Final Results
DCC PLC
17 May 2004
17 May 2004
Results for the year ended 31 March 2004
% change on prior year
----------------------
€ Reported Constant
currency*
Sales - continuing activities 2,198.0 m -2.0% +2.6%
Operating profit** - continuing activities 120.9 m +8.8% +14.1%
Profit before net exceptional items, 116.1 m +6.1% +11.2%
goodwill amortisation and tax
Adjusted earnings per share** 121.89 cent +9.8% +15.1%
Dividend per share 32.40 cent +15.0%
Operating cash flow 151.9 m +54.3%
Net cash at 31 March 2004 62.7 m (€20.1m: 2003)
Return on capital employed
- excluding goodwill: 39.8% (42.2%: 2003)
- including goodwill: 21.3% (22.0%: 2003)
* All constant currency figures quoted in this report are based on
retranslating current year figures at prior year translation rates
** Excluding net exceptional items and goodwill amortisation
DCC plc, the business support services group, today announced its results for
the year ended 31 March 2004.
Commenting on the results, DCC's Chief Executive/Deputy Chairman, Jim Flavin,
said:
'Following an excellent second half, in which DCC achieved constant currency
growth in operating profit of 18.9% (11.8% on a reported basis), full year
constant currency growth was 14.1% (8.8% reported). It is particularly
pleasing to note that constant currency operating profit growth in IT
Distribution was 15.0% in the second half compared to a decline of 11.6%
in the first half.
DCC has the business platforms, the management capacity and the financial
strength to pursue ambitious organic and acquisition growth.'
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
Kieran Conlon, Investor Relations Manager Web: www.dcc.ie
Excellent growth in operating profit
Following an excellent second half, in which DCC achieved constant currency
growth in operating profit of 18.9% (11.8% on a reported basis), full year
constant currency growth was 14.1% (8.8% reported).
Divisional operating profits (continuing activities) were as follows:
% change on prior year
----------------------
€'m Reported Constant
currency*
Energy 45.8 +8.4% +16.1%
IT Distribution 31.3 -3.1% +3.8%
Healthcare 13.6 +19.1% +21.2%
Food and Beverage 10.9 -7.5% -7.9%
Environmental 5.0 +56.7% +63.7%
Other (Homebuilding and Supply Chain Management) 14.3 +40.5% +40.5%
----- ------- ------
Total 120.9 +8.8% +14.1%
* All constant currency figures quoted in this report are based on
retranslating current year figures at prior year translation rates
It is particularly pleasing to note that constant currency operating profit
growth in IT Distribution was 15.0% in the second half compared to a decline of
11.6% in the first half.
The net interest charge was €4.8 million (€5.0 million: 2003). The tax rate for
the year was 12.5% (14.0%: 2003).
Adjusted earnings per share for the year increased 9.8% on a reported basis to
121.89 cent (15.1% on a constant currency basis). DCC has achieved compound
annual growth in reported adjusted earnings per share of 16.3% over the last
five years and 17.3% over the last ten years.
DCC again achieved excellent returns on capital employed, generating a return of
39.8% excluding goodwill and 21.3% including goodwill (42.2% and 22.0%
respectively: 2003).
Excellent cash generation
DCC's record of excellent cash generation continued with operating cash flow
before exceptional items growing to €151.9 million, an increase of 54.3%.
Working capital decreased by €20.6 million to equate to 11.6 days' sales at 31
March 2004, which compares favourably with 15.4 days' at 31 March 2003.
Dividend increase of 15%
The directors are recommending a final dividend of 20.65 cent per share which,
when added to the interim dividend of 11.75 cent per share, gives a total
dividend of 32.40 cent per share for the year, a 15% increase over the prior
year dividend of 28.175 cent per share. The dividend is covered 3.8 times by
adjusted earnings per share (3.9 times: 2003). The final dividend will be paid
on 14 July 2004 to shareholders on the register at the close of business on 28
May 2004.
Exceptional items
Operating exceptional items and non-operating net exceptional items in the year
amounted to €8.2 million.
Exceptional costs of €4.8 million relating to legal, restructuring and
redundancy costs associated with the breach of a contract to supply powered
mobility products to DCC's subsidiary DMA Limited by Pihsiang Machinery
Manufacturing Company Limited (a Taiwanese public company) have been recognised
in these accounts. However, damages of Stg£10.2 million and an interim cost
award of Stg£2.0 million - in total Stg£12.2 million (€18.3 million) - against
Pihsiang, its Chairman and major shareholder Mr Donald Wu and his wife and
Director Mrs Jenny Wu following a successful London High Court action by DMA
have not yet been recognised in the accounts as the amount has not yet been
received. The defendants are in breach of a London High Court order in respect
of the non-payment of the damages and the interim cost award. Collection of the
amount outstanding and interest accruing thereon at 8% per annum (per Court
order) is being vigorously pursued.
Other net exceptional costs of €3.4 million were incurred, principally in
relation to restructuring and redundancy, in a drive for improved efficiencies
across the Group.
Acquisition and Development
Acquisition discussions are currently being pursued with a range of companies in
the Energy, IT Distribution, Healthcare, Food and Beverage and Environmental
sectors. DCC maintained a strong focus on organic development during the year,
making solid progress in several key areas which will contribute to the Group's
future growth. Development expenditure in the year totalled €39.7 million.
Committed acquisition expenditure amounted to €9.2 million (of which €1.6
million was deferred) arising from the acquisition of smaller businesses in the
Energy, IT Distribution, Healthcare and Food and Beverage divisions. Capital
expenditure was €30.5 million, while the depreciation charge for the year was
€29.4 million.
Share buybacks
As announced during the year, DCC bought back 2.3 million of its own shares
(2.8% of listed share capital) at an average price per share of €10.70 and a
total cost of €25.0 million. DCC has bought back a total of 8.1% of its issued
share capital since July 2000 at an average price per share of €9.81 and a total
cost of €71.0 million.
DCC may use its strong financial position to buy back more shares in the current
financial year.
Financial strength to fund future growth
At 31 March 2004 DCC had net cash of €62.7 million (€20.1 million: 2003) and
shareholders' funds of €469.6 million (€429.3 million: 2003)
In April 2004 DCC completed a private placement of debt raising the equivalent
of €212.1 million in 10 and 12 year funding (average maturity 10.3 years) which
further strengthens the Group's capital structure and its capacity to pursue
organic and acquisition growth opportunities in all of its core business areas.
The strength of DCC's business model and attractive market conditions at the
time of the placement led to the funds being raised on very good terms.
Outlook
DCC has the business platforms, the management capacity and the financial
strength to pursue ambitious organic and acquisition growth.
Operating review
Energy % change
---------------
2004 2003 Reported Constant
currency
Sales €841.3m €845.0m -0.4% +4.8%
Operating profit €45.8m €42.2m +8.4% +16.1%
Return on capital employed
- excluding goodwill 39.4% 41.2%
- including goodwill 21.9% 23.1%
DCC's strong growth in the energy sector continued during the year with
operating profit increasing to €45.8 million, a constant currency increase of
16.1%. DCC is now the leading independent marketer of LPG and oil products in
Britain and Ireland and delivered 2.1 billion litres of product during the year.
DCC's LPG business performed strongly. LPG sales volumes increased by 16%
benefiting from the inclusion for the full year of sales of the British Gas LPG
business acquired in the prior year. The integration of British Gas LPG into
DCC's existing LPG business in the UK has been completed and the planned
synergies have been obtained. The combined business moved to new headquarters
in Syston, Leicestershire in March 2004 and has completed the upgrade to a
single IT platform. These developments will facilitate the achievement of
further efficiencies in the coming year.
DCC's oil business performed satisfactorily. The business in Scotland performed
strongly while trading in the Republic of Ireland was more challenging.
Overall, oil sales volumes were in line with the prior year.
IT Distribution % change
---------------
2004 2003 Reported Constant
currency
Sales €859.4m €894.9m -4.0% +2.0%
Operating profit €31.3m €32.3m -3.1% +3.8%
Operating margin 3.6% 3.6%
Return on capital employed
- excluding goodwill 41.9% 54.7%
- including goodwill 25.5% 30.2%
Following a challenging first half, excellent constant currency profit growth of
15.0% was achieved in the second half due to strong sales volume growth and good
cost control.
DCC's UK hardware distribution business recorded strong sales growth in several
key product areas, with particular growth in sales of PC and multi-function
office products. An improved second half benefitted from a moderation in the
rate of product price deflation and strong sales volume growth.
DCC's UK software distribution business had a satisfactory performance
notwithstanding the fact that there were no major new product releases by its
entertainment software vendors during the year. Lower selling prices of games
consoles resulted in an increase in the installed base which should contribute
to increased future demand for related software and accessories.
DCC's Irish IT distribution subsidiary had a very good year and delivered strong
profit growth despite product price deflation which was particularly severe in
the first half. The business continues to benefit from its position as the
leading IT distribution business in Ireland and from its very broad range of
suppliers and customers.
DCC's Continental European IT distribution business, Distrilogie, generated
excellent profit growth, with improved margins and good cost control. The
acquisition of a small French enterprise software distribution business shortly
before the year end and its integration with Distrilogie broadened the product
base and strengthened DCC's market position as a leading enterprise
infrastructure distributor.
Healthcare % change
----------------
2004 2003 Reported Constant
currency
Sales €149.0m €161.6m -7.8% -4.8%
Operating profit €13.6m €11.4m +19.1% +21.2%
Operating margin 9.1% 7.1%
Return on capital employed
- excluding goodwill 37.0% 33.6%
- including goodwill 12.1% 12.4%
Strong profit growth in DCC's healthcare business resulted from improved
profitability in all areas of its activities. Operating margins improved from
7.1% to 9.1% on slightly reduced sales, reflecting good growth in higher margin
business and the discontinuation of some activities.
Profit growth was strong in the hospital and community care business with a
particularly strong performance in specialist pharmaceutical products where
Technopharm continued its excellent record of rapid growth. A number of exciting
organic developments took place including the establishment of a pharmaceutical
compounding facility in Ireland, the establishment of a pharma sales division in
Britain and the European launch of a new range of mobility and rehabilitation
products under DCC's own brands.
Strong organic sales growth drove excellent profit growth in the nutraceuticals
business. The upgrading of the licenced packing facility in Cheshire was
successfully completed. The business continued to broaden its customer base and
achieved particularly good progress in Continental Europe with export sales from
the UK growing by 38% to represent 50% of total nutraceuticals sales for the
year.
Food and Beverage % change
---------------
2004 2003 Reported Constant
currency
Sales €170.7m €185.2m -7.8% -7.1%
Operating profit €10.9m €11.8m -7.5% -7.9%
Operating margin 6.4% 6.3%
Return on capital employed
- excluding goodwill 42.0% 55.8%
- including goodwill 21.4% 26.3%
DCC's food and beverage business was impacted by a slowdown in demand across the
Irish grocery and food service sectors which contributed to a 7.5% reduction in
operating profit. The reported sales figure for 2004 was also impacted by
comparison with 2003 due to a contract amounting to €19.7 million in 2003 which
changed to a commission based contract in 2004. Good sales growth was achieved
in a number of categories including wine and certain health food segments.
DCC expanded its food and beverage business in Northern Ireland through the
acquisition of Savoury Foods, which had a well developed van sales force, and
DWS, a wine importer and distributor. Also, building upon its successful track
record of marketing KP products in the Republic of Ireland, DCC reached
agreement during the year to market KP products in Northern Ireland. DCC now has
a sales and distribution reach throughout Ireland in each of the snackfoods,
healthy foods, hot and cold beverage and wine segments in which it operates.
Environmental % change
-------------
2004 2003 Reported Constant
currency
Sales €24.1m €19.2m +25.6% +28.1%
Operating profit €5.0m €3.2m +56.7% +63.7%
Operating margin 20.9% 16.8%
Return on capital employed
- excluding goodwill 50.8% 38.2%
- including goodwill 19.8% 14.4%
Excellent growth in all areas of DCC's environmental business continued during
the year with constant currency sales increasing by 28.1% (25.6% on a reported
basis) to €24.1 million and operating profit increasing by 63.7% (56.7%
reported) to €5.0 million.
The environmental industry continues to develop, driven by the increased amount
and enforcement of environmental legislation.
Following the acquisitions in recent years of Envirotech and Shannon
Environmental Services, DCC has leading positions in a number of environmental
market segments in Ireland. DCC now provides a broad range of services including
waste chemical, water and oil treatment, soil remediation and emergency response
to industrial and commercial customers from its three Environmental Protection
Agency/Environment and Heritage Service licenced sites in Ireland.
Other (Homebuilding and Supply Chain Management) % change
-------------
2004 2003 Reported Constant
currency
Sales €153.4m €136.9m +12.0% +12.0%
Operating profit €14.3m €10.2m +40.5% +40.5%
Manor Park Homebuilders (a 49% owned associate company), which is a leading
Irish homebuilding company, contributed operating profit of €15.2 million (€9.6
million: 2003). This excellent growth in profit was driven by an increase in
completed house and apartment sales to 607 from 500 in the prior year.
SerCom Solutions, the supply chain management business, generated a small
second-half operating profit and reported an operating loss for the year of €0.9
million (operating profit of €0.6 million: 2003). The business has continued to
generate good positive cash flow. During the second half SerCom Solutions
announced that it had entered into a strategic partnership with Kuehne & Nagel,
one of the world's leading logistics companies, to combine their respective
businesses' capabilities in supply chain management and global logistics
solutions.
Annual Report and Annual General Meeting
DCC's 2004 Annual Report is expected to be posted to shareholders on 3 June
2004. The Company's Annual General Meeting will be held at 11.00 a.m. on
Thursday 8 July 2004 in The Four Seasons Hotel, Simmonscourt Road, Ballsbridge,
Dublin 4, Ireland.
Note: All constant currency figures quoted in this report are based on
retranslating current year figures at prior year translation rates.
This announcement and further information on DCC is available
on the web at www.dcc.ie
SUMMARISED CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2004
2004 2003
Notes €'000 €'000
Turnover
- Continuing activities 2 2,197,965 2,242,884
- Discontinued activities - 29,490
2,197,965 2,272,374
Operating profit before operating exceptional items
- Continuing activities 3 120,876 111,093
- Discontinued activities - 3,239
120,876 114,332
Operating exceptional items 4 (2,288) (2,898)
Operating profit 118,588 111,434
Net interest payable (4,802) (4,970)
Profit on ordinary activities before goodwill 113,786 106,464
amortisation and non-operating net exceptional items
Goodwill amortisation (8,282) (7,340)
Non-operating net exceptional items 4 (5,897) (1,756)
Profit on ordinary activities before taxation 99,607 97,368
Taxation (14,509) (15,311)
Profit after taxation 85,098 82,057
Minority interests (771) (1,248)
Profit attributable to Group shareholders 84,327 80,809
Dividends 5 (26,572) (23,559)
Profit retained for the year 57,755 57,250
Earnings per ordinary share
- basic (cent) 6 101.98c 96.66c
- diluted (cent) 6 100.42c 95.50c
Adjusted earnings per ordinary share
- basic (cent) 6 121.89c 111.00c
- diluted (cent) 6 120.03c 109.67c
Dividend per ordinary share (cent) 5 32.400c 28.175c
CONSOLIDATED BALANCE SHEET
as at 31 March 2004
2004 2003
Note €'000 €'000
Fixed Assets
Goodwill arising on the acquisition of subsidiaries 129,566 132,044
Tangible fixed assets 212,252 209,432
Associated undertakings 53,780 40,330
395,598 381,806
Current Assets
Stocks 110,577 103,030
Debtors 330,385 321,650
Cash and term deposits 320,616 353,986
761,578 778,666
Creditors: Amounts falling due within one year
Bank and other debt 143,732 218,419
Trade and other creditors 362,688 334,997
Corporation tax 36,077 29,291
Proposed dividend 16,824 15,017
559,321 597,724
Net Current Assets 202,257 180,942
Total Assets less Current Liabilities 597,855 562,748
FINANCED BY:
Creditors: Amounts falling due after more than one year
Bank and other debt 16,555 21,250
Unsecured notes due 2008/11 97,612 94,258
Deferred acquisition consideration 6,799 11,887
120,966 127,395
Provisions for Liabilities and Charges 2,084 1,157
123,050 128,552
Capital and Reserves
Equity share capital and share premium 146,473 146,479
Reserves 323,139 282,800
Equity Shareholders' Funds 469,612 429,279
Minority interests 4,081 3,632
Capital grants 1,112 1,285
474,805 434,196
597,855 562,748
Net cash 7 62,717 20,059
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
for the year ended 31 March 2004
2004 2003
€'000 €'000
Profit attributable to Group shareholders 84,327 80,809
Dividends (26,572) (23,559)
57,755 57,250
Equity share capital issued (net of expenses) 1,122 231
Share buyback (inclusive of costs) (24,986) -
Exchange adjustments and other 6,442 (19,632)
Net movement in shareholders' funds 40,333 37,849
Opening shareholders' funds 429,279 391,430
Closing shareholders' funds 469,612 429,279
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2004
2004 2003
Note €'000 €'000
Inflows
Operating cash flow (see below) 141,246 92,467
Disposal proceeds - 14,732
Shares issues (net) 1,122 231
142,368 107,430
Outflows
Capital expenditure (net) 28,092 34,832
Acquisitions 14,308 88,215
Share buyback 24,986 -
Interest paid 3,609 4,864
Taxation paid 5,295 2,923
Dividends paid 24,765 21,258
101,055 152,092
Net cash inflow/(outflow) 41,313 (44,662)
Translation adjustment 1,345 1,648
Movement in net cash 42,658 (43,014)
Opening net cash 20,059 63,073
Closing net cash 7 62,717 20,059
OPERATING CASH FLOW
for the year ended 31 March 2004
2004 2003
€'000 €'000
Group operating profit 120,876 114,332
Operating profit of associated undertakings (19,201) (17,709)
Dividends received from associated undertakings 3,094 1,317
Depreciation of tangible fixed assets 29,401 29,495
Decrease/(increase) in working capital 20,606 (25,740)
Other (2,860) (3,212)
Operating cash flow before exceptional costs 151,916 98,483
Exceptional redundancy and net restructuring costs (10,670) (6,016)
Operating cash flow after exceptional costs 141,246 92,467
NOTES TO THE PRELIMINARY RESULTS
for the year ended 31 March 2004
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 2004 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 2003, containing an unqualified auditors' report, have been delivered to
the Registrar of Companies.
The financial statements for the year ended 31 March 2004 have been prepared in
accordance with the accounting policies set out in the financial statements for
the year ended 31 March 2003.
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 rates used in translating sterling balance sheet and profit and loss account
amounts were as follows:-
2004 2003
€1=Stg£ €1=Stg£
Balance sheet (closing rate) 0.666 0.690
Profit and loss (average rate)* 0.647 0.593
* Average exchange rates adjusted for the impact of profit and loss hedges
2. Turnover - Continuing Activities
2004 2003
€'000 €'000
Energy 841,344 845,032
IT Distribution 859,441 894,897
Healthcare 148,961 161,647
Food and Beverage 170,665 185,159
Environmental 24,131 19,215
Other (Homebuilding and Supply Chain Management) 153,423 136,934
Turnover - continuing activities 2,197,965 2,242,884
Analysis of turnover - continuing activities by
subsidiary undertakings and associated undertakings:
Subsidiary undertakings 2,074,465 2,111,066
Associated undertakings 123,500 131,818
Turnover - continuing activities 2,197,965 2,242,884
Of which acquisitions in the year contributed 23,024 47,283
3. Operating Profit - Continuing Activities
2004 2003
€'000 €'000
Energy 45,791 42,239
IT Distribution 31,274 32,289
Healthcare 13,595 11,415
Food and Beverage 10,876 11,756
Environmental 5,044 3,219
Other (Homebuilding and Supply Chain Management) 14,296 10,175
Operating profit - continuing activities 120,876 111,093
Analysis of operating profit - continuing activities by
subsidiary undertakings and associated undertakings:
Subsidiary undertakings 101,675 96,623
Associated undertakings 19,201 14,470
Operating profit - continuing activities 120,876 111,093
Of which acquisitions in the year contributed 168 5,165
4. Exceptional items
Operating exceptional items and non-operating net exceptional items in the year
amounted to €8.2 million.
Exceptional costs of €4.8 million relating to legal, restructuring and
redundancy costs associated with the breach of a contract to supply powered
mobility products to DCC's subsidiary DMA Limited by Pihsiang Machinery
Manufacturing Company Limited (a Taiwanese public company) have been recognised
in these accounts. However, damages of Stg£10.2 million and an interim cost
award of Stg£2.0 million - in total Stg£12.2 million (€18.3 million) - against
Pihsiang, its Chairman and major shareholder Mr Donald Wu and his wife and
Director Mrs Jenny Wu following a successful London High Court action by DMA
have not yet been recognised in the accounts as the amount has not yet been
received. The defendants are in breach of a London High Court order in respect
of the non-payment of the damages and the interim cost award. Collection of the
amount outstanding and interest accruing thereon at 8% per annum (per Court
order) is being vigorously pursued.
Other net exceptional costs of €3.4 million were incurred, principally in
relation to restructuring and redundancy, in a drive for improved efficiencies
across the Group.
5. Dividends
2004 2003
€'000 €'000
Interim dividend of 11.750 cent per share
(10.217 cent:2003) 9,748 8,542
Proposed final dividend of 20.650 cent per share
(17.958 cent: 2003) 16,824 15,017
26,572 23,559
6. Earnings per Ordinary Share
2004 2003
€'000 €'000
Profit after tax and minority interests 84,327 80,809
Net exceptional items 8,185 4,654
Goodwill amortisation 8,282 7,340
Adjusted profit after tax and minority interests 100,794 92,803
cent cent
Basic earnings per ordinary share
Basic earnings per ordinary share 101.98 96.66
Adjusted basic earnings per ordinary share* 121.89 111.00
Weighted average number of ordinary shares in issue during
the year ('000) 82,690 83,603
Diluted earnings per ordinary share
Diluted earnings per ordinary share 100.42 95.50
Adjusted diluted earnings per ordinary share* 120.03 109.67
Diluted weighted average number of ordinary shares for the
year ('000) 83,974 84,617
* adjusted to exclude net exceptional items and goodwill amortisation.
The diluted earnings used in the calculation of diluted earnings per ordinary
share were €84.327 million (€80.809 million: 2003) and in the calculation of
adjusted diluted earnings per ordinary share were €100.794 million (€92.803
million: 2003).
7. Analysis of Net Cash
2004 2003
€'000 €'000
Cash and term deposits 320,616 353,986
Bank and other debt repayable within one year (143,732) (218,419)
Bank and other debt repayable after more than
one year (16,555) (21,250)
Unsecured notes due 2008/11 (97,612) (94,258)
Net cash 62,717 20,059
This information is provided by RNS
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