DCC Regulatory News (DCC)

14 May 2013

DCC, the sales, marketing, distribution and business support services group, today announced its results for the year ended 31 March 2013.

Ø Revenue increased to €13 billion (+19.4% on a constant currency basis) driven by acquisitions, particularly in DCC Energy, and strong organic growth in DCC SerCom.

Ø Operating profit increased to €229 million (+21.3% on a constant currency basis) primarily reflecting the strong performances in DCC Energy, driven by a return to colder winter weather conditions compared to the very mild weather conditions in the prior year, and in DCC Healthcare, which benefited from acquisitions.

Ø Adjusted earnings per share up 26.0% on a constant currency basis and 32.6% on a reported basis.

Ø Proposed 11.4% increase in the final dividend to give a total full year dividend of 85.68 cent, an increase of 10.0% over the prior year. 19th consecutive year of dividend growth. 

Ø Excellent cash generation

o Operating cash flow of €325 million (€277 million in the prior year)

o Free cash flow of €198 million (€146 million in the prior year)

o Working capital days of 2.2, reduced from 2.5 days in the prior year.

Ø Increase in return on total capital employed to 15.6% driven by increased profit and strong working capital management.

Ø Record year for development activity with committed acquisition expenditure of €207 million, which has strengthened the market positions of a number of DCC's businesses.

Ø Successful debt fundraising completed in April 2013 raising $525 million (€404 million) in the US Private Placement market at attractive rates of interest. This funding, together with available cash resources and committed bank term facilities, ensures that the Group retains significant financial capacity to support its future growth.

Ø On 3 May 2013, the Group cancelled the listing of its shares on the Irish Stock Exchange while maintaining its Premium listing on the Official List of the United Kingdom Listing Authority. It is anticipated that DCC's shares will be included in the FTSE All-Share Index and the FTSE 250 Index from 24 June 2013.

Ø The Group anticipates strong growth in operating profit in the year to 31 March 2014.

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

"Group operating profit increased by 21.3% on a constant currency basis. Operating profit in DCC Energy, the Group's largest division, was significantly ahead of the prior year (48.0% ahead on a constant currency basis), reflecting the return to colder winter weather conditions compared to the very mild winter in the prior year. Operating profit in DCC SerCom, the Group's second largest division, was modestly ahead of the prior year, on a constant currency basis, with very strong growth in Britain in the mobile communications and tablet product categories. Operating profit in DCC Healthcare grew by 10.3% on a constant currency basis, benefiting from acquisitions in the current and prior year. Operating profit declined in DCC's two smaller divisions, DCC Environmental and DCC Food & Beverage.

The year was also one of significant development activity, in particular in DCC Energy and DCC Healthcare, with total capital deployed on acquisitions and net capital expenditure across the Group of €278 million.

The Board is recommending an increase of 11.4% in the final dividend to 56.20 cent per share which, when added to the interim dividend of 29.48 cent per share, gives a total dividend of 85.68 cent per share for the year, a 10.0% increase over the prior year. Over the last 19 years, since flotation, DCC has an unbroken record of dividend growth, at a compound annual growth rate of 14.7%.

With its move to a sole listing in London, DCC will, from now on, present its results in sterling.

The outlook for the year to 31 March 2014 is set against a continuing weak economic environment in its principal markets and the important assumption that there will be normal winter weather conditions. At this very early stage, the Group anticipates that its operating profit will be approximately 10% - 12% ahead of the prior year result which, in sterling, was £187 million. The incremental interest cost of the additional debt raised in April 2013 will temporarily hold back the growth in adjusted earnings per share to approximately 8% - 10% ahead of the prior year result, which in sterling, was 171 pence per share.

DCC retains a strong equity base, long term debt maturities and significant cash and committed bank resources which leave it well placed to continue the development of its business in existing and new geographies."

For reference, please contact:

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

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

Stephen Casey, Investor Relations Manager www.dcc.ie

Results

A summary of the Group's results for the year ended 31 March 2013 is as follows:

Overview of results

Revenue

Group revenue increased by 19.4%, on a constant currency basis, to €13 billion, primarily as a result of acquisitions in DCC Energy and strong organic growth in DCC SerCom. DCC Energy increased its sales volumes by 21.8%, with like for like volumes increasing by 2.3%. Excluding DCC Energy, Group revenue was 14.4% ahead of the prior year on a constant currency basis; most of this growth was organic and was driven by strong growth in DCC SerCom, particularly in Britain.

Operating profit

Group operating profit increased by 21.3% on a constant currency basis; approximately three quarters of this growth was organic, primarily reflecting a recovery in operating profit in DCC Energy.

Operating profit in DCC Energy, the Group's largest division, was significantly ahead of the prior year (48.0% ahead on a constant currency basis) reflecting the return to colder winter weather conditions compared to the very mild winter in the prior year as well as good development activity. The colder weather gave rise to increased heating related volumes, although commercial/industrial volumes were impacted by the weak economic environment.

Operating profit in DCC SerCom, the Group's second largest division, was modestly ahead of the prior year, on a constant currency basis, with very strong growth in Britain in the mobile communications and tablet product categories. Operating profit in DCC Healthcare grew by 10.3% on a constant currency basis, benefiting from acquisitions in the current and prior year.

Operating profit declined in DCC's two smaller divisions, DCC Environmental and DCC Food & Beverage.

Approximately 80% 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 £0.8154 = €1, compared to an average translation rate of £0.8684 = €1 for the prior year, a strengthening of 6%, which resulted in a positive translation impact on Group operating profit of €11.2 million. Consequently, on a reported basis, operating profit increased by 27.5%.

An analysis of the performance in each half of the year, on a constant currency basis, is shown below:

Finance costs (net)

Net finance costs decreased marginally to €17.3 million (2012: €17.9 million). Whilst average net debt during the year was €342 million compared to €248 million during the prior year, the average interest rate on the Group's debt was lower. Interest was covered 13.3 times by Group operating profit before amortisation of intangible assets (10.4 times in 2012).

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

Profit before net exceptional items, amortisation of intangible assets and tax of €211.9 million increased by 24.4% on a constant currency basis (by 31.0% on a reported basis).

Net exceptional charge and amortisation of intangible assets

The Group incurred a net exceptional charge of €31.2 million as follows:

The cash effect of the net exceptional charge was €30.9 million in the year ended 31 March 2013.

The Group incurred an exceptional charge of €20.7 million in relation to the restructuring of acquired and existing businesses. Most of this related to the planned integration into DCC Energy's existing operations of certain oil distribution assets previously owned by Total and of the BP UK LPG business, following the clearance of these acquisitions by the relevant competition authorities.

Acquisition and related costs of €14.9 million include the professional and tax costs (such as stamp duty) relating to the evaluation and completion of acquisitions. These costs also include the legal and other professional costs relating to the review and ultimate clearance by the relevant competition authorities of the Total and BP UK LPG acquisitions.

The net exceptional credit primarily relates to deferred acquisition consideration overprovided in previous years of €6.8 million less an IAS 39 ineffectiveness charge of €1.7 million.

The charge for the amortisation of acquisition related intangible assets increased from €11.4 million to €17.7 million, primarily due to the acquisitions completed in the current year and the second half of the prior year.

Profit before tax

Profit before tax of €163.0 million increased by 24.7% on a reported basis.

Taxation

The effective tax rate for the Group decreased to 17% compared to 18% in the previous year, primarily reflecting a reduction in the UK corporation tax rate.

Adjusted earnings per share

Adjusted earnings per share of 209.96 cent increased by 26.0% on a constant currency basis (32.6% on a reported basis).

Dividend

The Board is recommending an increase of 11.4% in the final dividend to 56.20 cent per share which, when added to the interim dividend of 29.48 cent per share, gives a total dividend of 85.68 cent per share for the year, a 10.0% increase over the total prior year dividend. The dividend is covered 2.5 times by adjusted earnings per share (2.1 times in 2012). It is proposed to pay the final dividend on 25 July 2013 to shareholders on the register at the close of business on 24 May 2013. Over the last 19 years, since flotation, DCC has an unbroken record of dividend growth, at a compound annual growth rate of 14.7%.

This is the last dividend which DCC will declare in euro. Subsequent dividends will be declared in sterling; however, DCC will offer shareholders the option of receiving their dividends in euro.

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

Operating cash flow in 2013 was €324.5 million compared to €277.3 million in 2012. Working capital was reduced by €34.6 million despite a €2.3 billion increase in revenue, with overall working capital days decreasing to 2.2 days at 31 March 2013 from 2.5 days at 31 March 2012.

After interest and tax payments and net capital expenditure, free cash flow amounted to €198.0 million compared to €146.0 million in the prior year.

Return on total capital employed

The Group's return on total capital employed increased from 14.2% to 15.6%, driven primarily by the increase in the Group's operating profit, particularly in DCC Energy and strong working capital management.

Acquisition and Capital Expenditure

Acquisition and capital expenditure in the year ended 31 March 2013 amounted to €277.7 million as follows:

Acquisitions and disposals

Committed acquisition expenditure in the year ended 31 March 2013 amounted to €207.2 million. The cash outflow on acquisitions in the year of €206.2 million includes the cash outlay on those acquisitions completed during the year and the payment of deferred and contingent acquisition consideration amounts which had previously been provided for.

§ DCC Energy

DCC Energy made significant strategic progress in expanding the scale and geographic presence of its LPG distribution business, committing circa €100 million to three acquisitions in Britain, Scandinavia and the Benelux region.

·; On 28 September 2012, DCC Energy acquired BP's LPG distribution business in Britain. This business supplies a wide range of industrial, commercial and domestic customers with an annual volume of approximately 87,000 tonnes of bulk and cylinder LPG and is highly complementary to Flogas, DCC's existing LPG business in Britain (which has annual sales volumes of approximately 190,000 tonnes). Following clearance of this acquisition by the Office of Fair Trading on 11 January 2013, this business is now being integrated into Flogas, having previously been the subject of a hold separate arrangement.

·; On 31 October 2012, DCC Energy acquired BP's LPG distribution business in the Netherlands, together with the trade and assets of BP's smaller LPG distribution business in north Belgium ("Benegas"). Benegas is one of the leading suppliers of LPG in the Netherlands, selling approximately 55,000 tonnes per annum of bulk, cylinder and aerosol LPG to a broad range of industrial, commercial and domestic customers.

·; On 9 December 2012, DCC Energy acquired the trade, fixed assets, stock and goodwill of the industrial LPG business of Statoil Fuel & Retail ASA in Sweden and Norway ("SFR LPG"). SFR LPG is the leading distributor of bulk LPG to industrial and commercial customers in Sweden and Norway and sells approximately 260,000 tonnes of LPG per annum. SFR LPG has now been rebranded as Flogas. This acquisition, together with DCC Energy's existing oil distribution businesses in Denmark and Sweden, has significantly increased the scale of DCC Energy's activities in Scandinavia.

The acquisitions of Benegas and SFR LPG have extended DCC's LPG distribution business for the first time beyond Britain and Ireland. These transactions follow acquisitions in recent years in oil distribution in Austria, Denmark and Sweden in pursuit of DCC Energy's vision to be the leading oil and LPG sales, marketing and distribution business in Europe.

Separately, the acquisition completed on 31 October 2011 of certain oil distribution assets in the UK previously owned by Total, which was also subject to a hold separate arrangement, was formally cleared by the UK Competition Commission on 4 September 2012 and is now being integrated into DCC Energy's UK oil distribution activities.

§ DCC SerCom

DCC SerCom made two modest acquisitions in line with its strategy to expand its range of IT and communications products. In May 2012, DCC SerCom acquired Go Telecom BV, a small Dutch business providing products and services in unified communications (including hardware, software and services for audio, video and telepresence conferencing), and in September 2012 it acquired a small distributor of Apple products in Ireland.

On 29 June 2012, DCC SerCom disposed of its Enterprise distribution business, Altimate Group SA.

§ DCC Healthcare

In line with its strategy, DCC Healthcare has significantly increased the scale of its business, particularly in pharma.

·; On 29 June 2012, DCC Healthcare broadened the range of services it provides to brand owners in the health & beauty sector and expanded its European customer base when it acquired Vitamex Manufacturing AB (formerly Midsona Manufacturing AB) ("Vitamex"). Vitamex provides product development, registration, manufacturing and packing services to a range of leading Swedish and international consumer healthcare and health & beauty brand owners.

·; On 27 February 2013, DCC Healthcare acquired Kent Pharmaceuticals (Holdings) Limited ("Kent Pharma"), a leading British generic pharmaceuticals company. The acquisition of Kent Pharma has brought a highly complementary product portfolio, product licence ownership and strong relationships in the British retail pharmacy channel. DCC Healthcare is combining Kent Pharma with its existing pharma activities to create a substantial generic pharma business with a leading position in the British market. In the near term, the enlarged pharma product portfolio and increased sales and marketing resource will generate growth opportunities for DCC Healthcare in Britain. Over time, the enhanced pharma regulatory and business development capability will also create opportunities for sales development in other geographic markets, in particular within the EU and in the Middle East and North Africa region. The combined business will provide a strong platform for further product in-licensing and bolt-on acquisition opportunities.

Capital expenditure

Net capital expenditure in the year of €70.5 million (2012: €65.6 million) compares to a depreciation charge of €66.5 million (2012: €55.4 million).

Financial strength

DCC's financial position remains very strong, well funded and highly liquid. At 31 March 2013 the Group had net debt of €219.9 million and total equity of €1.06 billion. In April 2013, the Group successfully completed a debt fundraising in the US Private Placement market raising $525 million (€404.1 million) at attractive rates of interest and with maturity terms of seven, ten and twelve years (average maturity of ten years). Pending deployment of these funds on acquisitions and future debt repayments, the funds raised add to DCC's cash resources and increase the average maturity on all of the Group's debt to just over six years.

The Group's strong funding and liquidity position at 31 March 2013, adjusted for the above fundraising which was completed on 25 April 2013, is summarised as follows:

Key financial ratios (as of 31 March 2013), including the principal financial covenants included in the Group's various lending agreements, are as follows:

The April 2013 debt fundraising together with available cash resources and committed bank term loan facilities ensures that the Group retains significant financial capacity to support its future plans. Pending the deployment of this cash on scheduled debt repayments and acquisition and development opportunities, the Group will incur an annual interest holding cost on this incremental debt. However, raising these funds at this time has taken advantage of relatively good market conditions well in advance of the Group's scheduled debt maturities of €285 million over the next two years.

Listing Arrangements

Following the completion of a review of the listing arrangements for DCC's shares, the Board determined, as announced on 27 February 2013, that it was appropriate for DCC to seek admission to the FTSE UK Index Series. This entailed cancelling the listing of the Company's shares on the Irish Stock Exchange ("ISE") while maintaining the Premium listing of DCC's shares on the Official List of the United Kingdom Listing Authority.

With effect from the close of business on 3 May 2013, DCC's listing on the Official List of the ISE was cancelled. DCC continues to anticipate that it should be included in the FTSE All-Share Index and the FTSE 250 Index from 24 June 2013.

These changes will not have any impact on the domicile or operations of DCC plc. The Company will remain incorporated, headquartered and tax resident in Ireland.

Reporting Currency

With effect from the start of the Group's financial year to 31 March 2014, DCC will present its results in sterling. The Board believes that this change will help to provide a clearer understanding of DCC's financial performance by more closely reflecting the geographic profile of its operations. Given the current composition of the Group's activities, this change is expected to reduce the impact of currency movements on reported results.

Accordingly, the results for the year ended 31 March 2013, as set out in this announcement, are the last set of results which DCC is presenting in euro. This preliminary results statement includes on pages 32 to 35 summary financial information presented in sterling for the year ended 31 March 2013, together with prior year comparatives. DCC's interim results for the six months to 30 September 2013 and subsequent results will be presented in sterling only.

Outlook

The outlook for the year to 31 March 2014 is set against a continuing weak economic environment in the group's principal markets and the important assumption that there will be normal winter weather conditions. At this very early stage, the Group anticipates that its operating profit will be approximately 10% - 12% ahead of the prior year result which, in sterling, was £187 million. The incremental interest cost of the additional debt raised in April 2013 will temporarily hold back the growth in adjusted earnings per share to approximately 8% - 10% ahead of the prior year result, which in sterling, was 171 pence per share.

Operating review

DCC Energy had an excellent year with operating profit 48.0% ahead of the prior year on a constant currency basis. The business benefited from organic profit growth, primarily driven by a return to colder winter weather conditions, and also from good development activity.

DCC Energy sold 9.6 billion litres of product during the year, an increase of 21.8% over the prior year, driven predominantly by acquisitions. Volumes were 2.3% ahead of the prior year on a like for like basis. Heating volumes increased by approximately 8% as average temperatures during the key winter months in Britain were 1.4 degrees cooler than the 10 year average and materially colder than the prior year although, with the exception of March, the winter had few prolonged cold periods. Overall volumes were impacted somewhat by the weak economic environment and the sustained high price of product.

The oil business in Britain and Ireland rebounded strongly from the very difficult prior year, benefiting from the colder temperatures and strong growth in transport fuels, particularly through fuelcards. The commercial and industrial sectors of the market proved challenging given the difficult economic environment. The unconditional clearance by the Competition Commission of the acquisition of certain oil distribution assets in the UK previously owned by Total paves the way for DCC Energy to continue to pursue its objective of increasing its share of the oil distribution market in Britain. DCC Energy's oil businesses in continental Europe also performed strongly, driven by the benefit of acquisitions. In the second half of the year, the business established a start-up operation in Bavaria in Germany and since the year end it has also acquired a small oil distribution business in Bavaria. DCC Energy now has oil distribution operations in six countries.

The LPG business had an excellent year achieving strong organic volume growth, reflecting the colder weather conditions and good market share growth in the commercial and industrial sectors of the market. The business also benefited from a more favourable product pricing environment.

From a development perspective, it was an excellent year for the LPG business with DCC Energy committing circa €100 million to the expansion of its LPG activities through the acquisitions of BP's businesses in Britain, the Netherlands and Belgium and of Statoil Fuel & Retail's business in Scandinavia. The clearance by the Office of Fair Trading of the acquisition of the BP LPG business in Britain will enable DCC Energy to integrate this business with its existing operations in Britain during the first quarter of the current financial year. These acquisitions significantly increased the scale and geographic scope of DCC Energy's LPG business in Europe. DCC Energy now operates LPG businesses in six countries with market leading positions in the Netherlands, Norway and Sweden and strong number two positions in Britain and Ireland.

* Excluding DCC SerCom's Enterprise distribution business which was disposed of in June 2012

DCC SerCom's operating profits increased by 1.3% on a constant currency basis. DCC SerCom achieved excellent organic growth in mobile devices in Britain and in its supply chain management activity, where it benefited from a significant finished goods fulfilment programme. This growth more than offset the effect of the decline in the market for home entertainment products in Britain and Ireland.

DCC SerCom achieved organic revenue growth of 16.8% on a constant currency basis, reflecting very strong growth in IT and communications products and the supply chain fulfilment contract noted above. The change in the product mix, with a lower proportion of home entertainment products in Britain and AV products in France along with a higher percentage of tablet and computing products, gave rise to a reduction in the overall operating margin of the business.

The business in Britain, which accounted for 72% of revenue, achieved very strong organic growth in its IT and communications product sectors, particularly in mobile devices such as smartphones and tablet computers. This reflects the rapid market acceptance of new computing and leisure form factors and the investment made in recent years to position the business as a significant participant in this market. DCC SerCom remains well placed to benefit from the ongoing demand from consumers and businesses to access content and data on a broad range of converged technology devices.

The home entertainment market in the UK declined by over 15% in the calendar year 2012, with the market for console gaming software and hardware declining by over 25% in the period due to a combination of factors, including a cyclical decline in anticipation of the next generation of consoles due to be launched in the current financial year. This decline had a negative impact on DCC SerCom's businesses in Britain and in Ireland. However, DCC SerCom has continued to develop its product and service portfolio in this market and is well placed to benefit from an upswing in the console gaming cycle.

The business in France achieved organic volume growth of 4.6% but profits declined due to a change in the product mix as the market for certain higher margin AV accessories declined.

DCC SerCom's supply chain management activity had a very strong year reflecting the contribution from a significant finished goods fulfilment contract, which is scheduled to wind down in the first half of the financial year to 31 March 2014.

DCC Healthcare made good progress during the year, growing its operating profit by 10.3% on a constant currency basis and significantly enhancing its growth platform in the pharma sector through the acquisition of Kent Pharma.

DCC Vital (formerly DCC Hospital Supplies & Services), which is involved in the sales, marketing and distribution of pharmaceuticals and medical devices and the provision of value added logistics services, had a good year with the impact of a challenging market in Ireland offset by acquisitions in both the current and prior year.

DCC Vital's pharma business achieved excellent profit growth. It generated good organic growth in the British retail pharmacy channel, especially in respiratory and pain management products, and benefited from a number of NHS contract wins for antibiotic products for the hospital sector. The result included a modest first time contribution from Kent Pharma, acquired in February 2013. Kent Pharma has a strong portfolio of own licence antibiotics and other generic pharmaceuticals together with an excellent sales network into the British retail pharmacy channel. Its strengths are highly complementary to DCC Vital's pre-existing pharma activities which were more weighted to intravenous pharmaceuticals for the hospital sector with a geographical bias towards Ireland. The integration of Kent Pharma is progressing well.

DCC Vital's devices business achieved strong growth in Britain, boosted by a first full year contribution from Forth Medical Group, a specialist distributor of neurological, orthopaedic and niche surgical devices acquired in February 2012. This offset the impact on its Irish activities of the budgetary constraints within the public healthcare system which have resulted in continued price pressure, especially in more commoditised medical and surgical products. DCC Vital's British value added logistics business recorded good profit growth for the year and benefited from continued market interest in its range of customised stock management and just-in-time logistics solutions for hospitals and manufacturers.

DCC Health & Beauty Solutions, a leading provider of outsourced services to brand owners in the health and beauty sectors, achieved excellent organic profit growth and benefited from a modest first time contribution from Vitamex Manufacturing, acquired in June 2012. Growth was achieved across both the nutrition (vitamins and health supplements) and beauty categories. The business benefited from successful new product development for existing British and European customers and from a number of new business wins, including in healthcare creams and liquids.

DCC Environmental experienced a decline in operating profit with difficult market conditions in both Britain and Ireland.

In Britain, the non hazardous waste business was impacted by increased price competition driven by a reduction in the volume of waste nationally and also by a reduction in income from the sale of recyclates as commodity prices fell. Notwithstanding this difficult backdrop, the business in Scotland performed well with operating profit ahead of the prior year. Price competition was also intense in the hazardous sector, which suffered from a reduction in demand due to the challenging economic climate.

As anticipated, operating profit in DCC Food & Beverage declined due to the full year effect of the loss of a major contract in the frozen and chilled logistics business in the second half of the prior year and a reduction in the profitability of the wine business in Britain.

The branded distribution activities in Ireland delivered growth in revenue and operating profit driven by a good performance in company owned brands. The Kelkin healthy foods brand continued to grow sales, particularly in the gluten free product category.

DCC's 2013 Annual Report will be published in June 2013. The Company's Annual General Meeting will be held at 11.00 am on Friday 19 July 2013 in The Four Seasons Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.

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 London at 11.00 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: +353 (0) 1 486 0914

UK / International: +44 (0) 20 7136 2055

Passcode: 6843800

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

Group Income Statement

for the year ended 31 March 2013

Group Statement of Comprehensive Income

for the year ended 31 March 2013

Group Balance Sheet

as at 31 March 2013

Group Statement of Changes in Equity

Group Cash Flow Statement

for the year ended 31 March 2013