Interim / Quarterly Report • Sep 30, 2011
Interim / Quarterly Report
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Interim Report 2011 DCC is a sales, marketing, distribution and business support services Group, operating across five divisions:
| Sales, marketing and distribution businesses (87% of profits) |
Business support services (13% of profits) |
|---|---|
| DCC Energy • Oil • LPG • Fuel cards |
|
| DCC SerCom SerCom Distribution IT & entertainment products to • Retailers • Resellers • Enterprise markets |
SerCom Solutions • Outsourced procurement and supply chain management services |
| DCC Healthcare • Hospital supplies and services focussed on the medical and pharmaceutical sectors |
• Outsourced solutions to the health and beauty sector |
| DCC Environmental | • Waste management and recycling services |
| DCC Food & Beverage • Healthfoods • Indulgence foods and beverages |
• Chilled and frozen logistics |
DCC currently employs approximately 8,300 people and is listed under Support Services on the Irish and London stock exchanges.
DCC's strategy is to grow a sustainable, diversified business through concentrating on those activities where it has established, or has the opportunity to establish, leadership positions (i.e. typically number 1 or 2) in its chosen markets.
| RESULTS HIGHLIGHTS | ||
|---|---|---|
| € | Reported | Change on prior year Constant currency† |
| 4,395.0m | +10.8% | +14.4% |
| 58.3m | -14.2% | -11.4% |
| Profit before net exceptional items, 50.0m |
-17.3% | -14.4% |
| 47.53 cent | -17.6% | -14.7% |
| 27.42 cent | +5.0% | |
| 71.0m | ||
| 145.5m | ||
| (2010: €59.8m) (2010: €98.6m) |
† all constant currency figures quoted in this report are based on retranslating 2011/12 figures at the prior year translation rate
* excluding net exceptionals and amortisation of intangible assets
As indicated in our Interim Management Statement on 15 July 2011, DCC's operating profit in its first half (which was budgeted to represent approximately 30% of the profit for the year) was affected by the impact of the very mild weather in April and May on its largest division, DCC Energy, where profits were down by €10.6 million (35.1%) on a constant currency basis.
Each of the Group's other four divisions traded ahead of or in line with the prior year. In aggregate these four divisions grew operating profit by 7.6% on a constant currency basis. Notably, there was another strong performance by SerCom Distribution, driven by the benefit of acquisitions completed in the prior year and good organic growth, with revenue ahead by 20.1% and operating profit ahead by 28.0%, both on a constant currency basis.
Overall, the Group's operating profit decreased by €7.7 million (11.4%) on a constant currency basis.
Adjusted earnings per share decreased by 14.7% on a constant currency basis.
Since April, the Group has made very good progress in its development agenda, committing incremental acquisition and capital expenditure of €146 million, and continues to be active in pursuing a range of other development opportunities.
The Board has decided to pay an interim dividend of 27.42 cent per share, representing a 5.0% increase on the interim dividend paid in the prior year.
As DCC enters its seasonally more significant second half, the economic environment within the principal geographies in which the Group operates remains challenging and has become increasingly uncertain. The outlook for the full year to 31 March 2012 is framed against this background and is based on the important assumption that the overall weather pattern for the second half will be that of a normal winter (compared to the extremely cold winter in the prior year), notwithstanding what has been a mild October.
DCC now believes that operating profit and adjusted earnings per share, both on a constant currency basis, will be approximately 5% behind the prior year.
On this basis and assuming an exchange rate of Stg£0.8800 = €1, this would result in operating profit and adjusted earnings per share being approximately 7.5% behind the prior year on a reported basis.
The acquisitions completed over the last twelve months have strengthened DCC's strategic position and with its strong balance sheet the Group remains very well placed to continue the development of its business in existing and new geographies.
Tommy Breen Chief Executive
For the six months ended 30 September 2011
A summary of the results for the six months ended 30 September 2011 is as follows:
| €'m | Change on prior year | |||
|---|---|---|---|---|
| Constant | ||||
| Reported | currency† | |||
| Revenue | 4,395.0 | +10.8% | +14.4% | |
| Operating profit* | ||||
| DCC Energy | 18.7 | -37.8% | -35.1% | |
| DCC SerCom | 15.2 | +6.7% | +10.3% | |
| DCC Healthcare | 10.5 | +0.6%** | +2.8%** | |
| DCC Environmental | 7.9 | +12.2% | +17.0% | |
| DCC Food & Beverage | 6.0 | +11.0% | +11.5% | |
| Group operating profit* | 58.3 | -14.2% | -11.4% | |
| Finance costs (net) | (8.3) | |||
| Profit before net exceptionals, | ||||
| amortisation of intangible assets and tax | 50.0 | -17.3% | -14.4% | |
| Net exceptional charge | (7.3) | |||
| Amortisation of intangible assets | (5.3) | |||
| Profit before tax | 37.4 | |||
| Taxation | (8.8) | |||
| Profit after tax | 28.6 | |||
| Adjusted earnings per share* | 47.53 cent | -17.6% | -14.7% | |
| Dividend per share | 27.42 cent | +5.0% | ||
| Operating cash flow | 71.0m | (2010: €59.8m) | ||
| Net debt at 30 September 2011 | 145.5m | (2010: €98.6m) | ||
† all constant currency figures quoted in this report are based on retranslating 2011/12 figures at the prior year translation rate * excluding net exceptionals and amortisation of intangible assets ** continuing activities (i.e. excluding Mobility and Rehabilitation)
Revenue
Group revenue increased by 14.4%, on a constant currency basis, primarily as a result of an increase in the price of oil relative to last year and the impact of acquisitions.
As indicated in the Interim Management Statement on 15 July 2011, DCC's operating profit in its first half (which was budgeted to represent approximately 30% of the profit for the year) was affected by the impact of the very mild weather in April and May on its largest division, DCC Energy, where profits were down by €10.6 million (35.1%) on a constant currency basis. Operating profit performance As indicated in the Interim Management Statement on 15 July 2011, DCC's operating profit in its first half (which was budgeted to represent approximately 30% of the profit for the year) was affected by the impact of the very mild weather in April and May on its largest division, DCC Energy, where profits were down by €10.6 million (35.1%) on a constant currency basis.
Each of the Group's other four divisions traded ahead of or in line with the prior year. In aggregate these four divisions grew operating profit by 7.6% on a constant currency basis. Notably, there was another strong performance by SerCom Distribution, driven by the benefit of acquisitions completed in the prior year and good organic growth, with revenue ahead by 20.1% and operating profit ahead by 28.0%, both on a constant currency basis. Each of the Group's other four divisions traded ahead of or in line with the prior year. In aggregate these four divisions grew operating profit by 7.6% on a constant currency basis. Notably, there was another strong performance by SerCom Distribution, driven by the benefit of acquisitions completed in the prior year and good organic growth, with revenue ahead by 20.1%
Overall, the Group's operating profit decreased by €7.7 million (11.4%) on a constant currency basis. Overall, the Group's operating profit decreased by €7.7 million (11.4%) on a constant currency
Approximately 74% of the Group's operating profit in the period was denominated in sterling. The average exchange rate at which sterling profits were translated during the period was Stg£0.8851 = €1, compared to an average translation rate of Stg£0.8476 = €1 for the same period in the prior year, a reduction of 4% which resulted in an adverse translation impact on Group operating profit of €1.9 million. Consequently on a reported basis operating profit decreased by 14.2%. Approximately 74% of the Group's operating profit in the period was denominated in sterling. The average exchange rate at which sterling profits were translated during the period was Stg£0.8851 = €1, compared to an average translation rate of Stg£0.8476 = €1 for the same period in the prior year, a reduction of 4% which resulted in an adverse translation impact on Group operating profit of €1.9 million. Consequently on a reported basis operating profit
The benefits of cost efficiencies achieved across the Group in prior years were maintained, with Group operating costs modestly lower than the prior year (on a constant currency basis and adjusted for the impact of acquisitions and disposals). The benefits of cost efficiencies achieved across the Group in prior years were maintained, with Group operating costs modestly lower than the prior year (on a constant currency basis and
Net finance costs for the period increased to €8.3 million (2010: €7.4 million) primarily as a result of higher average net debt levels. The Group's net debt averaged €170 million during the period compared to €155 million during the six months ended 30 September 2010. Finance costs (net) Net finance costs for the period increased to €8.3 million (2010: €7.4 million) primarily as a result of higher average net debt levels. The Group's net debt averaged €170 million during the period compared to €155 million during the six months ended 30 September 2010.
Profit before net exceptionals, amortisation of intangible assets and tax of €50.0 million decreased by 14.4% on a constant currency basis (a decrease of 17.3% on a reported basis). Profit before net exceptionals, amortisation of intangible assets and tax Profit before net exceptionals, amortisation of intangible assets and tax of €50.0 million decreased
The Group incurred a net exceptional charge before tax of €7.3 million as follows: Net exceptional charge and amortisation of intangible assets The Group incurred a net exceptional charge before tax of €7.3 million as follows:
| Total Total €'m €'m |
|
|---|---|
| Gain on restructuring of pension arrangements Gain on restructuring of pension arrangements Acquisition costs Acquisition costs Impairment of subsidiary goodwill and associate company |
2.7 2.7 (1.7) (1.7) |
| Impairment of subsidiary goodwill and associate company investment investment Reorganisation costs and other Reorganisation costs and other |
(3.1) (3.1) (5.2) (5.2) |
| Total Total |
(7.3) (7.3) |
Restructuring of certain of the Group's pension arrangements during the year gave rise to an exceptional gain of €2.7 million. Restructuring of certain of the Group's pension arrangements during the year gave rise to an exceptional gain of €2.7 million.
IFRS 3 (revised) requires that the professional and tax costs (such as stamp duty) relating to the evaluation and completion of an acquisition are expensed in the Income Statement whereas previously they were capitalised as part of the acquisition cost. During the first half these costs amounted to €1.7 million. IFRS 3 (revised) requires that the professional and tax costs (such as stamp duty) relating to the evaluation and completion of an acquisition are expensed in the Income Statement whereas previously they were capitalised as part of the acquisition cost. During the first half these costs amounted to €1.7 million.
There was a non-cash charge of €3.1 million in relation to the impairment of the carrying value of a subsidiary which was disposed of after the period end and of the carrying value of an associated company.
The balance of the net exceptional charge relates primarily to restructuring costs in one of the Group's Irish Food & Beverage subsidiaries and the integration costs of recently acquired businesses.
The charge for the amortisation of intangible assets was €5.3 million (2010: €5.0 million).
The effective tax rate for the Group was 20%, the same as for the six months ended 30 September 2010, and compares to 21% for the full year ended 31 March 2011, the reduction being primarily due to a reduction in the UK corporation tax rate.
Adjusted earnings per share of 47.53 cent decreased by 14.7% on a constant currency basis (a decrease of 17.6% on a reported basis).
The Board has decided to increase the interim dividend by 5.0% to 27.42 cent per share. This dividend will be paid on 2 December 2011 to shareholders on the register at the close of business on 18 November 2011.
As with its operating profit, the Group's cash flow is weighted towards its second half. The cash flow generated by the Group for the six months ended 30 September 2011 can be summarised as follows:
| 2011 €'m |
2011 €'m |
2010 €'m |
2010 €'m |
|---|---|---|---|
| 58.3 | 67.9 | ||
| 48.3 (44.6) (11.0) (1.6) (1.7) |
(10.6) | 11.5 (39.7) (6.7) (0.9) (0.2) |
(36.0) |
| 23.3 | 27.9 | ||
| 71.0 | 59.8 | ||
| (25.9) (33.7) 11.4 |
(27.4) (24.2) 8.2 |
||
Working capital remained tightly controlled with net working capital days at 30 September 2011 of 5.4 days compared to 5.9 days at 30 September 2010.
Including acquisitions committed to since 30 September 2011, committed acquisition and capital expenditure amounted to €145.8 million, as follows:
| Acquisitions €'m |
Capex €'m |
Total €'m |
|
|---|---|---|---|
| DCC Energy | 78.2 | 15.5 | 93.7 |
| DCC SerCom DCC Healthcare |
- 10.5 |
1.3 2.3 |
1.3 12.8 |
| DCC Environmental | 31.2 | 5.3 | 36.5 |
| DCC Food & Beverage | - . | 1.5 | 1.5 |
| Total | 119.9 | 25.9 | 145.8 |
Committed acquisition expenditure, from 1 April 2011 up to the date of this report, amounted to €119.9 million.
On 31 October 2011, DCC Energy completed the acquisition of certain oil distribution assets formerly owned by Total in Britain, the Isle of Man and the Channel Islands for a debt/cash free consideration of approximately €67 million. These businesses, which employ 550 people and sold 1.5 billion litres of fuel in 2010, comprise the following:
This acquisition represents a further significant step in DCC's growth strategy in oil distribution in Britain and considerably extends DCC Energy's presence in England and Wales. DCC has agreed certain undertakings with the UK Office of Fair Trading ("OFT"), the effect of which is that the Total Butler business will be held separate from DCC's existing oil distribution businesses in Britain pending completion by the OFT of a review of the acquisition of the business.
During the period, DCC Energy also completed the acquisition of a number of smaller oil distributors in Britain, Austria and Northern Ireland.
In May 2011, DCC Healthcare invested €9 million in acquiring the business, product licences and certain other assets of Neolab Limited, a British generic pharmaceuticals business based in Hampshire. The Neolab business is involved in the sourcing, registration, sales, marketing and distribution of generic pharmaceuticals and sells into the British community pharmacy sector under the Neolab and private label brands. Its portfolio covers a broad range of therapy areas including analgesia, respiratory, cardiology and psychiatry. There is a good strategic fit between the Neolab business and DCC Healthcare's existing pharma activities and the two businesses were integrated, which will deepen DCC's product registration expertise, broaden its product portfolio and open up new channels to market and supplier relationships. The Neolab product range and pipeline of new product registrations is well placed to benefit from market trends towards generic prescribing.
On 23 June 2011, DCC Environmental Britain Limited announced the acquisition of Oakwood Fuels Limited for an initial consideration of €11 million with additional amounts to be paid in future years based on the performance of the business. Oakwood is a British waste oil and hazardous waste collection, processing and recycling business based in Nottinghamshire. It collects waste lubricant oil and hazardous waste from businesses in a variety of sectors and converts the waste oil to processed fuel oil which is then sold to customers for use in a number of applications, including road surfacing operations, aggregate drying, industrial and agricultural drying, power stations, large boilers and furnaces. This acquisition broadens DCC Environmental's service offering into additional complementary waste streams in Britain and capitalises on the trend towards more sustainable waste management and in particular increased waste recovery and recycling. In August 2011, DCC Environmental Britain Limited also completed the acquisition of Maxi Waste Limited, a small recycling business operating from two facilities in Leicester.
The cash outflow on acquisitions in the six months to 30 September 2011, which was €65 million, includes only those acquisitions completed during the six months ended 30 September 2011 and deferred acquisition payments already provided for. This includes the completion on 30 September 2011 of the acquisition of Pace Fuelcare, which had been announced in February 2011.
Net capital expenditure in the first half of €25.9 million (2010: €27.4 million) compares to a depreciation charge of €26.8 million (2010: €25.9 million).
DCC's financial position remains very strong. At 30 September 2011, the Group had net debt of €145.5 million and total equity of €929.5 million. DCC has significant cash resources and relatively long term debt maturities. Substantially all of the Group's debt has been raised in the US private placement market with an average credit margin of 1.23% over floating Euribor/Libor and an average maturity of 5.5 years from 30 September 2011.
As DCC enters its seasonally more significant second half, the economic environment within the principal geographies in which the Group operates remains challenging and has become increasingly uncertain. The outlook for the full year to 31 March 2012 is framed against this background and is based on the important assumption that the overall weather pattern for the second half will be that of a normal winter (compared to the extremely cold winter in the prior year), notwithstanding what has been a mild October.
DCC now believes that operating profit and adjusted earnings per share, both on a constant currency basis, will be approximately 5% behind the prior year.
On this basis and assuming an exchange rate of Stg£0.8800 = €1, this would result in operating profit and adjusted earnings per share being approximately 7.5% behind the prior year on a reported basis.
The acquisitions completed over the last twelve months have strengthened DCC's strategic position and with its strong balance sheet the Group remains very well placed to continue the development of its business in existing and new geographies.
| DCC Energy | Change on prior year | |||
|---|---|---|---|---|
| 2011 | 2010 | Reported | Constant Currency |
|
| Revenue | €3,133.3m | €2,808.6m | +11.6% | +15.4% |
| Operating profit | €18.7m | €30.1m | -37.8% | -35.1% |
DCC Energy had a difficult first half, with operating profit 35.1% (€10.6 million) behind the prior year on a constant currency basis, as the business was significantly impacted by the very mild weather conditions in the first quarter.
Since the start of the calendar year, average temperatures in Britain and Ireland have been significantly warmer than the prior year and the 30 year average. This mild weather, in conjunction with the high price of product and the difficult economic environment, adversely impacted demand which resulted in spare capacity in the industry, leading to pressure on margins generally.
DCC Energy sold 3.2 billion litres of product during the first half, a decrease of 2.7% over the first half of the prior year. Organically, volumes declined by 4.9% on the prior year.
In the oil business in Britain and Ireland, heating oil volumes and margins were lower than the prior year reflecting the impact of the mild weather. DCC Energy's oil distribution businesses in Continental Europe (Denmark and Austria) performed well during the period, being less impacted by weather factors.
As with the oil businesses, demand in the LPG business for heating products was weak, with overall volumes down by 4.6%. The business also experienced a less favourable product pricing environment.
The fuel card business in Britain had a good first half and further strengthened its market share.
DCC Energy made excellent progress towards its key strategic objective of consolidating its position in the British oil distribution market, including the completion of the acquisition of Pace Fuelcare, a 455 million litre oil distribution business which operates from 19 locations across southern England (completed on 30 September 2011). On 31 October 2011, DCC Energy completed the acquisition of certain oil distribution assets previously owned by Total in Britain, the Isle of Man and the Channel Islands. The Total businesses sold in aggregate 1.5 billion litres of product in 2010 to a broad range of dealer owned dealer operated retail service stations, commercial, industrial, agricultural and domestic customers.
DCC Energy is at the very early stages of developing a presence in the alternative energy sector with an initial focus on the provision of energy solutions to customers across the division, allowing them to reduce their carbon footprint. DCC Energy has recently acquired a small business in Britain which distributes a broad range of alternative energy products including ground and air source heat pumps, solar panels and energy control systems to domestic and commercial customers.
DCC Energy has welcomed the publication (on 18 October 2011) by the UK Office of Fair Trading ("OFT") of its Market Study into the off-grid energy sector. In particular DCC Energy welcomes the following findings from the study in relation to the Heating Oil market:
The full Market Study Report can be found at http://www.oft.gov.uk/OFTwork/marketswork/completed/off-grid.
The outlook for DCC Energy, as it enters the seasonally more significant second half of its financial year, is set against the important assumption that there will be a return to a more normal weather pattern compared to the very mild conditions encountered so far this year. On this basis, DCC Energy continues to anticipate that operating profit on a constant currency basis for the year to 31 March 2012 will be behind the prior year, which benefited from an extremely cold winter.
| DCC SerCom | Change on prior year | |||
|---|---|---|---|---|
| 2011 | 2010 | Reported | Constant Currency |
|
| Revenue | €910.5m | €799.2m | +13.9% | +16.9% |
| Operating profit | €15.2m | €14.3m | +6.7% | +10.3% |
| Operating margin | 1.7% | 1.8% |
DCC SerCom achieved strong operating profit growth of 10.3% on a constant currency basis driven by another excellent performance in SerCom Distribution which generated revenue growth of 20.1% and operating profit growth of 28.0% also both on a constant currency basis, reflecting the benefit of acquisitions completed in the prior year and good organic growth.
DCC SerCom's Retail distribution business achieved strong profit growth as a result of a full six months contribution from Comtrade in France (which was acquired in the prior year). The businesses in Britain and Ireland continued to invest in their product and service offerings, including logistics and web fulfilment, but were held back somewhat by the weak home entertainment market. The Retail business in France had an excellent result reflecting good organic growth and the acquisition of Comtrade.
DCC SerCom's Reseller distribution business had an excellent first half, achieving significant profit growth with strong organic growth complemented by the acquisition of Advent Data (announced in March 2011). The business made further market share gains in the distribution of consumer IT products and also benefited from a number of development initiatives undertaken during the first half, including the introduction of new suppliers to support its networking and mobile communications business units.
DCC SerCom's Enterprise business achieved excellent operating profit growth with improved performances in France and Spain and the benefit of a full six months contribution from Codework, the UK business acquired in September 2010.
DCC SerCom's Supply Chain Management business experienced a very challenging first half and operating profit declined significantly as a result of reduced demand from a number of its major customers. Steps have been taken to address the cost base and the business has recently won a new contract which will contribute to the second half.
Despite a challenging economic environment in its principal markets, DCC SerCom anticipates that strong constant currency operating profit growth will be achieved for the year to 31 March 2012, reflecting the benefit of recent acquisitions and good business development activity.
| DCC Healthcare | Change on prior year | |||
|---|---|---|---|---|
| 2011 | 2010 | Reported | Constant Currency |
|
| Revenue | €153.8m | €166.3m | -7.5% | -4.6% |
| Operating profit | €10.5m | €11.1m | -5.9% | -3.9% |
| Operating margin | 6.8% | 6.7% |
| Revenue | €153.8m | €153.9m | +0.0% | +3.1% |
|---|---|---|---|---|
| Operating profit | €10.5m | €10.4m | +0.6% | +2.8% |
| Operating margin | 6.8% | 6.8% |
DCC Healthcare increased operating profit from continuing activities by 2.8% on a constant currency basis, against a challenging trading background, particularly in Ireland.
DCC Hospital Supplies & Services operated in a difficult environment in Ireland, where budgetary constraints within the public healthcare system have continued to reduce demand and increase price pressure. DCC strengthened its position in the Pharma sector in Britain in May through the acquisition of the business and certain assets of Neolab, a British generic pharma business, which boosted revenues in the first half and will contribute to profitability in the second half. While DCC Hospital Supplies & Services maintained its revenue levels, including achieving good growth in certain categories of medical consumables, margin was impacted by the market conditions in Ireland.
DCC Health & Beauty Solutions generated excellent revenue and profit growth in nutraceuticals driven by further revenue growth in international markets; however, overall profit was held back by the impact on its beauty operations of destocking by one of its important customers.
While pressure on healthcare spending in Ireland will continue to impact DCC Hospital Supplies & Services, DCC Health & Beauty Solutions expects to generate profit growth in the second half. Overall, DCC Healthcare expects operating profit from continuing activities for the year to 31 March 2012, on a constant currency basis, to be broadly in line with the prior year.
| DCC Environmental | Change on prior year | |||
|---|---|---|---|---|
| 2011 | 2010 | Reported | Constant Currency |
|
| Revenue | €65.4m | €53.4m | +22.5% | +27.1% |
| Operating profit | €7.9m | €7.0m | +12.2% | +17.0% |
| Operating margin | 12.0% | 13.1% |
DCC Environmental generated an increase in operating profit of 17.0% on a constant currency basis, benefiting from the first time contribution from Oakwood, which has performed strongly since its acquisition in June 2011.
Overall the business in Britain performed satisfactorily in the first half and successfully increased the volume of waste diverted from landfill. Oakwood is a waste oil and hazardous waste collection, processing and recycling business. The waste lubricant oil collected is converted to processed fuel oil, which is then sold to customers for use in a number of industrial applications. This acquisition broadens DCC Environmental's service offering in Britain into additional complementary waste streams and capitalises on the trend towards more sustainable waste management and in particular increased waste recovery and recycling. The business also added two materials recycling facilities in Leicester through the acquisition of Maxi Waste in August 2011.
The business in Ireland performed in line with the prior year in what continues to be a challenging market.
DCC Environmental anticipates that it will report a very strong increase in constant currency operating profit for the year to 31 March 2012.
| DCC Food & Beverage | Change on prior year | |||
|---|---|---|---|---|
| 2011 | 2010 | Reported | Constant Currency |
|
| Revenue | €132.0m | €138.3m | -4.5% | -3.5% |
| Operating profit | €6.0m | €5.4m | +11.0% | +11.5% |
| Operating margin | 4.5% | 3.9% |
Operating profit in DCC Food & Beverage for the first half increased by 11.5% on a constant currency basis, primarily as a result of a good performance in Indulgence Foods.
Indulgence Foods delivered very good operating profit growth benefiting from the prior year's acquisition of the Goodall's and YR brands and tight cost control. In Healthfoods, the Kelkin brand continues to grow as it expands its range of "healthy choice" products, although sales of certain third party agency brands declined.
The Frozen & Chilled logistics business performed in line with the prior year. However, since the end of the first half it has lost a major contract and consequently DCC Food & Beverage anticipates a decline in operating profit in the year to 31 March 2012.
This report 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 risks and uncertainties. DCC believes that its expectations and assumptions with respect to these forward-looking statements are reasonable. However, because they involve risk and uncertainty, which are in some cases beyond DCC's control, actual results or performance may differ materially from those expressed or implied by such forward-looking information.
The Board is responsible for the Group's risk management systems, which are designed to identify, manage and mitigate potential material risks to the achievement of the Group's strategic and business objectives. Details of the principal strategic, operational, compliance and financial risks facing the Group are set out on pages 54 to 55 of the 2011 Annual Report. These risks continue to be the principal risks and uncertainties facing the Group for the remaining six months of the financial year.
| j |
|---|
| (257,899) (289,748) (22,758) (10,962) 174.48c 173.90c 203.15c 202.48c 32,600 216,970 206,008 145,109 (19,827) (12,650) (12,650) (1,623) (14,273) (1,354) (15,627) Exceptionals €'000 - - - - - 7,177 - - - Pre (7,925,798) (257,899) (289,748) (2,931) (10,962) (50,517) (239) (42,417) exceptionals €'000 8,680,573 754,775 25,423 229,620 218,658 35,939 161,424 203,841 Total €'000 (3,632,966) (122,795) (148,632) (8,668) (5,042) (27,200) (146) (12,562) 41.19c 41.05c 57.65c 57.46c 34,218 379 34,597 332,805 7,588 60,298 55,256 34,597 19,249 47,159 3,965,771 Exceptionals €'000 (7,573) (7,573) (7,573) (602) (8,175) (1,354) (9,529) - - - - - - - - - Pre (1,095) (5,042) (26,598) (146) (11,208) (3,632,966) (122,795) (148,632) exceptionals €'000 332,805 7,588 62,829 19,249 55,334 44,126 3,965,771 67,871 (4,075,294) (12,798) (5,337) (24,404) (1,095) (8,818) (109,869) (156,698) 33.86c 33.75c 47.53c 47.38c Total €'000 4,395,045 9,970 50,356 45,019 17,860 37,380 28,562 28,227 335 28,562 319,751 Exceptionals (note 6) €'000 (10,695) (7,900) (7,900) (1,068) (7,238) (7,238) - - - - - 2,795 - - 1,730 - Pre (4,075,294) (109,869) (156,698) (2,103) (5,337) (24,404) (27) (8,818) exceptionals €'000 4,395,045 7,175 58,256 52,919 16,130 44,618 35,800 319,751 Notes Adjusted earnings per ordinary share Operating profit before amortisation 5 5 7 8 8 8 8 Profit after tax for the financial period Share of associates' loss after tax Selling and distribution expenses Amortisation of intangible assets Earnings per ordinary share Other operating expenses Administration expenses Non-controlling interests Other operating income Owners of the Parent of intangible assets the financial period Income tax expense Profit attributable to: Profit after tax for Profit before tax Operating profit Finance income Finance costs Cost of sales Gross profit Revenue Diluted Diluted Basic Basic |
Unaudited 6 months ended 30 September 2011 |
Unaudited 6 months ended 30 September 2010 |
Audited year ended 31 March 2011 |
||||
|---|---|---|---|---|---|---|---|
| 8,680,573 | |||||||
| (7,925,798) 754,775 |
|||||||
| (52,140) 35,939 |
|||||||
| 189,568 | |||||||
| (43,771) | |||||||
| 145,797 | |||||||
| 145,797 | |||||||
| Unaudited 6 months ended 30 Sept. 2011 €'000 |
Unaudited 6 months ended 30 Sept. 2010 €'000 |
Audited year ended 31 March 2011 €'000 |
|
|---|---|---|---|
| Profit for the period | 28,562 | 34,597 | 145,797 |
| Other comprehensive income: Currency translation effects Group defined benefit pension obligations: |
14,533 | 25,278 | 4,636 |
| - actuarial loss | (7,612) | (11,262) | (2,590) |
| - movement in deferred tax asset | 997 | 1,433 | 336 |
| (Losses)/gains relating to cash flow hedges | (119) | 2,197 | 1,623 |
| Movement in deferred tax liability on cash flow hedges Other comprehensive income for the period, net of tax |
43 7,842 |
(437) 17,209 |
(341) 3,664 |
| Total comprehensive income for the period | 36,404 | 51,806 | 149,461 |
| Attributable to: | |||
| Owners of the Parent | 36,069 | 51,427 | 148,773 |
| Non-controlling interests | 335 | 379 | 688 |
| 36,404 | 51,806 | 149,461 |
| Unaudited 30 Sept. 2011 |
Unaudited 30 Sept. 2010 |
Audited 31 March 2011 |
||
|---|---|---|---|---|
| Notes | €'000 | €'000 | €'000 | |
| ASSETS | ||||
| Non-current assets Property, plant and equipment Intangible assets Investments in associates |
409,918 708,989 1,186 |
385,027 625,379 2,247 |
395,485 636,114 2,281 |
|
| Deferred income tax assets | 9,783 | 9,961 | 9,328 | |
| Derivative financial instruments | 150,804 | 136,017 | 84,376 | |
| 1,280,680 | 1,158,631 | 1,127,584 | ||
| Current assets Inventories |
295,662 | 254,940 | 248,129 | |
| Trade and other receivables | 1,026,838 | 873,241 | 1,034,275 | |
| Derivative financial instruments | 2,356 | 3,304 | 3,562 | |
| Cash and cash equivalents | 617,617 | 682,046 | 700,340 | |
| 1,942,473 | 1,813,531 | 1,986,306 | ||
| Total assets | 3,223,153 | 2,972,162 | 3,113,890 | |
| EQUITY Capital and reserves attributable to owners of the Parent |
||||
| Equity share capital | 22,057 | 22,057 | 22,057 | |
| Share premium account | 124,687 | 124,687 | 124,687 | |
| Other reserves - share options | 10 | 9,999 | 9,704 | 10,537 |
| Cash flow hedge reserve | 10 | 911 | 1,465 | 987 |
| Foreign currency translation reserve | 10 | (110,603) | (104,494) | (125,136) |
| Other reserves Retained earnings |
10 | 1,400 877,590 |
1,400 796,024 |
1,400 895,108 |
| 926,041 | 850,843 | 929,640 | ||
| Non-controlling interests | 3,501 | 1,976 | 2,234 | |
| Total equity | 929,542 | 852,819 | 931,874 | |
| LIABILITIES Non-current liabilities |
||||
| Borrowings | 845,587 | 838,077 | 762,244 | |
| Derivative financial instruments | 19,322 | 21,042 | 30,142 | |
| Deferred income tax liabilities | 24,831 | 21,188 | 25,434 | |
| Retirement benefit obligations | 12 | 23,740 | 34,789 | 19,335 |
| Provisions for liabilities and charges | 13,009 | 13,385 | 14,256 | |
| Deferred acquisition consideration Government grants |
73,322 2,151 |
59,027 2,847 |
65,188 2,864 |
|
| Total non-current liabilities | 1,001,962 | 990,355 | 919,463 | |
| Current liabilities | ||||
| Trade and other payables | 1,179,858 | 981,599 | 1,149,786 | |
| Current income tax liabilities | 40,828 | 67,395 | 59,427 | |
| Borrowings Derivative financial instruments |
48,502 2,898 |
59,715 1,125 |
40,542 533 |
|
| Provisions for liabilities and charges | 4,822 | 2,217 | 3,109 | |
| Deferred acquisition consideration | 14,741 | 16,937 | 9,156 | |
| Total current liabilities | 1,291,649 | 1,128,988 | 1,262,553 | |
| Total liabilities | 2,293,611 | 2,119,343 | 2,182,016 | |
| Total equity and liabilities | 3,223,153 | 2,972,162 | 3,113,890 | |
| Net debt | 11 | (145,532) | (98,592) | (45,183) |
| For the six months ended 30 September 2011 | |||||||
|---|---|---|---|---|---|---|---|
| Equity | Attributable to owners of the Parent Share |
Other | Non | ||||
| share | premium | Retained | reserves | controlling | Total | ||
| capital | account | earnings | (note 10) | Total | interests | equity | |
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
| At beginning of period | 22,057 | 124,687 | 895,108 (112,212) | 929,640 | 2,234 | 931,874 | |
| Profit for the period | - | - | 28,227 | - | 28,227 | 335 | 28,562 |
| Currency translation | - | - | - | 14,533 | 14,533 | - | 14,533 |
| Group defined benefit pension obligations: | |||||||
| - actuarial loss | - | - | (7,612) | - | (7,612) | - | (7,612) |
| - movement in deferred tax asset | - | - | 997 | - | 997 | - | 997 |
| Losses relating to cash flow hedges | - | - | - | (119) | (119) | - | (119) |
| Movement in deferred tax liability on cash flow hedges | - | - | - | 43 | 43 | - | 43 |
| Total comprehensive income | - | - | 21,612 | 14,457 | 36,069 | 335 | 36,404 |
| Re-issue of treasury shares | - | - | 931 | - | 931 | - | 931 |
| Share based payment | - | - | - | (538) | (538) | - | (538) |
| Dividends | - | - | (40,061) | - | (40,061) | - | (40,061) |
| Other movements in non-controlling interests | - | - | - | - | - | 932 | 932 |
| At end of period | 22,057 | 124,687 | 877,590 | (98,293) | 926,041 | 3,501 | 929,542 |
| For the six months ended 30 September 2010 | Attributable to owners of the Parent | ||||||
|---|---|---|---|---|---|---|---|
| Equity | Share | Other | Non | ||||
| share | premium | Retained | reserves | controlling | Total | ||
| capital | account | earnings | (note 10) | Total | interests | equity | |
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
| At beginning of period | 22,057 | 124,687 | 806,452 | (119,519) | 833,677 | 3,249 | 836,926 |
| Profit for the period | - | - | 34,218 | - | 34,218 | 379 | 34,597 |
| Currency translation | - | - | - | 25,278 | 25,278 | - | 25,278 |
| Group defined benefit pension obligations: | |||||||
| - actuarial loss | - | - | (11,262) | - | (11,262) | - | (11,262) |
| - movement in deferred tax asset | - | - | 1,433 | - | 1,433 | - | 1,433 |
| Gains relating to cash flow hedges | - | - | - | 2,197 | 2,197 | - | 2,197 |
| Movement in deferred tax liability on cash flow hedges | - | - | - | (437) | (437) | - | (437) |
| Total comprehensive income | - | - | 24,389 | 27,038 | 51,427 | 379 | 51,806 |
| Re-issue of treasury shares | - | - | 1,479 | - | 1,479 | - | 1,479 |
| Share based payment | - | - | - | 556 | 556 | - | 556 |
| Dividends | - | - | (36,296) | - | (36,296) | - | (36,296) |
| Other movements in non-controlling interests | - | - | - | - | - | (1,652) | (1,652) |
| At end of period | 22,057 | 124,687 | 796,024 | (91,925) | 850,843 | 1,976 | 852,819 |
| For the year ended 31 March 2011 | Attributable to owners of the Parent | ||||||
|---|---|---|---|---|---|---|---|
| Equity | Share | Other | Non | ||||
| share | premium | Retained | reserves | controlling | Total | ||
| capital | account | earnings | (note 10) | Total | interests | equity | |
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
| At beginning of period | 22,057 | 124,687 | 806,452 | (119,519) | 833,677 | 3,249 | 836,926 |
| Profit for the period | - | - | 145,109 | - | 145,109 | 688 | 145,797 |
| Currency translation | - | - | - | 4,636 | 4,636 | - | 4,636 |
| Group defined benefit pension obligations: | |||||||
| - actuarial loss | - | - | (2,590) | - | (2,590) | - | (2,590) - |
| - movement in deferred tax asset | - | - | 336 | - | 336 | - | -336 |
| Gains relating to cash flow hedges | - | - | - | 1,623 | 1,623 | - | 1,623 - |
| Movement in deferred tax liability on cash flow hedges | - | - | - | (341) | (341) | - | (341) - |
| Total comprehensive income | - | - | 142,855 | 5,918 | 148,773 | 688 | 149,461 |
| Re-issue of treasury shares | - | - | 3,835 | - | 3,835 | - | 3,835 - |
| Share based payment | - | - | - | 1,389 | 1,389 | - | 1,389 - |
| Dividends | - | - | (58,034) | - | (58,034) | - | (58,034) - |
| Other movements in non-controlling interests | - | - | - | - | - | (1,703) | (1,703) |
| At end of period | 22,057 | 124,687 | 895,108 | (112,212) | 929,640 | 2,234 | 931,874 |
| Unaudited | Unaudited | Audited | |
|---|---|---|---|
| 6 months | 6 months | year | |
| ended | ended | ended | |
| 30 Sept. | 30 Sept. | 31 March | |
| 2011 | 2010 | 2011 | |
| €'000 | €'000 | €'000 | |
| Cash flows from operating activities | |||
| Profit for the period | 28,562 | 34,597 | 145,797 |
| Add back non-operating (income)/expense | |||
| - tax | 8,818 | 12,562 | 43,771 |
| - share of loss from associates | 1,095 | 146 | 239 |
| - net operating exceptionals | 7,900 | 7,573 | 12,650 |
| - net finance costs | 6,544 | 7,951 | 16,201 |
| Group operating profit before exceptionals | 52,919 | 62,829 | 218,658 |
| Share-based payment | (538) | 556 | 1,389 |
| Depreciation | 26,785 | 25,908 | 52,906 |
| Amortisation of intangible assets | 5,337 | 5,042 | 10,962 |
| Profit on disposal of property, plant and equipment | (435) | (491) | (818) |
| Amortisation of government grants | (299) | (318) | (730) |
| Other | (2,085) | 2,244 | (1,927) |
| Increase in working capital | (10,642) | (35,963) | (10,868) |
| Cash generated from operations | 71,042 | 59,807 | 269,572 |
| Exceptionals | (5,254) | (5,688) | (8,935) |
| Interest paid | (20,064) | (21,812) | (43,276) |
| Income tax paid | (27,511) | (19,035) | (56,343) |
| Net cash flows from operating activities | 18,213 | 13,272 | 161,018 |
| Investing activities | |||
| Inflows | |||
| Proceeds from disposal of property, plant and equipment | 2,023 | 2,397 | 5,586 |
| Government grants received | - | - | 626 |
| Proceeds on disposal of subsidiaries | - | 28,503 | 28,431 |
| Interest received | 13,872 | 16,682 | 30,809 |
| 15,895 | 47,582 | 65,452 | |
| Outflows | |||
| Purchase of property, plant and equipment | (27,971) | (29,837) | (83,381) |
| Acquisition of subsidiaries | (58,696) | (38,713) | (74,614) |
| Deferred acquisition consideration paid | (6,331) | (3,447) | (3,709) |
| (92,998) | (71,997) | (161,704) | |
| Net cash flows from investing activities | (77,103) | (24,415) | (96,252) |
| Financing activities | |||
| Inflows | |||
| Re-issue of treasury shares | 931 | 1,479 | 3,835 |
| Increase in interest-bearing loans and borrowings | - | 815 | 658 |
| 931 | 2,294 | 4,493 | |
| Outflows | |||
| Repayment of interest-bearing loans and borrowings | (5,558) | (13,529) | (21,157) |
| Repayment of finance lease liabilities | (319) | (975) | (1,234) |
| Dividends paid to owners of the Parent | (40,061) | (36,296) | (58,034) |
| Dividends paid to non-controlling interests | (196) | (196) | (219) |
| (46,134) | (50,996) | (80,644) | |
| Net cash flows from financing activities | (45,203) | (48,702) | (76,151) |
| Change in cash and cash equivalents | (104,093) | (59,845) | (11,385) |
| Translation adjustment | 7,741 | 16,167 | 2,552 |
| Cash and cash equivalents at beginning of period | 666,128 | 674,961 | 674,961 |
| Cash and cash equivalents at end of period | 569,776 | 631,283 | 666,128 |
| Cash and cash equivalents consists of: | |||
| Cash and short term bank deposits | 617,617 | 682,046 | 700,340 |
| Overdrafts | (47,841) | (50,763) | (34,212) |
| 569,776 | 631,283 | 666,128 | |
For the six months ended 30 September 2011
The Group Condensed Interim Financial Statements which should be read in conjunction with the annual financial statements for the year ended 31 March 2011 have been prepared in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency rules of the Irish Financial Services Regulatory Authority and in accordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34) as adopted by the EU.
The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of certain assets, liabilities, revenues and expenses together with disclosure of contingent assets and liabilities. Estimates and underlying assumptions are reviewed on an ongoing basis.
These condensed interim financial statements for the six months ended 30 September 2011 and the comparative figures for the six months ended 30 September 2010 are unaudited and have not been reviewed by the Auditors. The summary financial statements for the year ended 31 March 2011 represent an abbreviated version of the Group's full accounts for that year, on which the Auditors issued an unqualified audit report and which have been filed with the Registrar of Companies.
As detailed on page 81 of the Annual Report for the financial year ended 31 March 2011 the Group has amended its disclosure of the interest expense and income receivable arising on Group borrowings and related swaps. The comparative amounts for the six months ended 30 September 2010 have been presented on a consistent basis. This adjustment has no impact on the operating profit, net finance cost, profit before taxation, earnings per share or net cash flows previously reported for the six months ended 30 September 2010.
The accounting policies and methods of computation adopted in the preparation of the Group Condensed Interim Financial Statements are consistent with those applied in the Annual Report for the financial year ended 31 March 2011 and are described in those financial statements on pages 80 to 88.
The following interpretations or amended standards are mandatory for the first time for the financial year beginning 1 April 2011 but do not have any significant impact on the Group Condensed Interim Financial Statements:
The Group has also adopted the Improvements to IFRS issued by the IASB. This standard amends a number of other standards, basis of conclusions and guidance. The improvements include changes in presentation, recognition and measurement plus terminology and editorial changes. These amendments do not have a significant impact on the Group Condensed Interim Financial Statements.
The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future, a period of not less than twelve months from the date of this report. For this reason, the Directors continue to adopt the going concern basis in preparing the condensed interim financial statements.
The Group's financial statements are prepared in euro denoted by the symbol €. The exchange rates used in translating sterling Balance Sheets and Income Statement amounts were as follows:
| 6 months | 6 months | Year | |
|---|---|---|---|
| ended | ended | ended | |
| 30 Sept. | 30 Sept. | 31 March | |
| 2011 | 2010 | 2011 | |
| €1=Stg£ | €1=Stg£ | €1=Stg£ | |
| Balance Sheet (closing rate) | 0.867 | 0.860 | 0.884 |
| Income Statement (average rate) | 0.885 | 0.848 | 0.852 |
For the six months ended 30 September 2011
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as Mr. Tommy Breen, Chief Executive. The Group is primarily organised into five main operating segments: DCC Energy, DCC SerCom, DCC Healthcare, DCC Environmental and DCC Food & Beverage.
DCC Energy markets and sells oil products for commercial/industrial, transport and domestic use in Britain, Ireland and Continental Europe. DCC Energy markets and sells liquefied petroleum gas for similar uses in Britain and Ireland. DCC Energy also includes a fuel card services business.
DCC SerCom markets and sells a broad range of IT and consumer electronic products in Britain, Ireland and Continental Europe to computer resellers, high street retailers, computer superstores, on-line retailers and mail order companies. DCC SerCom also includes a supply chain management business.
DCC Healthcare markets and sells medical, surgical, laboratory and intravenous pharmaceutical products and provides related value added services to the acute care, community care and scientific sectors in Ireland and Britain. DCC Healthcare is also a provider of outsourced services to the health and beauty industry in Europe.
DCC Environmental provides a broad range of waste management and recycling services to the industrial, commercial, construction and public sectors in Britain and Ireland.
DCC Food & Beverage markets and sells food and beverages in Ireland to a broad range of customers and wine in Britain. DCC Food & Beverage also has a frozen and chilled food distribution business in Ireland.
Net finance costs and income tax are managed on a centralised basis and therefore these items are not allocated between operating segments for the purpose of presenting information to the chief operating decision maker and accordingly are not included in the detailed segmental analysis below.
The consolidated total assets of the Group as at 30 September 2011 of €3.223 billion were not materially different from the equivalent figure at 31 March 2011 and therefore the related segmental disclosure note has been omitted in accordance with IAS 34 Interim Financial Reporting.
Intersegment revenue is not material and thus not subject to separate disclosure.
| Unaudited six months ended 30 September 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|
| DCC | DCC | DCC Food | ||||||
| Energy | SerCom | DCC | DCC Healthcare Environmental & Beverage |
Total | ||||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |||
| Segment revenue | 3,133,325 | 910,483 | 153,835 | 65,370 | 132,032 | 4,395,045 | ||
| Operating profit* | 18,697 | 15,246 | 10,489 | 7,858 | 5,966 | 58,256 | ||
| Amortisation of intangible assets | (2,819) | (1,160) | (318) | (590) | (450) | (5,337) | ||
| Net operating exceptionals (note 6) | (5,008) | (548) | (781) | (170) | (1,393) | (7,900) | ||
| Operating profit | 10,870 | 13,538 | 9,390 | 7,098 | 4,123 | 45,019 |
| Unaudited six months ended 30 September 2010 | ||||||||
|---|---|---|---|---|---|---|---|---|
| DCC | DCC | DCC | DCC | DCC Food | ||||
| Energy | SerCom | Healthcare Environmental | & Beverage | Total | ||||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |||
| Segment revenue | 2,808,638 | 799,150 | 166,324 | 53,352 | 138,307 | 3,965,771 | ||
| Operating profit* | 30,067 | 14,283 | 11,145 | 7,001 | 5,375 | 67,871 | ||
| Amortisation of intangible assets | (3,528) | (244) | (327) | (943) | - | (5,042) | ||
| Net operating exceptionals (note 6) | (3,335) | (508) | (2,878) | - | (852) | (7,573) | ||
| Operating profit | 23,204 | 13,531 | 7,940 | 6,058 | 4,523 | 55,256 |
* Operating profit before amortisation of intangible assets and net operating exceptionals
For the six months ended 30 September 2011
| Audited year ended 31 March 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|
| DCC | DCC | DCC | DCC | DCC Food | ||||
| Energy | SerCom | Healthcare Environmental | & Beverage | Total | ||||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |||
| Segment revenue | 6,129,786 | 1,868,877 | 323,291 | 106,442 | 252,177 | 8,680,573 | ||
| Operating profit* | 137,307 | 46,029 | 23,203 | 11,589 | 11,492 | 229,620 | ||
| Amortisation of intangible assets | (7,145) | (944) | (800) | (2,073) | - | (10,962) | ||
| Net operating exceptionals (note 6) | (6,475) | (2,120) | (2,129) | (6) | (1,920) | (12,650) | ||
| Operating profit | 123,687 | 42,965 | 20,274 | 9,510 | 9,572 | 206,008 |
* Operating profit before amortisation of intangible assets and net operating exceptionals
| Republic of Rest of Ireland UK the World Total €'000 €'000 €'000 €'000 459,390 3,246,160 689,495 4,395,045 Operating profit 8,481 39,993 9,782 58,256 (562) (3,773) (1,002) (5,337) Amortisation of intangible assets Net operating exceptionals (note 6) (2,763) (4,896) (241) (7,900) 5,156 31,324 8,539 45,019 Unaudited six months ended 30 September 2010 Republic of Rest of Ireland UK the World Total €'000 €'000 €'000 €'000 427,801 2,966,770 571,200 3,965,771 Operating profit 11,662 46,867 9,342 67,871 Amortisation of intangible assets (358) (3,967) (717) (5,042) Net operating exceptionals (note 6) (1,018) (6,134) (421) (7,573) 10,286 36,766 8,204 55,256 Audited year ended 31 March 2011 Republic of Rest of Ireland UK the World Total €'000 €'000 €'000 €'000 919,966 6,388,742 1,371,865 8,680,573 Operating profit* 34,236 164,541 30,843 229,620 Amortisation of intangible assets (470) (8,773) (1,719) (10,962) Net operating exceptionals (note 6) (3,076) (8,582) (992) (12,650) |
Unaudited six months ended 30 September 2011 | |||||
|---|---|---|---|---|---|---|
| Segment revenue | ||||||
| Operating profit | ||||||
| Segment revenue | ||||||
| Operating profit | ||||||
| Segment revenue | ||||||
| Operating profit | 30,690 | 147,186 | 28,132 | 206,008 |
* Operating profit before amortisation of intangible assets and net operating exceptionals
For the six months ended 30 September 2011
| Unaudited 6 months ended 30 Sept. 2011 €'000 |
Unaudited 6 months ended 30 Sept. 2010 €'000 |
Audited year ended 31 March 2011 €'000 |
|
|---|---|---|---|
| Restructuring of Group defined benefit pension schemes | 2,684 | - | 4,976 |
| Impairment of subsidiary goodwill | (2,000) | - | - |
| Acquisition related fees | (1,736) | (1,746) | (3,566) |
| (Loss)/profit on disposal of subsidiaries | - | (311) | 894 |
| Cumulative foreign exchange translation losses relating to | |||
| subsidiaries disposed of | - | (3,145) | (3,145) |
| Impairment of property, plant and equipment | - | - | (6,074) |
| Restructuring costs and other | (6,848) | (2,371) | (5,735) |
| Operating exceptional items | (7,900) | (7,573) | (12,650) |
| Mark to market gains/(losses) (included in interest) | 1,730 | (602) | (1,623) |
| Impairment of associate company investment | (1,068) | - | - |
| Net exceptional items before taxation | (7,238) | (8,175) | (14,273) |
| Exceptional taxation charge | - | (1,354) | (1,354) |
| Net exceptional items after taxation | (7,238) | (9,529) | (15,627) |
The Group incurred a net exceptional charge of €7.238 million during the six months ended 30 September 2011.
Restructuring of certain of the Group's pension arrangements during the year gave rise to an exceptional gain of €2.684 million.
Most of the Group's debt has been raised in the US Private Placement market and swapped, using long term interest, currency and cross currency derivatives, to floating rate sterling and euro. The level of ineffectiveness calculated under IAS 39 by marking to market swaps designated as fair value hedges and the related fixed rate debt, together with gains or losses arising from marking to market swaps not designated as fair value hedges offset by gains or losses on that related fixed rate debt, is charged or credited as an exceptional item. In the six months ended 30 September 2011 this amounted to a total exceptional credit of €1.730 million.
IFRS 3 (revised) requires that the professional and tax costs (such as stamp duty) relating to the evaluation and completion of an acquisition are expensed in the Income Statement whereas previously they were capitalised as part of the acquisition cost. During the first half these costs amounted to €1.736 million.
There was a non-cash charge of €3.068 million in relation to the impairment of the carrying value of an associated company and the carrying value of a subsidiary which was disposed of after the half year end.
The balance of the net exceptional charge relates primarily to restructuring costs arising from the restructuring of one of the Group's Irish Food & Beverage subsidiaries and the integration of recently acquired businesses.
The taxation expense for the interim period is based on management's best estimate of the weighted average tax rate that is expected to be applicable for the full year. The Group's effective tax rate for the period was 20.0% (six months ended 30 September 2010: 20.0% and year ended 31 March 2011: 21.0%). The decrease in the effective tax rate versus the year ended 31 March 2011 is primarily due to a decrease in the standard rate of corporation tax in the UK which reduced from 28% to 26% on 1 April 2011.
For the six months ended 30 September 2011
| Unaudited 6 months ended 30 Sept. 2011 €'000 |
Unaudited 6 months ended 30 Sept. 2010 €'000 |
Audited year ended 31 March 2011 €'000 |
|
|---|---|---|---|
| Profit attributable to owners of the Parent Amortisation of intangible assets after tax Exceptionals after tax |
28,227 4,159 7,238 |
34,218 4,146 9,529 |
145,109 8,220 15,627 |
| Adjusted profit after taxation and non-controlling interests | 39,624 | 47,893 | 168,956 |
| Basic earnings per ordinary share | cent | cent | cent |
| Basic earnings per ordinary share | 33.86c | 41.19c | 174.48c |
| Adjusted basic earnings per ordinary share | 47.53c | 57.65c | 203.15c |
| Weighted average number of ordinary shares in issue (thousands) |
83,362 | 83,077 | 83,167 |
| Diluted earnings per ordinary share | cent | cent | cent |
| Diluted earnings per ordinary share | 33.75c | 41.05c | 173.90c |
| Adjusted diluted earnings per ordinary share | 47.38c | 57.46c | 202.48c |
| Diluted weighted average number of ordinary shares in issue (thousands) |
83,629 | 83,351 | 83,445 |
The adjusted figures for earnings per share are intended to demonstrate the results of the Group after eliminating the impact of amortisation of intangible assets and net exceptionals.
| Unaudited 6 months ended 30 Sept. 2011 €'000 |
Unaudited 6 months ended 30 Sept. 2010 €'000 |
Audited year ended 31 March 2011 €'000 |
|
|---|---|---|---|
| Interim - paid 26.11 cent per share on 3 December 2010 Final - paid 48.07 cent per share on 21 July 2011 (paid 43.70 cent per share on 22 July 2010) |
- 40,061 |
- 36,296 |
21,738 36,296 |
| 40,061 | 36,29636,296 | 58,034 |
On 7 November 2011, the Board approved an interim dividend of 27.42 cent per share (2010/2011 interim dividend: 26.11 cent per share). These condensed consolidated interim financial statements do not reflect this dividend payable.
For the six months ended 30 September 2011
| Share options €'000 |
Cash flow hedge reserve €'000 |
currency translation reserve €'000 |
Other reserves €'000 |
Total other reserves €'000 |
|
|---|---|---|---|---|---|
| At beginning of period | 10,537 | 987 | (125,136) | 1,400 | (112,212) |
| Currency translation | - | - | 14,533 | - | 14,533 |
| Losses relating to cash flow hedges | - | (119) | - | - | (119) |
| Movement in deferred tax liability on cash flow hedges | - | 43 | - | - | 43 |
| Share based payment | (538) | - | - | - | (538) |
| At end of period | 9,999 | 911 | (110,603) | 1,400 | (98,293) |
For the six months ended 30 September 2010 Foreign
| Share options €'000 |
Cash flow hedge reserve €'000 |
currency translation reserve €'000 |
Other reserves €'000 |
Total other reserves €'000 |
|
|---|---|---|---|---|---|
| At beginning of period | 9,148 | (295) | (129,772) | 1,400 | (119,519) |
| Currency translation | - | - | 25,278 | - | 25,278 |
| Gains relating to cash flow hedges | - | 2,197 | - | - | 2,197 |
| Movement in deferred tax liability on cash flow hedges | - | (437) | - | - | (437) |
| Share based payment | 556 | - | - | - | 556 |
| At end of period | 9,704 | 1,465 | (104,494) | 1,400 | (91,925) |
| For the year ended 31 March 2011 | Foreign | ||||
|---|---|---|---|---|---|
| Cash flow | currency | Total | |||
| Share | hedge | translation | Other | other | |
| options | reserve | reserve | reserves | reserves | |
| €'000 | €'000 | €'000 | €'000 | €'000 | |
| At beginning of period | 9,148 | (295) | (129,772) | 1,400 | (119,519) |
| Currency translation | - | - | 4,636 | - | 4,636 |
| Gains relating to cash flow hedges | - | 1,623 | - | - | 1,623 |
| Movement in deferred tax liability on cash flow hedges | - | (341) | - | - | (341) |
| Share based payment | 1,389 | - | - | - | 1,389 |
| At end of period | 10,537 | 987 | (125,136) | 1,400 | (112,212) |
For the six months ended 30 September 2011
| Unaudited 30 Sept. 2011 €'000 |
Unaudited 30 Sept. 2010 €'000 |
Audited 31 March 2011 €'000 |
|
|---|---|---|---|
| Non-current assets: | |||
| Derivative financial instruments | 150,804 | 136,017 | 84,376 |
| Current assets: | |||
| Derivative financial instruments | 2,356 | 3,304 | 3,562 |
| Cash and cash equivalents | 617,617 | 682,046 | 700,340 |
| 619,973 | 685,350 | 703,902 | |
| Non-current liabilities: | |||
| Borrowings | (553) | (93) | (763) |
| Derivative financial instruments | (19,322) | (21,042) | (30,142) |
| Unsecured Notes due 2013 to 2022 | (845,034) | (837,984) | (761,481) |
| (864,909) | (859,119) | (792,386) | |
| Current liabilities: | |||
| Borrowings | (48,502) | (59,715) | (35,263) |
| Derivative financial instruments | (2,898) | (1,125) | (533) |
| Unsecured Notes due 2011 | - | - | (5,279) |
| (51,400) | (60,840) | (41,075) | |
| Net debt (including Group share of joint ventures' net cash) | (145,532) | (98,592) | (45,183) |
| Group share of joint ventures' net cash | 1,339 | 1,163 | 1,603 |
The Group's defined benefit pension schemes' assets were measured at fair value at 30 September 2011. The defined benefit pension schemes' liabilities at 30 September 2011 have been updated to reflect material movements in the discount rate from the 31 March 2011 position.
The deficit on the Group's retirement benefit obligations increased from €19.335 million at 31 March 2011 to €23.740 million at 30 September 2011. The increase in the deficit was primarily driven by an actuarial loss on liabilities which arose from a reduction in the discount rate used to value liabilities.
The following actuarial assumptions have been made in determining the Group's retirement benefit obligation for the six months ended 30 September 2011:
| Unaudited | Unaudited | Audited | |
|---|---|---|---|
| 6 months | 6 months | year | |
| ended | ended | ended | |
| 30 Sept. | 30 Sept. | 31 March | |
| 2011 | 2010 | 2011 | |
| Discount rate | |||
| - Republic of Ireland | 5.20% | 4.80% | 5.50% |
| - UK | 5.25% | 4.95% | 5.45% |
For the six months ended 30 September 2011
The principal acquisitions completed by the Group during the six months ended 30 September 2011 were as follows:
The carrying amounts of the assets and liabilities acquired (excluding net cash acquired), determined in accordance with IFRS before completion of the business combinations, together with the fair value adjustments made to those carrying values were as follows:
| Unaudited 30 Sept. 2011 |
|
|---|---|
| €'000 | |
| Assets | |
| Non-current assets | |
| Property, plant and equipment Intangible assets - other intangible assets |
8,973 1,384 |
| Total non-current assets | 10,357 |
| Current assets | |
| Inventories | 7,466 |
| Trade and other receivables Total current assets |
43,810 51,276 |
| Equity | |
| Non-controlling interests | (1,097) (1,097) |
| Liabilities | |
| Non-current liabilities | |
| Deferred income tax liabilities | (153) |
| Provisions for liabilities and charges | (314) |
| Total non-current liabilities | (467) |
| Current liabilities | |
| Trade and other payables | (53,499) |
| Current income tax liabilities | (612) |
| Provisions for liabilities and charges | (124) |
| Total current liabilities | (54,235) |
| Identifiable net assets acquired | 5,834 |
| Intangible assets - goodwill Total consideration (enterprise value) |
70,986 76,820 |
| Satisfied by: | |
| Cash | 73,570 |
| Net cash acquired | (14,874) |
| Net cash outflow Deferred and contingent acquisition consideration |
58,696 18,124 |
| Total consideration | 76,820 |
None of the business combinations completed during the period were considered sufficiently material to warrant separate disclosure of the fair values attributable to those combinations.
There were no material adjustments made to the carrying amounts of the assets and liabilities acquired, determined in accordance with IFRS, before completion of the combinations during the financial period.
The initial assignments of fair values to identifiable net assets acquired have been performed on a provisional basis given the timing of closure of these acquisitions, with any amendments to these fair values to be finalised within a twelve month timeframe from the dates of acquisition. There were no adjustments processed during the six months ended 30 September 2011 to the fair value of business combinations completed during the preceding twelve months.
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.
For the six months ended 30 September 2011
None of the goodwill recognised in respect of acquisitions completed during the period is expected to be deductible for tax purposes.
Acquisition related costs included in the Group Income Statement amounted to €1.736 million.
No contingent liabilities were recognised on the acquisitions completed during the period or in prior financial years.
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to €44.581 million. The fair value of these receivables was €43.810 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance for impairment of €0.771 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 in the current period range from nil to €28.384 million.
The acquisitions during the period contributed €14.520 million to revenues and €1.633 million to operating profit before amortisation of intangible assets and net operating exceptionals. Had all the business combinations effected during the period occurred at the beginning of the period, total Group revenue for the six months ended 30 September 2011 would be €4,706.557 million and total Group operating profit before amortisation of intangible assets and net operating exceptionals would be €58.318 million.
The Group's operations are significantly second-half weighted primarily due to the demand for a significant proportion of DCC Energy's products being weather dependent and seasonal buying patterns in SerCom Distribution.
Goodwill is subject to impairment testing on an annual basis and more frequently if an indicator of impairment is considered to exist. Apart from the impairment of goodwill detailed in note 6, there were no other indicators of impairment during the six months ended 30 September 2011. The Board is satisfied that the carrying value of goodwill at 30 September 2011 has not been impaired.
There have been no related party transactions or changes in related party transactions other than those described in the Annual Report in respect of the year ended 31 March 2011 that could have a material impact on the financial position or performance of the Group in the six months ended 30 September 2011.
On 31 October 2011, DCC Energy completed the acquisition of certain oil distribution assets formerly owned by Total in Britain, the Isle of Man and the Channel Islands for a debt/cash free consideration of approximately €67.306 million. The carrying amounts of the assets and liabilities acquired, determined in accordance with IFRS, before completion of the combination were as follows:
| Fair | |
|---|---|
| value | |
| €'000 | |
| Non-current assets (excluding goodwill) | 20,384 |
| Current assets | 4,500 |
| Current liabilities | (923) |
| Identifiable net assets acquired | 23,961 |
| Goodwill arising on acquisition | 43,345 |
| Total consideration (enterprise value) | 67,306 |
The initial assignment of fair values to the identifiable net assets acquired has been performed on a provisional basis given the timing of closure of this transaction. There were no fair value adjustments made to the book value of assets acquired. Any amendment to these fair values will be disclosable in the 2012 Annual Report.
For the six months ended 30 September 2011
This report and further information on DCC is available at the Company's website www.dcc.ie. This report is being distributed to shareholders and will be available to the public at the Company's registered office at DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland.
We confirm that to the best of our knowledge:
Regulation 8(2) of the Transparency (Directive 2004/109/EC) Regulations 2007, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
Regulation 8(3) of the Transparency (Directive 2004/109/EC) Regulations 2007, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
On behalf of the Board
Michael Buckley Tommy Breen
Chairman Chief Executive
7 November 2011
Michael Buckley, Chairman* Tommy Breen, Chief Executive Róisín Brennan* David Byrne* Kevin Melia* John Moloney* Donal Murphy Fergal O'Dwyer Bernard Somers* Leslie Van de Walle*
* Non-executive
Gerard Whyte
Redmond McEvoy
DCC House Brewery Road Stillorgan Blackrock Co Dublin Ireland
Tel: + 353 1 2799 400 Fax: + 353 1 2831 017 Email: [email protected] Web: www.dcc.ie
Computershare Investor Services (Ireland) Limited Heron House Corrig Road Sandyford Industrial Estate Dublin 18 Ireland
Tel: + 353 1 2475 698 Fax: + 353 1 2163 151 Email: [email protected] Web: www.investorcentre.com/ie/contactus
DCC plc DCC House, Brewery Road, Stillorgan, Blackrock, Co. Dublin, Ireland. Tel: + 353 1 2799 400 Fax: + 353 1 2831 017 Email: [email protected] www.dcc.ie
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