Final Results
DCC PLC
16 May 2005
Results for the year ended 31 March 2005
% change on prior year
-----------------------
€ Reported Constant
currency*
Sales 2,731.5 m +24.3% +22.9%
Operating profit** 131.5 m +8.8% +11.2%
Profit before net exceptional items,
goodwill amortisation and tax 126.0 m +8.5% +11.0%
Adjusted earnings per share** 137.25 cent +12.6% +15.2%
Dividend per share 37.26 cent +15.0%
Net debt at 31 March 2005 8.2 m
Return on capital employed
- excluding goodwill: 40.5% (39.8%: 2004)
- including goodwill: 21.0% (21.3%: 2004)
* 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 2005.
Commenting on the results, DCC's Chief Executive/Deputy Chairman, Jim Flavin,
said:
'We are pleased to report another excellent year of growth, with sales
increasing by 22.9% to €2.73 billion and adjusted earnings per share by
15.2% to 137.25 cent (constant currency). Energy, Healthcare,
Food & Beverage, Environmental and Other activities all achieved excellent
profit growth. Profits in IT Distribution declined due to the very
challenging market conditions which have prevailed in the IT distribution
sector since late 2004.
Having completed several acquisitions during the year, DCC is focused on
leveraging its business platforms, management capacity and financial
strength to deliver continued organic and acquisition growth, strong cash
generation and excellent returns on capital.'
For reference, please contact:
Jim Flavin, Chief Executive/Deputy Chairman
Fergal O'Dwyer, Chief Financial Officer
Kieran Conlon, Investor Relations Manager
Tel: +353 1 2799 400
Email: investorrelations@dcc.ie
Web: www.dcc.ie
Excellent growth
It is pleasing to report another excellent year of growth, with sales increasing
by 22.9% to €2.73 billion and adjusted earnings per share by 15.2% to 137.25
cent (constant currency). Energy, Healthcare, Food & Beverage, Environmental
and Other activities all achieved excellent profit growth. Profits in IT
Distribution declined due to the very challenging market conditions which
have prevailed in the IT distribution sector since late 2004.
Divisional operating profits were as follows:
% change on prior year
----------------------
€'m Reported Constant
currency*
Energy 51.3 +12.0% +15.4%
IT Distribution 27.5 -11.9% -8.9%
Healthcare 16.1 +18.4% +20.2%
Food & Beverage 13.2 +21.7% +22.6%
Environmental 5.5 +8.5% +10.2%
Other (Homebuilding and Supply Chain Management) 17.9 +25.0% +25.0%
------ ------- -------
Total 131.5 +8.8% +11.2%
* All constant currency figures quoted in this report are based on
retranslating current year figures at prior year translation rates
The net interest charge was €5.6 million (€4.8 million: 2004). The effective tax
rate for the year was 12.0% (12.5%: 2004).
Adjusted earnings per share for the year increased by 12.6% on a reported basis
and by 15.2% on a constant currency basis to 137.25 cent. DCC has achieved
compound annual growth in reported adjusted earnings per share of 14.8% over the
last five years and 17.0% over the last ten years.
DCC again achieved excellent returns on capital employed, generating a return of
40.5% excluding goodwill and 21.0% including goodwill (39.8% and 21.3%
respectively: 2004).
Continued strong cash generation
DCC's record of strong cash generation continued with operating cash flow before
exceptional costs of €114.9 million. Despite an increase in sales of €533.6
million, working capital increased by just €23.6 million, equating to 10.5 days'
sales at 31 March 2005, compared to 11.6 days' sales at 31 March 2004.
Dividend increase of 15%
The Directors are recommending a final dividend of 23.75 cent per share which,
when added to the interim dividend of 13.51 cent per share, gives a total
dividend of 37.26 cent per share for the year, a 15% increase over the prior
year dividend of 32.40 cent per share. The dividend is covered 3.7 times by
adjusted earnings per share (3.8 times: 2004). The final dividend will be paid
on 11 July 2005 to shareholders on the register at the close of business on 27
May 2005.
Net exceptional items
As announced in January 2005, net exceptional charges of €16.0 million were
incurred. These arose mainly in relation to the restructuring of SerCom
Solutions, acquisition related restructuring in DCC Energy and legal costs.
The consolidation of SerCom Solutions' kitting and assembly activities at its
recently extended Limerick facility resulted in the closure of its loss-making
Dublin facility. Following this restructuring programme, the business is now
profitable and cash generative.
Following the acquisition by DCC Energy of the business of Shell Direct UK,
planned exceptional restructuring costs were incurred in order to improve the
overall efficiency of the business.
DCC incurred costs in relation to the Fyffes plc legal action and in relation to
the pursuit in Taiwan of the damages, costs and interest (amounting to €19.4
million at 31 March 2005) awarded to DCC by the High Court in London following
the successful legal action against Pihsiang Machinery Manufacturing Company
Limited, a Taiwanese public company, Donald Wu, its chairman and major
shareholder, and Jenny Wu, his wife and director (the Defendants). DCC has not
recognised the €19.4 million due from the Defendants in its accounts pending its
collection.
Fyffes Litigation
On 24 January 2002 Fyffes plc initiated legal action against DCC, its wholly
owned subsidiary, Lotus Green, and others in connection with the sale in
February 2000 by Lotus Green of 87% of the shareholding it held in Fyffes at
that time.
The Board of DCC set out its views on the Fyffes action in a comprehensive Stock
Exchange announcement on 24 January 2002 in which it stated that it 'is
completely satisfied that none of its officers was in possession of price
sensitive information on Fyffes in February 2000, when Lotus Green accepted
offers from the market for 87% of its shareholding in Fyffes, and believes that
the sales were undertaken with absolute propriety'.
On 3 August 2004 DCC announced to the Stock Exchange that it had made an
application to the High Court in Dublin to expedite the hearing of the legal
action initiated by Fyffes. As a result, the hearing of the action began in the
High Court on 2 December 2004. The hearing is expected to conclude before the
end of July 2005 but it is likely to be a number of months before a judgement is
delivered.
The action has been, and is being, fully defended consistent with the view of
the Board as set out in DCC's Stock Exchange announcement of 24 January 2002 and
the Directors have concluded that no provision should be made in respect of this
matter, other than expensing ongoing costs in relation to the action.
Acquisitions and Development
Acquisition and development expenditure amounted to €131.3 million. DCC's
ongoing acquisition programme resulted in a number of acquisitions being
completed during the year, at a total committed cost of €89.3 million, of which
€11.1 million was deferred. Capital expenditure amounted to €42.0 million. The
cash impact of acquisitions in the period was €81.1 million.
In October 2004, DCC Energy completed the acquisition of the business of Shell
Direct UK which supplies heating oils and transport fuels to domestic,
agricultural and small commercial and industrial customers in Britain. DCC is
now the largest independent oil marketing and distribution business in Britain.
In January 2005, DCC Energy acquired Dyneley Holdings Limited, a British company
that sells approximately 150 million litres of motor fuels per annum via fuel
cards under the BP, Esso and Texaco brands.
DCC Healthcare broadened its nutraceuticals business through the acquisition, in
December 2004, of 77.5% of Laleham Healthcare Limited, a contract manufacturer
and packer of creams and other liquid products for the health and beauty market.
The enlarged business is a leading supplier of contract services - product
development, manufacturing and packaging - to the European nutraceuticals
sector.
In August 2004, DCC Food & Beverage completed the acquisition of Bottle Green
Limited, a UK based wine sales and marketing business with a 5% volume share of
the UK off trade wine market, and increased its shareholding from 51.5% to 100%
in Allied Foods Limited, a leading player in the Irish chilled and frozen foods
distribution market.
The Group is actively pursuing further acquisitions in each of its divisions.
Share buybacks
DCC bought back a further 2,065,000 of its own shares on 17 May 2004 (2.53% of
listed share capital at that date) at a price of €12.80 per share and at a total
cost of €26.8 million. DCC has bought back a total of 10.45% of its issued share
capital since July 2000 at an average price per share of €10.48 and at a total
cost of €97.7 million.
Financial strength to fund future growth
At 31 March 2005 DCC had net debt of €8.2 million (net cash €62.7 million: 2004)
and shareholders' funds of €493.7 million (€469.6 million: 2004).
Outlook
Having completed several acquisitions during the year, DCC is focused on
leveraging its business platforms, management capacity and financial strength to
deliver continued organic and acquisition growth, strong cash generation and
excellent returns on capital.
Operating review
Energy % change
-------------------
2005 2004 Reported Constant
currency
Sales €1,240.6m €841.3m +47.4% +45.5%
Operating profit €51.3m €45.8m +12.0% +15.4%
Return on capital employed
- excluding goodwill 47.2% 39.4%
- including goodwill 23.7% 21.9%
DCC Energy achieved strong growth in the year with operating profit increasing,
on a constant currency basis, by 15.4%. During the year the business delivered
2.47 billion litres of product, an increase of 20%, further strengthening its
position as the leading independent marketer of LPG and oil products in Britain
and Ireland.
DCC's LPG business performed well in a challenging operating environment of
increasing product prices and milder weather conditions.
DCC's oil business grew strongly, benefiting from good organic volume growth in
Britain and the Republic of Ireland. The scale of the business was significantly
increased by the acquisition of the trade, assets and goodwill of the business
of Shell Direct UK and of Dyneley Holdings Limited. Both of these acquisitions
performed in line with expectations.
IT Distribution % change
-------------------
2005 2004 Reported Constant
currency
Sales €878.2m €859.4m +2.2% +0.8%
Operating profit €27.5m €31.3m -11.9% -8.9%
Operating margin 3.1% 3.6%
Return on capital employed
- excluding goodwill 34.2% 41.9%
- including goodwill 21.4% 25.5%
Following an excellent first half performance, the second half of the year was
very challenging for IT Distribution. While there was good sales volume growth,
this was offset by severe product price deflation. Profitability has also been
impacted by an increasingly competitive marketplace and adverse changes in
supplier terms and conditions.
DCC's UK hardware distribution business achieved good sales volume growth but
was particularly impacted by the severe product price deflation and margin
pressure in a very competitive UK hardware marketplace. Trading was more
difficult in the last quarter of the financial year and remains challenging.
DCC's UK software distribution business had an excellent year, with particularly
strong growth in sales of computer games, security software and peripheral
products into the major retailers. During the year the business continued to
broaden its product range in line with its strategy to be a specialist
distributor to the retail channel of software, peripherals and consumer
electronics.
DCC's Irish IT distribution business had a satisfactory performance, leveraging
its position as the leading distributor in Ireland to grow its market share in
a very competitive marketplace.
DCC's Continental European IT distribution business had a very difficult year.
The performance in the year was impacted by changes in terms with some key
suppliers, significant levels of price deflation and a very competitive European
enterprise infrastructure market.
Healthcare % change
-------------------
2005 2004 Reported Constant
currency
Sales €170.7m €149.0m +14.6% +13.7%
Operating profit €16.1m €13.6m +18.4% +20.2%
Operating margin 9.4% 9.1%
Return on capital employed
- excluding goodwill 40.3% 37.0%
- including goodwill 13.0% 12.1%
DCC Healthcare achieved good sales and profit growth and all areas of activity
developed well.
Good profit growth was achieved in the acute and community care sectors with
particularly strong growth in the sales of IV pharmaceutical products. Good
growth in sales of mobility and rehab products was achieved in Germany, Britain
and other markets, aided by increased investment in procurement resources in
China.
The nutraceuticals business enjoyed excellent organic growth benefiting from
its success in broadening its branded customer base particularly in Britain,
Scandinavia and the Benelux countries. The acquisition of Laleham Healthcare
broadens DCC Nutraceuticals' contract services offering and creates
opportunities to cross sell products and services.
Food & Beverage % change
--------------------
2005 2004 Reported Constant
currency
Sales €242.3m €170.7m +42.0% +41.5%
Operating profit €13.2m €10.9m +21.7% +22.6%
Operating margin 5.5% 6.4%
Return on capital employed
- excluding goodwill 40.8% 42.0%
- including goodwill 18.2% 21.4%
DCC Food & Beverage achieved strong sales and profit growth reflecting the
acquisition, completed in the first half of the year, of Bottle Green Limited
and an increased shareholding, from 51.5% to 100%, in Allied Foods. Both Bottle
Green and Allied Foods have performed in line with expectations.
There was good organic growth in wine and healthfoods with the Kelkin brand
performing particularly well. The increasingly competitive environment in the
Irish grocery and foodservice sectors continued to impact margins.
Environmental % change
-------------------
2005 2004 Reported Constant
currency
Sales €25.8m €24.1m +7.0% +6.5%
Operating profit €5.5m €5.0m +8.5% +10.2%
Operating margin 21.2% 20.9%
Return on capital employed
- excluding goodwill 41.1% 50.8%
- including goodwill 20.1% 19.8%
DCC Environmental achieved good sales and profit growth with steady progress
made in all areas of activity. DCC continues to provide a broad range of
services including waste chemical, water and oil treatment, soil remediation
and emergency response to industrial and commercial customers in Ireland.
DCC is seeking environmental business opportunities in Britain which are
opening up due to increased environmental regulations.
Other (Homebuilding and Supply Chain Management) % change
--------------------
2005 2004 Reported Constant
currency
Sales €174.0m €153.4m +13.4% +13.4%
Operating profit €17.9m €14.3m +25.0% +25.0%
Manor Park Homebuilders (a 49% owned associate company), which is a leading
Irish homebuilding company, contributed operating profit of €19.0 million
(€15.2 million: 2004) from house and apartment sales and related commercial
development.
SerCom Solutions, the supply chain management business, reported an operating
loss for the year of €1.1 million (operating loss of €0.9 million: 2004). The
business has successfully completed the restructuring programme announced in
January 2005 and has consolidated its Irish based kitting and assembly
activities at its recently expanded facility in Limerick. The business is now
profitably implementing its strategy of providing world class supply chain
management services.
Annual Report and Annual General Meeting
DCC's 2005 Annual Report is expected to be posted to shareholders on 2 June
2005. The Company's Annual General Meeting will be held at 11.00 a.m. on
Tuesday 5 July 2005 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 2005
2005 2004
Notes €'000 €'000
Turnover 2 2,731,524 2,197,965
Operating profit before operating exceptional items 3 131,536 120,876
Operating exceptional items 4 (3,815) (2,288)
Operating profit 127,721 118,588
Net interest payable (5,576) (4,802)
Profit on ordinary activities before goodwill 122,145 113,786
amortisation and non-operating net exceptional items
Goodwill amortisation (10,089) (8,282)
Non-operating net exceptional items 4 (12,152) (5,897)
Profit on ordinary activities before taxation 99,904 99,607
Taxation (15,115) (14,509)
Profit after taxation 84,789 85,098
Minority interests (1,022) (771)
Profit attributable to Group shareholders 83,767 84,327
Dividends 5 (29,458) (26,572)
Profit retained for the year 54,309 57,755
Earnings per ordinary share
- basic (cent) 6 104.69c 101.98c
- diluted (cent) 6 102.26c 100.42c
Adjusted earnings per ordinary share
- basic (cent) 6 137.25c 121.89c
- diluted (cent) 6 134.07c 120.03c
Dividend per ordinary share (cent) 5 37.26c 32.40c
CONSOLIDATED BALANCE SHEET
as at 31 March 2005
2005 2004
Note €'000 €'000
Fixed Assets
Goodwill arising on the acquisition of subsidiaries 193,762 129,566
Tangible fixed assets 247,647 212,252
Associated undertakings 64,192 53,780
505,601 395,598
Current Assets
Stocks 123,734 110,577
Debtors 421,534 330,385
Cash and term deposits 352,399 320,616
897,667 761,578
Creditors: Amounts falling due within one year
Bank and other debt 45,127 143,732
Trade and other creditors 471,283 362,688
Corporation tax 37,122 36,077
Proposed dividend 19,070 16,824
572,602 559,321
Net Current Assets 325,065 202,257
Total Assets less Current Liabilities 830,666 597,855
FINANCED BY:
Creditors: Amounts falling due after more than one year
Bank and other debt 10,370 16,555
Unsecured notes due 2008 to 2016 305,094 97,612
Deferred acquisition consideration 10,839 6,799
326,303 120,966
Provisions for Liabilities and Charges 5,361 2,084
331,664 123,050
Capital and Reserves
Equity share capital and share premium 146,548 146,473
Reserves 347,148 323,139
Equity Shareholders' Funds 493,696 469,612
Minority interests 4,348 4,081
Capital grants 958 1,112
499,002 474,805
830,666 597,855
Net (debt)/cash 7 (8,192) 62,717
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
for the year ended 31 March 2005
2005 2004
€'000 €'000
Profit attributable to Group shareholders 83,767 84,327
Dividends (29,458) (26,572)
54,309 57,755
Equity share capital issued (net of expenses) 6,858 1,122
Share buyback (inclusive of costs) (26,762) (24,986)
Exchange adjustments (10,321) 6,442
Net movement in shareholders' funds 24,084 40,333
Opening shareholders' funds 469,612 429,279
Closing shareholders' funds 493,696 469,612
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2005
2005 2004
Note €'000 €'000
Inflows
Operating cash flow (see below) 108,300 141,246
Share issues (net) 6,858 1,122
115,158 142,368
Outflows
Capital expenditure (net) 34,146 28,092
Acquisitions 81,148 14,308
Share buyback 26,762 24,986
Interest paid 2,904 3,609
Taxation paid 9,093 5,295
Dividends paid 27,212 24,765
181,265 101,055
Net cash (outflow)/inflow (66,107) 41,313
Translation adjustment (4,802) 1,345
Movement in net (debt)/cash (70,909) 42,658
Opening net cash 62,717 20,059
Closing net (debt)/cash 7 (8,192) 62,717
OPERATING CASH FLOW
for the year ended 31 March 2005
2005 2004
€'000 €'000
Group operating profit 131,536 120,876
Operating profit of associated undertakings (21,855) (19,201)
Dividends received from associated undertakings 1,354 3,094
Depreciation of tangible fixed assets 32,046 29,401
(Increase)/decrease in working capital (23,550) 20,606
Other (4,671) (2,860)
Operating cash flow before exceptional costs 114,860 151,916
Exceptional redundancy and net restructuring costs (6,560) (10,670)
Operating cash flow after exceptional costs 108,300 141,246
NOTES TO THE PRELIMINARY RESULTS
for the year ended 31 March 2005
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 2005 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 2004, containing an unqualified auditors' report, have been delivered to
the Registrar of Companies.
The financial statements for the year ended 31 March 2005 have been prepared in
accordance with the accounting policies set out in the financial statements for
the year ended 31 March 2004.
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:-
2005 2004
€1=Stg£ €1=Stg£
Balance sheet (closing rate) 0.689 0.666
Profit and loss (average rate)* 0.672 0.647
* Average exchange rates adjusted for the impact of profit and loss hedges
2. Turnover
2005 2004
€'000 €'000
Energy 1,240,551 841,344
IT Distribution 878,153 859,441
Healthcare 170,686 148,961
Food & Beverage 242,332 170,665
Environmental 25,823 24,131
Other (Homebuilding and Supply Chain Management) 173,979 153,423
Turnover 2,731,524 2,197,965
Analysis of turnover by subsidiary undertakings and
associated undertakings:
Subsidiary undertakings 2,627,927 2,074,465
Associated undertakings 103,597 123,500
Turnover 2,731,524 2,197,965
Of which acquisitions in the year contributed 282,457 23,024
3. Operating Profit
2005 2004
€'000 €'000
Energy 51,292 45,791
IT Distribution 27,562 31,274
Healthcare 16,097 13,595
Food & Beverage 13,240 10,876
Environmental 5,472 5,044
Other (Homebuilding and Supply Chain Management) 17,873 14,296
Operating profit 131,536 120,876
Analysis of operating profit by subsidiary undertakings and
associated undertakings:
Subsidiary undertakings 109,681 101,675
Associated undertakings 21,855 19,201
Operating profit 131,536 120,876
Of which acquisitions in the year contributed 8,243 168
4. Net exceptional items
Operating exceptional items and non-operating net exceptional items in the year
amounted to €16.0 million in relation to the restructuring of SerCom Solutions,
acquisition related restructuring in DCC Energy and legal cases.
SerCom Solutions, DCC's supply chain management subsidiary, restructured its
operations by consolidating its kitting and assembly activities at its Limerick
facility and by closing its loss making Dublin facility.
As part of the post acquisition integration of the business of Shell Direct UK,
exceptional restructuring costs have been incurred, arising in part from an
overlap of operations with DCC's Scottish Fuels business, in order to improve
the overall efficiency of its business.
DCC incurred costs in relation to the Fyffes plc legal action and in relation to
the pursuit in Taiwan of the damages, costs and interest awarded to DCC by the
High Court in London following the successful legal action against Pihsiang
Machinery Manufacturing Company Limited, a Taiwanese public company, Donald Wu,
its chairman and major shareholder, and Jenny Wu, his wife and director (the
Defendants). The total amount owing jointly and severally by the Defendants at
31 March 2005 was €19.4 million. DCC has not recognised this amount in its
accounts pending its collection.
5. Dividends
2005 2004
€'000 €'000
Interim dividend of 13.51 cent per share
(11.75 cent: 2004) 10,802 9,748
Proposed final dividend of 23.75 cent per share
(20.65 cent:2004) 19,070 16,824
Dividend attaching to shares bought-back (414) -
29,458 26,572
6. Earnings per Ordinary Share
2005 2004
€'000 €'000
Profit after tax and minority interests 83,767 84,327
Net exceptional items 15,967 8,185
Goodwill amortisation 10,089 8,282
Adjusted profit after tax and minority interests 109,823 100,794
cent cent
Basic earnings per ordinary share
Basic earnings per ordinary share 104.69 101.98
Adjusted basic earnings per ordinary share* 137.25 121.89
Weighted average number of ordinary shares in issue during
the year ('000) 80,018 82,690
Diluted earnings per ordinary share
Diluted earnings per ordinary share 102.26 100.42
Adjusted diluted earnings per ordinary share* 134.07 120.03
Diluted weighted average number of ordinary shares for the
year ('000) 81,913 83,974
* adjusted to exclude net exceptional items and goodwill amortisation.
The diluted earnings used in the calculation of diluted earnings per ordinary
share were €83.767 million (€84.327 million: 2004) and in the calculation of
adjusted diluted earnings per ordinary share were €109.823 million (€100.794
million: 2004).
7. Analysis of Net (Debt)/Cash
2005 2004
€'000 €'000
Cash and term deposits 352,399 320,616
Bank and other debt repayable within one year (45,127) (143,732)
Bank and other debt repayable after more than one year (10,370) (16,555)
Unsecured notes due 2008 to 2016 (305,094) (97,612)
Net (debt)/cash 8,192 62,717
This information is provided by RNS
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