferred at point in time 16,119,452 821,527 5,263,867 22,204,846
Energy solutions products and services 9,996,896 - - 9,996,896
Energy mobility products and services 6,122,556 - - 6,122,556
Medical and pharmaceutical products - 448,931 - 448,931
Nutrition and health & beauty products - 372,596 - 372,596
Technology products and services - - 5,263,867 5,263,867
Revenue 16,119,452 821,527 5,263,867 22,204,846
5. Exceptionals
2024 2023
£'000 £'000
Restructuring and integration costs and other (28,142) (13,401)
Acquisition and related costs (14,347) (10,604)
Adjustments to contingent acquisition consideration 3,180 (8,523)
Net operating exceptional items (39,309) (32,528)
Mark to market of swaps and related debt (873) 892
Net exceptional items before taxation (40,182) (31,636)
Income tax credit attaching to exceptional items 6,418 2,764
Net exceptional items after taxation (33,764) (28,872)
Non-controlling interest share of net exceptional items after taxation 449 211
Net exceptional items attributable to owners of the Parent (33,315) (28,661)
Restructuring and integration costs and other of £28.142 million relates to
the restructuring and integration of operations across a number of businesses
and acquisitions. Most of the cost relates to optimisation and integration of
operations in DCC Technology as well as costs incurred in DCC Healthcare to
merge operations in North America. Restructuring and integration costs and
other also include impairment charges relating to property, plant and
equipment (£4.140 million) and right-of-use assets (£3.032 million) arising
from these restructurings.
Acquisition and related costs include the professional fees and tax costs
relating to the evaluation and completion of acquisition opportunities and
amounted to £14.347 million.
Adjustments to contingent acquisition consideration of £3.180 million
reflects movements in provisions associated with the expected earn-out or
other deferred arrangements that arise through the Group's corporate
development activity. The credit in the year primarily reflects a decrease in
contingent consideration payable in respect of acquisitions in DCC Health
& Beauty Solutions where recent trading performance has been behind
expectations.
The level of ineffectiveness calculated under IAS 39 on the hedging
instruments related to the Group's US private placement debt is charged or
credited as an exceptional item. In the year ended 31 March 2024, this
amounted to an exceptional non-cash charge of £0.873 million. The cumulative
net exceptional credit taken in respect of IAS 39 ineffectiveness is £0.544
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 £6.418 million (2023: credit of
£2.764 million) and non-controlling interest credit of £0.449 million (2023:
£0.211 million) in relation to certain exceptional charges.
6. Earnings per Ordinary Share
2024 2023
£'000 £'000
Profit attributable to owners of the Parent 326,255 334,022
Amortisation of intangible assets after tax 89,957 87,690
Exceptionals after tax (note 5) 33,315 28,661
Adjusted profit after taxation and non-controlling interests 449,527 450,373
Basic earnings per ordinary share 2024 2023
pence pence
Basic earnings per ordinary share 330.24p 338.40p
Amortisation of intangible assets after tax 91.06p 88.84p
Exceptionals after tax 33.71p 29.03p
Adjusted basic earnings per ordinary share 455.01p 456.27p
Weighted average number of ordinary shares in issue (thousands) 98,794 98,707
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.
Diluted earnings per ordinary share 2024 2023
pence pence
Diluted earnings per ordinary share 329.85p 338.04p
Amortisation of intangible assets after tax 90.95p 88.74p
Exceptionals after tax 33.69p 29.01p
Adjusted diluted earnings per ordinary share 454.49p 455.79p
Weighted average number of ordinary shares in issue (thousands) 98,909 98,811
The earnings used for the purposes of the diluted earnings per ordinary share
calculations were £326.255 million (2023: £334.022 million) and £449.527
million (2023: £450.373 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 2024 was 98.909
million (2023: 98.811 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:
2024 2023
'000 '000
Weighted average number of ordinary shares in issue 98,794 98,707
Dilutive effect of options and awards 115 104
Weighted average number of ordinary shares for diluted earnings per share 98,909 98,811
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
Dividends paid per ordinary share are as follows: 2024 2023
£'000 £'000
Final - paid 127.17 pence per share on 20 July 2023 126,444 118,715
(2023: paid 119.93 pence per share on 21 July 2022)
Interim - paid 63.04 pence per share on 15 December 2023 62,373 59,128
(2023: paid 60.04 pence per share on 9 December 2022)
188,817 177,843
The Directors are proposing a final dividend in respect of the year ended 31
March 2024 of 133.53 pence per ordinary share (£131.998 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 2024
Share based payment Cash flow Foreign Other Total
reserve
hedge
currency translation reserve
reserves
£'000
£'000
reserve
£'000
£'000
£'000
At 1 April 2023 54,596 (48,280) 128,529 932 135,777
Currency translation - - (63,656) - (63,656)
Movements relating to cash flow hedges - 37,117 - - 37,117
Movement in deferred tax on cash flow hedges - (6,937) - - (6,937)
Share based payment 9,210 - - - 9,210
At 31 March 2024 63,806 (18,100) 64,873 932 111,511
For the year ended 31 March 2023
Share based payment Cash flow Foreign Other Total
reserve
hedge
currency translation reserve
reserves
£'000
£'000
reserve
£'000
£'000
£'000
At 1 April 2022 47,436 85,768 87,272 932 221,408
Currency translation - - 41,257 - 41,257
Movements relating to cash flow hedges - (164,422) - - (164,422)
Movement in deferred tax on cash flow hedges - 30,374 - - 30,374
Share based payment 7,160 - - - 7,160
At 31 March 2023 54,596 (48,280) 128,529 932 135,777
9. Analysis of Net Debt
2024 2023
£'000 £'000
Non-current assets
Derivative financial instruments 42,760 89,199
Current assets
Derivative financial instruments 55,064 59,258
Cash and cash equivalents 1,109,446 1,421,749
1,164,510 1,481,007
Non-current liabilities
Derivative financial instruments (27,536) (40,585)
Bank borrowings (34,205) (35,168)
Unsecured Notes (1,540,570) (1,898,591)
(1,602,311) (1,974,344)
Current liabilities
Bank borrowings (36,600) (50,543)
Derivative financial instruments (20,914) (42,341)
Unsecured Notes (332,143) (270,313)
(389,657) (363,197)
Net debt (excluding lease creditors) (784,698) (767,335)
Lease creditors (non-current) (284,856) (275,388)
Lease creditors (current) (77,527) (71,158)
Total lease creditors (362,383) (346,546)
Net debt (including lease creditors) (1,147,081) (1,113,881)
An analysis of the maturity profile of the Group's net cash/(debt) (including
lease creditors) at 31 March 2024 is as follows:
As at 31 March 2024 Less than Between Between Over Total
1 year
1 and 2
2 and 5
5 years
£'000
£'000
years
years
£'000
£'000 £'000
Cash and short-term deposits 1,109,446 - - - 1,109,446
Overdrafts (36,600) - - - (36,600)
Cash and cash equivalents 1,072,846 - - - 1,072,846
Bank borrowings - - (34,205) - (34,205)
Unsecured Notes (332,143) (87,796) (721,596) (731,178) (1,872,713)
Derivative financial instruments - Unsecured Notes
43,698 14,066 2,690 (429) 60,025
Derivative financial instruments - other (9,548) (1,103) - - (10,651)
774,853 (74,833) (753,111) (731,607) (784,698)
Lease creditors (77,527) (60,105) (111,929) (112,822) (362,383)
Net debt (including lease creditors) 697,326 (134,938) (865,040) (844,429) (1,147,081)
The Group's Unsecured Notes fall due between 21 May 2024 and 4 April 2034 with
an average maturity of 4.5 years at 31 March 2024. 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 2024. The defined benefit pension schemes' liabilities at 31
March 2024 were updated to reflect material movements in underlying
assumptions. The Group's post employment benefit obligations moved from a net
asset of £11.721 million at 31 March 2023 to a net liability of £6.557
million at 31 March 2024. The movement in the net asset/liability position
primarily reflects post-employment benefit obligations arising on acquisition
of £18.647 million.
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 Energy of 100% of Centreco in July 2023. Centreco is
a market-leading Solar PV and energy consultancy business in the UK, which
services commercial and industrial customers nationally.
· The acquisition by DCC Energy of 100% of Isolatiespecialist in August 2023.
Isolatiespecialist is a leading provider of energy efficiency and insulation
services to domestic and commercial customers in the Netherlands.
· The acquisition by DCC Energy of 100% of San Isabel Services Propane in
August 2023. San Isabel Services Propane is a US liquid gas distributor which
services both domestic and commercial customers in Colorado.
· The acquisition by DCC Energy of 100% of Solcellekraft in September 2023.
Solcellekraft is one of Norway's largest Solar PV businesses, servicing
commercial and domestic customers.
· The acquisition by DCC Energy of 100% of DTGen in November 2023. DTGen is a
leading UK-based provider of power solutions, with a particular focus on
emergency power solutions. DTGen offers a comprehensive service from design to
supply, installation, and continuous maintenance, catering to a diverse range
of sectors, including data centres, utilities, and healthcare.
· The acquisition by DCC Energy of 100% of the Energy Management division of
eEnergy Group plc ('EML') in February 2024. EML provides energy management
services including energy procurement, market analysis, risk management and
net zero pathway consulting to industrial, commercial, and public sector
customers in the UK. EML's technology and services empowers customers to
identify and eliminate energy waste and reduce their carbon emissions.
· The acquisition by DCC Energy of 100% of Progas GmbH ('Progas') in February
2024 for an enterprise value of approximately £140 million. Progas is a
leading distributor of liquid gas in Germany and this synergistic acquisition
represents DCC Energy's largest acquisition to date in Germany, Europe's
largest energy market, and considerably expands DCC Energy's customer base in
the market to over 100,000 customers.
The acquisition data presented below reflects the fair value of the
identifiable net assets acquired (excluding net cash/debt acquired) in respect
of acquisitions completed during the year.
Total Total
2024 2023
£'000
£'000
Assets
Non-current assets
Property, plant and equipment 48,603 6,273
Right-of-use leased assets 10,563 5,856
Intangible assets 156,964 131,453
Equity accounted investments 5,530 18,909
Deferred income tax assets 2,467 2,291
Total non-current assets 224,127 164,782
Current assets
Inventories 23,708 53,329
Trade and other receivables 59,945 36,760
Total current assets 83,653 90,089
Liabilities
Non-current liabilities
Deferred income tax liabilities (41,026) (38,112)
Post employment benefit obligations (18,647) -
Provisions for liabilities (13,245) (161)
Lease creditors (6,742) (3,933)
Total non-current liabilities (79,660) (42,206)
Current liabilities
Trade and other payables (61,022) (65,775)
Provisions for liabilities (6,919) (149)
Current income tax liabilities (8,179) (10,023)
Lease creditors (3,207) (2,166)
Total current liabilities (79,327) (78,113)
Identifiable net assets acquired 148,793 134,552
Non-controlling interests arising on acquisition - (166)
Goodwill 222,171 230,754
Total consideration 370,964 365,140
Satisfied by:
Cash 327,354 319,463
Net cash and cash equivalents acquired (39,199) (977)
Net cash outflow 288,155 318,486
Acquisition related liabilities 82,809 46,654
Total consideration 370,964 365,140
None of the business combinations completed during the period 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:
Total Book Fair value Fair
value
value adjustments
£'000
£'000
£'000
Non-current assets (excluding goodwill) 71,896 152,231 224,127
Current assets 97,667 (14,014) 83,653
Non-current liabilities (38,936) (40,724) (79,660)
Current liabilities (79,327) - (79,327)
Identifiable net assets acquired 51,300 97,493 148,793
Goodwill arising on acquisition 319,664 (97,493) 222,171
Total consideration 370,964 - 370,964
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 2025 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.
£9.555 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 £14.347 million.
No contingent liabilities were recognised on the acquisitions completed during
the year or the prior financial years.
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
£159.8 million.
The business combinations completed during the year contributed £171.589
million to revenues and £16.091 million to profit for the financial year
attributable to Owners of the Parent Company. 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 2024 would have been £20.148
billion and total Group profit for the financial year attributable to Owners
of the Parent Company would have been £345.502 million.
12. Seasonality of Operations
The Group's operations are significantly second half weighted primarily due to
a portion of the demand for DCC Energy's products being weather dependent and
seasonal buying patterns in DCC Technology.
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 2024 financial year.
14. Events after the Balance Sheet Date
In April 2024, DCC Energy acquired Next Energy for an initial enterprise value
of approximately £90 million. Next Energy is an energy efficiency and
renewable energy services provider focused on the UK domestic sector. Founded
in 2016 and employing 120 people, Next Energy is a market-leading provider of
retrofit energy transition solutions with an emphasis on the government funded
market. The business supports domestic customers to improve the energy ratings
of their houses. Next Energy has an addressable market of c.16 million homes
(more than half of the UK's housing stock), of which up to c.14.5 million have
either full or partial funding for retrofit. Services include the installation
of heat pumps, heating controls, insulation, solar PV and battery. Next Energy
accelerates DCC Energy's Cleaner Energy in Your Power strategy for UK domestic
customers, complementing existing capability.
The Group also acquired (or agreed to acquire) a number of smaller businesses
post year-end including Copropriétés Diagnostic and Secundo Photovoltaik.
An initial assignment of fair values to identifiable net assets acquired has
not been completed given the timing of the closure of these transactions.
15. Board Approval
This report was approved by the Board of Directors of DCC plc on 13 May 2024.
Supplementary Financial Information
For the year ended 31 March 2024
Alternative Performance Measures
The Group reports certain alternative performance measures ('APMs') that are
not required under International Financial Reporting Standards ('IFRS') which
represent the generally accepted accounting principles ('GAAP') under which
the Group reports. The Group believes that the presentation of these APMs
provides useful supplemental information which, when viewed in conjunction
with our IFRS financial information, provides investors with a more meaningful
understanding of the underlying financial and operating performance of the
Group and its divisions.
These APMs are primarily used for the following purposes:
· to evaluate the historical and planned underlying results of our
operations;
· to set director and management remuneration; and
· to discuss and explain the Group's performance with the investment analyst
community.
None of the APMs should be considered as an alternative to financial measures
derived in accordance with GAAP. The APMs can have limitations as analytical
tools and should not be considered in isolation or as a substitute for an
analysis of our results as reported under GAAP. These performance measures may
not be calculated uniformly by all companies and therefore may not be directly
comparable with similarly titled measures and disclosures of other companies.
The principal APMs used by the Group, together with reconciliations where the
non-GAAP measures are not readily identifiable from the financial statements,
are as follows:
Adjusted operating profit ('EBITA')
Definition
This comprises operating profit as reported in the Group Income Statement
before net operating exceptional items and amortisation of intangible assets.
Net operating exceptional items and amortisation of intangible assets are
excluded in order to assess the underlying performance of our operations. In
addition, neither metric forms part of Director or management remuneration
targets.
Calculation 2024 2023
£'000 £'000
Operating profit 529,396 511,988
Net operating exceptional items 39,309 32,528
Amortisation of intangible assets 114,075 111,146
Adjusted operating profit ('EBITA') 682,780 655,662
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.
Calculation 2024 2023
£'000 £'000
Adjusted operating profit ('EBITA') 682,780 655,662
Depreciation of property, plant and equipment 157,356 144,443
EBITDA 840,136 800,105
Net interest before exceptional items
Definition
The Group defines net interest before exceptional items as the net total of
finance costs and finance income before interest related exceptional items as
presented in the Group Income Statement.
Calculation 2024 2023
£'000 £'000
Finance costs before exceptional items (121,888) (96,735)
Finance income before exceptional items 16,512 16,111
Net interest before exceptional items (105,376) (80,624)
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. To maintain comparability with the
definitions contained in the Group's lending arrangements, EBITDA and net
interest exclude the impact of IFRS 16.
Calculation 2024 2023
£'000 £'000
EBITDA 840,136 800,105
Less: impact of IFRS 16 (6,970) (6,041)
EBITDA for covenant purposes 833,166 794,064
Net interest before exceptional items (105,376) (80,624)
Less: impact of IFRS 16 11,486 9,577
Net interest for covenant purposes (93,890) (71,047)
EBITDA interest cover (times) 8.9x 11.2x
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 adjusted operating profit less net interest before
exceptional items.
Calculation 2024 2023
£'000 £'000
Adjusted operating profit 682,780 655,662
Net interest before exceptional items (105,376) (80,624)
577,404 575,038
Income tax expense 83,213 84,762
Income tax attaching to net exceptionals 6,418 2,764
Deferred tax attaching to amortisation of intangible assets 24,118 23,456
Total income tax expense before exceptionals and deferred tax attaching to 113,749 110,982
amortisation of intangible assets
Effective tax rate (%) 19.7% 19.3%
Dividend cover
Definition
The dividend cover ratio measures the Group's ability to pay dividends from
earnings.
Calculation 2024 2023
pence pence
Adjusted earnings per share 455.01 456.27
Dividend 196.57 187.21
Dividend cover (times) 2.3x 2.4x
Constant currency
Definition
The translation of foreign denominated earnings can be impacted by movements
in foreign exchange rates versus sterling, the Group's presentation currency.
In order to present a better reflection of underlying performance in the
period, the Group retranslates foreign denominated current year earnings at
prior year exchange rates.
Revenue (constant currency) 2024 2023
£'000 £'000
Revenue 19,858,763 22,204,846
Currency impact 204,499 -
Revenue (constant currency) 20,063,262 22,204,846
Adjusted operating profit (constant currency)
Adjusted operating profit 682,780 655,662
Currency impact 7,935 -
Adjusted operating profit (constant currency) 690,715 655,662
Adjusted earnings per share (constant currency)
Adjusted profit after taxation and non-controlling interests 449,527 450,373
Currency impact 5,154 -
Adjusted profit after taxation and non-controlling interests (constant 454,681 450,373
currency)
Weighted average number of ordinary shares in issue ('000) 98,794 98,707
Adjusted earnings per share (constant currency) 460.23p 456.27p
Net capital expenditure
Definition
Net capital expenditure comprises purchases of property, plant and equipment,
proceeds from the disposal of property, plant and equipment and government
grants received in relation to property, plant and equipment.
Calculation 2024 2023
£'000 £'000
Purchase of property, plant and equipment 230,354 229,440
Government grants received in relation to property, plant and equipment (2,669) (216)
Proceeds from disposal of property, plant and equipment (6,666) (22,643)
Net capital expenditure 221,019 206,581
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.
Calculation 2024 2023
£'000 £'000
Cash generated from operations before exceptionals 995,793 860,746
Repayment of lease creditors (93,673) (83,796)
Net capital expenditure (221,019) (206,581)
Free cash flow 681,101 570,369
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).
Calculation 2024 2023
£'000 £'000
Free cash flow 681,101 570,369
Interest paid (including interest relating to lease creditors) (118,780) (82,576)
Interest relating to lease creditors 11,486 9,577
Income tax paid (124,057) (97,485)
Dividends received from equity accounted investments 1,261 -
Interest received 15,285 15,535
Free cash flow (after interest and tax payments) 466,296 415,420
Cash conversion ratio
Definition
The cash conversion ratio expresses free cash flow as a percentage of adjusted
operating profit.
Calculation 2024 2023
£'000 £'000
Free cash flow 681,101 570,369
Adjusted operating profit 682,780 655,662
Cash conversion ratio 100% 87%
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 to assess the underlying performance of our
operations. In addition, neither metric forms part of Director or management
remuneration targets.
ROCE (excl. IFRS 16)
Calculation 2024 2023
£'000 £'000
Total equity 3,183,032 3,058,310
Net debt (including lease creditors) 1,147,081 1,113,881
Goodwill and intangibles written-off 772,034 657,959
Right-of-use leased assets (349,925) (336,221)
Equity accounted investments (32,825) (47,789)
Acquisition related liabilities (current and non-current) 141,777 127,393
Total capital employed (excl. IFRS 16) 4,861,174 4,573,533
Average total capital employed (excl. IFRS 16) 4,717,354 4,294,686
Adjusted operating profit 682,780 655,662
Less: impact of IFRS 16 on operating profit (6,970) (6,041)
Adjusted operating profit 675,810 649,621
Return on capital employed (excl. IFRS 16) 14.3% 15.1%
ROCE (incl. IFRS 16)
Calculation 2024 2023
£'000 £'000
Total capital employed 4,861,174 4,573,533
Right-of-use leased assets 349,925 336,221
Total capital employed (incl. IFRS 16) 5,211,099 4,909,754
Average total capital employed (incl. IFRS 16) 5,060,427 4,626,572
Adjusted operating profit 682,780 655,662
Return on capital employed (incl. IFRS 16) 13.5% 14.2%
Committed acquisition expenditure
Definition
The Group defines committed acquisition expenditure as the total acquisition
cost of subsidiaries as presented in the Group Cash Flow Statement (excluding
amounts related to acquisitions which were committed to in previous years) and
future acquisition related liabilities for acquisitions committed to during
the year.
Calculation 2024 2023
£'000 £'000
Net cash outflow on acquisitions during the year 288,155 318,486
Cash outflow on acquisitions which were committed to in the previous year (16,651) (26,059)
Acquisition related liabilities arising on acquisitions during the year 82,809 46,654
Acquisition related liabilities which were committed to in the previous year (8,549) (431)
Amounts committed in the current year 143,803 23,060
Committed acquisition expenditure 489,567 361,710
Net working capital
Definition
Net working capital represents the net total of inventories, trade and other
receivables (excluding interest receivable), and trade and other payables
(excluding interest payable, amounts due in respect of property, plant and
equipment and government grants).
Calculation 2024 2023
£'000 £'000
Inventories 1,072,061 1,192,803
Trade and other receivables 2,172,422 2,312,269
Less: interest receivable (1,391) (558)
Trade and other payables (3,054,108) (3,279,898)
Less: interest payable 21,369 25,231
Less: amounts due in respect of property, plant and equipment 17,574 24,492
Less: government grants 36 31
Net working capital 227,963 274,370
Working capital (days)
Definition
Working capital days measures how long it takes in days for the Group to
convert working capital into revenue.
Calculation 2024 2023
£'000 £'000
Net working capital 227,963 274,370
March revenue 1,767,388 2,068,648
Working capital (days) 4.0 days 4.1 days
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