DCC Regulatory News (DCC)

RNS Number : 0826M

DCC PLC

18 May 2010

 

 

 

 

18 May 2010

Preliminary Results for the year ended 31 March 2010

 

 

RESULTS HIGHLIGHTS
	€		Change on prior year
			Reported	Constant currency†
Revenue	6,725.0m		+5.1%	+10.8%
Operating profit*	192.8m		+6.9%	+12.8%
Profit before net exceptional items, amortisation of intangible assets and tax	182.1m		+14.2%	+20.7%
Profit before tax	164.9m		+19.7%	+27.2%
Adjusted earnings per share*	177.98 cent		+5.2%	+11.3%
Dividend per share	67.44 cent		+8.2%
Operating cash flow	297.8m (2009: €304.9m)
Free cash flow**	229.1m (2009: €218.5m)
Net debt	53.5m (2009: €90.7m)
Return on total capital employed	18.4% (2009: 17.8%)
†all constant currency figures quoted in this report are based on retranslating 2009/10 figures at prior year translation rates * excluding net exceptionals and amortisation of intangible assets ** after interest and tax payments

 

DCC, the business support services group, today announced its results for the year ended 31 March 2010.

 

Commenting on the results, Tommy Breen, Chief Executive said:

 

"DCC had an excellent second half, which resulted in the Group's operating profit for the full year increasing by 12.8% on a constant currency basis and profit before exceptional items, amortisation of intangible assets and tax increasing by 20.7%, also on a constant currency basis. This result was achieved against a backdrop of difficult economic and trading conditions and having delivered particularly strong operating profit growth of 22.4% on a constant currency basis in the prior year. Return on total capital employed increased to 18.4% in the year.

 

Adjusted earnings per share, on a constant currency basis, increased by 11.3%. Reported adjusted earnings per share was 5.2% ahead of the prior year, reflecting the adverse impact of the 6.9% weakening of the sterling/euro exchange rate in the year on the translation into euro of the significant proportion (2010: 75%) of DCC's profits that are denominated in sterling.

 

Cash generation was again particularly strong, helped by a reduction in working capital of €71.8 million, resulting in operating cash flow of €297.8 million. During the year, DCC completed a US private debt placement raising the equivalent of €284 million in 5, 7, 10 and 12 year funding. The strength of DCC's business model and improving debt market conditions at the time of the placement led to the funds being raised on favourable terms.

 

DCC Energy, DCC's largest division, had another year of excellent operating profit growth driven by significant development activity in Britain and continental Europe. DCC Energy's proven ability to identify, execute, integrate and extract synergies from acquisitions was the key to this growth. The business also enjoyed the benefit of a second consecutive cold winter, although temperatures during the key trading months of April and from October through March were overall similar to the prior year.

 

DCC SerCom, DCC's second largest division, performed well, driven by excellent results in its distribution businesses in Britain. DCC Healthcare achieved a strong recovery in operating profit driven by excellent performances in its Hospital Supplies and Services and Health and Beauty Solutions businesses. As anticipated, DCC Environmental and DCC Food & Beverage experienced difficult trading conditions and operating profits in both of these businesses declined in the year, notwithstanding better second half performances, particularly in DCC Environmental which returned to profit growth.

 

The Board is recommending a 10.0% increase in the final dividend which, taken together with the 5.0% increase in the interim dividend, results in an increase in dividend for the full year of 8.2%.

 

The outlook for the year to 31 March 2011 is framed against the continuing uncertain economic outlook and has regard to an assumption that the weather pattern will not be as favourable as it was in each of the last two financial years. At this early stage the Group anticipates an operating profit increase of approximately 5% with adjusted earnings per share to be modestly ahead of the prior year, both on a constant currency basis. Based on an exchange rate of Stg£0.86 = €1.0, this equates to an operating profit increase of approximately 10% and an adjusted earnings per share increase of approximately 5%, both on a reported basis.

 

DCC is in a very strong financial position which provides significant capacity as we pursue an increasing number of acquisition opportunities."

 

For reference, please contact:

 

Tommy Breen, Chief Executive Tel: +353 1 2799 400

Fergal O'Dwyer, Chief Financial Officer Email:investorrelations@dcc.ie

Conor Murphy, Investor Relations Manager www.dcc.ie

 

 

Results

 

A summary of the results for the year ended 31 March 2010 is as follows:

 

	€'m		Change on prior year
			Reported		Constant currency†
Revenue	6,725.0		+5.1%		+10.8%
Operating profit*
DCC Energy	113.1		+12.3%		+19.6%
DCC SerCom	40.8		+1.7%		+6.4%
DCC Healthcare	21.1		+22.2%		+26.6%
DCC Environmental	9.3		-9.1%		-2.6%
DCC Food & Beverage	8.5		-29.8%		-29.5%
Group operating profit*	192.8		+6.9%		+12.8%
Share of associates' profit after tax	0.2
Finance costs (net)	(10.9)		-48.4%		-47.3%
Profit before exceptional items, amortisation of intangible assets and tax	182.1		+14.2%		+20.7%
Exceptional charge (net)	(11.0)
Amortisation of intangible assets	(6.2)
Profit before tax	164.9		+19.7%		+27.2%
Taxation	(33.2)
Profit after tax	131.7		+12.7%		+19.9%
Minority interests	(0.9)
Attributable profit	130.8		+12.5%		+19.7%
Adjusted earnings per share*	177.98 cent		+5.2%		+11.3%
Dividend per share	67.44 cent		+8.2%
Operating cash flow	297.8m (2009: €304.9m)
Free cash flow**	229.1m (2009: €218.5m)
Net debt at 31 March 2010	53.5m (2009: €90.7m)
Return on total capital employed	18.4% (2009: 17.8%)
† all constant currency figures quoted in this report are based on retranslating 2009/10 figures at prior year translation rates * excluding net exceptionals and amortisation of intangible assets ** after interest and tax payments

 

Overview of results

Revenue

DCC achieved constant currency revenue growth of 10.8% to €6.7 billion driven by acquisitions in DCC Energy and strong organic growth in DCC SerCom.

 

Operating profit

DCC's operating profit of €192.8 million increased by 12.8% on a constant currency basis. This result was achieved against a backdrop of difficult economic and trading conditions and having delivered particularly strong operating profit growth of 22.4% on a constant currency basis in the prior year. Approximately two thirds of the growth was driven by acquisitions and one third was organic.

 

DCC Energy, DCC's largest division, had another year of excellent operating profit growth driven by significant development activity in Britain and continental Europe. DCC Energy's proven ability to identify, execute, integrate and extract synergies from acquisitions was the key to this growth. The business also enjoyed the benefit of a second consecutive cold winter, although temperatures during the key trading months of April and from October through March were overall similar to the prior year.

 

DCC SerCom, DCC's second largest division, performed well, driven by excellent results in its distribution businesses in Britain. DCC Healthcare achieved a strong recovery in operating profit driven by excellent performances in its Hospital Supplies and Services and Health and Beauty Solutions businesses.

 

As anticipated, DCC Environmental and DCC Food & Beverage experienced difficult trading conditions and operating profits in both of these businesses declined in the year, notwithstanding better second half performances, particularly in DCC Environmental which returned to profit growth.

 

The Group's focus on achieving cost efficiencies across all parts of its operations has resulted in operating costs on a constant currency basis being 7% lower than the previous year (adjusted for the impact of acquisitions).

 

Approximately 75% of the Group's operating profit in the year was denominated in sterling. The average exchange rate at which sterling profits were translated during the year was Stg£0.8873 = €1, compared to an average translation rate of Stg£0.8262 = €1 in the prior year, an adverse movement of 6.9%. This adverse translation impact on Group operating profit was €10.6 million, resulting in an operating profit increase of 6.9% on a reported basis.

 

Excellent second half performance

DCC's results in the significantly more important second half of its financial year were excellent. An analysis of the performance in each half, on a constant currency basis, is as follows:

 

	2009/10*				2008/09				Change
Operating profit	H1	H2	FY		H1	H2	FY		H1	H2	FY
	€'m	€'m	€'m		€'m	€'m	€'m
DCC Energy	27.9	92.5	120.4		22.8	77.9	100.7		+22.9%	+18.6%	+19.6%
DCC SerCom	14.7	28.0	42.7		13.5	26.6	40.1		+8.5%	+5.3%	+6.4%
DCC Healthcare	9.0	12.9	21.9		9.8	7.5	17.3		-8.0%	+72.0%	+26.6%
DCC Environmental	5.2	4.8	10.0		7.3	2.9	10.2		-28.9%	+62.6%	-2.6%
DCC Food & Beverage	4.3	4.2	8.5		7.2	4.9	12.1		-40.6%	-12.8%	-29.5%
Group	61.1	142.4	203.5		60.6	119.8	180.4		+0.9%	+18.8%	+12.8%
Adjusted EPS (cent)	54.08	134.11	188.19		54.84	114.29	169.13		-1.4%	+17.3%	+11.3%
* all constant currency figures quoted in this report are based on retranslating 2009/10 figures at prior year translation rates

 

Finance costs (net)

Net finance costs for the year decreased significantly to €10.9 million (2009: €21.1 million) as a result of lower interest rates and lower average net debt levels. The Group's net debt averaged €155 million during the year, significantly lower than the average of €236 million during the prior year. Interest was covered 17.7 times by Group operating profit before amortisation of intangible assets (8.5 times in 2009).

 

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

Profit before net exceptional items, amortisation of intangible assets and tax of €182.1 million increased by 20.7% on a constant currency basis (14.2% on a reported basis).

 

Net exceptional items

The Group incurred a net exceptional charge of €11.0 million as follows:

 

	€'m
Restructuring costs and other	9.1
Goodwill impairments	1.9
	11.0

 

The restructuring costs were incurred in relation to recently acquired businesses and the implementation of cost reduction programmes across the Group.

 

Profit before tax

Profit before tax of €164.9 million increased by 27.2% on a constant currency basis (19.7% on a reported basis).

 

Taxation

As anticipated, the effective tax rate for the Group increased to 19% compared to 13% in the previous year. This increase was primarily due to lower available interest deductions against the Group's taxable profits in the UK and increased UK and continental European profits.

 

Adjusted earnings per share

Adjusted earnings per share of 177.98 cent increased by 11.3% on a constant currency basis (5.2% on a reported basis).

 

Dividend

The Board is recommending an increase of 10.0% in the final dividend to 43.70 cent per share which, when added to the interim dividend of 23.74 cent per share, gives a total dividend of 67.44 cent per share for the year, a 8.2% increase over the prior year dividend of 62.34 cent per share. The dividend is covered 2.6 times by adjusted earnings per share (2.7 times in 2009). It is proposed to pay the final dividend on 22 July 2010 to shareholders on the register at the close of business on 28 May 2010.

 

Cash flow

The Group's cash flow can be summarised as follows:

 

Year ended 31 March	2010 €'m	2010 €'m	2009 €'m	2009 €'m
Operating profit		192.8		180.4
Decrease/(increase) in working capital:
DCC Energy	45.9		72.3
DCC SerCom	8.7		4.1
DCC Healthcare	6.1		1.3
DCC Environmental	1.0		4.2
DCC Food & Beverage	10.1	71.8	(1.9)	80.0
Depreciation and other		33.2		44.5
Operating cash flow		297.8		304.9
Capital expenditure (net)		(35.7)		(50.4)
Interest and tax paid		(33.0)		(36.0)
Free cash flow		229.1		218.5
Acquisitions		(133.6)		(101.7)
Dividends		(52.5)		(48.7)
Exceptional items		(12.8)		(60.9)
Share issues		7.7		10.2
Disposals		0.8		8.5
Net inflow		38.7		25.9
Opening net debt		(90.7)		(123.7)
Translation		(1.5)		7.1
Closing net debt		(53.5)		(90.7)

 

Operating cash flow was again excellent at €297.8 million, compared to €304.9 million in 2009. Net working capital days at 31 March 2010 reduced significantly to 4.6 days from 11.9 days at 31 March 2009, with each of DCC's divisions achieving reductions in working capital days.

 

Free cash flow was €229.1 million compared to €218.5 million in the prior year.

 

Return on total capital employed

Reflecting the excellent operating profit growth and cash generation, DCC's return on total capital employed improved to 18.4% (2009: 17.8%).

 

Financial strength

At 31 March 2010, DCC had net debt of €53.5 million (2009: €90.7 million) and total equity of €836.9 million (2009: €726.2 million). This equates to gearing of 6% and a net debt to EBITDA ratio of 0.2.

 

In March 2010, DCC completed a US private debt placement, raising the equivalent of €284 million in 5, 7, 10 and 12 year funding which further strengthened the Group's capital structure and its financial capacity to pursue organic and acquisition growth opportunities. The strength of DCC's business model and improving debt market conditions at the time of the placement led to the funds being raised on favourable terms. Approximately 95% of the Group's total debt has been raised in the US private placement market with an average credit margin over floating Euribor/Libor of 1.23% and an average maturity of 7 years.

 

 

Acquisition and net capital expenditure

The cash outlay on acquisitions and net capital expenditure in the year amounted to €169.3 million as follows:

 

	Acquisitions	Net Capex	Total
	€'m	€'m	€'m
DCC Energy	110.3	16.3	126.6
DCC SerCom	7.1	4.0	11.1
DCC Healthcare	4.5	9.1	13.6
DCC Environmental	11.2	5.6	16.8
DCC Food & Beverage	0.5	0.7	1.2
Total	133.6	35.7	169.3

 

DCC Energy expanded its oil distribution business into continental Europe through the completion of the acquisitions of Shell's oil distribution businesses in Denmark for a consideration of €14.0 million (August 2009) and in Austria for a consideration of €18.3 million (January 2010). These businesses distribute heating oils and transport fuels to domestic, commercial and industrial customers throughout Denmark and Austria.

 

In October 2009, DCC Energy acquired the Bayford Oil distribution business, which operates from 14 locations principally in the North of England, for a consideration of €24.7 million and in December 2009 acquired the Brogans oil distribution and fuel card business, which operates from 15 locations principally in Scotland and the north of England, for a consideration of €47.2 million. These acquisitions further enhanced DCC Energy's position as the leading oil distributor in Britain, bringing its market share to approximately 14%, and also significantly increased the scale of its fuel card operations. Since the year end, DCC Energy has acquired Pearts, a medium sized oil distribution business which operates from four locations in the north of England, for a consideration of €15.0 million.

 

DCC SerCom completed a number of smaller bolt-on acquisitions in its Retail distribution and Enterprise distribution businesses as did DCC Healthcare in its Hospital Supplies and Services business.

 

In January 2010, the shareholding structures in the Group's British environmental business were re-organised resulting in the formation of a new holding company which now owns all of DCC's British environmental businesses. The holding company is owned 70% by DCC and 30% by Michael Tracey, the managing director of the business, with put and call options in place over his 30% shareholding.

 

Net capital expenditure of €35.7 million was significantly below the prior year amount of €50.4 million and compares to a depreciation charge for the year of €47.0 million.

 

Outlook

The outlook for the year to 31 March 2011 is framed against the continuing uncertain economic outlook and has regard to an assumption that the weather pattern will not be as favourable as it was in each of the last two financial years. At this early stage the Group anticipates an operating profit increase of approximately 5% with adjusted earnings per share to be modestly ahead of the prior year, both on a constant currency basis. Based on an exchange rate of Stg£0.86 = €1.0, this equates to an operating profit increase of approximately 10% and an adjusted earnings per share increase of approximately 5%, both on a reported basis.

 

DCC is in a very strong financial position which provides significant capacity as we pursue an increasing number of acquisition opportunities.

 

 

Operating review

 

DCC Energy
	2010	2009	Change on prior year
			Reported	Constant Currency
Revenue	€4,420.1m	€4,130.8m	+7.0%	+13.7%
Operating profit	€113.1m	€100.7m	+12.3%	+19.6%
Return on total capital employed	26.5%	24.9%

 

DCC Energy's operating profit was 19.6% ahead of the prior year on a constant currency basis. This was an excellent result particularly considering the very strong performance in the prior year when operating profits grew by 59.3% on a constant currency basis. The business benefited from the successful integration of a number of recent acquisitions and, for the second consecutive year, a particularly cold winter. While there were exceptionally cold conditions in the final quarter of the financial year, the temperatures during the key trading months of April and from October through March were overall similar to the prior year but below the 30 year average.

 

DCC Energy sold 6.2 billion litres of product, an increase of 15.9% on the prior year. Volumes were 7.8% behind the prior year on an organic basis as the business was impacted by weaker demand due to the economic environment and a more cautious approach towards the extension of credit.

 

The Oil distribution business achieved an excellent performance with the business in Britain continuing to benefit from the integration of and consequent synergies from recent acquisitions. Significant progress was made in the achievement of development objectives including the acquisitions of Bayford Oil (completed October 2009) and of Brogan Holdings Limited (completed December 2009). DCC is the clear market leader in oil distribution in Britain with a market share of approximately 14% and is well positioned to further consolidate what remains a very fragmented market.

 

DCC Energy expanded its oil distribution activities into continental Europe through the acquisitions of the Shell oil distribution businesses in Denmark (completed August 2009) and in Austria (completed January 2010). These businesses made an important contribution to the result in the year and should over time provide further development opportunities for DCC Energy. Despite the continued very weak economic environment in Ireland, the profitability of the Irish oil business recovered well.

 

Despite the difficult economic conditions and overall a less favourable product pricing environment, the LPG business in Britain and Ireland had a solid performance, benefiting from the cold winter weather.

 

The Fuel Card business had an excellent year, driven by good organic volume growth and the contribution from the acquisitions of Cookes Fuel Card (completed January 2009) and the Brogan fuel card business (completed December 2009).

 

After the excellent performance in the year to 31 March 2010, which again benefited from particularly cold winter conditions, DCC Energy remains well placed to continue its growth in the year to 31 March 2011, albeit more modestly, and to develop its business further through acquisition.

 

DCC SerCom
	2010	2009	Change on prior year
			Reported	Constant Currency
Revenue	€1,618.5m	€1,551.3m	+4.3%	+8.6%
Operating profit	€40.8m	€40.1m	+1.7%	+6.4%
Operating margin	2.5%	2.6%
Return on total capital employed	16.1%	15.5%

 

DCC SerCom's operating profit grew by 6.4% on a constant currency basis. SerCom Distribution achieved constant currency operating profit growth of 13.6% in difficult market conditions reflecting excellent performances by the British distribution businesses.

 

DCC SerCom's Retail distribution business, which accounted for 43% of SerCom Distribution's revenue, achieved excellent profit growth. The business performed particularly well in Britain where its focus on delivering value added services for suppliers and customers allowed it to gain market share, particularly with supermarkets and e-tail customers. The French business enjoys a strong position in the retail market and achieved a satisfactory performance despite weak consumer demand. Operating profit in the Irish business was held back by the challenging retail environment and investment undertaken to broaden its home entertainment service offering.

 

DCC SerCom's Reseller distribution business, which accounted for 38% of SerCom Distribution's revenue, had an excellent year, achieving significant operating profit growth. The business performed very strongly in Britain, achieving strong market share gains for suppliers through market development, notably in the sale of IT products through the mobile phone channel. The business continued to invest in supplier and customer development activity to support future growth.

 

DCC SerCom's Enterprise distribution business, which accounted for 19% of SerCom Distribution's revenue, had a difficult year, experiencing a decline in operating profit. Market share was maintained in all key areas, however adverse market conditions had an impact on demand for certain enterprise products and consequently on the profitability of the business.

 

Operating profit declined in DCC SerCom's Supply Chain Management business primarily due to the anticipated change in a major customer's procurement strategy.

 

SerCom Distribution is well positioned to continue to achieve operating profit growth in the year to 31 March 2011, notwithstanding that market conditions are likely to remain challenging. Operating profit in the Supply Chain Management business is likely to decline resulting in overall operating profit for DCC SerCom being broadly in line with the prior year on a constant currency basis.

 

DCC Healthcare
	2010	2009	Change on prior year
			Reported	Constant Currency
Revenue	€334.0m	€331.2m	+0.9%	+5.8%
Operating profit	€21.1m	€17.3m	+22.2%	+26.6%
Operating margin	6.3%	5.2%
Return on total capital employed	11.3%	9.4%

 

 

DCC Healthcare achieved constant currency operating profit growth of 26.6% for the year, which represented an excellent recovery in the profitability of the business.

 

DCC Hospital Supplies & Services achieved excellent operating profit growth. In Ireland, public spending constraints have resulted in price deflation and reduced demand in the healthcare market, which were offset by cost reductions and first time contributions from bolt-on acquisitions. In Britain, DCC's value added distribution services business grew its revenues strongly through a further roll out of its services within key customers and grew its operating profit significantly while continuing to invest in its operational infrastructure. The business was recently successful in a tender process for a 10 year framework agreement to roll out to acute care trusts within NHS London the "just-in-time" distribution service which it currently provides to Guys & St. Thomas' NHS Foundation Trust.

 

DCC Health & Beauty Solutions delivered excellent operating profit growth driven by continued growth in the nutraceuticals business and a significant recovery in contribution from its beauty operations. Good revenue growth and excellent operating profit growth was achieved in the nutraceuticals business following new contract wins last year and continued development with key customers. Operational capability was enhanced by capacity expansion and technological developments at DCC's soft gelatine encapsulation facility in Wales. The significant recovery in margins from the beauty business was driven by improved operational efficiency and recovery of prior year input cost increases.

 

DCC Mobility & Rehab made progress during the year and recorded a strong recovery in operating profit in the second half despite weak market conditions in Britain. The Australian business in particular had an excellent year.

 

In spite of a continuing challenging trading environment, particularly in Ireland, DCC Healthcare is well placed to achieve profit growth in the year to 31 March 2011. In particular, the developing opportunities in value added distribution services in Britain and the enhanced operational capability of DCC Health & Beauty Solutions provide a strong platform for growth.

 

 

DCC Environmental
	2010	2009	Change on prior year
			Reported	Constant Currency
Revenue	€77.4m	€81.8m	-5.4%	-0.2%
Operating profit	€9.3m	€10.2m	-9.1%	-2.6%
Operating margin	12.0%	12.5%
Return on total capital employed	9.7%	12.9%

 

While operating profit declined in DCC Environmental in the year ended 31 March 2010, the second half saw a return to profit growth relative to the same period last year. The British business grew its operating profit strongly in the year, however the trading environment remained particularly difficult in Ireland.

 

The business in Britain was successful in attracting new customers and drove greater operating efficiencies through cost reductions and increased rates of recycling, although it continued to suffer from reduced waste volumes from the construction sector. The business also benefited from a recovery in recyclate prices as the year progressed. In December 2009, DCC Environmental acquired Tank Cleaning Services, based in the North East of England, which, whilst modest in scale, represents a platform to grow the hazardous business in England.

 

Trading was very difficult in Ireland particularly in those areas of the business with exposure to the construction sector.

 

In January 2010, DCC announced the reorganisation of its British environmental operations (the William Tracey Group and Wastecycle) with the formation of a new holding company which now owns all of DCC's British environmental businesses. The holding company is owned 70% by DCC and 30% by Michael Tracey, the managing director of the business.

 

DCC Environmental anticipates strong operating profit growth in the current year, driven by the British business which is expected to benefit from its investment in upgraded recycling equipment and in additional sales resources. Operating profit will also benefit from the consolidation of 100% of the William Tracey Group for the full year (previously 50%).

 

DCC Food & Beverage
	2010	2009	Change on prior year
			Reported	Constant Currency
Revenue	€275.0m	€305.0m	-9.8%	-8.4%
Operating profit	€8.5m	€12.1m	-29.8%	-29.5%
Operating margin	3.1%	3.9%
Return on total capital employed	10.2%	14.1%

 

Overall trading conditions for DCC Food & Beverage were extremely challenging resulting in a decline in operating profit in the year to 31 March 2010 of 29.8%. The rate of decline slowed significantly in the second half to 12.8% compared to 40.6% in the first half.

 

The Indulgence and Healthfood businesses in Ireland were impacted by difficult economic and trading conditions. The downturn in the economy has resulted in consumers investing more time and effort seeking out cheaper product offerings and spending less on food and beverages. Weakness in the sterling exchange rate resulted in the direct sourcing of product from Britain by retailers and increased cross border shopping. These factors, along with increased competition in the market, resulted in price deflation. Throughout the year the businesses achieved cost reductions, however these only partly mitigated the impact of reduced sales and margins.

 

The Frozen and Chilled Logistics business performed satisfactorily in this difficult market through its focus on operational efficiencies.

 

While DCC Food & Beverage anticipates a continuation of the difficult trading environment, a return to operating profit growth in the year to 31 March 2011 is expected.

 

Annual Report and Annual General Meeting

DCC's 2010 Annual Report will be published in June 2010. The Company's Annual General Meeting will be held at 11:00 am on Friday 16 July 2010 in The Four Seasons Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.

 

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 risks and uncertainties. DCC believes that its expectations and assumptions with respect to these forward-looking statements are reasonable, however because they involve risk and uncertainty, which are in some cases beyond DCC's control, actual results or performance may differ materially from those expressed or implied by such forward-looking statements.

 

Presentation of results and dial-in facility

There will be a presentation of these results to analysts and investors/fund managers in Dublin at 9.00 am today. The slides for this presentation can be downloaded from DCC's website www.dcc.ie. A dial-in facility will be available for this meeting:

 

Ireland: 01 2421074

 

International: +44 208 974 7940

 

Passcode: 110192

 

This announcement and further information on DCC is available at www.dcc.ie

 

Group Income Statement

for the year ended 31 March 2010

			2010				2009
			Pre exceptionals	Exceptionals (note 5)	Total		Pre  exceptionals	Exceptionals (note 5)	Total
	Notes		€'000	€'000	€'000		€'000	€'000	€'000
Revenue	4		6,724,971	-	6,724,971		6,400,126	-	6,400,126
Cost of sales			(6,054,577)	-	(6,054,577)		(5,735,419)	-	(5,735,419)
Gross profit			670,394	-	670,394		664,707	-	664,707
Administration expenses			(234,181)	-	(234,181)		(244,227)	-	(244,227)
Selling and distribution expenses			(251,118)	-	(251,118)		(252,307)	-	(252,307)
Other operating income			9,703	827	10,530		14,320	6,176	20,496
Other operating expenses			(1,965)	(10,591)	(12,556)		(2,097)	(26,015)	(28,112)
Operating profit before amortisation of intangible assets			192,833	(9,764)	183,069		180,396	(19,839)	160,557
Amortisation of intangible assets			(6,150)	-	(6,150)		(5,719)	-	(5,719)
Operating profit	4		186,683	(9,764)	176,919		174,677	(19,839)	154,838
Finance costs			(17,983)	(1,285)	(19,268)		(41,262)	-	(41,262)
Finance income			7,098	-	7,098		20,152	3,919	24,071
Share of associates' profit after tax			152	-	152		168	-	168
Profit before tax			175,950	(11,049)	164,901		153,735	(15,920)	137,815
Income tax expense			(33,207)	-	(33,207)		(19,436)	(1,500)	(20,936)
Profit after tax for the financial year		142,743		(11,049)	131,694		134,299	(17,420)	116,879
Profit attributable to:
Owners of the Parent					130,803				116,314
Minority interest					891				565
					131,694				116,879
Earnings per ordinary share - Basic	6				158.76c				142.36c
Diluted	6				157.92c				141.36c
Adjusted earnings per ordinary share -
Basic	6				177.98c				169.13c
Diluted	6				177.04c				167.93c

Group Statement of Comprehensive Income

for the year ended 31 March 2010

 

			2010		2009
			€'000		€'000
Group profit for the financial year			131,694		116,879
Other comprehensive income:
Currency translation effects			23,353		(85,812)
Group defined benefit pension obligations:
- actuarial loss			(1,595)		(9,517)
- movement in deferred tax asset			861		911
Gains/(losses) relating to cash flow hedges			986		(1,600)
Movement in deferred tax liability on cash flow hedges			(107)		204
Other comprehensive income/(expense) for the financial year, net of tax			23,498		(95,814)
Total comprehensive income for the financial year			155,192		21,065
Attributable to:
Owners of the Parent			154,212		20,500
Minority interest			980		565
			155,192		21,065

Group Balance Sheet

as at 31 March 2010

 

			2010		2009
		Note	€'000		€'000
ASSETS
Non-current assets
Property, plant and equipment			358,096		319,301
Intangible assets			595,090		443,188
Investments in associates			2,393		2,208
Deferred income tax assets			12,166		9,435
Derivative financial instruments			101,921		128,313
			1,069,666		902,445
Current assets
Inventories			234,898		208,759
Trade and other receivables			922,019		672,782
Derivative financial instruments			1,343		322
Cash and cash equivalents			714,917		426,789
			1,873,177		1,308,652
Total assets			2,942,843		2,211,097
EQUITY
Capital and reserves attributable to owners of the Parent
Share capital			22,057		22,057
Share premium			124,687		124,687
Other reserves - share options			9,148		7,807
Cash flow hedge reserve			(295)		(1,174)
Foreign currency translation reserve			(129,772)		(153,036)
Other reserves			1,400		1,400
Retained earnings			806,452		720,909
			833,677		722,650
Minority interest			3,249		3,581
Total equity			836,926		726,231
LIABILITIES
Non-current liabilities
Borrowings			793,663		525,405
Derivative financial instruments			19,331		17,372
Deferred income tax liabilities			23,479		15,827
Retirement benefit obligations			23,690		29,498
Provisions for liabilities and charges			11,429		5,309
Deferred acquisition consideration			49,351		15,057
Government grants			3,678		1,995
			924,621		610,463
Current liabilities
Trade and other payables			1,039,641		696,294
Current income tax liabilities			71,699		54,948
Borrowings			58,169		101,657
Derivative financial instruments			557		1,660
Provisions for liabilities and charges			6,372		13,754
Deferred acquisition consideration			4,858		6,090
			1,181,296		874,403
Total liabilities			2,105,917		1,484,866
Total equity and liabilities			2,942,843		2,211,097
Net debt included above		9	(53,539)		(90,670)

Group Statement of Changes in Equity

 

 

 

For the year ended 31 March 2010	Attributable to owners of the Parent
	Equity	Share		Other
	share	premium	Retained	reserves		Minority	Total
	capital	account	earnings	(note 8)	Total	interest	equity
	€'000	€'000	€'000	€'000	€'000	€'000	€'000
At 1 April 2009	22,057	124,687	720,909	(145,003)	722,650	3,581	726,231
Profit for the financial year	-	-	130,803	-	130,803	891	131,694
Other comprehensive income/(expense):
Currency translation	-	-	-	23,264	23,264	89	23,353
Group defined benefit pension obligations:
- actuarial loss	-	-	(1,595)	-	(1,595)	-	(1,595)
- movement in deferred tax asset	-	-	861	-	861	-	861
Gains relating to cash flow hedges	-	-	-	986	986	-	986
Movement in deferred tax liability on cash flow hedges	-	-	-	(107)	(107)	-	(107)
Total comprehensive income	-	-	130,069	24,143	154,212	980	155,192
Re-issue of treasury shares	-	-	7,657	-	7,657	-	7,657
Share based payment	-	-	-	1,341	1,341	-	1,341
Dividends	-	-	(52,183)	-	(52,183)	-	(52,183)
Other movements in minority interest	-	-	-	-	-	(1,312)	(1,312)
At 31 March 2010	22,057	124,687	806,452	(119,519)	833,677	3,249	836,926

 

 

For the year ended 31 March 2009	Attributable to owners of the Parent
	Equity	Share		Other
	share	premium	Retained	reserves		Minority	Total
	capital	account	earnings	(note 8)	Total	interest	equity
	€'000	€'000	€'000	€'000	€'000	€'000	€'000
At 1 April 2008	22,057	124,687	650,871	(58,951)	738,664	3,771	742,435
Profit for the financial year	-	-	116,314	-	116,314	565	116,879
Other comprehensive income/(expense):
Currency translation	-	-	-	(85,812)	(85,812)	-	(85,812)
Group defined benefit pension obligations:
- actuarial loss	-	-	(9,517)	-	(9,517)	-	(9,517)
- movement in deferred tax asset	-	-	911	-	911	-	911
Losses relating to cash flow hedges	-	-	-	(1,600)	(1,600)	-	(1,600)
Movement in deferred tax liability on cash flow hedges	-	-	-	204	204	-	204
Total comprehensive income	-	-	107,708	(87,208)	20,500	565	21,065
Re-issue of treasury shares	-	-	10,267	-	10,267	-	10,267
Share based payment	-	-	-	1,156	1,156	-	1,156
Dividends	-	-	(47,937)	-	(47,937)	-	(47,937)
Other movements in minority interest	-	-	-	-	-	(755)	(755)
At 31 March 2009	22,057	124,687	720,909	(145,003)	722,650	3,581	726,231

Group Cash Flow Statement

for the year ended 31 March 2010

			2010		2009
		Note	€'000		€'000
Cash flows from operating activities
Profit for the financial year			131,694		116,879
Add back non-operating (income)/expense
- tax			33,207		20,936
- share of profit from associates			(152)		(168)
- net operating exceptionals			9,764		19,839
- net finance costs			12,170		17,191
Group operating profit before exceptionals			186,683		174,677
Share-based payments expense			1,341		1,156
Depreciation			46,956		45,409
Amortisation of intangible assets			6,150		5,719
Profit on disposal of property, plant and equipment			(1,515)		(719)
Amortisation of government grants			(800)		(830)
Other			(12,872)		(539)
Decrease in working capital			71,814		80,001
Cash generated from operations			297,757		304,874
Exceptionals			(12,842)		(60,940)
Interest paid			(15,980)		(38,274)
Income tax paid			(20,548)		(14,147)
Net cash flows from operating activities			248,387		191,513
Investing activities
Inflows
Proceeds from disposal of property, plant and equipment			9,831		5,484
Government grants received			1,799		1,130
Proceeds on disposal of associate			827		8,481
Interest received			3,507		16,417
			15,964		31,512
Outflows
Purchase of property, plant and equipment			(47,268)		(56,970)
Acquisition of subsidiaries			(129,515)		(89,725)
Deferred acquisition consideration paid			(4,127)		(11,987)
			(180,910)		(158,682)
Net cash flows from investing activities			(164,946)		(127,170)
Financing activities
Inflows
Re-issue of treasury shares			7,657		10,267
Increase in finance lease liabilities			1,035		-
Increase in interest-bearing loans and borrowings			293,568		84,348
			302,260		94,615
Outflows
Repayment of interest-bearing loans and borrowings			(43,424)		(92,938)
Repayment of finance lease liabilities			(618)		(1,129)
Dividends paid to owners of the Parent		7	(52,183)		(47,937)
Dividends paid to minority interests			(275)		(766)
			(96,500)		(142,770)
Net cash flows from financing activities			205,760		(48,155)
Change in cash and cash equivalents			289,201		16,188
Translation adjustment			10,243		(36,717)
Cash and cash equivalents at beginning of year			375,517		396,046
Cash and cash equivalents at end of year			674,961		375,517
Cash and cash equivalents consists of:
Cash and short term bank deposits			714,917		426,789
Overdrafts			(39,956)		(51,272)
			674,961		375,517

Notes to the Preliminary Results

for the year ended 31 March 2010

 

1. Basis of Preparation

 

The financial information, from the Group Income Statement to Note 15, contained in this preliminary results statement has been extracted from the Group financial statements for the year ended 31 March 2010 and is presented in euro, 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 2010 and their report was unqualified. The financial information for the year ended 31 March 2009 represents an abbreviated 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 Irish Stock Exchange and the accounting policies that the Group has adopted for 2010 and are consistent with those applied in the prior year except as otherwise set out below:

 

Adoption of new IFRS

A number of new IFRS and interpretations of the International Financial Reporting Interpretations Committee became effective for the Group's 2010 financial statements. The main changes are as follows:

·; IFRS 8 Operating Segments. IFRS 8 replaces IAS 14 and uses a 'management approach' under which segment information is presented on the same basis as that used for internal reporting purposes. Adoption of IFRS 8 has not resulted in any changes to the basis of segmentation or to the basis for measurement of operating profit employed in compiling the consolidated financial statements.

·; Amendment to IAS 1 Presentation of Financial Statements (Revised). This standard requires information in the financial statements to be aggregated on the basis of shared characteristics and to introduce a statement of comprehensive income which sets out all items of income and expense (that is, all non-owner changes in equity). Entities have a choice as to whether they present comprehensive income within a single statement or in two statements. The Group has elected to present two statements; an Income Statement and a Statement of Comprehensive Income.

 

The Group has not applied IFRS 3 Revised Business Combinations in its financial statements for 2010. This standard will become effective for all Group business combinations from 1 April 2010.

 

 

2. Statutory Accounts

 

The financial information included in this report does not constitute full statutory financial statements but has been derived from the Group financial statements for the year ended 31 March 2010 which were approved by the Board of Directors on 17 May 2010.

 

 

3. Reporting Currency

 

The Group's financial statements are prepared in euro denoted by the symbol €. The exchange rates used in translating sterling balance sheet and income statement amounts were as follows:

 

	2010		2009
	€1=Stg£		€1=Stg£
Balance sheet (closing rate)	0.889		0.930
Income statement (average rate)	0.887		0.826

 

4. Segmental Reporting

 

For management purposes, the Group is primarily organised into five main operating segments: DCC Energy, DCC SerCom, DCC Healthcare, DCC Environmental and DCC Food & Beverage.

(a) By business segment
	Year ended 31 March 2010

DCC DCC DCC DCC DCC Food

Energy SerCom Healthcare Environmental & Beverage Unallocated Total

	€'000		€'000		€'000		€'000		€'000		€'000			€'000
Segment revenue	4,420,122		1,618,455		334,044		77,366		274,984		-			6,724,971
Operating profit*	113,105		40,835		21,143		9,297		8,453		-			192,833
Amortisation of intangible assets	(4,510)		(318)		(394)		(799)		(129)		-			(6,150)
Net operating exceptionals (note 5)	(4,195)		(1,051)		(897)		-		(3,621)		-			(9,764)
Operating profit	104,400		39,466		19,852		8,498		4,703		-			176,919
	Year ended 31 March 2009

	DCC Energy		DCC SerCom		DCC Healthcare		DCC Environmental		DCC Food & Beverage			Unallocated	Total
	€'000		€'000		€'000		€'000		€'000		€'000		€'000
Segment revenue	4,130,842		1,551,316		331,223		81,772		304,973		-		6,400,126
Operating profit*	100,694		40,138		17,300		10,224		12,040		-		180,396
Amortisation of intangible assets	(2,830)		(882)		(704)		(807)		(496)		-		(5,719)
Net operating exceptionals (note 5)	(5,803)		(2,768)		(6,077)		(467)		(3,974)		(750)		(19,839)
Operating profit	92,061		36,488		10,519		8,950		7,570		(750)		154,838

 

* Operating profit before amortisation of intangible assets and net operating exceptionals

 

 

(b) By geography

 

Year ended 31 March 2010

 

Republic of Rest of

Ireland UK the World Total

							€'000		€'000		€'000		€'000
Segment revenue							1,107,364		4,748,268		869,339		6,724,971
Operating profit*							34,191		133,361		25,281		192,833
Amortisation of intangible assets							(962)		(4,317)		(871)		(6,150)
Net operating exceptionals (note 5)							(3,175)		(5,429)		(1,160)		(9,764)
Operating profit							30,054		123,615		23,250		176,919

 

Year ended 31 March 2009

Republic of Rest of

Ireland UK the World Total

							€'000		€'000		€'000		€'000
Segment revenue							1,004,169		4,819,165		576,792		6,400,126
Operating profit*							44,277		121,580		14,539		180,396
Amortisation of intangible assets							(1,741)		(3,887)		(91)		(5,719)
Net operating exceptionals (note 5)							(4,867)		(11,145)		(3,827)		(19,839)
Operating profit							37,669		106,548		10,621		154,838

 

* Operating profit before amortisation of intangible assets and net operating exceptionals

 

5. Exceptionals

 

	2010		2009
	€'000		€'000
Restructuring costs and other	(8,683)		(14,536)
Impairment of goodwill	(1,908)		(2,433)
Profit on disposal of associate	827		6,176
Closure of Days Healthcare Germany	-		(9,046)
Operating exceptional items	(9,764)		(19,839)
Mark to market gains (included in interest)	(1,285)		3,919
Net exceptional items before taxation	(11,049)		(15,920)
Exceptional deferred taxation charge	-		(1,500)
Net exceptional items after taxation	(11,049)		(17,420)

 

Exceptional restructuring costs, mainly comprising redundancy costs, were incurred in relation to recently acquired and existing Group businesses.

 

There was a non-cash goodwill impairment charge. An impairment review is performed annually for each cash-generating unit to which a carrying amount of goodwill has been allocated. The Group has written down the carrying value of goodwill amounts in relation to certain DCC Food & Beverage subsidiaries and accordingly a charge of €1.908 million has been taken in the year ended 31 March 2010.

 

Most of the Group's debt has been raised in the US Private Placement debt market and swapped, using long term interest, currency and cross currency derivatives, to floating rate sterling and euro. Under IAS 39, after "marking to market" swaps designated as fair value hedges and the related fixed rate debt, the level of ineffectiveness is taken to the Income Statement.

 

  

6. Earnings per Ordinary Share and Adjusted Earnings per Ordinary Share

 

	2010		2009
	€'000		€'000
Profit attributable to owners of the Parent	130,803		116,314
Amortisation of intangible assets after tax	4,787		4,448
Exceptionals after tax (note 5)	11,049		17,420
Adjusted profit after taxation and minority interests	146,639		138,182
Basic earnings per ordinary share	cent		cent
Basic earnings per ordinary share	158.76c		142.36c
Adjusted basic earnings per ordinary share*	177.98c		169.13c
Weighted average number of ordinary shares in issue ('000)	82,391		81,704
Diluted earnings per ordinary share	cent		cent
Diluted earnings per ordinary share	157.92c		141.36c
Adjusted diluted earnings per ordinary share*	177.04c		167.93c
Diluted weighted average number of ordinary shares in issue ('000)	82,830		82,284

 

* adjusted to exclude amortisation of intangible assets and exceptionals after tax.

 

 

7. Dividends

 

		2010		2009
		€'000		€'000
Interim 2009/2010 dividend of 23.74 cent per share (2008/2009: 22.61 cent per share)		19,526		18,564
Final 2008/2009 dividend of 39.73 cent per share (2007/2008: 36.12 cent per share)		32,657		29,373
		52,183		47,937

 

The Directors are proposing a final dividend in respect of the year ended 31 March 2010 of 43.70 cent per ordinary share (€36.273 million). This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.

 

 

8. Other Reserves

			Foreign
		Cash flow	currency
	Share	hedge	translation	Other
	options	reserve	reserve	reserves	Total
Group	€'000	€'000	€'000	€'000	€'000
At 1 April 2008	6,651	222	(67,224)	1,400	(58,951)
Currency translation	-	-	(85,812)	-	(85,812)
Cash flow hedges
- fair value losses in year	-	(7,023)	-	-	(7,023)
- tax on fair value losses	-	1,217	-	-	1,217
- transfers to sales	-	707	-	-	707
- transfers to cost of sales	-	4,716	-	-	4,716
- tax on transfers to income tax expense	-	(1,013)	-	-	(1,013)
Share based payment	1,156	-	-	-	1,156
At 31 March 2009	7,807	(1,174)	(153,036)	1,400	(145,003)
Currency translation	-	-	23,264	-	23,264
Cash flow hedges
- fair value gains in year	-	4,062	-	-	4,062
- tax on fair value gains	-	(926)	-	-	(926)
- transfers to sales	-	(180)	-	-	(180)
- transfers to cost of sales	-	(2,896)	-	-	(2,896)
- tax on transfers to income tax expense	-	819	-	-	819
Share based payment	1,341	-	-	-	1,341
At 31 March 2010	9,148	(295)	(129,772)	1,400	(119,519)

 

 

9. Analysis of Net Debt

	2010		2009
	€'000		€'000
Non-current assets:
Derivative financial instruments	101,921		128,313
Current assets:
Derivative financial instruments	1,343		322
Cash and cash equivalents	714,917		426,789
	716,260		427,111
Non-current liabilities:
Borrowings	(2,508)		(1,828)
Derivative financial instruments	(19,331)		(17,372)
Unsecured Notes due 2011 to 2022	(791,155)		(523,577)
	(812,994)		(542,777)
Current liabilities:
Borrowings	(58,169)		(101,657)
Derivative financial instruments	(557)		(1,660)
	(58,726)		(103,317)
Net debt	(53,539)		(90,670)

 

 

10. Retirement Benefit Obligations

 

The Group's defined benefit pension schemes' assets were measured at market value at 31 March 2010. The defined benefit pension schemes' liabilities at 31 March 2010 were updated to reflect material movements in underlying assumptions.

 

The deficit on the Group's retirement benefit obligations decreased to €23.690 million at 31 March 2010 from €29.498 million at 31 March 2009. The decrease in the deficit was primarily driven by favourable asset returns and contributions in excess of current service costs, in line with actuarial advice, which were somewhat offset by an increase in the valuation of pension liabilities due to a decrease in corporate bond yields used to value those liabilities.

 

  

11. Business Combinations

 

The principal acquisitions completed by the Group during the year, together with percentages acquired were as follows:

·; the acquisition of the trade, assets and goodwill of Shell's oil distribution business in Denmark, announced on 19 May 2009;

·; Bayford Oil Limited (100%): a UK based oil distribution business, announced on 1 October 2009;

·; Shell Direct Austria GmbH (100%): an Austrian fuel distribution business, announced on 10 November 2009;

·; Brogan Holdings Ltd ('Brogans') (100%): a UK based fuel distribution and fuel card business, announced on 14 December 2009; and

·; DCC Environmental Britain Limited (70%): the company which holds 100% of William Tracey Limited and Wastecycle Limited, announced on 21 January 2010.

 

The carrying amounts of the assets and liabilities acquired (excluding net cash acquired), determined in accordance with IFRS before completion of the business combinations, together with the fair value adjustments made to those carrying values were as follows:

 

	2010 €'000		2010 €'000		2010 €'000		2009 €'000
	Brogans		Others		Total		Total
Assets
Non-current assets
Property, plant and equipment	7,759		30,773		38,532		9,341
Intangible assets - other intangible assets	10,097		15,234		25,331		7,911
Deferred income tax assets	-		479		479		3,415
Total non-current assets	17,856		46,486		64,342		20,667
Current assets
Inventories	3,398		6,519		9,917		16,125
Trade and other receivables	26,888		59,877		86,765		113,140
Total current assets	30,286		66,396		96,682		129,265
Equity
Minority interest	-		1,037		1,037		(12)
Total equity	-		1,037		1,037		(12)
Liabilities
Non-current liabilities
Deferred income tax liabilities	(3,501)		(5,706)		(9,207)		(2,285)
Retirement benefit obligations	-		57		57		-
Provisions for liabilities and charges	-		(5,399)		(5,399)		-
Deferred acquisition consideration	-		(450)		(450)		-
Government grants	-		(650)		(650)		(6)
Total non-current liabilities	(3,501)		(12,148)		(15,649)		(2,291)
Current liabilities
Trade and other payables	(30,713)		(72,156)		(102,869)		(118,362)
Current income tax liabilities	(552)		(822)		(1,374)		(734)
Total current liabilities	(31,265)		(72,978)		(104,243)		(119,096)
Identifiable net assets acquired	13,376		28,793		42,169		28,533
Intangible assets - goodwill	34,805		88,289		123,094		69,896
Total consideration (enterprise value)	48,181		117,082		165,263		98,429
Satisfied by:
Cash	53,955		88,484		142,439		100,034
Net cash acquired	(5,774)		(7,150)		(12,924)		(10,309)
Net cash outflow	48,181		81,334		129,515		89,725
Deferred acquisition consideration	-		35,748		35,748		8,704
Total consideration	48,181		117,082		165,263		98,429

 

The acquisition of Brogans 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 value		Fair value adjustments		Fair value
Brogans	€'000		€'000		€'000
Non-current assets (excluding goodwill)	7,759		10,097		17,856
Current assets	30,286		-		30,286
Non-current liabilities and minority interest	(435)		(3,066)		(3,501)
Current liabilities	(31,265)		-		(31,265)
Identifiable net assets acquired	6,345		7,031		13,376
Goodwill arising on acquisition	41,836		(7,031)		34,805
Total consideration (enterprise value)	48,181		-		48,181

 

	Book value		Fair value adjustments		Fair value
Other acquisitions	€'000		€'000		€'000
Non-current assets (excluding goodwill)	31,252		15,234		46,486
Current assets	68,113		(1,717)		66,396
Non-current liabilities and minority interest	(6,076)		(5,035)		(11,111)
Current liabilities	(72,894)		(84)		(72,978)
Identifiable net assets acquired	20,395		8,398		28,793
Goodwill arising on acquisition	96,687		(8,398)		88,289
Total consideration (enterprise value)	117,082		-		117,082

 

	Book value		Fair value adjustments		Fair value
Total	€'000		€'000		€'000
Non-current assets (excluding goodwill)	39,011		25,331		64,342
Current assets	98,399		(1,717)		96,682
Non-current liabilities and minority interest	(6,511)		(8,101)		(14,612)
Current liabilities	(104,159)		(84)		(104,243)
Identifiable net assets acquired	26,740		15,429		42,169
Goodwill arising on acquisition	138,523		(15,429)		123,094
Total consideration (enterprise value)	165,263		-		165,263

 

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. Any amendments to these fair values within the twelve month timeframe from the date of acquisition will be disclosable in the 2011 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.

  

The total adjustments processed during the year to the fair value of business combinations completed during the year ended 31 March 2009 where those fair values were not readily determinable as at 31 March 2009 were as follows:

 

	Initial fair value assigned	Adjustments to  provisional fair values			Revised fair value
	€'000		€'000		€'000
Non-current assets (excluding goodwill)	20,667		-		20,667
Current assets	129,265		420		129,685
Non-current liabilities and minority interest	(2,303)		-		(2,303)
Current liabilities	(119,096)		-		(119,096)
Identifiable net assets acquired	28,533		420		28,953
Goodwill arising on acquisition	69,896		(420)		69,476
Total consideration (enterprise value)	98,429		-		98,429

 

 

The post-acquisition impact of business combinations completed during the year on Group profit for the financial year was as follows:

	2010 €'000		2009 €'000
Revenue	454,841		624,717
Cost of sales	(415,701)		(588,184)
Gross profit	39,140		36,533
Operating costs	(22,606)		(26,574)
	16,534		9,959
Operating exceptional items	(117)		(766)
Operating profit	16,417		9,193
Finance costs (net)	(512)		(86)
Profit before tax	15,905		9,107
Income tax expense	(3,891)		(2,199)
Group profit for the financial year	12,014		6,908

 

 

The revenue and profit of the Group for the financial period determined in accordance with IFRS as though the acquisition date for all business combinations effected during the year had been the beginning of that year would be as follows:

 

	2010 €'000		2009 €'000
Revenue	7,559,862		7,016,264
Group profit for the financial year	139,020		117,019

 

 

12. Seasonality of Operations

 

The Group's operations are significantly second-half weighted primarily due to a portion of the demand for DCC Energy's products being weather dependent and seasonal buying patterns in SerCom Distribution.

 

  

13. Related Party Transactions

 

As announced on 21 January 2010, DCC plc and Michael Tracey, the Managing Director of the William Tracey Group, formed a new holding company, DCC Environmental Britain Limited, which owns DCC's British environmental operations. Michael Tracey is a related party of DCC plc. Prior to the reorganisation DCC and Michael Tracey each owned 50% of the William Tracey Group and owned 90% and 10% respectively of Wastecycle Limited. In return for a consideration of Stg£8.455 million paid by DCC to Michael Tracey, both the William Tracey Group and Wastecycle became 100% subsidiaries of DCC Environmental Britain Limited which is owned 70% by DCC and 30% by Michael Tracey. Put and call options have been put in place over Michael Tracey's 30% shareholding in DCC Environmental Britain Limited to allow for the eventual sale of his shareholding to DCC at market value.

 

 

14. Events after the Balance Sheet Date

 

On 4 May 2010 the Group acquired 100% of F. Peart Limited ('Pearts'), a medium sized oil distribution business which operates from four locations in the north of England for a consideration of €15.0 million.

 

	Book value		Fair value adjustments		Fair value
Pearts	€'000		€'000		€'000
Non-current assets (excluding goodwill)	1,740		2,535		4,275
Current assets	15,658		-		15,658
Non-current liabilities and minority interest	(385)		(709)		(1,094)
Current liabilities	(15,217)		-		(15,217)
Identifiable net assets acquired	1,796		1,826		3,622
Goodwill arising on acquisition	13,186		(1,826)		11,360
Total consideration (enterprise value)	14,982		-		14,982

 

  

15. Board Approval

 

This announcement was approved by the Board of Directors of DCC plc on 17 May 2010.