REG - DCC PLC - Results for the year ended 31 March 2017 <Origin Href="QuoteRef">DCC.L</Origin> - Part 3
16/05/2017 07:06
- Part 3: For the preceding part double click ID:nRSP1983Fb
298
Inventories 1,922
Trade and other receivables 33,264
Interest receivable 1
Cash and cash equivalents 12,799
Assets classified as held for sale 193,170
Liabilities
Trade and other payables (35,741)
Amounts due in respect of property, plant and equipment (32)
Current income tax liabilities (3,533)
Deferred income tax liabilities (357)
Provisions for liabilities and charges (3,800)
Acquisition related liabilities (23,204)
Government grants (431)
Liabilities associated with assets classified as held for sale (67,098)
Net assets of the disposal group 126,072
The proceeds on disposal are expected to exceed the carrying value of the related net assets and accordingly no impairment
losses have been recognised on the classification of these operations as held for sale.
9. Other Reserves
For the year ended 31 March 2017
Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2016 14,954 (8,112) 70,887 932 78,661
Currency translation - - 34,650 - 34,650
Movements relating to cash flow hedges - (6,803) - - (6,803)
Movement in deferred tax liability on cash flow hedges - 1,334 - - 1,334
Share based payment 3,192 - - - 3,192
At 31 March 2017 18,146 (13,581) 105,537 932 111,034
For the year ended 31 March 2016
Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2015 12,756 (10,462) 32,683 932 35,909
Currency translation - - 35,706 - 35,706
Movements relating to cash flow hedges - 2,230 - - 2,230
Movement in deferred tax liability on cash flow hedges - 120 - - 120
Transfer to non-controlling interests - - 2,498 - 2,498
Share based payment 2,198 - - - 2,198
At 31 March 2016 14,954 (8,112) 70,887 932 78,661
10. Analysis of Net Debt
2017 2016
£'000 £'000
Non-current assets:
Derivative financial instruments 273,767 209,518
Current assets:
Derivative financial instruments 18,233 15,915
Cash and cash equivalents 1,048,064 1,182,034
1,066,297 1,197,949
Non-current liabilities:
Finance leases (165) (127)
Derivative financial instruments (506) (343)
Unsecured Notes (1,319,802) (1,260,294)
(1,320,473) (1,260,764)
Current liabilities:
Bank borrowings (88,041) (91,997)
Finance leases (190) (379)
Derivative financial instruments (5,894) (8,401)
Unsecured Notes (60,214) (100,428)
(154,339) (201,205)
Net debt excluding cash attributable to assets held for sale (134,748) (54,502)
Cash and short-term deposits attributable to assets held for sale (note 8) 12,799 -
Net debt including cash attributable to assets held for sale (121,949) (54,502)
11. Post Employment Benefit Obligations
The Group's defined benefit pension schemes' assets were measured at fair value at 31 March 2017. The defined benefit
pension schemes' liabilities at 31 March 2017 were updated to reflect material movements in underlying assumptions.
The net deficit on the Group's post employment benefit obligations decreased from £0.347 million at 31 March 2016 to £0.029
million at 31 March 2017. The movement in the deficit primarily reflects contributions in excess of the current service
cost offset by an actuarial loss on liabilities arising from a decrease in the discount rate used to value these
liabilities.
12. Business Combinations
A key strategy of the Group is to create and sustain market leadership positions through acquisitions in markets it
currently operates in, together with extending the Group's footprint into new geographic markets. In line with this
strategy, the principal acquisitions completed by the Group during the year, together with percentages acquired were as
follows:
· the acquisition in November 2016 of 100% of Shell's commercial, aviation and retail fuels business in Denmark
('Dansk Fuels');
· the acquisition of 100% of Medium (U.K.) ('Medium') in November 2016. Medium is a distributor of professional audio
visual equipment to resellers in the UK;
· the acquisition in December 2016 of 100% of Hammer Consolidated Holdings Limited ('Hammer'), a UK based specialist
distributor of server and storage solutions to resellers in the UK and Continental Europe;
· the acquisition in January 2017 of 79% of Medisource Ireland Limited, a specialist in the procurement and sale of
Exempt Medicinal Products, based in Ireland; and
· the acquisition of 97% of Gaz Européen Holdings SAS ('Gaz Européen') in January 2017. Gaz Européen, which is based
in France, is a natural gas retail and marketing business which supplies business and public sector customers.
The acquisition data presented below reflects the fair value of the identifiable net assets acquired (excluding net
cash/debt acquired) in respect of acquisitions completed during the year, together with measurement period adjustments made
to the provisional fair values in respect of the acquisition of Butagaz S.A.S. which was completed during the year ended 31
March 2016. These measurement period adjustments, which have no net cash impact, resulted in an increase in goodwill of
£0.986 million and primarily comprise reclassifications between categories of assets and liabilities.
Gaz Européen Others Total Total
2017 2017 2017 2016
£'000 £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 468 7,797 8,265 204,605
Intangible assets - other intangible assets 48,595 19,918 68,513 298,014
Equity accounted investments - 404 404 15,292
Deferred income tax assets - 60 60 11,605
Total non-current assets 49,063 28,179 77,242 529,516
Current assets
Inventories 9,287 22,920 32,207 52,339
Trade and other receivables 61,627 144,901 206,528 97,904
Total current assets 70,914 167,821 238,735 150,243
Liabilities
Non-current liabilities
Deferred income tax liabilities (16,731) (3,171) (19,902) (101,174)
Provisions for liabilities - (11,129) (11,129) (169,894)
Government grants - - - (46)
Total non-current liabilities (16,731) (14,300) (31,031) (271,114)
Current liabilities
Trade and other payables (46,539) (118,238) (164,777) (95,423)
Provisions for liabilities (102) (5,215) (5,317) (18,604)
Current income tax asset/(liability) 29 12,312 12,341 (18,719)
Acquisition related liabilities - (13,522) (13,522) -
Total current liabilities (46,612) (124,663) (171,275) (132,746)
Identifiable net assets acquired 56,634 57,037 113,671 275,899
Non-controlling interest arising on acquisition - - - (21,311)
Other reserve movements arising on acquisition - - - 2,503
Intangible assets - goodwill 44,328 72,847 117,175 214,470
Total consideration 100,962 129,884 230,846 471,561
Satisfied by:
Cash 109,736 132,282 242,018 500,492
Cash and cash equivalents acquired (11,158) (27,533) (38,691) (110,450)
Net cash outflow 98,578 104,749 203,327 390,042
Acquisition related liabilities 2,384 25,135 27,519 81,519
Total consideration 100,962 129,884 230,846 471,561
The acquisition of Gaz Européen has been deemed to be a substantial transaction and separate disclosure of the fair values
of the identifiable assets and liabilities has therefore been made. None of the remaining business combinations completed
during the year were considered sufficiently material to warrant separate disclosure of the fair values attributable to
those combinations. The carrying amounts of the assets and liabilities acquired, determined in accordance with IFRS,
before completion of the combination together with the adjustments made to those carrying values disclosed above were as
follows:
Book Fair value Fair
value adjustments value
Gaz Européen £'000 £'000 £'000
Non-current assets (excluding goodwill) 590 48,473 49,063
Current assets 71,103 (189) 70,914
Non-current liabilities - (16,731) (16,731)
Current liabilities (45,816) (796) (46,612)
Identifiable net assets acquired 25,877 30,757 56,634
Goodwill arising on acquisition 75,085 (30,757) 44,328
Total consideration 100,962 - 100,962
Book Fair value Fair
value adjustments value
Others £'000 £'000 £'000
Non-current assets (excluding goodwill) 30,105 (1,926) 28,179
Current assets 168,343 (522) 167,821
Non-current liabilities (1,470) (12,830) (14,300)
Current liabilities (123,184) (1,479) (124,663)
Identifiable net assets acquired 73,794 (16,757) 57,037
Goodwill arising on acquisition 56,090 16,757 72,847
Total consideration 129,884 - 129,884
Book Fair value Fair
value adjustments value
Total £'000 £'000 £'000
Non-current assets (excluding goodwill) 30,695 46,547 77,242
Current assets 239,446 (711) 238,735
Non-current liabilities (1,470) (29,561) (31,031)
Current liabilities (169,000) (2,275) (171,275)
Identifiable net assets acquired 99,671 14,000 113,671
Goodwill arising on acquisition 131,175 (14,000) 117,175
Total consideration 230,846 - 230,846
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 2018 Annual
Report as stipulated by IFRS 3.
The principal factors contributing to the recognition of goodwill on business combinations entered into by the Group are
the expected profitability of the acquired business and the realisation of cost savings and synergies with existing Group
entities.
None of the goodwill recognised in respect of acquisitions completed during the financial year is expected to be deductible
for tax purposes.
Acquisition related costs included in other operating expenses in the Group Income Statement amounted to £10.308 million.
No contingent liabilities were recognised on the acquisitions completed during the year or the prior financial years.
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to £210.874
million. The fair value of these receivables is £206.528 million (all of which is expected to be recoverable) and is
inclusive of an aggregate allowance for impairment of £4.346 million.
The fair value of contingent consideration recognised at the date of acquisition is calculated by discounting the expected
future payment to present value at the acquisition date. In general, for contingent consideration to become payable,
pre-defined profit thresholds must be exceeded. On an undiscounted basis, the future payments for which the Group may be
liable for acquisitions completed during the year range from £2.630 million to £56.697 million.
The acquisitions during the year contributed £318.4 million to revenues and £6.8 million to profit after tax and
non-controlling interests. Had all the business combinations effected during the year occurred at the beginning of the
year, total Group revenue (continuing) for the year ended 31 March 2017 would have been £12,843.3 million and total Group
profit after tax (continuing) would be £211.3 million.
13. 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.
14. Related Party Transactions
There have been no related party transactions or changes in related party transactions that could have a material impact on
the financial position or performance of the Group during the 2017 financial year.
15. Events after the Balance Sheet Date
As announced on 5 April 2017, the Group reached agreement to dispose of its Environmental division. The transaction is
expected to complete in the quarter to 30 June 2017, following receipt of competition clearance from the Irish competition
authority. The Group expects to receive cash proceeds on completion of approximately £170 million (25% of the British
businesses are owned by DCC's long-standing minority partner) and the transaction is expected to give rise to an
exceptional profit in the year ending 31 March 2018 of approximately £30 million.
The Group also announced on 5 April 2017 that it has reached agreement with Shell Gas (LPG) Holdings BV to acquire its
liquefied petroleum gas ('LPG') business in Hong Kong and Macau based on an enterprise value of HK$1.165 billion (c. £120
million). The business is one of the leading LPG businesses in Hong Kong and is the market leader in Macau. The business is
required to be separated from the broader Shell Hong Kong operations and the transaction requires certain regulatory
consents and operating licence approvals. The acquisition is expected to complete before the end of DCC's financial year
ending 31 March 2018.
16. Board Approval
This report was approved by the Board of Directors of DCC plc on 15 May 2017.
Supplementary Financial Information
For the year ended 31 March 2017
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:
Operating profit before net exceptionals and amortisation of intangible assets ('EBITA')
Definition
This comprises operating profit as reported in the Group Income Statement before net operating exceptional items and
amortisation of intangible assets.
Calculation 2017 £'000 2016 £'000
Operating profit before net exceptionals and amortisation of intangible assets ('EBITA') - continuing 345,005 285,345
Operating profit before net exceptionals and amortisation of intangible assets ('EBITA') - discontinued 18,546 15,178
Operating profit before net exceptionals and amortisation of intangible assets ('EBITA') 363,551 300,523
Operating profit before net exceptionals, depreciation and amortisation of intangible assets ('EBITDA')
Definition
EBITDA represents earnings before net interest, tax, depreciation, amortisation of intangible assets, share of equity
accounted investments' profit after tax and net exceptional items.
Calculation 2017 £'000 2016 £'000
EBITA 363,551 300,523
Depreciation 92,015 74,822
EBITDA 455,566 375,345
Net interest
Definition
The Group defines net interest as the net total of finance costs and finance income before interest related exceptional
items as presented in the Group Income Statement.
Calculation 2017 £'000 2016 £'000
Finance costs before exceptional items (72,910) (64,790)
Finance income before exceptional items 40,973 35,962
Net interest - continuing (31,937) (28,828)
Net interest - discontinued (163) (161)
Net interest (32,100) (28,989)
Effective tax rate
Definition
The Group's effective tax rate expresses the income tax expense before exceptionals and deferred tax attaching to the
amortisation of intangible assets as a percentage of EBITA less net interest.
Calculation 2017 £'000 2016 £'000
EBITA 363,551 300,523
Net interest (32,100) (28,989)
EBT 331,451 271,534
Income tax expense before exceptionals and deferred tax attaching to amortisation of intangible assets - continuing 54,787 41,042
Income tax expense before exceptionals and deferred tax attaching to amortisation of intangible assets - discontinued 3,217 2,403
Total income tax expense before exceptionals and deferred tax attaching to amortisation of intangible assets 58,004 43,445
Effective tax rate (%) 17.5% 16.0%
Adjusted earnings per share
Definition
The Group defines adjusted earnings per share as basic earnings per share adjusted for the impact of net exceptional items
and amortisation of intangible assets.
Calculation 2017 pence 2016 pence
Adjusted earnings per share - continuing 286.59 242.78
Adjusted earnings per share - discontinued 17.09 14.36
Adjusted earnings per share 303.68 257.14
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 - continuing, constant currency 2017 £'000 2016 £'000
Revenue - continuing 12,269,802 10,447,630
Currency impact (622,001) -
Revenue - continuing, constant currency 11,647,801 10,447,630
EBITA - continuing, constant currency
EBITA - continuing 345,005 285,345
Currency impact (23,084) -
EBITA - continuing, constant currency 321,921 285,345
Adjusted earnings per share - continuing, constant currency
Adjusted earnings - continuing 254,307 213,290
Currency impact (16,677) -
EBITA - continuing, constant currency 237,630 213,290
Weighted average number of ordinary shares in issue ('000) 88,735 87,854
Adjusted earnings per share - continuing, constant currency 267.80p 242.78p
Dividend cover
Definition
The dividend cover ratio measures the Group's ability to pay dividends from earnings.
Calculation 2017 pence 2016 pence
Adjusted earnings per share - continuing 286.59 242.78
Dividend 111.80 97.22
Dividend cover (times) 2.6x 2.5x
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 2017 £'000 2016 £'000
Purchase of property, plant and equipment 143,698 134,172
Proceeds from disposal of property, plant and equipment (12,315) (13,523)
Net capital expenditure 131,383 120,649
Free cash flow
Definition
Free cash flow is defined by the Group as cash generated from operations before exceptional items as reported in the Group
Cash Flow Statement after net capital expenditure.
Calculation 2017 £'000 2016 £'000
Cash generated from operations before exceptionals 546,870 411,712
Net capital expenditure (131,383) (120,649)
Free cash flow 415,487 291,063
Free cash flow (after interest and tax payments)
Definition
Free cash flow (after interest and tax payments) is defined by the Group as free cash flow after interest paid, income tax
paid, dividends received from equity accounted investments and interest received.
Calculation 2017 £'000 2016 £'000
Free cash flow 415,487 291,063
Interest paid (70,108) (64,432)
Income tax paid (62,180) (35,346)
Dividends received from equity accounted investments 125 365
Interest received 40,966 36,004
Free cash flow (after interest and tax payments) 324,290 227,654
Cash conversion ratio
Definition
The cash conversion ratio expresses free cash flow as a percentage of EBITA.
Calculation 2017 £'000 2016 £'000
Free cash flow 415,487 291,063
EBITA 363,551 300,523
Cash conversion ratio (%) 114% 97%
Net debt/EBITDA
Definition
The net debt to earnings before net interest, tax, depreciation, amortisation of intangible assets, share of equity
accounted investments' profit after tax and net exceptional items ('EBITDA') ratio is a measurement of leverage, and shows
how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant.
Calculation 2017 £'000 2016 £'000
Net debt 121,949 54,502
EBITDA 455,566 375,345
Net debt/EBITDA 0.3 0.2
Return on capital employed ('ROCE') - continuing
Definition
ROCE represents operating profit (continuing) before net operating exceptional items and amortisation of intangible assets
expressed as a percentage of the average total continuing capital employed. Total continuing capital employed represents
total equity adjusted for net debt/cash, goodwill and intangibles written off, acquisition related liabilities and equity
accounted investments.
Calculation 2017 £'000 2016 £'000
Total equity 1,507,721 1,350,476
Net debt (continuing) 134,748 69,473
Goodwill and intangibles written off (continuing) 228,340 189,210
Equity accounted investments (continuing) (24,938) (22,139)
Acquisition related liabilities (continuing, current and non-current) 94,917 99,438
Net assets of the disposal group (126,072) (104,694)
1,814,716 1,581,764
Average total capital employed - continuing 1,698,240 1,301,757
EBITA - continuing 345,005 285,345
Return on capital employed (%) - continuing 20.3% 21.9%
Committed acquisition expenditure
Definition
The Group defines committed acquisition expenditure as the total acquisition cost of subsidiaries as presented in the Group
Cash Flow Statement (excluding amounts related to acquisitions which were committed to in previous years) and future
acquisition related liabilities for acquisitions committed to during the year.
Calculation 2017 £'000 2016 £'000
Net cash outflow on acquisitions during the year 203,327 390,042
Cash outflow on acquisitions which were committed to in the previous year (34,372) (351,045)
Acquisition related liabilities arising on acquisitions during the year 41,041 81,519
Acquisition related liabilities which were committed to in the previous year (14,082) (79,288)
Amounts committed in the current year 358,000 39,000
Committed acquisition expenditure 553,914 80,228
Net working capital
Definition
Net working capital represents the net total of inventories, trade and other receivables (excluding interest receivable),
and trade and other payables (excluding interest payable, amounts due in respect of property, plant and equipment and
government grants).
Calculation 2017 £'000 2016 £'000
Inventories 456,395 393,948
Inventories (asset classified as held for sale) 1,922 -
Trade and other receivables 1,222,597 916,069
Trade and other receivables (asset held for sale) 33,264 -
Interest receivable (included in trade and other receivables) (223) (230)
Trade and other payables (1,820,517) (1,437,832)
Trade and other payables (asset held for sale) (35,741) -
Interest payable (included in trade and other payables) 4,534 3,967
Amounts due in respect of property, plant and equipment (included in trade and other payables) 6,349 2,967
Government grants (included in trade and other payables) 9 26
Net working capital (131,411) (121,085)
Working capital (days)
Definition
Working capital days measures how long it takes in days for the Group to convert working capital into revenue.
Calculation 2017 £'000 2016 £'000
Net working capital (131,411) (121,085)
March revenue 1,223,575 967,014
Working capital (days) (3.3 days) (3.9 days)
This information is provided by RNS
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