16th May 2005 07:00
DCC PLC16 May 2005 Results for the year ended 31 March 2005 % change on prior year ----------------------- • Reported Constant currency*Sales 2,731.5 m +24.3% +22.9% Operating profit** 131.5 m +8.8% +11.2% Profit before net exceptional items,goodwill amortisation and tax 126.0 m +8.5% +11.0% Adjusted earnings per share** 137.25 cent +12.6% +15.2% Dividend per share 37.26 cent +15.0% Net debt at 31 March 2005 8.2 m Return on capital employed - excluding goodwill: 40.5% (39.8%: 2004) - including goodwill: 21.0% (21.3%: 2004) * All constant currency figures quoted in this report are based on retranslating current year figures at prior year translation rates ** Excluding net exceptional items and goodwill amortisation DCC plc, the business support services group, today announced its results forthe year ended 31 March 2005. Commenting on the results, DCC's Chief Executive/Deputy Chairman, Jim Flavin,said: "We are pleased to report another excellent year of growth, with sales increasing by 22.9% to €2.73 billion and adjusted earnings per share by 15.2% to 137.25 cent (constant currency). Energy, Healthcare, Food & Beverage, Environmental and Other activities all achieved excellent profit growth. Profits in IT Distribution declined due to the very challenging market conditions which have prevailed in the IT distribution sector since late 2004. Having completed several acquisitions during the year, DCC is focused on leveraging its business platforms, management capacity and financial strength to deliver continued organic and acquisition growth, strong cash generation and excellent returns on capital." For reference, please contact:Jim Flavin, Chief Executive/Deputy Chairman Fergal O'Dwyer, Chief Financial Officer Kieran Conlon, Investor Relations Manager Tel: +353 1 2799 400Email: [email protected]: www.dcc.ie Excellent growth It is pleasing to report another excellent year of growth, with sales increasingby 22.9% to €2.73 billion and adjusted earnings per share by 15.2% to 137.25cent (constant currency). Energy, Healthcare, Food & Beverage, Environmental and Other activities all achieved excellent profit growth. Profits in ITDistribution declined due to the very challenging market conditions which have prevailed in the IT distribution sector since late 2004. Divisional operating profits were as follows: % change on prior year ---------------------- •'m Reported Constant currency*Energy 51.3 +12.0% +15.4%IT Distribution 27.5 -11.9% -8.9%Healthcare 16.1 +18.4% +20.2%Food & Beverage 13.2 +21.7% +22.6%Environmental 5.5 +8.5% +10.2%Other (Homebuilding and Supply Chain Management) 17.9 +25.0% +25.0% ------ ------- -------Total 131.5 +8.8% +11.2% * All constant currency figures quoted in this report are based on retranslating current year figures at prior year translation rates The net interest charge was €5.6 million (€4.8 million: 2004). The effective taxrate for the year was 12.0% (12.5%: 2004). Adjusted earnings per share for the year increased by 12.6% on a reported basisand by 15.2% on a constant currency basis to 137.25 cent. DCC has achievedcompound annual growth in reported adjusted earnings per share of 14.8% over thelast five years and 17.0% over the last ten years. DCC again achieved excellent returns on capital employed, generating a return of40.5% excluding goodwill and 21.0% including goodwill (39.8% and 21.3%respectively: 2004). Continued strong cash generation DCC's record of strong cash generation continued with operating cash flow beforeexceptional costs of €114.9 million. Despite an increase in sales of €533.6million, working capital increased by just €23.6 million, equating to 10.5 days'sales at 31 March 2005, compared to 11.6 days' sales at 31 March 2004. Dividend increase of 15% The Directors are recommending a final dividend of 23.75 cent per share which,when added to the interim dividend of 13.51 cent per share, gives a totaldividend of 37.26 cent per share for the year, a 15% increase over the prioryear dividend of 32.40 cent per share. The dividend is covered 3.7 times byadjusted earnings per share (3.8 times: 2004). The final dividend will be paidon 11 July 2005 to shareholders on the register at the close of business on 27May 2005. Net exceptional items As announced in January 2005, net exceptional charges of €16.0 million wereincurred. These arose mainly in relation to the restructuring of SerComSolutions, acquisition related restructuring in DCC Energy and legal costs. The consolidation of SerCom Solutions' kitting and assembly activities at itsrecently extended Limerick facility resulted in the closure of its loss-makingDublin facility. Following this restructuring programme, the business is nowprofitable and cash generative. Following the acquisition by DCC Energy of the business of Shell Direct UK,planned exceptional restructuring costs were incurred in order to improve theoverall efficiency of the business. DCC incurred costs in relation to the Fyffes plc legal action and in relation tothe pursuit in Taiwan of the damages, costs and interest (amounting to €19.4million at 31 March 2005) awarded to DCC by the High Court in London followingthe successful legal action against Pihsiang Machinery Manufacturing CompanyLimited, a Taiwanese public company, Donald Wu, its chairman and majorshareholder, and Jenny Wu, his wife and director (the Defendants). DCC has notrecognised the €19.4 million due from the Defendants in its accounts pending itscollection. Fyffes Litigation On 24 January 2002 Fyffes plc initiated legal action against DCC, its whollyowned subsidiary, Lotus Green, and others in connection with the sale inFebruary 2000 by Lotus Green of 87% of the shareholding it held in Fyffes atthat time. The Board of DCC set out its views on the Fyffes action in a comprehensive StockExchange announcement on 24 January 2002 in which it stated that it "iscompletely satisfied that none of its officers was in possession of pricesensitive information on Fyffes in February 2000, when Lotus Green acceptedoffers from the market for 87% of its shareholding in Fyffes, and believes thatthe sales were undertaken with absolute propriety". On 3 August 2004 DCC announced to the Stock Exchange that it had made anapplication to the High Court in Dublin to expedite the hearing of the legalaction initiated by Fyffes. As a result, the hearing of the action began in theHigh Court on 2 December 2004. The hearing is expected to conclude before theend of July 2005 but it is likely to be a number of months before a judgement isdelivered. The action has been, and is being, fully defended consistent with the view ofthe Board as set out in DCC's Stock Exchange announcement of 24 January 2002 andthe Directors have concluded that no provision should be made in respect of thismatter, other than expensing ongoing costs in relation to the action. Acquisitions and Development Acquisition and development expenditure amounted to €131.3 million. DCC'songoing acquisition programme resulted in a number of acquisitions beingcompleted during the year, at a total committed cost of €89.3 million, of which€11.1 million was deferred. Capital expenditure amounted to €42.0 million. Thecash impact of acquisitions in the period was €81.1 million. In October 2004, DCC Energy completed the acquisition of the business of ShellDirect UK which supplies heating oils and transport fuels to domestic,agricultural and small commercial and industrial customers in Britain. DCC isnow the largest independent oil marketing and distribution business in Britain.In January 2005, DCC Energy acquired Dyneley Holdings Limited, a British companythat sells approximately 150 million litres of motor fuels per annum via fuelcards under the BP, Esso and Texaco brands. DCC Healthcare broadened its nutraceuticals business through the acquisition, inDecember 2004, of 77.5% of Laleham Healthcare Limited, a contract manufacturerand packer of creams and other liquid products for the health and beauty market.The enlarged business is a leading supplier of contract services - productdevelopment, manufacturing and packaging - to the European nutraceuticalssector. In August 2004, DCC Food & Beverage completed the acquisition of Bottle GreenLimited, a UK based wine sales and marketing business with a 5% volume share ofthe UK off trade wine market, and increased its shareholding from 51.5% to 100%in Allied Foods Limited, a leading player in the Irish chilled and frozen foodsdistribution market. The Group is actively pursuing further acquisitions in each of its divisions. Share buybacks DCC bought back a further 2,065,000 of its own shares on 17 May 2004 (2.53% oflisted share capital at that date) at a price of €12.80 per share and at a totalcost of €26.8 million. DCC has bought back a total of 10.45% of its issued sharecapital since July 2000 at an average price per share of €10.48 and at a totalcost of €97.7 million. Financial strength to fund future growth At 31 March 2005 DCC had net debt of €8.2 million (net cash €62.7 million: 2004)and shareholders' funds of €493.7 million (€469.6 million: 2004). Outlook Having completed several acquisitions during the year, DCC is focused onleveraging its business platforms, management capacity and financial strength todeliver continued organic and acquisition growth, strong cash generation andexcellent returns on capital. Operating review Energy % change ------------------- 2005 2004 Reported Constant currencySales €1,240.6m €841.3m +47.4% +45.5% Operating profit €51.3m €45.8m +12.0% +15.4% Return on capital employed - excluding goodwill 47.2% 39.4% - including goodwill 23.7% 21.9% DCC Energy achieved strong growth in the year with operating profit increasing,on a constant currency basis, by 15.4%. During the year the business delivered2.47 billion litres of product, an increase of 20%, further strengthening itsposition as the leading independent marketer of LPG and oil products in Britainand Ireland. DCC's LPG business performed well in a challenging operating environment ofincreasing product prices and milder weather conditions. DCC's oil business grew strongly, benefiting from good organic volume growth inBritain and the Republic of Ireland. The scale of the business was significantlyincreased by the acquisition of the trade, assets and goodwill of the businessof Shell Direct UK and of Dyneley Holdings Limited. Both of these acquisitionsperformed in line with expectations. IT Distribution % change ------------------- 2005 2004 Reported Constant currencySales €878.2m €859.4m +2.2% +0.8% Operating profit €27.5m €31.3m -11.9% -8.9% Operating margin 3.1% 3.6% Return on capital employed - excluding goodwill 34.2% 41.9% - including goodwill 21.4% 25.5% Following an excellent first half performance, the second half of the year wasvery challenging for IT Distribution. While there was good sales volume growth,this was offset by severe product price deflation. Profitability has also beenimpacted by an increasingly competitive marketplace and adverse changes insupplier terms and conditions. DCC's UK hardware distribution business achieved good sales volume growth butwas particularly impacted by the severe product price deflation and marginpressure in a very competitive UK hardware marketplace. Trading was moredifficult in the last quarter of the financial year and remains challenging. DCC's UK software distribution business had an excellent year, with particularlystrong growth in sales of computer games, security software and peripheralproducts into the major retailers. During the year the business continued tobroaden its product range in line with its strategy to be a specialistdistributor to the retail channel of software, peripherals and consumerelectronics. DCC's Irish IT distribution business had a satisfactory performance, leveragingits position as the leading distributor in Ireland to grow its market share in a very competitive marketplace. DCC's Continental European IT distribution business had a very difficult year.The performance in the year was impacted by changes in terms with some keysuppliers, significant levels of price deflation and a very competitive Europeanenterprise infrastructure market. Healthcare % change ------------------- 2005 2004 Reported Constant currencySales €170.7m €149.0m +14.6% +13.7% Operating profit €16.1m €13.6m +18.4% +20.2% Operating margin 9.4% 9.1% Return on capital employed - excluding goodwill 40.3% 37.0% - including goodwill 13.0% 12.1% DCC Healthcare achieved good sales and profit growth and all areas of activitydeveloped well. Good profit growth was achieved in the acute and community care sectors withparticularly strong growth in the sales of IV pharmaceutical products. Goodgrowth in sales of mobility and rehab products was achieved in Germany, Britainand other markets, aided by increased investment in procurement resources inChina. The nutraceuticals business enjoyed excellent organic growth benefiting from its success in broadening its branded customer base particularly in Britain,Scandinavia and the Benelux countries. The acquisition of Laleham Healthcarebroadens DCC Nutraceuticals' contract services offering and createsopportunities to cross sell products and services. Food & Beverage % change -------------------- 2005 2004 Reported Constant currencySales €242.3m €170.7m +42.0% +41.5% Operating profit €13.2m €10.9m +21.7% +22.6% Operating margin 5.5% 6.4% Return on capital employed - excluding goodwill 40.8% 42.0% - including goodwill 18.2% 21.4% DCC Food & Beverage achieved strong sales and profit growth reflecting theacquisition, completed in the first half of the year, of Bottle Green Limitedand an increased shareholding, from 51.5% to 100%, in Allied Foods. Both BottleGreen and Allied Foods have performed in line with expectations. There was good organic growth in wine and healthfoods with the Kelkin brandperforming particularly well. The increasingly competitive environment in theIrish grocery and foodservice sectors continued to impact margins. Environmental % change ------------------- 2005 2004 Reported Constant currencySales €25.8m €24.1m +7.0% +6.5% Operating profit €5.5m €5.0m +8.5% +10.2% Operating margin 21.2% 20.9% Return on capital employed - excluding goodwill 41.1% 50.8% - including goodwill 20.1% 19.8% DCC Environmental achieved good sales and profit growth with steady progressmade in all areas of activity. DCC continues to provide a broad range ofservices including waste chemical, water and oil treatment, soil remediation and emergency response to industrial and commercial customers in Ireland. DCC is seeking environmental business opportunities in Britain which are opening up due to increased environmental regulations. Other (Homebuilding and Supply Chain Management) % change -------------------- 2005 2004 Reported Constant currencySales €174.0m €153.4m +13.4% +13.4% Operating profit €17.9m €14.3m +25.0% +25.0% Manor Park Homebuilders (a 49% owned associate company), which is a leadingIrish homebuilding company, contributed operating profit of €19.0 million (€15.2 million: 2004) from house and apartment sales and related commercialdevelopment. SerCom Solutions, the supply chain management business, reported an operatingloss for the year of €1.1 million (operating loss of €0.9 million: 2004). Thebusiness has successfully completed the restructuring programme announced inJanuary 2005 and has consolidated its Irish based kitting and assemblyactivities at its recently expanded facility in Limerick. The business is nowprofitably implementing its strategy of providing world class supply chainmanagement services. Annual Report and Annual General Meeting DCC's 2005 Annual Report is expected to be posted to shareholders on 2 June2005. The Company's Annual General Meeting will be held at 11.00 a.m. on Tuesday 5 July 2005 in The Four Seasons Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland. Note: All constant currency figures quoted in this report are based onretranslating current year figures at prior year translation rates. This announcement and further information on DCC is available on the web atwww.dcc.ie SUMMARISED CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the year ended 31 March 2005 2005 2004 Notes •'000 •'000 Turnover 2 2,731,524 2,197,965 Operating profit before operating exceptional items 3 131,536 120,876 Operating exceptional items 4 (3,815) (2,288) Operating profit 127,721 118,588 Net interest payable (5,576) (4,802) Profit on ordinary activities before goodwill 122,145 113,786 amortisation and non-operating net exceptional items Goodwill amortisation (10,089) (8,282) Non-operating net exceptional items 4 (12,152) (5,897) Profit on ordinary activities before taxation 99,904 99,607 Taxation (15,115) (14,509) Profit after taxation 84,789 85,098 Minority interests (1,022) (771) Profit attributable to Group shareholders 83,767 84,327 Dividends 5 (29,458) (26,572) Profit retained for the year 54,309 57,755 Earnings per ordinary share- basic (cent) 6 104.69c 101.98c- diluted (cent) 6 102.26c 100.42c Adjusted earnings per ordinary share- basic (cent) 6 137.25c 121.89c- diluted (cent) 6 134.07c 120.03c Dividend per ordinary share (cent) 5 37.26c 32.40c CONSOLIDATED BALANCE SHEETas at 31 March 2005 2005 2004 Note •'000 •'000 Fixed AssetsGoodwill arising on the acquisition of subsidiaries 193,762 129,566Tangible fixed assets 247,647 212,252Associated undertakings 64,192 53,780 505,601 395,598 Current AssetsStocks 123,734 110,577Debtors 421,534 330,385Cash and term deposits 352,399 320,616 897,667 761,578 Creditors: Amounts falling due within one yearBank and other debt 45,127 143,732Trade and other creditors 471,283 362,688Corporation tax 37,122 36,077Proposed dividend 19,070 16,824 572,602 559,321 Net Current Assets 325,065 202,257 Total Assets less Current Liabilities 830,666 597,855 FINANCED BY: Creditors: Amounts falling due after more than one yearBank and other debt 10,370 16,555Unsecured notes due 2008 to 2016 305,094 97,612Deferred acquisition consideration 10,839 6,799 326,303 120,966Provisions for Liabilities and Charges 5,361 2,084 331,664 123,050 Capital and ReservesEquity share capital and share premium 146,548 146,473Reserves 347,148 323,139Equity Shareholders' Funds 493,696 469,612Minority interests 4,348 4,081Capital grants 958 1,112 499,002 474,805 830,666 597,855 Net (debt)/cash 7 (8,192) 62,717 RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDSfor the year ended 31 March 2005 2005 2004 •'000 •'000 Profit attributable to Group shareholders 83,767 84,327 Dividends (29,458) (26,572) 54,309 57,755 Equity share capital issued (net of expenses) 6,858 1,122 Share buyback (inclusive of costs) (26,762) (24,986) Exchange adjustments (10,321) 6,442 Net movement in shareholders' funds 24,084 40,333 Opening shareholders' funds 469,612 429,279 Closing shareholders' funds 493,696 469,612 CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 March 2005 2005 2004 Note •'000 •'000 Inflows Operating cash flow (see below) 108,300 141,246Share issues (net) 6,858 1,122 115,158 142,368 Outflows Capital expenditure (net) 34,146 28,092Acquisitions 81,148 14,308Share buyback 26,762 24,986Interest paid 2,904 3,609Taxation paid 9,093 5,295Dividends paid 27,212 24,765 181,265 101,055 Net cash (outflow)/inflow (66,107) 41,313Translation adjustment (4,802) 1,345Movement in net (debt)/cash (70,909) 42,658Opening net cash 62,717 20,059Closing net (debt)/cash 7 (8,192) 62,717 OPERATING CASH FLOWfor the year ended 31 March 2005 2005 2004 •'000 •'000 Group operating profit 131,536 120,876Operating profit of associated undertakings (21,855) (19,201)Dividends received from associated undertakings 1,354 3,094Depreciation of tangible fixed assets 32,046 29,401(Increase)/decrease in working capital (23,550) 20,606Other (4,671) (2,860) Operating cash flow before exceptional costs 114,860 151,916 Exceptional redundancy and net restructuring costs (6,560) (10,670) Operating cash flow after exceptional costs 108,300 141,246 NOTES TO THE PRELIMINARY RESULTSfor the year ended 31 March 2005 1. Basis of Preparation The financial information set out herein does not represent full accounts andhas been abridged from the financial statements of DCC plc for the year ended 31March 2005 which carry an unqualified auditors' report and which have not yetbeen filed with the Registrar of Companies. Full accounts for the year ended 31March 2004, containing an unqualified auditors' report, have been delivered tothe Registrar of Companies. The financial statements for the year ended 31 March 2005 have been prepared inaccordance with the accounting policies set out in the financial statements forthe year ended 31 March 2004. Comparative amounts have been regrouped and restated, where necessary, on thesame basis as the amounts for the current year. The Group's financial statements are prepared in euro, denoted by the symbol •.The rates used in translating sterling balance sheet and profit and loss accountamounts were as follows:- 2005 2004 €1=Stg£ €1=Stg£ Balance sheet (closing rate) 0.689 0.666Profit and loss (average rate)* 0.672 0.647 * Average exchange rates adjusted for the impact of profit and loss hedges 2. Turnover 2005 2004 •'000 •'000 Energy 1,240,551 841,344IT Distribution 878,153 859,441Healthcare 170,686 148,961Food & Beverage 242,332 170,665Environmental 25,823 24,131Other (Homebuilding and Supply Chain Management) 173,979 153,423 Turnover 2,731,524 2,197,965 Analysis of turnover by subsidiary undertakings andassociated undertakings: Subsidiary undertakings 2,627,927 2,074,465Associated undertakings 103,597 123,500 Turnover 2,731,524 2,197,965 Of which acquisitions in the year contributed 282,457 23,024 3. Operating Profit 2005 2004 •'000 •'000 Energy 51,292 45,791IT Distribution 27,562 31,274Healthcare 16,097 13,595Food & Beverage 13,240 10,876Environmental 5,472 5,044Other (Homebuilding and Supply Chain Management) 17,873 14,296 Operating profit 131,536 120,876 Analysis of operating profit by subsidiary undertakings andassociated undertakings: Subsidiary undertakings 109,681 101,675Associated undertakings 21,855 19,201 Operating profit 131,536 120,876 Of which acquisitions in the year contributed 8,243 168 4. Net exceptional items Operating exceptional items and non-operating net exceptional items in the yearamounted to €16.0 million in relation to the restructuring of SerCom Solutions,acquisition related restructuring in DCC Energy and legal cases. SerCom Solutions, DCC's supply chain management subsidiary, restructured itsoperations by consolidating its kitting and assembly activities at its Limerickfacility and by closing its loss making Dublin facility. As part of the post acquisition integration of the business of Shell Direct UK,exceptional restructuring costs have been incurred, arising in part from anoverlap of operations with DCC's Scottish Fuels business, in order to improvethe overall efficiency of its business. DCC incurred costs in relation to the Fyffes plc legal action and in relation tothe pursuit in Taiwan of the damages, costs and interest awarded to DCC by theHigh Court in London following the successful legal action against PihsiangMachinery Manufacturing Company Limited, a Taiwanese public company, Donald Wu,its chairman and major shareholder, and Jenny Wu, his wife and director (theDefendants). The total amount owing jointly and severally by the Defendants at31 March 2005 was €19.4 million. DCC has not recognised this amount in itsaccounts pending its collection. 5. Dividends 2005 2004 •'000 •'000Interim dividend of 13.51 cent per share (11.75 cent: 2004) 10,802 9,748Proposed final dividend of 23.75 cent per share (20.65 cent:2004) 19,070 16,824Dividend attaching to shares bought-back (414) - 29,458 26,572 6. Earnings per Ordinary Share 2005 2004 •'000 •'000 Profit after tax and minority interests 83,767 84,327Net exceptional items 15,967 8,185Goodwill amortisation 10,089 8,282 Adjusted profit after tax and minority interests 109,823 100,794 cent centBasic earnings per ordinary share Basic earnings per ordinary share 104.69 101.98Adjusted basic earnings per ordinary share* 137.25 121.89 Weighted average number of ordinary shares in issue during the year ('000) 80,018 82,690 Diluted earnings per ordinary share Diluted earnings per ordinary share 102.26 100.42Adjusted diluted earnings per ordinary share* 134.07 120.03 Diluted weighted average number of ordinary shares for theyear ('000) 81,913 83,974 * adjusted to exclude net exceptional items and goodwill amortisation. The diluted earnings used in the calculation of diluted earnings per ordinaryshare were €83.767 million (€84.327 million: 2004) and in the calculation ofadjusted diluted earnings per ordinary share were €109.823 million (€100.794million: 2004). 7. Analysis of Net (Debt)/Cash 2005 2004 •'000 •'000 Cash and term deposits 352,399 320,616Bank and other debt repayable within one year (45,127) (143,732)Bank and other debt repayable after more than one year (10,370) (16,555)Unsecured notes due 2008 to 2016 (305,094) (97,612) Net (debt)/cash 8,192 62,717 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
DCC