DCC PLC (LON:DCC) Results for the year ended 31 March 2018

Transparency directive : regulatory news

15/05/2018 07:00
DCC PLC  -  DCC   

Results for the year ended 31 March 2018


Released 07:00 15-May-2018

 


15 May 2018


 


DCC Reports Strong Growth and Record Development Spend


 


DCC, the leading international sales, marketing and support services group, today announced its results for the year ended 31 March 2018.


 




























































Highlights



2018



2017



% change



DCC LPG volumes (thousand tonnes)1



1,876.2kT



1,565.6kT



+19.8%



DCC Retail & Oil volumes (billion litres)



12.308bn



11.572bn



+6.4%



Revenue - continuing2


(excl. DCC LPG and DCC Retail & Oil)



£3.598bn



£3.196bn



+12.6%



Adjusted operating profit - continuing2,3



£383.4m



£345.0m



+11.1%



Adjusted earnings per share - continuing2,3



317.5p



286.6p



+10.8%



Dividend per share



122.98p



111.80p



+10.0%



Free cash flow4



£328.1m



£415.5m



 



Return on capital employed - continuing2



17.5%



20.3%



 



                               


·     Strong performance for the year with all divisions recording good profit growth and Group adjusted operating profit on continuing operations increasing by 11.1% (8.6% ahead on a constant currency basis) to £383.4 million.


 


·     Adjusted earnings per share on continuing activities up 10.8% (8.3% ahead on a constant currency basis) to 317.5 pence.


 


·     Proposed 10.0% increase in the final dividend will see the total dividend for the year increase by 10.0%, the 24th consecutive year of dividend growth since DCC listed in 1994.


 


·     Good cash flow performance with free cash flow conversion of approximately 85% and a return on capital employed of 17.5%.


 


·     Record year of corporate development spend with approximately £670 million of acquisition capital deployed. 


 


·     Acquisitions completed across all divisions, including the acquisitions of Retail West and Elite One Source, DCC's first entry into the large US markets for LPG and for Health & Beauty Solutions.


 


·     The Group expects that the year ending 31 March 2019 will be another year of profit growth and development.


 


 


 





1  1 tonne of LPG equivalent to 1,969 litres of oil




2  Continuing operations exclude DCC Environmental which was disposed of in May 2017




3  Excluding net exceptionals and amortisation of intangible assets




4  After net capital expenditure and before net exceptionals, interest and tax payments



 


 


Commenting on the results, Donal Murphy, Chief Executive, said:


 


"It is pleasing to report that the year ended 31 March 2018 has been another year of strong growth for DCC, with each division recording good growth in operating profit.   


 


It was also a record year of development for the Group, with approximately £670 million of capital spent on acquisitions, the highest level of spend in DCC's history. The acquisition activity during the year again demonstrates DCC's ability to acquire and integrate businesses in our existing markets to strengthen our market positions, build scale and increase our relevance and service offerings to customers and suppliers. Importantly, it also reflects our strategy to extend our geographic footprint over time, as evidenced by DCC LPG's first acquisitions in the US and Asia and DCC Healthcare's first acquisition in the US. These acquisitions in new markets will provide further opportunities for both organic and acquisitive growth for the Group.


 


The Group continues to have the opportunity, ambition and capacity for further development across each of our divisions, supported by a strong and liquid balance sheet.


 


We expect that the year to 31 March 2019 will be another year of profit growth and development for the Group."


 


 


Presentation of results and dial-in / webcast facility


There will be a presentation of these results to analysts and fund managers at 9.00 am today in the London Stock Exchange.  The slides for this presentation can be downloaded from DCC's website, www.dcc.ie.


 


There will also be audio conference access to, and a live webcast of, the presentation.  The access details for the presentation are:


 


Ireland:                                +353 (0)1 246 5621


UK / International:            +44 (0)330 336 9411


Passcode:                            5200365


Webcast Link:                    https://edge.media-server.com/m6/p/g6h5bc8u


 


This report, a webcast of the presentation and further information on DCC is available at www.dcc.ie.


 


 


For reference, please contact:






















Donal Murphy, Chief Executive



             Tel: +353 1 2799 400



Fergal O'Dwyer, Chief Financial Officer



     Email: investorrelations@dcc.ie



Kevin Lucey, Head of Capital Markets



                               Web: www.dcc.ie



 


For media enquiries: Powerscourt (Lisa Kavanagh) 



 


                 Tel: +44 20 7250 1446



 


 


 


 


Group Results


A summary of the Group's results for the year ended 31 March 2018 is as follows:


 





































































































































































 



       2018


         £'m



       2017


          £'m



% change



Revenue - continuing1


     14,265



       12,270



+16.3%



Operating profit2



 



 



 



DCC LPG



       167.5



         160.4



+4.4%



DCC Retail & Oil



       113.8



           94.5



+20.4%



DCC Healthcare



         54.3



            49.0



+11.0%



DCC Technology



         47.8



            41.1



+16.3%



Group adjusted operating profit2 - continuing1



      383.4



         345.0



+11.1%



Finance costs (net) and other



       (35.4)



         (31.2)



 



Profit before net exceptionals, amortisation of intangible assets and tax



      348.0



         313.8



+10.9%



Net exceptional credit/(charge) after tax and non-controlling interests



        11.4



          (24.8)



 



Amortisation of intangible assets



       (43.0)



          (39.2)



 



Profit before tax



      316.4



         249.8



+26.6%



Taxation



       (49.3)



          (44.1)



 



Profit after tax



      267.1



         205.7



+29.8%



Profit after tax - discontinued operations



          0.8



            15.2



 



Non-controlling interests



        (6.1)



            (4.7)



 



Attributable profit



     261.8



         216.2



+21.1%



Adjusted earnings per share2- continuing1



    317.5p



         286.6p



+10.8%



Adjusted earnings per share2



    318.4p



         303.7p



+4.8%



Dividend per share



  122.98p



        111.80p



+10.0%



Operating cash flow



    473.4



         546.9



 



Free cash flow3



    328.1



         415.5



 



Net debt at 31 March



    542.7



         121.9



 



Total equity at 31 March



1,677.9



      1,507.7



 



Return on capital employed - continuing1



   17.5%



        20.3%  



 



1 Continuing operations exclude DCC Environmental which was disposed of in May 2017


2 Excluding net exceptionals and amortisation of intangible assets


3 After net capital expenditure and before net exceptionals, interest and tax payments



  

 


Revenue - continuing operations


Revenue from continuing operations increased by 16.3% (13.8% ahead on a constant currency basis) to £14.3 billion.


 


DCC LPG volumes increased by 19.8% to 1.9 million tonnes, driven by the acquisitions of Gaz Européen in the prior year and Shell Hong Kong & Macau in January 2018. On a like-for-like basis, volumes were 4.7% ahead of the prior year. DCC LPG's revenue increased by 30.8% (26.2% ahead on a constant currency basis).


 


Volumes in DCC Retail & Oil increased by 6.4% to 12.3 billion litres, reflecting the acquisitions of Dansk Fuels in the prior year and Esso Retail Norway in October 2017. Volumes were in line with the prior year on an organic basis.  DCC Retail & Oil's revenues increased by 15.8% (13.3% ahead on a constant currency basis).


 


Revenue excluding DCC LPG and DCC Retail & Oil increased by 12.6% (11.1% ahead on a constant currency basis) to £3.6 billion, approximately half of which was organic.


 


Group adjusted operating profit - continuing operations


Group adjusted operating profit from continuing operations increased by 11.1% to £383.4 million (8.6% ahead on a constant currency basis); approximately one third of the constant currency operating profit growth was organic. The average sterling/euro translation rate for the year of 1.1366 was 4.9% weaker than the average of 1.1956 in the prior year.


 


Operating profit in DCC LPG was 4.4% ahead of the prior year (1.0% ahead on a constant currency basis), despite the anticipated headwind of a rising cost of product and continued organic investment in its B2C natural gas and electricity offering in France.  DCC LPG benefited from the acquisition of Shell Hong Kong & Macau and strong organic growth from the business in Britain, where further progress was achieved in converting oil customers to LPG in the commercial and industrial sectors. 


 


In DCC Retail & Oil, operating profit was 20.4% ahead of the prior year (18.0% ahead on a constant currency basis).  Approximately half of the constant currency growth was organic and broadly based, with good profit growth across the division. The business in Britain benefited from a marginally colder than average winter, which drove a modest increase in heating demand. In Denmark, the business delivered strong organic growth and also benefited from the integration of the Dansk Fuels acquisition, completed in the prior year.  


 


Operating profit in DCC Healthcare was 11.0% ahead of the prior year (10.6% ahead on a constant currency basis) and approximately half of the constant currency growth was organic. DCC Vital performed strongly, driven by the first full year contribution from Medisource, which completed in January 2017, as well as good organic growth in medical devices. DCC Health & Beauty Solutions benefited modestly from the acquisition of Elite One Source in January 2018 and continued to deliver strong organic growth in nutritional products. 


 


In DCC Technology, operating profit was 16.3% ahead of the prior year (15.5% ahead on a constant currency basis), reflecting a very strong organic performance in the UK and Ireland, particularly in audio visual, components and gaming, and the benefit of the acquisitions of Hammer and MTR. In France, the B2B business again delivered good growth. The French consumer products business remained very challenging and a programme to significantly reduce costs while improving its logistics and operational efficiency is being implemented. The Nordics business again delivered strong growth in IT and audio visual products and benefited in particular from continued investment in building out its presence in Norway.


 

An analysis of the divisional performance in each half of the year, for the Group's continuing operations, is set out below:


 





























































































































































 



2017/18



 



2016/17



 



% change



 



 



H1



H2



FY



 



H1



H2



FY



 



H1



H2



FY



 



Adjusted operating profit*



£'m



£'m



£'m



 



£'m



£'m



£'m



 



 



 



 



 



DCC LPG



44.1



123.4



167.5



 



37.0



123.4



160.4



 



+19.2%



+0.0%



+4.4%



 



DCC Retail & Oil



42.2



71.6



113.8



 



39.0



55.5



94.5



 



+8.0%



+29.0%



+20.4%



 



DCC Healthcare



22.0



32.3



54.3



 



19.8



29.2



49.0



 



+11.6%



+10.6%



+11.0%



 



DCC Technology



14.2



33.6



47.8



 



11.3



29.8



41.1



 



+25.8%



+12.8%



+16.3%



 



Group



122.5



260.9



383.4



 



107.1



237.9



345.0



 



+14.4%



+9.7%



+11.1%



 



 



 



 



 



 



 



 



 



 



 



 



 



 



Adjusted EPS* (pence)



95.5



222.0



317.5



 



82.2



204.4



286.6



 



+16.1%



+8.6%



+10.8%



 



*Excluding net exceptionals and amortisation of intangible assets



 



 



 



 



 


Finance costs (net) and other


Net finance costs and other increased to £35.4 million (2017: £31.2 million) and reflects an increase in the Group's gross debt due primarily to the drawdown in September 2017 of a new £450 million US private placement debt issuance. It also reflects the higher average net debt during the year of £467 million compared to £301 million during the prior year. The average net debt increased due to the record level of acquisition spend of approximately £670 million during the year.


 


Profit before net exceptional items, amortisation of intangible assets and tax


Profit before net exceptional items, amortisation of intangible assets and tax increased by 10.9% to £348.0 million (8.4% ahead on a constant currency basis). 


 


Net exceptional credit and amortisation of intangible assets


The Group incurred a net exceptional credit after tax and non-controlling interests of £11.4 million as follows:


 


































 



       £'m



Profit on disposal of discontinued operations



         29.8



Acquisition and related costs



        (12.8)



Restructuring costs



(33.2)



IAS 39 mark-to-market gain and other



1.2



Tax and non-controlling interests



26.4



Net exceptional credit



11.4



 


The profit on disposal of discontinued operations relates to the gain recorded on the profitable sale of DCC's environmental division, which completed on 31 May 2017.


 


Acquisition costs include the professional fees and tax costs (such as stamp duty) relating to the evaluation and completion of acquisition opportunities and amounted to £12.8 million.


 


Restructuring costs amounted to £33.2 million and principally reflect the costs associated with the Group's focus on increasing the efficiency of its operating infrastructure and sales platforms. The majority of the charge relates to the Retail & Oil division where a large project to bring greater efficiency and reduced capital expenditure over time to the UK business' nationwide depot network infrastructure is underway and the project will result in a material reduction in the number of depot locations. An element of the charge also relates to the integration and restructuring costs associated with the prior year acquisition of Dansk Fuels in Denmark.


 


The other material element of the restructuring charge relates to the ongoing optimisation of DCC Technology's logistics and related infrastructure.  In the UK, the new national distribution centre is now operational and a number of the existing locations have transferred into the new infrastructure. The remaining existing locations will transition during the coming year and the majority of the legacy locations have now been sold successfully. A programme to significantly reduce costs, whilst improving the logistics and operational efficiency of DCC Technology's French consumer business is ongoing. This project will also deliver a consolidation of two existing warehouses into one new facility. Finally, the business in the Nordics has recently commissioned its new national distribution centre and it is now operational.


 


Most of the Group's debt has been raised in the US Private Placement market and swapped, using long term interest and cross currency interest rate derivatives, to both fixed and floating rate sterling and euro. The level of ineffectiveness calculated under IAS 39 on the fair value and cash flow hedge relationships relating to fixed rate debt is charged or credited as an exceptional item. In the year ended 31 March 2018, this amounted to an exceptional non-cash gain of £0.3 million. Following this credit, the cumulative net exceptional charge taken in respect of the Group's outstanding US Private Placement debt and related hedging instruments is £5.3 million. This, or any subsequent similar non-cash charges or gains, will net to zero over the remaining term of this debt and the related hedging instruments.  


 


The tax and non-controlling interests credit of £26.4 million principally reflects the impact of the recent reduction of the statutory corporation tax rate in France and corresponding reduction in the Group's deferred tax liabilities associated with the Group's brand and other intangible assets in France.


 


The charge for the amortisation of acquisition related intangible assets increased to £43.0 million from £39.2 million in the prior year, with the increase principally reflecting acquisitions completed in the current and prior year.


 


Profit before tax


Profit before tax increased by 26.6% to £316.4 million.


 


Taxation


The effective tax rate for the Group decreased to 17.0% from 17.5% in the prior year. The decrease primarily reflects reductions in certain territorial tax rates and the change in the geographical mix of the Group's earnings.


 


Discontinued operations


The Group's discontinued operations represent the activities of DCC Environmental which was disposed of in May 2017.


 


Adjusted earnings per share


Adjusted earnings per share on a continuing basis increased by 10.8% (8.3% ahead on a constant currency basis) to 317.5 pence.


 


Total adjusted earnings per share also increased by 4.8% (2.5% ahead on a constant currency basis) to 318.4 pence.


 


Dividend

The Board is recommending an increase of 10.0% in the final dividend to 82.09 pence per share, which, when added to the interim dividend of 40.89 pence per share, gives a total dividend for the year of 122.98 pence per share. This represents a 10.0% increase over the total prior year dividend of 111.80 pence per share.  The dividend is covered 2.6 times by adjusted earnings per share on a continuing basis (2.6 times in 2017).  It is proposed to pay the final dividend on 19 July 2018 to shareholders on the register at the close of business on 25 May 2018. 


 


Over its 24 years as a listed company, DCC has an unbroken record of dividend growth at a compound annual rate of 14.5%.


 


Cash flow

The Group generated good operating and free cash flow during the year as set out below:


 

















































































































































































































Year ended 31 March



 



 



2017


             £'m



 



 



 



 



 



Group operating profit



 


384.4


 


363.6


 


 


 


 


 


(Increase)/decrease in working capital


 


(13.8)


 


  84.0 


Depreciation and other


 


102.8


 


  99.3


 


 


 


 


 


Operating cash flow


 


473.4


 


546.9


 


 


 


 


 


Capital expenditure (net)


 


(145.3)


 


(131.4)


 


 


 


 


 


Free cash flow


 


328.1


 


415.5


 


 


 


 


 


Interest and tax paid, net of dividend from equity accounted investments


 


 

(96.0)


 


 

(91.2)


 


 


 


 


 


Free cash flow after interest and tax


 


232.1


 


324.3


 


 


 


 


 


Acquisitions


 


(691.0)


 


(262.4)


Disposals


 


160.1


 


-


Dividends


 


(102.9)


 


(90.1)


Dividends paid to non-controlling interests


 


-


 


(5.2)


Exceptional items


 


(12.6)


 


(31.5)


Share issues


 


3.3


 


2.6


 


 


 


 


 


Net outflow


 


(411.0)


 


(62.3)


 


 


 


 


 


Opening net debt


 


(121.9)


 


(54.5)


Translation and other


 


(9.8)


 


(5.1)


Closing net debt


 


(542.7)


 


(121.9)


 


Operating cash flow in 2018 was £473.4 million compared to £546.9 million in the prior year.  Working capital increased by £13.8 million (£7.3m increase on a continuing basis). Overall working capital days were negative 2.0 days sales, compared to negative 3.3 days sales in the prior year, reflecting the acquisition during the year of businesses with positive working capital characteristics. DCC Technology selectively uses supply chain financing solutions to sell, on a non-recourse basis, a portion of its receivables relating to certain larger supply chain/sales and marketing activities. The level of supply chain financing at 31 March 2018 increased on the prior year and supply chain financing had a positive impact on Group working capital days of 4.0 days (31 March 2017: 4.2 days) or £202.2 million (2017: £165.6 million).


 


Net capital expenditure amounted to £145.3 million for the year (2017: £131.4 million) and was net of disposal proceeds of £7.6 million. The increased level of gross capital expenditure reflects the increased scale of the Group and a number of investments being undertaken to support its continued growth and development. In the current year, the principal items included ongoing investment in new retail sites and site upgrades in the Retail & Oil division, investment to support the organic volume growth being achieved in the LPG division, and the completion of the new national distribution centres and related infrastructure in the Technology division. The net capital expenditure exceeded the depreciation charge in the year by £51.7 million.


 


The Group's free cash flow amounted to £328.1 million, representing an 85% conversion of operating profit into free cash flow.


 


Return on capital employed


The creation of shareholder value through the delivery of consistent, long-term returns well in excess of its cost of capital is one of DCC's core strategic aims. The return on capital employed by division was as follows:


 




































 



2018



2017



DCC LPG



17.4%



22.9%



DCC Retail & Oil



18.7%



19.8%



DCC Healthcare



16.7%



17.5%



DCC Technology



16.1%



17.1%



Group - continuing



17.5%



20.3%



 


The decrease in the return on capital employed versus the prior year principally reflects the impact of the substantial acquisition spend during the year as the Group entered new geographies.


 


Total cash spend on acquisitions for the year ended 31 March 2018


The total cash spend on acquisitions completed in the year was £691.0 million and included the payment of deferred and contingent acquisition consideration previously provided of £26.9 million.


 


Committed acquisitions


Committed acquisition expenditure in the period amounted to £355.3 million.  An analysis by division is shown below:


 










































 



 



 



            £'m



DCC LPG 



 



 



250.8



DCC Retail & Oil



 



 



27.9



DCC Healthcare



 



 



43.7



DCC Technology



 



 



32.9



Total



 



 



355.3



 


DCC LPG


Retail West


On 7 November 2017, DCC LPG announced that it had reached agreement with NGL Energy Partners LP ("NGL") to acquire its Retail West LPG division, Hicksgas LLC ("Retail West"). The acquisition completed on 31 March 2018.


 


Headquartered in Illinois, Retail West has been in business for over 70 years and employs 390 people. It sells approximately 130,000 tonnes (assuming normal winter weather conditions) of LPG annually from 43 customer service locations and 58 satellite facilities. The business trades under three prominent regional brands, Hicksgas, Pacer Propane and Propane Central, and a number of smaller, local brands. Retail West has leading market positions in Illinois, Indiana and Kansas and also operates in seven other states across the Mid-West and North-West regions. The acquisition represents DCC LPG's entry into the US market and is a further significant step in DCC's strategy to build a global LPG business over time. The US is one of the world's largest LPG markets and is an attractive and growing market. It is also highly fragmented, with over 4,000 LPG distribution businesses operating in the market. The acquisition of Retail West will provide DCC with a substantial, high-quality presence in the US with leading market positions in a number of states. The business has an excellent customer base, a strong and well-invested operational infrastructure and an experienced management team.


 


TEGA


On 4 January 2018, DCC LPG announced it had reached agreement with Linde AG to acquire Tega-Technische Gase und Gasetechnik GmbH, its LPG and refrigerant gas distribution business in Germany ("TEGA"). The transaction completed on 31 March 2018.


 


TEGA, headquartered in Würzburg, employs approximately 100 people across five operating sites, largely in southern Germany. TEGA has revenue of approximately €75 million evenly split between LPG and refrigerants. The business supplies approximately 35,000 tonnes of LPG annually to approximately 15,000 domestic and commercial customers. It also supplies refrigerant gases to wholesalers and end-users for use in air-conditioning, commercial cooling systems and refrigerators. The business has operated on a standalone basis within The Linde Group and continues to be led by its existing, highly experienced management team.


 


The acquisition of TEGA provides DCC LPG with a platform in the large, relatively fragmented German LPG market and further strengthens its position in the LPG market in Europe. In addition, it provides an entry into the refrigerant gas market, further enhancing the service capability of the LPG business, following the expansion into medical and aerosol gases in recent years.


 


Countrywide LPG


On 11 January 2018, DCC LPG announced it had reached agreement with Countrywide Farmers plc to acquire the trade and assets of its LPG distribution business in Britain ("Countrywide LPG"). Countrywide LPG supplies bulk and cylinder LPG to domestic, agricultural and commercial customers in Britain. The business sells approximately 20,000 tonnes of LPG annually.  The transaction completed on 28 February 2018 and is currently being held separate, pending merger clearance.


 


DCC Retail & Oil


SNAP


In May 2018, DCC Retail & Oil acquired SNAP, an end-to-end transaction processing and payment system for HGV fleets. The business facilitates cashless payments through licence plate recognition for services to HGV fleets at truck stops. The business, although modest, is growing strongly and will be complementary to the existing retail and oil businesses.


 


DCC Healthcare


Elite One Source


On 7 February 2018, DCC Health & Beauty Solutions announced the acquisition of Elite One Source Nutritional Services, Inc ("Elite One Source"), a provider of contract manufacturing and related services to the growing healthcare and dietary supplements market in the US.


 


Elite One Source focuses on complex-formulation nutritional products in tablet and capsule dosage forms, including organic and probiotic products, across a variety of packaging formats. Its service offering encompasses product development, formulation, manufacturing, packaging and regulatory services. Its customer base includes some of the leading specialist brands in the US consumer healthcare market. Elite One Source's facilities in Missoula, Montana are well-invested with significant scope to expand capacity to meet its organic growth plans. The facilities comply with FDA cGMP (current Good Manufacturing Practices) and Health Canada standards and are certified by leading third party regulatory bodies including NSF and USDA Organic. The business is led by an experienced management team and employs 180 people. 


 


The acquisition of Elite One Source provides an entry into the US market, the world's largest healthcare and dietary supplements market. The US is an innovative, high-growth market, with a fragmented contract manufacturing base, which offers DCC significant opportunities for organic and acquisitive growth.


 


DCC Technology


MTR


In July 2017, DCC Technology acquired MTR Group Ltd ("MTR"), a fast-growing UK-based provider of second lifecycle solutions for mobile and tablet devices.


 


Based in Harlow, Essex and employing 60 people, MTR provides a broad range of services to retailers, mobile handset manufacturers and insurance companies to source and refurbish mobile phones and tablets for resale to customers in the UK and abroad. In the year ended 30 November 2016, MTR generated service revenues of £11 million. The acquisition of MTR advances the DCC Technology strategy of expanding its service proposition to vendors and customers and provides access to the high growth second lifecycle solutions market. 


 


Hypertec


In March 2018, DCC Technology acquired Hypertec Ltd, a small UK-based distributor of third party and own-brand memory and accessory products. The business generated revenues of £28.3 million in its most recent financial year and employs approximately 50 people.


 


Disposals


The cash flow on disposals relates to the disposal of DCC's Environmental division on 31 May 2017. Full details of the disposal were set out in DCC's Stock Exchange announcement of 5 April 2017.


 


Since the year end, DCC Retail & Oil has completed the disposal of both its fuel storage terminal in Belfast to Valero Logistics UK Ltd, a subsidiary of Valero Energy Corporation, and its distribution business in Northern Ireland to Nicholl Fuel Oils Ltd. The distribution business sold approximately 250 million litres of product in the year to 31 March 2018. The sale excludes the retail business in Northern Ireland.


 


Financial strength


An integral part of the Group's strategy is the maintenance of a strong and liquid balance sheet to enable it to take advantage of development opportunities as they arise. As a result of the continued strong cash flow performance, DCC's financial position remains very strong. At 31 March 2018, the Group had net debt of £542.7 million, total equity of £1.7 billion, cash resources, net of overdrafts, of £964.3 million and a further £400 million of undrawn committed debt facilities. The Group's outstanding term debt at 31 March 2018 had an average maturity of 6.3 years. Substantially all of the Group's debt has been raised in the US Private Placement market with an average credit margin of 1.6% over floating Euribor/Libor.


 


At 31 March 2018, the Group's Net Debt: EBITDA was 1.1 times, reflecting the large acquisition spend in the second half of the financial year.


 

Outlook


The Group expects that the year ending 31 March 2019 will be another year of profit growth and development.


 

Annual Report and Annual General Meeting

DCC's 2018 Annual Report will be published in June 2018.  The Company's Annual General Meeting will be held at 11.00 am on Friday 13 July 2018 in The InterContinental Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland. 


 

Performance Review - Divisional Analysis


 




































DCC LPG



2018



2017



% change



Volumes (thousand tonnes)



1,876.2kT



1,565.6kT



+19.8%



Operating profit



£167.5m



£160.4m



+4.4%



Operating profit per tonne



£89.27



£102.49



 



Return on capital employed



17.4%



22.9%



 



 


DCC LPG recorded a good performance, with operating profit increasing by 4.4% (1.0% ahead on a constant currency basis), despite the anticipated headwind of an increasing cost of product and continued organic investment in its B2C natural gas and electricity offering in France. DCC LPG also made excellent progress in expanding its geographic presence, completing the acquisitions of Shell Hong Kong & Macau in January 2018, as well as TEGA in Germany and Retail West in the US, both on 31 March 2018.  


 


The volume growth of 19.8% was driven by the prior year acquisition of Gaz Européen and the acquisition of Shell Hong Kong & Macau. Volumes grew 4.7% on a like-for-like basis, primarily reflecting strong growth in natural gas volumes and continued growth in sales of LPG to industrial and commercial customers.


 


As anticipated, the operating profit per tonne declined versus the prior year due to a significantly higher cost of product and the mix impact of lower margin natural gas volumes becoming more material.


 


The French business performed in line with expectations, benefiting from strong cost control and good margin management and the business continues to progress organic new product development and efficiency opportunities. The 'Click & Collect' concept, allowing 24/7 order and collection of cylinders using a mobile application, is being expanded to an increasing number of locations.  The business also continues to invest in its B2C offering in natural gas and electricity, launched in the second half of the year, which leverages the existing B2B natural gas operating platform as well as the Butagaz brand, the most recognised gas brand in France.


 


In Britain, the business delivered strong organic profit growth, despite the impact of supply constraints across the industry in the peak winter season. The business delivered strong volume growth, reflecting its continued focus on converting industrial and commercial users of oil to LPG. In Ireland, the business also benefited from growth in commercial volumes, reflecting continued strong demand from existing and new customers in the sector. 


 


In Asia, Shell Hong Kong & Macau has been successfully integrated into DCC LPG's operations and has performed in line with expectations since acquisition.


 


Following the completion of recent acquisitions, DCC LPG has operations across ten countries and is very well placed to continue its development in existing territories, in both LPG and related adjacencies, as well as further developing its geographic footprint.


 

 




































DCC Retail & Oil



2018



2017



% change



Volumes (litres)



12.308bn



11.572bn



+6.4%



Operating profit



£113.8m



£94.5m



+20.4%



Operating profit per litre



0.92ppl



0.82ppl



 



Return on capital employed



18.7%



19.8%



 



 


DCC Retail & Oil had an excellent year, with operating profit increasing to £113.8 million, 20.4% ahead of the prior year (18.0% ahead on a constant currency basis). The strong performance reflects organic profit growth across all territories and acquisitions completed in the current and prior year.


 


DCC Retail & Oil sold 12.3 billion litres of product during the year, an increase of 6.4% over the prior year, driven by the prior year acquisition of Dansk Fuels and the acquisition of Esso Retail Norway in October 2017. Organic volumes were in line with the prior year.


 


In the UK and Ireland, the business delivered strong organic profit growth and benefited modestly from good heating oil demand following a marginally colder than average winter. The business continues to make good progress in developing its business in differentiated premium products, cross-selling value added products and services, such as telemetry, and developing in adjacent product areas such as lubricants and aviation. The business also continued its plans to organically invest in developing an unmanned retail network in the UK and Ireland and now has 39 unmanned sites, with a pipeline of further sites under consideration.


 


The Fuel Card business performed well, delivering organic profit growth whilst also expanding its operations organically into the German and French markets during the year.


 


In May 2018, DCC Retail & Oil acquired SNAP, an end-to-end transaction processing and payment system for HGV fleets. The business facilitates cashless payments through licence plate recognition for services to HGV fleets at truck stops. The business, although modest, is growing strongly and will be complementary to the existing retail and oil businesses.


 


A strong performance in the Danish business reflected organic growth in commercial, agricultural and domestic volumes and a full year's contribution from Dansk Fuels, which has been fully integrated. The Danish business now has leading market positions across the domestic, agricultural, commercial and aviation markets, in addition to operating 144 retail sites under the Shell brand. In France, the business delivered good profit growth while operating in a more competitive environment and continued to invest in both its customer proposition and upgrading its sites. In October 2017, DCC Retail & Oil completed, ahead of schedule, the acquisition of Esso's retail network in Norway. The business has now been integrated into DCC Retail & Oil's retail operating infrastructure, enabling management to commence driving improvements in what is a difficult market environment. The businesses in both Sweden and Austria performed well during the year.


 


Following a strategic review of the market position and invested capital of the business in Northern Ireland, DCC Retail & Oil completed the sale of its fuel storage terminal and distribution business in Northern Ireland in April 2018. The business sold approximately 250 million litres of volume in the year ended 31 March 2018.


 


Following completion of the acquisition of Esso Retail Norway, DCC Retail & Oil now has substantial operations in eight countries and has developed a scalable platform to grow the business in existing and new territories across its distribution, retail and fuel card activities.


 

 




































DCC Healthcare



2018



2017



% change



Revenue



£514.6m



£506.5m



+1.6%



Operating profit



£54.3m



£49.0m



+11.0%



Operating margin



10.6%



9.7%



 



Return on capital employed



16.7%



17.5%



 



 


DCC Healthcare again delivered strong growth, with operating profit increasing by 11.0% (10.6% ahead on a constant currency basis), with approximately half of the growth being organic. The business continued to improve its operating margin and also completed the acquisition of Elite One Source in January 2018, its first acquisition in the large and growing health supplements market in the US.


 


DCC Vital, which is focused on the sales and marketing of medical devices and pharmaceuticals to healthcare providers in Britain and Ireland, performed very strongly and benefited from the prior year acquisition of Medisource and good organic growth in medical devices. In the British primary care sector, DCC Vital enhanced its position as the market leader in the supply of medical consumables and equipment to GP surgeries with the completion of two small complementary bolt-on acquisitions. The integration of both acquisitions into DCC Vital's existing infrastructure is progressing to plan. DCC Vital's pharma activities also performed well, benefiting from the strength of its supply chain for certain essential medicines. A strong performance in the Irish business reflected a full year contribution from Medisource, acquired in January 2017, and continued strong growth in the supply of medical devices to the hospital and community care sectors. DCC Vital's operating margin was further enhanced by exiting the supply of certain low value commodity products into hospitals in Britain, continuing the product portfolio streamlining of prior years.


 


DCC Health & Beauty Solutions, which provides outsourced solutions to international nutrition and beauty brand owners, generated excellent organic growth in the nutrition sector and benefited from the acquisition of Elite One Source in January 2018, which has performed in line with expectations since acquisition. The organic growth was driven by the continued focus on complex product formulations, particularly soft gels, and benefited from increasing end-user demand for nutritional products in DCC Health & Beauty Solutions' key markets of Europe, the US and Asia. In the beauty sector, while the overall performance was held back somewhat due to destocking by certain customers, the business benefited from excellent growth in sachet filling and also generated a number of new business development opportunities during the second half of the year.


 


DCC Health & Beauty Solutions is continuing to progress a number of investment projects across its manufacturing facilities in Britain and in its recently acquired facilities in the US, which will add new capacity and product capability, enhancing its ability to meet the growing market demand for its services.


 

 




































DCC Technology



2018



2017



% change



Revenue



£3.083bn



£2.689bn



+14.7%



Operating profit



£47.8m



£41.1m



+16.3%



Operating margin



1.6%



1.5%



 



Return on capital employed



16.1%



17.1%



 



 


DCC Technology achieved very strong operating profit growth of 16.3% (15.5% ahead on a constant currency basis), reflecting acquisitions completed in the current and prior year and organic profit growth in the UK, Ireland and the Nordics.


 


In the UK, DCC Technology's largest market, the business achieved very strong revenue and profit growth, driven by market share gains and growth in key product categories including audio visual, components and gaming. The business continued to invest in both its product and service capability to allow it to take advantage of growth opportunities in audio visual, home automation, enterprise software and consumer product solutions.


 


Hammer, acquired in December 2016, achieved strong growth in sales of server and storage products into key markets, including the datacentre market. The acquisition of MTR, in July 2017, has allowed DCC Technology to enhance its service offering in the mobile market, strengthening its relationships with key vendor and retail partners. The business has performed very strongly since acquisition and provides a platform to extend its service offering outside of the UK. In February 2018, DCC Technology acquired Hypertec, a small specialist distributor of own-brand and third party memory and accessory products to reseller customers in the UK.


 


The new UK national distribution centre is now operational and the business has successfully disposed of most of its original warehousing. The associated project to upgrade its enterprise management system, which will significantly enhance the capability of the business to service its customers and suppliers, is progressing well and is scheduled to be completed by the end of the year.


 


The Irish business delivered strong organic profit growth as it benefited from a good performance in the enterprise segment and the continued development of its service proposition, including device life cycle management.


 


In France, the B2B segment performed strongly as it benefited from expansion of its audio visual offering and strong organic growth in its core cabling business. The French consumer products business remained very challenging and a programme to significantly reduce costs, while improving its logistics and operational efficiency, has been implemented. In the Nordics, the business experienced very strong organic growth and continues to benefit from investments made to broaden the reach of the business in Norway, Denmark and Finland. The business is making a significant investment in warehousing capacity to support future growth, in particular in audio visual and IT products. 


 


The business in the Middle East generated very strong revenue and profit growth reflecting further development of its relationships with key retailers in the region. Supply Chain Services continues to invest in its global service offering and also acts as an essential centre of expertise, supporting the broader DCC Technology business.


 


The performance in the current year, together with recent investments made in its service offering and infrastructure, leaves DCC Technology well positioned to drive further growth in both its existing and new markets.


 


 


Forward-looking statements


This announcement contains some forward-looking statements that represent DCC's expectations for its business, based on current expectations about future events, which by their nature involve risk and uncertainty.  DCC believes that its expectations and assumptions with respect to these forward-looking statements are reasonable, however because they involve risk and uncertainty as to future circumstances, which are in many cases beyond DCC's control, actual results or performance may differ materially from those expressed in or implied by such forward-looking statements.



 



Group Income Statement


For the year ended 31 March 2018                




































































































































































































































































































































































































































































































 



 



2018



 



2017



 



 



 



Pre exceptionals



Exceptionals


(note 5)



 


Total



 



Pre exceptionals



Exceptionals


(note 5)



 


Total



 



Continuing operations



Notes



£'000



£'000



£'000



 



£'000



£'000



£'000



 



 



 



 



 



 



 



 



 



 



 



Revenue 



4



14,264,639



-



14,264,639



 



12,269,802



-



12,269,802



 



Cost of sales



 



(12,857,814)



-



(12,857,814)



 



(11,006,805)



-



(11,006,805)



 



Gross profit



 



1,406,825



-



1,406,825



 



1,262,997



-



1,262,997



 



Administration expenses



 



(384,701)



-



(384,701)



 



(323,320)



-



(323,320)



 



Selling and distribution expenses



 



(652,636)



-



(652,636)



 



(605,182)



-



(605,182)



Other operating income



 



28,652



1,156



29,808



 



28,297



1,879



30,176



 



Other operating expenses



 



(14,740)



(46,269)



(61,009)



 



(17,787)



(38,176)



(55,963)



 



Adjusted operating profit



383,400



(45,113)



338,287



 



345,005



              (36,297)



308,708



 



Amortisation of intangible assets



(43,059)



-



(43,059)



 



(39,130)



                         -



(39,130)



 



Operating profit



4



340,341



(45,113)



295,228



 



305,875



              (36,297)



269,578



 



Finance costs



 



(73,156)



-



(73,156)



 



(72,910)



                         -



(72,910)



 



Finance income



 



37,421



299



37,720



 



40,973



                10,101



51,074



 



Equity accounted investments' profit after tax



368



-



368



 



712



                         -



712



 



Profit before tax



304,974



(44,814)



260,160



 



274,650



             (26,196)



248,454



 



Income tax expense



 



(49,289)



25,407



(23,882)



 



(44,113)



                (1,756)



(45,869)



 



Profit for the year (continuing operations)



255,685



(19,407)



236,278



 



230,537



              (27,952)



202,585



 



Profit for the year from discontinued operations



 


8



 


801



 


29,842



 


30,643



 



 


15,160



 


                         -



 


15,160



 



Profit after tax for the financial year



          



256,486



10,435



266,921



 



245,697



              (27,952)



217,745



 



 



 



 



 



 



 



 



 



 



 



Profit attributable to:



 



 



 



 



 



 



 



 



 



Owners of the Parent



 



250,420



11,404



261,824



 



241,011



(24,814)



216,197



 



Non-controlling interests



 



6,066



(969)



5,097



 



4,686



(3,138)



1,548



 



 



 



256,486



10,435



266,921



 



245,697



(27,952)



217,745



 



 



 



 



 



 



 



 



 



 



 



 



Earnings per ordinary share



 



 



 



 



 



 



 



 



 



Basic earnings per share



6



 



 



        293.83p



 



 



       243.64p



 



 



Diluted earnings per share



6



 



 



        292.79p



 



 



       242.00p



 



 



Basic adjusted earnings per share



6



 



 



        318.35p



 



 



       303.68p



 



 



Diluted adjusted earnings per share



6



 



 



        317.21p



 



 



       301.63p



 



 



 



 



 



 



 



 



 



 



 



 



Earnings per ordinary share - continuing operations



 



 



 



 



 



 



 



Basic earnings per share



6



 



 



        259.44p



 



 



       226.56p



 



 



Diluted earnings per share



6



 



 



        258.52p



 



 



       225.04p



 



 



Basic adjusted earnings per share



6



 



 



        317.45p



 



 



       286.59p



 



 



Diluted adjusted earnings per share



6



 



 



        316.31p



 



 



       284.66p



 


                                       


 



Group Statement of Comprehensive Income


For the year ended 31 March 2018










































































































































































































































































































































































 



 



 



 



 



 



 



 



 



 



 



 



2018



 



2017



 



 



 



 



 



£'000



 



£'000



 



 



 



 



 



 



 



 



 



Group profit for the financial year



 



 



 



266,921



 



217,745



 



 



 



 



 



 



 



 



 



Other comprehensive income:



 



 



 



 



 



 



Items that may be reclassified subsequently to profit or loss



 



 



 



 



 



 



Currency translation:



 



 



 



 



 



 



 



- arising in the year



 



 



 



682



 



37,084



 



- recycled to the Income Statement on disposal



 



 



 



(4,548)



 



-



 



Movements relating to cash flow hedges



 



 



 



(3,030)



 



(6,803)



 



Movement in deferred tax liability on cash flow hedges



 



 



 



433



 



1,334



 



 



 



 



(6,463)



 



31,615



 



Items that will not be reclassified to profit or loss



 



 



 



 



 



 



Group defined benefit pension obligations:



 



 



 



 



 



 



- remeasurements



 



 



5,215



 



(3,056)



 



- movement in deferred tax asset



 



 



(665)



 



413



 



 



 



 



4,550



 



(2,643)



 



 



 



 



 



 



 



 



Other comprehensive income for the financial year, net of tax



 



 



(1,913)



 



28,972



 



 



 



 



 



 



 



 



 



Total comprehensive income for the financial year



 



 



 



265,008



 



246,717



 



 



 



 



 



 



 



 



 



Attributable to:



 



 



 



 



 



 



 



Owners of the Parent



 



 



 



259,336



 



242,735



 



Non-controlling interests



 



 



 



5,672



 



3,982



 



 



 



 



 



 



 



 



 



 



 



 



 



265,008



 



246,717



 



 



 



 



 



 



 



 



 



Attributable to:



 



 



 



 



 



 



 



Continuing operations



 



 



 



234,365



 



230,199



 



Discontinued operations



 



 



 



30,643



 



16,518



 



 



 



 



 



 



 



 



 



 



 



 



 



265,008



 



246,717



 


                           

 

Group Balance Sheet


















































































































































































































































































































































































































































































































































































As at 31 March 2018



 



 



 



 



 



 



 



 



 



 



2018



 



2017



 



Notes



 



 



£'000



 



£'000



ASSETS



 



 



 



 



 



 



Non-current assets



 



 



 



 



 



 



Property, plant and equipment



 



 



 



933,038



 



750,020



Intangible assets and goodwill



 



 



 



1,936,962



 



1,422,572



Equity accounted investments



 



 



 



24,461



 



24,938



Deferred income tax assets



 



 



 



26,154



 



22,619



Derivative financial instruments



 



 



 



103,085



 



273,767



 



 



 



 



3,023,700



 



2,493,916



 



 



 



 



 



 



 



Current assets



 



 



 



 



 



 



Inventories



 



 



 



530,473



 



456,395



Trade and other receivables



 



 



 



1,426,217



 



1,222,597



Derivative financial instruments



 



 



 



8,050



 



18,233



Cash and cash equivalents



 



 



 



1,038,827



 



1,048,064



 



 



 



 



3,003,567



 



2,745,289



Assets classified as held for sale



 



 



 



-



 



193,170



 



 



 



 



3,003,567



 



2,938,459



 



 



 



 



 



 



 



Total assets



 



 



 



6,027,267



 



5,432,375



 



 



 



 



 



 



 



EQUITY



 



 



 



 



 



 



Capital and reserves attributable to owners of the Parent



 



 



 



 



Share capital



 



 



 



15,455



 



15,455



Share premium



 



 



 



280,533



 



277,211



Share based payment reserve



9



 



 



22,883



 



18,146



Cash flow hedge reserve



9



 



 



(16,178)



 



(13,581)



Foreign currency translation reserve



9



 



 



101,096



 



105,537



Other reserves



9



 



 



932



 



932



Retained earnings



 



 



 



1,237,937



 



1,074,434



Equity attributable to owners of the Parent



 



 



 



1,642,658



 



1,478,134



Non-controlling interests



 



 



 



35,259



 



29,587



Total equity



 



 



 



1,677,917



 



1,507,721



 



 



 



 



 



 



 



LIABILITIES



 



 



 



 



 



 



Non-current liabilities



 



 



 



 



 



 



Borrowings



 



 



 



1,598,521



 



1,319,967



Derivative financial instruments



 



 



 



10,732



 



506



Deferred income tax liabilities



 



 



 



152,552



 



155,297



Post employment benefit obligations



11



 



 



(286)



 



29



Provisions for liabilities



 



 



 



278,890



 



255,650



Acquisition related liabilities



 



 



 



71,454



 



66,617



Government grants



 



 



 



237



 



261



 



 



 



 



2,112,100



 



1,798,327



 



 



 



 



 



 



 



Current liabilities



 



 



 



 



 



 



Trade and other payables



 



 



 



2,063,260



 



1,820,517



Current income tax liabilities



 



 



 



19,769



 



25,051



Borrowings



 



 



 



74,897



 



148,445



Derivative financial instruments



 



 



 



8,474



 



5,894



Provisions for liabilities



 



 



 



44,451



 



31,022



Acquisition related liabilities



 



 



 



26,399



 



28,300



 



 



 



 



2,237,250



 



2,059,229



Liabilities associated with assets classified as held for sale



 



 



 



-



 



67,098



 



 



 



 



2,237,250



 



2,126,327



Total liabilities



 



 



 



4,349,350



 



3,924,654



 



 



 



 



 



 



 



Total equity and liabilities



 



 



 



6,027,267



 



5,432,375



 



 



 



 



 



 



 



Net debt included above (including cash attributable to assets held for sale)



 


10



 



 



 


(542,662)



 



 


(121,949)



 

Group Statement of Changes in Equity


 


 




























































































































































































































































For the year ended 31 March 2018



Attributable to owners of the Parent



 



 



 



 



 



 



Other



 



Non-



 



 



Share



Share



Retained



reserves



 



controlling



Total



 



capital



premium



earnings



(note 9)



Total



interests



equity



 



£'000



£'000



£'000



£'000



£'000



£'000



£'000



 



 



 



 



 



 



 



 



At 1 April 2017



15,455



277,211



1,074,434



111,034



1,478,134



29,587



1,507,721



 



 



 



 



 



 



 



 



Profit for the financial year



-



-



   261,824



             -



   261,824



        5,097



   266,921



 



 



 



 



 



 



 



 



Currency translation:



 



 



 



 



 



 



 



- arising in the year



               -



                  -



               -



        107



          107



           575



          682



- recycled to the Income Statement on disposal



               -



                  -



               -



    (4,548)



     (4,548)



                -



     (4,548)



Group defined benefit pension obligations:



               



                  



               



 



               



 



 



- remeasurements



               -



-



       5,215



             -



       5,215



                -



       5,215



- movement in deferred tax asset



               -



-



        (665)



             -



        (665)



                -



        (665)



Movements relating to cash flow hedges



               -



-



               -



    (3,030)



     (3,030)



                -



     (3,030)



Movement in deferred tax liability on cash flow hedges



               -



-



               -



        433



          433



                -



          433



Total comprehensive income



               -



-



   266,374



    (7,038)



   259,336



        5,672



   265,008



 



 



 



 



 



 



 



 



Re-issue of treasury shares



               -



3,322



               -



             -



       3,322



                -



       3,322



Share based payment



               -



-



               -



     4,737



       4,737



                -



       4,737



Dividends



               -



-



 (102,871)



             -



 (102,871)



                -



 (102,871)



 



 



 



 



 



 



 



 



At 31 March 2018



15,455



280,533



1,237,937



108,733



1,642,658



35,259



1,677,917



 


 








































































































































































































































For the year ended 31 March 2017



Attributable to owners of the Parent



 



 



 



 



 



 



Other



 



Non-



 



 



Share



Share



Retained



reserves



 



controlling



Total



 



capital



premium



earnings



(note 9)



Total



interests



equity



 



£'000



£'000



£'000



£'000



£'000



£'000



£'000



 



 



 



 



 



 



 



 



At 1 April 2016



15,455



277,211



948,316



78,661



1,319,643



30,833



1,350,476



 



 



 



 



 



 



 



 



Profit for the financial year



-



-



   216,197



             -



   216,197



         1,548



   217,745



 



 



 



 



 



 



 



 



Currency translation



               -



                  -



               -



   34,650



     34,650



         2,434



     37,084



Group defined benefit pension obligations:



               



                  



               



 



               



 



 



- remeasurements



               -



-



     (3,056)



             -



     (3,056)



                -



     (3,056)



- movement in deferred tax asset



               -



-



          413



             -



          413



                -



          413



Movements relating to cash flow hedges



               -



-



               -



    (6,803)



     (6,803)



                -



     (6,803)



Movement in deferred tax liability on cash flow hedges



               -



-



               -



     1,334



       1,334



                -



       1,334



Total comprehensive income



               -



-



   213,554



   29,181



   242,735



         3,982



   246,717



 



 



 



 



 



 



 



 



Re-issue of treasury shares



               -



-



       2,600



             -



       2,600



                -



       2,600



Share based payment



               -



-



               -



     3,192



       3,192



                -



       3,192



Dividends



               -



-



   (90,036)



             -



   (90,036)



       (5,228)



   (95,264)



 



 



 



 



 



 



 



 



At 31 March 2017



15,455



277,211



1,074,434



111,034



1,478,134



29,587



1,507,721



 

Group Cash Flow Statement

























































































































































































































































































































































































































































































































































































































For the year ended 31 March 2018



 



 



 



 



 



 



 



 



 



 



2018



 



2017



 



 



Note



 



£'000



 



£'000



Cash flows from operating activities



 



 



 



 



 



 



Profit for the financial year



 



 



 



266,921



 



217,745



Add back non-operating expenses/(income):



 



 



 



 



 



 



-  tax



 



 



 



24,046



 



49,054



-  share of equity accounted investments' profit



 



 



 



(368)



 



(712)



-  net operating exceptionals



 



 



 



15,271



 



36,297



-  net finance costs



 



 



 



35,452



 



21,999



Group operating profit before exceptionals



 



 



 



341,322



 



324,383



Share-based payments expense



 



 



 



4,737



 



3,192



Depreciation



 



 



 



93,722



 



92,015



Amortisation of intangible assets



 



 



 



43,059



 



39,168



Profit on disposal of property, plant and equipment



 



 



 



(167)



 



(173)



Amortisation of government grants



 



 



 



(36)



 



(235)



Other



 



 



 



4,555



 



4,571



Decrease in working capital



 



 



 



(13,758)



 



83,949



Cash generated from operations before exceptionals



 



 



 



473,434



 



546,870



Exceptionals



 



 



 



(12,602)



 



(31,269)



Cash generated from operations



 



 



 



460,832



 



515,601



Interest paid



 



 



 



(69,900)



 



(70,108)



Income tax paid



 



 



 



(65,437)



 



(62,180)



Net cash flows from operating activities



 



 



 



325,495



 



383,313



 



 



 



 



 



 



 



Investing activities



 



 



 



 



 



 



Inflows:



 



 



 



 



 



 



Proceeds from disposal of property, plant and equipment



 



 



 



7,617



 



12,315



Dividends received from equity accounted investments



 



 



 



1,980



 



125



Disposal of subsidiaries



 



8



 



160,063



 



-



Interest received



 



 



 



37,399



 



40,966



 



 



 



 



207,059



 



53,406



Outflows:



 



 



 



 



 



 



Purchase of property, plant and equipment



 



 



 



(152,997)



 



(143,698)



Acquisition of subsidiaries



 



12



 



(664,109)



 



(203,327)



Payment of accrued acquisition related liabilities



 



 



 



(26,910)



 



(59,069)



 



 



 



 



(844,016)



 



(406,094)



Net cash flows from investing activities



 



 



 



(636,957)



 



(352,688)



 



 



 



 



 



 



 



Financing activities



 



 



 



 



 



 



Inflows:



 



 



 



 



 



 



Proceeds from issue of shares



 



 



 



3,322



 



2,600



Net cash inflow on derivative financial instruments



 



 



 



11,275



 



14,212



Increase in interest-bearing loans and borrowings



 



 



 



458,593



 



-



Increase in finance lease liabilities



 



 



 



766



 



-



 



 



 



 



473,956



 



16,812



Outflows:



 



 



 



 



 



 



Repayment of interest-bearing loans and borrowings



 



 



 



(58,130)



 



(108,140)



Repayment of finance lease liabilities



 



 



 



(4)



 



(177)



Dividends paid to owners of the Parent



 



7



 



(102,871)



 



(90,036)



Dividends paid to non-controlling interests



 



 



 



-



 



(5,228)



 



 



 



 



(161,005)



 



(203,581)



Net cash flows from financing activities



 



 



 



312,951



 



(186,769)



 



 



 



 



 



 



 



Change in cash and cash equivalents



 



 



 



1,489



 



(156,144)



Translation adjustment



 



 



 



(10,018)



 



38,929



Cash and cash equivalents at beginning of year



 



 



 



972,822



 



1,090,037



Cash and cash equivalents at end of year



 



 



 



964,293



 



972,822



 



 



 



 



 



 



 



Cash and cash equivalents consists of:



 



 



 



 



 



 



Cash and short term bank deposits



 



 



 



1,038,827



 



1,048,064



Overdrafts



 



 



 



(74,534)



 



(88,041)



Cash and short term deposits attributable to assets held for sale



 



 



 



-



 



12,799



 



 



 



 



964,293



 



972,822



 



 



 



 



 



 



 


               

 

Notes to the Condensed Financial Statements


For the year ended 31 March 2018


 


 


1.             Basis of Preparation


 


The financial information, from the Group Income Statement to note 15, contained in this preliminary results statement has been derived from the Group financial statements for the year ended 31 March 2018 and is presented in sterling, rounded to the nearest thousand.  The financial information does not include all the information and disclosures required in the annual financial statements. The Annual Report will be distributed to shareholders and made available on the Company's website www.dcc.ie.  It will also be filed with the Companies Registration Office. The auditors have reported on the financial statements for the year ended 31 March 2018 and their report was unqualified. The financial information for the year ended 31 March 2017 represents an abbreviated, restated (see note 4) version of the Group's statutory financial statements on which an unqualified audit report was issued and which have been filed with the Companies Registration Office. The financial information presented in this report has been prepared in accordance with the Listing Rules of the Financial Services Authority and the accounting policies that the Group has adopted for 2018 which are consistent with those applied in the prior year.


 


 


2.             Accounting Policies


 


The Group has adopted the following standards, interpretations and amendments to existing standards during the financial year:


 


·     Amendments to IAS 7 Statement of Cash Flows - Disclosure Initiative. These amendments are intended to improve the information provided to users of financial statements regarding the entity's financing activities. This amendment, which was EU endorsed in November 2017, did not have a significant impact on the Group's consolidated financial statements; and


·     Amendments to IAS 12 Income Taxes - Recognition of Deferred Tax Assets for Unrealised Losses. These amendments clarify, inter alia, that unrealised losses on debt instruments measured at fair value (and measured at cost for tax purposes) give rise to a deductible temporary difference regardless of whether the instrument is recovered through sale or by holding it to maturity or whether it is probable that the issuer will pay all contractual cash flows. Entities are therefore required to recognise deferred taxes for temporary differences from unrealised losses of debt instruments measured at fair value if all other recognition criteria for deferred taxes are met. This amendment, which was EU endorsed in November 2017, did not have a significant impact on the Group's consolidated financial statements.


 


There are other changes to IFRS which became effective for the Group during the financial year but did not result in material changes to the Group's consolidated financial statements.


 


 


3.            Reporting Currency


 


The Group's financial statements are presented in sterling, denoted by the symbol '£'. Results and cash flows of operations based in non-sterling countries have been translated into sterling at average rates for the year, and the related balance sheets have been translated at the rates of exchange ruling at the balance sheet date.  The principal exchange rates used for translation of results and balance sheets into sterling were as follows:










































































 



             Average rate



            Closing rate



 



2018



2017



2018



2017



 



Stg£1=



Stg£1=



Stg£1=



Stg£1=



 



 



 



 



 



Euro



1.1366



1.1956



1.1430



1.1689



Danish Krone



8.4603



8.9150



8.5187



8.6942



Swedish Krona



11.0482



11.3729



11.7548



11.1423



Norwegian Krone



10.7901



10.9811



11.0607



10.7169



US Dollar



1.3236



1.3181



1.4083



1.2497



Hong Kong Dollar



10.3312



10.2260



11.0522



9.7106



 


 

















 


4.             Segmental Reporting


 


DCC is a leading international sales, marketing and support services group headquartered in Dublin, Ireland.  Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.  The chief operating decision maker has been identified as Mr. Donal Murphy, Chief Executive and his executive management team. 


 


As noted in the Group's Annual Report for the year ended 31 March 2017, DCC is presenting DCC LPG and DCC Retail & Oil as separate reportable segments from 1 April 2017, in line with the revised management and organisational structures of the businesses. Previously, these two segments comprised the Group's former DCC Energy segment. Following these changes in the composition of operating segments, segmental reporting has been revised and the comparative disclosures have been restated as required under IFRS 8.


 


The Group is organised into four operating segments: DCC LPG, DCC Retail & Oil, DCC Healthcare and DCC Technology.


 


DCC LPG is a leading liquefied petroleum gas ('LPG') sales and marketing business with operations in Europe, Asia and the US with a developing business in the retailing of natural gas and electricity;


 


DCC Retail & Oil is a leader in the sales, marketing and retailing of transport and commercial fuels, heating oils and related products and services in Europe;


 


DCC Healthcare is a leading healthcare business, providing products and services to healthcare providers and health and beauty brand owners; and


 


DCC Technology is a leading route-to-market and supply chain partner for global technology brands.


 


Net finance costs and income tax are managed on a centralised basis and therefore these items are not allocated between operating segments for the purpose of presenting information to the chief operating decision maker and accordingly are not included in the detailed segmental analysis below. Intersegment revenue is not material and thus not subject to separate disclosure.


 


 

 


 
 

 


An analysis of the Group's performance by segment and geographic location is as follows:

 


(a)           By operating segment


 










 



                                             Year ended 31 March 2018



                                                                                          

















































































































  DCC LPG   DCC Retail & Oil   DCC Healthcare   DCC Technology   Total 

 



£'000



 



£'000



 



          £'000



 



£'000



 



£'000



 



 



 



 



 



 



 



 



 



 



Segment revenue



1,403,779



 



   9,262,836



 



      514,564



 



3,083,460



 



14,264,639



 



 



 



 



 



 



 



 



 



 



Adjusted operating profit



167,485



 



113,757



 



        54,318



 



47,840



 



      383,400



Amortisation of intangible assets



(21,312)



 



(8,983)



 



         (7,198)



 



(5,566)



 



       (43,059)



Net operating exceptionals (note 5)



(8,127)



 



(21,788)



 



         (3,034)



 



(12,164)



 



       (45,113)



Operating profit



138,046



 



82,986



 



        44,086



 



30,110



 



      295,228



                                                                                                                                                                                                     















 


 


 



 



 



 



                                          Year ended 31 March 2017



                                                               

















































































































  DCC LPG   DCC Retail & Oil   DCC Healthcare   DCC Technology   Total

 



£'000



 



£'000



 



          £'000



 



£'000



 



£'000



 



 



 



 



 



 



 



 



 



 



Segment revenue



1,073,212



 



   8,000,923



 



      506,562



 



   2,689,105



 



12,269,802



 



 



 



 



 



 



 



 



 



 



Adjusted operating profit



160,462



 



94,479



 



48,944



 



        41,120



 



      345,005



Amortisation of intangible assets



(18,277)



 



(9,962)



 



(7,258)



 



         (3,633)



 



      (39,130)



Net operating exceptionals (note 5)



(6,854)



 



(13,633)



 



(2,695)



 



       (13,115)



 



      (36,297)



Operating profit



135,331



 



70,884



 



38,991



 



        24,372



 



      269,578



 


                                                                                                                


(b)           By geography


 


The Group has a presence in 15 countries worldwide. The following represents a geographical analysis of revenue and non-current assets in accordance with IFRS 8, which requires disclosure of information about the country of domicile (Republic of Ireland) and countries with material revenue and non-current assets.


 


Revenue from continuing operations is derived almost entirely from the sale of goods and is disclosed based on the location of the entity selling the goods. The analysis of non-current assets is based on the location of the assets. There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8.


 






























































































 


 



                         Revenue



 



                 Non-current assets*



 



 



2018



2017



 



2018



2017



 



 



£'000



£'000



 



£'000



£'000



 



 



 



 



 



 



 



 



Republic of Ireland



927,133



759,439



 



129,050



123,348



 



United Kingdom



7,741,143



7,239,193



 



1,050,804



985,717



 



France



2,712,240



2,402,290



 



882,276



869,895



 



Other



2,884,123



1,868,880



 



832,331



218,570



 



 



14,264,639



12,269,802



 



2,894,461



2,197,530



 



 



 



 



 



 



 



 



 * Non-current assets comprise intangible assets, property, plant and equipment and equity accounted investments


 

 


 


5.             Exceptionals






















































































































































































 



 



 



 



 



 



 



 



 



2018



 



2017



 



 



 



£'000



 



£'000



 



 



 



 



 



 



Restructuring costs



 



 



(29,419)



 



(19,345)



Acquisition and related costs



 



 



(12,789)



 



(10,308)



Impairment of property, plant and equipment



 



 



(3,735)



 



(1,164)



Adjustments to contingent acquisition consideration



 



 



477



 



(5,114)



Other operating exceptional items



 



 



353



 



(366)



Net operating exceptional items



 



 



(45,113)



 



(36,297)



 



 



 



 



 



 



Mark to market of swaps and related debt



 



 



299



 



10,101



Net exceptional items before taxation



 



 



(44,814)



 



(26,196)



 



 



 



 



 



 



Deferred tax



 



 



25,407



 



(1,756)



Net exceptional items after taxation (continuing operations)



 



 



(19,407)



 



(27,952)



 



 



 



 



 



 



Profit on disposal of discontinued operations (note 8)



 



 



29,842



 



-



Net exceptional items after taxation



 



 



10,435



 



(27,952)



 



 



 



 



 



 



Non-controlling interest share of net exceptional items after taxation



 



 



969



 



3,138



Net exceptional items attributable to owners of the Parent



 



 



11,404



 



(24,814)



 


The profit on disposal of discontinued operations relates to the gain recorded on the profitable sale of DCC's environmental division, which completed on 31 May 2017.


 


Acquisition costs include the professional fees and tax costs (such as stamp duty) relating to the evaluation and completion of acquisition opportunities and amounted to £12.789 million.


 


Restructuring costs amounted to £29.419 million and principally reflect the costs associated with the Group's focus on increasing the efficiency of its operating infrastructure and sales platforms. The majority of the charge relates to the Retail & Oil division where a large project to bring greater efficiency and reduced capital expenditure over time to the UK business' nationwide depot network infrastructure is underway and the project will result in a material reduction in the number of depot locations. The Group incurred a related impairment charge on property, plant and equipment of £3.735 million on this project. An element of the overall charge also relates to the integration and restructuring costs associated with the prior year acquisition of Dansk Fuels in Denmark.


 


The other material element of the restructuring charge relates to the ongoing optimisation of DCC Technology's logistics and related infrastructure.  In the UK, the new national distribution centre is now operational and a number of the existing locations have transferred into the new infrastructure. The remaining existing locations will transition during the coming year and the majority of the existing locations have now been sold successfully. A programme to significantly reduce costs while improving the logistics and operational efficiency of DCC Technology's French consumer business is ongoing. This project will also deliver a consolidation of two existing warehouses into one new facility. Finally, the business in the Nordics has recently commissioned its new national distribution centre and it is now operational.


 


Most of the Group's debt has been raised in the US Private Placement market and swapped, using long term interest and cross currency interest rate derivatives, to both fixed and floating rate sterling and euro. The level of ineffectiveness calculated under IAS 39 on the fair value and cash flow hedge relationships relating to fixed rate debt is charged or credited as an exceptional item. In the year ended 31 March 2018, this amounted to an exceptional non-cash gain of £0.299 million. Following this credit, the cumulative net exceptional charge taken in respect of the Group's outstanding US Private Placement debt and related hedging instruments is £5.3 million. This, or any subsequent similar non-cash charges or gains, will net to zero over the remaining term of this debt and the related hedging instruments.  


 


The deferred tax credit of £25.407 million principally reflects the impact of the recent reduction of the statutory corporation tax rate in France and the corresponding reduction in the Group's deferred tax liabilities associated with the Group's brand and other intangible assets in France.


 


There was a non controlling interest credit of £0.969 million in relation to certain of the above exceptional charges.


 

 


 


6.             Earnings per Ordinary Share


 































































































































































































































































 



 



Discontinued



 



 



 



   Discontinued



 



 



 



Continuing



  operations



 



 



Continuing



 operations



 



 



operations



(note 8)



Total



 



operations



(note 8)



Total



 



2018



2018



2018



 



2017



2017



2017



 



£'000



£'000



£'000



 



£'000



£'000



£'000



 



 



 



 



 



 



 



 



Profit attributable to owners of the Parent



231,181



30,643



261,824



 



201,037



15,160



216,197



Amortisation of intangible assets after tax



33,245



-



33,245



 



28,456



6



28,462



Exceptionals after tax (note 5)



18,438



(11,404)



 



          24,814



-



24,814



Adjusted profit after taxation and


non-controlling interests



 


282,864



 


801



 


283,665



 



 


        254,307



 


15,166



 


269,473



 



 



 



 



 



 



 



 



 



Continuing



Discontinued



 



 



Continuing



Discontinued



 



 



 



operations



operations



Total



 



operations



operations



Total



 



2018



2018



2018



 



2017



2017



2017



Basic earnings per ordinary share



pence



pence



pence



 



pence



pence



pence



 



 



 



 



 



 



 



 



Basic earnings per ordinary share



259.44p



34.39p



293.83p



 



226.56p



17.08p



243.64p



Amortisation of intangible assets after tax



37.31p



-



37.31p



 



32.07p



0.01p



32.08p



Exceptionals after tax



     20.70p



          (12.79p)



 



27.96p



          -



27.96p



Adjusted basic earnings per


ordinary share



 


317.45p



 


0.90p



 


318.35p



 



 


286.59p



 


17.09p



 


303.68p



 



 



 



 



 



 



 



 



Weighted average number of ordinary shares in issue (thousands)



 



 



 


89,106



 



 



 



    88,735



 



 



 



 



 



 



 



 


                             

Basic earnings per share is calculated by dividing the profit attributable to owners of the Parent by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares.  The adjusted figures for basic earnings per ordinary share (a non-GAAP financial measure) are intended to demonstrate the results of the Group after eliminating the impact of amortisation of intangible assets and net exceptionals.


 




































































































































 



Continuing



Discontinued



 



 



Continuing



Discontinued



 



 



 



operations



operations



Total



 



operations



operations



Total



 



 



2018



2018



2018



 



2017



2017



2017



Diluted earnings per ordinary share



pence



pence



pence



 



pence



pence



pence



 



 



 



 



 



 



 



 



Basic earnings per ordinary share



258.52p



          34.27p



292.79p



 



225.04p



          16.96p



242.00p



Amortisation of intangible assets after tax



37.18p



                    -



37.18p



 



31.84p



            0.01p



31.85p



Exceptionals after tax



20.61p



          (33.37p)



          (12.76p)



 



27.78p



                    -



27.78p



Adjusted basic earnings per


ordinary share



 


316.31p



 


            0.90p



 


317.21p



 



 


284.66p



 


          16.97p



 


301.63p



 



 



 



 



 



 



 



 



Weighted average number of ordinary shares in issue (thousands)



 



 



 


89,425



 



 



 



     89,338


                       

 


The earnings used for the purposes of the continuing diluted earnings per ordinary share calculations were £231.181 million (2017: £201.037 million) and £282.864 million (2017: £254.307 million) for the purposes of the continuing adjusted diluted earnings per ordinary share calculations.


 


The earnings used for the purposes of the discontinued diluted earnings per ordinary share calculations were £30.643 million (2017: £15.160 million) and £0.801 million (2017: £15.166 million) for the purposes of the discontinued adjusted diluted earnings per ordinary share calculations.


 


 The weighted average number of ordinary shares used in calculating the diluted earnings per ordinary share for the year ended 31 March 2018 was 89.425 million (2017: 89.338 million). A reconciliation of the weighted average number of ordinary shares used for the purposes of calculating the diluted earnings per ordinary share amounts is as follows:


 










































 



2018



 



2017



 



'000



 



'000



 



 



 



 



Weighted average number of ordinary shares in issue



89,106



 



88,735



Dilutive effect of options and awards



319



 



603



Weighted average number of ordinary shares for diluted earnings per share



89,425



 



89,338



 


Diluted earnings per ordinary share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. Share options and awards are the Company's only category of dilutive potential ordinary shares.


 


Employee share options and awards, which are performance-based, are treated as contingently issuable shares because their issue is contingent upon satisfaction of specified performance conditions in addition to the passage of time. These contingently issuable shares are excluded from the computation of diluted earnings per ordinary share where the conditions governing exercisability would not have been satisfied as at the end of the reporting period if that were the end of the vesting period.


 


The adjusted figures for diluted earnings per ordinary share (a non-GAAP financial measure) are intended to demonstrate the results of the Group after eliminating the impact of amortisation of intangible assets and net exceptionals.


 


 


7.             Dividends




































































 



 



 



 



2018



 



2017



 



 



 



 



£'000



 



£'000



 



 



 



 



 



 



 



Final - paid 74.63 pence per share on 20 July 2017


(2017: paid 64.18 pence per share on 21 July 2016)



 



 



              66,520



 



           57,621



Interim - paid 40.89 pence per share on 11 December 2017    (2017: paid 37.17 pence per share on 12 December 2016)



 



 



 


36,351



 



 


32,415



 



 



 



 


                         



 


102,871



 



 


90,036


               

 


The Directors are proposing a final dividend in respect of the year ended 31 March 2018 of 82.09 pence per ordinary share (£73.242 million). This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.


  


 


8.             Discontinued Operations


 


As announced on 31 May 2017, the Group completed the disposal of the Environmental division. The proceeds on disposal will be used to fund the continued development of DCC's continuing operations. The conditions for the segment to be classified as a discontinued operation were satisfied during the year ended 31 March 2017 and the results of the Environmental segment were presented separately in the 2017 Annual Report as discontinued operations in the Group Income Statement and the assets and liabilities of this segment were classified as an asset held for sale at the reporting date.


 


The following table summarises the consideration received, the profit on disposal of discontinued operations and the net cash flow arising on the disposal of this segment:













































































































































































































 



 



 



 



 



2018



 



 



 



 



 



£'000



 



 



 



 



 



 



Net consideration



 



 



 



 



 



Net proceeds received



 



 



 



 



164,526



Costs of disposal



 



 



 



 



(4,463)



Total net consideration



 



 



 



 



160,063



 



 



 



 



 



 



Assets and liabilities disposed of



 



 



 



 



 



Non-current assets



 



 



 



 



145,675



Current assets



 



 



 



 



34,198



Non-current liabilities



 



 



 



 



(4,358)



Current liabilities



 



 



 



 



(40,746)



Net identifiable assets and liabilities disposed of



 



 



 



 



134,769



Recycling of foreign exchange gain previously recognised in foreign currency translation reserve



 



(4,548)



 



 



130,221



Profit on disposal of discontinued operations



 



29,842



 



 



 



 



 



 



 



 



 



 



 



 



Net cash flow on disposal of discontinued operations



 



 



 



 



 



Total proceeds received



 



 



 



 



174,321



Cash and cash equivalents disposed of



 



 



 



 



(9,795)



Net cash inflow on disposal of discontinued operations



 



 



 



 



164,526



Disposal costs paid



 



 



 



 



(4,463)



Net cash flow on disposal of discontinued operations



 



 



 



 



160,063



 



 



 



 



 



 



 


The following table details the results of discontinued operations included in the Group Income Statement:


 






















































































































































 



 



 



2018



 



2017



 



 



 



£'000



 



£'000



 



 



 



 



 



 



Revenue



 



 



29,614



 



175,232



Cost of sales



 



 



(20,292)



 



(119,654)



Gross profit



 



 



9,322



 



55,578



Operating expenses



 



 



(8,341)



 



(37,032)



Adjusted operating profit



 



 



981



 



18,546



Amortisation of intangible assets



 



 



-



 



(38)



Operating profit



 



 



981



 



18,508



Net finance costs



 



 



(16)



 



(163)



Profit before tax



 



 



965



 



18,345



Income tax expense



 



 



(164)



 



(3,185)



 



 



 



801



 



15,160



Profit on disposal of discontinued operations



 



 



29,842



 



-



 



 



 



 



 



 



Profit from discontinued operations after tax



 



 



30,643



 



15,160



 



 



 



 



 



 



 


   

The following table details the cash flow from discontinued operations included in the Group Cash Flow Statement:


 






































































 



 



 



2018



 



2017



 



 



 



£'000



 



£'000



 



 



 



 



 



 



Net cash flow from operating activities



 



 



(5,602)



 



22,461



Net cash flow from investing activities



 



 



(1,332)



 



(6,661)



 



 



 



 



 



 



Net cash flow from discontinued operations



 



 



(6,934)



 



15,800



 



 



 



 



 



 



 


 


9.             Other Reserves















































































































































































 



 



 



 



 



 



For the year ended 31 March 2018



 



 



 



 



 



 



 



 



Foreign



 



 



 



Share based



Cash flow



currency



 



 



 



payment



hedge



translation



Other



 



 



reserve



reserve



reserve



reserves



Total



 



£'000



£'000



£'000



£'000



£'000



 



 



 



 



 



 



 



                   



                   



 



 



 



At 1 April 2017



18,146



(13,581)



105,537



932



111,034



 



 



 



 



 



 



Currency translation:



 



 



 



 



 



- arising in the year



-



-



107



-



107



- recycled to the Income Statement on disposal



-



-



(4,548)



-



(4,548)



Movements relating to cash flow hedges



-



(3,030)



-



-



(3,030)



Movement in deferred tax liability on cash flow hedges                   -



433



-



-



433



Share based payment



4,737



-



-



-



4,737



 



 



 



 



 



 



At 31 March 2018



22,883



(16,178)



101,096



932



108,733



 



 



 



 



 



 


               

 































































































































































 



 



 



 



 



 



For the year ended 31 March 2017



 



 



 



 



 



 



 



 



Foreign



 



 



 



Share based



Cash flow



currency



 



 



 



payment



hedge



translation



Other



 



 



reserve



reserve



reserve



reserves



Total



 



£'000



£'000



£'000



£'000



£'000



 



 



 



 



 



 



 



                   



                   



 



 



 



At 1 April 2016



14,954



(8,112)



70,887



932



78,661



 



 



 



 



 



 



Currency translation



-



-



34,650



-



34,650



Movements relating to cash flow hedges



-



(6,803)



-



-



(6,803)



Movement in deferred tax liability on cash flow hedges                    -



1,334



-



-



1,334



Share based payment



3,192



-



-



-



3,192



 



 



 



 



 



 



At 31 March 2017



18,146



(13,581)



105,537



932



111,034



 



 



 



 



 



 


               

  

 


10.          Analysis of Net Debt



































































































































































































 



 



 



2018



 



2017



 



 



 



£'000



 



£'000



Non-current assets



 



 



 



 



 



Derivative financial instruments



 



 



103,085



 



273,767



 



 



 



 



 



 



Current assets



 



 



 



 



 



Derivative financial instruments



 



 



8,050



 



18,233



Cash and cash equivalents



 



 



1,038,827



 



1,048,064



 



 



 



1,046,877



 



1,066,297



Non-current liabilities



 



 



 



 



 



Finance leases



 



 



(692)



 



(165)



Derivative financial instruments



 



 



(10,732)



 



(506)



Unsecured Notes



 



 



(1,597,829)



 



(1,319,802)



 



 



 



(1,609,253)



 



(1,320,473)



Current liabilities



 



 



 



 



 



Bank borrowings



 



 



(74,534)



 



(88,041)



Finance leases



 



 



(363)



 



(190)



Derivative financial instruments



 



 



(8,474)



 



(5,894)



Unsecured Notes



 



 



-



 



(60,214)



 



 



 



(83,371)



 



(154,339)



 


Net debt excluding cash attributable to assets held for sale



 



 


(542,662)



 



 


(134,748)



Cash and short-term deposits attributable to assets held for sale



 



-



 



12,799



 


Net debt including cash attributable to assets held for sale



 



 


(542,662)



 



 


(121,949)



 



 



 



 



 



 



 


11.          Post Employment Benefit Obligations


 


The Group's defined benefit pension schemes' assets were measured at fair value at 31 March 2018.  The defined benefit pension schemes' liabilities at 31 March 2018 were updated to reflect material movements in underlying assumptions.


 


The Group's post employment benefit obligations moved from a net deficit of £0.029 million at 31 March 2017 to a net asset of £0.286 million at 31 March 2018. The movement in the deficit primarily reflects the inclusion of post employment benefit obligations arising on the TEGA acquisition, offset by actuarial gains on liabilities and contributions in excess of the current service cost.


 


 


12.          Business Combinations


 


A key strategy of the Group is to create and sustain market leadership positions through acquisitions in markets it currently operates in, together with extending the Group's footprint into new geographic markets. In line with this strategy, the principal acquisitions completed by the Group during the year, together with percentages acquired were as follows:


·      the acquisition on 31 March 2018 of 100% of NGL Energy Partners LP's Retail West LPG division, Hicksgas LLC ('Retail West'). Retail West is a US based LPG distributor with leading market positions in Illinois, Indiana and Kansas and also operates in seven other states across the Mid-West and North-West regions;


·      the acquisition on 31 March 2018 of 100% of Tega-Technische Gase und Gasetechnik GmbH ('TEGA'). TEGA is an LPG and refrigerant gas distribution business and operates across five sites largely based in southern Germany;


·      the acquisition in February 2018 of 100% of the trade and assets of the British LPG distribution business ('Countrywide LPG') of Countrywide Farmers plc. Countrywide LPG supplies bulk and cylinder LPG to domestic, agricultural and commercial customers in Britain;


·      the acquisition of 100% of Elite One Source Nutritional Services Inc ('Elite') in February 2018. Elite is a US based provider of contract manufacturing and related services to the growing healthcare and dietary supplements market in the US;


·      the completion of the acquisition of Shell Gas (LPG) Holdings BV's LPG business in Hong Kong and Macau ('Shell HK&M'), as announced in January 2018. The business provides LPG in bulk, cylinder and autogas formats to domestic, commercial and industrial customers in the region;


·      the completion of the acquisition of Esso's retail petrol station network in Norway, as announced in October 2017, comprising a national network of company-operated sites and contracts to supply Esso-branded dealer owned stations (together referred to as 'Esso Retail Norway'); and


·      the acquisition of 100% of MTR Group Ltd ('MTR') in July 2017. MTR is a UK based provider of second lifecycle solutions for mobile and tablet devices.


 

 


 


  

The acquisition data presented below reflects the fair value of the identifiable net assets acquired (excluding net cash/debt acquired) in respect of acquisitions completed during the year.






















































































































































































































































































































































 


 



 



 



 



 



 



 



Esso Retail


Norway



Others



Total



Total



 



 



2018



2018



2018



2017



 



 



£'000



£'000



£'000



£'000



 



Assets



 



 



 



 



 



Non-current assets



 



 



 



 



 



Property, plant and equipment



63,822



78,610



142,432



8,265



 



Intangible assets - other intangible assets



55,885



87,728



143,613



68,513



 



Equity accounted investments



-



497



497



404



 



Deferred income tax assets



6,047



362



6,409



60



 



Total non-current assets



125,754



167,197



292,951



77,242



 



 



 



 



 



 



 



Current assets



 



 



 



 



 



Inventories



6,587



28,545



35,132



32,207



 



Trade and other receivables



6,945



45,039



51,984



206,528



 



Total current assets



13,532



73,584



87,116



238,735



 



 



 



 



 



 



 



Liabilities



 



 



 



 



 



Non-current liabilities



 



 



 



 



 



Deferred income tax liabilities



(12,853)



(15,355)



(28,208)



(19,902)



 



Post employment benefit obligations



-



(9,636)



(9,636)



-



 



Provisions for liabilities



(6,042)



(4,674)



(10,716)



(11,129)



 



Acquisition related liabilities



-



(102)



(102)



-



 



Total non-current liabilities



(18,895)



(29,767)



(48,662)



(31,031)



 



 



 



 



 



 



 



Current liabilities



 



 



 



 



 



Trade and other payables



(798)



(37,202)



(38,000)



(164,777)



 



Provisions for liabilities



-



(4,271)



(4,271)



(5,317)



 



Current income tax (liability)/asset



-



(2,629)



(2,629)



12,341



 



Acquisition related liabilities



-



(57)



(57)



(13,522)



 



Total current liabilities



(798)



(44,159)



(44,957)



(171,275)



 



 



 



 



 



 



 



Identifiable net assets acquired



119,593



166,855



286,448



113,671



 



Goodwill



120,925



284,417



405,342



117,175



 



Total consideration



240,518



451,272



691,790



230,846



 



 



 



 



 



 



 



Satisfied by:



 



 



 



 



 



Cash



240,518



441,943



682,461



242,018



 



Cash and cash equivalents acquired



-



(18,352)



(18,352)



(38,691)



 



Net cash outflow



240,518



423,591



664,109



203,327



 



Acquisition related liabilities



-



27,681



27,681



27,519



 



Total consideration



240,518



451,272



691,790



230,846



 



 


  

The acquisition of Esso Retail Norway has been deemed to be a substantial transaction and separate disclosure of the fair values of the identifiable assets and liabilities has therefore been made.  None of the remaining business combinations completed during the year were considered sufficiently material to warrant separate disclosure of the fair values attributable to those combinations.  The carrying amounts of the assets and liabilities acquired, determined in accordance with IFRS, before completion of the combination together with the adjustments made to those carrying values disclosed above were as follows:


 








































































 



Book



Fair value



Fair



 



value



adjustments



value



Esso Retail Norway



£'000



£'000



£'000



 



 



 



 



Non-current assets (excluding goodwill)



69,869



55,885



125,754



Current assets



13,532



-



13,532



Non-current liabilities



(6,042)



(12,853)



(18,895)



Current liabilities



(520)



(278)



(798)



Identifiable net assets acquired



76,839



42,754



119,593



Goodwill arising on acquisition



163,679



(42,754)



120,925



Total consideration



240,518



-



240,518



 


 








































































 



Book



Fair value



Fair



 



value



adjustments



value



Others



£'000



£'000



£'000



 



 



 



 



Non-current assets (excluding goodwill)



80,296



86,901



167,197



Current assets



73,977



(393)



73,584



Non-current liabilities



(14,623)



(15,144)



(29,767)



Current liabilities



(43,953)



(206)



(44,159)



Identifiable net assets acquired



95,697



71,158



166,855



Goodwill arising on acquisition



355,575



(71,158)



284,417



Total consideration



451,272



-



451,272



 


 








































































 



Book



Fair value



Fair



 



value



adjustments



value



Total



£'000



£'000



£'000



 



 



 



 



Non-current assets (excluding goodwill)



150,165



142,786



292,951



Current assets



87,509



(393)



87,116



Non-current liabilities



(20,665)



(27,997)



(48,662)



Current liabilities



(44,473)



(484)



(44,957)



Identifiable net assets acquired



172,536



113,912



286,448



Goodwill arising on acquisition



519,254



(113,912)



405,342



Total consideration



691,790



-



691,790



 


The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect of a number of the business combinations above given the timing of closure of these transactions. The acquisitions of Retail West and TEGA both completed on 31 March 2018 and, as such, it has not yet been feasible to perform a preliminary assignment of fair values to identifiable net assets. Any amendments to fair values within the twelve month timeframe from the date of acquisition will be disclosable in the 2019 Annual Report as stipulated by IFRS 3.


 


The principal factors contributing to the recognition of goodwill on business combinations entered into by the Group are the expected profitability of the acquired business and the realisation of cost savings and synergies with existing Group entities.

 


£101.086 million of the goodwill recognised in respect of acquisitions completed during the financial year is expected to be deductible for tax purposes.


 


Acquisition related costs included in other operating expenses in the Group Income Statement amounted to £12.789 million.


 


No contingent liabilities were recognised on the acquisitions completed during the year or the prior financial years.


 


The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to £53.056 million.  The fair value of these receivables is £51.984 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance for impairment of £1.072 million. In relation to the acquisition of Esso Retail Norway, the gross contractual value of trade and other receivables as at the date of acquisition amounted to £7.223 million. The fair value of these receivables is £6.945 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance for impairment of £0.278 million.


 


The fair value of contingent consideration recognised at the date of acquisition is calculated by discounting the expected future payment to present value at the acquisition date.  In general, for contingent consideration to become payable, pre-defined profit thresholds must be exceeded.  On an undiscounted basis, the future payments for which the Group may be liable for acquisitions completed during the year range from £15.346 million to £51.737 million.


 


The acquisitions during the year contributed £347.4 million to revenues and £11.5 million to profit after tax. The acquisition of Esso Retail Norway during the year contributed £263.4 million to revenues and £2.6 million to profit after tax. Had all the business combinations effected during the year occurred at the beginning of the year, total Group revenue (continuing) for the year ended 31 March 2018 would have been £14,977.9 million and total Group profit after tax (continuing) would be £274.5 million.


 


 


13.          Seasonality of Operations


 


The Group's operations are significantly second-half weighted primarily due to a portion of the demand for DCC's LPG and Retail & Oil products being weather dependent and seasonal buying patterns in DCC Technology.


 


 


14.          Related Party Transactions


 


There have been no related party transactions or changes in related party transactions that could have a material impact on the financial position or performance of the Group during the 2018 financial year.


 


 


15.          Board Approval


 


This report was approved by the Board of Directors of DCC plc on 14 May 2018.


 

 


 


Supplementary Financial Information


For the year ended 31 March 2018


 


 


Alternative Performance Measures


 


The Group reports certain alternative performance measures ('APMs') that are not required under International Financial Reporting Standards ('IFRS') which represent the generally accepted accounting principles ('GAAP') under which the Group reports. The Group believes that the presentation of these APMs provides useful supplemental information which, when viewed in conjunction with our IFRS financial information, provides investors with a more meaningful understanding of the underlying financial and operating performance of the Group and its divisions.


 


These APMs are primarily used for the following purposes:


- to evaluate the historical and planned underlying results of our operations;


- to set director and management remuneration; and


- to discuss and explain the Group's performance with the investment analyst community.


 


None of the APMs should be considered as an alternative to financial measures derived in accordance with GAAP. The APMs can have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. These performance measures may not be calculated uniformly by all companies and therefore may not be directly comparable with similarly titled measures and disclosures of other companies.


 


The principal APMs used by the Group, together with reconciliations where the non-GAAP measures are not readily identifiable from the financial statements, are as follows:


 


 


Adjusted operating profit ('EBITA')


Definition


This comprises operating profit as reported in the Group Income Statement before net operating exceptional items and amortisation of intangible assets. Net operating exceptional items and amortisation of intangible assets are excluded in order to assess the underlying performance of our operations. In addition, neither metric forms part of Director or management remuneration targets.


 









































Calculation



2018


£'000



2017


£'000



Operating profit



295,228



269,578



Net operating exceptional items



45,113



36,297



Amortisation of intangible assets



43,059



39,130



Adjusted operating profit - continuing



383,400



345,005



Adjusted operating profit - discontinued



981



18,546



Adjusted operating profit ('EBITA')



384,381



363,551



 


 


Adjusted operating profit before depreciation ('EBITDA')


Definition


EBITDA represents earnings before net interest, tax, depreciation, amortisation of intangible assets, share of equity accounted investments' profit after tax and net exceptional items.


 


























Calculation



2018


£'000



2017


£'000



Adjusted operating profit ('EBITA')



384,381



363,551



Depreciation



93,722



92,015



EBITDA



478,103



455,566



 


 


  

Net interest


Definition


The Group defines net interest as the net total of finance costs and finance income before interest related exceptional items as presented in the Group Income Statement.


 




































Calculation



2018


£'000



2017


£'000



Finance costs before exceptional items



(73,156)



(72,910)



Finance income before exceptional items



37,421



40,973



Net interest - continuing



(35,735)



(31,937)



Net interest - discontinued



(16)



(163)



Net interest



(35,751)



(32,100)



 


 


Effective tax rate


Definition


The Group's effective tax rate expresses the income tax expense before exceptionals and deferred tax attaching to the amortisation of intangible assets as a percentage of EBITA less net interest.


 





























































Calculation



2018


£'000



2017


£'000



Adjusted operating profit



384,381



363,551



Net interest



(35,751)



(32,100)



Earnings before taxation



348,630



331,451



 


Income tax expense



23,882



45,869



Exceptional deferred tax



25,407



(1,756)



Deferred tax attaching to amortisation of intangible assets



9,814



10,674



Income tax expense before exceptionals and deferred tax attaching to


amortisation of intangible assets - continuing



59,103



54,787



Income tax expense before exceptionals and deferred tax attaching to


amortisation of intangible assets - discontinued



164



3,217



Total income tax expense before exceptionals and deferred tax attaching to


amortisation of intangible assets



59,267



58,004



Effective tax rate (%)



17.0%



17.5%



 


 


  

Adjusted earnings per share


Definition


The Group defines adjusted earnings per share as basic earnings per share adjusted for the impact of net exceptional items and amortisation of intangible assets.


 


























Calculation



2018


pence



2017


pence



Adjusted earnings per share - continuing



317.45



286.59



Adjusted earnings per share - discontinued



0.90



17.09



Adjusted earnings per share



318.35



303.68



 


 


Constant currency


Definition


The translation of foreign denominated earnings can be impacted by movements in foreign exchange rates versus sterling, the Group's presentation currency. In order to present a better reflection of underlying performance in the period, the Group retranslates foreign denominated current year earnings at prior year exchange rates.


 



















































Revenue - continuing, constant currency



2018


£'000



2017


£'000



Revenue - continuing



14,264,639



12,269,802



Currency impact



(296,654)



-



Revenue - continuing, constant currency



13,967,985



12,269,802



 



 



 



Adjusted operating profit - continuing, constant currency



 



 



Adjusted operating profit - continuing



383,400



345,005



Currency impact



(8,890)



-



Adjusted operating profit - continuing, constant currency



374,510



345,005



 




































 


Adjusted earnings per share - continuing, constant currency



 



 



Adjusted earnings - continuing



282,864



254,307



Currency impact



(6,280)



-



Adjusted earnings - continuing, constant currency



276,584



254,307



Weighted average number of ordinary shares in issue ('000)



89,106



88,735



Adjusted earnings per share - continuing, constant currency



310.40p



286.59p



 


 


Dividend cover


Definition


The dividend cover ratio measures the Group's ability to pay dividends from earnings.


 


























Calculation



2018


pence



2017


 pence



Adjusted earnings per share - continuing



317.45



286.59



Dividend



122.98



111.80



Dividend cover (times)



2.6x



2.6x



 


 


Net capital expenditure


Definition


Net capital expenditure comprises purchases of property, plant and equipment, proceeds from the disposal of property, plant and equipment and government grants received in relation to property, plant and equipment.


 


























Calculation



2018


£'000



2017


£'000



Purchase of property, plant and equipment



152,997



143,698



Proceeds from disposal of property, plant and equipment



(7,617)



(12,315)



Net capital expenditure



145,380



131,383



 


 


Free cash flow


Definition


Free cash flow is defined by the Group as cash generated from operations before exceptional items as reported in the Group Cash Flow Statement after net capital expenditure.


 


























Calculation



2018


£'000



2017


£'000



Cash generated from operations before exceptionals



473,434



546,870



Net capital expenditure



(145,380)



(131,383)



Free cash flow



328,054



415,487



 


 


Free cash flow (after interest and tax payments)


Definition


Free cash flow (after interest and tax payments) is defined by the Group as free cash flow after interest paid, income tax paid, dividends received from equity accounted investments and interest received.









































Calculation



2018


£'000



2017


£'000



Free cash flow



328,054



415,487



Interest paid



(69,900)



(70,108)



Income tax paid



(65,437)



(62,180)



Dividends received from equity accounted investments



1,980



125



Interest received



37,399



40,966



Free cash flow (after interest and tax payments)



232,096



324,290



 


 


 

Cash conversion ratio


Definition


The cash conversion ratio expresses free cash flow as a percentage of adjusted operating profit.


 


























Calculation



2018


£'000



2017


£'000



Free cash flow



328,054



415,487



Adjusted operating profit



384,381



363,551



Cash conversion ratio (%)



85%



114%



 


 


Net debt/EBITDA


Definition


The net debt to earnings before net interest, tax, depreciation, amortisation of intangible assets, share of equity accounted investments' profit after tax and net exceptional items ('EBITDA') ratio is a measurement of leverage, and shows how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant. 


 


























Calculation



2018


£'000



2017


£'000



Net debt



542,662



121,949



EBITDA



478,103



455,566



Net debt/EBITDA (times)



1.1x



0.3x



 


 


Return on capital employed ('ROCE') - continuing


Definition


ROCE represents adjusted operating profit (continuing) expressed as a percentage of the average total continuing capital employed. Total continuing capital employed represents total equity adjusted for net debt/cash, goodwill and intangibles written off, acquisition related liabilities and equity accounted investments.


 





























































Calculation



2018


£'000



2017


£'000



Total equity



1,677,917



1,507,721



Net debt (continuing)



542,662



134,748



Goodwill and intangibles written off (continuing)



271,399



228,340



Equity accounted investments (continuing)



(24,461)



(24,938)



Acquisition related liabilities (continuing, current and non-current)



97,853



94,917



Net assets of the disposal group



-



(126,072)



 



2,565,370



1,814,716



Average total capital employed - continuing



2,190,043



1,698,240



Adjusted operating profit - continuing



383,400



345,005



Return on capital employed (%) - continuing



17.5%



20.3%



 



 


Committed acquisition expenditure


Definition


The Group defines committed acquisition expenditure as the total acquisition cost of subsidiaries as presented in the Group Cash Flow Statement (excluding amounts related to acquisitions which were committed to in previous years) and future acquisition related liabilities for acquisitions committed to during the year.


 









































Calculation



2018


£'000



2017


£'000



Net cash outflow on acquisitions during the year



664,109



203,327



Cash outflow on acquisitions which were committed to in the previous year



(341,253)



(34,372)



Acquisition related liabilities arising on acquisitions during the year



27,840



41,041



Acquisition related liabilities which were committed to in the previous year



(13,404)



(14,082)



Amounts committed in the current year



18,000



358,000



Committed acquisition expenditure



355,292



553,914



 


 


Net working capital


Definition


Net working capital represents the net total of inventories, trade and other receivables (excluding interest receivable), and trade and other payables (excluding interest payable, amounts due in respect of property, plant and equipment and government grants).


 


































































Calculation



2018


£'000



2017


£'000



Inventories



530,473



456,395



Add: inventories of the disposal group



-



1,922



Trade and other receivables



1,426,217



1,222,597



Add: trade and other receivables of the disposal group



-



33,264



Less: interest receivable



(126)



(223)



Trade and other payables



(2,063,260)



(1,820,517)



Add: trade and other payables of the disposal group



-



(35,741)



Less: interest payable



4,775



4,534



Less: amounts due in respect of property, plant and equipment



10,671



6,349



Less: government grants



9



9



Net working capital



(91,241)



(131,411)



 


 


Working capital (days)


Definition


Working capital days measures how long it takes in days for the Group to convert working capital into revenue.


 


























Calculation



2018


£'000



2017


£'000



Net working capital



(91,241)



(131,411)



March revenue



1,418,988



1,223,575



Working capital (days)



(2.0 days)



(3.3 days)



 



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