REG - DCC PLC - Results for the six months ended 30 September 2022
08/11/2022 07:00
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RNS Number : 5976F DCC PLC 08 November 2022
8 November 2022
DCC Delivers Strong Growth and Development
DCC, the leading international sales, marketing and support services group,
today announces its results for the six months ended 30 September 2022.
Financial highlights: 2022 2021 % change % change CC1
Revenue £10.837bn £7.518bn +44.1% +44.4%
Adjusted operating profit2 £221.2m £195.8m +13.0% +10.7%
DCC Energy £132.5m £118.4m +11.9% +12.4%
DCC Healthcare £43.2m £50.2m -13.9% -16.0%
DCC Technology £45.5m £27.2m +67.4% +52.7%
Adjusted earnings per share2 146.4p 134.2p +9.1% +6.7%
Interim dividend 60.04p 55.85p +7.5%
Net debt (excl. lease creditors)3 £782.3m £54.1m
· Strong growth in the seasonally less significant first half of the
year, a very good performance in the context of on-going challenges in global
commodity prices and the macro-economic environment.
· Operating profit increased by 13.0% (10.7% on a constant currency
basis) to £221.2 million, driven by strong organic growth in DCC Energy and
the prior year acquisition of Almo in DCC Technology. Adjusted earnings per
share increased 9.1% to 146.4 pence per share.
· Interim dividend increased by 7.5% to 60.04 pence per share.
· Excellent period of acquisition activity with approximately £300
million committed to development since the Group's prior year results
announcement in May 2022, including:
o DCC Healthcare's recent completion of the acquisition of Medi-Globe, its
largest acquisition to date, significantly expanding DCC Vital's presence in
medical devices.
o DCC Energy has completed several acquisitions which expand its services
and renewable offering, including PVO, a leading international distributor of
solar panels; Protech, which provides a wide range of renewable and energy
efficient heating solutions; and Freedom Heat Pumps, one of the UK's largest
distributors of air source heat pumps.
· DCC expects that the year ending 31 March 2023 will be another year
of profit growth and development, notwithstanding the challenging macro
environment at present.
1 Constant currency ('CC') represents the retranslation of foreign denominated
current year results at prior year exchange rates
2 Excluding net exceptionals and amortisation of intangible assets
3 Net debt including lease creditors at 30 September 2022 was £1,118.3
million (30 September 2021: £390.3 million)
Donal Murphy, Chief Executive, commented:
"DCC reported strong growth in the seasonally less significant first half of
our financial year. The Group continued to perform well in a volatile and
challenging environment, reflecting our resilient business model and strong
market positions.
We made good progress in delivering our priorities for the allocation of
capital. During the period we committed approximately £300 million to
acquisitions in the healthcare and energy services and renewables sectors. The
acquisitions in the period are consistent with our aim to build a material
position in the European healthcare sector and ensuring we are leading the
decarbonisation of our energy customers. Our priorities are consistent with
the growth opportunities we see in our chosen sectors of Energy, Healthcare
and Technology and we continue to see substantial opportunity in these
sectors.
I want to thank all our colleagues for their dedication in continuing to serve
our customers with the essential products and services they need every day. We
are leading the energy transition and accelerating our growth in the
healthcare and technology sectors."
Investor enquiries:
Kevin Lucey, Chief Financial Officer Tel: +353 1 2799 400
Rossa White, Head of Group Investor Relations Email: investorrelations@dcc.ie (mailto:investorrelations@dcc.ie)
Media enquiries:
Powerscourt (Eavan Gannon/Genevieve Ryan) Tel: +44 20 7250 1446
Email: DCC@powerscourt-group.com (mailto:DCC@powerscourt-group.com)
Presentation of results - audio webcast and conference call details
DCC will host a live audio webcast and conference call of the presentation at
09.00 today. The slides for this presentation can be downloaded from DCC's
website, www.dcc.ie (http://www.dcc.ie) .
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The access details for the conference call are as follows:
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Passcode: 859286
This report, presentation slides and a replay of the audio will be made
available at www.dcc.ie (http://www.dcc.ie) .
About DCC plc
DCC is a leading international sales, marketing and support services group
with a clear focus on sustainable growth. DCC is an ambitious and
entrepreneurial business operating in 23 countries, supplying products and
services used by millions of people every day. Building strong routes to
market, driving for results, focusing on cash conversion and generating
superior sustainable returns on capital employed enable the Group to reinvest
in its business, creating value for its stakeholders.
Headquartered in Dublin, the Group operates across three sectors: energy,
healthcare and technology, employing over 16,000 people. DCC plc is listed on
the London Stock Exchange and is a constituent of the FTSE 100. In its
financial year ended 31 March 2022, DCC generated revenue of £17.7 billion
and adjusted operating profit of £589.2 million.
DCC has an excellent record, delivering compound annual growth of 14% in
adjusted operating profit and generating an average return on capital employed
of approximately 19% over 28 years as a public company.
Follow us on LinkedIn (https://www.linkedin.com/company/dcc-plc) , Twitter
(https://twitter.com/dccplc?s=20&t=Z_XyTAnFQUI0tdsX3k5nfA) .
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.
Divisional Performance Reviews
DCC Energy 2022 2021 % change % change CC
Volumes (billion litres equivalent)1 7.197bn 7.060bn +1.9%
Operating profit £132.5m £118.4m +11.9% +12.4%
Operating profit per litre 1.84ppl 1.68ppl
DCC Energy recorded strong operating profit growth in the seasonally less
significant first half of the financial year. Operating profit increased by
11.9% (12.4% on a constant currency basis) to £132.5 million. Volumes grew
1.9%, driven by acquisitions completed in the prior year as well as a rebound
in commercial and hospitality demand during the first quarter versus the
Covid-19 restrictions experienced in the prior year. DCC Energy continued to
make good progress during the first half in expanding its capability and
broadening its customer offering in energy services and renewables and this
was an important contributor to the profit growth in the period. The business
invested both organically and through acquisition in capabilities across
solar, heat pumps, renewables (both liquid and electricity) and energy
services, further strengthening its capability to lead the energy transition.
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. Separately, much of the services and renewables
that DCC Energy provides do not have associated volumes such as solar
installations, heat pump solutions, energy efficiency services, lubricants and
refrigerants.
Energy Solutions 2022 2021 % change % change CC
Volumes (billion litres equivalent) 4.816bn 4.685bn +2.8%
Operating profit £78.1m £68.0m +14.9% +15.4%
Operating profit per litre 1.62ppl 1.45ppl
Energy Solutions sold 4.8 billion litres in the first half of the year, an
increase of 2.8% over the prior year. The business benefited from the
first-time contribution of Naturgy Ireland (acquired December 2021), while
commercial and industrial volumes also increased, reflecting improved activity
after the lifting of almost all Covid-19 related restrictions which were a
feature in the first quarter of the prior year.
Energy Solutions Continental Europe saw good demand from domestic and
commercial customers, leveraging the strong supply positions the business has
established across its markets. In France, the business performed well,
notwithstanding the significant volatility experienced in the natural gas and
power sector of the market. The Austrian business performed strongly,
benefiting from its strong supply position and good cost control. The
businesses in Benelux and Germany both performed well, continuing to see the
benefit of recently integrated acquisitions. The solar photovoltaic service
offering continued to develop and will be significantly enhanced by the
recently completed acquisition of PVO, a leading international distributor of
solar PV and related energy products.
Energy Solutions Britain and Ireland performed well during the first half of
the financial year, benefiting from the organic and acquisitive expansion of
its product and service offering in recent years. The business continued its
rollout of biofuels for commercial and domestic customers and delivered good
growth in lubricants. The business also benefited from the acquisition of
Naturgy Ireland, which continues to develop its offering of renewable
solutions such as biogas, renewable electricity and solar. The acquisition of
Protech, which designs and installs combined heat and power units for
commercial and industrial customers, has strengthened the service offering in
renewable solutions. The business also recently acquired Freedom Heat Pumps, a
leading value-added distributor of air source heat pumps and accessories in
the UK. The acquisition further expands DCC Energy's range of solutions,
products, supplier relationships and technical expertise in the sales and
marketing of heat pump solutions to domestic and commercial customers.
Energy Solutions North America saw robust volume demand notwithstanding the
significantly higher energy prices throughout the period. The business has
continued to integrate acquisitions completed in the prior year and has also
further strengthened its management and technology infrastructure and
continued to build its acquisition pipeline. Energy Solutions Nordics achieved
excellent volume growth driven by strong commercial demand. Combined with a
good supply position, operating profit grew strongly in the first half of the
year.
Mobility 2022 2021 % change % change CC
Volumes (billion litres equivalent) 2.381bn 2.374bn +0.3%
Operating profit £54.4m £50.4m +7.7% +8.4%
Operating profit per litre 2.28ppl 2.12ppl
The Mobility business recorded strong growth in operating profit in the first
half of the financial year and expanded its presence in renewable products and
services. Volumes were modestly ahead of the prior year. The business
benefited from the full lifting of Covid-19 restrictions in the first quarter,
although summer volumes were lower as holidaymakers travelled less by road
relative to the prior year. The business also benefited modestly from the
first-time contribution of the retail network in Luxembourg (acquired
September 2021).
In France, the business performed strongly in what was a difficult operating
environment, led by a very good supply chain and logistics performance. The
business continued its investment in cleaner fuels and energy transition. The
business achieved good growth in E85 fuel volume after the investment in the
prior year, while the fast-charging infrastructure on the motorway network (in
partnership with Engie) will be operational before the end of the financial
year. The business also traded well in the Nordic region and invested in new
energy infrastructure by doubling its number of EV fast chargers since the end
of the last financial year. The Mobility business in the UK achieved good
growth, leveraging investments completed in the prior year.
DCC Healthcare 2022 2021 % change % change CC
Revenue £377.7m £384.2m -1.7% -3.9%
Operating profit £43.2m £50.2m -13.9% -16.0%
Operating margin 11.4% 13.1%
DCC Healthcare saw operating profits decline in the first half of the
financial year. As anticipated, this reflects the very strong prior year
comparatives, lower Covid-19 related sales and the impact of labour
availability, inflation and supply chain issues. Over the last two financial
years DCC Healthcare has enhanced the scale and strategic positioning of the
business through acquisitions in the US and continental Europe, and delivered
very strong organic growth. Compound annual growth in operating profit over
this two-year period was 34%, approximately half of which was organic. DCC
Healthcare expects to report profit growth for the full year driven by organic
growth in the second half of the year and the benefit of the recently
completed Medi-Globe acquisition.
DCC Vital, which is focused on the sales and marketing of medical products to
healthcare providers, was impacted by reduced Covid-19 related sales in the
first half of the financial year. The underlying business performed well,
growing strongly in medical devices in Britain, as elective procedures began
to recover. Sales of anaesthesia and cardiac monitoring products in particular
rebounded well. DCC Vital also generated strong growth in primary care,
particularly in Germany which recorded good organic growth and benefited from
two modest bolt-on acquisitions. The ability of healthcare systems to ramp up
elective procedures since the pandemic has been hampered by supply chain
issues and clinical staff shortages; DCC Vital remains well placed to benefit
from the continued recovery in activity as healthcare systems address these
issues.
DCC Vital recently completed the acquisition of Medi-Globe, DCC Healthcare's
largest acquisition to date. The acquisition significantly expands DCC Vital's
presence in the European healthcare market, following on from the acquisition
of primary care supplier Wörner Medical in May 2021. The combination of DCC
Vital's existing medical devices activities with Medi-Globe will create a
leading international platform in single-use medical devices for minimally
invasive procedures, with strong product development capability.
DCC Health & Beauty Solutions provides outsourced solutions to
international nutrition and beauty brand owners. During the first half of the
year the business was impacted by labour availability, inflation and supply
chain issues as the world emerged from the Covid-19 pandemic. In Europe, the
business saw reduced demand from nutritional brands who destocked following
the very strong growth of recent years. In the US, the business performed well
despite the challenging labour and supply chain environment, generating
excellent growth in sales of effervescent products to leading US nutrition
brands. The beauty sales mix was impacted by reduced demand from some premium
beauty brands. DCC Health & Beauty Solutions continued to invest in
expanding capacity and enhancing capability across its manufacturing
facilities, including progressing its nutritional gummy manufacturing
capability in both the UK and the US.
DCC Technology 2022 2021 % change % change CC
Revenue £2.541bn £1.985bn +28.0% +27.4%
Operating profit £45.5m £27.2m +67.4% +52.7%
Operating margin 1.8% 1.4%
DCC Technology recorded very strong revenue and profit growth in the first
half of the year, driven by the acquisition of Almo (acquired December 2021).
Operating profit increased by 67.4% (52.7% on a constant currency basis) to
£45.5 million. The slowdown in consumer confidence due to the challenging
macro environment began to have an impact across all markets during the
period, although the impact has varied by geography and end-user category. DCC
Technology has improved margins and exercised tight cost control in the
period.
Market conditions were most challenging in the consumer product sectors, due
to the impact on consumer confidence of the substantial increase in the
cost-of-living and uncertain economic outlook. This was most evident in
continental Europe and the UK but was also a feature in North America. Demand
in higher-margin B2B sectors, such as Pro AV and Pro Audio products, held up
well as businesses generally maintained planned investment in their technology
infrastructure. The supply chain issues experienced by the global technology
market have improved, which has reduced product shortages.
The North American business performed robustly in the first half of the year,
albeit behind expectations. Revenue and operating profit were significantly
ahead of the prior year due to the acquisition of Almo and growth in the Pro
AV and Pro Audio sectors. The performance of consumer products was mixed;
demand for domestic and premium appliances and consumer electronics was
robust, but the market generally experienced much weaker demand during the
summer months for certain product segments, such as air-conditioners. During
the period the business successfully integrated its pre-existing Pro AV
business with the Pro AV operations of Almo to create the largest distributor
of Pro AV equipment in North America. Following the progress made in recent
years, DCC Technology now has a very strong platform to develop and expand its
business in North America.
The more pronounced economic uncertainty in Europe compared with the US led to
lower demand in continental European markets. Revenue declined year on year,
particularly for consumer products in the retail and etail channels, but
margin improvement and good cost control limited the impact on profitability.
Consistent with trends seen elsewhere, activity in the B2B sectors in France
and the Pro AV businesses across the Nordics and DACH region performed well.
In the UK and Ireland, the business performed robustly and in line with
expectations, notwithstanding the impact of the economic environment on
demand. The UK business benefited from more stable operating conditions
following constraints last year caused by supply chain and labour shortages
and the implementation of new warehouse management systems. The business in
Ireland recorded good organic revenue and operating profit growth in the first
half of the financial year.
Group Financial Review
A summary of the Group's results for the six months ended 30 September 2022 is
as follows:
2022 2021
£'m £'m % change
Revenue 10,837 7,518 +44.1%
Adjusted operating profit(1)
DCC Energy 132.5 118.4 +11.9%
DCC Healthcare 43.2 50.2 -13.9%
DCC Technology 45.5 27.2 +67.4%
Group adjusted operating profit(1) 221.2 195.8 +13.0%
Finance costs (net) and other (31.9) (26.9)
Profit before net exceptionals, amortisation of intangible assets and tax 189.3 168.9 +12.1%
Net exceptional charge before tax and non-controlling interests (6.6) (17.3)
Amortisation of intangible assets (50.4) (36.6)
Profit before tax 132.3 115.0
Taxation (27.1) (24.3)
Profit after tax 105.2 90.7
Non-controlling interests (7.7) (6.2)
Attributable profit 97.5 84.5
Adjusted earnings per share(1) 146.4 pence 134.2 pence +9.1%
Dividend per share 60.04 pence 55.85 pence +7.5%
Free cash flow(2) 37.6 12.3
Net debt at 30 September (excluding lease creditors) 782.3 54.1
Lease creditors 336.0 336.2
Net debt at 30 September (including lease creditors) 1,118.3 390.3
( )
(1 )Excluding net exceptionals and amortisation of intangible assets
(2) After net working capital and net capital expenditure but before net
exceptionals, interest and tax payments
( )
Income Statement Review
Reporting currency
The Group's financial statements are presented in sterling, denoted by the
symbol '£'. The principal exchange rates used for the translation of results
into sterling are set out in note 4, Reporting Currency, on page 22.
The net impact of currency translation on the Group income statement versus
the prior period added approximately 2.3% to the reported growth in operating
profit, primarily due to the weakening of the average sterling exchange rate
versus the US Dollar.
Revenue
Overall, Group revenue increased by 44.1% (44.4% on a constant currency basis)
to £10.837 billion, primarily due to significantly higher revenues in DCC
Energy where commodity prices were materially higher than during the first six
months of the prior year.
DCC Energy sold 7.2 billion litres of product in the first half, a 1.9%
increase versus the prior year. Volume growth was driven by acquisitions
completed in the prior year as well as a rebound in commercial and hospitality
demand during the first quarter versus the Covid-19 restrictions experienced
in the prior year.
Combined revenue in DCC Healthcare and DCC Technology was £2.9 billion, an
increase of 23.2% reflecting the acquisition of Almo which was completed in
the second half of the prior year.
Group adjusted operating profit
Group adjusted operating profit increased by 13.0% to £221.2 million (10.7%
ahead on a constant currency basis), in the seasonally less significant first
half of the year, driven by good organic growth in DCC Energy and the prior
year acquisition of Almo in DCC Technology. This represents a very good
performance in the context of on-going challenges in global commodity prices
and the macro-economic environment. Following very strong growth in the prior
year, operating profit was in line with the prior year organically. Strong
organic growth in DCC Energy was offset by the more difficult trading
environment across DCC Healthcare and DCC Technology.
DCC Energy traded strongly during a period of significant volatility in energy
markets. Operating profit increased by 11.9% (12.4% on a constant currency
basis) to £132.5 million.
As anticipated, operating profit in DCC Healthcare declined by 13.9%
reflecting the very strong prior year comparatives, lower Covid-19 related
sales and the impact of labour availability, inflation and supply chain
issues. DCC Healthcare expects to report profit growth for the full year
overall driven by organic growth in the second half of the year and the
benefit of the recently completed Medi-Globe acquisition.
DCC Technology recorded very strong growth benefiting from the acquisition of
the Almo which completed in the second half of the prior financial year.
Operating profit increased 67.4% to £45.5 million (52.7% ahead on a constant
currency basis).
Finance costs (net) and other
Net finance and other costs increased to £31.9 million (2021: £26.9
million), primarily reflecting increased average gross debt and the increasing
interest rate environment. Average net debt, excluding lease creditors, in the
period was £883 million, compared to an average net debt of £211 million in
the prior year. The increase in average net debt excluding lease creditors
reflects the acquisition activity in the second half of the prior year,
particularly the acquisition of Almo.
Profit before net exceptional items, amortisation of intangible assets and tax
Profit before net exceptional items, amortisation of intangible assets and tax
increased by 12.1% to £189.3 million.
Net exceptional items and amortisation of intangible assets
The Group recorded a net exceptional charge after tax of £7.0 million in the
first six months of the year as follows:
£'m
Acquisition and related costs 5.1
Restructuring and integration costs and other 4.0
IAS 39 mark-to-market gain (2.5)
6.6
Tax attaching to exceptional items 0.4
Net exceptional charge 7.0
Acquisition and related costs include the professional fees and tax costs
relating to the evaluation and completion of acquisition opportunities and
amounted to £5.1 million.
Restructuring and integration costs and other of £4.0 million relates to the
restructuring of operations across a number of businesses and acquisitions.
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 six months ended 30 September 2022,
this amounted to an exceptional non-cash gain of £2.5 million. The cumulative
net exceptional credit taken in respect of IAS 39 ineffectiveness is £3.0
million. This, or any subsequent similar non-cash charges or gains, will net
to zero over the remaining term of this debt and the related hedging
instruments.
The charge for the amortisation of acquisition related intangible assets
increased to £50.4 million from £36.6 million in the prior year, with the
increase primarily reflecting acquisitions, notably Almo, completed during the
second half of the prior year.
Profit before tax
Profit before tax increased to £132.3 million.
Taxation
The effective tax rate for the Group in the first half of the year of 19.5% is
based on the anticipated mix of profits for the full year. It compares to a
full year effective tax rate in the prior year of 18.3%, with the increase
reflecting the increasingly international footprint of the Group.
Adjusted earnings per share
Adjusted earnings per share increased by 9.1% to 146.4 pence, reflecting the
increase in profit before exceptional items and goodwill amortisation.
Dividend
The Board has decided to pay an interim dividend of 60.04 pence per share,
which represents a 7.5% increase on the prior year interim dividend of 55.85
pence per share. This dividend will be paid on 9 December 2022 to shareholders
on the register at the close of business on 18 November 2022.
Cash Flow, Development & Financial Strength
Cash flow
As with its operating profit, the Group's operating cash flow is significantly
weighted towards the second half of the year. The cash flow of the Group for
the six months ended 30 September 2022 can be summarised as follows:
Six months ended 30 September 2022 2021
£'m £'m
Group operating profit 221.2 195.8
Increase in working capital (151.3) (183.2)
Depreciation (excluding ROU leased assets) and other 76.0 70.2
Operating cash flow (pre add-back for depreciation on ROU leased assets) 145.9 82.8
Capital expenditure (net) (103.9) (67.0)
42.0 15.8
Depreciation on ROU leased assets 35.6 32.4
Repayment of lease creditors (40.0) (35.9)
Free cash flow 37.6 12.3
Interest and tax paid, net of dividend from equity accounted investments (59.5) (53.4)
Free cash flow (after interest and tax) (21.9) (41.1)
Acquisitions (41.7) (162.4)
Dividends (117.2) (106.8)
Exceptional items (2.5) (9.8)
Share issues 0.3 0.4
Net outflow (183.0) (319.7)
Opening net debt (756.6) (150.2)
Translation and other (178.7) 79.6
Closing net debt (including lease creditors) (1,118.3) (390.3)
Analysis of closing net debt (including lease creditors):
Net debt at 30 September (excluding lease creditors) (782.3) (54.1)
Lease creditors at 30 September (336.0) (336.2)
(1,118.3) (390.3)
As expected, working capital increased by £151.3 million in the first half of
the financial year, reflecting the typical seasonal outflow across the Group.
The net investment through the period in working capital reflects the
increasing scale of the Group's activities and seasonal working capital
requirements, particularly in DCC Technology and an investment in inventory
across the Energy Solutions business to underpin service levels to customers.
The absolute value of working capital at 30 September 2022 was £448.8 million
versus £25.2 million (negative) at 30 September 2021, principally reflecting
the prior year acquisition of Almo and the aforementioned investment across
DCC Energy. Overall working capital days at 30 September 2022 was 6.8 days
sales (2021: negative 0.5 days sales) reflecting recently completed
acquisitions. DCC Technology selectively uses supply chain financing solutions
to sell, on a non-recourse basis, a portion of its receivables relating to
certain larger supply chain/sales and marketing activities. The level of
supply chain financing at 30 September 2022 was £159.3 million (2021: £125.9
million), with the modest increase reflecting higher revenues in the UK
business following constraints in the prior year caused by product supply
disruption and warehouse upgrades. Supply chain financing had a positive
impact on Group working capital days of 2.4 days (30 September 2021: 2.5
days).
Net capital expenditure for the six months amounted to £103.9 million (2021
£67.0 million), was net of disposal proceeds of £7.8 million, and reflects
continued investment in development initiatives across the Group.
Capital expenditure in DCC Energy primarily comprised expenditure on tanks,
cylinders, depot infrastructure and installations and the continued rollout of
'Click and Collect' services, supporting new and existing customers in Energy
Solutions. There was also continued development spend in relation to the
Avonmouth LPG storage facility in the UK. In Mobility, there was investment in
retail sites and upgrades across the business, including adding further lower
emission product capability such as EV fast charging and related services in
the Nordics. In DCC Healthcare, the capital expenditure primarily related to
increased manufacturing capability and capacity across DCC Health & Beauty
Solutions, including investments in progressing gummy capability in Europe and
the US. Capital expenditure in DCC Technology included a new fleet of electric
forklift trucks in North America along with warehouse and IT developments
across the division as part of the programme of continuous system improvement.
Net capital expenditure for the Group exceeded the depreciation charge of
£69.6 million (excluding right-of-use leased assets) in the period by £34.3
million.
Free cash flow in the six months ended 30 September 2022 of £37.6 million
compares to £12.3 million in the prior year.
Total cash spend on acquisitions in the six months to 30 September 2022
The total cash spend on acquisitions in the six months ended 30 September 2022
was £41.7 million. This included the completion of the acquisition of the
Danish biogas plant, Frijsenborg Biogas, in DCC Energy and a German primary
care bolt-on acquisition in DCC Healthcare which were announced in the prior
year Results Announcement in May 2022. Payment of deferred and contingent
acquisition consideration previously provided amounted to £10.4 million.
Committed acquisition and capital expenditure
Committed acquisition and capital expenditure in the period amounted to
£407.5 million as follows:
Acquisitions Capex Total
£'m £'m £'m
DCC Energy 90.6 87.1 177.7
DCC Healthcare 213.0 12.3 225.3
DCC Technology - 4.5 4.5
Total 303.6 103.9 407.5
Acquisition activity
The Group continues to be active from a development perspective. Acquisition
expenditure committed by the Group since the prior year results announcement
on 17 May 2022 amounted to c.£300 million and included:
DCC Energy
PVO
In November 2022, DCC completed the acquisition of PVO International BV
("PVO"), a leading distributor of solar panels, invertors, batteries and
accessories used in the commercial, industrial and domestic energy sectors
across continental Europe. PVO was established in 2014 and has grown rapidly
to become one of the leading solar solutions suppliers in Europe, with a
market-leading position in the Benelux, and growing positions in eight other
European countries including Germany, Poland and Finland. The business is
headquartered in Rosmalen, the Netherlands, and employs approximately 50
people.
PVO is an excellent strategic fit for DCC. It will leverage PVO's established
market position in the fast-growing solar PV market and DCC Energy's knowledge
and experience in transitioning customers to cleaner energy products and
services including solar solutions. The majority of the consideration for PVO
was payable in cash on completion, followed by earn out payments over three
years based on PVO's future trading.
Protech Group
DCC Energy acquired Protech Group in June 2022. Established in 2008, Protech
Group provides a wide range of renewable and energy efficient heating
solutions to commercial and industrial customers across the UK. The
acquisition of Protech strengthens the range of low carbon and renewable
technologies for customers in the UK, as well as market leading maintenance
and services offerings.
DCC Energy also completed a number of small complementary bolt-on acquisitions
in the period in Sweden and Norway and a solar business in Austria.
Freedom Heat Pumps
In October 2022, DCC Energy completed the acquisition of Freedom Heat Pumps
("Freedom"). Freedom is one of the UK's largest distributors of air source
heat pumps and accessories required for installation into residential
properties, offering a value-added distribution model, including pre and
post-sales technical support to installers. Freedom has approximately 400
active customers including heat pump installers, builders' merchants, and
smaller distributors. The acquisition of Freedom is in line with DCC Energy's
strategy of accelerating the net zero journey of its customers and investing
in capabilities to build a strong position in the sales, marketing and
distribution of renewable energy products and services.
Frijsenborg Biogas
In July 2022, DCC Energy entered a joint venture to became co-owner of one of
Denmark's largest farming biogas plants, Frijsenborg Biogas. The investment
expands DCC Energy's position in the gas market at a time of progress for
Danish biogas and enables DCC to provide biogas solutions to its customers in
the region.
DCC Healthcare
Medi-Globe
In October 2022, DCC Healthcare completed the acquisition of Medi-Globe
Technologies GmbH ("Medi-Globe"), an international medical devices business
focused on minimally invasive procedures. The acquisition was based on an
enterprise value of approximately €245 million (£213 million) on a
cash-free, debt-free basis.
Medi-Globe, founded in 1990, is involved in the development, manufacture and
distribution of single-use devices for endoscopy in diagnostic and therapeutic
procedures. The business has grown organically and through bolt-on
acquisitions to become a leading global player in its focus areas of
gastroenterology and urology. These are large and growing therapeutic areas,
benefiting from strong demographic and treatment trends. Medi-Globe has
revenues of approximately €120 million (£104 million) and employs
approximately 600 people. Its products are sold to hospitals and procurement
organisations in over 120 countries through direct sales operations in
Germany, France, Austria, Netherlands, Czechia and Brazil, and an
international network of distributors.
In May 2022, DCC Healthcare completed its second primary care bolt-on
acquisition in Germany following its initial market entry through the Wörner
acquisition in April 2021.
Financial strength
An integral part of the Group's strategy is the maintenance of a strong and
liquid balance sheet which, among other benefits, enables it to take advantage
of development opportunities as they arise. At 30 September 2022, the Group
had net debt (excluding lease creditors) of £782.3 million, cash of
approximately £1.2 billion and undrawn committed bank facilities of £338
million. Lease creditors at the same date amounted to £336.0 million. In
October 2022, DCC successfully raised a private placement issuance equivalent
to £647.7 million to be drawn down in December 2022 to refinance existing
indebtedness.
Substantially all of the Group's term debt has been raised in the US private
placement market and has an average maturity of 4.3 years (6.1 years pro-forma
for the recent private placement transaction).
Management appointments
Dr. Fabian Ziegler commenced his role as CEO, DCC Energy on 1 November 2022.
Fabian has extensive senior leadership experience in the energy sector having
held various senior management roles in Shell plc during his 26-year career.
He was Country Chair of Shell Germany and Chair of the Management Board with
responsibility for Shell's businesses (upstream, downstream, power and
renewables) in the DACH region. In his previous role Fabian was at the
forefront of energy transition having developed and driven Shell's net zero
emissions plans for the region. Prior to this, Fabian was the Chief
Procurement Officer for the Shell Group. He has also led major global
transformation programmes and has held various general management roles in
fuels, lubricants and LPG. The breadth of Fabian's leadership experience in
the energy sector, coupled with his ambition to drive the energy transition,
will enable DCC to accelerate its Leading with Energy strategy.
Following Fabian's appointment, Eddie O'Brien has moved into the role of Group
Chief Strategy & Sustainability Officer, from his role as Interim CEO, DCC
Energy.
DCC recently appointed Clive Fitzharris as Managing Director of DCC Technology
and he will also join the Group Management Team. Clive was previously Managing
Director of DCC Technology's operations in North America and Continental
Europe. Clive joined DCC in 2009 and has held a number of senior management
positions across the Group, including as Group Head of Strategy &
Development. Clive succeeds Tim Griffin, who has been appointed as CEO of DCC
Technology's volume distribution businesses in the UK, Ireland, the Middle
East and France.
Principal risks and uncertainties
The Board of DCC is responsible for the Group's risk management and internal
control systems, which are designed to identify, manage and mitigate material
risks to the achievement of the Group's strategic and business objectives. The
Board has approved a Risk Management Policy which sets out delegated
responsibilities and procedures for the management of risk across the Group.
The principal risks and uncertainties facing the Group in the short to medium
term, as set out on pages 97 to 101 of the 2022 Annual Report (together with
the principal mitigation measures), continue to be the principal risks and
uncertainties facing the Group for the remaining six months of the financial
year.
This is not an exhaustive statement of all relevant risks and uncertainties.
Matters which are not currently known to the Board or events which the Board
considers to be of low likelihood could emerge and give rise to material
consequences. The mitigation measures that are in place in relation to
identified risks are designed to provide a reasonable and proportionate, and
not an absolute, level of protection against the impact of the events in
question.
Group Income Statement
Unaudited 6 months ended Unaudited 6 months ended Audited year ended
30 September 2022 30 September 2021 31 March 2022
Pre exceptionals Exceptionals Pre exceptionals Exceptionals Pre exceptionals Exceptionals
(note 6) Total (note 6) Total (note 6) Total
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 5 10,837,130 - 10,837,130 7,518,329 - 7,518,329 17,732,020 - 17,732,020
Cost of sales (9,759,622) - (9,759,622) (6,621,722) - (6,621,722) (15,694,347) - (15,694,347)
Gross profit 1,077,508 - 1,077,508 896,607 - 896,607 2,037,673 - 2,037,673
Administration expenses (341,072) - (341,072) (280,674) - (280,674) (517,128) - (517,128)
Selling and distribution expenses (523,803) - (523,803) (430,615) - (430,615) (965,489) - (965,489)
Other operating income/(expenses) 8,540 (9,045) (505) 10,463 (18,305) (7,842) 34,178 (46,534) (12,356)
Adjusted operating profit 221,173 (9,045) 212,128 195,781 (18,305) 177,476 589,234 (46,534) 542,700
Amortisation of intangible assets (50,405) - (50,405) (36,566) - (36,566) (84,340) - (84,340)
Operating profit 5 170,768 (9,045) 161,723 159,215 (18,305) 140,910 504,894 (46,534) 458,360
Finance costs (41,469) - (41,469) (39,355) - (39,355) (77,205) - (77,205)
Finance income 10,185 2,504 12,689 12,056 967 13,023 23,075 1,192 24,267
Equity accounted investments' profit after tax (606) - (606) 390 - 390 314 - 314
Profit before tax 138,878 (6,541) 132,337 132,306 (17,338) 114,968 451,078 (45,342) 405,736
Income tax expense 7 (26,630) (498) (27,128) (24,089) (184) (24,273) (81,235) 1,501 (79,734)
Profit after tax for the financial period 112,248 (7,039) 105,209 108,217 (17,522) 90,695 369,843 (43,841) 326,002
Profit attributable to:
Owners of the Parent Company 104,474 (6,948) 97,526 102,029 (17,522) 84,507 356,214 (43,841) 312,373
Non-controlling interests 774 (91) 7,683 6,188 - 6,188 13,629 - 13,629
112,248 (7,039) 105,209 108,217 (17,522) 90,695 369,843 (43,841) 326,002
Earnings per ordinary share
Basic earnings per share 8 98.83p 85.71p 316.78p
Diluted earnings per share 8 98.77p 85.66p 316.36p
Adjusted basic earnings per share 8 146.42p 134.24p 430.11p
Adjusted diluted earnings per share 8 146.32p 134.16p 429.55p
Group Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
£'000 £'000 £'000
Group profit for the period 105,209 90,695 326,002
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Currency translation 166,078 17,481 26,549
Movements relating to cash flow hedges (59,784) 105,035 88,776
Movement in deferred tax liability on cash flow hedges 10,089 (19,065) (16,138)
116,383 103,451 99,187
Items that will not be reclassified to profit or loss
Group defined benefit pension obligations:
- remeasurements 3,685 (2,747) (748)
- movement in deferred tax asset (719) 494 210
2,966 (2,253) (538)
Other comprehensive income for the period, net of tax 119,349 101,198 98,649
Total comprehensive income for the period 224,558 191,893 424,651
Attributable to:
Owners of the Parent Company 214,010 185,077 411,485
Non-controlling interests 10,548 6,816 13,166
224,558 191,893 424,651
Group Balance Sheet
Unaudited Unaudited Audited
30 Sept. 30 Sept. 31 March
2022 2021 2022
Notes £'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 1,333,779 1,171,866 1,253,349
Right-of-use leased assets 326,306 328,432 327,551
Intangible assets and goodwill 2,791,596 2,343,529 2,634,449
Equity accounted investments 46,864 26,891 26,843
Deferred income tax assets 58,924 30,974 54,494
Derivative financial instruments 143,547 126,079 118,578
4,701,016 4,027,771 4,415,264
Current assets
Inventories 1,454,627 941,545 1,133,666
Trade and other receivables 2,218,757 1,557,229 2,508,613
Derivative financial instruments 178,101 150,744 107,361
Cash and cash equivalents 1,258,065 1,437,725 1,394,272
5,109,550 4,087,243 5,143,912
Total assets 9,810,566 8,115,014 9,559,176
EQUITY
Capital and reserves attributable to owners of the Parent Company
Share capital 17,422 17,422 17,422
Share premium 883,652 883,318 883,321
Share based payment reserve 10 50,960 44,531 47,436
Cash flow hedge reserve 10 36,073 99,100 85,768
Foreign currency translation reserve 10 250,485 77,113 87,272
Other reserves 10 932 932 932
Retained earnings 1,766,614 1,607,747 1,783,033
Equity attributable to owners of the Parent Company 3,006,138 2,730,163 2,905,184
Non-controlling interests 75,661 66,582 65,379
Total equity 3,081,799 2,796,745 2,970,563
LIABILITIES
Non-current liabilities
Borrowings 1,851,052 1,568,450 1,933,482
Lease creditors 270,188 275,859 273,164
Derivative financial instruments 51,789 - 10,330
Deferred income tax liabilities 259,590 198,237 259,796
Post employment benefit obligations 13 (11,761) (5,517) (7,745)
Provisions for liabilities 306,536 282,641 284,191
Acquisition related liabilities 72,680 74,942 72,650
Government grants 352 367 356
2,800,426 2,394,979 2,826,224
Current liabilities
Trade and other payables 3,250,559 2,548,083 3,468,705
Current income tax liabilities 64,268 41,744 59,963
Borrowings 379,746 147,108 67,668
Lease creditors 65,770 60,322 63,538
Derivative financial instruments 79,426 53,140 28,634
Provisions for liabilities 62,137 47,723 50,279
Acquisition related liabilities 26,435 25,170 23,602
3,928,341 2,923,290 3,762,389
Total liabilities 6,728,767 5,318,269 6,588,613
Total equity and liabilities 9,810,566 8,115,014 9,559,176
Net debt included above (excluding lease creditors) 11 (782,300) (54,150) (419,903)
Group Statement of Changes in Equity
For the six months ended 30 September 2022 Attributable to owners of the Parent Company
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note 10) Total interests equity
£'000 £'000 £'000 £'000 £'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 period - - 97,526 - 97,526 7,683 105,209
Currency translation - - - 163,213 163,213 2,865 166,078
Group defined benefit pension obligations:
- remeasurements - - 3,685 - 3,685 - 3,685
- movement in deferred tax asset - - (719) - (719) - (719)
Movements relating to cash flow hedges - - - (59,784) (59,784) - (59,784)
Movement in deferred tax liability on cash flow hedges - - - 10,089 10,089 - 10,089
Total comprehensive income - - 100,492 113,518 214,010 10,548 224,558
Re-issue of treasury shares - 331 - - 331 - 331
Share based payment - - - 3,524 3,524 - 3,524
Dividends - - (116,911) - (116,911) (266) (117,177)
At 30 September 2022 17,422 883,652 1,766,614 338,450 3,006,138 75,661 3,081,799
For the six months ended 30 September 2021 Attributable to owners of the Parent Company
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note 10) Total interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2021 17,422 882,924 1,631,797 115,291 2,647,434 58,210 2,705,644
Profit for the period - - 84,507 - 84,507 6,188 90,695
Currency translation - - - 16,853 16,853 628 17,481
Group defined benefit pension obligations:
- remeasurements - - (2,747) - (2,747) - (2,747)
- movement in deferred tax asset - - 494 - 494 - 494
Movements relating to cash flow hedges - - - 105,035 105,035 - 105,035
Movement in deferred tax liability on cash flow hedges - - - (19,065) (19,065) - (19,065)
Total comprehensive income - - 82,254 102,823 185,077 6,816 191,893
Re-issue of treasury shares - 394 - - 394 - 394
Share based payment - - - 3,562 3,562 - 3,562
Non-controlling interest arising on acquisition - - - - - 2,058 2,058
Dividends - - (106,304) - (106,304) (502) (106,806)
At 30 September 2021 17,422 883,318 1,607,747 221,676 2,730,163 66,582 2,796,745
Group Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
Notes £'000 £'000 £'000
Cash flows from operating activities
Profit for the period 105,209 90,695 326,002
Add back non-operating expenses/(income)
- tax 27,128 24,273 79,734
- share of equity accounted investments' profit 606 (390) (314)
- net operating exceptionals 6 9,045 18,305 46,534
- net finance costs 28,780 26,332 52,938
Group operating profit before exceptionals 170,768 159,215 504,894
Share-based payments expense 3,524 3,562 6,467
Depreciation (including right-of-use leased assets) 105,223 101,428 205,780
Amortisation of intangible assets 50,405 36,566 84,340
Profit on disposal of property, plant and equipment (1,872) (3,746) (8,916)
Amortisation of government grants (9) (9) (20)
Other 4,703 1,470 4,614
Increase in working capital (151,302) (183,210) (168,726)
Cash generated from operations before exceptionals 181,440 115,276 628,433
Exceptionals (2,492) (10,564) (30,270)
Cash generated from operations 178,948 104,712 598,163
Interest paid (including lease interest) (39,575) (35,281) (70,103)
Income tax paid (34,668) (34,894) (76,292)
Net cash flows from operating activities 104,705 34,537 451,768
Investing activities
Inflows:
Proceeds from disposal of property, plant and equipment 7,797 11,148 23,524
Proceeds on disposal of equity accounted investment - 778 772
Interest received 10,137 12,033 22,759
17,934 23,959 47,055
Outflows:
Purchase of property, plant and equipment (111,671) (78,187) (194,353)
Acquisition of subsidiaries 12 (31,335) (141,281) (668,123)
Payment of accrued acquisition related liabilities (10,378) (21,140) (52,006)
(153,384) (240,608) (914,482)
Net cash flows from investing activities (135,450) (216,649) (867,427)
Financing activities
Inflows:
Proceeds from issue of shares 331 394 397
Net cash inflow on derivative financial instruments - 31,475 30,936
Increase in interest-bearing loans and borrowings - - 372,426
331 31,869 403,759
Outflows:
Repayment of interest-bearing loans and borrowings - (105,166) (149,182)
Net cash outflow on derivative financial instruments (8,188) - -
Repayment of lease creditors (35,396) (31,173) (65,580)
Dividends paid to owners of the Parent Company 9 (116,911) (106,304) (160,599)
Dividends paid to non-controlling interests (266) (502) (6,909)
(160,761) (243,145) (382,270)
Net cash flows from financing activities (160,430) (211,276) 21,489
Change in cash and cash equivalents (191,175) (393,388) (394,170)
Translation adjustment 42,588 11,761 3,878
Cash and cash equivalents at beginning of period 1,326,604 1,716,896 1,716,896
Cash and cash equivalents at end of period 1,178,017 1,335,269 1,326,604
Cash and cash equivalents consists of:
Cash and short-term bank deposits 11 1,258,065 1,437,725 1,394,272
Overdrafts 11 (80,048) (102,456) (67,668)
1,178,017 1,335,269 1,326,604
Notes to the Condensed Financial Statements
for the six months ended 30 September 2022
1. Basis of Preparation
The Group condensed interim financial statements which should be read in
conjunction with the annual financial statements for the year ended 31 March
2022 have been prepared in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007, the related Transparency rules of the Irish
Financial Services Regulatory Authority and in accordance with IAS 34 Interim
Financial Reporting as adopted by the European Union.
The preparation of the interim financial statements requires management to
make judgements, estimates and assumptions that affect the application of
policies and reported amounts of certain assets, liabilities, revenues and
expenses together with disclosure of contingent assets and liabilities.
Estimates and underlying assumptions are reviewed on an ongoing basis.
These condensed interim financial statements for the six months ended 30
September 2022 and the comparative figures for the six months ended 30
September 2021 are unaudited and have not been reviewed by the Auditors. The
summary financial statements for the year ended 31 March 2022 represent an
abbreviated version of the Group's full accounts for that year, on which the
Auditors issued an unqualified audit report and which have been filed with the
Registrar of Companies.
2. Accounting Policies
The accounting policies and methods of computation adopted in the preparation
of the Group condensed interim financial statements are consistent with those
applied in the 2022 Annual Report and are described in those financial
statements on pages 221 to 229.
The following changes to IFRS became effective for the Group during the period
but did not result in material changes to the Group's consolidated financial
statements:
· Onerous Contracts - Cost of Fulfilling a Contract - Amendments to IAS
37
· Property, Plant and Equipment: Proceeds before Intended Use -
Amendments to IAS 16
· Reference to the Conceptual Framework - Amendments to IFRS 3
· Annual Improvements to IFRS Standards 2018-2020
The Group has not applied certain new standards, amendments and
interpretations to existing standards that have been issued but are not yet
effective. They are either not expected to have a material effect on the
consolidated financial statements or they are not currently relevant for the
Group.
3. Going Concern
Having reassessed the principal risks facing the Group (as detailed on pages
97 to 101 of the 2022 Annual Report), the Directors believe that the Group is
well placed to manage these risks successfully. No concerns or material
uncertainties have been identified as part of our assessment.
The Directors have a reasonable expectation that DCC plc, and the Group as a
whole, has adequate resources to continue in operational existence for the
foreseeable future, a period of not less than twelve months from the date of
this report. For this reason, the Directors continue to adopt the going
concern basis of accounting in preparing the condensed interim financial
statements.
4. 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 period,
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
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 Sept. 30 Sept. 31 March 30 Sept. 30 Sept. 31 March
2022 2021 2022 2022 2021 2022
Stg£1= Stg£1= Stg£1= Stg£1= Stg£1= Stg£1=
Euro 1.1776 1.1652 1.1750 1.1325 1.1621 1.1820
Danish Krone 8.7622 8.6661 8.7400 8.4219 8.6415 8.7918
Swedish Krona 12.3516 11.8445 12.0190 12.3435 11.8167 12.2187
Norwegian Krone 11.7220 11.8558 11.8654 11.9862 11.8129 11.4787
US Dollar 1.2356 1.3909 1.3694 1.1040 1.3456 1.3122
Canadian Dollar 1.5808 1.7238 1.7163 1.5177 1.7141 1.6425
Hong Kong Dollar 9.6922 10.8076 10.6580 8.6660 10.4804 10.2740
5. Segmental Reporting
DCC is an international sales, marketing and support services group
headquartered in Dublin, Ireland. Operating segments are reported in a manner
consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been identified as Mr.
Donal Murphy, Chief Executive and his executive management team.
As disclosed on pages 22 to 27 of the Group's 2022 Annual Report, the Group
has organised all of its energy activities (previously DCC LPG and DCC Retail
& Oil) into one reportable segment, DCC Energy, with effect from 1 April
2022.
The Group is organised into three operating segments (as identified under IFRS
8 Operating Segments) and generates revenue through the following activities:
DCC Energy operates through two business segments, Energy Solutions and Mobility. The Energy Solutions business is focused on reducing the complexity of energy transition and delivering affordable energy solutions. The Mobility business is focused on developing multi-energy networks and services for people and businesses on the move. DCC Energy is accelerating the net zero journey of energy consumers by leading the sales, marketing and distribution of low carbon energy solutions.
DCC Healthcare is a leading healthcare business, providing products and
services to health and beauty brand owners and healthcare providers.
DCC Technology is a leading route-to-market and supply chain partner for
global technology brands and customers. DCC Technology provides a broad range
of consumer, business and enterprise technology products and services to
retailers, resellers and integrators and domestic appliances and lifestyle
products to retailers and consumers.
The chief operating decision maker monitors the operating results of segments
separately in order to allocate resources between segments and to assess
performance. Segment performance is predominantly evaluated based on operating
profit before amortisation of intangible assets and net operating exceptional
items. Net finance costs and income tax are managed on a centralised basis and
therefore these items are not allocated between operating segments for the
purpose of presenting information to the chief operating decision maker and
accordingly are not included in the detailed segmental analysis.
The consolidated total assets of the Group as at 30 September 2022 amounted to
£9.8 billion. This figure was not materially different to the equivalent
figure at 31 March 2022 and therefore the related segmental disclosure note
has been omitted in accordance with IAS 34 Interim Financial Reporting.
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
Unaudited six months ended 30 September 2022
DCC DCC
DCC
Energy Healthcare Technology
Total
£'000 £'000 £'000 £'000
Segment revenue 7,918,151 377,651 2,541,328 10,837,130
Adjusted operating profit 132,432 43,222 45,519 221,173
Amortisation of intangible assets (30,787) (3,241) (16,377) (50,405)
Net operating exceptionals (note 6) (6,714) (1,479) (852) (9,045)
Operating profit 94,931 38,502 28,290 161,723
Unaudited six months ended 30 September 2021
DCC DCC
DCC
Energy Healthcare Technology
Total
£'000 £'000 £'000 £'000
Segment revenue 5,148,801 384,224 1,985,304 7,518,329
Adjusted operating profit 118,391 50,203 27,187 195,781
Amortisation of intangible assets (26,053) (1,804) (8,709) (36,566)
Net operating exceptionals (note 6) (7,667) (789) (9,849) (18,305)
Operating profit 84,671 47,610 8,629 140,910
Audited year ended 31 March 2022
DCC DCC
DCC
Energy Healthcare Technology
Total
£'000 £'000 £'000 £'000
Segment revenue 12,322,589 765,213 4,644,218 17,732,020
Adjusted operating profit 407,132 100,415 81,687 589,234
Amortisation of intangible assets (55,667) (6,092) (22,581) (84,340)
Net operating exceptionals (note 6) (16,687) (6,540) (23,307) (46,534)
Operating profit 334,778 87,783 35,799 458,360
(b) By geography
The Group has a presence in 23 countries worldwide. The following represents a
geographical revenue analysis about the country of domicile (Republic of
Ireland) and countries with material revenue representing over 10% of Group
revenue.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
£'000 £'000 £'000
Republic of Ireland 998,903 588,902 1,609,797
United Kingdom 3,807,095 3,122,439 6,632,084
France 1,730,440 1,383,777 3,251,238
United States 1,098,101 425,317 1,301,893
Other 3,202,591 1,997,894 4,937,008
10,837,130 7,518,329 17,732,020
(c) 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 profitability
is driven by absolute contribution per tonne/litre of product sold, and not a
percentage margin. Accordingly, management review geographic volume
performance rather than geographic revenue performance for 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.
As disclosed on pages 22 to 27 of the Group's 2022 Annual Report, the Group
has organised all of its energy activities (previously DCC LPG and DCC Retail
& Oil) into one reportable segment, DCC Energy, with effect from 1 April
2022. Consequently, the Group will now report disaggregated revenue across DCC
Energy's two major revenue lines, energy solutions and energy mobility.
Comparative data has been restated accordingly.
Unaudited six months ended 30 September 2022
DCC DCC
DCC
Energy Healthcare
Technology Total
£'000 £'000 £'000 £'000
Republic of Ireland (country of domicile) 767,473 52,649 178,781 998,903
United Kingdom 2,763,070 201,827 842,198 3,807,095
France 1,575,703 - 154,737 1,730,440
North America 101,716 85,206 992,754 1,179,676
Other 2,710,189 37,969 372,858 3,121,016
7,918,151 377,651 2,541,328 10,837,130
Energy solutions products and services 4,628,849 - - 4,628,849
Energy mobility products and services 3,289,302 - - 3,289,302
Medical and pharmaceutical products - 192,496 - 192,496
Nutrition and health & beauty products - 185,155 - 185,155
Technology products and services - - 2,541,328 2,541,328
7,918,151 377,651 2,541,328 10,837,130
Products transferred at point in time 7,918,151 377,651 2,541,328 10,837,130
Unaudited six months ended 30 September 2021
DCC DCC
DCC
Energy Healthcare Technology
Total
£'000 £'000 £'000 £'000
Republic of Ireland (country of domicile) 362,584 60,088 166,230 588,902
United Kingdom 1,948,260 208,998 965,181 3,122,439
France 1,225,292 - 158,485 1,383,777
North America 62,075 75,961 353,262 491,298
Other 1,550,590 39,177 342,146 1,931,913
5,148,801 384,224 1,985,304 7,518,329
Energy solutions products and services (restated) 2,851,783 - - 2,851,783
Energy mobility products and services (restated) 2,297,018 - - 2,297,018
Medical and pharmaceutical products - 204,465 - 204,465
Nutrition and health & beauty products - 179,759 - 179,759
Technology products and services - - 1,985,304 1,985,304
5,148,801 384,224 1,985,304 7,518,329
Products transferred at point in time 5,148,801 384,224 1,985,304 7,518,329
Audited year ended 31 March 2022
DCC DCC
DCC
Energy Healthcare Technology
Total
£'000 £'000 £'000 £'000
Republic of Ireland (country of domicile) 1,094,400 117,405 397,992 1,609,797
United Kingdom 4,229,986 419,088 1,983,010 6,632,084
France 2,900,787 - 350,451 3,251,238
North America 261,559 148,318 1,035,055 1,444,932
Other 3,835,857 80,402 877,710 4,793,969
12,322,589 765,213 4,644,218 17,732,020
Energy solutions products and services (restated) 7,306,762 - - 7,306,762
Energy mobility products and services (restated) 5,015,827 - - 5,015,827
Medical and pharmaceutical products - 407,672 - 407,672
Nutrition and health & beauty products - 357,541 - 357,541
Technology products and services - - 4,644,218 4,644,218
12,322,589 765,213 4,644,218 17,732,020
Products transferred at point in time 12,322,589 765,213 4,644,218 17,732,020
6. Exceptionals
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
£'000 £'000 £'000
Acquisition and related costs (5,026) (5,782) (9,934)
Restructuring and integration costs and other (4,019) (4,523) (16,736)
Adjustments to contingent acquisition consideration - (8,000) (19,864)
Net operating exceptional items (9,045) (18,305) (46,534)
Mark to market of swaps and related debt 2,504 967 1,192
Net exceptional items before taxation (6,541) (17,338) (45,342)
Income tax and deferred tax (charge)/credit attaching to exceptional items (498) (184) 1,501
Net exceptional items after taxation (7,039) (17,522) (43,841)
Non-controlling interests share of net exceptional items after taxation 91 - -
Net exceptional items attributable to owners of the Parent Company (7,039) (17,522) (43,841)
Acquisition and related costs include the professional fees and tax costs
(such as stamp duty) relating to the evaluation and/or completion of
acquisition opportunities and amounted to £5.026 million.
Restructuring and integration costs and other of £4.019 million relates to
the restructuring of operations across a number of businesses and
acquisitions.
Most of the Group's debt has been raised in the US private placement market,
denominated in US dollars, euro and sterling. Long-term interest and cross
currency interest rate derivatives have been utilised to achieve an
appropriate mix of fixed and floating rate debt across the three currencies.
The level of ineffectiveness calculated under IAS 39 on the fair value and
cash flow hedge relationships relating to this debt is charged or credited as
an exceptional item. In the six months ended 30 September 2022, this amounted
to an exceptional non-cash gain of £2.504 million. Following this credit, the
cumulative net exceptional credit taken in respect of the Group's outstanding
US Private Placement debt and related hedging instruments is £3.039 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.
Adjustments to contingent acquisition consideration in the comparative periods
relate to increases in contingent consideration payable in respect of
acquisitions in DCC Technology and DCC Energy where performance was ahead of
expectations.
7. Taxation
The taxation expense for the interim period is based on management's best
estimate of the weighted average tax rate that is expected to be applicable
for the full year. The Group's effective tax rate for the period was 19.5%
(six months ended 30 September 2021: 18% and year ended 31 March 2022:
18.3%).
8. Earnings per Ordinary Share
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
£'000 £'000 £'000
Profit attributable to owners of the Parent 97,526 84,507 312,373
Amortisation of intangible assets after tax 40,007 30,328 67,919
Exceptionals after tax 6,948 17,522 43,841
Adjusted profit after taxation and non-controlling interests 144,481 132,357 424,133
Basic earnings per ordinary share
Basic earnings per share is calculated by dividing the profit attributable to
owners of the Parent Company 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.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
pence pence pence
Basic earnings per ordinary share 98.83p 85.71p 316.78p
Amortisation of intangible assets after tax 40.55p 30.76p 68.88p
Exceptionals after tax 7.04p 17.77p 44.45p
Adjusted basic earnings per ordinary share 146.42p 134.24p 430.11p
Weighted average number of ordinary shares in issue (thousands) 98,679 98,596 98,610
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. 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. 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.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
pence pence pence
Diluted earnings per ordinary share 98.77p 85.66p 316.36p
Amortisation of intangible assets after tax 40.51p 30.74p 68.79p
Exceptionals after tax 7.04p 17.76p 44.40p
Adjusted diluted earnings per ordinary share 146.32p 134.16p 429.55p
Weighted average number of ordinary shares in issue (dilutive, thousands) 98,745 98,654 98,739
The earnings used for the purposes of the diluted earnings per ordinary share
calculations were £97.526 million (six months ended 30 September 2021:
£84.507 million) and £144.481 million (six months ended 30 September 2021:
£132.357 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 six months
ended 30 September 2022 was 98.745 million (six months ended 30 September
2021: 98.654 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 Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
'000 '000 '000
Weighted average number of ordinary shares in issue 98,679 98,596 98,610
Dilutive effect of options and awards 66 58 129
Weighted average number of ordinary shares for diluted earnings per share 98,745 98,654 98,739
9. Dividends
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
£'000 £'000 £'000
Interim - paid 55.85 pence per share on 10 December 2021 - - 55,182
Final - paid 119.93 pence per share on 21 July 2022
(paid 107.85 pence per share on 22 July 2021) 116,911 106,304 105,417
116,911 106,304 160,599
On 7 November 2022, the Board approved an interim dividend of 60.04 pence per
share (£59.269 million). These condensed interim financial statements do not
reflect this dividend payable.
10. Other Reserves
For the six months ended 30 September 2022 Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2022 47,436 85,768 87,272 932 221,408
Currency translation - - 163,213 - 163,213
Movements relating to cash flow hedges - (59,784) - - (59,784)
Movement in deferred tax liability on cash flow hedges - 10,089 - - 10,089
Share based payment 3,524 - - - 3,524
At 30 September 2022 50,960 36,073 250,485 932 338,450
For the six months ended 30 September 2021 Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2021 40,969 13,130 60,260 932 115,291
Currency translation - - 16,853 - 16,853
Movements relating to cash flow hedges - 105,035 - - 105,035
Movement in deferred tax liability on cash flow hedges - (19,065) - - (19,065)
Share based payment 3,562 - - - 3,562
At 30 September 2021 44,531 99,100 77,113 932 221,676
For the year ended 31 March 2022 Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2021 40,969 13,130 60,260 932 115,291
Currency translation - - 27,012 - 27,012
Movements relating to cash flow hedges - 88,776 - - 88,776
Movement in deferred tax liability on cash flow hedges - (16,138) - - (16,138)
Share based payment 6,467 - - - 6,467
At 31 March 2022 47,436 85,768 87,272 932 221,408
11. Analysis of Net Debt
Unaudited Unaudited Audited
30 Sept. 30 Sept. 31 March
2022 2021 2022
£'000 £'000 £'000
Non-current assets:
Derivative financial instruments 143,547 126,079 118,578
Current assets:
Derivative financial instruments 178,101 150,744 107,361
Cash and cash equivalents 1,258,065 1,437,725 1,394,272
1,436,166 1,588,469 1,501,633
Non-current liabilities:
Derivative financial instruments (51,789) - (10,330)
Bank borrowings (461,958) - (388,660)
Unsecured Notes (1,389,094) (1,568,450) (1,544,822)
(1,902,841) (1,568,450) (1,943,812)
Current liabilities:
Derivative financial instruments (79,426) (53,140) (28,634)
Bank borrowings (80,048) (102,456) (67,668)
Unsecured Notes (299,698) (44,652) -
(459,172) (200,248) (96,302)
Net debt (excluding lease creditors) (782,300) (54,150) (419,903)
Lease creditors - non-current (270,188) (275,859) (273,164)
Lease creditors - current (65,770) (60,322) (63,538)
Total lease creditors (335,958) (336,181) (336,702)
Net debt (including lease creditors) (1,118,258) (390,331) (756,605)
An analysis of the maturity profile of the Group's net debt (including lease
creditors) at 30 September 2022 is as follows:
Between Between
Less than 1 and 2 2 and 5 Over
1 year years years 5 years Total
At 30 September 2022 £'000 £'000 £'000 £'000 £'000
Cash and short-term deposits 1,258,065 - - - 1,258,065
Overdrafts (80,048) - - - (80,048)
Cash and cash equivalents 1,178,017 - - - 1,178,017
Bank borrowings - - (461,958) - (461,958)
Unsecured Notes (299,698) (356,226) (645,890) (386,978) (1,688,792)
Derivative financial instruments - Unsecured Notes 76,013 61,915 28,876 (50) 166,754
Derivative financial instruments - other 22,662 1,017 - - 23,679
Net debt (excluding lease creditors) 976,994 (293,294) (1,078,972) (387,028) (782,300)
Lease creditors (65,770) (55,478) (98,564) (116,146) (335,958)
Net debt (including lease creditors) 911,224 (348,772) (1,177,536) (503,174) (1,118,258)
The Group's Unsecured Notes fall due between 25 April 2023 and 4 April 2034
with an average maturity of 4.3 years at 30 September 2022. The full fair
value of a hedging derivative is allocated to the time period corresponding to
the maturity of the hedged item.
12. Business Combinations
A key strategy of the Group is to create and sustain market leadership
positions through acquisitions in markets it currently operates in, together
with extending the Group's footprint into new geographic markets. In line with
this strategy, the principal acquisitions completed by the Group during the
period, together with percentages acquired, were as follows:
· The acquisition by DCC Energy of 100% of Protech Group in June 2022.
Established in 2008, Protech Group provides a wide range of renewable and
energy efficient heating solutions, maintenance and water services to
commercial and industrial customers across the UK. The acquisition of Protech
significantly strengthens the range of low carbon and renewable technologies
in the DCC Energy portfolio, as well as market leading maintenance and
services offerings; and
· The acquisition by DCC Energy in July 2022 of 50% of Frijsenborg
Biogas, a Danish biogas plant. This investment expands DCC Energy's position
in the gas market at a time of progress for Danish biogas and enables DCC to
provide biogas solutions to its customers in the region.
The acquisition data presented below reflects the fair value of the
identifiable net assets acquired (excluding cash and cash equivalents
acquired) in respect of acquisitions completed during the six months ended 30
September 2022.
6 months 6 months
ended ended
30 Sept. 30 Sept.
2022 2021
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 3,721 29,840
Right-of-use leased assets - 21,793
Equity accounted investments 18,260 -
Deferred income tax assets - 376
Total non-current assets 21,981 52,009
Current assets
Inventories 372 23,262
Trade and other receivables 2,115 26,999
Total current assets 2,487 50,261
Liabilities
Non-current liabilities
Deferred income tax liabilities (12) -
Lease creditors - (18,617)
Provisions for liabilities and charges - (7,879)
Total non-current liabilities (12) (26,496)
Current liabilities
Trade and other payables (2,295) (54,630)
Current income tax liability (890) (1,337)
Lease creditors - (3,176)
Total current liabilities (3,185) (59,143)
Identifiable net assets acquired 21,271 16,631
Non-controlling interest arising on acquisition - (2,058)
Intangible assets - goodwill 13,926 152,471
Total consideration 35,197 167,044
Satisfied by:
Cash 32,509 152,865
Cash and cash equivalents acquired (1,174) (11,584)
Net cash outflow 31,335 141,281
Acquisition related liabilities 3,862 25,763
Total consideration 35,197 167,044
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 2023 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 and related costs included in other operating expenses in the
Group Income Statement amounted to £5.026 million (six months ended 30
September 2021: £5.782 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 £2.1 million. The fair value of
these receivables is £2.1 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 nil to
£14.9 million.
The acquisitions during the period contributed £3.9 million to revenues and
£0.1 million to profit after tax. The revenue and profit of the Group
determined in accordance with IFRS for the period ended 30 September 2022
would not have been materially different than reported in the Income Statement
if the acquisition date for all business combinations completed during the
period had been as of the beginning of the period.
13. Post Employment Benefit Obligations
The Group's defined benefit pension schemes' assets were measured at fair
value at 30 September 2022. The defined benefit pension schemes' liabilities
at 30 September 2022 were updated to reflect material movements in underlying
assumptions.
The Group's post employment benefit obligations moved from a net asset of
£7.745 million at 31 March 2022 to a net asset of £11.761 million at 30
September 2022. This movement was primarily driven by an actuarial gain on
liabilities arising from an increase in the discount rates used to value these
liabilities.
The following actuarial assumptions have been made in determining the Group's
retirement benefit obligation for the six months ended 30 September 2022:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
Discount rate
- Republic of Ireland 4.10% 1.30% 2.10%
- United Kingdom 4.90% 2.00% 2.75%
- Germany 4.10% 1.30% 2.10%
14. 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.
15. 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 2022 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 2022.
16. Events after the Balance Sheet Date
PVO
In November 2022, DCC acquired PVO International BV ("PVO"), a leading
distributor of solar panels, invertors, batteries and accessories used in the
commercial, industrial and domestic energy sectors across continental Europe.
PVO is headquartered in Rosmalen, the Netherlands, employing approximately 50
people and has a market-leading position in the Benelux and growing positions
in eight other European countries including Germany, Poland and Finland. An
initial assignment of fair values to identifiable net assets acquired has not
been completed given the timing of the closure of the transaction.
Medi-Globe
In October 2022, DCC Healthcare completed the acquisition of Medi-Globe
Technologies GmbH ("Medi-Globe"), an international medical devices business
focused on minimally invasive procedures. Medi-Globe has revenues of
approximately €120 million (£104 million) and employs approximately 600
people. Its products are sold to hospitals and procurement organisations in
over 120 countries through direct sales operations in Germany, France,
Austria, Netherlands, Czechia and Brazil and an international network of
distributors. The acquisition was based on an enterprise value of
approximately €245 million (£213 million) on a cash-free, debt-free
basis. An initial assignment of fair values to identifiable net assets
acquired has not been completed given the timing of the closure of the
transaction.
17. Board Approval
This report was approved by the Board of Directors of DCC plc on 7 November
2022.
18. 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 2022 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
Mark Breuer
Donal Murphy
Chairman
Chief Executive
7 November 2022
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
targets.
6 months ended 6 months ended
Year ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
£'000 £'000 £'000
Operating profit 161,723 140,910 458,360
Net operating exceptional items 9,045 18,305 46,534
Amortisation of intangible assets 50,405 36,566 84,340
Adjusted operating profit ('EBITA') 221,173 195,781 589,234
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.
6 months ended 6 months ended
Year ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
£'000 £'000 £'000
Finance costs before exceptional items (41,469) (39,355) (77,205)
Finance income before exceptional items 10,185 12,056 23,075
Net interest before exceptional items (31,284) (27,299) (54,130)
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 6 months ended
ended
30 Sept. 30 Sept.
2022 2021
Revenue (constant currency) £'000 £'000
Revenue 10,837,130 7,518,329
Currency impact 22,396 -
Revenue (constant currency) 10,859,526 7,518,329
6 months ended 6 months ended
30 Sept. 30 Sept.
2022 2021
Adjusted operating profit (constant currency) £'000 £'000
Adjusted operating profit 221,173 195,781
Currency impact (4,415) -
Adjusted operating profit (constant currency) 216,758 195,781
6 months ended 6 months ended
30 Sept. 30 Sept.
2022 2021
Adjusted earnings per share (constant currency) £'000 £'000
Adjusted profit after taxation and non-controlling interests (note 8) 144,481 132,357
Currency impact (3,118) -
Adjusted profit after taxation and non-controlling interests (constant 141,363 132,357
currency)
Weighted average number of ordinary shares in issue ('000) 98,679 98,596
Adjusted earnings per share (constant currency) 143.26p 134.24p
Effective tax rate
Definition
The Group's effective tax rate expresses the income tax expense before
exceptionals and deferred tax attaching to the amortisation of intangible
assets as a percentage of EBITA less net interest.
6 months ended 6 months ended
Year ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
£'000 £'000 £'000
Adjusted operating profit 221,173 195,781 589,234
Net interest before exceptional items (31,284) (27,299) (54,130)
Earnings before taxation 189,889 168,482 535,104
Income tax expense 27,128 24,273 79,734
Income tax attaching to net exceptionals (498) (184) 1,501
Deferred tax attaching to amortisation of intangible assets 10,398 6,238 16,421
Total income tax expense before exceptionals and deferred tax attaching to
amortisation of intangible assets
37,028 30,327 97,656
Effective tax rate (%) 19.5% 18.0% 18.3%
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
2022 2021 2022
£'000 £'000 £'000
Purchase of property, plant and equipment 111,671 78,187 194,353
Proceeds from disposal of property, plant and equipment (7,797) (11,148) (23,524)
Net capital expenditure 103,874 67,039 170,829
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 and net capital expenditure.
6 months ended 6 months ended
Year ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
£'000 £'000 £'000
Cash generated from operations before exceptionals 181,440 115,276 628,433
Repayment of lease creditors (39,954) (35,911) (75,053)
Net capital expenditure (103,874) (67,039) (170,829)
Free cash flow 37,612 12,326 382,551
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).
6 months ended 6 months ended
Year ended
30 Sept. 30 Sept. 31 March
2022 2021 2022
£'000 £'000 £'000
Free cash flow 37,612 12,326 382,551
Interest paid (including interest relating to lease creditors) (39,575) (35,281) (70,103)
Interest relating to lease creditors 4,558 4,738 9,473
Income tax paid (34,668) (34,894) (76,292)
Interest received 10,137 12,033 22,759
Free cash flow (after interest and tax payments) (21,936) (41,078) 268,388
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. 31March
2022 2021 2022
£'000 £'000 £'000
Net cash outflow on acquisitions during the period 31,335 141,281 668,123
Net cash outflow on acquisitions which were committed to in the previous (25,377) (112,478) (114,658)
period
Acquisition related liabilities arising on acquisitions during the period 3,862 25,763 47,381
Acquisition related liabilities which were committed to in the previous period (420) (18,912) (21,510)
Amounts committed in the current period, cash outflow post period end 294,240 42,081 24,100
Committed acquisition expenditure 303,640 77,735 603,436
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
2022 2021 2022
£'000 £'000 £'000
Inventories 1,454,627 941,545 1,133,666
Trade and other receivables 2,218,757 1,557,229 2,508,613
Less: interest receivable (232) (39) (170)
Trade and other payables (3,250,559) (2,548,083) (3,468,705)
Less: interest payable 15,181 14,625 13,981
Less: amounts due in respect of property, plant and equipment 10,980 9,510 18,850
Less: government grants 13 17 16
Net working capital 448,767 (25,196) 206,251
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
2022 2021 2022
£'000 £'000 £'000
Net working capital 448,767 (25,196) 206,251
September/March revenue 1,986,225 1,485,343 2,267,333
Working capital (days) 6.8 days (0.5 days) 2.8 days
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