Preliminary Results
DCC PLC
14 May 2001
DCC plc
14 May 2001
Results for the Year ended 31 March 2001
EUR
Turnover 1,870.1m Up 42.1%
Operating profit 91.7m Up 24.3%
Profit before exceptional gains, 87.3m Up 22.4%
goodwill amortisation and tax
Adjusted earnings per share* 84.7 cent Up 23.1%
Dividend per share 21.12 cent Up 20.0%
Net cash at 31 March 2001: EUR83.2 million (2000: EUR89.2 million)
Return on capital employed - excluding goodwill: 48.1% (2000: 40.6%)
- including goodwill: 23.7% (2000: 20.9%)
* adjusted to exclude exceptional gains and goodwill amortisation.
DCC, the leading value added marketing and distribution group, today
announced its results for the year ended 31 March 2001. Commenting on the
results, DCC's Chief Executive & Deputy Chairman, Jim Flavin, said:
'Another year of excellent organic profit growth and a further increase in
DCC's high return on capital employed are the key features of these results.
DCC has delivered compound annual growth in adjusted earnings per share of
21.5% over the last five years. This reflects well on DCC's focus on growth
markets and its disciplined and rigorous operating and financial controls.
Operating in diverse growth markets, with a very strong balance sheet, DCC is
well positioned, in these more uncertain times, to continue to achieve strong
growth and excellent long-term shareholder returns.'
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
Another year of excellent organic profit growth and a further increase in
DCC's high return on capital employed are the key features of these results.
This reflects well on DCC's focus on growth markets and its disciplined and
rigorous operating and financial controls.
- Turnover was up 42.1% to EUR1,870.1 million.
- Operating profit was up 24.3% to EUR91.7 million.
- Operating cash flow at EUR83.4 million was good compared with operating
profits from subsidiaries of EUR82.8 million.
- The net interest charge reduced to EUR4.4 million from EUR6.4 million.
- Profit before exceptional gains, goodwill amortisation and tax increased
by 22.4% to EUR87.3 million.
- The effective tax rate was 15.0%, unchanged from the previous year.
- Adjusted earnings per share (i.e. excluding exceptional gains and
goodwill amortisation) increased by 23.1% to 84.7 cent.
DCC's application of its core skills in value added marketing and
distribution - focused sales teams, deep market knowledge and distribution
reach - has delivered compound annual growth in adjusted earnings per share
of 21.5% over the last five years.
Business Highlights
DCC is a value added marketing and distribution group, which operates
principally in growth segments of the IT, energy and healthcare markets. DCC
holds strong market positions in the UK and Ireland and is expanding its IT
and healthcare activities in Continental Europe.
IT - operating profit EUR31.2m - up 52.5% (34.0% of total operating profit)
SerCom Distribution had another excellent year with very strong performances
in all operating subsidiaries. Distrilogie, the Continental European
specialist storage equipment distributor, achieved excellent growth in its
first full year of contribution.
Energy - operating profit EUR23.6m - up 17.8% (25.7% of total operating
profit)
Energy achieved strong organic growth and enhanced its position in the
Northern Ireland market through the acquisition of Fuel Services in July 2000.
Healthcare - operating profit EUR20.3m - up 27.4% (22.2% of total operating
profit)
Healthcare had another year of excellent growth, all of which was organically
generated.
Other activities - operating profit EUR16.6m - down 4.2% (18.1% of total
operating profit)
Other activities, including the food businesses and supply chain management
services, showed a modest reduction in profitability, principally reflecting
significant developmental investment in IT systems, skilled personnel and
management resources in SerCom Solutions.
Development Activity
DCC continues to exploit the significant growth opportunities in the markets
in which it operates. DCC has a particular focus on achieving strong organic
growth, supplemented by complementary acquisitions.
In total, EUR74.2 million was committed to organic growth and acquisitions
during the year.
Investment in working capital and fixed assets amounted to EUR54.0 million.
The strong organic sales growth resulted in an increased investment in
working capital of EUR19.9 million. Working capital efficiency remained
excellent and equated to 13.2 days' sales at the year end.
Total capital expenditure was EUR34.1 million (2000: EUR29.0 million). The
expenditure was incurred across the Group and included the extension of
SerCom Distribution's UK warehousing and distribution hub. The depreciation
charge for the year was EUR20.8 million (2000: EUR18.9 million).
Acquisition expenditure, inclusive of net debt acquired, totalled EUR20.2
million in the year, of which EUR0.7 million was satisfied in DCC shares and
EUR4.2 million was deferred. The cash impact of acquisitions amounted to
EUR26.0 million (including the payment of EUR10.7 million of deferred
consideration which had been provided for at 31 March 2000). The principal
acquisition was Fuel Services which has been successfully integrated with
DCC's existing energy operations in Northern Ireland. DCC is now the leading
marketer of fuel oils and distillates in Northern Ireland.
DCC is actively pursuing a range of bolt-on acquisitions in the IT, energy
and healthcare areas at this time. In energy, DCC has signed a Heads of
Agreement to acquire part of BP's commercial, agricultural and domestic oil
business in Scotland and Northern England. The business employs 200 people
and services a range of customers from 14 locations.
Financial Strength and Share Buy Back
As announced on 28 July 2000, the Board took advantage of the Group's strong
balance sheet to buy back 2.6 million shares (2.9% of the issued share
capital) at EUR9.50 per share costing EUR24.7 million. Following the share
buy back and the development expenditure referred to above, which in total
amounted to EUR98.9 million, the Group had net cash of EUR83.2 million at
31 March 2001 (EUR89.2m at 31 March 2000). Shareholders' funds at 31 March
2001 amounted to EUR354.7 million.
DCC's strong financial position leaves the Group well placed to pursue its
growth objectives and, if deemed appropriate, to buy back more shares.
Dividend
The Directors recommend a final net dividend of 13.38 cent per share which,
when added to the interim dividend of 7.74 cent per share, gives a total
dividend of 21.12 cent per share for the year. This represents an increase of
20.0% on the dividend of 17.60 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 (2000: 3.9 times). The final dividend will be paid on 10 July 2001 to
shareholders on the register at the close of business on 25 May 2001.
Outlook
Operating in diverse growth markets, with a very strong balance sheet, DCC is
well positioned, in these more uncertain times, to continue to achieve strong
growth and excellent long-term shareholder returns.
Operating Review
IT (SerCom Distribution)
2001 2000
Turnover EUR753.9m EUR542.3m +39.0%
Operating Profit EUR31.2m EUR20.5m +52.5%
Operating Margin 4.1% 3.8%
ROCE - excluding goodwill 67.5% 62.3%
- including goodwill 33.9% 33.6%
This was another excellent year for SerCom Distribution with very strong
performances in all operating subsidiaries. Distrilogie, the Continental
European specialist storage equipment distributor, achieved excellent growth
in its first full year of contribution.
The British hardware distribution business continued to produce excellent
results in a highly competitive marketplace. Its key strengths of proactive,
product-focused sales teams and the breadth of its customer base contributed
to good growth and consolidated its position as one of the leading
distributors in Britain. A new specialist division in the high growth area of
computer storage products was established during the year.
The British software distribution business benefited from its focused
strategy of specialising in consumer software distribution and generated
excellent profit growth.
The extension of the warehousing and distribution hub in Altham, near
Manchester, completed during the year, increased the logistics capacity of
SerCom Distribution in Britain by a factor of 2.5 times.
The Irish business again produced excellent growth during the year. The
company benefited from the significant investment in its new and larger
distribution facility in Dublin which was completed in the previous year.
This facilitated a further broadening of its product range, including the
introduction of new server and storage products.
Distrilogie had a strong performance in the year and will continue to benefit
from the increasing demand for storage products. The specialist service
offered by Distrilogie is valued by major vendors such as IBM and Sun and has
enabled Distrilogie to attract additional suppliers such as Compaq and
Network Appliance.
Energy
2001 2000
Turnover EUR610.3m EUR369.8m +65.0%
Operating Profit EUR23.6m EUR20.0m +17.8%
Operating Margin 3.9% 5.4%
ROCE - excluding goodwill 44.8% 38.6%
- including goodwill 21.0% 19.0%
Energy achieved strong organic growth and enhanced its position in the
Northern Ireland market through the acquisition of Fuel Services in July
2000.
The increase in turnover reflects strong volume growth and higher selling
prices, which were due to increases in the cost of oil and LPG - crude oil
prices remained high throughout the year, exacerbated by the strength of the
dollar. Extreme volatility in refined oil product prices at certain times in
the year had a somewhat negative impact on the growth of oil profits.
However, the volume increases drove excellent operating profit growth
overall.
Oil volumes grew substantially to in excess of 1 billion litres with
continued strong organic growth in the Republic of Ireland and Northern
Ireland. Fuel Services was acquired in July 2000 and was successfully
integrated into DCC's existing operations in Northern Ireland, making DCC the
leading marketer of fuel oil and distillates in this region. The continuing
roll-out of the new Emo logo is generating increased brand awareness,
particularly in the Republic of Ireland where DCC has a modest presence in
the retail petrol market.
LPG volumes showed satisfactory growth and margins improved as sales price
increases were implemented in response to increased product costs and the
strengthening of the dollar. The use of LPG autogas as a transport fuel in
Britain continues to develop as a result of government policy to promote its
use as a more environmentally friendly fuel; DCC has a significant market
share in this small but fast-growing market segment.
Healthcare
2001 2000
Turnover EUR182.7m EUR155.6m +17.4%
Operating Profit EUR20.3m EUR16.0m +27.4%
Operating Margin 11.1% 10.3%
ROCE - excluding goodwill 43.3% 41.3%
- including goodwill 19.1% 16.8%
Healthcare had another year of excellent growth, all of which was organically
generated.
In mobility and rehabilitation, DCC increased its share of the British and
German markets for powered mobility products. In order to exploit the
opportunities presented by the continuing growth of the mobility and
rehabilitation market, DCC has significantly augmented its management team in
this area.
DCC's British based nutraceuticals business achieved excellent sales and
profit growth. DCC has increased the level of integration of the tablet
manufacturing and soft gel encapsulation businesses. This will provide a
better platform from which to penetrate further the British and European
nutraceuticals markets. The loss of an important customer, with effect from
September next, will adversely impact the nutraceuticals business in the
shorter term but the longer term outlook for the business and the sector
continues to be positive.
DCC's Irish hospital supply business performed satisfactorily. During the
year the integration of Fannin (medical and surgical supplies) and BM Browne
(hospital laboratory supplies) was completed. This has consolidated Fannin
Healthcare's leadership position, both in the scale of its business and in
the breadth of its product offering to customers. The company is at an
advanced stage of developing an e-commerce system, tailored to meet the
particular needs of Irish hospitals.
Other Activities
2001 2000
Turnover EUR323.3m EUR248.4m +30.2%
Operating Profit EUR16.6m EUR17.3m -4.2%
Operating Margin 5.1% 7.0%
ROCE - excluding goodwill 37.1% 41.6%
- including goodwill 21.8% 23.7%
Other activities, including the food businesses and supply chain management
services, showed a modest reduction in profitability, principally reflecting
significant developmental investment in IT systems, skilled personnel and
management resources in SerCom Solutions.
Food - DCC's focus on higher growth segments of the Irish food market -
including healthy foods, soft drinks, wine and snacks - generated sales
growth of 13.7% to EUR182.4 million, with particularly good growth in the
food service sector. DCC has a deep distribution reach, supplying a broad
retail and food service customer base. During the year, this distribution
reach was extended through investment in additional sales and marketing
resources, including an expanded van sales force, which contributed to the
strong sales performance.
Operating profits were EUR8.5 million compared with EUR8.9 million in the
prior year. Operating margins reduced due to the increased euro cost of
sterling purchases, together with planned investment in additional sales and
marketing resources.
Supply Chain Management Services - DCC's supply chain management services
business, SerCom Solutions, continued to invest in the development of its
business. This included the installation of a new SAP system and a
significant strengthening of the management team across all disciplines.
Sales grew by 68.2% to EUR103.6 million. Operating profit was EUR2.8
million compared with EUR3.8 million in the prior year, reflecting the
significant developmental investment in IT systems, skilled personnel and
management resources.
Other - Operating profit from other interests increased by 16.4% to EUR5.3
million. The principal other interest is DCC's 49% shareholding in Manor Park
Homebuilders, which has commenced operations on a major housing development
at Clonee, west Dublin. 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 continued profit growth in the future.
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 11am on Friday 6 July
2001 in the Conrad International Hotel, Earlsfort Terrace, Dublin 2.
DCC plc
SUMMARISED CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2001
2001 2000
Notes EUR'000 EUR'000
Turnover - continuing activities 2 1,870,141 1,316,111
- discontinued activities 2 - 210,889
1,870,141 1,527,000
Operating profit - continuing activities 3 91,737 73,785
- discontinued activities 3 - 3,958
91,737 77,743
Net interest payable 3 (4,402) (6,400)
Profit on ordinary activities before net
exceptional gains, goodwill amortisation
and tax 3 87,335 71,343
Net exceptional gains - 71,365
Goodwill amortisation 3 (4,923) (3,535)
Profit before tax 3 82,412 139,173
Taxation (13,100) (18,701)
Profit after tax 69,312 120,472
Minority interests (1,230) (631)
Profit attributable to DCC shareholders 68,082 119,841
Dividends 4 (18,140) (15,366)
Profit retained for the year 49,942 104,475
Earnings per ordinary share - basic 5 78.98c 137.39c
Adjusted earnings
per ordinary share - basic 5 84.69c 68.80c
Dividend per ordinary share 21.12c 17.60c
DCC plc
CONSOLIDATED BALANCE SHEET
as at 31 March 2001
2001 2000
Note EUR'000 EUR'000
Fixed Assets
Goodwill arising on the acquisition of subsidiaries 84,447 75,559
Tangible fixed assets 135,241 123,094
Associated undertakings 38,458 34,598
258,146 233,251
Current Assets
Stocks 93,063 76,016
Debtors 296,804 232,301
Disposal proceeds receivable - 16,100
Cash and term deposits 454,582 551,276
844,449 875,693
Creditors: Amounts falling due within one year
Trade and other creditors 328,328 266,133
Bank and other debt 200,621 191,781
Corporation tax 18,959 17,937
Proposed dividend 11,449 9,735
559,357 485,586
Net Current Assets 285,092 390,107
Total Assets less Current Liabilities 543,238 623,358
FINANCED BY:
Creditors: Amounts falling due after more
than one year
Unsecured Notes due 2008/11 104,977 108,611
Bank and other debt 65,753 161,725
Deferred acquisition consideration 11,464 17,569
182,194 287,905
Provisions for liabilities and charges 1,801 2,090
183,995 289,995
Capital and Reserves
Equity share capital and share premium 146,484 143,814
Reserves 208,202 185,309
Equity Shareholders' Funds 354,686 329,123
Minority interests 3,493 3,274
Capital grants 1,064 966
359,243 333,363
543,238 623,358
Net cash 6 83,231 89,159
DCC plc
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 March 2001
2001 2000
EUR'000 EUR'000
Profit attributable to DCC shareholders 68,082 119,841
Dividends (18,140) (15,366)
49,942 104,475
Issues of equity share capital net of capital duty 2,670 1,234
Acquisition of own shares (24,668) -
Movement on other reserves of associated undertakings (25) 2,492
Goodwill realised previously eliminated against
reserves - 20,733
Exchange adjustments (2,356) 4,968
Net movements in shareholders' funds 25,563 133,902
Opening shareholders' funds 329,123 195,221
Closing shareholders' funds 354,686 329,123
DCC plc
CASH FLOW
for the year ended 31 March 2001
2001 2000
Note EUR'000 EUR'000
Inflows
Operating cash flow (see below) 83,369 96,297
Disposal proceeds 16,026 109,745
Shares issues (net) 1,930 9
101,325 206,051
Outflows
Capital expenditure (net) 29,506 24,736
Acquisitions 25,969 37,575
Acquisition of own shares 24,668 -
Interest paid 2,587 5,635
Tax paid 9,073 9,400
Dividends paid 16,426 13,701
108,229 91,047
Net cash (outflow)/inflow (6,904) 115,004
Translation adjustment 976 (5,548)
Movement in net cash/(debt) (5,928) 109,456
Opening net cash/(debt) 89,159 (20,297)
Closing net cash 6 83,231 89,159
OPERATING CASH FLOW
for the year ended 31 March 2001
2001 2000
EUR'000 EUR'000
Group operating profit 91,737 77,743
Operating profit of associated undertakings (8,950) (15,879)
Dividends received from associated undertakings 1,896 2,768
Depreciation of tangible fixed assets 20,766 18,890
(Increase)/decrease in working capital (19,929) 15,823
Other (2,151) (3,048)
Operating Cash Flow 83,369 96,297
DCC plc
Notes to the Preliminary Results for the Year ended 31 March 2001
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 2001 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 2000, containing an unqualified auditors' report, have been
delivered to the Registrar of Companies.
The financial statements for the year ended 31 March 2001 have been prepared
in accordance with the accounting policies set out in the financial
statements for the year ended 31 March 2000.
Comparative amounts have been regrouped and restated, where necessary, on the
same basis as the amounts for the current year.
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 2001 31 March 2000
EUR1=Stg£ EUR1=Stg£
Balance sheet (closing rate) 0.619 0.599
Profit and loss (average rate) 0.613 0.643
2. Turnover
Year ended Year ended
31 March 2001 31 March 2000
EUR'000 EUR'000
IT 753,887 542,298
Energy 610,257 369,812
Healthcare 182,657 155,555
Other Activities 323,340 248,446
Continuing activities 1,870,141 1,316,111
Discontinued activities - 210,889
1,870,141 1,527,000
Subsidiary undertakings 1,712,402 1,203,758
Associated undertakings 157,739 112,353
Turnover - continuing activities 1,870,141 1,316,111
Of which acquisitions in the year contributed 69,028 49,547
3. Profit before Tax
Year ended Year ended
31 March 2001 31 March 2000
EUR'000 EUR'000
IT 31,203 20,458
Energy 23,617 20,053
Healthcare 20,313 15,951
Other Activities 16,604 17,323
Operating profit - continuing activities* 91,737 73,785
Discontinued activities - 3,958
Operating profit 91,737 77,743
Net interest payable (4,402) (6,400)
Profit before net exceptional gains and
goodwill amortisation 87,335 71,343
Net exceptional gains - 71,365
Goodwill amortisation (4,923) (3,535)
Profit before tax 82,412 139,173
Analysis of operating profit - continuing
activities by subsidiary undertakings and
associated undertakings:
Subsidiary undertakings 82,787 66,256
Associated undertakings 8,950 7,529
Operating profit - continuing activities 91,737 73,785
* Of which acquisitions in the year contributed 1,078 598
4. Dividends
Year ended Year ended
31 March 31 March
2001 2000
EUR'000 EUR'000
Interim dividend of 7.74 cent per share (2000:6.45 cent) 6,619 5,631
Proposed final dividend of 13.38 cent per share
(2000: 11.15 cent) 11,449 9,735
Additional dividend 72 -
18,140 15,366
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.
5. Earnings per Ordinary Share
Year ended Year ended
31 March 31 March
2001 2000
EUR'000 EUR'000
Profit after tax and minority interests 68,082 119,841
Net exceptional gains (net of taxation) - (63,365)
Goodwill amortisation 4,923 3,535
Adjusted profit after tax and minority interests 73,005 60,011
Basic earnings per ordinary share
Basic earnings per ordinary share 78.98c 137.39c
Adjusted basic earnings per ordinary share* 84.69c 68.80c
Weighted average number of ordinary shares
in issue during the year ('000) 86,202 87,225
Diluted earnings per ordinary share
Diluted earnings per ordinary share 78.28c 133.43c
Adjusted diluted earnings per ordinary share* 83.94c 66.89c
Diluted weighted average number of ordinary shares
for the year ('000) 87,030 89,925
* adjusted to exclude goodwill amortisation and net exceptional gains
The diluted earnings used in the calculation of diluted earnings per ordinary
share were EUR68.131 million (2000: EUR119.989 million) and in the
calculation of adjusted diluted earnings per ordinary share were EUR73.054
million (2000: EUR60.159 million).
6. Analysis of Net Cash
Year ended Year ended
31 March 31 March
2001 2000
EUR'000 EUR'000
Cash and term deposits 454,582 551,276
Bank and other debt repayable within one year (200,621) (191,781)
Bank and other debt repayable after more than one year (65,753) (161,725)
Unsecured notes due 2008/11 (104,977) (108,611)
Net cash 83,231 89,159
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