REG - DCC PLC - Results for the year ended 31 March 2022
17/05/2022 07:00
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RNS Number : 6883L DCC PLC 17 May 2022
17 May 2022
DCC, the leading international sales, marketing and support services group, is
today announcing its results for the year ended 31 March 2022.
Excellent Organic Performance and Continued Acquisitive Growth
Financial highlights: 2022 2021 % change % change CC(1) (#_ftn1)
Revenue £17.732bn £13.412bn +32.2% +35.9%
Adjusted operating profit (#_ftn2) 2 £589.2m £530.2m +11.1% +15.1%
DCC LPG £237.7m £231.3m +2.8% +6.7%
DCC Retail & Oil £169.4m £144.8m +17.0% +20.1%
DCC Healthcare £100.4m £81.7m +22.9% +25.5%
DCC Technology £81.7m £72.4m +12.8% +19.9%
Adjusted earnings per share(2) 430.1p 386.6p +11.2% +15.2%
Dividend per share 175.78p 159.80p +10.0%
Free cash flow(3) £382.6m £687.8m
Return on capital employed(4) 16.5% 17.1%
· Very strong growth in Group adjusted operating profit, up 11.1% (15.1%
on a constant currency basis) to £589.2 million, ahead of market
expectations:
o Excellent organic profit growth of 6.1%
o Acquisition growth of 9.0%
o Growth in operating profit across each division
o Adjusted earnings per share up 11.2% (15.2% on a constant currency basis)
· Proposed 11.2% increase in the final dividend will see the total
dividend for the year increase by 10.0%, DCC's 28(th) consecutive year of
dividend growth.
· Free cash flow of £382.6 million reflects anticipated reversal of
prior year working capital timing benefits - cumulative free cash flow
conversion across both years of 96%.
· Continued momentum in acquisition activity with c.£600 million
committed in the period, including Almo, DCC's largest acquisition to date.
· Separately this morning, DCC has announced an updated strategy for its
energy business, including:
- Creation of DCC Energy. New divisional and management structure is
aligned with DCC's goal of leading customers in their transition to lower
carbon and renewable energies
- Capital allocation priorities to accelerate the transition capability
of DCC Energy
- A 2050 or sooner net zero target for Scope 3 carbon emissions
· DCC expects that the year ending 31 March 2023 will be another year of
profit growth and development, notwithstanding the challenging macro
environment at present.
1 Constant currency ('CC') represents the retranslation of foreign denominated
current year results at prior year exchange rates
(https://www.rnssubmit.com/ns/#_ftnref2) 2 Excluding net exceptionals and
amortisation of intangible assets
3 After net working capital and net capital expenditure and before net
exceptionals, interest and tax payments
4 Excluding the impact of IFRS 16 Leases. Current year ROCE including the
impact of IFRS 16 Leases is 15.3%
Commenting on the results, Donal Murphy, Chief Executive, said:
"I am very pleased that DCC has delivered an excellent performance in a
challenging macro environment, with profit growth across each of our
divisions, again demonstrating the resilience of our business. Our colleagues
around the Group continued to deliver for our healthcare, technology and
energy customers and other stakeholders, ensuring the supply of DCC's
essential products and services. It was a very good period for acquisition
activity, with approximately £600 million committed to the continued growth
and evolution of the Group. Separately, this morning we are announcing an
updated strategy for our activities in the energy sector. We are committed to
leading our customers in their energy transition by providing innovative and
cleaner energy solutions that will help them to achieve their net zero goals.
We are ambitious to build DCC into a global leader in our chosen sectors. We
have the platforms, opportunities and capability to do so. Although the world
is experiencing a particularly volatile period and supply chain disruption is
elevated, DCC is well positioned to grow and develop with momentum.”
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/Genevieve Ryan) Tel: +44 20 7250 1446
Email: DCC@powerscourt-group.com (mailto:DCC@powerscourt-group.com)
Presentation of results - audio webcast and conference call details
DCC will host a live audio webcast and conference call of the presentation at
09.00 BST today. The slides for this presentation can be downloaded from DCC's
website, www.dcc.ie (http://www.dcc.ie) . The access details for the live
presentation are as follows:
Ireland: +353 (0) 1 536 9584
UK: +44 (0) 20 3936 2999
International: +44 (0) 20 3936 2999
Passcode: 893512
Webcast link:
https://www.investis-live.com/dcc/6254073ea330680c006e6714/wgjw
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fdcc%2F6254073ea330680c006e6714%2Fwgjw&data=04%7C01%7Chdaly%40dcc.ie%7C5db4f4d890d2406b50e108da1bb2aedd%7C5b7cb417ee004876ab2b81fab4a0c984%7C1%7C0%7C637852751504979403%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000&sdata=9%2B1tVxTSHHvHW1Usa6nbImQRU7xfRvxkBQOsotdqHIM%3D&reserved=0)
This report, presentation slides and a replay of the audio webcast will be
made available at www.dcc.ie (http://www.dcc.ie) .
About DCC plc
DCC is a leading international sales, marketing and support services group
with a clear focus on sustainable growth. DCC is an ambitious and
entrepreneurial business operating in 21 countries, supplying products and
services used by millions of people every day. Building strong routes to
market, driving for results, focusing on cash conversion and generating
superior sustainable returns on capital employed enable the Group to reinvest
in its business, creating value for its stakeholders.
Headquartered in Dublin, the Group operates across three sectors: energy,
healthcare and technology, employing over 15,400 people. DCC plc is listed on
the London Stock Exchange and is a constituent of the FTSE 100. In its
financial year ended 31 March 2022, DCC generated revenue of £17.7
billion and adjusted operating profit of £589.2 million.
DCC has an excellent record, delivering compound annual growth of 14% in
adjusted operating profit and generating an average return on capital employed
of approximately 19% over 28 years as a public company.
Follow us on LinkedIn (https://www.linkedin.com/company/dcc-plc) , Twitter
(https://twitter.com/dccplc?s=20&t=Z_XyTAnFQUI0tdsX3k5nfA) .
www.dcc.ie (http://www.dcc.ie)
Forward-looking statements
This announcement contains some forward-looking statements that represent
DCC's expectations for its business, based on current expectations about
future events, which by their nature involve risk and uncertainty. DCC
believes that its expectations and assumptions with respect to these
forward-looking statements are reasonable, however because they involve risk
and uncertainty as to future circumstances, which are in many cases beyond
DCC's control, actual results or performance may differ materially from those
expressed in or implied by such forward-looking statements.
Divisional Performance Reviews
DCC LPG 2022 2021 % change % change CC
Volumes (thousand tonnes) 2,615.2kT 2,259.3kT +15.8%
Operating profit £237.7m £231.3m +2.8% +6.7%
Operating profit per tonne £90.89 £102.36
Return on capital employed excl. IFRS 16 15.8% 17.4%
Return on capital employed incl. IFRS 16 15.1% 16.6%
DCC LPG performed strongly during the year with operating profit increasing by
2.8% (6.7% on a constant currency basis) to £237.7 million. The profit growth
was achieved despite the backdrop of both very substantial increases and
volatility in the wholesale cost of product, with average product cost almost
doubling during the year. Notwithstanding this backdrop, DCC LPG delivered
modest organic profit growth and also benefited from bolt-on acquisitions
completed in the current and prior year.
Volumes increased by 15.8% driven by the reopening of economies and
acquisition activity in the US and Ireland. Organic volumes increased by 6.8%
due to the strong recovery in commercial and industrial demand. As expected,
operating profit per tonne was lower due to the mix impact of the significant
increase in lower margin commercial and industrial customer demand and the
impact of the lower margin UPG and Naturgy acquisitions.
The French business performed well, benefiting from continued good domestic
demand and growth in the cylinder sector, where it has increased its market
share over the last two years. The recent acquisitions and expansion of the
business into the solar sector has been successful and performed ahead of
expectations, driven by strong demand for the design, build and maintenance
solution offering. In B2B gas and power, the business continued to expand its
customer base and range of energy solutions, although the higher wholesale
cost of energy and associated volatility was a headwind throughout the year.
The business continues to broaden the energy transition solutions it offers to
customers in France and, amongst other initiatives, has launched an innovative
service that provides energy efficiency and management, renewable power and EV
charging capability to large offices and shopping centres. The business also
delivered strong growth in its other European markets of Scandinavia, Germany
and Benelux, benefiting from good organic growth and the acquisition of
Primagaz in the Netherlands earlier in the year.
In Britain and Ireland, the business experienced a strong recovery in
commercial volumes. It also grew its market share through oil to LPG
conversions that lower customer carbon emissions by approximately 20%. In
Ireland, the off-grid LPG business performed well, although similar to the
experience in France, the on-grid gas and power business faced significant
volatility and increased wholesale cost of product for natural gas and
electricity. In December 2021, DCC acquired Naturgy's power and gas marketing
operations in Ireland. The acquisition adds innovative energy transition
expertise in biomethane, direct renewable electricity power purchase
agreements and solar solutions, and has performed in line with expectations
since acquisition.
The US business delivered strong volume and operating profit growth during the
year, driven by the full year contribution from the prior year acquisitions of
NES (September 2020) and UPG (January 2021) as well as three smaller bolt-on
acquisitions completed in recent months in Kentucky and Colorado. The US
business now operates across 22 states serving 310,000 customers. In Hong Kong
& Macau, the business performed well during a difficult year for the
region and continued to grow its customer base, adding several new large
residential estates.
DCC Retail & Oil 2022 2021 % change % change CC
Volumes (billion litres) 11.628bn 10.199bn +14.0%
Operating profit £169.4m £144.8m +17.0% +20.1%
Operating profit per litre 1.46ppl 1.42ppl
Return on capital employed excl. IFRS 16 24.8% 19.2%
Return on capital employed incl. IFRS 16 21.0% 16.9%
DCC Retail & Oil delivered excellent growth, with operating profit
increasing to £169.4 million, 17.0% ahead of prior year (20.1% on a constant
currency basis). The vast majority of the growth was organic, reflecting
strong volume growth and an excellent operational and cost performance. In
addition, the business continues to deliver significant growth in non-fuel
profits, particularly in lubricants and HGV and fleet services.
DCC Retail & Oil sold 11.6 billion litres of product, an increase of 14.0%
on the prior year. The significant volume increase was driven by a strong
recovery in commercial, retail and fuel card volumes, which had been adversely
impacted by Covid-19 restrictions in the prior year. The business experienced
particularly strong demand in Scandinavia, France and Britain.
The business in Britain and Ireland recorded very strong organic operating
profit growth, in part due to the recovery in commercial activity, which drove
fuel and fuel card usage. In Britain, the business also delivered good growth
in its company owned retail network, with non-fuel sales performing strongly.
The business delivered good growth across lubricants, truck stop, roadside
services and heating services, with the growth in the increased range of
customer solutions continuing to broaden the activities of the British
business. Recently, the business acquired a new HGV bunker site in the Port of
Felixstowe, further strengthening its network of HGV service coverage to 26
strategically located facilities across Britain. The business in Ireland
delivered very strong organic growth, benefiting from the integration of the
two recent bolt-on acquisitions and from strong demand from the power
generation sector.
The Scandinavian business performed robustly following an excellent
performance in the prior year. The business in Denmark performed particularly
well and generated strong growth across the retail, agricultural and
commercial sectors. In Scandinavia, the business continued to deploy capital
into lower emissions fuels and EV charging infrastructure, including winning a
significant tender for a transport mobility hub in Norway. In Denmark, the
business has partnered with Shell Re-Charge to provide customers with EV
charging solutions in the home, office, forecourts and public spaces.
In France, the business recorded very strong growth, as restrictions were
eased and retail mobility consumers were increasingly active. The business
made good progress during the year in further developing its products and
solution offerings to mobility customers. The business has partnered with
ENGIE to deploy EV chargers on 16 motorway sites. It also rolled out the
infrastructure to enable the sale of E85 biofuel (85% ethanol content) across
59 sites on its network. E85 offers a significantly lower carbon alternative
product for customers. In September 2021, the business also acquired a
synergistic network of 19 convenience-led retail sites in Luxembourg, which
are performing in line with expectations. Although modest, the acquisition has
added a strong company-operated convenience retailing capability. DCC Retail
& Oil has also recently entered into a major lubricants distribution
agreement to the auto franchise and independent workshop segments in France,
establishing a platform to develop further organic revenue opportunities in
the lubricants sector in Europe.
DCC Healthcare 2022 2021 % change % change CC
Revenue £765.2m £655.4m +16.8% +19.5%
Operating profit £100.4m £81.7m +22.9% +25.5%
Operating margin 13.1% 12.5%
Return on capital employed excl. IFRS 16 20.5% 18.7%
Return on capital employed incl. IFRS 16 19.2% 17.0%
DCC Healthcare delivered an excellent performance, generating operating profit
growth of 22.9% (25.5% on a constant currency basis), approximately two-thirds
of which was organic. The very strong organic performance was driven by DCC
Vital, which generated excellent organic profit growth across Britain, Ireland
and the DACH region. DCC Health & Beauty Solutions performed well against
a challenging operational backdrop. The strong result also benefited from the
first-time contribution of Wörner, acquired in April 2021, which traded ahead
of expectations.
DCC Vital, which is focused on the sales and marketing of medical products to
healthcare providers,
generated excellent revenue and operating profit growth. Although the pandemic
continued to impact on the level of routine hospital procedures and in-person
GP consultations, DCC Vital continued to service the healthcare systems with
the supply of pandemic-related products across all its markets. PPE sales were
particularly strong in Scotland and Ireland and the business also benefited
from the distribution of antigen tests to the nursing home sector in Germany.
DCC Vital is very well positioned to benefit when activity levels normalise
across the healthcare systems.
DCC Health & Beauty Solutions, which provides outsourced solutions to
international nutrition and beauty brand owners performed well in an
environment of supply chain and labour availability challenges. Following
excellent growth in the prior year, the US businesses were impacted by supply
chain and labour availability challenges as the economy re-opened, and by a
small number of customers adjusting their demand to reflect market growth
rates normalising back towards longer-term growth trends. The European
businesses generated very good profit growth, driven by strong growth with
nutrition brands in Germany, Scandinavia and Iberia and in premium skincare
products for leading international and digital brands.
It was also another year of strategic progress. Reflecting its strong organic
and acquisitive growth expectations, DCC Healthcare strengthened its
management resources including establishing a new DCC Health & Beauty
Solutions divisional team in the US. DCC Health & Beauty Solutions
expanded its capacity and capability across its manufacturing facilities,
including adding manufacturing capability in nutritional gummies in Britain
and commencing a capital investment project at its Florida facility which will
add this capability in the US market in 2023. Gummies is the fastest growing
product format in the nutritional market. The acquisition of Wörner by DCC
Vital, established a new growth platform in Primary Care in Europe. DCC Vital
is pursuing an active pipeline of opportunities to further expand its
footprint in the Primary Care sector and has already completed or committed to
acquire two bolt-on acquisitions in Germany.
DCC Technology 2022 2021 % change % change CC
Revenue £4.644bn £4.483bn +3.6% +6.4%
Operating profit £81.7m £72.4m +12.8% +19.9%
Operating margin 1.8% 1.6%
Return on capital employed excl. IFRS 16 9.1%* 12.3%
Return on capital employed incl. IFRS 16 8.5% 11.0%
* The ROCE in DCC Technology reflects the acquisition impact of Almo occurring
later in the financial year. On a pro-forma basis the ROCE in DCC Technology
excluding IFRS 16 was 10.7%.
DCC Technology delivered very strong operating profit growth of 12.8% (19.9%
on a constant currency basis), driven by the contributions from acquisitions
completed during the year. The very strong performance was achieved despite a
challenging supply chain environment.
The North American business performed strongly throughout the year. The
business delivered very strong organic revenue and operating profit growth and
also benefited from the first-time contribution of Almo. Sales of Pro AV
products recovered significantly as Covid-19 restrictions eased and spending
on large event, conference and other at-work locations resumed. Demand for Pro
Audio and music products and entertainment-at-home products, including
consumer electronics, remained robust, with supply constraints in certain
product categories. The two complementary bolt-on acquisitions (The Music
People and JB&A) completed in the prior year both performed well and have
strengthened DCC Technology's developing market presence and product portfolio
in North America. In December 2021, DCC Technology completed the acquisition
of Almo. Combined with DCC Technology's existing business, the acquisition has
created the leading specialist Pro AV value-added distributor in North
America. It has also expanded the business into the attractive appliance and
lifestyle product categories. Since acquisition Almo has integrated well into
the Group and has traded in line with expectations.
In the UK, the business experienced a significant level of supply constraints
and reduced demand for consumer products as the pandemic eased. As previously
reported, and although now operating effectively, the business was also
impacted during the year by the implementation of a new warehouse management
system. These factors contributed to a decline in both revenue and operating
profit in the year. The business in Ireland performed very well, with good
organic revenue and operating profit growth driven by demand for consumer and
mobile products and a recovery in demand in the B2B sectors. The business
successfully relocated to a new facility during the year which will enable
continued growth in the medium term.
In Continental Europe, the business generated good organic revenue and
operating profit growth. The business benefited from the recovery in demand
for B2B products, particularly in the DACH region and Italy. As anticipated,
demand for consumer and working-from-home products began to normalise as the
year progressed, while the business also experienced some restrictions in
supply, particularly for certain consumer products. In Scandinavia, the
business achieved strong revenue and profit growth, particularly in the etail
and retail channels. In France, the B2B business performed well, driven by
good growth in its range of own-brand accessories. In April 2021, the business
completed the acquisition of Azenn which has performed strongly since
acquisition and has further broadened the B2B product and customer base in
France.
Group Financial Review
A summary of the Group's results for the year ended 31 March 2022 is as
follows:
2022 2021 % change
£'m £'m
Revenue 17,732 13,412 +32.2%
Adjusted operating profit(1)
DCC LPG 237.7 231.3 +2.8%
DCC Retail & Oil 169.4 144.8 +17.0%
DCC Healthcare 100.4 81.7 +22.9%
DCC Technology 81.7 72.4 +12.8%
Group adjusted operating profit(1) 589.2 530.2 +11.1%
Finance costs (net) and other (53.8) (59.1)
Profit before net exceptionals, amortisation of intangible assets and tax 535.4 471.1 +13.7%
Net exceptional charge before tax and non-controlling interests (45.3) (39.1)
Amortisation of intangible assets (84.4) (66.9)
Profit before tax 405.7 365.1 +11.1%
Taxation (79.7) (62.3)
Profit after tax 326.0 302.8
Non-controlling interests (13.6) (10.2)
Attributable profit 312.4 292.6
Adjusted earnings per share(1) 430.1p 386.6p +11.2%
Dividend per share 175.78p 159.80p 10.0%
Operating cash flow 560.6 842.3
Free cash flow(2) 382.6 687.8
Net (debt)/cash at 31 March (excl. lease creditors) (419.9) 165.0
Lease creditors (336.7) (315.2)
Net debt at 31 March (including lease creditors) (756.6) (150.2)
Total equity at 31 March 2,970.6 2,705.6
Return on capital employed (excl. IFRS 16) 16.5% 17.1%
Return on capital employed (incl. IFRS 16) 15.3% 15.7%
(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
Reporting currency
The Group's financial statements are presented in sterling, denoted by the
symbol '£'. The principal exchange rates used for the translation of results
into sterling are set out in note 3, Reporting Currency, on page 23.
The net impact of currency translation on the Group Income Statement versus
the prior period was significant, accounting for a headwind of approximately
4.0%, or £20.9 million against the reported growth in operating profit.
Average sterling exchange rates strengthened against most relevant currencies,
including the US dollar and euro.
Revenue
Overall, Group revenue increased by 32.2% to £17.7 billion, driven by the
higher energy commodity prices that prevailed during the year and also by the
recovery in energy volumes across both DCC LPG and DCC Retail & Oil.
Volumes in DCC LPG increased by 15.8% to 2.6 million tonnes, driven by the
reopening of economics and acquisitions completed during the year in the US
and Ireland. Organically, volumes increased 6.8% due to strong recovery and
growth of commercial and industrial demand.
DCC Retail & Oil volumes of 11.6 billion litres were 14.0% ahead of the
prior year, and 10.9% organically, driven by a strong recovery in commercial,
retail and fuel card volumes, which had been adversely impacted by Covid-19
restrictions in the prior year.
Combined revenue in DCC Healthcare and DCC Technology was £5.4 billion, an
increase of 5.3%, reflecting strong revenue growth in DCC Healthcare and DCC
Technology's North American businesses.
Group adjusted operating profit
Group adjusted operating profit increased by 11.1% (15.1% on a constant
currency basis) to £589.2 million. On a constant currency basis, operating
profit increased by 6.1% organically and acquisitive growth was 9.0%. The
overall growth represents a very strong performance in the context of
well-documented challenges in global commodity prices, supply chain shortages
and labour availability.
DCC LPG performed strongly during the year despite the backdrop of very
substantial increases and volatility in the wholesale cost of product.
Operating profit increased by 2.8% (6.7% on a constant currency basis) to
£237.7 million benefiting from modest organic growth and bolt-on acquisitions
completed in Ireland and the US.
Operating profit in DCC Retail & Oil increased to £169.4 million, 17.0%
ahead of the prior year (20.1% on a constant currency basis), the vast
majority of which was organic. The excellent organic performance reflects the
strong volume recovery, continued growth in non-fuel profits and a very good
operational and cost performance.
DCC Healthcare generated excellent operating profit growth of 22.9% (25.5% on
a constant currency basis) to £100.4 million, two thirds of which was
organic. The very strong organic performance was driven by DCC Vital, which
generated excellent organic profit growth across Britain, Ireland and the DACH
region. DCC Vital also benefited from the acquisition of Wörner in April
2021.
Operating profit in DCC Technology increased to £81.7 million, 12.8% ahead of
the prior year (19.9% on a constant currency basis). The very strong operating
profit growth was driven by the contributions from acquisitions completed
during the year. The business in North America performed very strongly and
benefited from the notable acquisition of Almo, completed in December 2021.
FY22 FY21 % change
H1 H2 FY H1 H2 FY H1 H2 FY
Adj. operating profit* £'m £'m £'m £'m £'m £'m
DCC LPG 48.4 189.3 237.7 45.6 185.7 231.3 +6.2% +2.0% +2.8%
DCC Retail & Oil 70.0 99.4 169.4 65.2 79.6 144.8 +7.4% +24.8% +17.0%
DCC Healthcare 50.2 50.2 100.4 39.8 41.9 81.7 +26.0% +19.9% +22.9%
DCC Technology 27.2 54.5 81.7 25.5 46.9 72.4 +6.5% +16.2% +12.8%
Group 195.8 393.4 589.2 176.1 354.1 530.2 +11.2% +11.1% +11.1%
Adjusted EPS* (pence) 134.2 295.9 430.1 117.9 268.7 386.6 +13.8% +10.1% +11.2%
*Excluding net exceptionals and amortisation of intangible assets
Finance costs (net) and other
Net finance costs and other decreased to £53.8 million (2021: £59.1
million). The decrease primarily reflects a lower interest charge due to lower
average gross debt balances, following private placement debt repayments in
May 2021.
Average net debt, excluding lease creditors, was £428 million, compared to an
average net debt of £215 million in the prior year, and reflects substantial
acquisition activity during the year and also increased investment in working
capital. The Group's average private placement debt, which is the primary
driver of finance costs, decreased versus the prior year reflecting the
repayment of private placement debt and the strengthening of sterling against
the euro and US dollar. Interest was covered 16.1 times1 (#_ftn3) by Group
adjusted operating profit before depreciation and amortisation of intangible
assets (2021: 13.2 times).
Profit before net exceptional items, amortisation of intangible assets and tax
Profit before net exceptional items, amortisation of intangible assets and tax
increased by 13.7% to £535.4 million.
(
1 (#_ftnref3)
)( Using the definitions contained in the Group's lending agreements)
Net exceptional charge and amortisation of intangible assets
The Group incurred a net exceptional charge after tax and non-controlling
interests of £43.8 million (2021: net exceptional charge of £35.0 million)
as follows:
£'m
Adjustments to contingent acquisition consideration (19.9)
Restructuring and integration costs and other (16.7)
Acquisition and related costs (9.9)
IAS 39 mark-to-market gain 1.2
(45.3)
Tax attaching to exceptional items 1.5
Net exceptional charge (43.8)
There was a net cash outflow of £29.5 million relating to exceptional items.
Adjustments to contingent acquisition consideration of £19.9 million reflects
movements in provisions associated with the expected earn-out or other
deferred arrangements that arise through the Group's corporate development
activity. The charge in the year primarily reflects increases in contingent
consideration payable in respect of acquisitions in DCC Technology where the
trading performance of acquisitions in North America has been very strong and
ahead of expectations and also in respect of an acquisition in DCC Retail
& Oil where performance has also been ahead of expectations.
Restructuring and integration costs and other of £16.7 million relates to the
restructuring and integration of operations across a number of businesses and
acquisitions. The significant items during the year include costs related to
the integration of acquisitions in DCC LPG and DCC Technology. These include
the integration of Primagaz in the Netherlands, acquired during the financial
year and where integration with DCC's existing operations is continuing in
line with expectations. It also includes the integration of Almo and
combination with DCC Technology's existing Pro-AV business in North America.
It also includes the final stage of the consolidation of the UK infrastructure
in DCC Technology and a project underway in France to enhance the efficiency
of the LPG operating infrastructure.
Acquisition and related costs include the professional fees and tax costs
relating to the evaluation and completion of acquisition opportunities and
amounted to £9.9 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 year ended 31 March 2022, this
amounted to an exceptional non-cash gain of £1.2 million. The cumulative net
exceptional credit taken in respect IAS 39 ineffectiveness is £0.5 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 £84.4 million from £66.9 million in the prior year reflecting
acquisitions completed during the second half of the prior year and in the
current year.
Profit before tax
Profit before tax increased by 11.1% to £405.7 million.
Taxation
The effective tax rate for the Group increased to 18.3% (2021: 17.0%). The
Group's effective tax rate is influenced by the geographical mix of profits
arising in any year and the tax rates attributable to the individual
territories. The increase in the year was driven by the expansion of the Group
in recent years into certain higher tax geographies and the increasing
corporate tax rate environment generally.
Adjusted earnings per share
Adjusted earnings per share increased by 11.2% (15.2% on a constant currency
basis) to 430.1 pence, reflecting the increase in profit before exceptional
items and goodwill amortisation.
Dividend
The Board is proposing an 11.2% increase in the final dividend to 119.93 pence
per share, which, when added to the interim dividend of 55.85 pence per share,
gives a total dividend for the year of 175.78 pence per share. This represents
a 10.0% increase over the total prior year dividend of 159.80 pence per share.
The dividend is covered 2.4 times by adjusted earnings per share (2021: 2.4
times). It is proposed to pay the final dividend on 21 July 2022 to
shareholders on the register at the close of business on 27 May 2022.
Over its 28 years as a listed company, DCC has an unbroken record of dividend
growth at a compound annual rate of 13.7%.
Return on capital employed
The creation of shareholder value through the delivery of consistent,
sustainable long-term returns well in excess of its cost of capital is one of
DCC's core strategic aims. The return on capital employed by division was as
follows:
2022 2021 2022 2021
excl. IFRS 16 excl. IFRS 16 incl. IFRS 16 incl. IFRS 16
DCC LPG 15.8% 17.4% 15.1% 16.6%
DCC Retail & Oil 24.8% 19.2% 21.0% 16.9%
DCC Healthcare 20.5% 18.7% 19.2% 17.0%
DCC Technology 9.1%* 12.3% 8.5% 11.0%
Group 16.5% 17.1% 15.3% 15.7%
*The ROCE in DCC Technology reflects the acquisition impact of Almo occurring
later in the financial year. On a pro-forma basis the ROCE in DCC Technology
excluding IFRS 16 was 10.7%.
The Group continued to generate very strong returns on capital employed,
notwithstanding the substantial increase in the scale of the Group in recent
years. The modest decrease in return on capital employed versus the prior year
primarily reflects the substantial acquisition spend during the year of £720
million and the timing of the acquisition of Almo, the Group's largest
acquisition to date, which occurred later in the year and seasonally had a
dilutive impact. It also reflects recent investment in development capital
expenditure and working capital which will deliver good organic growth for the
Group in the future.
Cash Flow, Development and Financial Strength
Cash flow
The Group generated operating and free cash flow during the year as set out
below:
Year ended 31 March 2022 2021
£'m £'m
Group operating profit 589.2 530.2
(Increase)/decrease in working capital (168.7) 177.7
Depreciation (excluding ROU leased assets) and other 140.1 134.4
Operating cash flow (pre add-back for depreciation on ROU leased assets) 560.6 842.3
Capital expenditure (net) (170.8) (146.9)
389.8 695.4
Depreciation on ROU leased assets 67.8 61.4
Repayment of lease creditors (75.0) (69.0)
Free cash flow 382.6 687.8
Interest and tax paid, net of dividend from equity accounted investments (114.2) (108.9)
Free cash flow (after interest and tax) 268.4 578.9
Acquisitions (720.1) (272.6)
Dividends (167.5) (148.3)
Exceptional items/disposals (29.5) (29.4)
Share issues 0.4 -
Net (outflow)/inflow (648.3) 128.6
Opening net debt (150.2) (367.1)
Translation and other 41.9 88.3
Closing net debt (including lease creditors) (756.6) (150.2)
Analysis of closing net debt (including lease creditors):
Net (debt)/cash at 31 March (excluding lease creditors) (419.9) 165.0
Lease creditors at 31 March (336.7) (315.2)
(756.6) (150.2)
The Group's operating cash flow amounted to £560.6 million, compared to
£842.3 million in the prior year.
Working capital increased by £168.7 million which includes the expected
reversal of approximately £80 million of one-off timing benefits in the prior
year which were highlighted in the Results Announcement in May 2021. A
decrease in the utilisation of supply chain financing in DCC Technology
accounted for £65 million, with the remaining outflow reflecting net
investment in working capital across the Group. The increase in energy prices
during the period drove a reduction in working capital in DCC Retail & Oil
and an increase in working capital in DCC LPG. The movements reflect the
respective underlying negative and positive working capital characteristics of
each division. The remaining modest net investment in working capital across
the Group reflected increased inventory holdings which ensured customers were
serviced as effectively as possible given the volatile supply chain
environment.
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. As anticipated, the level of
supply chain financing at 31 March 2022 was lower than the prior year at
£168.0 million (2021: £232.6 million), with the decrease of £65.0 million
reflecting the lower volume throughput in the UK business as a result of
product supply disruption and warehouse system upgrades. Supply chain
financing had a positive impact on Group working capital days of 2.3 days (31
March 2021: 4.9 days).
Overall working capital days were 2.8 days sales, compared to negative 4.3
days sales in the prior year, primarily reflecting the acquisition activity in
the year in DCC Technology, DCC Healthcare and DCC LPG.
As illustrated in the table overleaf, net capital expenditure amounted to
£170.9 million for the year (2021: £146.9 million) and was net of disposal
proceeds of £23.5 million (2021: £15.9 million). The level of net capital
expenditure reflects continued investment in organic initiatives across the
Group, supporting the Group's continued growth and development.
Capital expenditure in DCC LPG primarily comprised development expenditure on
tanks, cylinders and installations, supporting new business, the conversion of
oil customers to LPG, and the continued rollout of bioLPG cylinders and 'Click
and Collect' services. There was also continued development spend in relation
to the Avonmouth LPG storage facility in the UK. In the Retail & Oil
division, there was continued investment in new retail sites and site
upgrades, including adding further lower emission product capability such at
HVO in a number of markets and E85 in France, EV fast charging and related
services. It also included capital expenditure in relation to the ongoing
project to optimise the depot network in the UK to bring greater network and
capital efficiency over time. In DCC Healthcare, the capital expenditure
primarily related to increased manufacturing capability across DCC Health
& Beauty Solutions in both Europe and the US, through the installation of
new machines across multiple businesses to facilitate the strong growth in
customer demand. The majority of the capital expenditure in DCC Technology
related to the new warehouse management system which is now live in the UK,
solar panel installation on the roof of the UK national distribution centre,
along with development spend in Ireland to relocate to a new, larger, office
and warehouse facility during the period. Net capital expenditure for the
Group exceeded the depreciation charge (excluding depreciation on right-of-use
leased assets) in the year by £32.9 million.
The Group's free cash flow amounted to £382.6 million versus £687.8 million
in the prior year. The cumulative conversion of operating profit into free
cash flow across both years was very strong at 96%.
Total cash spend on acquisitions for the year ended 31 March 2022
The total cash spend on acquisitions completed in the year was £720.1
million. The spend primarily reflects acquisitions committed and completed
during the current year, but also includes the acquisition of Wörner in DCC
Healthcare, Primagaz and Solewa in DCC LPG, Jones Ireland in DCC Retail &
Oil and Azenn in DCC Technology which were announced in the prior year Results
Announcement in May 2021. Payment of deferred and contingent acquisition
consideration previously provided amounted to £52.0 million.
Committed acquisition and net capital expenditure
Committed acquisition spend since the prior year preliminary results statement
and net capital expenditure in the current year amounted to £774.3 million.
An analysis by division is shown below:
Acquisitions Capex Total
£'m £'m £'m
DCC LPG 39.1 91.9 131.0
DCC Retail & Oil 53.9 43.9 97.8
DCC Healthcare 10.1 24.3 34.4
DCC Technology 500.3 10.8 511.1
Total 603.4 170.9 774.3
DCC continues to be very active from a development perspective. Since the
results announcement for the year ended 31 March 2021 in May 2021, DCC has
committed approximately £600 million to new acquisitions across Europe and
North America. The Group has the platforms, opportunities and capability to
build the Group into a global leader in its chosen sectors. Recent acquisition
activity of the Group includes:
DCC Technology
Almo Corporation
DCC Technology completed the acquisition of Almo Corporation ("Almo") on 14
December 2021. The acquisition was based on an initial enterprise value of
approximately $610 million (£462 million) on a cash-free, debt-free basis.
Almo is one of the largest specialist Pro AV businesses in the United
States and is a leading national distributor of consumer appliances, consumer
electronics and lifestyle products selling to integrators, resellers, dealers,
retailers and e-tailers nationwide.
The business is headquartered in Philadelphia and employs approximately 660
people across the United States. In its most recent financial year, the
business recorded revenues of approximately $1.3 billion (£1.0 billion) and
had underlying EBITA of approximately $75 million (£57 million).
The transaction represents DCC's largest acquisition to date and is a major
step in the continuing expansion of both DCC and DCC Technology in North
America. Since entering the market in 2018, DCC Technology has expanded
significantly, through strong organic growth and acquisition activity.
Together with DCC Technology's existing platform, the acquisition of Almo will
create the leading specialist Pro AV business in North America. Further
details on the acquisition can be found in DCC's stock exchange announcement
of 15 December 2021.
During the year DCC Technology also acquired a small business in the Nordic
region which distributes AV and security camera equipment, further enhancing
DCC Technology's service offering to its customers in the region.
DCC LPG
Naturgy Ireland
In December 2021, DCC LPG acquired Naturgy's Irish power and gas marketing
operations. The business is a service-led supplier of electricity and gas to
large B2B energy customers and also provides a range of services including
demand side management, lighting as a service, solar PV and PPA management.
Founded in 2004, the business has a long track record of sourcing and
supplying renewable power to industrial and commercial customers and was the
first company in Ireland to supply 100% renewable electricity. The acquisition
enhances DCC's presence in the Irish electricity and gas markets and
represents an important step in its strategy to expand its energy solutions
offering across the island of Ireland.
DCC LPG also completed a number of small bolt-on acquisitions in Colorado and
Kentucky, further expanding its presence in the US propane market and also
completed a number of modest acquisitions in the German and Austrian markets.
DCC Retail & Oil
DCC Retail & Oil completed a number of bolt-on acquisitions during the
year. In September 2021, DCC Retail & Oil acquired a network of 19 retail
convenience sites in Luxembourg. The locations, which DCC will operate, have a
leading convenience offering utilising the Cactus Shoppi brand. The network
contains well-located, urban sites, suitable for investment in EV fast
charging infrastructure in the future. In Denmark, the business also recently
committed to acquire a stake in a biogas production facility. The transaction
will secure the supply of the offtake from the plant and further expand the
range of renewable products available to customers in the market. In Britain,
DCC Retail & Oil completed a number of complementary bolt-on acquisitions
including a HGV service business, offering multiple services to hauliers
including secure parking, fuel provision, truck washing facilities and
accommodation.
DCC Retail & Oil also completed a small bolt-on acquisition in the bulk
fuels and lubricants market in Norway.
DCC Healthcare
Since its initial market entry into Germany through the Wörner acquisition in
April 2021, DCC Healthcare has completed a primary care bolt-on acquisition
and has also now agreed to acquire another, further developing its presence in
a fragmented and growing market.
Financial strength
An integral part of the Group's strategy remains the maintenance of a strong
and liquid balance sheet which, amongst other benefits, enables it to take
advantage of development opportunities as they arise. The increasing scale and
geographic diversity of DCC is enabling the Group to evolve its approach
somewhat, leveraging a broader array of funding options and, over time,
reducing the relative level of gross cash held on the balance sheet. At 31
March 2022, the Group had net debt (including lease creditors) of £756.6
million, net debt (excluding lease creditors) of £419.9 million, cash
resources (net of overdrafts) of £1.3 billion and total equity of £3.0
billion.
In March 2022, DCC entered into a new Sustainability-Linked Revolving Credit
Facility with its banking group of 10 leading international banks. The
facility, at £800 million, is significantly larger than the Group's previous
facility of £400 million and is committed for five years. The facility is the
Group's first sustainability-linked funding arrangement and contains a number
of sustainability metrics and targets, demonstrating DCC's commitment to
excellence in its approach to Sustainability and ESG generally. The increased
scale of the facility will also enable the Group to continue to evolve its
funding options into the future.
Substantially all of the Group's term debt has been raised in the US private
placement market and has an average maturity of 4.7 years.
Establishment of DCC Energy
For periods commencing from 1 April 2022, DCC will organise and report its
activities through three divisions: DCC Energy, DCC Healthcare and DCC
Technology. DCC Energy contains all of the Group's activities in the energy
sector (previously DCC LPG and DCC Retail & Oil) and DCC Energy is
organised in turn into two reporting segments, Energy Solutions and Mobility.
Further information on the establishment of DCC Energy and its strategy is
contained in the separate Stock Exchange Announcement released this morning.
Appointment of Corporate Broker
Following a recent review of its corporate broking arrangements, DCC has
appointed UBS alongside its existing corporate brokers J.P. Morgan Cazenove
and Davy.
Annual General Meeting
The Company's Annual General Meeting will be held at 11.00 am on Friday 15
July 2022 at the Powerscourt Hotel, Powerscourt Estate, Enniskerry, Co.
Wicklow, A98 DR12.
Group Income Statement
For the year ended 31 March 2022
2022 2021
Pre exceptionals Exceptionals Pre exceptionals Exceptionals
(note 5) Total (note 5) Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Revenue 4 17,732,020 - 17,732,020 13,412,450 - 13,412,450
Cost of sales (15,694,347) - (15,694,347) (11,592,970) - (11,592,970)
Gross profit 2,037,673 - 2,037,673 1,819,480 - 1,819,480
Administration expenses (517,128) - (517,128) (499,812) - (499,812)
Selling and distribution expenses (965,489) - (965,489) (814,758) - (814,758)
Other operating income/(expenses) 34,178 (46,534) (12,356) 25,333 (40,495) (15,162)
Adjusted operating profit 589,234 (46,534) 542,700 530,243 (40,495) 489,748
Amortisation of intangible assets (84,340) - (84,340) (66,898) - (66,898)
Operating profit 4 504,894 (46,534) 458,360 463,345 (40,495) 422,850
Finance costs (77,205) - (77,205) (85,639) - (85,639)
Finance income 23,075 1,192 24,267 26,253 1,384 27,637
Equity accounted investments' profit after tax 314 - 314 233 - 233
Profit before tax 451,078 (45,342) 405,736 404,192 (39,111) 365,081
Income tax expense (81,235) 1,501 (79,734) (66,382) 4,104 (62,278)
Profit after tax for the financial year 369,843 (43,841) 326,002 337,810 (35,007) 302,803
Profit attributable to:
Owners of the Parent 356,214 (43,841) 312,373 327,626 (35,007) 292,619
Non-controlling interests 13,629 - 13,629 10,184 - 10,184
369,843 (43,841) 326,002 337,810 (35,007) 302,803
Earnings per ordinary share
Basic earnings per share 6 316.78p 297.04p
Diluted earnings per share 6 316.36p 296.62p
Basic adjusted earnings per share 6 430.11p 386.62p
Diluted adjusted earnings per share 6 429.55p 386.07p
Group Statement of Comprehensive Income
For the year ended 31 March 2022
2022 2021
£'000 £'000
Group profit for the financial year 326,002 302,803
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Currency translation 26,549 (53,527)
Movements relating to cash flow hedges 88,776 67,961
Movement in deferred tax liability on cash flow hedges (16,138) (11,554)
99,187 2,880
Items that will not be reclassified to profit or loss
Group defined benefit pension obligations:
- remeasurements (748) 254
- movement in deferred tax asset 210 159
(538) 413
Other comprehensive income for the financial year, net of tax 98,649 3,293
Total comprehensive income for the financial year 424,651 306,096
Attributable to:
Owners of the Parent 411,485 298,172
Non-controlling interests 13,166 7,924
424,651 306,096
Group Balance Sheet
As at 31 March 2022
2022 2021
Notes £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 1,253,349 1,137,634
Right-of-use leased assets 327,551 308,863
Intangible assets and goodwill 2,634,449 2,206,735
Equity accounted investments 26,843 27,134
Deferred income tax assets 54,494 30,706
Derivative financial instruments 9 118,578 121,671
4,415,264 3,832,743
Current assets
Inventories 1,133,666 685,950
Trade and other receivables 2,508,613 1,689,372
Derivative financial instruments 9 107,361 40,181
Cash and cash equivalents 9 1,394,272 1,786,556
5,143,912 4,202,059
Total assets 9,559,176 8,034,802
EQUITY
Capital and reserves attributable to owners of the Parent
Share capital 17,422 17,422
Share premium 883,321 882,924
Share based payment reserve 8 47,436 40,969
Cash flow hedge reserve 8 85,768 13,130
Foreign currency translation reserve 8 87,272 60,260
Other reserves 8 932 932
Retained earnings 1,783,033 1,631,797
Equity attributable to owners of the Parent 2,905,184 2,647,434
Non-controlling interests 65,379 58,210
Total equity 2,970,563 2,705,644
LIABILITIES
Non-current liabilities
Borrowings 9 1,933,482 1,553,200
Lease creditors 9 273,164 261,617
Derivative financial instruments 9 10,330 652
Deferred income tax liabilities 259,796 183,220
Post employment benefit obligations 10 (7,745) (8,024)
Provisions for liabilities 284,191 279,492
Acquisition related liabilities 72,650 62,549
Government grants 356 373
2,826,224 2,333,079
Current liabilities
Trade and other payables 3,468,705 2,604,177
Current income tax liabilities 59,963 44,081
Borrowings 67,668 219,659
Lease creditors 9 63,538 53,607
Derivative financial instruments 9 28,634 9,843
Provisions for liabilities 50,279 42,859
Acquisition related liabilities 23,602 21,853
3,762,389 2,996,079
Total liabilities 6,588,613 5,329,158
Total equity and liabilities 9,559,176 8,034,802
Net (debt)/cash included above (excluding lease creditors) 9 (419,903) 165,054
Group Statement of Changes in Equity
For the year ended 31 March 2022 Attributable to owners of the Parent
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note 8) Total interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2021 17,422 882,924 1,631,797 115,291 2,647,434 58,210 2,705,644
Profit for the financial year - - 312,373 - 312,373 13,629 326,002
Other comprehensive income:
Currency translation - - - 27,012 27,012 (463) 26,549
Group defined benefit pension obligations:
- remeasurements - - (748) - (748) - (748)
- movement in deferred tax asset - - 210 - 210 - 210
Movements relating to cash flow hedges - - - 88,776 88,776 - 88,776
Movement in deferred tax liability on cash flow hedges - - - (16,138) (16,138) - (16,138)
Total comprehensive income - - 311,835 99,650 411,485 13,166 424,651
Re-issue of treasury shares - 397 - - 397 - 397
Share based payment - - - 6,467 6,467 - 6,467
Non-controlling interest arising on acquisition - - - - - 912 912
Dividends - - (160,599) - (160,599) (6,909) (167,508)
At 31 March 2022 17,422 883,321 1,783,033 221,408 2,905,184 65,379 2,970,563
For the year ended 31 March 2021 Attributable to owners of the Parent
Other Non-
Share Share Retained reserves controlling Total
capital premium earnings (note 8) Total interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2020 17,422 882,887 1,482,288 104,096 2,486,693 54,765 2,541,458
Profit for the financial year - - 292,619 - 292,619 10,184 302,803
Other comprehensive income:
Currency translation - - - (51,267) (51,267) (2,260) (53,527)
Group defined benefit pension obligations:
- remeasurements - - 254 - 254 - 254
- movement in deferred tax asset - - 159 - 159 - 159
Movements relating to cash flow hedges - - - 67,961 67,961 - 67,961
Movement in deferred tax liability on cash flow hedges - - - (11,554) (11,554) - (11,554)
Total comprehensive income - - 293,032 5,140 298,172 7,924 306,096
Re-issue of treasury shares - 37 - - 37 - 37
Share based payment - - - 6,055 6,055 - 6,055
Non-controlling interest arising on acquisition - - - - - 323 323
Dividends - - (143,523) - (143,523) (4,802) (148,325)
At 31 March 2021 17,422 882,924 1,631,797 115,291 2,647,434 58,210 2,705,644
Group Cash Flow Statement
For the year ended 31 March 2022
2022 2021
Notes £'000 £'000
Cash flows from operating activities
Profit for the financial year 326,002 302,803
Add back non-operating expenses/(income):
- tax 79,734 62,278
- share of equity accounted investments' profit (314) (233)
- net operating exceptionals 46,534 40,495
- net finance costs 52,938 58,002
Group operating profit before exceptionals 504,894 463,345
Share-based payments expense 6,467 6,055
Depreciation (including right-of-use leased assets) 205,780 192,572
Amortisation of intangible assets 84,340 66,898
Profit on disposal of property, plant and equipment (8,916) (5,263)
Amortisation of government grants (20) (36)
Other 4,614 2,418
(Increase)/decrease in working capital (168,726) 177,670
Cash generated from operations before exceptionals 628,433 903,659
Exceptionals (30,270) (29,358)
Cash generated from operations 598,163 874,301
Interest paid (including lease interest) (70,103) (84,342)
Income tax paid (76,292) (62,191)
Net cash flows from operating activities 451,768 727,768
Investing activities
Inflows:
Proceeds from disposal of property, plant and equipment 23,524 15,898
Government grants received in relation to property, plant and equipment - 89
Disposal of equity accounted investments 772 -
Interest received 22,759 27,930
47,055 43,917
Outflows:
Purchase of property, plant and equipment (194,353) (162,879)
Acquisition of subsidiaries 11 (668,123) (236,232)
Payment of accrued acquisition related liabilities (52,006) (36,330)
(914,482) (435,441)
Net cash flows from investing activities (867,427) (391,524)
Financing activities
Inflows:
Proceeds from issue of shares 397 37
Net cash inflow on derivative financial instruments 30,936 68,554
Increase in interest-bearing loans and borrowings 372,426 320,000
403,759 388,591
Outflows:
Repayment of interest-bearing loans and borrowings (149,182) (437,612)
Repayment of lease creditors (65,580) (59,279)
Dividends paid to owners of the Parent 7 (160,599) (143,523)
Dividends paid to non-controlling interests (6,909) (4,802)
(382,270) (645,216)
Net cash flows from financing activities 21,489 (256,625)
Change in cash and cash equivalents (394,170) 79,619
Translation adjustment 3,878 (47,496)
Cash and cash equivalents at beginning of year 1,716,896 1,684,773
Cash and cash equivalents at end of year 1,326,604 1,716,896
Cash and cash equivalents consists of:
Cash and short-term bank deposits 1,394,272 1,786,556
Overdrafts (67,668) (69,660)
1,326,604 1,716,896
Notes to the Condensed Financial Statements
For the year ended 31 March 2022
1. Basis of Preparation
The financial information, from the Group Income Statement to note 15,
contained in this preliminary results statement has been derived from the
Group financial statements for the year ended 31 March 2022 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 2022 and their report was
unqualified. The financial information for the year ended 31 March 2021
represents an abbreviated 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 the year ended 31 March 2022.
2. Accounting Policies
The following changes to IFRS became effective for the Group during the year
but did not result in material changes to the Group's consolidated financial
statements:
· Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to
IFRS 16)
· Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16. See further details below.
Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9, IAS 39, IFRS
7, IFRS 4 and IFRS 16
The amendments provide temporary reliefs which address the financial reporting
effects when an interbank offered rate (IBOR) is replaced with an alternative
nearly risk-free interest rate (RFR). The amendments include the following
practical expedients:
· A practical expedient to require contractual changes, or changes to
cash flows that are directly required by the reform, to be treated as changes
to a floating interest rate, equivalent to a movement in a market rate of
interest
· Permit changes required by IBOR reform to be made to hedge
designations and hedge documentation without the hedging relationship being
discontinued
· Provide temporary relief to entities from having to meet the
separately identifiable requirement when an RFR instrument is designated as a
hedge of a risk component
The amendments applied to four interest rate swaps and two cross currency
interest rate swaps in place at 31 March 2022 and the hedge documentation and
floating rate calculations were updated accordingly ahead of 31 March 2022.
The amendments did not result in a material change to the Group's financial
statements. There are no other hedge accounting relationships or financial
instruments that have yet to transition to an alternative benchmark rate as at
31 March 2022.
Standards, interpretations and amendments to published standards that are not
yet effective
The Group has not applied certain new standards, amendments and
interpretations to existing standards that have been issued but are not yet
effective. These include:
· Onerous Contracts - Cost of Fulfilling a Contract (Amendments to
IAS 37)
· Annual Improvements to IFRS Standards 2018-2020 Amendments to IFRS
1 First-time Adoption of International Financial Reporting Standards, IFRS 9
Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture
· Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16)
· Reference to the Conceptual Framework (Amendments to IFRS 3)
· Classification of Liabilities as Current or Non-current (Amendments
to IAS 1)
· IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance
Contracts
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2)
· Definition of Accounting Estimates (Amendments to IAS 8)
· Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12)
The impact of these new standards is not expected d to result 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
2022 2021 2022 2021
Stg£1= Stg£1= Stg£1= Stg£1=
Euro 1.1750 1.1182 1.1820 1.1736
Danish krone 8.7400 8.3295 8.7918 8.7282
Swedish krona 12.0190 11.6205 12.2187 12.0154
Norwegian krone 11.8654 12.0742 11.4787 11.7304
US dollar 1.3694 1.3036 1.3122 1.3760
Hong Kong dollar 10.6580 10.1056 10.2740 10.6975
4. 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 four operating segments (as identified under IFRS
8 Operating Segments) and generates revenue through the following activities:
DCC LPG is a leading liquefied petroleum gas ('LPG') sales and marketing
business, supplying LPG in cylinder and bulk format to residential, commercial
and industrial customers. In addition, DCC LPG continues to develop a broader
customer offering through the supply of natural gas, power and renewables
products, plus a range of specialty gases such as refrigerants and medical
gases.
DCC Retail & Oil is a leading provider of transport and heating energy,
lower emission fuels and biofuels, and related services to consumers and
businesses across Europe and has a key focus on being a market leader in
providing sustainable energy solutions to consumers.
DCC Healthcare is a leading healthcare business, providing products and
services to health and beauty brand owners and healthcare providers.
DCC Technology is a leading route-to-market and supply chain partner for
global technology brands and customers. DCC Technology provides a broad range
of consumer, business and enterprise technology products and services to
retailers, resellers and integrators and domestic appliances and lifestyle
products to retailers and consumers.
The chief operating decision maker monitors the operating results of segments
separately in order to allocate resources between segments and to assess
performance. Segment performance is predominantly evaluated based on operating
profit before amortisation of intangible assets and net operating exceptional
items. Net finance costs and income tax are managed on a centralised basis and
therefore these items are not allocated between operating segments for the
purpose of presenting information to the chief operating decision maker and
accordingly are not included in the detailed segmental analysis. 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
Year ended
31 March 2022
DCC
DCC
DCC DCC
LPG
Retail & Oil Healthcare
Technology Total
£'000 £'000 £'000 £'000 £'000
Segment revenue 2,608,303 9,714,286 765,213 4,644,218 17,732,020
Adjusted operating profit 237,700 169,432 100,415 81,687 589,234
Amortisation of intangible assets (45,903) (9,764) (6,092) (22,581) (84,340)
Net operating exceptionals (note 5) (10,487) (6,200) (6,540) (23,307) (46,534)
Operating profit 181,310 153,468 87,783 35,799 458,360
Year ended
31 March 2021
DCC DCC
DCC DCC
LPG Retail & Oil Healthcare
Technology Total
£'000 £'000 £'000 £'000 £'000
Segment revenue 1,685,570 6,588,186 655,364 4,483,330 13,412,450
Adjusted operating profit 231,253 144,824 81,721 72,445 530,243
Amortisation of intangible assets (37,829) (4,926) (5,504) (18,639) (66,898)
Net operating exceptionals (note 5) (17,732) (5,261) (4,229) (13,273) (40,495)
Operating profit 175,692 134,637 71,988 40,533 422,850
(b) By geography
The Group has a presence in 21 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 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*
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Republic of Ireland 1,609,797 901,802 254,453 180,635
United Kingdom 6,632,084 5,932,234 1,264,586 1,253,059
France 3,251,238 2,442,082 950,929 918,853
United States 1,301,893 801,368 871,143 548,708
Rest of World 4,937,008 3,334,964 901,081 779,111
17,732,020 13,412,450 4,242,192 3,680,366
* Non-current assets comprise property, plant and equipment, right-of-use
leased assets, intangible assets and goodwill and equity accounted investments
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 LPG and Retail & Oil segments 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 these two segments operate
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
these two segments 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.
Year ended
31 March 2022
DCC DCC
DCC DCC
LPG Retail & Oil Healthcare
Technology Total
£'000 £'000 £'000 £'000 £'000
Republic of Ireland (country of domicile) 313,206 781,194 117,405 397,992 1,609,797
United Kingdom 425,871 3,804,115 419,088 1,983,010 6,632,084
France 1,148,089 1,752,698 - 350,451 3,251,238
North America 261,559 - 148,318 1,035,055 1,444,932
Rest of World 459,578 3,376,279 80,402 877,710 4,793,969
Revenue 2,608,303 9,714,286 765,213 4,644,218 17,732,020
Products transferred at point in time 2,608,303 9,714,286 765,213 4,644,218 17,732,020
LPG and related products 2,608,303 - - - 2,608,303
Oil and related products - 9,714,286 - - 9,714,286
Medical and pharmaceutical products - - 407,672 - 407,672
Nutrition and health & beauty products - - 357,541 - 357,541
Technology products and services - - - 4,644,218 4,644,218
Revenue 2,608,303 9,714,286 765,213 4,644,218 17,732,020
Year ended
31 March 2021
DCC DCC
DCC DCC
LPG Retail & Oil Healthcare
Technology Total
£'000 £'000 £'000 £'000 £'000
Republic of Ireland (country of domicile) 130,842 340,285 103,364 327,311 901,802
United Kingdom 330,907 2,699,344 373,413 2,528,570 5,932,234
France 767,199 1,348,429 - 326,454 2,442,082
North America 173,122 - 178,587 571,886 923,595
Rest of World 283,500 2,200,128 - 729,109 3,212,737
Revenue 1,685,570 6,588,186 655,364 4,483,330 13,412,450
Products transferred at point in time 1,685,570 6,588,186 655,364 4,483,330 13,412,450
LPG and related products 1,685,570 - - - 1,685,570
Oil and related products - 6,588,186 - - 6,588,186
Medical and pharmaceutical products - - 281,540 - 281,540
Nutrition and health & beauty products - - 373,824 - 373,824
Technology products and services - - - 4,483,330 4,483,330
Revenue 1,685,570 6,588,186 655,364 4,483,330 13,412,450
5. Exceptionals
2022 2021
£'000 £'000
Adjustments to contingent acquisition consideration (19,864) 27
Restructuring and integration costs and other (16,736) (26,918)
Acquisition and related costs (9,934) (13,604)
Net operating exceptional items (46,534) (40,495)
Mark to market of swaps and related debt 1,192 1,384
Net exceptional items before taxation (45,342) (39,111)
Income tax credit attaching to exceptional items 1,501 4,104
Net exceptional items attributable to owners of the Parent (43,841) (35,007)
Adjustments to contingent and deferred consideration of £19.864 million
reflects movements in provisions associated with the expected earn-out or
other deferred arrangements that arise through the Group's corporate
development activity. The charge in the year primarily reflects increases in
contingent consideration payable in respect of acquisitions in DCC Technology
where the trading performance of acquisitions in North America has been very
strong and ahead of expectations and also in respect of an acquisition in DCC
Retail & Oil where performance has also been ahead of expectations. In
accordance with IFRS 3, this increase in the fair value of contingent
consideration is recognised as a charge in the Income Statement.
Restructuring and integration costs and other of £16.736 million relates to
the restructuring and integration of operations across a number of businesses
and acquisitions. The significant items during the year include costs related
to the integration of acquisitions in DCC LPG and DCC Technology. These
include the integration of Primagaz in the Netherlands, acquired during the
financial year and where integration with DCC's existing operations is
continuing in line with expectations. It also includes the integration of Almo
and combination with DCC Technology's existing Pro-Av business in North
America. It also includes the final stage of the consolidation of the UK
infrastructure in DCC Technology and a project underway in France to enhance
the efficiency of the LPG operating infrastructure.
Acquisition and related costs include the professional fees and tax costs
relating to the evaluation and completion of acquisition opportunities and
amounted to £9.934 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 year ended 31 March 2022, this amounted to an
exceptional non-cash gain of £1.192 million. Following this gain, the
cumulative net exceptional charge taken in respect of the Group's outstanding
US Private Placement debt and related hedging instruments is £0.546 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 related income tax credit of £1.501 million in relation to
certain exceptional charges.
The net cash flow impact in the current year for exceptional items and the
disposal of equity accounted investments was an outflow of £29.498 million
(2021: an outflow of £29.358 million).
6. Earnings per Ordinary Share
2022 2021
£'000 £'000
Profit attributable to owners of the Parent 312,373 292,619
Amortisation of intangible assets after tax 67,919 53,234
Exceptionals after tax (note 5) 43,841 35,007
Adjusted profit after taxation and non-controlling interests 424,133 380,860
2022 2021
Basic earnings per ordinary share pence pence
Basic earnings per ordinary share 316.78p 297.04p
Amortisation of intangible assets after tax 68.88p 54.04p
Exceptionals after tax 44.45p 35.54p
Adjusted basic earnings per ordinary share 430.11p 386.62p
Weighted average number of ordinary shares in issue (thousands) 98,610 98,510
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.
2022 2021
Diluted earnings per ordinary share pence pence
Diluted earnings per ordinary share 316.36p 296.62p
Amortisation of intangible assets after tax 68.79p 53.96p
Exceptionals after tax 44.40p 35.49p
Adjusted diluted earnings per ordinary share 429.55p 386.07p
Weighted average number of ordinary shares in issue (thousands) 98,739 98,650
The earnings used for the purposes of the diluted earnings per ordinary share
calculations were £312.373 million (2021: £292.619 million) and £424.133
million (2021: £380.860 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 year ended 31 March 2022 was 98.739
million (2021: 98.650 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:
2022 2021
'000 '000
Weighted average number of ordinary shares in issue 98,610 98,510
Dilutive effect of options and awards 129 140
Weighted average number of ordinary shares for diluted earnings per share 98,739 98,650
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.
7. Dividends
2022 2021
£'000 £'000
Final - paid 107.85 pence per share on 22 July 2021 105,417 92,478
(2021: paid 95.79 pence per share on 23 July 2020)
Interim - paid 55.85 pence per share on 10 December 2021 (2021: paid 51.95
pence per share on 9 December 2020)
55,182 51,045
160,599 143,523
The Directors are proposing a final dividend in respect of the year ended 31
March 2022 of 119.93 pence per ordinary share (£118.303 million). This
proposed dividend is subject to approval by the shareholders at the Annual
General Meeting.
8. Other Reserves
For the year ended 31 March 2022
Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2021 40,969 13,130 60,260 932 115,291
Currency translation - - 27,012 - 27,012
Movements relating to cash flow hedges - 88,776 - - 88,776
Movement in deferred tax liability on cash flow hedges (16,138) - - (16,138)
-
Share based payment 6,467 - - - 6,467
At 31 March 2022 47,436 85,768 87,272 932 221,408
For the year ended 31 March 2021
Foreign
Share based Cash flow currency
payment hedge translation Other
reserve reserve reserve reserves Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2020 34,914 (43,277) 111,527 932 104,096
Currency translation - - (51,267) - (51,267)
Movements relating to cash flow hedges - 67,961 - - 67,961
Movement in deferred tax liability on cash flow hedges (11,554) - - (11,554)
-
Share based payment 6,055 - - - 6,055
At 31 March 2021 40,969 13,130 60,260 932 115,291
9. Analysis of Net Debt
2022 2021
£'000 £'000
Non-current assets
Derivative financial instruments 118,578 121,671
Current assets
Derivative financial instruments 107,361 40,181
Cash and cash equivalents 1,394,272 1,786,556
1,501,633 1,826,737
Non-current liabilities
Derivative financial instruments (10,330) (652)
Bank borrowings (388,660) -
Unsecured Notes (1,544,822) (1,553,200)
(1,943,812) (1,553,852)
Current liabilities
Bank borrowings (67,668) (69,660)
Derivative financial instruments (28,634) (9,843)
Unsecured Notes - (149,999)
(96,302) (229,502)
Net (debt)/cash (excluding lease creditors) (419,903) 165,054
Lease creditors (non-current) (273,164) (261,617)
Lease creditors (current) (63,538) (53,607)
Total lease creditors (336,702) (315,224)
Net debt (including lease creditors) (756,605) (150,170)
An analysis of the maturity profile of the Group's net cash/(debt) (including
lease creditors) at 31 March 2022 is as follows:
Between Between
Less than 1 and 2 2 and 5 Over
1 year years years 5 years Total
At 31 March 2022 £'000 £'000 £'000 £'000 £'000
Cash and short-term deposits 1,394,272 - - - 1,394,272
Overdrafts (67,668) - - - (67,668)
Cash and cash equivalents 1,326,604 - - - 1,326,604
Unsecured Notes - (255,477) (623,835) (665,510) (1,544,822)
Bank borrowings - (388,660) - (388,660)
-
Derivative financial instruments - Unsecured Notes - 36,768 71,749 (4,450) 104,067
Derivative financial instruments - other 78,727 5,209 (1,028) - 82,908
Net cash/(debt) (excluding lease creditors) (213,500) (941,774) (669,960) (419,903)
1,405,331
Lease creditors (63,538) (55,478) (98,564) (119,122) (336,702)
Net debt (including lease creditors) 1,341,793 (268,978) (1,040,338) (789,082) (756,605)
The Group's Unsecured Notes fall due between 25 April 2023 and 4 April 2034
with an average maturity of 4.7 years at 31 March 2022. The full fair value of
a hedging derivative is allocated to the time period corresponding to the
maturity of the hedged item.
10. Post Employment Benefit Obligations
The Group's defined benefit pension schemes' assets were measured at fair
value at 31 March 2022. The defined benefit pension schemes' liabilities at 31
March 2022 were updated to reflect material movements in underlying
assumptions.
The Group's post employment benefit obligations moved from a net asset of
£8.024 million at 31 March 2021 to a net asset of £7.745 million at 31 March
2022. The movement in the net asset position primarily reflects contributions
in excess of the current service cost being more than offset by actuarial
losses recognised in the year.
11. 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 Healthcare in June 2021 of 100% of Wörner
Medizinprodukte Holding GmbH ("Wörner"), a leading supplier of medical and
laboratory products to the primary care sector in Germany and Switzerland.
Wörner sells a broad product range to approximately 20,000 customers
annually, including general practitioners, primary care centres, specialist
medical centres and laboratories;
· The acquisition by DCC LPG of 100% of Primagaz from SHV Energy in July
2021. The business focuses on the bulk and cylinder LPG markets, and serves
approximately 10,000 customers annually;
· The acquisition by DCC Retail & Oil in September 2021 of a network
of 19 retail forecourt sites in Luxembourg. Most of the sites are Gulf branded
with established convenience retail operations under the Cactus Shoppi brand
which DCC will operate. The network contains well-located, urban sites,
suitable for investment in EV fast charging infrastructure in the future;
· The acquisition of 100% of Naturgy's Irish power and gas marketing
operations by DCC LPG in December 2021. The business is a service-led supplier
of electricity and gas to large B2B energy customers and also provides a range
of services including demand side management, lighting as a service, solar PV
and PPA management. The acquisition enhances DCC's presence in the Irish
electricity and gas markets and represents an important step in its strategy
to expand its energy solutions offering across the island of Ireland; and
· The acquisition by DCC Technology of 100% of Almo Corporation ("Almo")
in December 2021. Almo is one of the largest specialist Pro AV businesses
in the United States and is a leading national distributor of consumer
appliances, consumer electronics and lifestyle products selling to
integrators, resellers, dealers, retailers and e-tailers nationwide. The
transaction represents DCC's largest acquisition to date and is a major step
in the continuing expansion of both DCC and DCC Technology in North America.
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.
Almo Others Total Total
2022 2022 2022 2021
£'000 £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 28,052 35,121 63,173 41,868
Right-of-use leased assets 7,113 24,947 32,060 9,144
Intangible assets 149,701 107,589 257,290 124,014
Deferred income tax assets 15,254 390 15,644 15
Total non-current assets 200,120 168,047 368,167 175,041
Current assets
Inventories 229,556 24,966 254,522 18,209
Trade and other receivables 113,009 87,434 200,443 30,640
Total current assets 342,565 112,400 454,965 48,849
Liabilities
Non-current liabilities
Deferred income tax liabilities (40,419) (24,275) (64,694) (10,981)
Provisions for liabilities - (7,336) (7,336) (659)
Lease creditors (3,670) (20,585) (24,255) (7,350)
Total non-current liabilities (44,089) (52,196) (96,285) (18,990)
Current liabilities
Trade and other payables (104,677) (124,659) (229,336) (48,955)
Provisions for liabilities - (91) (91) (69)
Current income tax assets/(liabilities) 5,138 (2,599) 2,539 (880)
Lease creditors (3,443) (4,120) (7,563) (1,794)
Total current liabilities (102,982) (131,469) (234,451) (51,698)
Identifiable net assets acquired 395,614 96,782 492,396 153,202
Non-controlling interests arising on acquisition - (912) (912) (323)
Goodwill 103,648 120,372 224,020 92,674
Total consideration 499,262 216,242 715,504 245,553
Satisfied by:
Cash 465,657 215,799 681,456 248,694
Net debt/(cash and cash equivalents) acquired 16,519 (29,852) (13,333) (12,462)
Net cash outflow 482,176 185,947 668,123 236,232
Acquisition related liabilities 17,086 30,295 47,381 9,321
Total consideration 499,262 216,242 715,504 245,553
The acquisition of Almo 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 period 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
Almo £'000 £'000 £'000
Non-current assets (excluding goodwill) 50,419 149,701 200,120
Current assets 348,696 (6,131) 342,565
Non-current liabilities (3,670) (40,419) (44,089)
Current liabilities (101,595) (1,387) (102,982)
Identifiable net assets acquired 293,850 101,764 395,614
Goodwill arising on acquisition 205,412 (101,764) 103,648
Total consideration 499,262 - 499,262
Book Fair value Fair
value adjustments value
Others £'000 £'000 £'000
Non-current assets (excluding goodwill) 64,355 103,692 168,047
Current assets 117,686 (5,286) 112,400
Non-current liabilities (27,967) (24,229) (52,196)
Current liabilities (128,294) (3,175) (131,469)
Identifiable net assets acquired 25,780 71,002 96,782
Non-controlling interests arising on acquisition (912) - (912)
Goodwill arising on acquisition 191,374 (71,002) 120,372
Total consideration 216,242 - 216,242
Book Fair value Fair
value adjustments value
Total £'000 £'000 £'000
Non-current assets (excluding goodwill) 114,774 253,393 368,167
Current assets 466,382 (11,417) 454,965
Non-current liabilities (31,637) (64,848) (96,285)
Current liabilities (229,889) (4,562) (234,451)
Identifiable net assets acquired 319,630 172,766 492,396
Non-controlling interests arising on acquisition (912) - (912)
Goodwill arising on acquisition 396,786 (172,766) 224,020
Total consideration 715,504 - 715,504
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 fair values within the twelve month timeframe from the date of
acquisition will be disclosable in the 2023 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.
£8.3 million 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 £9.934 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 £206.523 million. The fair
value of these receivables is £200.443 million (all of which is expected to
be recoverable) and is inclusive of an aggregate allowance for impairment of
£6.080 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 nil to
£71.0 million.
The acquisitions during the year contributed £851.115 million to revenues and
£29.596 million to profit after tax. Had all the business combinations
effected during the year occurred at the beginning of the year, total Group
revenue for the year ended 31 March 2022 would have been £18.780 billion and
total Group profit after tax would have been £345.547 million.
12. Seasonality of Operations
The Group's operations are significantly second-half weighted primarily due to
a portion of the demand for DCC's LPG and Retail & Oil products being
weather dependent and seasonal buying patterns in DCC Technology.
13. 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 2022 financial year.
14. Events after the Balance Sheet Date
As detailed on page 16, the Group will organise and report all of its energy
activities (previously DCC LPG and DCC Retail & Oil) as one reportable
segment, DCC Energy, with effect from 1 April 2022. Further information on the
establishment of DCC Energy and its strategy is available on www.dcc.ie
(http://www.dcc.ie) .
There have been no other material events subsequent to 31 March 2022 which
would require disclosure in this Report.
15. Board Approval
This report was approved by the Board of Directors of DCC plc on 16 May 2022.
Supplementary Financial Information
For the year ended 31 March 2022
Alternative Performance Measures
The Group reports certain alternative performance measures ('APMs') that are
not required under International Financial Reporting Standards ('IFRS') which
represent the generally accepted accounting principles ('GAAP') under which
the Group reports. The Group believes that the presentation of these APMs
provides useful supplemental information which, when viewed in conjunction
with our IFRS financial information, provides investors with a more meaningful
understanding of the underlying financial and operating performance of the
Group and its divisions.
These APMs are primarily used for the following purposes:
- to evaluate the historical and planned underlying results of our operations;
- to set director and management remuneration; and
- to discuss and explain the Group's performance with the investment analyst
community.
None of the APMs should be considered as an alternative to financial measures
derived in accordance with GAAP. The APMs can have limitations as analytical
tools and should not be considered in isolation or as a substitute for an
analysis of our results as reported under GAAP. These performance measures may
not be calculated uniformly by all companies and therefore may not be directly
comparable with similarly titled measures and disclosures of other companies.
The principal APMs used by the Group, together with reconciliations where the
non-GAAP measures are not readily identifiable from the financial statements,
are as follows:
Adjusted operating profit ('EBITA')
Definition
This comprises operating profit as reported in the Group Income Statement
before net operating exceptional items and amortisation of intangible assets.
Net operating exceptional items and amortisation of intangible assets are
excluded in order to assess the underlying performance of our operations. In
addition, neither metric forms part of Director or management remuneration
targets.
Calculation 2022 2021
£'000 £'000
Operating profit 458,360 422,850
Net operating exceptional items 46,534 40,495
Amortisation of intangible assets 84,340 66,898
Adjusted operating profit ('EBITA') 589,234 530,243
Adjusted operating profit before depreciation ('EBITDA')
Definition
EBITDA represents earnings before net interest, tax, depreciation on property,
plant and equipment, amortisation of intangible assets, share of equity
accounted investments' profit after tax and net exceptional items. This metric
is used to compare profitability between companies by eliminating the effects
of financing, tax environments, asset bases and business combinations history.
It is also utilised as a proxy for a company's cash flow.
Calculation 2022 2021
£'000 £'000
Adjusted operating profit ('EBITA') 589,234 530,243
Depreciation of property, plant and equipment 137,976 131,199
EBITDA 727,210 661,442
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 2022 2021
£'000 £'000
Finance costs before exceptional items (77,205) (85,639)
Finance income before exceptional items 23,075 26,253
Net interest before exceptional items (54,130) (59,386)
Interest cover - EBITDA Interest Cover
Definition
The EBITDA interest cover ratio measures the Group's ability to pay interest
charges on debt from cash flows. In order to maintain comparability with the
definitions contained in the Group's lending arrangements, EBITDA and net
interest exclude the impact arising from the adoption of IFRS 16.
Calculation 2022 2021
£'000 £'000
EBITDA 727,210 661,442
Less: impact of adoption of IFRS 16 in the current year (6,728) (5,563)
720,482 655,879
Net interest before exceptional items (54,130) (59,386)
Less: impact of adoption of IFRS 16 in the current year 9,473 9,707
(44,657) (49,679)
EBITDA interest cover (times) 16.1x 13.2x
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 2022 2021
£'000 £'000
Adjusted operating profit 589,234 530,243
Net interest before exceptional items (54,130) (59,386)
535,104 470,857
Income tax expense 79,734 62,278
Income tax attaching to net exceptionals 1,501 4,104
Deferred tax attaching to amortisation of intangible assets 16,421 13,664
Total income tax expense before exceptionals and deferred tax attaching to 97,656 80,046
amortisation of intangible assets
Effective tax rate (%) 18.3% 17.0%
Dividend cover
Definition
The dividend cover ratio measures the Group's ability to pay dividends from
earnings.
Calculation 2022 2021
pence pence
Adjusted earnings per share 430.11 386.62
Dividend 175.78 159.80
Dividend cover (times) 2.4x 2.4x
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) 2022 2021
£'000 £'000
Revenue 17,732,020 13,412,450
Currency impact 496,412 -
Revenue (constant currency) 18,228,432 13,412,450
Adjusted operating profit (constant currency)
Adjusted operating profit 589,234 530,243
Currency impact 20,872 -
Adjusted operating profit (constant currency) 610,106 530,243
Adjusted earnings per share (constant currency)
Adjusted profit after taxation and non-controlling interests 424,133 380,860
Currency impact 14,976 -
Adjusted profit after taxation and non-controlling interests (constant 439,109 380,860
currency)
Weighted average number of ordinary shares in issue ('000) 98,610 98,510
Adjusted earnings per share (constant currency) 445.30p 386.62p
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 2022 2021
£'000 £'000
Purchase of property, plant and equipment 194,353 162,879
Government grants received in relation to property, plant and equipment - (89)
Proceeds from disposal of property, plant and equipment (23,524) (15,898)
Net capital expenditure 170,829 146,892
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 (including interest) and net capital expenditure.
Calculation 2022 2021
£'000 £'000
Cash generated from operations before exceptionals 628,433 903,659
Repayment of lease creditors (75,053) (68,986)
Net capital expenditure (170,829) (146,892)
Free cash flow 382,551 687,781
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 2022 2021
£'000 £'000
Free cash flow 382,551 687,781
Interest paid (including interest relating to lease creditors) (70,103) (84,342)
Interest relating to lease creditors 9,473 9,707
Income tax paid (76,292) (62,191)
Interest received 22,759 27,930
Free cash flow (after interest and tax payments) 268,388 578,885
Cash conversion ratio
Definition
The cash conversion ratio expresses free cash flow as a percentage of adjusted
operating profit.
Calculation 2022 2021
£'000 £'000
Free cash flow 382,551 687,781
Adjusted operating profit 589,234 530,243
Cash conversion ratio (%) 65% 130%
Return on capital employed ('ROCE')
Definition
ROCE represents adjusted operating profit expressed as a percentage of the
average total capital employed.
The Group adopted IFRS 16 Leases on the transition date of 1 April 2019 using
the modified retrospective approach, meaning that comparatives were not
restated. To assist comparability with prior years, the Group presents ROCE
excluding the impact of IFRS 16 ('ROCE excl. IFRS 16') as well as ROCE
including the impact of IFRS 16 ('ROCE incl. IFRS 16'). Total capital employed
(excl. IFRS 16) represents total equity adjusted for net debt/cash (including
lease creditors), goodwill and intangibles written off, right-of-use leased
assets, acquisition related liabilities and equity accounted investments
whilst total capital employed (incl. IFRS 16) includes right-of-use leased
assets.
Similarly, adjusted operating profit is presented both excluding and including
the impact of IFRS 16. Net operating exceptional items and amortisation of
intangible assets are excluded in order to assess the underlying performance
of our operations. In addition, neither metric forms part of Director or
management remuneration targets.
ROCE (excl. IFRS 16)
Calculation 2022 2021
£'000 £'000
Total equity 2,970,563 2,705,644
Net debt (including lease creditors) 756,605 150,170
Goodwill and intangibles written off 546,813 462,473
Right-of-use leased assets (327,551) (308,863)
Equity accounted investments (26,843) (27,134)
Acquisition related liabilities (current and non-current) 96,252 84,402
4,015,839 3,066,692
Average total capital employed (excl. IFRS 16) 3,541,266 3,076,327
Adjusted operating profit 589,234 530,243
Less: impact of adoption of IFRS 16 Leases on operating profit (6,728) (5,563)
Adjusted operating profit 582,506 524,680
Return on capital employed (excl. IFRS 16) 16.5% 17.1%
ROCE (incl. IFRS 16)
Calculation 2022 2021
£'000 £'000
Total capital employed 4,015,839 3,066,692
Right-of-use leased assets 327,551 308,863
4,343,390 3,375,555
Average total capital employed (incl. IFRS 16) 3,859,473 3,382,807
Adjusted operating profit 589,234 530,243
Return on capital employed (incl. IFRS 16) 15.3% 15.7%
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 2022 2021
£'000 £'000
Net cash outflow on acquisitions during the year 668,123 236,232
Cash outflow on acquisitions which were committed to in the previous year (114,658) (22,388)
Acquisition related liabilities arising on acquisitions during the year 47,381 9,321
Acquisition related liabilities which were committed to in the previous year (21,510) (539)
Amounts committed in the current year 24,100 152,000
Committed acquisition expenditure 603,436 374,626
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 2022 2021
£'000 £'000
Inventories 1,133,666 685,950
Trade and other receivables 2,508,613 1,689,372
Less: interest receivable (170) (16)
Trade and other payables (3,468,705) (2,604,177)
Less: interest payable 13,981 11,668
Less: amounts due in respect of property, plant and equipment 18,850 13,554
Less: government grants 16 20
Net working capital 206,251 (203,629)
Working capital (days)
Definition
Working capital days measures how long it takes in days for the Group to
convert working capital into revenue.
Calculation 2022 2021
£'000 £'000
Net working capital 206,251 (203,629)
March revenue 2,267,233 1,468,052
Working capital (days) 2.8 days (4.3 days)
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