Interim Management Statement
DCC PLC
05 February 2008
DCC plc
Interim Management Statement
DCC plc, the procurement, sales, marketing, distribution and business support
services group listed on both the Irish and London stock exchanges, is issuing
this Interim Management Statement in accordance with the reporting requirements
of the Transparency Regulations 2007.
Quarter to 31 December 2007
DCC had excellent revenue and operating profit growth in its third quarter to 31
December 2007 driven by particularly strong growth in DCC Energy, DCC SerCom and
DCC Environmental. DCC Food & Beverage results were in line with the Group's
expectations while DCC Healthcare was impacted by weaker results in its Health &
Beauty Solutions business.
Relevance of sterling / euro exchange rate
It is estimated that sterling profits will represent approximately 63% of DCC's
operating profits in the current financial year and, due to seasonal factors,
approximately 73% in the fourth quarter. The sterling exchange rate against the
euro weakened significantly towards the end of the third quarter and has
weakened further in the fourth quarter to date.
Outlook for the fourth quarter and the year to 31 March 2008
Taking into account trading in January and the outlook for February and March,
strong growth in Group operating profit is anticipated for the fourth quarter.
However, the adverse impact of the current sterling / euro exchange rate on the
translation of DCC's sterling profits into euro will reduce the rate of growth.
The translation into euro of expected sterling profits will reduce euro
operating profit by approximately €3 million in the year to 31 March 2008. DCC
now expects to achieve mid to high teen growth in operating profit in the year.
Material events and transactions
As previously announced, DCC received a dividend of €172 million from Manor Park
Homebuilders Limited ('Manor Park') on 18 December 2007 and subsequently
disposed of its 49% shareholding in Manor Park for a cash consideration of €9
million.
The original cost of investment in Manor Park in February 1980 was €56,000
(IR£44,100). In addition to the dividend of €172 million received on 18 December
2007, DCC had in earlier years received dividends amounting in total to
approximately €10 million. The total profit on cost was therefore €191 million.
The book carrying value of the investment in Manor Park, having taken account of
DCC's share of post acquisition profits, was €86 million, which gave rise to a
profit of €95 million over book value.
DCC announced on 12 November 2007 that it had reached conditional agreement to
acquire Banque Magnetique SAS, a French company based in Paris, which is a
leading distributor of consumer electronic products and IT peripherals to the
French retail market, for a cash cost of €38.1 million, made up of consideration
of €12.5 million and net debt of €25.6 million. The acquisition was completed on
20 December 2007.
As announced on 23 November 2007, DCC Healthcare has expanded its presence in
Britain through the acquisition of Squadron Medical Limited ('Squadron') for an
initial consideration of €16 million and further consideration of up to €12
million, dependant on future profits. Based in Chesterfield, Squadron procures
and supplies medical and surgical products on a just in time basis to point of
use within hospitals. Squadron is well positioned for continued strong growth in
the British hospital supply sector.
DCC is actively pursuing further acquisitions in each of its core areas, with a
particular focus on DCC's energy, healthcare and environmental services
businesses.
Net exceptional profit
Arising from the dividend from Manor Park and the profit on its subsequent
disposal and after allowing for exceptional costs, the most material of which
relates to the exceptional charge of €50 million made in the six months to 30
September 2007 in relation to the Fyffes action, DCC expects to report an
overall Group exceptional profit for the year to 31 March 2008 of approximately
€34 million.
Financial position
After the expenditure on recent acquisitions, the financing of increased working
capital arising from substantial revenue growth and seasonal factors, the
receipt of the dividend from Manor Park and the proceeds of its subsequent sale,
the current Group net debt is approximately €250 million. In line with normal
seasonal working capital patterns, it is expected that the net debt at the year
end will be significantly lower.
Potential impact of sterling / euro exchange rate in the year to 31 March 2009
Based on current exchange rates, the adverse impact of the translation into euro
of estimated sterling profits in the year to 31 March 2009 would be approximately
€12 million in that year.
Jim Flavin, Executive Chairman of DCC plc, commented:
'We achieved accelerated operating profit growth in the quarter to 31 December
2007 and we expect strong growth in the final quarter. The weakness of sterling
is not helpful but DCC is well positioned, both commercially and financially, to
maintain its record of growth since listing in 1994.'
Financial calendar
DCC expects to announce its preliminary results for the year to 31 March 2008 on
Monday, 19 May 2008.
For reference:
Jim Flavin, Executive Chairman Telephone: + 353 1 2799400
Tommy Breen, Group Managing Director Email: investorrelations@dcc.ie
Fergal O'Dwyer, Chief Financial Officer Web: www.dcc.ie
Conor Murphy, Investor Relations Manager
About DCC plc:
DCC plc is a procurement, sales, marketing, distribution and business support
services group headquartered in Dublin with international operations across four
continents. DCC has five divisions - DCC Energy, DCC SerCom, DCC Healthcare, DCC
Environmental and DCC Food & Beverage. In its last financial year to 31 March
2007, DCC had sales of €4.046 billion and operating profits of €140.1 million
and currently employs approximately 7,000 people in 16 countries. DCC's shares
are listed on both the Irish and London stock exchanges under Business Support
Services.
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