REG - DCC PLC - Results for the six months ended 30 September 2017 <Origin Href="QuoteRef">DCC.L</Origin> - Part 3
14/11/2017 07:11
- Part 3: For the preceding part double click ID:nRSN3787Wb
Profit attributable to owners of the Parent 58,169 30,532 88,701 56,869 8,719 65,588
Amortisation of intangible assets after tax 14,653 - 14,653 13,164 71 13,235
Exceptionals after tax 12,155 (29,742) (17,587) 2,901 - 2,901
Adjusted profit after taxation and non-controlling interests 84,977 790 85,767 72,934 8,790 81,724
Basic earnings per ordinary share
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 period, 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.
6 months ended 30 September 2017 6 months ended 30 September 2016
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
pence pence pence pence pence pence
Basic earnings per ordinary share 65.36p 34.30p 99.66p 64.12p 9.83p 73.95p
Amortisation of intangible assets after tax 16.46p - 16.46p 14.84p 0.08p 14.92p
Exceptionals after tax 13.65p (33.41p) (19.76p) 3.27p - 3.27p
Adjusted basic earnings per ordinary share 95.47p 0.89p 96.36p 82.23p 9.91p 92.14p
Weighted average number of ordinary shares in issue (thousands) 89,007 88,691
Diluted earnings per ordinary share
Diluted earnings per ordinary share is calculated by adjusting the weighted average number of ordinary shares outstanding
to assume conversion of all dilutive potential ordinary shares. Share options and awards are the Company's only category of
dilutive potential ordinary shares. Employee share options and awards, which are performance-based, are treated as
contingently issuable shares because their issue is contingent upon satisfaction of specified performance conditions in
addition to the passage of time. These contingently issuable shares are excluded from the computation of diluted earnings
per ordinary share where the conditions governing exercisability would not have been satisfied as at the end of the
reporting period if that were the end of the vesting period.
The adjusted figures for diluted earnings per ordinary share (a non-GAAP financial measure) are intended to demonstrate the
results of the Group after eliminating the impact of amortisation of intangible assets and net exceptionals.
6 months ended 30 September 2017 6 months ended 30 September 2016
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
pence pence pence pence pence pence
Diluted earnings per ordinary share 65.06p 34.15p 99.21p 63.66p 9.76p 73.42p
Amortisation of intangible assets after tax 16.39p - 16.39p 14.73p 0.08p 14.81p
Exceptionals after tax 13.59p (33.26p) (19.67p) 3.25p - 3.25p
Adjusted diluted earnings per ordinary share 95.04p 0.89p 95.93p 81.64p 9.84p 91.48p
Weighted average number of ordinary shares in issue (dilutive, thousands) 89,410 89,332
The earnings used for the purposes of the continuing diluted earnings per ordinary share calculations were £58.169 million
(six months ended 30 September 2016: £56.869 million) and £84.977 million (six months ended 30 September 2016: £72.934
million) for the purposes of the continuing adjusted diluted earnings per ordinary share calculations.
The earnings used for the purposes of the discontinued diluted earnings per ordinary share calculations were £30.532
million (six months ended 30 September 2016: £8.719 million) and £0.790 million (six months ended 30 September 2016: £8.790
million) for the purposes of the discontinued adjusted diluted earnings per ordinary share calculations.
The weighted average number of ordinary shares used in calculating the diluted earnings per ordinary share for the six
months ended 30 September 2017 was 89.410 million (six months ended 30 September 2016: 89.332 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:
Unaudited Unaudited
6 months 6 months
ended ended
30 Sept. 30 Sept.
2017 2016
'000 '000
Weighted average number of ordinary shares in issue 89,007 88,691
Dilutive effect of options and awards 403 641
Weighted average number of ordinary shares for diluted earnings per share 89,410 89,332
10. Dividends
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
£'000 £'000 £'000
Interim - paid 37.17 pence per share on 12 December 2016 - - 32,415
Final - paid 74.63 pence per share on 20 July 2017 (paid 64.18 pence per share on 21 July 2016) 66,376 55,720 57,621
66,376 55,720 90,036
On 13 November 2017, the Board approved an interim dividend of 40.89 pence per share (£36.473 million). These condensed
interim financial statements do not reflect this dividend payable.
11. Other Reserves
For the six months ended 30 September 2017
Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2017 18,146 (13,581) 105,537 932 111,034
Currency translation:
- arising in the period - - 16,813 - 16,813
- recycled to the Income Statement on disposal - - (4,548) - (4,548)
Movements relating to cash flow hedges - 20,292 - - 20,292
Movement in deferred tax liability on cash flow hedges - (3,570) - - (3,570)
Share based payment 1,931 - - - 1,931
At 30 September 2017 20,077 3,141 117,802 932 141,952
For the six months ended 30 September 2016
Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2016 14,954 (8,112) 70,887 932 78,661
Currency translation - - 35,972 - 35,972
Movements relating to cash flow hedges - 9,409 - - 9,409
Movement in deferred tax liability on cash flow hedges - (1,504) - - (1,504)
Share based payment 1,415 - - - 1,415
At 30 September 2016 16,369 (207) 106,859 932 123,953
For the year ended 31 March 2017
Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2016 14,954 (8,112) 70,887 932 78,661
Currency translation - - 34,650 - 34,650
Movements relating to cash flow hedges - (6,803) - - (6,803)
Movement in deferred tax liability on cash flow hedges - 1,334 - - 1,334
Share based payment 3,192 - - - 3,192
At 31 March 2017 18,146 (13,581) 105,537 932 111,034
12. Analysis of Net Debt
Unaudited Unaudited Audited
30 Sept. 30 Sept. 31 March
2017 2016 2017
£'000 £'000 £'000
Non-current assets:
Derivative financial instruments 180,109 271,609 273,767
Current assets:
Derivative financial instruments 18,479 37,132 18,233
Cash and cash equivalents 1,497,061 1,138,953 1,048,064
1,515,540 1,176,085 1,066,297
Non-current liabilities:
Finance leases (190) (131) (165)
Derivative financial instruments (5,610) - (506)
Unsecured Notes (1,680,317) (1,384,880) (1,319,802)
(1,686,117) (1,385,011) (1,320,473)
Current liabilities:
Bank borrowings (118,193) (95,151) (88,041)
Finance leases (166) (322) (190)
Derivative financial instruments (3,511) (2,574) (5,894)
Unsecured Notes - (76,801) (60,214)
(121,870) (174,848) (154,339)
Net debt excluding cash attributable to assets held for sale (112,338) (112,165) (134,748)
Cash and short-term deposits attributable to assets held for sale - - 12,799
Net debt including cash attributable to assets held for sale (112,338) (112,165) (121,949)
In September 2017, the Group successfully completed the drawdown of a new c.£450 million private placement debt issuance.
13. Post Employment Benefit Obligations
The Group's defined benefit pension schemes' assets were measured at fair value at 30 September 2017. The defined benefit
pension schemes' liabilities at 30 September 2017 were updated to reflect material movements in underlying assumptions.
The Group's post employment benefit obligations moved from a net deficit of £0.029 million at 31 March 2017 to a net asset
of £4.862 million at 30 September 2017. This movement was primarily driven by an actuarial gain on liabilities arising from
an increase in the discount rate used to value these liabilities and by contributions in excess of the current service
cost.
The following actuarial assumptions have been made in determining the Group's retirement benefit obligation for the six
months ended 30 September 2017:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
Discount rate
- Republic of Ireland 2.10% 1.50% 2.00%
- United Kingdom 2.70% 2.45% 2.55%
14. 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, there were a number of relatively small acquisitions completed by the Group during the period, the largest of
which was the acquisition by DCC Technology of 100% of MTR Group Ltd, a UK based provider of second lifecycle solutions for
mobile and tablet devices.
The acquisition data presented below reflects the fair value of the identifiable net assets acquired (excluding net
cash/debt acquired) in respect of acquisitions completed during the six months ended 30 September 2017.
6 months 6 months
ended ended
30 Sept. 30 Sept.
2017 2016
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 6,695 (2,100)
Equity accounted investments 157 1,762
Total non-current assets 6,852 (338)
Current assets
Inventories 2,880 1,324
Trade and other receivables 2,307 3,724
Total current assets 5,187 5,048
Liabilities
Non-current liabilities
Deferred income tax liabilities (45) (13)
Total non-current liabilities (45) (13)
Current liabilities
Trade and other payables (2,826) 2,445
Provisions for liabilities and charges - (5,043)
Current income tax liability (599) 8,479
Acquisition related liabilities - (9,717)
Total current liabilities (3,425) (3,836)
Identifiable net assets acquired 8,569 861
Intangible assets - goodwill 18,918 6,798
Total consideration 27,487 7,659
Satisfied by:
Cash 13,111 8,813
Cash and cash equivalents acquired (108) (2,204)
Net cash outflow 13,003 6,609
Acquisition related liabilities 14,484 1,050
Total consideration 27,487 7,659
Reconciliation to Group Cash Flow Statement:
Net cash outflow on acquisitions completed during the period 13,003 6,609
Pre-completion deposits paid (Esso Norway and Shell Hong Kong & Macau) 31,310 -
Total outflow as reported in the Group Cash Flow Statement 44,313 6,609
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.
There were no adjustments made to the carrying amounts of assets and liabilities acquired in arriving at their fair values.
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in
respect of a number of the business combinations above given the timing of closure of these transactions. Any amendments
to these fair values within the twelve month timeframe from the date of acquisition will be disclosable in the Group's
condensed interim financial statements for the six months ending 30 September 2018 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.
Acquisition related costs included in other operating expenses in the Group Income Statement amounted to £3.512 million
(six months ended 30 September 2016: £1.374 million).
No contingent liabilities were recognised on the acquisitions completed during the financial period or the prior financial
years.
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to £2.315
million. The fair value of these receivables is £2.307 million (all of which is expected to be recoverable).
None of the goodwill recognised in respect of acquisitions completed during the period is expected to be deductible for tax
purposes.
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 period range from £8.0 million to £37.5 million.
The post-acquisition impact of sales and profit after tax of acquisitions completed during the period was not material. The
revenue and profit of the Group determined in accordance with IFRS for the period ended 30 September 2017 would not have
been materially different from that reported in the Income Statement, had the acquisition date for all business
combinations been the beginning of the period.
15. Seasonality of Operations
The Group's operations are significantly second-half weighted primarily due to a portion of the demand for DCC's LPG and
Retail & Oil products being weather dependent and seasonal buying patterns in DCC Technology.
16. Related Party Transactions
There have been no related party transactions or changes in the nature and scale of the related party transactions
described in the 2017 Annual Report that could have had a material impact on the financial position or performance of the
Group in the six months ended 30 September 2017.
17. Events after the Balance Sheet Date
Esso Retail Norway
On 25 October 2017, DCC announced it had completed the acquisition of Esso's retail petrol station network in Norway.
Details of the acquisition were set out in DCC's Stock Exchange Announcement on 7 February 2017. The total consideration
was approximately NOK 2.43 billion (c. £235 million), plus the value of stock in tank at the date of acquisition, and was
paid in cash on completion. An initial assignment of fair values to identifiable net assets acquired has not been completed
given the timing of the closure of the transaction.
Retail West
On 7 November 2017, DCC LPG announced that it had reached agreement with NGL Energy Partners LP ('NGL') to acquire its
Retail West LPG division, Hicksgas LLC ('Retail West'), based on an enterprise value of US$200 million (c. £152 million).
The transaction is expected to complete on 31 March 2018, following receipt of customary regulatory consents and separation
from NGL.
18. Board Approval
This report was approved by the Board of Directors of DCC plc on 13 November 2017.
19. Distribution of Interim Report
This report and further information on DCC is available at the Company's website www.dcc.ie. A printed copy is available
to the public at the Company's registered office at DCC House, Leopardstown Road, Foxrock, Dublin 18, Ireland.
Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
· the condensed set of interim financial statements for the six months ended 30 September 2017 have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU; and
· the interim management report includes a fair review of the information required by:
- Regulation 8(2) of the Transparency (Directive 2004/109/EC) Regulations 2007, being an indication of important events
that have occurred during the first six months of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
- Regulation 8(3) of the Transparency (Directive 2004/109/EC) Regulations 2007, being related party transactions that have
taken place in the first six months of the current financial year and that have materially affected the financial position
or performance of the entity during that period; and any changes in the related party transactions described in the last
annual report that could do so.
On behalf of the Board
John Moloney Donal Murphy
Chairman Chief Executive
13 November 2017
Supplementary Financial Information
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.
6 months ended 6 months ended Year ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
£'000 £'000 £'000
Operating profit 88,845 84,501 269,578
Net operating exceptional items 13,126 4,416 36,297
Amortisation of intangible assets 20,527 18,178 39,130
Adjusted operating profit ('EBITA') - continuing 122,498 107,095 345,005
Adjusted operating profit ('EBITA') - discontinued 980 10,728 18,546
Adjusted operating profit ('EBITA') 123,478 117,823 363,551
Net interest
Definition
The Group defines net interest as the net total of finance costs and finance income before interest related exceptional
items as presented in the Group Income Statement.
6 months ended 6 months ended Year ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
£'000 £'000 £'000
Finance costs before exceptional items (34,508) (35,676) (72,910)
Finance income before exceptional items 18,832 19,163 40,973
Net interest - continuing (15,676) (16,513) (31,937)
Net interest - discontinued (16) (73) (163)
Net interest (15,692) (16,586) (32,100)
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.
6 months ended 6 months ended
30 Sept. 30 Sept.
2017 2016
Calculation: Revenue - continuing, constant currency £'000 £'000
Revenue - continuing 6,449,472 5,507,286
Currency impact (215,145) -
Revenue - continuing, constant currency 6,234,327 5,507,286
6 months ended 6 months ended
30 Sept. 30 Sept.
2017 2016
Calculation: Adjusted operating profit - continuing, constant currency £'000 £'000
Adjusted operating profit - continuing 122,498 107,095
Currency impact (5,066) -
Adjusted operating profit - continuing, constant currency 117,432 107,095
6 months ended 6 months ended
30 Sept. 30 Sept.
2017 2016
Calculation: Adjusted earnings per share (pence) - continuing, constant currency £'000 £'000
Adjusted earnings - continuing 84,977 72,934
Currency impact (3,385) -
Adjusted earnings - continuing, constant currency 81,592 72,934
Weighted average number of ordinary shares ('000) 89,007 88,691
Adjusted earnings per share (pence) - continuing, constant currency 91.67p 82.23p
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.
6 months ended 6 months ended Year ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
£'000 £'000 £'000
Adjusted operating profit 123,478 117,823 363,551
Net interest (15,692) (16,586) (32,100)
Earnings before taxation 107,786 101,237 331,451
Income tax expense 13,196 11,223 45,869
Income tax relating to exceptional items 157 (386) (1,756)
Deferred tax attaching to amortisation of intangible assets 5,874 5,014 10,674
Income tax expense before exceptionals and deferred tax attaching to amortisation of intangible assets - continuing 19,227 15,851 54,787
Income tax expense before exceptionals and deferred tax attaching to amortisation of intangible assets - discontinued 174 1,865 3,217
Total income tax expense before exceptionals and deferred tax attaching to amortisation of intangible assets 19,401 17,716 58,004
Effective tax rate (%) 18.0% 17.5% 17.5%
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.
6 months ended 6 months ended Year ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
£'000 £'000 £'000
Purchase of property, plant and equipment 71,592 65,878 143,698
Proceeds from disposal of property, plant and equipment (2,525) (6,076) (12,315)
Net capital expenditure 69,067 59,802 131,383
Free cash flow
Definition
Free cash flow is defined by the Group as cash generated from operations before exceptional items as reported in the Group
Cash Flow Statement after net capital expenditure.
6 months ended 6 months ended Year ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
£'000 £'000 £'000
Cash generated from operations before exceptionals 83,975 141,039 546,870
Net capital expenditure (69,067) (59,802) (131,383)
Free cash flow 14,908 81,237 415,487
Free cash flow (after interest and tax payments)
Definition
Free cash flow (after interest and tax payments) is defined by the Group as free cash flow after interest paid, income tax
paid, dividends received from equity accounted investments and interest received.
6 months ended 6 months ended Year ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
£'000 £'000 £'000
Free cash flow 14,908 81,237 415,487
Interest paid (32,457) (33,313) (70,108)
Income tax paid (35,905) (28,122) (62,180)
Dividends received from equity accounted investments 1,317 121 125
Interest received 19,001 19,191 40,966
Free cash flow (after interest and tax payments) (33,136) 39,114 324,290
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 period.
6 months ended 6 months ended Year ended
30 Sept. 30 Sept. 31 March
2017 2016 2017
£'000 £'000 £'000
Net cash outflow on acquisitions during the period 44,313 6,609 203,327
Net cash outflow on acquisitions which were committed to in the previous period (31,310) (6,609) (34,372)
Acquisition related liabilities arising on acquisitions during the period 14,484 1,050 41,041
Acquisition related liabilities which were committed to in the previous period - (1,050) (14,082)
Amounts committed in the current period 152,672 180,515 358,000
Committed acquisition expenditure 180,159 180,515 553,914
Net working capital
Definition
Net working capital represents the net total of inventories, trade and other receivables (excluding interest receivable),
and trade and other payables (excluding interest payable, amounts due in respect of property, plant and equipment and
current government grants).
As at As at As at
30 Sept. 30 Sept. 31 March
2017 2016 2017
£'000 £'000 £'000
Inventories 548,903 435,716 456,395
Inventories (asset classified as held for sale) - - 1,922
Trade and other receivables 1,204,122 997,017 1,222,597
Trade and other receivables (asset classified as held for sale) - - 33,264
Interest receivable (included in trade and other receivables) (59) (151) (223)
Trade and other payables (1,831,926) (1,536,255) (1,820,517)
Trade and other payables (asset classified as held for sale) - - (35,741)
Interest payable (included in trade and other payables) 5,268 5,342 4,534
Amounts due in respect of property, plant and equipment (included in trade and other payables) 4,093 228 6,349
Government grants (included in trade and other payables) 9 83 9
Net working capital (69,590) (98,020) (131,411)
Working capital (days)
Definition
Working capital days measures how long it takes in days for the Group to convert working capital into revenue.
As at As at As at
30 Sept. 30 Sept. 31 March
2017 2016 2017
£'000 £'000 £'000
Net working capital (69,590) (98,020) (131,411)
September/March revenue 1,219,059 1,014,498 1,223,575
Working capital (days) (1.7 days) (2.9 days) (3.3 days)
This information is provided by RNS
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