REG - DCC PLC - Results for the year ended 31 March 2017 <Origin Href="QuoteRef">DCC.L</Origin> - Part 2
16/05/2017 07:06
- Part 2: For the preceding part double click ID:nRSP1983Fa
intangible assets 345,005 (36,297) 308,708 285,345 (13,652) 271,693
Amortisation of intangible assets (39,130) - (39,130) (31,146) - (31,146)
Operating profit 4 305,875 (36,297) 269,578 254,199 (13,652) 240,547
Finance costs (72,910) - (72,910) (64,790) (9,419) (74,209)
Finance income 40,973 10,101 51,074 35,962 - 35,962
Equity accounted investments' profit after tax 712 - 712 504 - 504
Profit before tax 274,650 (26,196) 248,454 225,875 (23,071) 202,804
Income tax expense (44,113) (1,756) (45,869) (33,707) 710 (32,997)
Profit for the year (continuing operations) 230,537 (27,952) 202,585 192,168 (22,361) 169,807
Profit for the year from discontinued operations 8 15,160 - 15,160 12,224 (988) 11,236
Profit after tax for the financial year 1 245,697 (27,952) 217,745 204,392 (23,349) 181,043
Profit attributable to:
Owners of the Parent 216,197 178,031
Non-controlling interests 1,548 3,012
217,745 181,043
Earnings per ordinary share
Basic earnings per share 6 243.64p 202.64p
Diluted earnings per share 6 242.00p 201.02p
Basic adjusted earnings per share 6 303.68p 257.14p
Diluted adjusted earnings per share 6 301.63p 255.07p
Earnings per ordinary share - continuing operations
Basic earnings per share 6 226.56p 189.85p
Diluted earnings per share 6 225.04p 188.33p
Basic adjusted earnings per share 6 286.59p 242.78p
Diluted adjusted earnings per share 6 284.66p 240.83p
Group Statement of Comprehensive Income
For the year ended 31 March 2017
Restated
2017 2016
£'000 £'000
Group profit for the financial year 217,745 181,043
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Currency translation 37,084 37,971
Movements relating to cash flow hedges (6,803) 2,230
Movement in deferred tax liability on cash flow hedges 1,334 120
31,615 40,321
Items that will not be reclassified to profit or loss
Group defined benefit pension obligations:
- remeasurements (3,056) 4,894
- movement in deferred tax asset 413 (570)
(2,643) 4,324
Other comprehensive income for the financial year, net of tax 28,972 44,645
Total comprehensive income for the financial year 246,717 225,688
Attributable to:
Owners of the Parent 242,735 220,411
Non-controlling interests 3,982 5,277
246,717 225,688
Attributable to:
Continuing operations 230,199 212,978
Discontinued operations 16,518 12,710
246,717 225,688
Group Balance Sheet
As at 31 March 2017
2017 2016
Notes £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 750,020 739,503
Intangible assets 1,422,572 1,297,065
Equity accounted investments 24,938 22,139
Deferred income tax assets 22,619 21,285
Derivative financial instruments 273,767 209,518
2,493,916 2,289,510
Current assets
Inventories 456,395 393,948
Trade and other receivables 1,222,597 916,069
Derivative financial instruments 18,233 15,915
Cash and cash equivalents 1,048,064 1,182,034
2,745,289 2,507,966
Assets classified as held for sale 8 193,170 -
2,938,459 2,507,966
Total assets 5,432,375 4,797,476
EQUITY
Capital and reserves attributable to owners of the Parent
Share capital 15,455 15,455
Share premium 277,211 277,211
Share based payment reserve 9 18,146 14,954
Cash flow hedge reserve 9 (13,581) (8,112)
Foreign currency translation reserve 9 105,537 70,887
Other reserves 9 932 932
Retained earnings 1,074,434 948,316
Equity attributable to owners of the Parent 1,478,134 1,319,643
Non-controlling interests 29,587 30,833
Total equity 1,507,721 1,350,476
LIABILITIES
Non-current liabilities
Borrowings 1,319,967 1,260,421
Derivative financial instruments 506 343
Deferred income tax liabilities 155,297 133,646
Post employment benefit obligations 11 29 347
Provisions for liabilities 255,650 213,115
Acquisition related liabilities 66,617 81,411
Government grants 261 904
1,798,327 1,690,187
Current liabilities
Trade and other payables 1,820,517 1,437,832
Current income tax liabilities 25,051 45,172
Borrowings 148,445 192,804
Derivative financial instruments 5,894 8,401
Provisions for liabilities 31,022 31,373
Acquisition related liabilities 28,300 41,231
2,059,229 1,756,813
Liabilities associated with assets classified as held for sale 8 67,098 -
2,126,327 1,756,813
Total liabilities 3,924,654 3,447,000
Total equity and liabilities 5,432,375 4,797,476
Net debt included above (including cash attributable to assets held for sale) 10 (121,949) (54,502)
Group Statement of Changes in Equity
For the year ended 31 March 2017 Attributable to owners of the Parent
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note 9) Total interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2016 15,455 277,211 948,316 78,661 1,319,643 30,833 1,350,476
Profit for the financial year - - 216,197 - 216,197 1,548 217,745
Currency translation - - - 34,650 34,650 2,434 37,084
Group defined benefit pension obligations:
- remeasurements - - (3,056) - (3,056) - (3,056)
- movement in deferred tax asset - - 413 - 413 - 413
Movements relating to cash flow hedges - - - (6,803) (6,803) - (6,803)
Movement in deferred tax liability on cash flow hedges - - - 1,334 1,334 - 1,334
Total comprehensive income - - 213,554 29,181 242,735 3,982 246,717
Re-issue of treasury shares - - 2,600 - 2,600 - 2,600
Share based payment - - - 3,192 3,192 - 3,192
Dividends - - (90,036) - (90,036) (5,228) (95,264)
At 31 March 2017 15,455 277,211 1,074,434 111,034 1,478,134 29,587 1,507,721
For the year ended 31 March 2016 Attributable to owners of the Parent
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note 9) Total interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2015 14,688 83,032 849,119 35,909 982,748 4,245 986,993
Profit for the financial year - - 178,031 - 178,031 3,012 181,043
Currency translation - - - 35,706 35,706 2,265 37,971
Group defined benefit pension obligations:
- remeasurements - - 4,894 - 4,894 - 4,894
- movement in deferred tax asset - - (570) - (570) - (570)
Movements relating to cash flow hedges - - - 2,230 2,230 - 2,230
Movement in deferred tax liability on cash flow hedges - - - 120 120 - 120
Total comprehensive income - - 182,355 38,056 220,411 5,277 225,688
Issue of share capital 767 194,179 - - 194,946 - 194,946
Re-issue of treasury shares - - 2,781 - 2,781 - 2,781
Share based payment - - - 2,198 2,198 - 2,198
Dividends - - (80,938) - (80,938) - (80,938)
Non-controlling interest arising on acquisition - - (5,001) 2,498 (2,503) 21,311 18,808
At 31 March 2016 15,455 277,211 948,316 78,661 1,319,643 30,833 1,350,476
Group Cash Flow Statement
For the year ended 31 March 2017
2017 2016
Note £'000 £'000
Cash flows from operating activities
Profit for the financial year 217,745 181,043
Add back non-operating expenses/(income)
- tax 49,054 35,314
- share of equity accounted investments' profit (712) (504)
- net operating exceptionals 36,297 14,640
- net finance costs 21,999 38,408
Group operating profit before exceptionals 324,383 268,901
Share-based payments expense 3,192 2,198
Depreciation 92,015 74,822
Amortisation of intangible assets 39,168 31,622
(Profit)/loss on disposal of property, plant and equipment (173) 415
Amortisation of government grants (235) (419)
Other 4,571 (3,412)
Decrease in working capital 83,949 37,585
Cash generated from operations before exceptionals 546,870 411,712
Exceptionals (31,269) (19,567)
Cash generated from operations 515,601 392,145
Interest paid (70,108) (64,432)
Income tax paid (62,180) (35,346)
Net cash flows from operating activities 383,313 292,367
Investing activities
Inflows:
Proceeds from disposal of property, plant and equipment 12,315 13,523
Dividends received from equity accounted investments 125 365
Disposal of subsidiaries and equity accounted investments - 4,173
Interest received 40,966 36,004
53,406 54,065
Outflows:
Purchase of property, plant and equipment (143,698) (134,172)
Acquisition of subsidiaries 12 (203,327) (390,042)
Payment of accrued acquisition related liabilities (59,069) (3,913)
(406,094) (528,127)
Net cash flows from investing activities (352,688) (474,062)
Financing activities
Inflows:
Proceeds from issue of shares 2,600 197,727
Net cash inflow on derivative financial instruments 14,212 1,953
Increase in finance lease liabilities - 59
16,812 199,739
Outflows:
Repayment of interest-bearing loans and borrowings (108,140) (14,832)
Repayment of finance lease liabilities (177) (151)
Dividends paid to owners of the Parent 7 (90,036) (80,938)
Dividends paid to non-controlling interests (5,228) -
(203,581) (95,921)
Net cash flows from financing activities (186,769) 103,818
Change in cash and cash equivalents (156,144) (77,877)
Translation adjustment 38,929 38,249
Cash and cash equivalents at beginning of year 1,090,037 1,129,665
Cash and cash equivalents at end of year 972,822 1,090,037
Cash and cash equivalents consists of:
Cash and short term bank deposits 1,048,064 1,182,034
Overdrafts (88,041) (91,997)
Cash and short term deposits attributable to assets held for sale 12,799 -
972,822 1,090,037
Notes to the Condensed Financial Statements
For the year ended 31 March 2017
1. Basis of Preparation
The financial information, from the Group Income Statement to note 16, contained in this preliminary results statement has
been derived from the Group financial statements for the year ended 31 March 2017 and is presented in sterling, rounded to
the nearest thousand. The financial information does not include all the information and disclosures required in the
annual financial statements. The Annual Report will be distributed to shareholders and made available on the Company's
website www.dcc.ie. It will also be filed with the Companies Registration Office. The auditors have reported on the
financial statements for the year ended 31 March 2017 and their report was unqualified. The financial information for the
year ended 31 March 2016 represents an abbreviated, restated (see note 8) version of the Group's statutory financial
statements on which an unqualified audit report was issued and which have been filed with the Companies Registration
Office.
The financial information presented in this report has been prepared in accordance with the Listing Rules of the Financial
Services Authority and the accounting policies that the Group has adopted for 2017 which are consistent with those applied
in the prior year.
2. Accounting Policies
There were no changes to IFRS which became effective for the Group during the financial year which resulted in material
changes to the Group's consolidated financial statements.
3. Reporting Currency
The Group's financial statements are presented in sterling, denoted by the symbol '£'. Results and cash flows of operations
based in non-sterling countries have been translated into sterling at average rates for the year, and the related balance
sheets have been translated at the rates of exchange ruling at the balance sheet date. The principal exchange rates used
for translation of results and balance sheets into sterling were as follows:
Average rate Closing rate
2017 2016 2017 2016
Stg£1= Stg£1= Stg£1= Stg£1=
Euro 1.1956 1.3697 1.1689 1.2633
Swedish Krona 11.3729 12.7937 11.1423 11.6547
Danish Krone 8.9150 10.2297 8.6942 9.4134
Norwegian Krone 10.9811 12.4995 10.7169 11.8938
4. Segmental Reporting
DCC is an international sales, marketing and business 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. Tommy Breen, Chief Executive and his executive management
team.
As announced on 5 April 2017, the Group entered into an agreement to dispose of its Environmental division. Following this
change in the composition of operating segments, segmental reporting has been revised and the prior year segmental
disclosures have been restated as required under IFRS 8.
The Group is organised into three operating segments: DCC Energy, DCC Healthcare and DCC Technology.
DCC Energy is the leading liquefied petroleum gas ('LPG') and oil sales and marketing business in Europe with a growing
position in the retail petrol station market.
DCC Healthcare is a leading healthcare business, providing products and services to healthcare providers and health and
beauty brand owners.
DCC Technology is a leading European sales, marketing and services partner for global technology brands.
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 below. Intersegment revenue is not material and thus not subject to separate
disclosure.
An analysis of the Group's performance, based on continuing operations, by operating segment and geographic location is as follows:
(a) By operating segment
Year ended 31 March 2017
DCC DCC DCC
Continuing operations Energy
Healthcare Technology Total
£'000 £'000 £'000 £'000
Segment revenue 9,074,135 506,562 2,689,105 12,269,802
Operating profit* 254,941 48,944 41,120 345,005
Amortisation of intangible assets (28,239) (7,258) (3,633) (39,130)
Net operating exceptionals (note 5) (20,487) (2,695) (13,115) (36,297)
Operating profit 206,215 38,991 24,372 269,578
Year ended 31 March 2016 (restated)
DCC DCC DCC
Continuing operations Energy
Healthcare Technology Total
£'000 £'000 £'000 £'000
Segment revenue 7,515,308 490,617 2,441,705 10,447,630
Operating profit* 205,181 45,039 35,125 285,345
Amortisation of intangible assets (21,381) (7,138) (2,627) (31,146)
Net operating exceptionals (note 5) (9,057) 5,859 (10,454) (13,652)
Operating profit 174,743 43,760 22,044 240,547
(b) By geography
The Group has a presence in 15 countries worldwide. The following represents a geographical analysis of revenue and
non-current assets in accordance with IFRS 8, which requires disclosure of information about the country of domicile
(Republic of Ireland) and countries with material revenue and non-current assets.
Revenue from continuing operations is derived almost entirely from the sale of goods and is disclosed based on the location
of the entity selling the goods. The analysis of non-current assets is based on the location of the assets. There are no
material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8.
Revenue Non-current assets**
Restated
2017 2016 2017 2016
£'000 £'000 £'000 £'000
Republic of Ireland 759,439 639,149 123,348 132,892
United Kingdom 7,239,193 6,852,640 985,717 1,010,908
France 2,402,290 1,487,875 869,895 733,287
Other 1,868,880 1,467,966 218,570 181,620
12,269,802 10,447,630 2,197,530 2,058,707
* Operating profit before amortisation of intangible assets and net operating exceptionals
** Non-current assets comprise intangible assets, property, plant and equipment and equity accounted investments
5. Exceptionals
Restated
2017 2016
£'000 £'000
Restructuring costs (19,345) (15,777)
Acquisition and related costs (10,308) (7,226)
Adjustments to contingent acquisition consideration (5,114) 6,290
Impairment of property, plant and equipment (1,164) (947)
Gain arising from legal case settlements - 4,291
Legal and other operating exceptional items (366) (283)
Net operating exceptional items (36,297) (13,652)
Mark to market of swaps and related debt 10,101 (9,419)
Net exceptional items before taxation (26,196) (23,071)
Tax attributable to net exceptional items (1,756) 710
Net exceptional items after taxation (continuing operations) (27,952) (22,361)
Net exceptional items relating to discontinued operations - (988)
Net exceptional items after taxation (27,952) (23,349)
Non-controlling interest share of net exceptional items after taxation 3,138 (323)
Net exceptional items attributable to owners of the Parent (24,814) (23,672)
The Group has focused on the efficiency of its operating infrastructures and sales platforms, particularly in areas where
it has been acquisitive in recent years. The Group incurred an exceptional charge of £19.345 million (2016: £15.777
million) in relation to restructuring of existing and acquired businesses. The majority of the charge relates to
restructuring and integration in the Energy division where the Group has been most acquisitive. The charge also includes
integration costs related to acquisition activity and costs in respect of the pre-operating period of the new UK national
distribution centre in the Technology division.
Acquisition costs, which include professional fees and tax costs (such as stamp duty) incurred in evaluating and completing
acquisitions, amounted to £10.308 million (2016: £7.226 million) and reflect the significant level of development activity
undertaken by the Group during the year.
The net increase in the provision for contingent acquisition consideration of £5.114 million (2016: decrease of £6.290
million) is due to the stronger than anticipated trading performance of a small number of businesses acquired during the
last three years, where earn-out arrangements are in place.
Most of the Group's debt has been raised in the US Private Placement market and swapped, using long term interest, currency
and cross currency interest rate derivatives, to both fixed and floating rate sterling and euro. The level of
ineffectiveness calculated under IAS 39 on the fair value and cash flow hedge relationships relating to fixed rate debt,
together with gains or losses arising from marking to market swaps not designated as hedges, offset by foreign exchange
translation gains or losses on the related fixed rate debt, is charged or credited as an exceptional item. In the year
ended 31 March 2017, this amounted to an exceptional non-cash gain of £10.101 million (2016: charge of £9.419 million).
Following this credit, the cumulative net exceptional charge taken in respect of the Group's outstanding US Private
Placement debt and related hedging instruments is £5.6 million. This, or any subsequent similar non-cash charges or gains,
will net to zero over the remaining term of this debt and the related hedging instruments.
There was a net tax charge of £1.756 million (2016: credit of £0.710 million) and a non-controlling interest credit of
£3.138 million (2016: charge of £0.323 million) in relation to the above net exceptional charge.
The gain arising from legal case settlements in the prior year of £4.291 million was primarily due to a final cash recovery
in respect of the Pihsiang legal claim.
6. Earnings per Ordinary Share
Discontinued Discontinued
Continuing operations Continuing operations
operations (note 8) Total operations (note 8) Total
2017 2017 2017 2016 2016 2016
£'000 £'000 £'000 £'000 £'000 £'000
Profit attributable to owners of the Parent 201,037 15,160 216,197 166,795 11,236 178,031
Amortisation of intangible assets after tax 28,456 6 28,462 23,811 390 24,201
Exceptionals after tax (note 5) 24,814 - 24,814 22,684 988 23,672
Adjusted profit after taxation and non-controlling interests 254,307 15,166 269,473 213,290 12,614 225,904
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
2017 2017 2017 2016 2016 2016
Basic earnings per ordinary share pence pence pence pence pence pence
Basic earnings per ordinary share 226.56p 17.08p 243.64p 189.85p 12.79p 202.64p
Amortisation of intangible assets after tax 32.07p 0.01p 32.08p 27.11p 0.44p 27.55p
Exceptionals after tax 27.96p - 27.96p 25.82p 1.13p 26.95p
Adjusted basic earnings per ordinary share 286.59p 17.09p 303.68p 242.78p 14.36p 257.14p
Weighted average number of ordinary shares in issue (thousands) 88,735 87,854
Basic earnings per share is calculated by dividing the profit attributable to owners of the Parent by the weighted average
number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury
shares. The adjusted figures for basic earnings per ordinary share (a non-GAAP financial measure) are intended to
demonstrate the results of the Group after eliminating the impact of amortisation of intangible assets and net
exceptionals.
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
2017 2017 2017 2016 2016 2016
Diluted earnings per ordinary share pence pence pence pence pence pence
Basic earnings per ordinary share 225.04p 16.96p 242.00p 188.33p 12.69p 201.02p
Amortisation of intangible assets after tax 31.84p 0.01p 31.85p 26.89p 0.43p 27.32p
Exceptionals after tax 27.78p - 27.78p 25.61p 1.12p 26.73p
Adjusted basic earnings per ordinary share 284.66p 16.97p 301.63p 240.83p 14.24p 255.07p
Weighted average number of ordinary shares in issue (thousands) 89,338 88,564
The earnings used for the purposes of the continuing diluted earnings per ordinary share calculations were £201.037 million
(2016: £166.795 million) and £254.307 million (2016: £213.290 million) for the purposes of the continuing adjusted diluted
earnings per ordinary share calculations.
The earnings used for the purposes of the discontinued diluted earnings per ordinary share calculations were £15.160
million (2016: £11.236 million) and £15.166 million (2016: £12.614 million) for the purposes of the discontinued adjusted
diluted earnings per ordinary share calculations.
The weighted average number of ordinary shares used in calculating the diluted earnings per ordinary share for the year
ended 31 March 2017 was 89.338 million (2016: 88.564 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:
2017 2016
'000 '000
Weighted average number of ordinary shares in issue 88,735 87,854
Dilutive effect of options and awards 603 710
Weighted average number of ordinary shares for diluted earnings per share 89,338 88,564
Diluted earnings per ordinary share is calculated by adjusting the weighted average number of ordinary shares outstanding
to assume conversion of all dilutive potential ordinary shares. Share options and awards are the Company's only category of
dilutive potential ordinary shares.
Employee share options and awards, which are performance-based, are treated as contingently issuable shares because their
issue is contingent upon satisfaction of specified performance conditions in addition to the passage of time. These
contingently issuable shares are excluded from the computation of diluted earnings per ordinary share where the conditions
governing exercisability would not have been satisfied as at the end of the reporting period if that were the end of the
vesting period.
The adjusted figures for diluted earnings per ordinary share (a non-GAAP financial measure) are intended to demonstrate the
results of the Group after eliminating the impact of amortisation of intangible assets and net exceptionals.
7. Dividends
2017 2016
£'000 £'000
Final - paid 64.18 pence per share on 21 July 2016(2016: paid 55.81 pence per share on 23 July 2015) 57,621 50,646
Interim - paid 37.17 pence per share on 12 December 2016 (2016: paid 33.04 pence per share on 7 December 2015) 32,415 30,292
90,036 80,938
The Directors are proposing a final dividend in respect of the year ended 31 March 2017 of 74.63 pence per ordinary share
(£66.284 million). This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.
8. Discontinued Operations
As announced on 5 April 2017, the Group entered into an agreement to dispose of the Environmental segment. The proceeds on
disposal will be used to fund the continued development of DCC's Energy, Healthcare and Technology divisions. The disposal
is expected to complete in the quarter to 30 June 2017 at which time control of the Environmental businesses will pass to
the acquirer. The transaction is expected to give rise to an exceptional profit in the year ending 31 March 2018 of
approximately £30 million.
The conditions for the segment to be classified as a discontinued operation have been satisfied, and, accordingly, the
results of the Environmental segment are presented separately as discontinued operations in the Group Income Statement and
the assets and liabilities of this segment are classified as an asset held for sale at the balance sheet date.
The following table details the results of discontinued operations included in the Group Income Statement:
2017 2016
£'000 £'000
Revenue 175,232 153,455
Cost of sales (119,654) (107,551)
Gross profit 55,578 45,904
Operating expenses (37,032) (30,726)
Operating profit before amortisation of intangible assets and exceptional items 18,546 15,178
Amortisation of intangible assets (38) (476)
Net operating exceptionals - (988)
Operating profit 18,508 13,714
Net finance costs (163) (161)
Profit before tax 18,345 13,553
Income tax expense (3,185) (2,317)
Profit from discontinued operations after tax 15,160 11,236
The following table details the cash flow from discontinued operations included in the Group Cash Flow Statement:
2017 2016
£'000 £'000
Net cash flow from operating activities 22,461 19,153
Net cash flow from investing activities (6,661) (12,389)
Net cash flow from discontinued operations 15,800 6,764
The fair value less costs to sell of the major classes of assets and liabilities held for sale as at 31 March 2017 are as
follows:
2017
£'000
Assets
Property, plant and equipment 65,551
Intangible assets 79,335
Deferred income tax assets
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