Interim Results
DCC PLC
11 November 2002
11 November 2002
DCC Group Earnings up 7.1%
Interim Results for the Six Months ended 30 September 2002
€
Turnover 1,030.5 m Up 11.3%
Operating profit 41.1 m Up 4.8%
Profit before net exceptional items, 38.8 m Up 4.1%
goodwill amortisation and taxation
Adjusted earnings per share* 39.46 cent Up 7.1%
Dividend per share 10.217 cent Up 10.0%
Net cash at 30 September 2002 35.9 m
* adjusted to exclude net exceptional items and goodwill amortisation
DCC, the business support services group, today announced its results for the
six months ended 30 September 2002.
Commenting on the results, DCC's Chief Executive/Deputy Chairman, Jim Flavin,
said:
'This very satisfactory result again shows DCC's resilience in a challenging
business environment.
DCC is well positioned to achieve strong growth in both the more significant
second half of the current financial year and the next financial year. The
longer term outlook remains very encouraging.'
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
Results
The very satisfactory result in the six months ended 30 September 2002 again
shows DCC's resilience in a challenging business environment.
• Turnover was up 11.3% to €1,030.5 million.
• Operating profit was up 4.8% to €41.1 million.
• The net interest charge for the period was €2.3 million (€2.0
million).
• Profit before net exceptional items, goodwill amortisation and
taxation increased by 4.1% to €38.8 million.
• Adjusted earnings per share (i.e. excluding net exceptional items and
goodwill amortisation) increased by 7.1% to 39.46 cent.
• Interim dividend is up 10.0% to 10.217 cent.
Business highlights
DCC is a business support services group focused on sales, marketing and
distribution in the energy, IT, healthcare and food markets, with operations in
Britain, Ireland and Continental Europe.
• DCC's excellent growth in the energy market continued with operating
profits up 23.6% to €10.1 million.
• DCC's IT distribution operations again achieved an excellent result
relative to the overall IT market with operating profits up 3.2% to €13.6
million.
• DCC's healthcare operations were severely impacted by the loss of its
supply of Shoprider powered mobility products, with operating profits down
41.0% to €6.3m.
• DCC's food business recorded an increase in operating profits of
13.4% to €5.8 million.
• DCC's other activities achieved an excellent increase of 153.9% in
operating profits to €5.3m.
Development activity
On 4 November, DCC announced that it had agreed to acquire, subject to
completion, Centrica's liquefied petroleum gas (LPG) business, British Gas LPG,
for a consideration of £41.1 million (approximately €64.5 million) in cash. The
acquisition of British Gas LPG will double DCC's share of the LPG market in
Britain to 21%, making it the second largest LPG company in Britain.
British Gas LPG generated operating profits of £2.3 million on turnover of £54.1
million in the year ended 31 December 2001. For the eight months to 31 August
2002, unaudited operating profits were £2.9 million (approximately €4.5
million).
The acquisition of British Gas LPG will continue the strong growth momentum in
DCC's substantial energy operations and together with the Alta Gas acquisition
last year is expected to lead to a substantial increase in the profit
contribution to DCC from the LPG market in Britain. It is anticipated that the
transaction will be completed by the end of November 2002.
In the six months ended 30 September 2002, DCC's development expenditure
totalled €58.4 million. The cash impact of acquisitions amounted to €5.3 million
and related mainly to payments of deferred consideration, which had been
provided for at 31 March 2002. Capital expenditure was €16.8 million. Working
capital investment increased by €36.3 million reflecting normal seasonality and
sales growth in the period. Working capital equated to 19.4 days sales, which
compares favourably with 21.9 days at 30 September 2001.
Financial strength
At 30 September 2002, the Group had net cash of €35.9 million and shareholders'
funds of €408.5 million. DCC's strong financial position leaves the Group well
placed to pursue its growth objectives.
Dividend
The Board has decided to pay an interim dividend of 10.217 cent per share - up
10.0% on the interim dividend paid in the previous financial year. The interim
dividend will be paid on 2 December 2002 to shareholders on the register at the
close of business on 22 November 2002.
Outlook
DCC is well positioned to achieve strong growth in both the more significant
second half of the current financial year and the next financial year. The
longer term outlook remains very encouraging.
Operating review
Energy
2002 2001
Turnover €365.1m €295.6m +23.5%
Operating profit €10.1m €8.2m +23.6%
DCC's excellent growth in the energy market continued.
This excellent result reflects strong volume growth in both LPG and oil
products, with good contributions from acquisitions completed in the prior year.
Last year DCC extended its oil marketing and distribution activities to Scotland
and Northern England and is continuing to seek suitable opportunities in the
fragmented British oil distribution sector.
The recently announced planned acquisition of British Gas LPG will continue the
strong growth momentum in DCC's energy operations. This acquisition, together
with the Alta Gas acquisition last year, will significantly strengthen DCC's
position in the LPG market in Britain. DCC Energy is now one of the largest
independent companies marketing and distributing LPG and oil in Britain and
Ireland.
DCC's environmental services business continues to develop well following the
acquisition of Envirotech last year and is expanding into Britain, initially in
the marketing of chemicals for the treatment of water, effluents and process
liquids.
IT (SerCom Distribution)
2002 2001
Turnover €411.1m €363.7m +13.0%
Operating profit €13.6m €13.2m +3.2%
Operating margin 3.3% 3.6%
DCC's IT Distribution operations again achieved an excellent result relative to
the overall IT market.
DCC's business in the British hardware distribution sector continued its
excellent record of consistent out-performance by growing its revenue and
profits in a marketplace that remained depressed throughout the first half. The
business has continued to expand its product and supplier base and is well
placed to capitalise on opportunities to further increase its market share.
DCC's British software distribution business had a very good first half,
benefiting from a positive market background and from sales of the Xbox games
console and related software. The outlook for the games software market sector
remains encouraging and the business is well positioned as the leading marketer
and distributor in this sector.
DCC's Irish IT distribution business achieved strong profit growth. The
business strengthened its market position and benefited from efficiency
improvements made last year. In common with DCC's other IT distribution
businesses, the business also benefited from the strong financial position of
the Group, which has increased its attractiveness to suppliers in the current
environment.
In Continental Europe, DCC's specialist storage distribution business performed
well in very difficult market conditions. This business will benefit from an
upturn in IT expenditure by large corporates. The business has broadened its
product range and maintained its market leading position in storage distribution
in France, Spain and Portugal.
Healthcare
2002 2001
Turnover €95.3m €100.8m -5.5%
Operating profit €6.3m €10.6m -41.0%
Operating margin 6.6% 10.6%
DCC's healthcare operations were severely impacted by the loss of its supply of
Shoprider powered mobility products.
DCC's hospital supply business recorded excellent profit growth. Satisfactory
organic growth was achieved against a background of tighter spending on capital
equipment by Irish hospitals. This growth was augmented by a strong
contribution from TechnoPharm, the fast growing distributor of specialist
pharmaceutical products to acute care hospitals in Ireland, which was acquired
in February 2002. DCC continues to develop important strategic alliances with
its major customers in the Irish hospital sector.
DCC's nutraceuticals business is now well placed for growth following continuing
progress in broadening its customer base. The business recently completed the
first phase of an expansion of its soft gel encapsulation facility in Wales,
which is licensed by the Medicines Control Agency.
As previously announced through the AGM Statement on 5 July, DCC's mobility and
rehabilitation business has been severely impacted by the loss of its supply of
Shoprider powered mobility products. This arose from breaches by the
manufacturer of a long-term supply agreement. Legal proceedings have been issued
and are being aggressively pursued. A replacement range of powered mobility
products has been launched under DCC's own DMA brand and other procurement
initiatives are underway to improve the overall competitive position of the
business over time.
Food
2002 2001
Turnover €98.1m €90.1m +8.9%
Operating profit €5.8m €5.1m +13.4%
Operating margin 5.9% 5.7%
DCC's food business recorded good growth in operating profits.
Good sales growth was generated across DCC's range of own and third party
branded products. There was strong growth in sales of healthy foods, including
DCC's Kelkin brand. Substantial growth was recorded in wine sales, benefiting
from increased marketing activity, while snack foods also performed well.
Other activities
DCC's other activities, SerCom Solutions and Manor Park Homebuilders (an
associate company), contributed operating profits of €5.3 million (2001: €2.1m).
SerCom Solutions, which provides supply chain management services to the IT
sector, had an improved performance despite the continuing challenging
conditions in its market. Manor Park, a leading Irish house builder, had an
excellent result benefiting from sales at its principal sites at Ongar in west
Dublin, in Drogheda and in Cork.
Consolidated Profit and Loss Account
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2002 2001 2002
Notes €'000 €'000 €'000
Turnover 2 1,030,489 925,604 2,048,889
Operating profit 3 41,061 39,187 102,712
Net interest payable (2,307) (1,972) (5,003)
Profit on ordinary activities
before net exceptional items,
goodwill amortisation and taxation 38,754 37,215 97,709
Net exceptional items - 18 (1,126)
Goodwill amortisation (3,505) (2,533) (5,671)
Profit on ordinary
activities before taxation 3 35,249 34,700 90,912
Taxation (5,426) (5,210) (13,679)
Profit after taxation 29,823 29,490 77,233
Minority interests (341) (497) (940)
Profit attributable to
Group shareholders 29,482 28,993 76,293
Dividends 4 (8,542) (7,750) (20,466)
Profit retained for the period 20,940 21,243 55,827
Earnings per ordinary share
- basic (cent) 5 35.27c 33.89c 90.26c
- diluted (cent) 5 34.95c 33.66c 89.38c
Adjusted earnings per
ordinary share - basic (cent) 5 39.46c 36.83c 98.30c
- diluted (cent) 5 39.10c 36.57c 97.35c
Dividend per ordinary share (cent) 4 10.217c 9.288c 24.500c
Consolidated Balance Sheet
Unaudited Restated
Unaudited Audited
30 Sept. 30 Sept. 31 March
2002 2001 2002
Note €'000 €'000 €'000
Fixed Assets
Intangible assets - goodwill 115,629 96,978 118,332
Tangible fixed assets 160,353 144,059 159,156
Financial assets - associated
undertakings 43,547 33,340 38,976
319,529 274,377 316,464
Current Assets
Stocks 102,017 117,987 112,795
Debtors 297,992 304,568 334,341
Cash and term deposits 286,090 392,382 304,661
686,099 814,937 751,797
Creditors: Amounts falling
due within one year
Bank and other debt 121,036 218,416 108,795
Amount due in respect
of buyback of shares - 21,044 -
Trade and other creditors 296,421 318,722 377,151
Corporation tax 19,334 14,361 18,473
Proposed dividend 8,542 7,750 12,716
445,333 580,293 517,135
Net Current Assets 240,766 234,644 234,662
Total Assets less Current
Liabilities 560,295 509,021 551,126
FINANCED BY:
Creditors: Amounts falling due
after more than one year
Bank and other debt 25,923 32,519 26,757
Unsecured Notes due 2008/11 103,257 104,502 106,036
Deferred acquisition consideration 14,780 10,144 18,954
143,960 147,165 151,747
Provisions for Liabilities
and Charges 2,805 2,762 2,816
146,765 149,927 154,563
Capital and Reserves
Equity share capital and
share premium 146,458 146,481 146,465
Reserves 262,047 207,975 244,965
Equity Shareholders' Funds 408,505 354,456 391,430
Minority interests 3,913 3,662 4,010
Capital grants 1,112 976 1,123
413,530 359,094 396,563
560,295 509,021 551,126
Net cash 6 35,874 36,945 63,073
Reconciliation of Movements in Equity Shareholders' Funds
Unaudited Restated
Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2002 2001 2002
€'000 €'000 €'000
Profit attributable to Group shareholders 29,482 28,993 76,293
Dividends (8,542) (7,750) (20,466)
Profit retained for the period 20,940 21,243 55,827
Share buyback (inclusive of costs) - (21,307) (21,307)
Issues of equity share capital
net of capital duty 80 1,246 2,464
Movement on other reserves
of associated undertakings (189) (30) 8
Exchange adjustments and other (3,756) (419) 715
Net movement in shareholders' funds 17,075 733 37,707
Opening shareholders' funds as
previously reported 391,430 354,686 354,686
Prior year adjustment - deferred tax - (963) (963)
Closing shareholders' funds 408,505 354,456 391,430
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2002 2001 2002
Note €'000 €'000 €'000
Inflows
Operating cash flow (see below) 9,608 (2,683) 117,470
Disposal proceeds 1,590 8,259 11,358
Share issues (net) 80 - 792
11,278 5,576 129,620
Outflows
Capital expenditure (net) 16,354 14,687 33,006
Acquisitions/payment of
deferred consideration 5,340 16,895 59,637
Acquisition of own shares - - 21,307
Interest paid 1,723 582 3,789
Tax paid 1,878 8,294 12,461
Dividends paid 12,716 11,449 19,199
38,011 51,907 149,399
Net cash outflow (26,733) (46,331) (19,779)
Translation adjustment (466) 45 (379)
Movement in net cash for the period (27,199) (46,286) (20,158)
Opening net cash 63,073 83,231 83,231
Closing net cash 6 35,874 36,945 63,073
Operating Cash Flow
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2002 2001 2002
€'000 €'000 €'000
Group operating profit 41,061 39,187 102,712
Operating profit of associated undertakings (8,099) (4,383) (13,602)
Dividends received from associated
undertakings 836 796 1,264
Depreciation of tangible fixed assets 13,436 11,012 25,268
(Increase)/decrease in working capital (36,271) (48,388) 6,904
Other (1,355) (907) (5,076)
Operating cash flow 9,608 (2,683) 117,470
Notes to the Interim Results
for the Six Months ended 30 September 2002
1. Basis of Preparation
The interim financial statements for the six months ended 30 September 2002 have
been prepared in accordance with the accounting policies set out in the
financial statements for the year ended 31 March 2002. The Group adopted FRS19
'Deferred Tax' during the year ended 31 March 2002. Deferred tax is recognised
in respect of all timing differences that have originated but not reversed at
the balance sheet date. The comparative figures for the six months ended 30
September 2001 have been restated to take account of the effect of a prior year
adjustment in respect of this change of accounting policy. The effect on the
comparative figures was to decrease shareholders' funds at 30 September 2001 by
€0.963 million.
The interim financial statements for the six months ended 30 September 2002 and
the comparative figures for the six months ended 30 September 2001 are
unaudited. The summary financial statements for the year ended 31 March 2002
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.
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 amounts were as follows:
6 months ended 6 months ended Year ended
30 Sept. 2002 30 Sept. 2001 31 March 2002
€1=Stg£ €1=Stg£ €1=Stg£
Balance sheet (closing rate) 0.630 0.622 0.613
Profit and loss (average rate) 0.631 0.614 0.615
2. Turnover
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2002 2001 2002
€'000 €'000 €'000
Energy 365,070 295,628 717,623
IT 411,054 363,714 813,769
Healthcare 95,261 100,808 192,474
Food 98,133 90,114 184,219
Other Activities 60,971 75,340 140,804
1,030,489 925,604 2,048,889
Analysis of turnover by subsidiary undertakings
and associated undertakings:
Subsidiary undertakings 950,666 842,405 1,888,678
Associated undertakings 79,823 83,199 160,211
1,030,489 925,604 2,048,889
Of which acquisitions contributed - 35,709 187,251
Notes to the Interim Results
for the Six Months ended 30 September 2002
3. Profit before Taxation
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2002 2001 2002
€'000 €'000 €'000
Energy 10,094 8,169 34,979
IT 13,600 13,176 30,631
Healthcare 6,279 10,643 20,717
Food 5,804 5,118 11,007
Other Activities 5,284 2,081 5,378
Group operating profit * 41,061 39,187 102,712
Net interest payable (2,307) (1,972) (5,003)
Profit on ordinary activities
before net exceptional items,
goodwill amortisation and taxation 38,754 37,215 97,709
Net exceptional items - 18 (1,126)
Goodwill amortisation (3,505) (2,533) (5,671)
Profit before taxation 35,249 34,700 90,912
Analysis of operating profit
by subsidiary undertakings
and associated undertakings:
Subsidiary undertakings 32,962 34,804 89,110
Associated undertakings 8,099 4,383 13,602
Operating profit 41,061 39,187 102,712
*Of which acquisitions contributed - 395 7,112
4. Dividends
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2002 2001 2002
€'000 €'000 €'000
Interim dividend of 10.217 cent
per share (2001: 9.288 cent per share) 8,542 7,750 7,750
Proposed final dividend of
15.212 cent per share - - 12,716
8,542 7,750 20,466
Notes to the Interim Results
for the Six Months ended 30 September 2002
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
2002 2001 2002
€'000 €'000 €'000
Profit after taxation and minority interests 29,482 28,993 76,293
Net exceptional items - (18) 1,126
Goodwill amortisation 3,505 2,533 5,671
Adjusted profit after taxation and
minority interests 32,987 31,508 83,090
Basic earnings per ordinary share cent cent cent
Basic earnings per ordinary share 35.27 33.89 90.26
Adjusted basic earnings per ordinary share* 39.46 36.83 98.30
Weighted average number of ordinary shares
in issue during the period ('000) 83,595 85,549 84,527
Diluted earnings per ordinary share
Diluted earnings per ordinary share 34.95 33.66 89.38
Adjusted diluted earnings per ordinary share* 39.10 36.57 97.35
Diluted weighted average number of
ordinary shares ('000) 84,356 86,147 85,354
*adjusted to exclude goodwill amortisation and net exceptional items.
6. Analysis of Net Cash
Unaudited Unaudited Audited
30 Sept. 30 Sept. 31 March
2002 2001 2002
€'000 €'000 €'000
Cash and term deposits 286,090 392,382 304,661
Bank and other debt repayable within
one year (121,036) (218,416) (108,795)
Bank and other debt repayable
after more than one year (25,923) (32,519) (26,757)
Unsecured Notes due 2008/11 (103,257) (104,502) (106,036)
Net cash 35,874 36,945 63,073
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. END
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