Final Results
DCC PLC
19 May 2003
DCC PLC
19 May 2003
Results for the Year ended 31 March 2003
€
Turnover - continuing activities 2,242.9 m Up 11.0%
Operating profit* - continuing activities 111.1 m Up 13.2%
Profit before net exceptional items, 109.4 m Up 11.9%
goodwill amortisation and tax
Adjusted earnings per share* 111.0 cent Up 12.9%
Dividend per share 28.175 cent Up 15.0%
Net cash at 31 March 2003 20.1 m
Return on capital employed - excl. goodwill: 42.2% (2002: 46.3%)
- incl. goodwill: 22.0% (2002: 23.1%)
* excluding net exceptional items and goodwill amortisation
DCC, the business support services group, today announced its results for the
year ended 31 March 2003.
Commenting on the results, DCC's Chief Executive/Deputy Chairman, Jim Flavin,
said:
'DCC achieved accelerated operating profit growth from continuing activities of
18.5% in the more significant second half of its financial year, compared to
growth of 4.7% in the first half. This resulted in an excellent 13.2% increase
in operating profits from continuing activities for the year.
DCC has achieved compound annual growth in adjusted earnings per share of 19.6%
over the last five years and 18.8% over the last ten years.
DCC is commercially and financially well placed to generate continuing good
growth both organically and by acquisition.'
For reference, please contact:
Jim Flavin, Chief Executive/Deputy Chairman Tel: +353 1 2799 400
Fergal O'Dwyer, Chief Financial Officer Email: investorrelations@dcc.ie
Conor Costigan, Investor Relations Manager www.dcc.ie
FINANCIAL HIGHLIGHTS
Excellent operating profit and earnings growth
DCC achieved accelerated operating profit growth from continuing activities of
18.5% in the more significant second half of its financial year, compared to
growth of 4.7% in the first half. This resulted in an excellent 13.2% increase
in operating profits from continuing activities to €111.1 million for the year.
UK based activities contributed 53% of Group operating profits, Irish
activities 46% and other areas 1%.
Turnover from continuing activities was up 11.0% to €2,242.9 million, of which
sales of DCC's own brands accounted for approximately 42%.
Divisional operating profits were as follows:
€'m Growth Group %
• Energy 45.5 + 30.0% 41%
• IT (SerCom Distribution & SerCom Solutions) 32.9 + 7.7% 30%
• Food & Healthcare 23.2 - 14.7% 21%
• Other (principally Manor Park) 9.5 + 74.6% 8%
• Total - continuing activities 111.1 + 13.2% 100%
Both the interest charge at €5.0 million and the tax rate at 14% were unchanged
from last year.
Adjusted earnings per share (i.e. excluding net exceptional items and goodwill
amortisation) grew by 12.9% to 111.0 cent. DCC has achieved compound annual
growth in adjusted earnings per share of 19.6% over the last five years and
18.8% over the last ten years.
Development
A total of €121.0 million was committed to acquisitions and capital expenditure.
Acquisition expenditure totalled €80.3 million, principally relating to the
acquisition of British Gas LPG in November 2002 and Shannon Environmental
Services in January 2003. The cash impact of acquisitions amounted to €88.2
million, taking into account the payment of €7.9 million of deferred
consideration previously provided for.
Capital expenditure was €40.7 million (2002: €37.3 million). The depreciation
charge for the year was €29.5 million (2002: €25.3 million).
Excellent ROCE - strong balance sheet
Excellent returns on capital employed were again achieved - 42.2% excluding
goodwill and 22.0% including goodwill (2002: 46.3% and 23.1% respectively).
DCC's balance sheet remains strong with net cash of €20.1 million at 31 March
2003 (2002: €63.1m) and shareholders' funds of €429.3 million (2002: €391.4
million).
Net exceptional items
Net operating and non-operating exceptional items totalled €4.7 million. These
comprised restructuring and redundancy costs of €9.0 million, the majority of
which arose in DCC's mobility and rehabilitation healthcare business, offset by
net disposal gains of €4.3 million, principally in respect of the disposal of
the Group's 45% interest in Merits Health Products Company Limited, a Taiwanese
supplier of mobility products.
Pension costs
Pension costs, computed in accordance with Statement of Standard Accounting
Practice 24, totalled €6.2 million (2002: €5.1 million), of which €3.4 million
(2002: €3.2 million) was in respect of defined benefit schemes. Full
implementation of Financial Reporting Standard 17 - Retirement Benefits (FRS
17), which prescribes new accounting rules for defined benefit schemes, has
been deferred by the Accounting Standards Board, except for the detailed
disclosure required in the notes to the financial statements. As at 31 March
2003, the net FRS 17 pension funding liability of the Group amounted to
€15.8 million (2002: €2.7 million), which represents 1.7% of DCC's market
capitalisation (at a share price of €11.30).
OUTLOOK
DCC is commercially and financially well placed to generate continuing good
growth both organically and by acquisition.
MARKET SECTOR HIGHLIGHTS
DCC sells, markets and distributes leading own and third party brands in the
energy, IT, food and healthcare markets, principally in Britain and Ireland.
Energy (41% of operating profits)
DCC's strong growth in the energy distribution sector in recent years continued
during the current year. Operating profits were up an excellent 30.0% to €45.5
million on turnover of €864.2 million (2002: €717.6m). This profit growth was
achieved despite a background of increasing product costs. DCC has built a very
substantial energy business servicing a broad base of approximately 220,000
customers from 92 locations in Britain and Ireland.
LPG volumes increased by 56%, benefiting from a full year contribution from
Alta Gas, acquired in December 2001, and from the acquisition of British Gas
LPG in November 2002. DCC is now the second largest marketer of LPG in both
Britain and Ireland. Profit growth in LPG was excellent, although held back
somewhat as sales price increases achieved during the year did not fully offset
the impact of rising product costs.
The British Gas LPG business has performed well since acquisition. After the
busy winter months, its integration into DCC's existing Flogas business is well
underway and progressing very satisfactorily. The significant synergies
anticipated at the time of acquisition are being achieved on, or ahead of,
schedule.
DCC's volumes in the oil distribution sector increased by 7%, benefiting from a
full year contribution from Scottish Fuels, acquired in September 2001. DCC has
market leading positions in Northern Ireland and Scotland, a significant
position in the Republic of Ireland market and continues to seek suitable
opportunities to expand its operations, particularly in Britain.
DCC Environmental grew strongly across all activities and benefited from a full
year contribution from Envirotech, acquired in September 2001. Shannon
Environmental Services (SES), acquired in January 2003, operates a licensed
waste management site which will enable DCC to broaden the range of services it
offers to existing customers, as well as to broaden its customer base.
IT (SerCom Distribution & SerCom Solutions) (30% of operating profits)
DCC's IT businesses grew revenues by 7.4% to €984.8 million and achieved profit
growth of 7.7% to €32.9 million - an excellent result relative to the general
IT market.
SerCom Distribution accounted for 98% of total IT profits and generated record
operating profits for the year of €32.3 million (2002: €30.6 million) on sales
of €894.9 million (2002: €813.8 million). Profit growth accelerated to 7.1% in
the second half, compared with 3.2% growth in the first half.
DCC's British hardware distribution business grew its revenues and profits in a
market that remained depressed throughout the year. Its product focused
telesales teams have grown DCC's market share and delivered value to suppliers.
The business's efficient cost model, detailed management processes and bottom
line focused ethos enabled it to maintain strong operating margins.
DCC's British software distribution business had an excellent year with
significant revenue and profit growth across both its business and leisure
product ranges. During the year the business strengthened its position as the
leading distributor of software and related 'add-on' hardware products. This
position has been further enhanced by the addition of a number of new suppliers
including Adobe, Creative Labs and Nokia (who appointed DCC as sole distributor
of its new N-gage game deck).
The Irish IT distribution business performed very well after a challenging
prior year. The business increased its sales - strengthening its supplier
relationships - and leveraged profitability from a reduced cost base. DCC has
consolidated its position as the leading IT distributor in the Irish market.
The Continental European specialist storage distribution business, unlike DCC's
other IT distribution businesses, is weighted towards large ticket sales where
typically the ultimate customers are large corporates. This sector remained
difficult through the year. Despite this the business grew its sales, broadened
its product range and maintained its market leading position in storage
distribution in France, Spain and Portugal.
SerCom Solutions, the supply chain management business, recorded an improved
result with operating profits of €0.6 million (2002: loss of €0.1 million) on
sales of €89.9 million (2002: €103.3 million).
Food & Healthcare (21% of operating profits)
Food - DCC's Irish food business recorded like for like sales growth of 9.5% to
€185.2 million. The general trading environment in the second half of the year
was more challenging than last year, however operating profits for the year
grew by 6.8% to €11.8 million.
Sales of healthy foods, including DCC's Kelkin brand, showed continued strong
growth. In a much more competitive snack foods market, DCC recorded a solid
performance and at least maintained its share of the market. Increased
marketing activity in the wine sector drove further market penetration and
significant sales growth, particularly in the retail sector. Soft drinks
sales grew well, benefiting from the success of Robinson's 'Fruit Shoots'
product, while improved packaging helped to boost sales of catering beverages.
Healthcare - The profitability of DCC's healthcare operations was severely
impacted by the loss of its supply of Shoprider powered mobility products.
Sales from continuing activities at €161.6 million were 1.5% behind last year
and operating profits from continuing activities were down 29.3% to €11.4
million.
In hospital and community care supplies in Ireland, DCC recorded very good
profit growth. Against a background of tighter spending by Irish hospitals, the
business achieved satisfactory organic growth, benefiting from the strength and
scale of its technical salesforce and the breadth and nature of its product
range. The business is primarily focused on single use medical devices and
surgical instruments, laboratory consumables and specialist pharmaceuticals,
with a low dependency on larger capital items. Organic growth was augmented by
a strong full year contribution from TechnoPharm, the rapidly growing
distributor of specialist pharmaceutical products to acute care hospitals in
Ireland, which was acquired in February 2002.
DCC's nutraceuticals business returned to strong profit growth in the second
half of the year. The business completed an expansion of its soft gel
encapsulation facility in Wales and is currently upgrading the packing
capability at its tabletting facility in Cheshire. In addition to these
developments, the business achieved further progress in broadening its customer
base, particularly in Europe.
DCC is restructuring its mobility and rehabilitation business. Significant
procurement initiatives and cost saving measures have been implemented and
further initiatives are underway to improve the overall competitive position of
the business. DCC launched a range of powered mobility products under its own
DMA brand to replace the Shoprider range. The legal action against Pihsiang for
its breach of contract to supply Shoprider powered mobility products is being
pursued aggressively.
OTHER (8% of operating profits)
DCC's other activities, principally Manor Park Homebuilders (an associate
company) which is a leading Irish housebuilder, contributed operating profits
of €9.5 million (2002: €5.5 million). Manor Park achieved excellent profit
growth, driven by an increase in house sale closures to 500 this year, up from
370 last year, principally at its larger sites at Ongar in west Dublin and
Drogheda. Manor Park has a substantial land bank and is well placed to achieve
continued profit growth in the coming years.
DIVIDEND
The Directors are recommending a final dividend of 17.958 cent per share
which, when added to the interim dividend of 10.217 cent per share, gives a
total dividend of 28.175 cent per share for the year, a 15.0% increase over the
prior year dividend of 24.5 cent. The dividend is covered 3.9 times by adjusted
earnings per share (2002: 4.0 times). The final dividend will be paid on 14
July 2003 to shareholders on the register at the close of business on 30 May
2003.
AGM
The Company's Annual General Meeting will be held at 11.00 a.m. on Tuesday 8
July 2003 in The Berkeley Court Hotel, Lansdowne Road, Dublin 4, Ireland.
This announcement and further information on DCC is available on www.dcc.ie
MARKET SECTOR ANALYSIS
for the year ended 31 March 2003
Energy
2003 2002 Growth
Turnover €864.2m €717.6m + 20.4%
Operating profit €45.5m €35.0m + 30.0%
ROCE - excluding goodwill 41.0% 49.1%
- including goodwill 22.1% 23.8%
IT (SerCom Distribution & SerCom Solutions)
2003 2002 Growth
Turnover €984.8m €917.1m + 7.4%
Operating profit €32.9m €30.5m + 7.7%
Operating margin 3.3% 3.3%
ROCE - excluding goodwill 41.8% 43.8%
- including goodwill 24.4% 24.4%
Note - SerCom Distribution
Turnover €894.9m €813.8m + 10.0%
Operating profit €32.3m €30.6m + 5.4%
Operating margin 3.6% 3.8%
Food & Healthcare
2003 2002 Growth
Turnover - continuing activities €346.8m €348.4m - 0.4%
Operating profit - continuing €23.2m €27.1m - 14.7%
activities
Operating margin 6.7% 7.8%
ROCE - excluding goodwill 38.2% 44.3%
- including goodwill 14.6% 17.9%
Sales split - by market
- Food 53% 53%
- Healthcare 47% 47%
100% 100%
Operating profit split - by market
- Food 51% 41%
- Healthcare 49% 59%
100% 100%
ANALYSIS OF OPERATING PROFIT FROM CONTINUING ACTIVITIES
for the year ended 31 March 2003
2003 2002 Growth
__________________ ____________________ ________________________
H1 H2 FY H1 H2 FY H1 H2 FY
€'m €'m €'m €'m €'m €'m % % %
Energy 10.1 35.4 45.5 8.2 26.8 35.0 + 23.6% + 31.9% + 30.0%
IT 14.5 18.4 32.9 13.0 17.5 30.5 + 11.6% + 4.9% + 7.7%
Food & 10.8 12.4 23.2 14.5 12.6 27.1 - 25.8% - 1.8% - 14.7%
Healthcare
Other 4.4 5.1 9.5 2.3 3.2 5.5 + 94.1% + 61.0% + 74.6%
Total - 39.8 71.3 111.1 38.0 60.1 98.1 + 4.7% + 18.5% + 13.2%
continuing
SUMMARISED CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2003
2003 2002
Notes €'000 €'000
Turnover
- Continuing activities 2 2,242,884 2,020,566
- Discontinued activities 29,490 28,323
2,272,374 2,048,889
Operating profit before operating exceptional items
- Continuing activities 3 111,093 98,148
- Discontinued activities 3,239 4,564
114,332 102,712
Operating exceptional items 4 (2,898) -
Operating profit 111,434 102,712
Net interest payable (4,970) (5,003)
Profit on ordinary activities before 106,464 97,709
goodwill amortisation and non-operating net
exceptional items
Goodwill amortisation (7,340) (5,671)
Non-operating net exceptional items 5 (1,756) (1,126)
Profit on ordinary activities before 97,368 90,912
taxation
Taxation (15,311) (13,679)
Profit after taxation 82,057 77,233
Minority interests (1,248) (940)
Profit attributable to Group shareholders 80,809 76,293
Dividends 6 (23,559) (20,466)
Profit retained for the year 57,250 55,827
Earnings per ordinary share
- basic (cent) 7 96.66c 90.26c
- diluted (cent) 7 95.50c 89.38c
Adjusted earnings per ordinary share
- basic (cent) 7 111.00c 98.30c
- diluted (cent) 7 109.67c 97.35c
Dividend per ordinary share (cent) 6 28.175c 24.500c
CONSOLIDATED BALANCE SHEET
as at 31 March 2003
2003 2002
Note €'000 €'000
Fixed Assets
Goodwill arising on the acquisition of 132,044 118,332
subsidiaries
Tangible fixed assets 209,432 159,156
Associated undertakings 40,330 38,976
381,806 316,464
Current Assets
Stocks 103,030 112,795
Debtors 321,650 334,341
Cash and term deposits 353,986 304,661
778,666 751,797
Creditors: Amounts falling due within
one year
Bank and other debt 218,419 108,795
Trade and other creditors 334,997 377,151
Corporation tax 29,291 18,473
Proposed dividend 15,017 12,716
597,724 517,135
Net Current Assets 180,942 234,662
Total Assets less Current 562,748 551,126
Liabilities
FINANCED BY:
Creditors: Amounts falling due after more than one year
Bank and other debt 21,250 26,757
Unsecured notes due 2008/11 94,258 106,036
Deferred acquisition consideration 11,887 18,954
127,395 151,747
Provisions for Liabilities and Charges 1,157 2,816
128,552 154,563
Capital and Reserves
Equity share capital and share premium 146,479 146,465
Reserves 282,800 244,965
Equity Shareholders' Funds 429,279 391,430
Minority interests 3,632 4,010
Capital grants 1,285 1,123
434,196 396,563
562,748 551,126
Net cash 8 20,059 63,073
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
for the year ended 31 March 2003
2003 2002
€'000 €'000
Profit attributable to Group shareholders 80,809 76,293
Dividends (23,559) (20,466)
57,250 55,827
Equity share capital issued (net of expenses) 231 2,464
Share buyback (inclusive of costs) - (21,307)
Exchange adjustments and other (19,632) 723
Net movement in shareholders' funds 37,849 37,707
Opening shareholders' funds 391,430 353,723
Closing shareholders' funds 429,279 391,430
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2003
2003 2002
Note €'000 €'000
Inflows
Operating cash flow (see below) 92,467 117,470
Disposal proceeds 14,732 11,358
Shares issues (net) 231 792
107,430 129,620
Outflows
Capital expenditure (net) 34,832 33,006
Acquisitions 88,215 59,637
Share buyback - 21,307
Interest paid 4,864 3,789
Taxation paid 2,923 12,461
Dividends paid 21,258 19,199
152,092 149,399
Net cash outflow (44,662) (19,779)
Translation adjustment 1,648 (379)
Movement in net cash (43,014) (20,158)
Opening net cash 63,073 83,231
Closing net cash 8 20,059 63,073
OPERATING CASH FLOW
for the year ended 31 March 2003
2003 2002
€'000 €'000
Group operating profit 114,332 102,712
Operating profit of associated undertakings (17,709) (13,602)
Dividends received from associated undertakings 1,317 1,264
Depreciation of tangible fixed assets 29,495 25,268
(Increase)/decrease in working capital (25,740) 6,904
Other (3,212) (2,198)
Operating cash flow before exceptional costs 98,483 120,348
Exceptional redundancy and restructuring costs (6,016) (2,878)
Operating cash flow after exceptional costs 92,467 117,470
NOTES TO THE PRELIMINARY RESULTS
for the year ended 31 March 2003
1. Basis of Preparation
The financial information set out herein does not represent full accounts and
has been abridged from the financial statements of DCC plc for the year ended
31 March 2003 which carry an unqualified auditors' report and which have not
yet been filed with the Registrar of Companies. Full accounts for the year
ended 31 March 2002, containing an unqualified auditors' report, have been
delivered to the Registrar of Companies.
The financial statements for the year ended 31 March 2003 have been prepared in
accordance with the accounting policies set out in the financial statements for
the year ended 31 March 2002.
Comparative amounts have been regrouped and restated, where necessary, on the
same basis as the amounts for the current year.
The Group's financial statements are prepared in euro, denoted by the symbol €.
The exchange rates used in translating sterling balance sheet and profit and
loss account amounts were as follows:-
2003 2002
€1=Stg£ €1=Stg£
Balance sheet (closing rate) 0.690 0.613
Profit and loss (average rate) 0.640 0.615
2. Turnover - Continuing Activities
2003 2002
€'000 €'000
Energy 864,247 717,623
IT 984,815 917,068
Food & Healthcare 346,806 348,370
Other Activities 47,016 37,505
Turnover - continuing activities 2,242,884 2,020,566
Analysis of turnover - continuing activities by
subsidiary undertakings and associated undertakings:
Subsidiary undertakings 2,111,066 1,888,678
Associated undertakings 131,818 131,888
Turnover - continuing activities 2,242,884 2,020,566
Of which acquisitions in the year contributed 47,283 187,251
3. Operating Profit - Continuing Activities
2003 2002
€'000 €'000
Energy 45,458 34,979
IT 32,876 30,517
Food & Healthcare 23,171 27,160
Other Activities 9,588 5,492
Operating profit - continuing activities 111,093 98,148
Analysis of operating profit - continuing activities by
subsidiary undertakings and associated undertakings:
Subsidiary undertakings 96,623 89,110
Associated undertakings 14,470 9,038
Operating profit - continuing activities 111,093 98,148
Of which acquisitions in the year contributed 5,165 7,112
4. Operating Exceptional Items
Operating exceptional charges of €2.898 million were incurred during the year
primarily in respect of redundancy costs arising from a review of the
operations of certain of the Group's existing and acquired businesses.
5. Non-operating Net Exceptional Items
Non-operating exceptional charges of €6.079 million were incurred in the
restructuring of DCC Healthcare's rehabilitation and mobility activities as a
result of the loss of the supply of Shoprider powered mobility products. The
restructuring costs comprise redundancy costs, stock write-offs, write downs
of plant and legal costs.
Net exceptional gains of €4.323 million arose on disposals, primarily the sale
of the Group's 45.0% interest in DCC Healthcare's associate, Merits Health
Products Company Limited.
6. Dividends
2003 2002
€'000 €'000
Interim dividend of 10.217 cent per share (2002: 9.288 cent) 8,542 7,750
Proposed final dividend of 17.958 cent per share (2002: 15,017 12,716
15.212 cent)
23,559 20,466
7. Earnings per Ordinary Share
2003 2002
€'000 €'000
Profit after tax and minority interests 80,809 76,293
Net exceptional items 4,654 1,126
Goodwill amortisation 7,340 5,671
Adjusted profit after tax and minority interests 92,803 83,090
cent cent
Basic earnings per ordinary share
Basic earnings per ordinary share 96.66 90.26
Adjusted basic earnings per ordinary share* 111.00 98.30
Weighted average number of ordinary shares in issue during
the year ('000) 83,603 84,527
Diluted earnings per ordinary share
Diluted earnings per ordinary share 95.50 89.38
Adjusted diluted earnings per ordinary share* 109.67 97.35
Diluted weighted average number of ordinary shares for the 84,617 85,354
year ('000)
* adjusted to exclude net exceptional items and goodwill amortisation.
The diluted earnings used in the calculation of diluted earnings per ordinary
share were €80.809 million (2002: €76.293 million) and in the calculation of
adjusted diluted earnings per ordinary share were €92.803 million (2002:
€83.090 million).
8. Analysis of Net Cash
2003 2002
€'000 €'000
Cash and term deposits 353,986 304,661
Bank and other debt repayable within one (218,419) (108,795)
year
Bank and other debt repayable after more than (21,250) (26,757)
one year
Unsecured notes due 2008/11 (94,258) (106,036)
Net cash 20,059 63,073
This information is provided by RNS
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