Preliminary Results
DCC PLC
10 May 2002
DCC plc
Preliminary Results
DCC plc
13 May 2002
Results for the Year ended 31 March 2002
EUR
Turnover 2,048.9 m Up 9.6%
Operating profit 102.7 m Up 12.0%
Operating cash flow 117.5 m Up 40.9%
Profit before net exceptional 97.7 m Up 11.9%
items, goodwill amortisation and tax
Adjusted earnings per share* 98.30 cent Up 16.1%
Dividend per share 24.50 cent Up 16.0%
Net cash at 31 March 2002 63.1 m (2001: EUR83.2 m)
Return on capital employed - excl. goodwill: 46.3% (2001: 48.1%)
- incl. goodwill: 23.1% (2001: 23.7%)
* adjusted to exclude net exceptional items and goodwill amortisation
DCC, the business support services group, today announced its results for the
year ended 31 March 2002. Commenting on the results, DCC's Chief
Executive/Deputy Chairman, Jim Flavin, said:
'DCC's continued strong earnings growth and excellent cash generation
demonstrate the Group's resilience in the current more challenging business
environment. DCC has achieved compound annual growth in adjusted earnings per
share of 18.6% over the last ten years and 21.3% over the last five years.
It is pleasing to note the increasing scale of the Group with the attainment
of two milestones - turnover in excess of EUR2 billion and operating profits
in excess of EUR100 million.
DCC is well placed commercially and financially (net cash of EUR63.1 million
at 31 March 2002) to generate ongoing growth both organically and by
acquisition.'
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 Website: www.dcc.ie
Results
DCC's strong earnings growth and excellent cash generation demonstrate the
Group's resilience in the current more challenging business environment.
- Turnover was up 9.6% to EUR2,048.9 million.
- Operating profit was up 12.0% to EUR102.7 million.
- Operating cash flow at EUR117.5 million was up 40.9%.
- Profit before net exceptional items, goodwill amortisation and tax
increased by 11.9% to EUR97.7 million.
- The tax rate was 14.0% (2001: 15.0%).
- Profit after taxation and minority interests grew by 12.1% to EUR76.3
million.
- Adjusted earnings per share (i.e. excluding net exceptional items and
goodwill amortisation) increased by 16.1% to 98.30 cent.
- Dividend per share is up 16.0% to 24.50 cent.
- Net cash at 31 March 2002 of EUR63.1 million (2001: EUR83.2m).
DCC has achieved compound annual growth in adjusted earnings per share of
18.6% over the last ten years and 21.3% over the last five years.
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 energy activities generated outstanding operating profit growth, up
48.1% to EUR35.0 million, reflecting the excellent business development
which DCC has achieved in this sector.
- DCC's IT distribution operations achieved a very creditable result in the
increasingly difficult market conditions for the IT industry as the past
financial year progressed, with operating profits of EUR30.6 million
(2001: EUR31.2m).
- DCC's profit growth in healthcare, up 2.0% to EUR20.7 million, was held
back by a number of shorter term trading issues within the businesses.
- DCC's food operations achieved excellent operating profit growth, up
30.0% to EUR11.0 million, benefiting from good sales growth and a
recovery in margins.
Development Activity
DCC's primary acquisition focus continues to be bolt-on acquisitions which can
be integrated with existing businesses in order to increase their scale,
strengthen their competitive position and achieve cost efficiencies. A number
of attractive opportunities are currently being pursued.
During the year a total of EUR102.9 million was committed to acquisitions and
capital expenditure.
DCC completed several synergistic bolt-on acquisitions during the year which
provide enhanced platforms for growth in each of its markets. Acquisition
expenditure totalled EUR65.6 million in the year, of which EUR0.4 million was
satisfied in DCC shares and EUR14.0 million was deferred. The cash impact of
acquisitions amounted to EUR59.6 million (including the payment of EUR8.4
million of deferred consideration previously provided for).
Capital expenditure was EUR37.3 million (2001: EUR34.1 million). The
depreciation charge for the year was EUR25.3 million (2001: EUR20.8 million).
Working capital efficiency was excellent and equated to 11.5 days' sales at
the year end (2001: 13.2 days).
Share Buyback
As announced on 28 September 2001, the Board took advantage of the Group's
strong balance sheet to buy back 2,275,000 shares, representing 2.6% of the
issued share capital, at EUR9.25 per share, for a total consideration of
EUR21.04 million. This purchase, when combined with the shares purchased in
the prior financial year, brings the total bought back to 5.5% of DCC's issued
share capital.
Dividend
The Directors recommend a final net dividend of 15.212 cent per share which,
when added to the interim dividend of 9.288 cent per share, gives a total
dividend of 24.500 cent per share for the year. This represents an increase
of 16.0% on the dividend of 21.120 cent per share paid in respect of the
previous year. The dividend for the year is covered 4.0 times by adjusted
earnings per share (2001: 4.0 times). The final dividend will be paid on 11
July 2002 to shareholders on the register at the close of business on 24 May
2002.
Propriety of Fyffes Share Sale in February 2000
On 24 January 2002, Fyffes plc initiated legal proceedings against DCC plc and
others under Part V of the Irish Companies Act, 1990 in connection with the
sale by DCC's wholly owned subsidiary, Lotus Green Limited, of 87% of its
shareholding in Fyffes plc in February 2000. The Board of DCC plc, having
taken legal advice and having obtained the opinion of other independent
experts, considers the Fyffes legal action to be without merit and
inconsistent with the share dealings, actions and statements of Fyffes and
certain of its directors and officers at that time. The Board is completely
satisfied that no DCC Group company or officer was in possession of price
sensitive information and that the sale was undertaken with absolute
propriety. The Fyffes legal action will be vigorously rebutted.
Outlook
DCC is well placed commercially and financially to generate ongoing growth
both organically and by acquisition.
Operating Review
Energy
2002 2001
Turnover EUR717.6m EUR610.3m + 17.6%
Operating Profit EUR35.0m EUR23.6m + 48.1%
ROCE - excluding goodwill 49.1% 44.8%
- including goodwill 23.8% 21.0%
Energy generated outstanding profit growth reflecting the excellent business
development which DCC has achieved in this sector. During the year a number
of strategically important bolt-on acquisitions were completed. DCC Energy is
now one of the largest independent companies marketing and distributing oil
and LPG products in Britain and Ireland.
Liquified petroleum gas (LPG) volumes benefited from the particularly good
growth achieved in the automotive gas sector in Britain. DCC has a
significant share of this fast growing segment of the LPG market. Alta Gas, a
British based marketer and distributor of cylinder LPG, was purchased in
December 2001 and integrated with DCC's existing Flogas operations.
Consolidation has been a feature of the British LPG market in recent years and
the acquisition of Alta Gas places DCC firmly among the market leaders.
DCC's oil marketing and distribution activities were extended into Britain
with the acquisition of BP's oil marketing and distribution business in
Scotland and Northern England (now called Scottish Fuels) and of Noble Fuels
on Teeside. DCC is now the market leader in oil distribution in Scotland and
has an excellent platform for further growth in the fragmented British market.
DCC has had a strong presence in the oil treatment sector of the environmental
services market in Ireland for a number of years. The acquisition in
September 2001 of Envirotech, a marketer of chemicals for the treatment of
water effluent and process liquids, has broadened DCC's environmental services
activities into the high growth water treatment sector. The environmental
services industry is experiencing rapid growth, driven by increased
enforcement of regulations, and offers DCC exciting opportunities for
development.
IT (SerCom Distribution)
2002 2001
Turnover EUR813.8m EUR753.9m + 7.9%
Operating Profit EUR30.6m EUR31.2m - 1.8%
Operating Margin 3.8% 4.1%
ROCE - excluding goodwill 60.4% 67.5%
- including goodwill 31.3% 33.9%
SerCom Distribution achieved a very creditable result in the increasingly
difficult market conditions for the IT industry as the past financial year
progressed.
DCC's British computer hardware distribution business again demonstrated the
robust nature of its business model. It benefited from its broad customer and
product base which was enhanced during the year by the acquisition of AGP, a
south of England based computer storage products distributor. The logistics
and back office functions of AGP were integrated into SerCom Distribution's UK
facility in Altham, where capacity had been significantly extended in the
previous financial year.
DCC's British software distribution business benefited from the strong growth
in demand for leisure software products. DCC's appointment by Microsoft as
exclusive distributor of the Xbox console, software and peripherals for the UK
and Irish distribution channels is a clear endorsement of its market leading
position and operational strength in the leisure software sector.
In Continental Europe, DCC's specialist computer storage distribution business
had a difficult second half following a significant slowdown in IT spending by
large corporates. Our specialist focus on computer storage products continues
to be recognised by vendors and during the year IBM named the company as its
largest storage distributor in Europe. The business is well placed to benefit
from an upturn in corporate IT expenditure.
The Irish business was impacted by the significant slowdown in the Irish IT
market. The company has substantially reduced its cost base in order to
better position itself for renewed profit growth.
Healthcare
2002 2001
Turnover EUR192.5m EUR182.7m + 5.4%
Operating Profit EUR20.7m EUR20.3m + 2.0%
Operating Margin 10.8% 11.1%
ROCE - excluding goodwill 41.4% 43.3%
- including goodwill 17.6% 19.1%
Healthcare profit growth was held back in the year by a number of shorter term
trading issues within the businesses.
DCC's hospital supply business further broadened its product portfolio during
the year with the acquisition of TechnoPharm, a fast growing distributor of
specialist pharmaceutical products to acute care hospitals in Ireland.
Customer service levels were further enhanced with the rollout of a bespoke
e-commerce system to Irish hospitals, which are choosing to perform an
increasing proportion of their transactions electronically as they see the
benefits of this service. Of note during the year was a new sales and
marketing arrangement with Tyco Healthcare, under which DCC is now marketing
all of Tyco's medical and surgical products in Ireland. The hospital supply
business remains well placed to benefit from increased government spending on
health services.
Having performed well in the first nine months, DCC's mobility and
rehabilitation business was severely impacted in the last quarter by the
disruption of its supply of Shoprider powered mobility products arising from a
breach by the manufacturer of a long term supply agreement. Action has been
taken which will restore supplies of powered mobility products from
alternative sources.
In DCC's nutraceuticals operations, significant new business has been won
since the previously announced loss of a major customer. The customer base
will continue to be broadened and it is expected that the lost business will
be fully replaced over time.
Food
2002 2001
Turnover EUR184.2m EUR182.4m + 1.0%
Operating Profit EUR11.0m EUR8.5m + 30.0%
Operating Margin 6.0% 4.6%
ROCE - excluding goodwill 62.5% 51.3%
- including goodwill 26.9% 21.4%
This was an excellent result in Food benefiting from underlying sales growth
of 7% and a recovery in margins.
DCC has deep distribution reach, supplying a broad base of retail and food
service customers. DCC continued to invest in extending this distribution
reach during the year with increased sales and marketing resources. This
contributed to the good sales performance across all product categories, with
strong growth in wine and soft drinks.
During the year a significant rationalisation was carried out in Kylemore
Foods, a 50% owned associate, which involved the closure of the company's
fresh bakery operations. This is reflected in an exceptional charge in the
year but has resulted in a substantial increase in Kylemore's operating
profits.
Other Interests
DCC's other interests, principally Manor Park Homebuilders (an associate
company) and SerCom Solutions, contributed operating profits of EUR5.4 million
(2001: EUR8.1m). Manor Park, a leading Irish housebuilder with a substantial
land bank, achieved a good result and is well placed to achieve strong profit
growth in the coming years. SerCom Solutions, which provides supply chain
management services to the IT sector, had a challenging year due to the impact
of the severe slowdown in the IT market.
This announcement and further information on DCC is available on DCC's
website, www.dcc.ie
The Company's Annual General Meeting will be held at 11 am on Friday 5 July
2002 in The Berkeley Court Hotel, Lansdowne Road, Dublin 4.
DCC plc
SUMMARISED CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2002
2002 2001
Notes EUR'000 EUR'000
Turnover 2 2,048,889 1,870,141
Operating profit 3 102,712 91,737
Net interest payable 3 (5,003) (4,402)
Profit on ordinary activities
before net exceptional items,
goodwill amortisation and tax 3 97,709 87,335
Net exceptional items 4 (1,126) -
Goodwill amortisation (5,671) (4,923)
Profit on ordinary activities
before taxation 90,912 82,412
Taxation (13,679) (13,100)
Profit after taxation 77,233 69,312
Minority interests (940) (1,230)
Profit attributable to Group shareholders 76,293 68,082
Dividends 5 (20,466) (18,140)
Profit retained for the year 55,827 49,942
Earnings per ordinary share
- basic (cent) 6 90.26c 78.98c
- diluted (cent) 6 89.38c 78.28c
Adjusted earnings per ordinary share
- basic (cent) 6 98.30c 84.69c
- diluted (cent) 6 97.35c 83.94c
Dividend per ordinary share (cent) 5 24.50c 21.12c
DCC plc
CONSOLIDATED BALANCE SHEET
as at 31 March 2002
2002 2001
(Restated)
Note EUR'000 EUR'000
Fixed Assets
Goodwill arising on the acquisition of 118,332 84,447
subsidiaries
Tangible fixed assets 159,156 135,241
Associated undertakings 38,976 38,458
316,464 258,146
Current Assets
Stocks 112,795 93,063
Debtors 334,341 296,804
Cash and term deposits 304,661 454,582
751,797 844,449
Creditors: Amounts falling due within one year
Trade and other creditors 377,151 328,328
Bank and other debt 108,795 200,621
Corporation tax 18,473 18,959
Proposed dividend 12,716 11,449
517,135 559,357
Net Current Assets 234,662 285,092
Total Assets less Current Liabilities 551,126 543,238
FINANCED BY:
Creditors: Amounts falling due after more
than one year
Unsecured Notes due 2008/11 106,036 104,977
Bank and other debt 26,757 65,753
Deferred acquisition consideration 18,954 11,464
151,747 182,194
Provisions for Liabilities and Charges 2,816 2,764
154,563 184,958
Capital and Reserves
Equity share capital and share premium 146,465 146,484
Reserves 244,965 207,239
Equity Shareholders' Funds 391,430 353,723
Minority interests 4,010 3,493
Capital grants 1,123 1,064
396,563 358,280
551,126 543,238
Net cash 7 63,073 83,231
DCC plc
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 March 2002
2002 2001
(Restated)
EUR'000 EUR'000
Profit attributable to Group shareholders 76,293 68,082
Dividends (20,466) (18,140)
55,827 49,942
Equity share capital issued (net of expenses) 2,464 2,670
Share buyback (inclusive of costs) (21,307) (24,668)
Exchange adjustments and other 723 (2,381)
Net movement in shareholders' funds 37,707 25,563
Opening shareholders' funds 353,723 329,123
Prior year adjustment - (963)
Closing shareholders' funds 391,430 353,723
DCC plc
CASH FLOW
for the year ended 31 March 2002
2002 2001
Note EUR'000 EUR'000
Inflows
Operating cash flow (see below) 117,470 83,369
Disposal proceeds 11,358 16,026
Shares issues (net) 792 1,930
129,620 101,325
Outflows
Capital expenditure (net) 33,006 29,506
Acquisitions 59,637 25,969
Share buyback 21,307 24,668
Interest paid 3,789 2,587
Taxation paid 12,461 9,073
Dividends paid 19,199 16,426
149,399 108,229
Net cash outflow (19,779) (6,904)
Translation adjustment (379) 976
Movement in net cash (20,158) (5,928)
Opening net cash 83,231 89,159
Closing net cash 7 63,073 83,231
OPERATING CASH FLOW
for the year ended 31 March 2002
2002 2001
EUR'000 EUR'000
Group operating profit 102,712 91,737
Operating profit of associated undertakings (13,602) (8,950)
Dividends received from associated undertakings 1,264 1,896
Depreciation of tangible fixed assets 25,268 20,766
Decrease/(increase) in working capital 6,904 (19,929)
Other (5,076) (2,151)
Operating cash flow 117,470 83,369
DCC plc
Notes to the Preliminary Results for the Year ended 31 March 2002
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 2002 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 2001, containing an unqualified auditors' report, have been
delivered to the Registrar of Companies.
The financial statements for the year ended 31 March 2002 have been prepared
in accordance with the accounting policies set out in the financial statements
for the year ended 31 March 2001 save for a change in the Group's accounting
policy in relation to deferred tax. Previously provision was made under the
liability method for deferred taxation on timing differences to the extent
that it was probable that a liability would crystallise in the foreseeable
future. In accordance with FRS19, which is applicable for accounting periods
ending on or after 23 January 2002, deferred taxation is provided in respect
of all timing differences that have originated but not reversed by the balance
sheet date. The comparative figures 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 31 March 2000 by EUR0.963 million.
The Group's financial statements are prepared in euro, denoted by the symbol
EUR. The exchange rates used in translating sterling balance sheet and profit
and loss account amounts were as follows:-
Year ended Year ended
31 March 2002 31 March 2001
EUR1=Stg£ EUR1=Stg£
Balance sheet (closing rate) 0.613 0.619
Profit and loss (average rate) 0.615 0.613
2. Turnover
Year ended Year ended
31 March 31 March
2002 2001
EUR'000 EUR'000
Energy 717,623 610,257
IT 813,769 753,887
Healthcare 192,474 182,657
Food 184,219 182,367
Other Activities 140,804 140,973
2,048,889 1,870,141
Subsidiary undertakings 1,888,678 1,712,402
Associated undertakings 160,211 157,739
Turnover - continuing activities 2,048,889 1,870,141
Of which acquisitions in the year contributed 187,251 69,208
3. Profit before Taxation
Year ended Year ended
31 March 31 March
2002 2001
EUR'000 EUR'000
Energy 34,979 23,617
IT 30,631 31,203
Healthcare 20,717 20,313
Food 11,007 8,464
Other Activities 5,378 8,140
Operating profit* 102,712 91,737
Net interest payable (5,003) (4,402)
Profit before net exceptional items and 97,709 87,335
goodwill amortisation
Net exceptional items (1,126) -
Goodwill amortisation (5,671) (4,923)
Profit on ordinary activities before 90,912 82,412
taxation
Analysis of operating profit by subsidiary
undertakings and associated undertakings:
Subsidiary undertakings 89,110 82,787
Associated undertakings 13,602 8,950
Operating profit* 102,712 91,737
* Of which acquisitions in the year contributed 7,112 1,078
4. Net Exceptional Items
Net exceptional items comprise the Group's share of the reorganisation costs
of associated undertakings and subsidiaries less a profit on the disposal of
an associated undertaking.
5. Dividends
Year ended Year ended
31 March 31 March
2002 2001
EUR'000 EUR'000
Interim dividend of 9.288 cent per share 7,750 6,619
(2001: 7.74 cent)
Proposed final dividend of 15.212 cent per 12,716 11,449
share (2001: 13.38 cent)
Additional dividend - 72
20,466 18,140
The additional dividend of EUR72,000 is in respect of shares issued after the
date of approval of the 31 March 2000 financial statements but qualifying for
receipt of the final dividend declared in respect of that year.
6. Earnings per Ordinary Share
Year ended Year ended
31 March 31 March
2002 2001
EUR'000 EUR'000
Profit after tax and minority interests 76,293 68,082
Net exceptional items 1,126 -
Goodwill amortisation 5,671 4,923
Adjusted profit after tax and minority interests 83,090 73,005
cent cent
Basic earnings per ordinary share
Basic earnings per ordinary share 90.26 78.98
Adjusted basic earnings per ordinary share* 98.30 84.69
Weighted average number of ordinary shares 84,527 86,202
in issue during the year ('000)
Diluted earnings per ordinary share
Diluted earnings per ordinary share 89.38 78.28
Adjusted diluted earnings per ordinary share* 97.35 83.94
Diluted weighted average number of ordinary 85,354 87,030
shares for the year ('000)
* adjusted to exclude net exceptional items and goodwill amortisation.
The diluted earnings used in the calculation of diluted earnings per ordinary
share were EUR76.293 million (2001: EUR68.131 million) and in the calculation
of adjusted diluted earnings per ordinary share were EUR83.090 million (2001:
EUR73.054 million).
7. Analysis of Net Cash
31 March 31 March
2002 2001
EUR'000 EUR'000
Cash and term deposits 304,661 454,582
Bank and other debt repayable within one year (108,795) (200,621)
Bank and other debt repayable after more than
one year (26,757) (65,753)
Unsecured Notes due 2008/11 (106,036) (104,977)
Net cash 63,073 83,231
This information is provided by RNS
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