Interim Results

DCC PLC 20 November 2000 Interim Results for the Six Months ended 30 September 2000 EUR Turnover - continuing activities 822.6m Up 54.6% Operating profit - continuing activities 34.3m Up 25.1% Profit before goodwill amortisation and tax 32.1m Up 23.6% Adjusted earnings per share* 30.67c Up 23.1% Dividend per share 7.74c Up 20.0% Net cash at 30 September 2000 was EUR13.5m. *adjusted to exclude goodwill amortisation DCC, the leading value added marketing and distribution group, today announced its results for the six months ended 30 September 2000. Commenting on the results, DCC's Chief Executive & Deputy Chairman, Jim Flavin, said: 'This was an excellent result driven by strong organic growth. We expect to achieve continued strong growth for the full year. DCC is well positioned in growth markets, has a proven strategy and substantial financial capacity - the longer term outlook is very promising.' For further reference, please contact: Jim Flavin, Chief Executive & Deputy Chairman Fergal O'Dwyer, Chief Financial Officer Conor Costigan, Investor Relations Manager Tel: +353 1 283 1011 email: investorrelations@dcc.ie website: www.dcc.ie Results DCC's strong positions in growth market sectors, focused sales teams, deep market knowledge and distribution reach again delivered strong organic growth. Turnover from continuing activities was up 54.6% to EUR822.6 million. Operating profit from continuing activities was up 25.1% to EUR34.3 million. The net interest charge for the period reduced to EUR2.1 million from EUR3.3 million. Profit before goodwill amortisation and tax increased by 23.6% to EUR32.1 million. The tax rate was 15.0%, unchanged from the actual tax rate for the year ended 31 March 2000. Adjusted basic earnings per share, which excludes the effect of goodwill amortisation, increased by 23.1% to 30.67 cent. Business Highlights DCC adds value in the marketing and distribution of its own and third party branded products in the IT, healthcare, energy and food markets. DCC has strong market positions in the UK and Ireland and is expanding its IT and healthcare activities in Continental Europe. IT (SerCom Distribution) continues to capitalise on its strong market positions and achieved excellent revenue and profit growth. Healthcare performed very well in the first half, with strong growth in the mobility/rehab and nutraceuticals businesses in particular. Energy achieved strong profit growth driven by significant oil sales volume growth. Food achieved good sales growth in the period. Profit growth was modest, held back by the increased euro cost of Sterling purchases. Supply Chain Management Services (SerCom Solutions) made excellent progress during the period. Modern supply chain management concepts are increasingly becoming part of the distribution process across many industry sectors and DCC is building valuable expertise in this area. Development Activity DCC will exploit the significant growth opportunities in the markets in which it operates. DCC has a particular focus on achieving strong organic growth, which will be supplemented by complementary acquisitions. In total, EUR84.5 million was committed to organic growth and acquisitions in the first half. Investment in working capital and fixed assets amounted to EUR67.7 million. The strong organic growth resulted in an increased investment in working capital of EUR54.6 million. Capital expenditure was EUR13.1 million. Acquisition expenditure, inclusive of net debt acquired, totalled EUR16.8 million in the period, of which EUR4.2 million is deferred. The principal acquisition was Fuel Services, a leading Northern Ireland oil distributor. The cash impact of acquisitions amounted to EUR23.3 million (including the payment of EUR10.7 million of deferred consideration, which had been provided for at 31 March 2000). Financial Strength and Share Buy Back As announced on 28 July 2000, the Board took advantage of the Group's strong balance sheet to buy back 2.6 million shares (2.9% of the issued share capital) at EUR9.50 per share costing EUR24.7 million. Following the share buy back and the development expenditure referred to above, which in total amounted to EUR109.2 million, the Group had net cash of EUR13.5 million at 30 September 2000 (EUR89.2m at 31 March 2000). Shareholders' funds at 30 September 2000 amounted to EUR324.4 million. DCC's strong financial position leaves the Group well placed to pursue its growth objectives and, if deemed appropriate, to buy back more shares. Dividend The Board has decided to pay an interim dividend of 7.74 cent per share - up 20.0% on the interim dividend paid in the previous financial year. The interim dividend will be paid on 8 December 2000 to shareholders on the register at the close of business on 1 December 2000. Outlook Following an excellent result in the first half driven by strong organic growth, DCC expects to achieve continued strong growth for the full year. DCC is well positioned in growth markets, has a proven strategy and substantial financial capacity - the longer term outlook is very promising. Operating Review for the Six Months ended 30 September 2000 - Continuing Activities IT (SerCom Distribution) 2000 1999 Turnover EUR327.9m EUR203.4m +61.2% Operating profit EUR11.6m EUR8.6m +36.1% Operating margin 3.6% 4.2% IT (SerCom Distribution) has a long and consistent record of excellent returns on capital employed (60.2% in the year ended 31 March 2000) and excellent sales and profit growth. The reduction in margin reflects the faster growth of a range of lower margin products, which have high return on capital employed characteristics due to their low working capital intensity. DCC's primary focus is on optimising returns on capital employed. DCC's hardware distribution business in Britain continued to grow strongly across its main product categories. DCC's position as Britain's leading distributor for most of its suppliers, together with its pro-active, product focused telesales teams and efficient operations, has enabled it to continue to outperform its competitors. Software distribution in Britain had a very strong first half and DCC further strengthened its position as the leading distributor in the high growth consumer software market. DCC enjoyed strong growth across its range of hardware and software products in Ireland. The Irish market for IT products is buoyant and DCC's leading position enabled it to grow its market share in many of the leading brands which it markets. In Continental Europe, DCC's value added computer storage distribution business enjoyed good performances in the Spanish, Portuguese and Italian markets in the first half, while growth in France has been held back due to shorter term market conditions. In September, DCC's French business was appointed as distributor for Compaq's range of storage products, further strengthening its product portfolio. Healthcare 2000 1999 Turnover EUR97.8m EUR77.0m +27.1% Operating profit EUR9.8m EUR7.6m +28.9% Operating margin 10.0% 9.9% Healthcare achieved excellent organic sales and profit growth in the first half. There was continued strong growth in the mobility/rehab business, particularly in powered mobility products in the UK and German markets. DCC's nutraceuticals businesses also achieved strong organic growth and the business units benefited from enhanced cohesion both in marketing and in manufacturing (tablets and capsules). DCC's hospital supply business enjoyed good growth, benefiting from increased spending on healthcare in Ireland. Energy 2000 1999 Turnover EUR254.3m EUR139.6m +82.1% Operating profit EUR5.7m EUR4.6m +21.7% Operating margin 2.2% 3.3% The substantial increase in Energy turnover is the result of higher sales prices, which reflect the significantly higher price of oil and LPG, and strong sales volume growth, especially in oil. The strong growth in operating profits was driven by the growth in oil sales volume. Oil volumes grew substantially, benefiting from strong organic growth in both the Republic of Ireland and Northern Ireland. Following the integration with Emo Oil of recent acquisitions in Northern Ireland - Cawoods, acquired in August 1999, and Fuel Services, acquired in July 2000 - DCC is now the leading marketer of fuel oil and distillates in Northern Ireland. LPG volumes grew satisfactorily in the first half. Sales price increases were implemented in all markets during the period as the cost of butane and propane reached new highs, exacerbated in local currency terms by the strength of the dollar. Food 2000 1999 Turnover EUR87.4m EUR76.7m +13.9% Operating profit EUR4.3m EUR4.2m +3.2% Operating margin 5.0% 5.5% DCC's focus on higher growth segments of the Irish food market - including health foods, snacks, ground coffee, wine and soft drinks - together with its deep distribution reach to a broad retail and food service customer base, generated sales growth of 13.9% in the first half. Profit growth was modest, held back by the increased euro cost of Sterling purchases and planned investment in additional sales and marketing resources. Supply Chain Management Services (SerCom Solutions) 2000 1999 Turnover EUR40.5m EUR22.8m +77.3% Operating profit EUR0.7m EUR0.5m +45.8% Operating margin 1.6% 2.0% Supply Chain Management Services (SerCom Solutions) made excellent progress in the development of its business in the first half as evidenced by the turnover increase of 77.3%. The senior management team was significantly strengthened and the investment in the upgrading of IT systems will be largely complete by the end of the current financial year. These developments are enhancing SerCom Solutions' ability to provide an expanded range of supply chain management services to its customers in the IT and telecommunications sectors. Other Interests 2000 1999 Turnover EUR14.7m EUR12.5m +17.9% Operating profit EUR2.1m EUR1.9m +11.4% The Group's principal other interest is its 49% shareholding in Manor Park Homebuilders. Manor Park has a substantial land bank, which has been acquired at a very attractive cost relative to current market values, leaving it well placed for continued profit growth in the future. DCC plc SUMMARISED CONSOLIDATED PROFIT AND LOSS ACCOUNT Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 Sept. 30 Sept. 31 March 2000 1999 2000 Notes EUR'000 EUR'000 EUR'000 Turnover - continuing activities 2 822,571 532,017 1,316,111 - discontinued activities 2 - 104,071 210,889 2 822,571 636,088 1,527,000 Operating profit - continuing activities 3 34,251 27,389 73,785 - discontinued activities 3 - 1,847 3,958 34,251 29,236 77,743 Net interest payable (2,129) (3,251) (6,400) Profit on ordinary activities before net exceptional gains, goodwill amortisation and taxation 32,122 25,985 71,343 Net exceptional gains - - 71,365 Goodwill amortisation (2,352) (1,694) (3,535) Profit on ordinary activities before taxation 3 29,770 24,291 139,173 Taxation (4,818) (3,898) (18,701) Profit after taxation 24,952 20,393 120,472 Minority interests (659) (380) (631) Profit attributable to Group shareholders 24,293 20,013 119,841 Dividends 4 (6,691) (5,631) (15,366) Profit retained for the period 17,602 14,382 104,475 Earnings per ordinary share - basic (cent) 5 27.96c 22.97c 137.39c - fully diluted (cent) 5 27.33c 22.39c 133.43c Adjusted earnings per ordinary share - basic (cent) 5 30.67c 24.91c 68.80c - fully diluted (cent) 5 29.97c 24.29c 66.89c Dividend per ordinary share (cent) 4 7.74c 6.45c 17.60c DCC plc STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 Sept. 30 Sept. 31 March 2000 1999 2000 EUR'000 EUR'000 EUR'000 Profit attributable to Group shareholders 24,293 20,013 119,841 Movement on associated undertaking reserves 38 1,834 2,307 Exchange adjustments 353 932 4,968 Total recognised gains and losses relating to the period 24,684 22,779 127,116 DCC plc CONSOLIDATED BALANCE SHEET Unaudited Unaudited Audited 30 Sept. 30 Sept. 31 March 2000 1999 2000 Note EUR'000 EUR'000 EUR'000 Fixed Assets Intangible assets - goodwill 83,957 50,595 75,559 Tangible fixed assets 129,353 114,237 123,094 Financial assets - associated undertakings 36,103 61,560 34,598 249,413 226,392 233,251 Current Assets Stocks 96,770 75,100 76,016 Debtors 274,289 173,678 248,401 Cash and term deposits 367,223 299,020 551,276 738,282 547,798 875,693 Creditors: Amounts falling due within one year Bank and other debt 155,341 87,549 191,781 Trade and other creditors 258,899 165,060 255,133 Deferred acquisition consideration 6,146 3,250 11,000 Corporation tax 15,637 9,575 17,937 Proposed dividend 6,619 5,631 9,735 442,642 271,065 485,586 Net Current Assets 295,640 276,733 390,107 Total Assets less Current Liabilities 545,053 503,125 623,358 FINANCED BY: Creditors: Amounts falling due after more than one year Bank and other debt 89,482 173,967 161,725 Unsecured Notes due 2008/11 108,933 100,381 108,611 Deferred acquisition consideration 15,814 7,541 17,569 214,229 281,889 287,905 Provisions for Liabilities and Charges 2,060 2,215 2,090 216,289 284,104 289,995 Capital and Reserves Equity share capital and share premium 145,759 144,159 143,814 Reserves 178,634 69,445 185,309 Equity Shareholders' Funds 324,393 213,604 329,123 Minority interests 3,541 4,191 3,274 Capital grants 830 1,226 966 328,764 219,021 333,363 545,053 503,125 623,358 Net cash/(debt) 6 13,467 (62,877) 89,159 DCC plc RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 Sept. 30 Sept. 31 March 2000 1999 2000 EUR'000 EUR'000 EUR'000 Profit attributable to Group shareholders 24,293 20,013 119,841 Dividends (6,691) (5,631) (15,366) Profit retained for the period 17,602 14,382 104,475 Acquisition of own shares (24,668) - - Goodwill previously eliminated against reserves - - 20,733 Equity share capital issued (net of expenses) 1,945 1,235 1,234 Movement on associated undertaking reserves 38 1,834 2,492 Exchange adjustments 353 932 4,968 Net movement in equity shareholders' funds (4,730) 18,383 133,902 Opening equity shareholders' funds 329,123 195,221 195,221 Closing equity shareholders' funds 324,393 213,604 329,123 DCC plc CASH FLOW Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 Sept. 30 Sept. 31 March 2000 1999 2000 Note EUR'000 EUR'000 EUR'000 Inflows Operating cash flow (see below) (13,898) 5,362 96,297 Disposal proceeds 16,026 - 109,745 Share issues (net) 1,945 10 9 4,073 5,372 206,051 Outflows Capital expenditure (net) 13,116 11,669 24,736 Acquisitions and investments 23,299 19,089 37,575 Acquisition of own shares 24,668 - - Interest paid 2,764 3,970 5,549 Taxation paid 5,765 4,008 9,400 Dividends paid 9,807 8,070 13,701 Other 62 40 86 79,481 46,846 91,047 Net cash (outflow)/inflow (75,408) (41,474) 115,004 Exchange movements (284) (1,106) (5,548) Movement in net (debt)/cash for the period (75,692) (42,580) 109,456 Opening net cash/(debt) 89,159 (20,297) (20,297) Closing net cash/(debt) 6 13,467 (62,877) 89,159 OPERATING CASH FLOW Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 Sept. 30 Sept. 31 March 2000 1999 2000 EUR'000 EUR'000 EUR'000 Group operating profit 34,251 29,236 77,743 Operating profit of associated undertakings (3,672) (6,804) (15,879) Dividends received from associated undertakings 917 1,484 2,768 Depreciation of tangible fixed assets 9,808 8,612 18,890 Amortisation of capital grants (118) (167) (296) (Increase)/decrease in working capital (54,593) (26,817) 15,823 Other (491) (182) (2,752) Operating cash flow (13,898) 5,362 96,297 DCC plc Notes to the Interim Results for the Six Months ended 30 September 2000 1. Basis of Preparation The interim financial statements for the six months ended 30 September 2000 have been prepared in accordance with the accounting policies set out in the financial statements for the year ended 31 March 2000. The interim financial statements for the six months ended 30 September 2000 and the comparative figures for the six months ended 30 September 1999 are unaudited. The summary financial statements for the year ended 31 March 2000 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. Comparative amounts have been regrouped and restated, where necessary, on the same basis as amounts for the current period. The Group's financial statements are prepared in euros denoted by the symbol EUR. The exchange rates used in translating sterling balance sheet and profit and loss amounts were as follows: 6 months ended 6 months ended Year ended 30 September 2000 30 September 1999 31 March 2000 EUR 1=Stg£ EUR 1=Stg£ EUR 1=Stg£ Balance sheet (closing rate) 0.597 0.648 0.599 Profit and loss (average rate) 0.610 0.658 0.643 2. Turnover Unaudited 6 months Unaudited 6 months Audited ended 30 Sept. 2000 ended 30 Sept. 1999 year ended Market Subsidiary Assoc Subsidiary Assoc 31 March 2000 Segment U'takings U'takings Total U'takings U'takings Total Total EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 IT 324,920 2,935 327,855 203,392 - 203,392 542,298 Healthcare 78,882 18,937 97,819 68,240 8,752 76,992 155,555 Energy 254,327 - 254,327 139,627 - 139,627 369,812 Food 51,421 36,008 87,429 43,656 33,075 76,731 160,372 Supply Chain Mgt. Services 40,456 - 40,456 22,816 - 22,816 61,551 Other Interests - 14,685 14,685 - 12,459 12,459 26,523 Continuing activities 750,006 72,565 822,571 477,731 54,286 532,017 1,316,111 Discontinued activities - - - 8,040 96,031 104,071 210,889 Turnover 750,006 72,565 822,571 485,771 150,317 636,088 1,527,000 Of which acquisitions contributed 13,113 9,414 49,547 3. Profit before Taxation Unaudited 6 months Unaudited 6 months Audited ended 30 Sept. 2000 ended 30 Sept. 1999 year ended Market Subsidiary Assoc Subsidiary Assoc 31 March 2000 Segment U'takings U'takings Total U'takings U'takings Total Total EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 IT 11,522 123 11,645 8,557 - 8,557 20,458 Healthcare 9,189 629 9,818 7,109 506 7,615 15,951 Energy 5,660 - 5,660 4,649 - 4,649 20,053 Food 3,552 788 4,340 3,526 678 4,204 8,916 Supply Chain Mgt. Services 656 - 656 450 - 450 3,812 Other Interests - 2,132 2,132 - 1,914 1,914 4,595 Continuing activities 30,579 3,672 34,251 24,291 3,098 27,389 73,785 Discontinued activities - - - (1,859) 3,706 1,847 3,958 Group operating profit * 30,579 3,672 34,251 22,432 6,804 29,236 77,743 Net interest payable (1,563) (566) (2,129) (3,046) (205) (3,251) (6,400) Profit on ordinary activities before net exceptional gains, goodwill amortisation and taxation 29,016 3,106 32,122 19,386 6,599 25,985 71,343 Net exceptional gains - - - - - - 71,365 Goodwill amort. (2,076) (276) (2,352) (1,285) (409) (1,694) (3,535) Profit before taxation 26,940 2,830 29,770 18,101 6,190 24,291 139,173 *Of which acquisitions contributed (179) (23) 598 4. Dividends Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 Sept. 30 Sept. 31 March 2000 1999 2000 EUR'000 EUR'000 EUR'000 Per Ordinary Share Interim dividend of 7.74 cent per share (1999: 6.45 cent) 6,619 5,631 5,631 Proposed final dividend of 11.15 cent per share - - 9,735 Additional final dividend 72 - - 6,691 5,631 15,366 The additional final dividend of EUR72,000 is in respect of shares issued after the date of approval of the relevant accounts but qualifying for receipt of the dividend declared. 5. Earnings per Ordinary Share and Adjusted Earnings per Ordinary Share Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 Sept. 30 Sept. 31 March 2000 1999 2000 EUR'000 EUR'000 EUR'000 Profit after taxation and minority interests 24,293 20,013 119,841 Net exceptional gains (net of taxation) - - (63,365) Goodwill amortisation 2,352 1,694 3,535 Adjusted profit after taxation and minority interests 26,645 21,707 60,011 Basic earnings per ordinary share cent cent cent Basic earnings per ordinary share 27.96 22.97 137.39 Adjusted basic earnings per ordinary share* 30.67 24.91 68.80 Weighted average number of ordinary shares in issue during the period ('000) 86,890 87,141 87,225 Fully diluted earnings per ordinary share Fully diluted earnings per ordinary share 27.33 22.39 133.43 Adjusted fully diluted earnings per ordinary share* 29.97 24.29 66.89 Fully diluted weighted average number of ordinary shares ('000) 89,276 89,678 89,925 *adjusted to exclude goodwill amortisation and net exceptional items which are not expected to recur regularly. The fully diluted earnings for the purpose of the fully diluted earnings per ordinary share calculation were EUR24.400 million (Six months ended 30 September 1999: EUR20.087 million and year ended 31 March 2000: EUR119.989 million) and EUR26.752 million (Six months ended 30 September 1999: EUR21.781 million and year ended 31 March 2000: EUR60.159 million) for the purpose of the adjusted fully diluted earnings per ordinary share calculation. 6. Analysis of Closing Net Cash/(Debt) Unaudited Unaudited Audited 30 Sept. 30 Sept. 31 March 2000 1999 2000 EUR'000 EUR'000 EUR'000 Cash and term deposits 367,223 299,020 551,276 Bank and other debt repayable within one year (155,341) (87,549) (191,781) Bank and other debt repayable after more than one year (89,482) (173,967) (161,725) Unsecured Notes due 2008/11 (108,933) (100,381) (108,611) Net cash/(debt) 13,467 (62,877) 89,159 7. Distribution of Interim Report This announcement and further information on DCC is available at the Company's website at www.dcc.ie. A printed copy of this report is being posted to shareholders and will be available to the public at the Company's registered office at DCC House, Stillorgan, Blackrock, Co. Dublin.

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