Interim Results- 'Excellent Sales & Profit Growth'

DCC PLC 8 November 1999 Interim Results for the Six Months ended 30 September 1999 Euro Turnover 636.1m Up 36.2% Profit before goodwill amortisation and tax 26.0m Up 19.3% Basic adjusted earnings per share 24.91c Up 21.5% Dividend per share 6.45c Up 19.5% Net debt/equity ratio at 30 September 1999 was 29.4% (1998:6.2%) DCC's Chief Executive & Deputy Chairman, Jim Flavin, said today: 'DCC again generated excellent sales and profit growth in the first six months, driven by strong organic growth and good results from acquisitions made last year. We expect to maintain our record of strong growth for the year as a whole.' For further reference, please contact: Jim Flavin, Chief Executive & Deputy Chairman Tel: +353-1-2831011 Fergal O'Dwyer, Chief Financial Officer Michael Scholefield, Group Secretary and Investor Relations Manager DCC plc Interim Results for the Six Months ended 30 September 1999 DCC plc announces an increase of 19.3% in profit before goodwill amortisation and tax for the six months ended 30 September 1999 to EUR26.0 million (1998: EUR21.8 million). Basic adjusted earnings per share, which excludes the effect of goodwill amortisation, increased by 21.5% to 24.91 cents from 20.51 cents. Group operating profit increased by 22.5% to EUR29.2 million from EUR23.9 million. The net interest charge for the period increased to EUR3.2 million from EUR2.1 million, primarily reflecting the financing costs of acquisition activity undertaken in 1998/99. Goodwill amortised in the first half year amounted to EUR1.7 million (1998: EUR0.5 million). Profit before tax increased by 13.9% to EUR24.3 million from EUR21.3 million. The interim tax rate of 15.0% compares with the 1998 interim tax rate of 16.0% and the Group's actual tax rate for the year ended 31 March 1999 of 15.0%. FTSE Reclassification With effect from 20 September 1999 the FTSE Actuaries Industry Classification Committee reclassified DCC's shares from 'Diversified Industrials' to 'Distributors - Other'. This reclassification reflects DCC's focused approach to value added marketing and distribution which generated 91% of the Group's operating profits in the year to March 1999. 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 built strong positions in growth segments of these markets in Britain and Ireland. Value Added Marketing and Distribution DCC's focused sales teams, market knowledge and distribution reach continued to drive strong organic growth. The results also reflect a good contribution from acquisitions made last year. Turnover was up 38.1% to EUR592.7 million from EUR429.3 million and operating profit was up 33.4% to EUR28.7 million from EUR21.5 million. Particularly strong results were achieved in IT, healthcare and food distribution with more modest growth in energy. Supply Chain Management Services On 27 September 1999 DCC announced the launch of SerCom Solutions (previously known as Printech International) as a provider of supply chain management services to the IT industry. These services, which are increasingly being outsourced by international IT companies, include procurement, project management, localisation, sub-assembly, warehousing, just-in-time delivery and e-commerce solutions. Against the background of e-commerce and business globalisation, the IT industry is showing the way in the adoption of supply chain management concepts which lead to more cost effective and efficient distribution, shorter lead times to market and reduced inventory levels. Over time these concepts will be applied in other industry sectors and are therefore complementary to DCC's business of value added marketing and distribution. The results from these expanding supply chain management services in the first half reflect the continued investment in skilled personnel and information technology (incorporating e-commerce initiatives) required to position the Group for growth in this area. Although turnover was up 12.3% to EUR30.9 million, these developmental costs contributed to an operating loss of EUR1.4 million compared to a profit of EUR1.3 million in the previous year. Dividend The Board has decided to pay an interim dividend of 6.45 cents per share - up 19.5% on the interim dividend of 5.40 cents per share paid in the previous financial year. The interim dividend will be paid on 26 November 1999 to shareholders on the register at the close of business on 19 November 1999. Acquisition and Development Activity Acquisition and capital expenditure in the first half year amounted to EUR22.1 million. Acquisition expenditure committed in the period (inclusive of net debt acquired) amounted to EUR10.8 million cash. This principally comprised expenditure on bolt-on acquisitions in healthcare and energy distribution as follows: the acquisition of a 74.9% shareholding in Casa Garden, a distributor of mobility and rehabilitation products based in Lohne in Germany; the acquisition of Cawoods Oil in Northern Ireland; and the acquisitions of a number of small LPG distributors in Britain. Deferred acquisition consideration amounting to EUR9.5 million was also paid during the period, of which EUR8.3 million was paid in cash and EUR1.2 million in DCC shares. Including this deferred consideration, the cash impact of acquisitions in the period amounted to EUR19.1 million. Capital expenditure in the half year amounted to EUR11.3 million (1998: EUR7.3 million). Financial Strength Shareholders' funds at 30 September 1999 amounted to EUR213.6 million compared to EUR195.2 million at 31 March 1999. Net debt at 30 September 1999 increased to EUR62.9 million (1998: EUR10.8 million), giving a debt ratio of 29.4% (1998: 6.2%). This reflects acquisition expenditure and the increased working capital required to finance the very strong sales growth in the first six months of the financial year. Year 2000 DCC has been preparing for Year 2000 compliance since 1997 through a formally structured compliance programme. The focus of the Group's Year 2000 programme over the past six months has been on testing all critical systems and equipment to ensure compliance and on contingency planning, covering the Group's own operations as well as those of important suppliers and customers. The programme is now substantially complete and no significant impact on the business of the Group is anticipated. Outlook DCC again generated excellent sales and profit growth in the first six months, driven by strong organic growth and good results from acquisitions made last year. The Group expects to maintain its record of strong growth for the year as a whole. Operating Review - 6 Months ended 30 September 1999 Value Added Marketing and Distribution IT 1999 1998 Turnover EUR203.4m EUR155.0m + 31.2% Operating Profit EUR8.6m EUR6.3m + 35.2% Operating Margin 4.2% 4.1% DCC's IT distribution business in Britain and Ireland continued to generate excellent sales volume growth and to improve margins through operating efficiencies. Micro P, the British hardware distribution business, maintained its consistent record of dynamic revenue and profit growth. Micro P's growth strategy is built on highly motivated and focused telesales teams which are organised by product group and provide customers with the specialist product knowledge they require. This approach assures suppliers that their brands and products are actively promoted on a daily basis. Efficient management of logistics ensures that customers receive next day delivery anywhere in Britain. Good growth was achieved across all product divisions and the Year 2000 issue has had no discernible negative impact on sales. In software, Gem Distribution generated good growth in what is a seasonally quiet trading period. Gem's reputation as the leading specialist consumer software distributor in Britain has been further enhanced by Sega's decision to choose Gem as its distributor for the highly successful launch in October of its new 'Dreamcast' games console. Sharptext, the Irish computer distributor, again achieved very significant growth. Its extensive customer base and track record of achieving strong volume growth for its key suppliers ensure that Sharptext is chosen by many of the world's leading computer hardware and software companies to distribute their products in Ireland. Healthcare 1999 1998 Turnover EUR77.0m EUR50.4m + 52.8% Operating Profit EUR7.6m EUR4.4m + 73.0% Operating Margin 9.9% 8.7% The strong sales and profit growth in healthcare reflects good organic growth and contributions from acquisitions made in the previous financial year. In hospital supply, sales and profits increased substantially as a result of the BM Browne acquisition last year. The final stages of the integration of the Fannin and Browne businesses are expected to be completed during the first half of 2000. In mobility and rehab, sales and margins improved in Britain resulting in profits well ahead of last year. The new businesses in the US and Germany made modest contributions. Good sales growth in the health supplements business resulted in strong profit growth. The acquisitions of EuroCaps (soft gel encapsulation) and Thompson & Capper (tablet manufacture) last year have greatly strengthened DCC's health supplements business. Energy 1999 1998 Turnover EUR139.6m EUR74.4m + 87.8% Operating Profit EUR4.7m EUR4.4m + 4.9% Operating Margin 3.3% 6.0% In energy distribution, DCC achieved growth despite the difficult background of significant increases in crude oil prices since the start of the financial year. The significant increase in turnover reflects organic volume growth, the acquisition of the Burmah oil business in the Republic of Ireland and sales price increases due to the increase in the cost of oil and LPG. In the energy business, percentage operating margins fluctuate as oil prices change. This, together with the increased oil volumes which carry a lower percentage margin, was principally responsible for the reduction in the overall percentage operating margin. Oil volumes grew by 65% from strong organic growth and from a full six months' contribution from the Burmah oil business in the Republic of Ireland which was acquired in January 1999. The integration of Burmah within Emo Oil has been completed and is delivering the anticipated synergies. The acquisition of Cawoods Oil in August 1999 significantly increased the scale of DCC's oil distribution business in Northern Ireland. LPG volumes were broadly in line with the previous year. Although LPG price increases were implemented in Ireland and Britain it was not possible to fully recover the increases in the cost of butane and propane during the period. However, current selling prices now reflect prevailing LPG product costs. Food 1999 1998 Turnover EUR172.7m EUR149.5m + 15.5% Operating Profit EUR7.9m EUR6.4m + 23.9% Operating Margin 4.6% 4.3% DCC's focus on higher growth segments of the Irish food trade again contributed to excellent profit growth in food distribution. Strong volume and profit growth was achieved in snackfoods and ground coffee. Sales to the catering and food service sector increased significantly. The Robinsons drinks range has recently been added to the cold beverage portfolio in the Republic of Ireland. In healthfoods, strong volume and profit growth was achieved with DCC's 'Kelkin' healthfood brand continuing to perform well. DCC's new 50% associate, Kylemore, the bakery and restaurant group, performed in line with expectations. DCC's other 50% associate, Allied Foods, the Irish chilled and frozen foods distributor, experienced tighter margins in its logistics business. Included in the results for food distribution is DCC's 10.3% share of Fyffes plc's profit for Fyffes' half year ended 30 April 1999. Fyffes, the leading fresh produce distribution company in Europe, maintained its record of good earnings growth. Operating Review - 6 Months ended 30 September 1999 Supply Chain Management Services 1999 1998 Turnover EUR30.9m EUR27.6m + 12.3% Operating (Loss)/Profit (EUR1.4m) EUR1.3m - 204.5% Operating Margin (4.5%) 4.9% The IT industry outsources certain business critical activities to a small number of carefully selected partners in order to achieve cost efficient distribution, shorter lead times to market and reduced inventory levels. SerCom Solutions and its subsidiary ITP provide their customers in the IT industry with a range of these supply chain management services including procurement, project management, localisation, sub-assembly, warehousing, just-in-time delivery and e- commerce solutions. DCC's supply chain management services business has been making significant investment in skilled personnel and information technology - incorporating e-commerce initiatives - as it extends its range of services. This investment, while costly in the short term, is positioning DCC for growth in the provision of supply chain management services, initially for the IT industry. Over time DCC expects this capability to be relevant to the other markets which it serves. Other Interests 1999 1998 Turnover EUR12.5m EUR10.1m + 23.8% Operating Profit EUR1.9m EUR1.0m + 93.9% The Group's principal other interest is its 49% shareholding in Manor Park Homebuilders which achieved a strong increase in profits. 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 significant 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 1999 1998 1999 Notes EUR'000 EUR'000 EUR'000 Turnover 2 636,088 466,890 1,059,266 Group operating profit 3 29,236 23,867 63,661 Net interest payable (3,251) (2,085) (4,439) Profit on ordinary activities before goodwill amortisation and tax 25,985 21,782 59,222 Goodwill amortisation (1,694) (452) (1,557) Profit before tax 3 24,291 21,330 57,665 Tax (3,898) (3,485) (8,883) Profit after tax 20,393 17,845 48,782 Minority interests (380) (634) (802) Profit attributable to DCC shareholders 20,013 17,211 47,980 Dividends 4 (5,631) (4,916) (12,992) Profit retained for the period 14,382 12,295 34,988 Earnings per ordinary share - basic (cents) 5 22.97c 19.98c 55.39c Adjusted earnings per ordinary share - basic (cents) 5 24.91c 20.51c 57.19c Dividend per ordinary share (cents) 6.45c 5.40c 14.66c 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 1999 1998 1999 EUR'000 EUR'000 EUR'000 Profit attributable to DCC shareholders 20,013 17,211 47,980 Movement on other reserves of associated undertakings 1,834 (683) (454) Exchange adjustments 932 (775) (220) Total recognised gains and losses relating to the period 22,779 15,753 47,306 DCC plc CONSOLIDATED BALANCE SHEET Unaudited Unaudited Audited 30 Sept. 30 Sept. 31 March 1999 1998 1999 Note EUR'000 EUR'000 EUR'000 Fixed Assets Goodwill arising on the acquisition of subsidiaries 50,595 8,180 46,028 Tangible fixed assets 114,237 96,231 106,697 Associated undertakings 61,560 48,773 56,844 226,392 153,184 209,569 Current Assets Stocks 75,100 50,961 54,133 Debtors 173,678 118,402 150,924 Cash and term deposits 299,020 276,715 311,314 547,798 446,078 516,371 Creditors:Amounts falling due within one year Trade and other creditors 165,060 113,033 152,914 Deferred acquisition consideration 3,250 3,527 10,167 Bank and other debt 87,549 27,183 41,759 Corporation tax 9,575 8,382 10,762 Proposed dividend 5,631 4,698 8,070 271,065 156,823 223,672 Net Current Assets 276,733 289,255 292,699 Total Assets less Current Liabilities 503,125 442,439 502,268 FINANCED BY: Creditors:Amounts falling due after more than one year Unsecured Notes due 2008/11 100,381 93,820 97,557 Bank debt and other debt 173,967 166,546 192,295 Deferred acquisition consideration 7,541 - 9,868 281,889 260,366 299,720 Provisions for liabilities and charges 2,215 2,165 2,244 284,104 262,531 301,964 Capital and Reserves Equity share capital and share premium 144,159 142,733 142,924 Reserves 69,445 31,520 52,297 Equity Shareholders' Funds 213,604 174,253 195,221 Minority interests 4,191 3,949 3,902 Capital grants 1,226 1,706 1,181 219,021 179,908 200,304 503,125 442,439 502,268 Net debt 6 (62,877) (10,834) (20,297) DCC plc RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 Sept. 30 Sept. 31 March 1999 1998 1999 EUR'000 EUR'000 EUR'000 Profit attributable to DCC shareholders 20,013 17,211 47,980 Dividends (5,631) (4,916) (12,992) Profit retained for the period 14,382 12,295 34,988 Issues of equity share capital net of capital duty 1,235 9,334 9,525 Movement on other reserves of associated undertakings 1,834 (683) (3,154) Exchange adjustments 932 (775) (220) Net movement in shareholders'funds 18,383 20,171 41,139 Opening shareholders' funds 195,221 154,082 154,082 Closing shareholders' funds 213,604 174,253 195,221 DCC plc CASH FLOW Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 Sept. 30 Sept. 31 March 1999 1998 1999 Note EUR'000 EUR'000 EUR'000 Inflows Operating cash flow (see below) 5,362 9,114 65,530 Share issues (net) 10 8,465 8,656 5,372 17,579 74,186 Outflows Capital expenditure (net) 11,669 7,860 16,816 Acquisitions and investments 19,089 15,289 59,124 Interest paid 3,970 1,331 4,080 Tax paid 4,008 2,270 5,768 Dividends paid 8,070 5,824 10,527 Other 40 7,745 7,879 46,846 40,319 104,194 Net cash outflow (41,474) (22,740) (30,008) Translation adjustment (1,106) 4,872 2,677 Movement in net(debt)/cash for the period (42,580) (17,868) (27,331) Opening net (debt)/cash (20,297) 7,034 7,034 Closing net (debt) 6 (62,877) (10,834) (20,297) OPERATING CASH FLOW Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 Sept. 30 Sept. 31 March 1999 1998 1999 EUR'000 EUR'000 EUR'000 Group operating profit 29,236 23,867 63,661 Operating profit of associated undertaking (6,804) (5,022) (12,129) Dividends received from associated undertakings 1,484 1,121 2,268 Depreciation of tangible fixed assets 8,612 7,524 16,176 Amortisation of capital grants (167) (246) (366) Increase in working capital (26,817) (17,897) (3,352) Other (182) (233) (728) Operating cash flow 5,362 9,114 65,530 DCC plc Notes to the Interim Results for the Six Months ended 30 September 1999 1. Basis of Preparation The interim financial statements for the six months ended 30 September 1999 have been prepared in accordance with the accounting policies set out in the financial statements for the year ended 31 March 1999. The interim financial statements for the six months ended 30 September 1999 and the comparative figures for the six months ended 30 September 1998 are unaudited. The summary financial statements for the year ended 31 March 1999 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 Sept 1999 30 Sept 1998 31 March 1999 EUR1=Stg£ EUR1=Stg£ EUR1=Stg£ Balance sheet (closing rate) 0.648 0.693 0.666 Profit and loss (average rate) 0.658 0.665 0.681 2. Turnover Unaudited 6 months Unaudited 6 months Audited ended 30 Sept. 1999 ended 30 Sept. 1998 year ended Market Subsidiary Assoc Subsidiary Assoc 31 March 1999 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 203,392 - 203,392 155,024 - 155,024 354,613 Healthcare 68,240 8,752 76,992 44,196 6,184 50,380 114,759 Energy 139,627 - 139,627 74,365 - 74,365 193,305 Food 43,656 129,021 172,677 39,228 110,270 149,498 314,179 Value Added Marketing and Distribn. 454,915 137,773 592,688 312,813 116,454 429,267 976,856 Supply Chain Management Services 30,856 85 30,941 27,244 311 27,555 61,900 Other Interests - 12,459 12,459 - 10,068 10,068 20,510 Turnover 485,771 150,317 636,088 340,057 126,833 466,890 1,059,266 Of which acquisitions contributed 9,414 1,826 42,531 3. Profit before Tax Unaudited 6 months Unaudited 6 months Audited ended 30 Sept. 1999 ended 30 Sept. 1998 year ended Market Subsidiary Assoc Subsidiary Assoc 31 March 1999 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 8,557 - 8,557 6,327 - 6,327 14,975 Healthcare 7,109 506 7,615 3,962 441 4,403 9,780 Energy 4,649 - 4,649 4,430 - 4,430 18,213 Food 3,526 4,377 7,903 2,800 3,579 6,379 14,984 Value Added Marketing and Distribn. 23,841 4,883 28,724 17,519 4,020 21,539 57,952 Supply Chain Management Services (1,409) 7 (1,402) 1,326 15 1,341 3,336 Other Interests - 1,914 1,914 - 987 987 2,373 Operating profit* 22,432 6,804 29,236 18,845 5,022 23,867 63,661 Net interest payable (3,046) (205) (3,251) (1,933) (152) (2,085) (4,439) Goodwill amort. (1,285) (409) (1,694) (103) (349) (452) (1,557) Profit before tax 18,101 6,190 24,291 16,809 4,521 21,330 57,665 *Of which acquisitions contributed (23) 145 3,512 4. Dividends Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 Sept. 30 Sept. 31 March 1999 1998 1999 EUR'000 EUR'000 EUR'000 Interim dividend of 6.45 cents per share (1998: 5.396 cents) 5,631 4,698 4,698 Second interim dividend of 9.264 cents per share - - 8,070 Additional final dividend - 218 224 5,631 4,916 12,992 The additional final dividend of EUR218,000 paid in the six months ended 30 September 1998 (Year ended 31 March 1999: EUR224,000) 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 Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 Sept. 30 Sept. 31 March 1999 1998 1999 EUR'000 EUR'000 EUR'000 Profit after tax and minority interests 20,013 17,211 47,980 Goodwill amortisation 1,694 452 1,557 Adjusted profit after tax and minority interests 21,707 17,663 49,537 Basic earnings per ordinary share Basic earnings per ordinary share (cents) 22.97c 19.98c 55.39c Adjusted basic earnings per ordinary share (cents)* 24.91c 20.51c 57.19c Weighted average number of ordinary shares in issue during the period ('000) 87,141 86,128 86,621 Fully diluted earnings per ordinary share Fully diluted earnings per ordinary share (cents) 22.39c 19.72c 54.32c Adjusted fully diluted earnings per ordinary share (cents)* 24.29c 20.24c 56.08c Fully diluted weighted average number of ordinary shares ('000) 89,678 87,276 88,504 *adjusted to exclude goodwill amortisation. The fully diluted earnings for the purposes of the fully diluted earnings per ordinary share calculation was EUR20,087,000 (Six months ended 30 September 1998: EUR17,211,000 and year ended 31 March 1999: EUR48,079,000) and EUR21,781,000 (Six months ended 30 September 1998: EUR17,663,000 and year ended 31 March 1999: EUR49,636,000) for the purposes of the adjusted fully diluted earnings per ordinary share calculation. 6. Analysis of Closing Net Debt Unaudited Unaudited Audited 30 Sept. 30 Sept. 31 March 1999 1998 1999 EUR'000 EUR'000 EUR'000 Cash and term deposits 299,020 276,715 311,314 Bank and other debt repayable within one year (87,549) (27,183) (41,759) Bank and other debt repayable after more than one year (173,967) (166,546) (192,295) Unsecured Notes due 2008/11 (100,381) (93,820) (97,557) Net debt (62,877) (10,834) (20,297) 7. Distribution of Interim Report This announcement and further information on DCC is also available at http://www.dcc.ie. A printed copy of this report will be posted to shareholders in the near future and will be available to the public at the Company's registered office at DCC House, Stillorgan, Blackrock, Co. Dublin.

Companies

DCC (CDI) (DCC)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today