Interim Results
DCC PLC
10 November 2003
Interim Results for the Six Months ended 30 September 2003
€
Sales
- continuing activities 975.1 m Down 4.1% (Underlying Up 1.4%)*
Operating profit**
- continuing activities 41.2 m Up 3.4% (Underlying Up 5.6%)*
Profit before net exceptional items,
goodwill amortisation and tax 38.8 m Up 0.1%
Adjusted earnings per share** 40.32 cent Up 2.2%
Dividend per share 11.75 cent Up 15.0%
Net cash at 30 September 2003 32.1 m
* on a constant currency basis
** excluding net exceptional items and goodwill amortisation
DCC, the business support services group, today announced its results for the
six months ended 30 September 2003.
Commenting on the results, DCC's Chief Executive/Deputy Chairman, Jim Flavin,
said:
'DCC achieved excellent profit growth in Energy, Healthcare and Other
Activities. The results of DCC's IT division were impacted by challenging
trading conditions in the IT industry. Against this background, the increase
in Group operating profit of 5.6% on a constant currency basis is a creditable
result.
Cash generation was excellent in the period resulting in net cash of €32.1
million at 30 September 2003.
DCC's business is significantly second-half weighted and the Group expects good
underlying growth in the second half although the reported rate of growth will
be held back by the adverse impact of weaker sterling on the translation of UK
profits.'
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
Results
• Sales from continuing activities were €975.1 million in the period, a
decrease of 4.1% and an underlying increase of 1.4% when adjusted for the
impact of weaker sterling.
• Operating profit from continuing activities grew by 3.4% to €41.2
million - an underlying increase of 5.6% when adjusted for the impact of
weaker sterling.
• Net interest charge for the period was €2.4 million (2002: €2.3 million).
• Profit before net exceptional items, goodwill amortisation and taxation
was unchanged at €38.8 million.
• Adjusted earnings per share (i.e. excluding net exceptional items and
goodwill amortisation) increased by 2.2% to 40.32 cent.
• Interim dividend increased by 15.0% to 11.75 cent per share.
DCC achieved excellent profit growth in Energy, Healthcare and Other Activities.
The results of DCC's IT division were impacted by challenging trading conditions
in the IT industry. Against this background, the increase in Group operating
profit of 5.6% on a constant currency basis is a creditable result.
Excellent cash flow
Cash generation was excellent with operating cash flow before exceptional items
of €52.9 million in the period. Working capital decreased by €4.0 million since
31 March 2003 to equate to 17.0 days sales at 30 September 2003, which compares
favourably with 19.4 days at 30 September 2002. The cash impact of acquisitions
amounted to €4.5 million which included payments of deferred consideration
amounting to €2.1 million that had been provided for at 31 March 2003.
Business overview
DCC is a business support services group principally focused on sales, marketing
and distribution in the energy, IT, healthcare and food markets, with operations
in Britain, Ireland and Continental Europe.
• Divisional operating profits were as follows:
€ m Growth Constant currency growth
• Energy 13.0 +29.0% +32.9%
• IT 10.6 -27.3% -24.1%
• Healthcare & Food 11.5 +5.8% +6.1%
• Other Activities 6.1 +40.2% +40.2%
Total
- continuing activities 41.2 +3.4% +5.6%
• DCC achieved excellent growth in its energy business with operating
profit up 29.0% to €13.0 million following the successful integration of
acquisitions completed in recent years.
• DCC's IT distribution business, SerCom Distribution, recorded an
operating profit of €11.6 million, a decrease of 15.0% (11.6% when adjusted
for the effects of weaker sterling) due to difficult trading conditions
during the period, particularly in the UK hardware industry. SerCom Solutions,
the supply chain management services business, reported an operating loss of
€1.0 million compared to an operating profit of €0.9 million in the
corresponding period of last year.
• DCC Healthcare achieved an excellent increase in operating profit of
28.5% to €6.5 million, with significant improvements in both its hospital and
community care and its nutraceuticals operations.
DCC's food business was impacted by the slowdown across the Irish grocery and
food service sectors resulting in a 13.8% decrease in operating profit to
€5.0 million.
• DCC's Other Activities, which principally comprise its 49% owned
associate company Manor Park Homebuilders, achieved excellent operating profit
growth of 40.2% to €6.1 million driven by a significant increase in the number
of completed house sales during the period.
Net exceptional items
Net operating and non-operating exceptional items totalled €3.6 million. They
principally comprised restructuring and redundancy costs in SerCom Solutions
and costs associated with the legal action against Pihsiang for its breach of
contract to supply Shoprider powered mobility products to DCC.
Development activity
DCC's development expenditure totalled €17.1 million in the six months ended 30
September 2003. Committed acquisition expenditure amounted to €3.3 million in
the period, of which €0.9 million was deferred. Capital expenditure was €13.8
million.
The Group continues to aggressively pursue organic growth and is actively
seeking acquisitions in all areas with a particular focus on Energy and
Healthcare.
Financial strength
At 30 September 2003, the Group had net cash of €32.1 million and shareholders'
funds of €443.0 million. DCC's strong financial position leaves the Group well
placed to pursue its growth objectives.
During the period DCC bought back 40,000 of its own shares at a cost of €0.4
million.
Dividend increase of 15%
Having regard to DCC's strong balance sheet and high ongoing cash generation the
Board has decided to increase the interim dividend by 15% to 11.75 cent per
share. The interim dividend will be paid on 1 December 2003 to shareholders on
the register at the close of business on 21 November 2003.
Outlook
DCC's business is significantly second-half weighted and the Group expects good
underlying growth in the second half although the reported rate of growth will
be held back by the adverse impact of weaker sterling on the translation of UK
profits.
Operating review
Energy
2003 2002
Sales €375.3m €365.1m + 2.8%
Operating profit €13.0m €10.1m + 29.0%
DCC's energy business has grown significantly in size and strength in recent
years. This growth continued in the six month period ended 30 September 2003
with the division reporting an excellent increase in operating profit.
LPG sales volumes increased by 47.5%, benefitting from the acquisition of
British Gas' LPG business in the previous year, while sales volumes in oil
distribution were impacted by the unusually mild weather and fell by 4.8% during
the period.
Acquisition and integration benefits drove improved performance. The integration
of British Gas LPG, which was acquired in the prior year, with DCC's existing UK
LPG distribution business has been successfully completed and planned synergies
are being achieved. In addition, the performance of DCC's Scottish oil business,
acquired in September 2001 from BP, is continuing to benefit from operational
improvements implemented since acquisition.
DCC's environmental services business continued to develop well. The
acquisitions of Envirotech and Shannon Environmental Services in the previous
year have increased the scale and opportunities for synergy in DCC's
environmental services business as it continues to broaden the scope of services
offered to customers.
IT
2003 2002
Sales
- SerCom Distribution €378.6m €411.0m - 7.9%
- SerCom Solutions €35.3m €43.2m - 18.2%
€413.9m €454.2m - 8.9%
Operating profit
- SerCom Distribution €11.6m €13.6m - 15.0%
- SerCom Solutions €(1.0m) €0.9m - 210.6%
€10.6m €14.5m - 27.3%
Operating margin
- SerCom Distribution 3.1% 3.3%
SerCom Distribution
SerCom Distribution achieved strong sales volume growth in the UK and Ireland.
However, as a result of severe product sales price deflation in the last six
months underlying sales declined by 1% on a constant currency basis. Underlying
operating profit declined by 11.6% on a constant currency basis.
The severe price deflation had a particular impact on margins in SerCom
Distribution's UK hardware business which was partly offset by tight cost
control.
DCC's UK software distribution business had a satisfactory first half
although it did not benefit from any major new product releases by its vendors
as had been the case in the same period in the previous year with the newly
launched X-box games console and related software.
The Irish IT distribution business had a very good first half benefitting from
its market leading position and strong relationships with all of the leading
hardware and software vendors.
DCC's Continental European IT distribution business benefitted from improved
margins and good cost control in a tough trading environment. This business
continues to broaden its product range and agreed a new distribution agreement
with Oracle during the period.
SerCom Solutions
SerCom Solutions, the supply chain management business, had a difficult first
half recording an operating loss of €1.0 million (2002: operating profit of
€0.9 million) on sales of €35.3 million (2002: €43.2 million). The business has
been impacted by the trend for technology companies, its traditional customer
base, to locate their manufacturing activities in Eastern Europe and Asia.
SerCom Solutions is focused on broadening its customer base beyond the IT
industry and on reducing its cost base.
Healthcare and Food
2003 2002*
Sales
- Healthcare €76.6m €81.3m - 5.8%
- Food €84.7m €98.1m - 13.6%
€161.3m €179.4m - 10.1%
Operating profit
- Healthcare €6.5m €5.0m + 28.5%
- Food €5.0m €5.8m - 13.8%
€11.5m €10.8m + 5.8%
Operating margin
- Healthcare 8.4% 6.2%
- Food 5.9% 5.9%
* continuing activities
Healthcare
DCC Healthcare achieved an excellent increase in operating profit of 28.5% to
€6.5 million, with significant improvements in both its hospital and community
care and its nutraceuticals operations. The decline in reported sales reflects
weaker sterling exchange rates and the aggressive sell out of Shoprider scooter
stocks at low margins in the comparative period.
DCC recorded excellent profit growth in its hospital and community care
businesses. In Ireland, sales of specialist pharmaceutical products to acute
care hospitals continued to grow rapidly. In Britain, good progress has been
achieved in the mobility and rehabilitation area through new procurement
initiatives, product launches and cost saving measures resulting in a
significant improvement in the competitive position of the business. The initial
launch of DCC's new range of 'DMA Strider' electrically powered scooters,
manufactured in Taiwan by KYMCO, to DCC's design and specification, has been
well received by the market.
DCC's nutraceuticals business recorded strong profit growth in the first half
of the year. Demand in the UK market was relatively weak during the period;
however, the business benefitted from its progress in broadening its customer
base in Continental Europe and Scandinavia.
Food
DCC's food business was impacted by the slowdown across the Irish grocery and
food service sectors. Notwithstanding this, the division recorded a 2.7%
increase in like-for-like sales with good growth in wine and certain health
food segments. During the period DCC launched a van sales operation in Northern
Ireland and has recently commenced selling KP snack products in this market.
Other Activities
2003 2002
Sales €24.5m €17.8m + 37.7%
Operating profit €6.1m €4.4m + 40.2%
DCC's Other Activities, principally Manor Park Homebuilders (a 49% owned
associate company) which is a leading Irish housebuilder, achieved excellent
profit growth driven by an increase in completed house sales to 243 in the six
month period, up from 188 in the corresponding period of the prior year. Manor
Park has a substantial land bank for future development.
Summarised Consolidated Profit and Loss Account
for the six months ended 30 September 2003
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2003 2002 2003
Notes €'000 €'000 €'000
Turnover
- continuing activities 2 975,122 1,016,491 2,242,884
- discontinued activities - 13,998 29,490
975,122 1,030,489 2,272,374
Operating profit before
operating exceptional
items
- continuing activities 3 41,164 39,813 111,093
- discontinued activities - 1,248 3,239
41,164 41,061 114,332
Operating exceptional
items 4 95 - (2,898)
Operating profit 41,259 41,061 111,434
Net interest payable (2,357) (2,307) (4,970)
Profit on ordinary activities before
non-operating net exceptional items
and goodwill amortisation 38,902 38,754 106,464
Non-operating net
exceptional items 4 (3,726) - (1,756)
Goodwill amortisation (3,959) (3,505) (7,340)
Profit on ordinary activities
before taxation 31,217 35,249 97,368
Taxation (4,851) (5,426) (15,311)
Profit after taxation 26,366 29,823 82,057
Minority interests (241) (341) (1,248)
Profit attributable to
Group shareholders 26,125 29,482 80,809
Dividends 5 (9,823) (8,542) (23,559)
Profit retained for the
period 16,302 20,940 57,250
Earnings per ordinary
share
- basic (cent) 6 31.24c 35.27c 96.66c
- diluted (cent) 6 30.87c 34.95c 95.50c
Adjusted earnings per
ordinary share
- basic (cent) 6 40.32c 39.46c 111.00c
- diluted (cent) 6 39.84c 39.10c 109.67c
Dividend per ordinary
share (cent) 5 11.75c 10.217c 28.175c
Consolidated Balance Sheet
as at 30 September 2003
Unaudited Unaudited Audited
30 Sept. 30 Sept. 31 March
2003 2002 2003
Note €'000 €'000 €'000
Fixed Assets
Intangible assets
- goodwill 130,543 115,629 132,044
Tangible fixed assets 205,152 160,353 209,432
Financial assets
- associated undertakings 44,329 43,547 40,330
380,024 319,529 381,806
Current Assets
Stocks 113,224 102,017 103,030
Debtors 286,636 297,992 321,650
Cash and term deposits 203,120 286,090 353,986
602,980 686,099 778,666
Creditors: Amounts
falling due within one year
Bank and other debt 58,653 121,036 218,419
Trade and other creditors 309,487 296,421 334,997
Corporation tax 30,102 19,334 29,291
Proposed dividend 9,823 8,542 15,017
408,065 445,333 597,724
Net Current Assets 194,915 240,766 180,942
Total Assets less
Current Liabilities 574,939 560,295 562,748
FINANCED BY:
Creditors: Amounts falling due
after more than one year
Bank and other debt 19,310 25,923 21,250
Unsecured Notes due 2008/11 93,043 103,257 94,258
Deferred acquisition
consideration 11,991 14,780 11,887
124,344 143,960 127,395
Provisions for Liabilities
and Charges 2,518 2,805 1,157
126,862 146,765 128,552
Capital and Reserves
Equity share capital and
share premium 146,479 146,458 146,479
Reserves 296,569 262,047 282,800
Equity Shareholders' Funds 443,048 408,505 429,279
Minority interests 3,760 3,913 3,632
Capital grants 1,269 1,112 1,285
448,077 413,530 434,196
574,939 560,295 562,748
Net cash 7 32,114 35,874 20,059
Reconciliation of Movements in Equity Shareholders' Funds
for the six months ended 30 September 2003
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2003 2002 2003
€'000 €'000 €'000
Profit attributable to Group
shareholders 26,125 29,482 80,809
Dividends (9,823) (8,542) (23,559)
Profit retained for the period 16,302 20,940 57,250
Share buyback (inclusive of costs) (405) - -
Issues of equity share capital net of
capital duty 119 80 231
Exchange adjustments (2,247) (3,945) (19,632)
Net movement in shareholders' funds 13,769 17,075 37,849
Opening shareholders' funds 429,279 391,430 391,430
Closing shareholders' funds 443,048 408,505 429,279
Consolidated Cash Flow Statement
for the six months ended 30 September 2003
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2003 2002 2003
Note €'000 €'000 €'000
Inflows
Operating cash flow (see below) 47,918 9,608 92,467
Disposal proceeds - 1,590 14,732
Share issues (net) 119 80 231
48,037 11,278 107,430
Outflows
Capital expenditure (net) 12,043 16,354 34,832
Acquisitions/payments of deferred
consideration 4,452 5,340 88,215
Acquisition of own shares 405 - -
Interest paid 1,924 1,723 4,864
Tax paid 2,452 1,878 2,923
Dividends paid 15,017 12,716 21,258
36,293 38,011 152,092
Net cash inflow/(outflow) 11,744 (26,733) (44,662)
Translation adjustment 311 (466) 1,648
Movement in net cash for the
period 12,055 (27,199) (43,014)
Opening net cash 20,059 63,073 63,073
Closing net cash 7 32,114 35,874 20,059
Operating Cash Flow
for the six months ended 30 September 2003
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2003 2002 2003
€'000 €'000 €'000
Group operating profit 41,164 41,061 114,332
Operating profit of associated
undertakings (7,922) (8,099) (17,709)
Dividends received from associated
undertakings 2,442 836 1,317
Depreciation of tangible fixed
assets 14,358 13,436 29,495
Decrease/(increase) in working
capital 4,010 (36,271) (25,740)
Other (1,152) (1,355) (3,212)
Operating cash flow before
exceptional costs 52,900 9,608 98,483
Exceptional redundancy and
restructuring costs (4,982) - (6,016)
Operating cash flow after
exceptional costs 47,918 9,608 92,467
Notes to the Interim Results
for the six months ended 30 September 2003
1. Basis of Preparation
The interim financial statements for the six months ended 30 September 2003
have been prepared in accordance with the accounting policies set out in the
financial statements for the year ended 31 March 2003.
The interim financial statements for the six months ended 30 September 2003 and
the comparative figures for the six months ended 30 September 2002 are
unaudited. The summary financial statements for the year ended 31 March 2003
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. 2003 30 Sept. 2002 31 March 2003
€1=Stg£ €1=Stg£ €1=Stg£
Balance sheet (closing rate) 0.699 0.630 0.690
Profit and loss (average rate) 0.699 0.631 0.640
2. Turnover - Continuing Activities
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2003 2002 2003
€'000 €'000 €'000
Energy 375,333 365,070 864,247
IT 413,941 454,229 984,815
Healthcare 76,590 81,263 161,647
Food 84,749 98,133 185,159
Other Activities 24,509 17,796 47,016
Turnover - continuing activities 975,122 1,016,491 2,242,884
Analysis of turnover by subsidiary
undertakings and associated undertakings:
Subsidiary undertakings 920,864 950,666 2,111,066
Associated undertakings 54,258 65,825 131,818
975,122 1,016,491 2,242,884
Of which acquisitions contributed 2,123 - 47,283
3. Operating Profit - Continuing Activities
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2003 2002 2003
€'000 €'000 €'000
Energy 13,017 10,094 45,458
IT 10,555 14,514 32,876
Healthcare 6,465 5,031 11,415
Food 5,001 5,804 11,756
Other Activities 6,126 4,370 9,588
Group operating profit 41,164 39,813 111,093
Analysis of operating profit by subsidiary
undertakings and associated undertakings:
Subsidiary undertakings 33,242 32,962 96,623
Associated undertakings 7,922 6,851 14,470
Operating profit
- continuing activities 41,164 39,813 111,093
Of which acquisitions contributed - - 5,165
4. Net Exceptional Items
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2003 2002 2003
€'000 €'000 €'000
Net operating exceptional items 95 - (2,898)
Reorganisation and
restructuring costs (3,726) - (6,079)
Net gains on disposals of interest
in subsidiary undertakings
and associated undertakings and
investments - - 4,323
Non-operating net exceptional items (3,726) - (1,756)
Net exceptional items (3,631) - (4,654)
Net operating and non-operating exceptional items totalled €3.631 million. They
principally comprised restructuring and redundancy costs in SerCom Solutions and
costs associated with the legal action against Pihsiang for breach of contract
to supply Shoprider powered mobility products.
5. Dividends
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 Sept. 30 Sept. 31 March
2003 2002 2003
€'000 €'000 €'000
Interim dividend of 11.75 cent
per share (2002: 10.217 cent
per share) 9,823 8,542 8,542
Proposed final dividend of
17.958 cent per share - - 15,017
9,823 8,542 23,559
6. 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
2003 2002 2003
€'000 €'000 €'000
Profit after taxation and minority
interests 26,125 29,482 80,809
Net exceptional items 3,631 - 4,654
Goodwill amortisation 3,959 3,505 7,340
Adjusted profit after taxation and
minority interests 33,715 32,987 92,803
Basic earnings per ordinary share cent cent cent
Basic earnings per ordinary share 31.24 35.27 96.66
Adjusted basic earnings per
ordinary share * 40.32 39.46 111.00
Weighted average number of ordinary shares
in issue during the period ('000) 83,618 83,595 83,603
Diluted earnings per ordinary share
Diluted earnings per ordinary share 30.87 34.95 95.50
Adjusted diluted earnings per
ordinary share * 39.84 39.10 109.67
Diluted weighted average number of
ordinary shares ('000) 84,627 84,356 84,617
* adjusted to exclude goodwill amortisation and net exceptional items.
7. Analysis of Net Cash
Unaudited Unaudited Audited
30 Sept. 30 Sept. 31 March
2003 2002 2003
€'000 €'000 €'000
Cash and term deposits 203,120 286,090 353,986
Bank and other debt repayable
within one year (58,653) (121,036) (218,419)
Bank and other debt repayable
after more than one year (19,310) (25,923) (21,250)
Unsecured Notes due 2008/11 (93,043) (103,257) (94,258)
Net cash 32,114 35,874 20,059
8. 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, Ireland.
This information is provided by RNS
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