REG - DCC PLC - Results for the six months ended 30 September 2023
14/11/2023 07:15
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RNS Number : 2995T DCC PLC 14 November 2023
14 November 2023
Interim results for the six months ended 30 September 2023
Strong Growth in Operating Profit, Excellent Acquisition Activity
· Group adjusted operating profit up 12.0% (12.2% on a constant currency
basis) in the seasonally less significant first half of the year.
· Within the constant currency growth of 12.2%, organic growth was 4.4%
driven by an excellent performance from DCC Energy and partially offset, as
anticipated, by a decline in both DCC Healthcare and DCC Technology. M&A
contributed 7.8% of the constant currency growth.
· Interim dividend increased by 5.0% to 63.04 pence per share.
· Since our prior year Final Results in May 2023, DCC has committed
approximately £310 million to new acquisitions in DCC Energy, including:
- As announced separately today, the synergistic acquisition of Progas for
c.£140 million, a nationwide distributor of LPG in Germany, Europe's largest
energy market; and
- The acquisition of five energy management and services businesses to
further expand our offering in this high growth sector.
· DCC continues to expect that the year ending 31 March 2024 will be another
year of operating profit growth in line with expectations, and continued
development activity.
Donal Murphy, Chief Executive, commented:
"We delivered strong profit growth in the first half of our financial year.
Although the macro environment remains volatile, DCC continued to perform
thanks to our resilient and diverse business. DCC Energy traded strongly while
continuing to execute the Cleaner Energy in Your Power strategy we outlined
earlier this year. During the period we committed to seven acquisitions
aligned to our strategic priorities to give all our customers the power to
choose a cleaner energy future."
Financial Highlights 2023 2022 % change % change CC(1)
Revenue £9.616bn £10.837bn -11.3% -11.1%
Adjusted operating profit(2) £247.6m £221.2m +12.0% +12.2%
DCC Energy £170.6m £132.5m +28.9% +28.9%
DCC Healthcare £38.3m £43.2m -11.3% -12.0%
DCC Technology £38.7m £45.5m -15.0% -13.4%
Adjusted earnings per share(2) 149.3p 146.4p +1.9% +2.3%
Interim dividend 63.04p 60.04p +5.0%
Net debt (excl. lease creditors)(3) £1,039.1m £782.3m
(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 2023 was £1,386.5
million (30 September 2022: £1,118.3 million)
Contact information
Investor enquiries:
Kevin Lucey, Chief Financial Officer Tel: +353 1 2799 400
Rossa White, Head of Group Investor Relations Email: investorrelations@dcc.ie
Media enquiries:
Powerscourt (Eavan Gannon/Pete Lambie) Tel: +44 20 7250 1446
Email: DCC@powerscourt-group.com
Presentation of results - audio webcast and conference call details
Group management will host a live audio webcast and conference call of the
presentation at 09.00 GMT today. The slides for this presentation can be
downloaded from DCC's website, www.dcc.ie (https://www.dcc.ie/)
The access details are as follows:
Ireland: +353 (0) 1 691 7842
UK: +44 (0) 203 936 2999
International: +44 (0) 203 936 2999
Passcode: 771225
Webcast link:
https://www.investis-live.com/dcc/6538f26037a2c50c00313f29/bwrtt
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fdcc%2F6538f26037a2c50c00313f29%2Fbwrtt&data=05%7C01%7Chdaly%40dcc.ie%7Ce724e8f20cf8434748e808dbda10ee7d%7C5b7cb417ee004876ab2b81fab4a0c984%7C0%7C0%7C638343538510102792%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=1090BT%2BJrg4bLYYcuJxRQcDWMtyGcFhl7k8mTaNBcR4%3D&reserved=0)
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. We
provide solutions the world needs across three transformative sectors: energy,
healthcare and technology; where we acquire, improve and grow diverse
businesses. We bring our growth mindset to our businesses in 22 countries
across four continents, empowering our 16,000 employees to create long term
value - for our shareholders, customers, society and the planet.
Headquartered in Dublin, DCC plc is listed on the London Stock Exchange and is
a constituent of the FTSE 100. In our financial year ended 31 March 2023, DCC
generated revenues of £22.2 billion and adjusted operating profit of £655.7
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 29 years as a public company.
Follow us on LinkedIn (https://www.linkedin.com/company/dcc-plc)
www.dcc.ie (http://www.dcc.ie)
Forward-looking statements
This announcement contains some forward-looking statements that represent
DCC's expectations for its business, based on current expectations about
future events, which by their nature involve risk and uncertainty. DCC
believes that its expectations and assumptions with respect to these
forward-looking statements are reasonable; however, because they involve risk
and uncertainty as to future circumstances, which are in many cases beyond
DCC's control, actual results or performance may differ materially from those
expressed in or implied by such forward-looking statements.
Group & divisional performance Review
A summary of the Group's results for the six months ended 30 September 2023 is
as follows:
2023 2022
£'m £'m % change
Revenue 9,616 10,837 -11.3%
Adjusted operating profit1
DCC Energy 170.6 132.5 +28.9%
DCC Healthcare 38.3 43.2 -11.3%
DCC Technology 38.7 45.5 -15.0%
Group adjusted operating profit(1) 247.6 221.2 +12.0%
Finance costs (net) and other (52.2) (31.9)
Profit before net exceptionals, amortisation of intangible assets and tax 195.4 189.3 +3.2%
Net exceptional charge before tax and non-controlling interests (12.2) (6.6)
Amortisation of intangible assets (53.5) (50.4)
Profit before tax 129.7 132.3
Taxation (28.3) (27.1)
Profit after tax 101.4 105.2
Non-controlling interests (8.4) (7.7)
Attributable profit 93.0 97.5
Adjusted earnings per share(1) 149.3p 146.4p +1.9%
Dividend per share 63.04p 60.04p +5.0%
Free cash flow(2) 54.5 37.6
Net debt at 30 September (excluding lease creditors) (1,039.1) (782.3)
Lease creditors (347.4) (336.0)
Net debt at 30 September (including lease creditors) (1,386.5) (1,118.3)
(1) Excluding net exceptionals and amortisation of intangible assets
(2) After net working capital and net capital expenditure and before net
exceptionals, interest and tax payments
Income Statement Review
Group revenue
Overall, Group revenue decreased by 11.3% (11.1% on a constant currency basis)
to £9.6 billion, primarily due to lower revenue in DCC Energy where average
commodity prices were lower than during the first six months of the prior
year.
DCC Energy sold 7.2 billion litres of product in the first half, in line with
the prior year. There was modest volume growth across Energy Solutions, driven
by the Nordics business which recorded strong growth with aviation, commercial
and industrial customers. This was offset by a modest decline in Energy
Mobility, where volumes in France were disrupted by strike activity in the
first quarter and competitor activity more recently. Revenue in DCC Energy
declined by 12.8% to £6.9 billion, reflecting lower commodity prices. DCC
Healthcare recorded revenue of £420.5m, an increase of 11.3% (10.9% on a
constant currency basis) driven by the acquisition of Medi‐Globe during the
second half of the prior year. Organically, revenue declined by 0.9% as growth
in DCC Vital was offset by reduced demand in DCC Health & Beauty
Solutions. Revenue in DCC Technology was £2.3 billion, a decrease of 9.7%
(9.1% on a constant currency basis), driven by weaker demand for consumer
technology products in our Life Tech and Info Tech segments.
Group adjusted operating profit
Group adjusted operating profit increased by 12.0% to £247.6 million (12.2%
on a constant currency basis), in the seasonally less significant first half
of the year. Strong organic growth in DCC Energy was somewhat offset, as
anticipated, by the more difficult trading environment across DCC Healthcare
and DCC Technology.
The impact on reported Group adjusted operating profit of foreign exchange
(FX) translation, M&A and organic growth was as follows:
Period FX translation M&A Organic Reported growth
H1 FY24 -0.2% +7.8% +4.4% 12.0%
H1 FY23 +2.3% +12.6% -1.9% 13.0%
The net impact of FX translation in the first half of the year was a modest
headwind of 0.2%, or £0.5 million, in the reported growth in adjusted
operating profit. This reflects average sterling exchange rates strengthening
against most of the Group's reporting currencies during the period, offset by
a modest weakening against Euro.
Acquisitions completed in the prior year and in the current period contributed
7.8% of the reported operating profit growth. The material contribution during
the six-month period came from the prior year acquisitions of Medi-Globe and
PVO.
The Group's organic operating profit growth was 4.4%, driven by the strong
performance of DCC Energy. As expected, DCC Healthcare and DCC Technology
experienced more difficult market conditions and declined organically. The
inflationary environment continued to be a significant feature during the
period. The organic profit growth was achieved despite a 5.3% (or c.£50
million) increase in the Group's like for like overhead cost base. Further
commentary on the trading performance of each of the three divisions is
detailed below.
Divisional Performance Reviews
DCC Energy 2023 2022 % change % change CC
Volumes (billion litre equivalent)(1) 7.184bn 7.197bn -0.2%
Gross profit £764.4m £667.1m +14.6% +14.6%
Operating profit £170.6m £132.5m +28.9% +28.9%
Operating profit per litre 2.38ppl 1.84ppl
· DCC Energy delivered an excellent performance in the seasonally less
significant first half of the financial year. Operating profit increased by
28.9% (28.9% constant currency). Both Energy Solutions (up 33.3%) and Energy
Mobility (up 22.5%) delivered very strong growth. Organic growth was 21.1%,
with M&A contributing 7.8%.
· We continue to execute the strategy outlined at our Energy 'Insights Day'
on 6 September 2023. In the first half, we increased the share of operating
profits from services, renewables and other products ('SRO') to 46%, up from
39% in the same period a year ago (SRO revenues are not seasonal so this
percentage will be lower for the full year(2)). DCC Energy's Scope 3 emissions
were unchanged versus the prior period as aviation volumes recovered. The
carbon intensity of our profits declined by 22% versus prior year.
· DCC Energy committed £310.5 million to acquisitions in the first half.
Five of the seven acquisitions were in energy management services. We have now
built strong capability in energy management services in France, the UK,
Ireland, Norway and the Netherlands. We also made two LPG acquisitions. The
larger of the two, Progas, significantly increases our scale in Germany,
Europe's largest energy market.
(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. A lot of the services and renewables do not
have associated volumes such as solar installations, heat pump solutions,
fleet services and energy efficiency services. Overall, c.30% of DCC Energy's
operating profit has no direct volume (litres equivalent) attached to it.
(2 )Services, renewables and other ('SRO') products are not seasonally
weighted whereas our traditional and lower carbon activities are second half
weighted, so the share of DCC Energy operating profit from SRO is larger in
the first half of the financial year.
DCC Energy Solutions 2023 2022 % change % change CC
Volumes (billion litre equivalent) 4.829bn 4.816bn +0.3%
Operating profit £104.1m £78.1m +33.3% +32.1%
Operating profit per litre 2.16ppl 1.62ppl
DCC Energy Solutions grew its operating profit by 33.3% (32.1% constant
currency). This reflected very strong organic growth in energy management
services (and SRO products), the contribution from acquisitions, good
procurement and cost management. Volumes of traditional fuels and lower carbon
LPG were very modestly ahead of the prior year. We sold 48 million litres of
HVO biofuel, up from 27 million litres in the same period last year.
There are four operating regions within DCC Energy Solutions: Continental
Europe, UK & Ireland, the Nordics and North America. DCC Energy's
excellent organic performance was driven primarily by Continental Europe and
the Nordics.
In Continental Europe, volumes were in line with the prior year although the
experience was mixed across different geographies and customer groups. We grew
volumes to commercial and industrial customers, and had notable customer wins,
but experienced softer end-markets in the domestic sector. Following a
difficult first half in the prior year, our on-grid gas and power business
recovered strongly. We also expanded our energy management business
organically and through acquisitions.
In the UK & Ireland, volume and operating profit was in line with the
prior year. The economic environment in the UK was less favourable, however
our LPG business performed well and continued to grow its market share. The
fuels market was more difficult, and we saw increased competition through the
summer months. We continued to grow our energy management business,
highlighted by the acquisition of Centreco, the market-leading commercial and
industrial solar business in the UK and Alternative Energy Ireland (AEI), the
second-largest player in Ireland.
In the Nordics, we grew very strongly driven by demand from commercial and
industrial customers for LPG. We continued to develop the market for
sustainable aviation fuel in Denmark and we delivered strong growth in
aviation generally. We also expanded our services and renewables solutions by
acquiring Solcellekraft, one of Norway's largest Solar PV businesses.
In North America our business primarily serves domestic and small commercial
heating customers, so it is particularly seasonal. Trading in the region was
in line with the prior year. We have made good progress in building out our
regional centre in Chicago and are investing in technology and digital
capability which will enable the further scaling of the business. During the
period we acquired San Isabel Services Propane in Colorado. We believe there
will be further opportunities to consolidate within the fragmented US LPG
market in the years to come.
DCC Energy Mobility 2023 2022 % change % change CC
Volumes (billion litre equivalent) 2.354bn 2.381bn -1.1%
Operating profit £66.5m £54.4m +22.5% +24.4%
Operating profit per litre 2.83ppl 2.28ppl
DCC Energy Mobility grew its operating profit by 22.5% (24.4% constant
currency). All of the growth was organic. Our UK and Nordics businesses
performed ahead of expectations, whereas France was modestly behind
expectations. Renewable/bio volumes were up 8% compared to the same period in
the prior year. We have continued to invest in EV charging across the network.
We have added EV capability to 122 sites in total, almost doubling the number
of sites from 64 a year ago. We will look to deploy EV charging on 300-400 of
our retail sites by 2030.
Our UK business grew strongly and ahead of expectations, helped by a good
performance from our convenience operations. We also grew our fuel card and
HGV services operating profit very strongly. We continue to expand our range
of digital solutions in this area; it is an important growth area in our
strategy we communicated in September 2023.
Operating profit grew modestly in France and Luxembourg in what was a
challenging market environment. The market saw widespread disruption due to
strike action early in the first half of the year and in more recent weeks the
market has been very competitive. Our Nordic businesses performed strongly;
each business in the region (Denmark, Sweden and Norway) traded ahead of
expectations.
DCC Healthcare 2023 2022 % change % change CC
Revenue £420.5m £377.7m +11.3% +10.9%
Gross profit £130.8m £113.6m +15.2% +14.7%
Operating profit £38.3m £43.2m -11.3% -12.0%
Operating margin 9.1% 11.4%
· Operating profit declined by 11.3% (12.0% constant currency) and by 28.3%
organically, due to the challenging market conditions experienced by DCC
Health & Beauty Solutions.
· DCC Vital performed well and delivered strong profit growth, driven by the
prior year acquisition of Medi-Globe and a good trading performance. Operating
profit in DCC Health & Beauty Solutions declined, impacted by weak market
conditions principally as a result of the sustained period of market
destocking which began in the second quarter of the prior year and which
endured longer than expected. In recent months, we have seen an uptick in
order intake levels across most of our businesses. In addition, the latest
market data indicates improving consumer demand trends.
· The long-term growth opportunity in the nutritional products market remains
attractive for DCC Health & Beauty Solutions. We continued to invest
during the period to enhance the capability of the business, including
completing a new state-of-the-art gummy production facility in Florida, which
positions the business to capitalise on higher margin complex formulation
products.
Divisional revenue
DCC Healthcare recorded revenue of £420.5 million, an increase of 11.3%.
Organically, revenue declined by 0.9% as growth in DCC Vital was offset by
reduced demand in DCC Health & Beauty Solutions.
DCC Vital
DCC Vital delivered strong growth in the first half of the financial year
driven by the benefit of the acquisition of Medi-Globe which performed
strongly during the period along with a strong trading performance in the
Irish market.
In Medical Devices, the business delivered good organic growth and benefited
from the first-time contribution of Medi-Globe. The integration of Medi-Globe
is progressing well, including cross-selling Medi-Globe products into our
existing DCC Vital sales platform. In the UK, the business generated good
revenue growth despite the challenging market environment which was impacted
by NHS budgetary constraints and industrial action by healthcare
practitioners.
In Primary Care, we generated growth in the DACH region, but conditions were
more difficult in the UK for our market leading business due to NHS funding
constraints. We continued to invest during the period in our technology
platform to enhance e-commerce and digital capability which will drive further
growth and efficiency for the business in the coming years.
DCC Health & Beauty Solutions
Consistent with the second half of the prior year, DCC Health & Beauty
Solutions continued to operate in a challenging market context and our
operating profit declined materially. The revenue decline and relatively
higher fixed cost base resulted in negative operating leverage. The
destocking, which began in the second quarter of the prior year, endured much
longer than DCC or other market participants and experts expected. During the
first half of the year, end-consumers, retailers and customers in both Europe
and the US continued to work through their elevated stock positions. The
business has not seen any material customer attrition. During the first half,
we experienced increased engagement with customers on new product development.
As the second quarter progressed, we saw an uptick in orders across most of
our businesses which has continued into the early weeks of the second half of
the year. In addition, the latest market data indicates improving consumer
demand trends.
Given the difficult market context, DCC Health & Beauty Solutions has been
particularly focused on operational efficiency. During the first half, we
combined two of our US businesses and consolidated their manufacturing
activities into one site in Florida, generating scale and efficiency benefits.
We also invested to enhance our product offering, recently completing a new
state-of-the-art gummy facility in Florida which enhances our capability in
this attractive product format.
DCC Technology 2023 2022 % change % change CC
Revenue £2.294bn £2.541bn -9.7% -9.1%
Gross profit £288.6m £296.9m -2.8% -2.0%
Operating profit £38.7m £45.5m -15.0% -13.4%
Operating margin 1.7% 1.8%
· Operating profit declined by 15.0% (13.4% organic constant currency) in the
first half of the year. As expected, there was lower market demand for
consumer technology products. This continued the trend seen in the second half
of the prior year, although our business maintained market share during the
period.
· Pro Tech demand was robust, and we saw good growth in Pro Audio products in
particular. Divisionally, the areas of weakness were the consumer-focused Info
Tech in Europe and Life Tech in the US, where declining consumer spending
impacted demand. North America, where we have businesses in Pro Tech and Life
Tech, accounted for most of the operating profit of DCC Technology in the
first half.
· Given significant cost inflation, we implemented a range of cost reduction
measures which maintained overhead costs in line with the prior year. The
strong focus on operational improvement in our Info Tech business in the UK
continued and delivered improved profitability in the first half.
Divisional revenue
Divisional revenue declined by 9.7%, driven by weaker demand for consumer
technology products in our Life Tech and Info Tech segments. Revenue was 9.1%
lower organically.
Pro Tech
In Pro Tech, DCC Technology is the leading specialist distributor of AV
products globally, with a particularly strong presence in North America. The
Pro Tech segment delivered a good performance in the first half, driven by
strong growth in Pro Audio in North America. The strong performance in this
higher margin specialist category was beneficial to the division's margin mix.
Demand for AV products was robust. After a strong performance in the prior
year, we maintained our market share in North America. In Europe, we
experienced mixed levels of demand across the region. There was reasonable
demand for AV and related products, but weaker demand for enterprise level
products.
Info Tech
Our Info Tech business distributes high-volume consumer and business IT
products to the retail and reseller channels in Europe, with a particularly
strong presence in the UK, Ireland and the Nordics. Despite the weak market
and related revenue decline, our business in the UK continued to recover
strongly in the first half of the year. Operational improvements contributed
to a better gross margin and cost performance. We are continuing to focus on
these improvements, including the consolidation of a secondary warehouse
facility into one national location in the north of England. The business in
Ireland continued to perform well and in line with expectations in the first
half of the year.
Across the rest of our European Info Tech markets, which have a largely
consumer focus, our Nordic business performed robustly. We experienced weaker
demand in France and the Benelux where operating profit declined.
Life Tech
In Life Tech we distribute consumer appliances and lifestyle technology
products to the retail and etail channels in North America. During the first
half of the year, performance in Life Tech declined as a result of weaker
demand for consumer electronics, music products, appliances and increased
discounting in certain overstocked segments. We increased our investment in
digital marketing and this resulted in improved product visibility and market
share on key etail platforms.
Finance costs (net) and other
Net finance costs and other, which includes the Group's net financing costs,
lease interest and the share of profit/loss of associated businesses,
increased to £52.2 million (2022: £31.9 million). As in the second half of
the prior year, the increase in the period primarily reflects increased net
financing costs due to the much higher interest rate environment.
The substantial change in the global interest rate environment from summer
2022 onwards impacted the cost of the floating rate element of the Group's
gross debt. The net impact of the rising interest rate environment amounted to
approximately £17 million. Presently, approximately 40% of the Group's gross
debt is at floating rates.
Average net debt, excluding lease creditors, in the period was £1.2 billion,
compared to an average net debt of £883 million in the prior year. The
increase in average net debt excluding lease creditors reflects the
substantial acquisition activity during the current period and the second half
of the prior year.
Net exceptional items and amortisation of intangible assets
The Group recorded a net exceptional charge after tax of £12.2 million in the
first six months of the year as follows:
£'m
Restructuring and integration costs and other (8.4)
Acquisition and related costs (3.8)
IAS 39 mark-to-market gain -
(12.2)
Tax attaching to exceptional items -
Net exceptional charge (12.2)
Restructuring and integration costs and other of £8.4 million relates to the
restructuring of operations across a number of businesses and recent
acquisitions. Most of the cost relates to optimisation and integration of
operations in the Technology division. Acquisition and related costs include
the professional fees and tax costs relating to the evaluation and completion
of acquisition opportunities and amounted to £3.8 million.
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 2023
this was not material and at the reporting date the cumulative net exceptional
credit taken in respect of IAS 39 ineffectiveness was £1.4 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 £53.5 million from £50.4 million in the prior period, with the
increase reflecting acquisitions completed in the prior year.
Taxation
The effective tax rate for the Group in the first half of the year of 20.3% 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 19.3%. The higher tax rate
reflects corporation tax increases in a number of jurisdictions and the
increasingly international footprint of the Group.
Adjusted earnings per share
Adjusted earnings per share increased by 1.9% to 149.3 pence, reflecting the
increase in profit before exceptional items and goodwill amortisation.
Dividend
The Board has decided to pay an interim dividend of 63.04 pence per share,
which represents a 5.0% increase on the prior year interim dividend of 60.04
pence per share. This dividend will be paid on 15 December 2023 to
shareholders on the register at the close of business on 24 November 2023.
Cash Flow, capital DEPLOYMENT & Financial strength
Cash flow
As with its operating profit, the Group's operating cash flow is significantly
weighted towards the second half of the financial year. The cash flow of the
Group for the six months ended 30 September 2023 can be summarised as follows:
Six months ended 30 September 2023 2022
£'m £'m
Group operating profit 247.6 221.2
Increase in working capital (154.1) (151.3)
Depreciation (excluding ROU leased assets) and other 76.9 76.0
Operating cash flow (pre add-back for depreciation on ROU leased assets) 170.4 145.9
Capital expenditure (net) (111.4) (103.9)
59.0 42.0
Depreciation on ROU leased assets 39.9 35.6
Repayment of lease creditors (44.4) (40.0)
Free cash flow 54.5 37.6
Interest and tax paid, net of dividend from equity accounted investments (88.6) (59.5)
Free cash flow (after interest and tax) (34.1) (21.9)
Acquisitions (151.8) (41.7)
Dividends (126.9) (117.2)
Exceptional items (7.8) (2.5)
Share issues 0.2 0.3
Net outflow (320.4) (183.0)
Opening net debt (including lease creditors) (1,113.9) (756.6)
Translation and other 47.8 (178.7)
Closing net debt (including lease creditors) (1,386.5) (1,118.3)
Analysis of closing net debt (including lease creditors):
Net debt at 30 September (excluding lease creditors) (1,039.1) (782.3)
Lease creditors at 30 September (347.4) (336.0)
(1,386.5) (1,118.3)
Free cash flow generation
Free cash flow in the six months ended 30 September 2023 of £54.5 million
compares to £37.6 million in the prior year. On a rolling 12-month basis
(i.e., H1 FY24 and H2 FY23 cumulatively), free cash flow conversion remained
strong at 86%.
Working capital
As expected, working capital increased by £154.1 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 scale of
the Group's activities and seasonal working capital requirements, particularly
in DCC Technology and within DCC Energy Solutions. The absolute value of
working capital at 30 September 2023 was in line with the prior year at
£440.2 million (£448.8 million at 30 September 2022), a good performance
given the lower utilisation of supply chain financing within DCC Technology
(see below). Overall working capital days at 30 September 2023 was 7.4 days
sales (2022: 6.8 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 2023 reduced materially compared with the prior year
to £122.8 million (2022: £159.3 million). Supply chain financing had a
positive impact on Group working capital days of 2.1 days (30 September 2022:
2.4 days).
Net capital expenditure
Net capital expenditure for the six months of £111.4 million (2022: 103.9
million) was net of disposal proceeds (£3.4 million) and government grants
received (£2.7 million) and reflects continued investment in development
initiatives across the Group.
2023 2022
£'m £'m
DCC Energy 89.7 87.1
DCC Healthcare 17.7 12.3
DCC Technology 4.0 4.5
Total 111.4 103.9
Capital expenditure in DCC Energy primarily comprised expenditure on tanks,
cylinders and installations, with a focus on supporting new and existing LPG
customers in Energy Solutions. In Mobility, there was investment to maintain
our retail sites and upgrades across the business, including adding further
lower emission product capability, EV fast charging and related forecourt
services in the Nordics and France in particular. In DCC Healthcare, the
spending primarily related to increased manufacturing capability and capacity
across DCC Health & Beauty Solutions. The business recently commissioned
its gummy line in Florida and is in the process of expanding effervescent
capacity at its Minnesota operations. Net capital expenditure for the Group
exceeded the depreciation charge of £76.4 million (excluding right-of-use
leased assets) in the period by £35.0 million.
Total cash spend on acquisitions in the six months to 30 September 2023
The total cash spend on acquisitions in the six months ended 30 September 2023
was £151.8 million. This included the completion of the acquisition of AEI,
Hafod Renewables and O'sitoit in DCC Energy which were announced in the prior
year Results Announcement in May 2023. Payment of deferred and contingent
acquisition consideration previously provided amounted to £30.5 million.
Committed acquisitions
Committed acquisitions in the period amounted to £310.5 million as follows:
2023 2022
£'m £'m
DCC Energy 310.5 90.6
DCC Healthcare - 213.0
Total 310.5 303.6
DCC continues to be very active from a development perspective. The Group's
recent acquisitions include:
DCC Energy
DCC Energy has committed approximately £310 million to seven new acquisitions
which support its strategy to build a leading energy management business and
further expand its offering in the distribution of lower-carbon LPG products.
The largest of these transactions was the agreement to acquire Progas, which
is set out in further detail below. In addition, the division completed the
following acquisitions:
· In July 2023, DCC Energy acquired Centreco, a market-leading Solar PV and
energy consultancy business in the UK, which services commercial and
industrial customers nationally, and SLER40, a French Solar PV and heat pump
business servicing domestic and commercial customers with design,
installation, and maintenance services.
· In August 2023, DCC Energy acquired Isolatiespecialist, a leading provider
of energy efficiency and insulation services to domestic and commercial
customers in the Netherlands, and San Isabel Services Propane, a US LPG
distributor which services both domestic and commercial customers in Colorado.
· DCC Energy acquired Solcellekraft in September 2023, one of Norway's
largest Solar PV businesses, servicing commercial and domestic customers.
· In November 2023, DCC Energy acquired DTGen, a leading UK-based provider of
power solutions, with a particular focus on emergency power solutions. DTGen
offers a comprehensive service from design to supply, installation, and
continuous maintenance, catering to a diverse range of sectors, including data
centres, utilities, and healthcare.
Progas
In September 2023, DCC Energy agreed to acquire Progas GmbH ("Progas"), a
leading distributor of LPG in Germany, for an enterprise value of
approximately £140 million, subject to customary regulatory approval. The
synergistic acquisition will represent DCC Energy's largest acquisition to
date in Germany, Europe's largest energy market, and considerably expands DCC
Energy's customer base in the market to over 100,000 customers. The
acquisition is expected to generate a mid-teen return on capital employed in
the first year of ownership. The transaction is expected to complete by the
end of the financial year. A separate stock exchange announcement was issued
on the acquisition this morning.
Financial strength
DCC has always maintained a strong balance sheet which enables the
implementation of the Group's strategy. A strong balance sheet provides many
strategic and commercial benefits, enabling DCC to take advantage of
acquisitive or organic development opportunities as they arise. At 30
September 2023, the Group had net debt (including lease creditors) of £1.4
billion, net debt (excluding lease creditors) of £1.0 billion, cash resources
(net of overdrafts) of £842 million and undrawn committed facilities of over
£765 million.
Substantially all of the Group's term debt has been raised in the US private
placement market and has an average maturity of 5.1 years. In April 2023, DCC
repaid £223.3 million of maturing US private placement notes from cash
resources.
DCC has taken a pro-active approach to the credit markets since going public.
The Group has been active in the US private placement debt market since 1996
and has built up a robust and well-diversified funding portfolio, with a
balanced maturity profile. DCC's long term banking partners, investors and
suppliers have always appreciated the strong credit quality of the Company. In
November 2023 S&P Global Ratings issued a BBB rating and Fitch issued a
BBB rating for DCC in the first public credit rating opinions of the Company.
These investment grade ratings combined with our strong balance sheet,
resilient business model, cashflow and a strong track record in the private
debt markets, gives access to an increased array of funding instruments to
enable the continued growth and development of the Group.
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 80 to 83 of the 2023 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
For the six months ended 30 September 2023
Unaudited 6 months ended Unaudited 6 months ended Audited year ended
30 September 2023 30 September 2022 31 March 2023
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 9,615,978 - 9,615,978 10,837,130 - 10,837,130 22,204,846 - 22,204,846
Cost of sales (8,432,158) - (8,432,158) (9,759,622) - (9,759,622) (19,800,114) - (19,800,114)
Gross profit 1,183,820 - 1,183,820 1,077,508 - 1,077,508 2,404,732 - 2,404,732
Administration expenses (364,396) - (364,396) (341,072) - (341,072) (629,510) - (629,510)
Selling and distribution expenses (583,143) - (583,143) (523,803) - (523,803) (1,157,642) - (1,157,642)
Other operating income/(expenses) 11,361 (12,201) (840) 8,540 (9,045) (505) 38,082 (32,528) 5,554
Adjusted operating profit 247,642 (12,201) 235,441 221,173 (9,045) 212,128 655,662 (32,528) 623,134
Amortisation of intangible assets (53,512) - (53,512) (50,405) - (50,405) (111,146) - (111,146)
Operating profit 5 194,130 (12,201) 181,929 170,768 (9,045) 161,723 544,516 (32,528) 511,988
Finance costs (60,270) - (60,270) (41,469) - (41,469) (96,735) - (96,735)
Finance income 7,923 12 7,935 10,185 2,504 12,689 16,111 892 17,003
Equity accounted investments' profit/loss after tax 137 - 137 (606) - (606) (692) - (692)
Profit before tax 141,920 (12,189) 129,731 138,878 (6,541) 132,337 463,200 (31,636) 431,564
Income tax expense 7 (28,325) (15) (28,340) (26,630) (498) (27,128) (87,526) 2,764 (84,762)
Profit after tax for the financial period 113,595 (12,204) 101,391 112,248 (7,039) 105,209 375,674 (28,872) 346,802
Profit attributable to:
Owners of the Parent Company 105,233 (12,204) 93,029 104,474 (6,948) 97,526 362,683 (28,661) 334,022
Non-controlling interests 8,362 - 8,362 7,774 (91) 7,683 12,991 (211) 12,780
113,595 (12,204) 101,391 112,248 (7,039) 105,209 375,674 (28,872) 346,802
Earnings per ordinary share
Basic earnings per share 8 94.20p 98.83p 338.40p
Diluted earnings per share 8 94.14p 98.77p 338.04p
Adjusted basic earnings per share 8 149.27p 146.42p 456.27p
Adjusted diluted earnings per share 8 149.19p 146.32p 455.79p
Group Statement of Comprehensive Income
For the six months ended 30 September 2023
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2023 2022 2023
£'000 £'000 £'000
Group profit for the period 101,391 105,209 346,802
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Currency translation (27,569) 166,078 43,280
Movements relating to cash flow hedges 59,931 (59,784) (164,422)
Movement in deferred tax liability on cash flow hedges (11,567) 10,089 30,374
20,795 116,383 (90,768)
Items that will not be reclassified to profit or loss
Group defined benefit pension obligations:
- remeasurements 1,839 3,685 2,811
- movement in deferred tax asset (373) (719) (800)
1,466 2,966 2,011
Other comprehensive income for the period, net of tax 22,261 119,349 (88,757)
Total comprehensive income for the period 123,652 224,558 258,045
Attributable to:
Owners of the Parent Company 116,772 214,010 243,242
Non-controlling interests 6,880 10,548 14,803
123,652 224,558 258,045
Group Balance Sheet
As at 30 September 2023
Notes Unaudited Unaudited Audited
30 Sept. 30 Sept. 31 March
2023 2022 2023
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 1,369,547 1,333,779 1,354,806
Right-of-use leased assets 333,975 326,306 336,221
Intangible assets and goodwill 3,050,965 2,791,596 2,957,629
Equity accounted investments 45,770 46,864 47,789
Deferred income tax assets 68,836 58,924 69,053
Derivative financial instruments 52,021 143,547 89,199
4,921,114 4,701,016 4,854,697
Current assets
Inventories 1,335,355 1,454,627 1,192,803
Trade and other receivables 2,015,679 2,218,757 2,312,269
Derivative financial instruments 71,107 178,101 59,258
Cash and cash equivalents 882,923 1,258,065 1,421,749
4,305,064 5,109,550 4,986,079
Total assets 9,226,178 9,810,566 9,840,776
EQUITY
Capital and reserves attributable to owners of the Parent Company
Share capital 17,422 17,422 17,422
Share premium 883,873 883,652 883,669
Share based payment reserve 10 58,190 50,960 54,596
Cash flow hedge reserve 10 84 36,073 (48,280)
Foreign currency translation reserve 10 102,442 250,485 128,529
Other reserves 10 932 932 932
Retained earnings 1,909,099 1,766,614 1,941,223
Equity attributable to owners of the Parent Company 2,972,042 3,006,138 2,978,091
Non-controlling interests 86,789 75,661 80,219
Total equity 3,058,831 3,081,799 3,058,310
LIABILITIES
Non-current liabilities
Borrowings 1,600,671 1,851,052 1,933,759
Lease creditors 274,607 270,188 275,388
Derivative financial instruments 39,305 51,789 40,585
Deferred income tax liabilities 261,312 259,590 263,623
Post employment benefit obligations 12 (13,482) (11,761) (11,721)
Provisions for liabilities 294,957 306,536 301,067
Acquisition related liabilities 110,195 72,680 86,172
Government grants 2,914 352 446
2,570,479 2,800,426 2,889,319
Current liabilities
Trade and other payables 2,944,129 3,250,559 3,279,898
Current income tax liabilities 79,849 64,268 85,324
Borrowings 375,804 379,746 320,856
Lease creditors 72,763 65,770 71,158
Derivative financial instruments 29,385 79,426 42,341
Provisions for liabilities 53,770 62,137 52,349
Acquisition related liabilities 41,168 26,435 41,221
3,596,868 3,928,341 3,893,147
Total liabilities 6,167,347 6,728,767 6,782,466
Total equity and liabilities 9,226,178 9,810,566 9,840,776
Net debt included above (excluding lease creditors) 11 (1,039,114) (782,300) (767,335)
Group Statement of Changes in Equity
For the six months ended 30 September 2023
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 2023 17,422 883,669 1,941,223 135,777 2,978,091 80,219 3,058,310
Profit for the period - - 93,029 - 93,029 8,362 101,391
Other comprehensive income:
Currency translation - - - (26,087) (26,087) (1,482) (27,569)
Group defined benefit pension obligations:
- remeasurements - - 1,839 - 1,839 - 1,839
- movement in deferred tax asset - - (373) - (373) - (373)
Movements relating to cash flow hedges - - - 59,931 59,931 - 59,931
Movement in deferred tax liability on cash flow hedges
- - - (11,567) (11,567) - (11,567)
Total comprehensive income - - 94,495 22,277 116,772 6,880 123,652
Re-issue of treasury shares - 204 - - 204 - 204
Share based payment - - - 3,594 3,594 - 3,594
Dividends - - (126,619) - (126,619) (310) (126,929)
At 30 September 2023 17,422 883,873 1,909,099 161,648 2,972,042 86,789 3,058,831
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
Other comprehensive income:
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
Group Cash Flow Statement
For the six months ended 30 September 2023
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2023 2022 2023
Notes £'000 £'000 £'000
Cash flow from operating activities
Profit for the period 101,391 105,209 346,802
Add back non-operating expenses/(income):
- tax 28,340 27,128 84,762
- share of equity accounted investments' (profit)/loss (137) 606 692
- net operating exceptionals 6 12,201 9,045 32,528
- net finance costs 52,335 28,780 79,732
Group operating profit before exceptionals 194,130 170,768 544,516
Share-based payments expense 3,594 3,524 7,160
Depreciation (including right-of-use leased assets) 116,329 105,223 219,681
Amortisation of intangible assets 53,512 50,405 111,146
Profit on disposal of property, plant and equipment (580) (1,872) (12,346)
Amortisation of government grants (208) (9) (114)
Other (2,387) 4,703 4,654
Increase in working capital (154,082) (151,302) (13,951)
Cash generated from operations before exceptionals 210,308 181,440 860,746
Exceptionals (7,810) (2,492) (23,780)
Cash generated from operations 202,498 178,948 836,966
Interest paid (including lease interest) (57,548) (39,575) (82,576)
Income tax paid (45,586) (34,668) (97,485)
Net cash flow from operating activities 99,364 104,705 656,905
Investing activities
Inflows:
Proceeds from disposal of property, plant and equipment 3,404 7,797 22,643
Government grants received in relation to property, plant and equipment 2,672 - 216
Dividends received from equity accounted investments 1,234 - -
Interest received 8,003 10,137 15,535
15,313 17,934 38,394
Outflows:
Purchase of property, plant and equipment (117,434) (111,671) (229,440)
Acquisition of subsidiaries and equity accounted investments 13 (121,298) (31,335) (318,486)
Payment of accrued acquisition related liabilities (30,460) (10,378) (21,987)
(269,192) (153,384) (569,913)
Net cash flow from investing activities (253,879) (135,450) (531,519)
Financing activities
Inflows:
Proceeds from issue of shares 204 331 348
Net cash inflow on derivative financial instruments 64,951 - -
Increase in interest-bearing loans and borrowings - - 603,054
65,155 331 603,402
Outflows:
Repayment of interest-bearing loans and borrowings (270,836) - (393,469)
Net cash outflow on derivative financial instruments - (8,188) (57,902)
Repayment of lease creditors (principal) (39,143) (35,396) (74,219)
Dividends paid to owners of the Parent Company 9 (126,619) (116,911) (177,843)
Dividends paid to non-controlling interests (310) (266) (129)
(436,908) (160,761) (703,562)
Net cash flow from financing activities (371,753) (160,430) (100,160)
Change in cash and cash equivalents (526,268) (191,175) 25,226
Translation adjustment (2,517) 42,588 19,376
Cash and cash equivalents at beginning of period 1,371,206 1,326,604 1,326,604
Cash and cash equivalents at end of period 842,421 1,178,017 1,371,206
Cash and cash equivalents consists of:
Cash and short-term bank deposits 11 882,923 1,258,065 1,421,749
Overdrafts 11 (40,502) (80,048) (50,543)
842,421 1,178,017 1,371,206
Notes to the Condensed Financial Statements
For the six months ended 30 September 2023
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
2023 have been prepared in accordance with International Financial Reporting
Standards ('IFRS'), the International Financial Reporting Interpretations
Committee ('IFRIC') and in accordance with IAS 34 Interim Financial Reporting
as adopted by the European Union. The Group condensed interim financial
statements have also been prepared in accordance with the Transparency
(Directive 2004/109/EC) Regulations 2007 and the related Transparency rules of
the Irish Financial Services Regulatory Authority.
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 2023 and the comparative figures for the six months ended 30
September 2022 are unaudited and have not been reviewed by the Auditors. The
summary financial statements for the year ended 31 March 2023 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 2023 Annual Report and are described in those financial
statements on pages 213 to 223.
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:
· Disclosure of Accounting Policies - Amendments to IAS 1
· Definition of Accounting Estimates - Amendments to IAS 8
· Insurance Contracts - IFRS 17
· Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to IAS 12
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
80 to 83 of the 2023 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
2023 2022 2023 2023 2022 2023
Stg£1= Stg£1= Stg£1= Stg£1= Stg£1= Stg£1=
Euro 1.1547 1.1776 1.1597 1.1566 1.1325 1.1374
Danish krone 8.6029 8.7622 8.6304 8.6249 8.4219 8.4719
Swedish krona 13.3771 12.3516 12.4772 13.3385 12.3435 12.8304
Norwegian krone 13.4042 11.7220 11.8985 13.0158 11.9862 12.9595
US dollar 1.2566 1.2356 1.2101 1.2253 1.1040 1.2369
Canadian dollar 1.6934 1.5808 1.5934 1.6455 1.5177 1.6762
Hong Kong dollar 9.8460 9.6922 9.4837 9.5951 8.6660 9.7096
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.
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 to allocate resources between segments and to assess performance.
Segment performance is predominantly evaluated based on operating profit
before amortisation of intangible assets and net operating exceptional items
('adjusted operating profit') and return on capital employed. Net finance
costs and income tax are managed on a centralised basis and therefore these
items are not allocated between operating segments for the purpose of
presenting information to the chief operating decision maker and accordingly
are not included in the detailed segmental analysis.
The consolidated total assets of the Group as at 30 September 2023 amounted to
£9.2 billion. This figure was not materially different to the equivalent
figure at 31 March 2023 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 2023
DCC DCC DCC Total
Energy Healthcare Technology £'000
£'000 £'000 £'000
Segment revenue 6,901,527 420,476 2,293,975 9,615,978
Adjusted operating profit 170,644 38,317 38,681 247,642
Amortisation of intangible assets (33,544) (5,670) (14,298) (53,512)
Net operating exceptionals (note 6) (3,022) (1,001) (8,178) (12,201)
Operating profit 134,078 31,646 16,205 181,929
Unaudited six months ended 30 September 2022
DCC DCC DCC Total
Energy Healthcare Technology £'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
Audited year ended 31 March 2023
DCC DCC DCC Total
Energy Healthcare Technology £'000
£'000 £'000 £'000
Segment revenue 16,119,452 821,527 5,263,867 22,204,846
Adjusted operating profit 457,815 91,742 106,105 655,662
Amortisation of intangible assets (68,731) (9,318) (33,097) (111,146)
Net operating exceptionals (note 6) (21,603) (4,367) (6,558) (32,528)
Operating profit 367,481 78,057 66,450 511,988
(b) By geography
The Group has a presence in 22 countries worldwide. The following represents a
geographical revenue analysis about the country of domicile (Republic of
Ireland) and countries with material revenue representing over 10% of Group
revenue. Revenue from operations is derived almost entirely from the sale of
goods and is disclosed based on the location of the entity selling the goods.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2023 2022 2023
£'000 £'000 £'000
Republic of Ireland (country of domicile) 957,401 998,903 2,255,595
United Kingdom 3,199,914 3,807,095 7,562,103
France 1,629,130 1,730,440 3,706,272
United States 971,226 1,098,101 2,189,358
Rest of World 2,858,307 3,202,591 6,491,518
9,615,978 10,837,130 22,204,846
(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.
Unaudited six months ended 30 September 2023
DCC DCC DCC Total
Energy Healthcare Technology £'000
£'000 £'000 £'000
Republic of Ireland (country of domicile) 730,753 60,438 166,210 957,401
United Kingdom 2,258,335 185,772 755,807 3,199,914
France 1,475,570 26,939 126,621 1,629,130
North America 74,135 74,710 903,337 1,052,182
Rest of World 2,362,734 72,617 342,000 2,777,351
Revenue 6,901,527 420,476 2,293,975 9,615,978
Products transferred at point in time 6,901,527 420,476 2,293,975 9,615,978
Energy solutions products and services 4,131,388 - - 4,131,388
Energy mobility products and services 2,770,139 - - 2,770,139
Medical and pharmaceutical products - 249,093 - 249,093
Nutrition and health & beauty products - 171,383 - 171,383
Technology products and services - - 2,293,975 2,293,975
Revenue 6,901,527 420,476 2,293,975 9,615,978
Unaudited six months ended 30 September 2022 (Restated)
DCC DCC DCC Total
Energy Healthcare Technology £'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
Rest of World 2,710,189 37,969 372,858 3,121,016
Revenue 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
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
Revenue 7,918,151 377,651 2,541,328 10,837,130
Audited year ended 31 March 2023
DCC DCC DCC Total
Energy Healthcare Technology £'000
£'000 £'000 £'000
Republic of Ireland (country of domicile) 1,688,901 110,766 455,928 2,255,595
United Kingdom 5,358,282 399,599 1,804,222 7,562,103
France 3,360,372 24,173 321,727 3,706,272
North America 311,521 175,757 1,875,842 2,363,120
Rest of World 5,400,376 111,232 806,148 6,317,756
Revenue 16,119,452 821,527 5,263,867 22,204,846
Products transferred at point in time 16,119,452 821,527 5,263,867 22,204,846
Energy solutions products and services 9,996,896 - - 9,996,896
Energy mobility products and services 6,122,556 - - 6,122,556
Medical and pharmaceutical products - 448,931 - 448,931
Nutrition and health & beauty products - 372,596 - 372,596
Technology products and services - - 5,263,867 5,263,867
Revenue 16,119,452 821,527 5,263,867 22,204,846
6. Exceptionals
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2023 2022 2023
£'000 £'000 £'000
Restructuring and integration costs and other (8,411) (4,019) (13,401)
Acquisition and related costs (3,790) (5,026) (10,604)
Adjustments to contingent acquisition consideration - - (8,523)
Net operating exceptional items (12,201) (9,045) (32,528)
Mark to market of swaps and related debt 12 2,504 892
Net exceptional items before taxation (12,189) (6,541) (31,636)
Income tax and deferred tax attaching to exceptional items (15) (498) 2,764
Net exceptional items after taxation (12,204) (7,039) (28,872)
Non-controlling interests share of net exceptional items after taxation - 91 211
Net exceptional items attributable to owners of the Parent Company (12,204) (6,948) (28,661)
Restructuring and integration costs and other of £8.411 million relates to
the restructuring of operations across a number of businesses and recent
acquisitions. Most of the cost relates to optimisation and integration of
operations in the Technology division.
Acquisition and related costs include the professional fees and tax costs
relating to the evaluation and completion of acquisition opportunities and
amounted to £3.790 million.
Most of the Group's debt has been raised in the US private placement market,
denominated in US dollars, euro and sterling. Long-term interest and cross
currency interest rate derivatives have been utilised to achieve an
appropriate mix of fixed and floating rate debt across the three currencies.
The level of ineffectiveness calculated under IAS 39 on the fair value and
cash flow hedge relationships relating to this debt is charged or credited as
an exceptional item. In the six months ended 30 September 2023, this amounted
to an exceptional non-cash gain of £12,000. 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 £1.434 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.
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 20.3%
(six months ended 30 September 2022: 19.5% and year ended 31 March 2023:
19.3%).
8. Earnings per Ordinary Share
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2023 2022 2023
£'000 £'000 £'000
Profit attributable to owners of the Parent Company 93,029 97,526 334,022
Amortisation of intangible assets after tax 42,192 40,007 87,690
Exceptionals after tax (note 6) 12,204 6,948 28,661
Adjusted profit after taxation and non-controlling interests 147,425 144,481 450,373
Unaudited Unaudited Audited
Basic earnings per ordinary share 6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2023 2022 2023
pence pence pence
Basic earnings per ordinary share 94.20p 98.83p 338.40p
Amortisation of intangible assets after tax 42.72p 40.55p 88.84p
Exceptionals after tax 12.35p 7.04p 29.03p
Adjusted basic earnings per ordinary share 149.27p 146.42p 456.27p
Weighted average number of ordinary shares in issue (thousands) 98,762 98,679 98,707
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
Diluted earnings per ordinary share 6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2023 2022 2023
pence pence pence
Diluted earnings per ordinary share 94.14p 98.77p 338.04p
Amortisation of intangible assets after tax 42.70p 40.51p 88.74p
Exceptionals after tax 12.35p 7.04p 29.01p
Adjusted diluted earnings per ordinary share 149.19p 146.32p 455.79p
Weighted average number of ordinary shares in issue (thousands) 98,815 98,745 98,811
The earnings used for the purposes of the diluted earnings per ordinary share
calculations were £93.029 million (six months ended 30 September 2022:
£97.526 million) and £147.425 million (six months ended 30 September 2022:
£144.481 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 2023 was
98.815 million (six months ended 30 September 2022: 98.745 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
2023 2022 2023
'000 '000 '000
Weighted average number of ordinary shares in issue 98,762 98,679 98,707
Dilutive effect of options and awards 53 66 104
Weighted average number of ordinary shares for diluted earnings 98,815 98,745 98,811
per 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.
9. Dividends
Dividends paid per ordinary share: Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2023 2022 2023
£'000 £'000 £'000
Interim - paid 60.04 pence per share on 9 December 2022 - - 59,128
Final - paid 127.17 pence per share on 20 July 2023
(2023: paid 119.83 pence per share on 21 July 2022)
126,619 116,911 118,715
126,619 116,911 177,843
On 13 November 2023, the Board approved an interim dividend of 63.04 pence per
share (£62.265 million). These condensed interim financial statements do not
reflect this dividend payable.
10. Other Reserves
For the six months ended 30 September 2023
Share based payment Cash flow Foreign Other Total
reserve
hedge
currency translation reserve
reserves
£'000
£'000
reserve
£'000
£'000
£'000
At 1 April 2023 54,596 (48,280) 128,529 932 135,777
Currency translation - - (26,087) - (26,087)
Movements relating to cash flow hedges - 59,931 - - 59,931
Movement in deferred tax liability on cash flow hedges - (11,567) - - (11,567)
Share based payment 3,594 - - - 3,594
At 30 September 2023 58,190 84 102,442 932 161,648
For the six months ended 30 September 2022
Share based payment Cash flow Foreign Other Total
reserve
hedge
currency translation reserve
reserves
£'000
£'000
reserve
£'000
£'000
£'000
At 1 April 2022 47,436 85,768 87,272 932 221,408
Currency translation - - 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 year ended 31 March 2023
Share based payment Cash flow Foreign Other Total
reserve
hedge
currency translation reserve
reserves
£'000
£'000
reserve
£'000
£'000
£'000
At 1 April 2022 47,436 85,768 87,272 932 221,408
Currency translation - - 41,257 - 41,257
Movements relating to cash flow hedges - (164,422) - - (164,422)
Movement in deferred tax liability on cash flow hedges - 30,374 - - 30,374
Share based payment 7,160 - - - 7,160
At 31 March 2023 54,596 (48,280) 128,529 932 135,777
11. Analysis of Net Debt
Unaudited Unaudited Audited
30 Sept. 30 Sept. 31 March
2023 2022 2023
£'000 £'000 £'000
Non-current assets
Derivative financial instruments 52,021 143,547 89,199
Current assets
Derivative financial instruments 71,107 178,101 59,258
Cash and cash equivalents 882,923 1,258,065 1,421,749
954,030 1,436,166 1,481,007
Non-current liabilities
Derivative financial instruments (39,305) (51,789) (40,585)
Bank borrowings (34,584) (461,958) (35,168)
Unsecured Notes (1,566,087) (1,389,094) (1,898,591)
(1,639,976) (1,902,841) (1,974,344)
Current liabilities
Bank borrowings (40,502) (80,048) (50,543)
Derivative financial instruments (29,385) (79,426) (42,341)
Unsecured Notes (335,302) (299,698) (270,313)
(405,189) (459,172) (363,197)
Net debt (excluding lease creditors) (1,039,114) (782,300) (767,335)
Lease creditors (non-current) (274,607) (270,188) (275,388)
Lease creditors (current) (72,763) (65,770) (71,158)
Total lease creditors (347,370) (335,958) (346,546)
Net debt (including lease creditors) (1,386,484) (1,118,258) (1,113,881)
An analysis of the maturity profile of the Group's net debt (including lease
creditors) at 30 September 2023 is as follows:
As at 30 September 2023 Less than Between Between Over Total
1 year
1 and 2
2 and 5
5 years
£'000
£'000
years
years
£'000
£'000 £'000
Cash and short-term deposits 882,923 - - - 882,923
Overdrafts (40,502) - - - (40,502)
Cash and cash equivalents 842,421 - - - 842,421
Bank borrowings - - (34,584) - (34,584)
Unsecured Notes (335,302) (90,590) (522,657) (952,840) (1,901,389)
Derivative financial instruments:
- Unsecured Notes 45,023 15,888 (3,057) (1,797) 56,057
- Other (3,301) 725 957 - (1,619)
Net debt (excluding lease creditors) 548,841 (73,977) (559,341) (954,637) (1,039,114)
Lease creditors (72,763) (57,322) (106,192) (111,093) (347,370)
Net debt (including lease creditors) 476,078 (131,299) (665,533) (1,065,730) (1,386,484)
The Group's Unsecured Notes fall due between 21 April 2024 and 4 April 2034
with an average maturity of 5.1 years at 30 September 2023. The full fair
value of a hedging derivative is allocated to the time period corresponding to
the maturity of the hedged item.
12. Post Employment Benefit Obligations
The Group's defined benefit pension schemes' assets were measured at fair
value at 30 September 2023. The defined benefit pension schemes' liabilities
at 30 September 2023 were updated to reflect material movements in underlying
assumptions.
The Group's post-employment benefit obligations moved from a net asset of
£11.721 million at 31 March 2023 to a net asset of £13.482 million at 30
September 2023. 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 2023:
Unaudited Unaudited Audited
6 months ended 6 months ended year
30 Sept. 30 Sept. ended
2023 2022 31 March
2023
Discount rate
Republic of Ireland 4.60% 4.10% 4.10%
United Kingdom 5.60% 4.90% 4.85%
Germany 4.60% 4.10% 4.10%
13. 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 Hafod Renewables in May 2023.
Hafod is a supplier and installer of renewable energy sources in the UK;
· The acquisition by DCC Energy of 100% of O'sitoit in May 2023. O'sitoit is
a solar installer in central and eastern France;
· The acquisition by DCC Energy of 100% of AEI in May 2023. AEI is a leading
solar installation and services business in Ireland;
· The acquisition by DCC Energy of 100% of Centreco in July 2023. Centreco is
a market-leading solar PV and energy consultancy business in the UK which
services commercial and industrial customers nationally;
· The acquisition by DCC Energy of 100% of SLER40 in July 2023. SLER40 is a
French Solar PV and heat pump business servicing domestic and commercial
customers with design, installation, and maintenance services;
· The acquisition by DCC Energy of 100% of Isolatiespecialist in August 2023.
Isolatiespecialist is a leading provider of energy efficiency and insulation
services to domestic and commercial customers in the Netherlands;
· The acquisition by DCC Energy of 100% of San Isabel Services Propane in
August 2023. San Isabel Services Propane is a US LPG distributor which
services both domestic and commercial customers in Colorado; and
· The acquisition by DCC Energy of 100% of Solcellekraft in September 2023.
Solcellekraft is one of Norway's largest Solar PV businesses, servicing
commercial and domestic customers.
The acquisition 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 2023.
6 months 6 months
ended ended
30 Sept. 30 Sept.
2023 2022
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 3,192 3,721
Right-of-use leased assets 2,725 -
Equity accounted investments - 18,260
Total non-current assets 5,917 21,981
Current assets
Inventories 6,374 372
Trade and other receivables 16,071 2,115
Total current assets 22,445 2,487
Liabilities
Non-current liabilities
Deferred income tax liabilities (158) (12)
Provisions for liabilities and charges (389) -
Lease creditors (2,104) -
Total non-current liabilities (2,651) (12)
Current liabilities
Trade and other payables (14,885) (2,295)
Current income tax liability (1,447) (890)
Lease creditors (621) -
Total current liabilities (16,953) (3,185)
Identifiable net assets acquired 8,758 21,271
Intangible assets and goodwill 166,763 13,926
Total consideration 175,521 35,197
Satisfied by:
Cash 126,635 32,509
Cash and cash equivalents acquired (5,337) (1,174)
Net cash outflow 121,298 31,335
Acquisition related liabilities 54,223 3,862
Total consideration 175,521 35,197
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 2024 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 £3.790 million (six months ended 30
September 2022: £5.026 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 £16.942 million. The fair value
of these receivables is £16.071 million (all of which is expected to be
recoverable).
Approximately £12.2 million of the goodwill acquired in 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 £1.4
million to £92.4 million.
The acquisitions during the period contributed £19.6 million to revenues and
£2.4 million to profit after tax. Had all the business combinations completed
during the period occurred at the beginning of the period, total Group
revenue for the six months ended 30 September 2023 would have been £9.7
billion and total Group profit after tax would have been £106.8 million.
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 2023 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 2023.
16. Events after the Balance Sheet Date
There have been no material events subsequent to 30 September 2023 which would
require disclosure in this Report.
17. Board Approval
This report was approved by the Board of Directors of DCC plc on 13 November
2023.
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 director's responsibilities
We confirm that to the best of our knowledge:
· the condensed set of interim financial statements for the six months ended
30 September 2023 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, Chairman
Donal Murphy, Chief Executive
13 November 2023
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 to assess the underlying performance of our operations. In addition,
neither metric forms part of Director or management remuneration targets.
Calculation 6 months 6 months Year ended
ended ended 31 March
2023
30 Sept. 30 Sept.
£'000
2023 2022
£'000 £'000
Operating profit 181,929 161,723 511,988
Net operating exceptional items 12,201 9,045 32,528
Amortisation of intangible assets 53,512 50,405 111,146
Adjusted operating profit ('EBITA') 247,642 221,173 655,662
Net interest before exceptional items
Definition
The Group defines net interest before exceptional items as the net total of
finance costs and finance income before interest related exceptional items as
presented in the Group Income Statement.
Calculation 6 months 6 months Year ended
ended ended 31 March
2023
30 Sept. 30 Sept.
£'000
2023 2022
£'000 £'000
Finance costs before exceptional items (60,270) (41,469) (96,735)
Finance income before exceptional items 7,923 10,185 16,111
Net interest before exceptional items (52,347) (31,284) (80,624)
Effective tax rate
Definition
The Group's effective tax rate expresses the income tax expense before
exceptionals and deferred tax attaching to the amortisation of intangible
assets as a percentage of adjusted operating profit less net interest before
exceptional items.
Calculation 6 months 6 months Year ended
ended ended 31 March
2023
30 Sept. 30 Sept.
£'000
2023 2022
£'000 £'000
Adjusted operating profit 247,642 221,173 655,662
Net interest before exceptional items (52,347) (31,284) (80,624)
Earnings before taxation 195,295 189,889 575,038
Income tax expense 84,762
28,340 27,128
Income tax attaching to net exceptionals (15) (498) 2,764
Deferred tax attaching to amortisation of intangible assets 11,320 10,398 23,456
Total income tax expense before exceptionals and deferred tax attaching to 110,982
amortisation of intangible assets
39,645 37,028
Effective tax rate (%) 20.3% 19.5% 19.3%
Constant currency
Definition
The translation of foreign denominated earnings can be impacted by movements
in foreign exchange rates versus sterling, the Group's presentation currency.
In order to present a better reflection of underlying performance in the
period, the Group retranslates foreign denominated current year earnings at
prior year exchange rates.
Revenue (constant currency) 6 months 6 months
ended ended
30 Sept. 30 Sept.
2023 2022
£'000 £'000
Revenue 9,615,978 10,837,130
Currency impact 21,673 -
Revenue (constant currency) 9,637,651 10,837,130
Adjusted operating profit (constant currency)
Adjusted operating profit 247,642 221,173
Currency impact 536 -
Adjusted operating profit (constant currency) 248,178 221,173
Adjusted earnings per share (constant currency)
Adjusted profit after taxation and non-controlling interests (note 8) 147,425 144,481
Currency impact 552 -
Adjusted profit after taxation and non-controlling interests (constant 147,977 144,481
currency)
Weighted average number of ordinary shares in issue ('000) 98,762 98,679
Adjusted earnings per share (constant currency) 149.83p 146.42p
Net capital expenditure
Definition
Net capital expenditure comprises purchases of property, plant and equipment,
proceeds from the disposal of property, plant and equipment and government
grants received in relation to property, plant and equipment.
Calculation 6 months 6 months Year ended
ended ended 31 March
2023
30 Sept. 30 Sept.
£'000
2023 2022
£'000 £'000
Purchase of property, plant and equipment 117,434 111,671 229,440
Government grants received in relation to property, plant and equipment (2,672) - (216)
Proceeds from disposal of property, plant and equipment (3,404) (7,797) (22,643)
Net capital expenditure 111,358 103,874 206,581
Free cash flow
Definition
Free cash flow is defined by the Group as cash generated from operations
before exceptional items as reported in the Group Cash Flow Statement after
repayment of lease creditors and net capital expenditure.
Calculation 6 months 6 months Year ended
ended ended 31 March
2023
30 Sept. 30 Sept.
£'000
2023 2022
£'000 £'000
Cash generated from operations before exceptionals 210,308 181,440 860,746
Repayment of lease creditors (44,490) (39,954) (83,796)
Net capital expenditure (111,358) (103,874) (206,581)
Free cash flow 54,460 37,612 570,369
Free cash flow (after interest and tax payments)
Definition
Free cash flow (after interest and tax payments) is defined by the Group as
free cash flow after interest paid (excluding interest relating to lease
creditors), income tax paid, dividends received from equity accounted
investments and interest received. As noted in the definition of free cash
flow, interest amounts relating to the repayment of lease creditors has been
deducted in arriving at the Group's free cash flow and are therefore excluded
from the interest paid figure in arriving at the Group's free cash flow (after
interest and tax payments).
Calculation 6 months 6 months Year ended
ended ended 31 March
2023
30 Sept. 30 Sept.
£'000
2023 2022
£'000 £'000
Free cash flow 54,460 37,612 570,369
Interest paid (including interest relating to lease creditors) (57,548) (39,575) (82,576)
Interest relating to lease creditors 5,347 4,558 9,577
Income tax paid (45,586) (34,668) (97,485)
Dividends received from equity accounted investments 1,234 - -
Interest received 8,003 10,137 15,535
Free cash flow (after interest and tax payments) (34,090) (21,936) 415,420
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.
Calculation 6 months 6 months Year ended
ended ended 31 March
2023
30 Sept. 30 Sept.
£'000
2023 2022
£'000 £'000
Net cash outflow on acquisitions during the period 121,298 31,335 318,486
Net cash outflow on acquisitions which were committed to in the (26,059)
previous period (17,246) (25,377)
Acquisition related liabilities arising on acquisitions during the period 54,223 3,862 46,654
Acquisition related liabilities which were committed to in the (431)
previous period (7,735) (420)
Amounts committed in the current period 160,000 294,240 23,060
Committed acquisition expenditure 310,540 303,640 361,710
Net working capital
Definition
Net working capital represents the net total of inventories, trade and other
receivables (excluding interest receivable), and trade and other payables
(excluding interest payable, amounts due in respect of property, plant and
equipment and current government grants).
Calculation As at As at As at
30 Sept. 30 Sept. 31 March
2023
2022
2023
£'000 £'000 £'000
Inventories 1,335,355 1,454,627 1,192,803
Trade and other receivables 2,015,679 2,218,757 2,312,269
Less: interest receivable (469) (232) (558)
Trade and other payables (2,944,129) (3,250,559) (3,279,898)
Less: interest payable 24,189 15,181 25,231
Less: amounts due in respect of property, plant and equipment 9,514 10,980 24,492
Less: government grants 20 13 31
Net working capital 440,159 448,767 274,370
Working capital (days)
Definition
Working capital days measures how long it takes in days for the Group to
convert working capital into revenue.
Calculation As at As at As at
30 Sept. 30 Sept. 31 March
2023
2022
2023
£'000 £'000 £'000
Net working capital 440,159 448,767 274,370
March revenue 1,786,999 1,986,225 2,068,648
Working capital (days) 7.4 days 6.8 days 4.1 days
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