DCC plc
Annual Report 2001

Plain-text annual report

Contents Adding Value in Marketing and Distribution DCC is a value added marketing and distribution group, which operates principally in growth segments of the IT, energy and healthcare markets. DCC holds strong market positions in the UK and Ireland and is expanding its IT and healthcare activities in Continental Europe. The Company's shares are quoted on the Irish and London stock exchanges. Contents Financial Highlights inside front cover Group at a Glance inside front flap DCC is diversified in the markets we address. We are highly focused in what we do - adding value in marketing and distribution. Procurement DCC builds enduring relationships with key suppliers and leading brand owners, driving superior volume growth. High quality operations DCC develops skilled management teams who drive consistent strong growth through: • Product focused sales teams • Excellent technical support • Effective use of IT • Focus on working capital • Strong cash generation Directors Chairman’s Statement Chief Executive/ Deputy Chairman’s Review Operating Review Financial Review Management Corporate Governance Report of the Directors Report on Directors’ Remuneration Statement of Directors’ Responsibilities Report of the Auditors Accounting Policies Financial Statements Notes to the Financial Statements Market penetration DCC's deep distribution reach penetrates a broad range of customers across market sectors. Group Directory Shareholder Information Corporate Information Index 2 4 6 10 20 24 26 28 30 34 35 37 40 45 74 77 79 80 Five Year Summary and Key Ratios inside back cover ANNUAL REPORT AND ACCOUNTS 2001 1 Directors Board of Directors Alex Spain: Chairman Alex Spain, B.Comm., F.C.A. (aged 68), is non-executive Chairman of DCC and is a director of a number of other companies. He was Managing Partner of KPMG in Ireland from 1977 to 1984. He is a former President of the Institute of Chartered Accountants in Ireland and a former Chairman of the Financial Services Industry Association in Ireland. Mr Spain joined the Board and became Chairman in 1976. Chairman of the Audit, Remuneration and Nomination committees Jim Flavin: Chief Executive/Deputy Chairman Jim Flavin, B.Comm., D.P.A., F.C.A. (aged 58), founded DCC in 1976 and is Chief Executive and Deputy Chairman. He has extensive experience in the areas of business development and corporate acquisitions. Prior to founding DCC, he worked as head of AIB Bank’s venture capital unit. Mr Flavin is also Deputy Chairman of Eircom plc. Member of the Nomination committee Tommy Breen Tommy Breen, B.Sc. (Econ), F.C.A., (aged 42), executive Director, joined DCC in 1985, having previously worked with KPMG. He is Managing Director of DCC SerCom. Mr Breen joined the Board in 2000. Tony Barry Tony Barry, Chartered Engineer (aged 66), non-executive Director, is a member of the Court of Bank of Ireland, Chairman of Greencore Group plc and a director of Ivernia West plc. He was Chairman of CRH plc from 1994 to May 2000, having previously been Chief Executive. He is a past President of The Irish Business and Employers’ Confederation. Mr Barry joined the Board in 1995. Member of the Audit, Remuneration and Nomination committees 2 ANNUAL REPORT AND ACCOUNTS 2001 Directors Morgan Crowe Morgan Crowe, Dip. Eng., M.B.A. (aged 56), executive Director, joined DCC in 1976, having previously worked with the Boeing Company in Seattle and with IBM in Dublin. He is Managing Director of DCC Healthcare. Mr Crowe joined the Board in 1979. Paddy Gallagher Paddy Gallagher, B.L., D.P.A. (aged 61), non-executive Director, retired as Head of Legal and Pensions Administration at Guinness Ireland Group in 2000. He previously worked with Aer Lingus, the Irish national airline, and is a former Chairman of the Irish Association of Pension Funds. He is a member of the Committee of Management of Irish Pension Fund Property Unit Trust. Mr Gallagher joined the Board in 1976. Member of the Audit, Remuneration and Nomination committees Kevin Murray Kevin Murray, B.E., F.C.A. (aged 42), executive Director, joined DCC in 1988, having previously worked with Shell Chemicals in London and Arthur Andersen in Dublin. He is Managing Director of DCC Energy and DCC Foods. Mr Murray joined the Board in 2000. Fergal O’Dwyer Fergal O’Dwyer, F.C.A. (aged 41), executive Director, joined DCC in 1989 having previously worked with KPMG in Johannesburg and Price Waterhouse in Dublin. He was appointed Chief Financial Officer in 1994. Mr O’Dwyer joined the Board in 2000. ANNUAL REPORT AND ACCOUNTS 2001 3 Chairman’s Statement Chairman’s Statement Results DCC again achieved excellent growth in the year to 31 March 2001. Turnover grew by 42.1% to s1.87 billion and operating profit increased by 24.3% to s91.7 million. Adjusted earnings per share increased by 23.1% to 84.7 cent. The return on tangible capital employed increased to 48.1% from 40.6% and inclusive of acquisition goodwill the return increased to 23.7% from 20.9%. Dividend The Directors are recommending a final dividend of 13.38 cent per share which, added to the interim dividend of 7.74 cent per share, gives a total dividend for the year of 21.12 cent per share. This represents an increase of 20.0% on the dividend of 17.60 cent per share paid in respect of the year ended 31 March 2000. The dividend for the year is covered 4.0 times by adjusted earnings per share (2000: 3.9 times). The final dividend will be paid on 10 July 2001 to shareholders on the register at the close of business on 25 May 2001. 4 ANNUAL REPORT AND ACCOUNTS 2001 Chairman’s Statement Financial strength & share buy back operates throughout Britain and Ireland, is now the largest DCC has achieved excellent growth since its listing in 1994. distributor of fuel oils and distillates in Northern Ireland. Adjusted earnings per share have increased at a compound rate of 19.7% per annum over this period. Reflecting the high Corporate governance quality of the Group's earnings, DCC has also been strongly DCC is committed to pursuing best practice in relation to cash generative and had net cash at 31 March 2001 of D83.2 corporate governance matters. Following publication of the million. In light of this position, DCC availed of the opportunity Turnbull guidance for directors on internal control, Internal during the year to buy back 2.56 million of its own shares Control: Guidance for Directors on the Combined Code, the (representing 2.9% of its issued share capital) at D9.50 per Board is satisfied that the Group has effective ongoing share, costing D24.7 million in total. The share buy back was processes for identifying, evaluating and managing risks faced by the Group. The future The Group will continue to seek opportunities to invest both organically and by acquisition to exploit growth opportunities in its markets. Alex Spain Chairman 11 May 2001 earnings enhancing and has had a minimal impact on DCC's financial capacity. Selective share buy backs are intended to complement, rather than substitute for, the Group's capital investment and acquisition programmes. Development During the year a total of D74.2 million was invested in organic growth and acquisitions (2000: D52.3 million). The expenditure was incurred across the Group and included the extension of SerCom Distribution's UK warehousing and distribution hub. DCC's principal acquisition during the year was Fuel Services which has been successfully integrated with the Group‘s existing energy operations in Northern Ireland. As a result of the acquisition, DCC's energy division, which ANNUAL REPORT AND ACCOUNTS 2001 5 Chief Executive/Deputy Chairman’s Review Chief Executive/ Deputy Chairman’s Review Strong, consistent and high quality earnings growth DCC is committed to creating shareholder value through delivering consistent, long-term quality returns well in excess of our cost of capital. Compound annual growth in adjusted earnings per share over the last five years of 21.5% reflects well on DCC’s focus on growth markets and its disciplined and rigorous operating and financial controls. The "quality" of DCC’s earnings growth record is underscored by high and increasing returns on capital employed and excellent cash generation. It is interesting to note that since the listing of DCC in 1994 the growth and development of operations outside of the Republic of Ireland have generated the greater proportion of DCC’s earnings growth over that period. The table below sets out the geographical split of operating profit for the years ended 31 March 2001 and 2000. UK Other areas Republic of Ireland 2001 48% 6% 54% 46% 2000 44% 1% 45% 55% 100% 100% 6 ANNUAL REPORT AND ACCOUNTS 2001 Chief Executive/Deputy Chairman’s Review Core strengths and values internationally, both organically and by acquisition. Other Our core strengths and values are: activities in food, supply chain management services and • Organic growth – we are focused on recurring revenue house building generated 18% of DCC’s operating profit. While businesses operating in growth market sectors. smaller than the Group’s principal core divisions, these • Bolt-on acquisitions – we seek to augment organic growth businesses are of significant importance to DCC and we will with bolt-on acquisitions which can be integrated with or continue to strive for cost effective growth in each. complement existing operations, and which extend DCC’s reach in markets we know. DCC remains robust in the view that the ongoing pace of • High returns on capital employed – we like low working technological advances will continue to drive above average capital intensity businesses and we constantly focus on growth in the IT market into the long term. Furthermore, achieving high and increasing returns on capital employed. particular segments of the IT market, including storage and • Market sector diversity – we see our market sector diversity networking, will grow very strongly. This will benefit DCC’s as a great strength. specialist storage distributor Distrilogie, which has a strong • Focused activity – we apply our core skills and presence in Southern Europe, and the growing storage and competencies in value added marketing and distribution – networking business of DCC’s UK and Irish IT distribution focused sales teams, deep market knowledge, distribution operations. DCC’s business-to-business IT distribution model, reach, high quality service to vendors and customers and which is based on an excellent reputation with its vendors after sales service – in each of our market sectors. 94% of and reseller customer base, has consistently delivered Group revenues in the past year were generated through superior profit growth and returns. With a modest share of a business-to-business trading. large, fragmented European market, DCC’s proven strategy • Commercially adventurous but financially prudent – finally, leaves the Group well placed for continued strong growth. DCC seeks to be commercially adventurous while at the DCC has achieved consistently excellent returns on tangible same time financially prudent – financial prudence capital employed in its IT distribution business – 67.5% in the engenders corporate poise and stability and facilitates past year. appropriate risk taking. The recurring nature of profit and cash flows in the oil and LPG Focus on IT, energy and healthcare distribution sector have underpinned DCC’s energy division. In In the past year 82% of DCC’s operating profit was generated addition to a strong LPG distribution business in Ireland and from the Group’s activities in the IT, energy and healthcare the UK, DCC has, in recent years, built a significant presence in markets – up from 65% five years ago. Each of these markets the oil distribution sector in Ireland by developing excellent has good growth characteristics, which are discussed further supply relationships with oil majors and by identifying and below, and provide the opportunity for DCC to expand ANNUAL REPORT AND ACCOUNTS 2001 7 Chief Executive/Deputy Chairman’s Review successfully integrating value enhancing bolt-on acquisitions. Quality and best practice The expansion of the Group’s oil distribution operations into DCC promotes a quality culture through consistent the UK is now a key strategic aim of DCC’s energy business. improvement in all aspects of its business. A continuous focus Building on a strong relationship with BP, a key supplier in on key areas such as procurement, management development, Northern Ireland, DCC recently entered into a Heads of information technology, financial management and Agreement to acquire part of its commercial, agricultural and acquisitions contributes to improvements in operational and domestic oil business in Scotland and Northern England. The financial performance. UK oil distribution market is fragmented and this planned acquisition will establish a strong base from which DCC will In procurement, for example, DCC’s scale and group grow both organically and through bolt-on acquisitions in the purchasing expertise generates cost savings across many key British oil distribution market. DCC achieves high returns on overhead areas. In addition, DCC is leveraging the Group’s tangible capital employed and strong cash generation in its scale, financial strength and track record in securing new Energy division – return on tangible capital employed in the agencies and products for business units. past year was 44.8%. The healthcare market has excellent long-term growth best practice in all aspects of our business, is a perpetual one characteristics. It continues to benefit from a number of which drives continuous improvement in all areas of The ambition to be world class, through the achievement of significant underlying trends. These include an ageing DCC’s business. population in the developed world and increased government spending on healthcare. In addition, there is an increasing Information technology awareness of health issues among the general population. The effective use of information technology is an essential part DCC’s healthcare businesses in hospital supplies, mobility of DCC’s strategy to drive cost effective growth and maximise products and nutraceuticals should benefit from these key competitive advantage. The intelligent use of technology, trends. In this area also, DCC achieved an excellent return on including the selective implementation of Enterprise tangible capital employed in the past year of 43.3%. Resource Planning systems, is generating significant benefits for DCC’s businesses. 8 ANNUAL REPORT AND ACCOUNTS 2001 Chief Executive/Deputy Chairman’s Review Human resources corporate websites. The new website provides users with a Sustainability of superior performance depends more than flexible and easily navigable information resource on all anything on the quality of leadership and the engagement aspects of DCC. It incorporates an interactive share price and contribution of employees. DCC employs over 3,000 monitor, audio and video investor presentations and an people, led by entrepreneurial management teams and, extensive library of historical information which is constantly through its group leadership development processes, is updated with news releases and announcements. focused on optimising and developing DCC’s uniquely diverse talent bank of people. The fact that many employees Looking forward have equity interests in DCC motivates them to take an In these more uncertain times, DCC’s application of its core interest in the performance not just of their own business but skills in value added marketing and distribution in diverse that of the DCC Group as a whole. growth markets, combined with an immensely strong balance sheet, leaves DCC well positioned to continue its consistent Investor relations record of strong growth and excellent long-term DCC has a substantial international shareholder base which shareholder returns. is continuing to expand. Significant senior management resources are committed to communicating with the Jim Flavin investment community and DCC’s Investor Relations function Chief Executive/Deputy Chairman strives to ensure that the support the company provides is 11 May 2001 consistent with best international practice. Corporate websites are an increasingly important platform for communicating with the investment community. During the year, DCC’s website (www.dcc.ie)was redesigned following benchmarking against many of the best European and US ANNUAL REPORT AND ACCOUNTS 2001 9 Operating Review 10 ANNUAL REPORT AND ACCOUNTS 2001 Operating Review SerCom Distribution’s specialised telesales teams provide a proactive, product- focused service to it’s 8,000 customers across Europe. Operating Review (IT) SerCom Distribution This was another excellent year for SerCom Distribution with very strong Marketing and distributing a broad range of computer hardware and software products. • Britain: SerCom Distribution is a leading distributor of computer hardware, including performances in all operating subsidiaries. Distrilogie, the Continental European specialist storage equipment distributor, achieved excellent growth in its first full year of contribution. PCs, peripherals, consumables, networking The British hardware distribution business continued to and storage products, to its extensive computer reseller customer base. It is also the leading distributor of consumer software, produce excellent results in a highly competitive marketplace. Its key strengths of proactive, product-focused sales teams marketing and distributing business and and the breadth of its customer base contributed to good leisure software to retail outlets, mail order businesses and computer resellers. growth and consolidated its position as one of the leading distributors in Britain. A new specialist division in the high • Ireland: SerCom Distribution is one of the growth area of computer storage products was established country's leading IT distributors selling a broad range of major hardware and software brands. during the year. • Continental Europe: SerCom Distribution is the leading specialist distributor of high and The British software distribution business benefited from its focused strategy of specialising in consumer software mid-range storage solutions in France, with distribution and generated excellent profit growth. expanding operations in Spain and Portugal. ANNUAL REPORT AND ACCOUNTS 2001 11 Operating Review SerCom Distribution is constantly expanding its product portfolio. In the past 12 months it has broadened its offering in Personal Digital Assistant (PDA), mobile computing and storage products. The extension of the warehousing and distribution hub in Distrilogie had a strong performance in the year and will Altham, near Manchester, completed during the year, continue to benefit from the increasing demand for storage increased the logistics capacity of SerCom Distribution in products. The specialist service offered by Distrilogie is Britain by a factor of 2.5 times. valued by major vendors such as IBM and Sun and has enabled Distrilogie to attract additional suppliers such as The Irish business again produced excellent growth during the Compaq and Network Appliance. year. The company benefited from the significant investment in its new and larger distribution facility in Dublin which was SerCom Distribution completed in the previous year. This facilitated a further broadening of its product range, including the introduction of new server and storage products. Turnover Operating profit Operating margin Return on capital employed - excluding goodwill - including goodwill 2001 2000 E753.9m E31.2m 4.1% a542.3m a20.5m 3.8% +39.0% +52.5% 67.5% 33.9% 62.3% 33.6% 12 ANNUAL REPORT AND ACCOUNTS 2001 Operating Review Flogas has a 24% share of the fast growing UK autogas market. Energy Energy achieved strong organic growth and enhanced its position in the Marketing and distributing oil and liquefied petroleum gas (LPG) products in Ireland and Britain under DCC’s own Emo, Flogas and other local brands. Northern Ireland market through the acquisition of Fuel Services in July 2000. The increase in turnover reflects strong volume growth and higher selling prices, which were due to increases in the cost • Oil: DCC is a substantial and the fastest of oil and LPG - crude oil prices remained high throughout the growing player in the Irish oil distribution market (heating and transport oils); it has nationwide access to importation facilities. • LPG: DCC markets and distributes propane and butane products, including autogas; it has a leading market position in Ireland and a nationwide distribution network in Britain. year, exacerbated by the strength of the dollar. Extreme volatility in refined oil product prices at certain times in the year had a somewhat negative impact on the growth of oil profits. However, the volume increases drove excellent operating profit growth overall. Oil volumes grew substantially to in excess of 1 billion litres • Environmental Services: DCC is a waste with continued strong organic growth in the Republic of Ireland management services provider, principally to the Irish petrol retailing sector and to the industrial sector. and Northern Ireland. Fuel Services was acquired in July 2000 and was successfully integrated into DCC's existing operations ANNUAL REPORT AND ACCOUNTS 2001 13 Operating Review Emo Oil is Ireland’s fastest growing independent oil distributor and is a leading supplier of home heating oil in Dublin. in Northern Ireland, making DCC the leading marketer of fuel oil and distillates in this region. The continuing roll-out of the new Emo logo is generating increased brand awareness, particularly in the Republic of Ireland where DCC has a modest presence in the retail petrol market. LPG volumes showed satisfactory growth and margins improved as sales price increases were implemented in Energy response to increased product costs and the strengthening of the dollar. The use of LPG autogas as a transport fuel in Britain continues to develop as a result of government policy to promote its use as a more environmentally friendly fuel; DCC has a significant market share in this small but fast- growing market segment. Turnover Operating profit Operating margin Return on capital employed - excluding goodwill - including goodwill 2001 2000 E610.3m E23.6m 3.9% a369.8m a20.0m 5.4% +65.0% +17.8% 44.8% 21.0% 38.6% 19.0% 14 ANNUAL REPORT AND ACCOUNTS 2001 Operating Review Healthcare Marketing and distribution of mobility and rehabilitation equipment, hospital supplies and nutraceuticals. • Mobility and rehabilitation: DCC has a strong position in the UK mobility and rehabilitation market, with a growing presence in Continental Europe and the US, particularly in electrically powered scooters and powerchairs. • Hospital supplies: DCC is the leading supplier of medical, surgical and laboratory equipment and consumables to Irish healthcare sector. Fannin Healthcare’s highly trained and qualified sales teams provide extensive technical support to its customers in Irish hospitals and laboratories Healthcare had another year of excellent growth, all of which was organically generated. In mobility and rehabilitation, DCC increased its share of the British and German markets for powered mobility products. In order to exploit the opportunities presented by the continuing growth of the mobility and rehabilitation market, DCC has significantly augmented its management team in this area. DCC's British based nutraceuticals business achieved excellent • Nutraceuticals: DCC is a leading full-service sales and profit growth. DCC has increased the level of supplier of private label and branded nutraceuticals (vitamins and supplements) in Britain with a growing export customer base. DCC provides marketing, category management and contract manufacturing (tablets, hard-gel and soft-gel capsules) services. integration of the tablet manufacturing and soft gel ANNUAL REPORT AND ACCOUNTS 2001 15 Operating Review encapsulation businesses. This will provide a better platform supplies) was completed. This has consolidated Fannin from which to penetrate further the British and European Healthcare's leadership position both in the scale of its nutraceuticals markets. The loss of an important customer, with business and in the breadth of its product offering to effect from September next, will adversely impact the customers. The company is at an advanced stage in nutraceuticals business in the shorter term, but the longer term developing an e-commerce system, tailored to meet the outlook for the business and the sector continues to be positive. particular needs of Irish hospitals. DCC's Irish hospital supply business performed satisfactorily. During the year the integration of Fannin (medical and surgical supplies) and BM Browne (hospital laboratory Healthcare Turnover Operating profit Operating margin Return on capital employed - excluding goodwill - including goodwill DCC’s nutraceuticals operations provide a ‘one-stop shop’ service to its customers, from product development and manufacture, through to marketing and distribution. 2001 2000 E182.7m E20.3m 11.1% a155.6m a16.0m 10.3% +17.4% +27.4% 43.3% 19.1% 41.3% 16.8% DCC is the exclusive European distributor of the leading Shoprider range of powered scooters and powerchairs. Other Activities Other activities, including the food businesses and supply chain DCC's principal other activities comprise its management services, showed a modest reduction in profitability, food, supply chain management services and principally reflecting significant developmental investment in IT systems, house building businesses. skilled personnel and management resources in SerCom Solutions. • Food: DCC markets and distributes leading own and third party branded food and beverage products, focused on growth segments of the Irish food market, to an extensive retail and food-service customer base. Food - DCC's focus on higher growth segments of the Irish food market - including healthy foods, soft drinks, wine and snacks - generated sales growth of 13.7% to d182.4 million, • Supply Chain Management Services: SerCom with particularly good growth in the food service sector. DCC has a deep distribution reach, supplying a broad retail and food service customer base. During the year, this distribution reach was extended through investment in additional sales Solutions provides outsourced supply chain management solutions to leading global manufacturers in the IT and telecommunications sectors. • Other interests: DCC's principal other interest is its 49% shareholding in Manor Park Homebuilders, one of Ireland's leading house builders, which has a substantial land bank available for future development. 16 ANNUAL REPORT AND ACCOUNTS 2001 Operating Review KP, whose products have been successfully marketed in Ireland for many years by DCC, grew its market share further during the year. and marketing resources, including an expanded van sales force, which contributed to the strong sales performance. Operating profits were d8.5 million compared with d8.9 million in the prior year. Operating margins reduced due to the increased euro cost of sterling purchases, together with planned investment in additional sales and marketing resources. DCC’s product portfolio includes many leading food and beverage brands. Following the acquisition of the Robinsons agency last year, DCC is strengthening its share of the growing soft drinks market. ANNUAL REPORT AND ACCOUNTS 2001 17 Operating Review DCC markets and distributes an excellent range of wines including leading names such as Torres, Brown Brothers and Bollinger. Supply Chain Management Services - DCC's supply chain management services business, SerCom Solutions, continued to invest in the development of its business. This has included ® the installation of a new SAP system and a significant strengthening of the management team across all disciplines. Sales grew by 68.2% to d103.6 million. Operating profit was d2.8 million compared with d3.8 million in the prior year, reflecting the significant developmental investment in IT systems, skilled personnel and management resources. Other - Operating profit from other interests increased by 16.4% to d5.3 million. The principal other interest is DCC’s 49% shareholding in Manor Park Homebuilders, which has commenced operations on a major housing development at Clonee, west Dublin. Manor Park has a substantial land bank, which has been acquired at a very attractive cost relative to current market values, leaving it well placed for continued profit growth in the future. Other Activities Turnover Operating profit Operating margin Return on capital employed - excluding goodwill - including goodwill * continuing activities 2001 2000* E323.3m E16.6m 5.1% a248.4m a17.3m 7.0% +30.2% -4.2% 37.1% 21.8% 41.6% 23.7% SerCom Solutions manages the online sale and worldwide fulfillment of certain software upgrades for IBM. 18 ANNUAL REPORT AND ACCOUNTS 2001 Operating Review ANNUAL REPORT AND ACCOUNTS 2001 19 Financial Review Financial Review Delivering superior performance DCC is committed to creating shareholder value through delivering consistent, long-term returns in excess of our cost of capital. An investment of d1,000 in DCC on 1 April 1996, when combined with the reinvestment of dividends in DCC, grew to a value of d3,953 over the five years to 31 March 2001. This represents a compound annual increase of 31.6%, compared with compound annual growth in the ISEQ index of 18.1% over the same period. DCC’s focus on shareholder value aligns corporate and shareholder goals and drives decision making processes across the Group. The commitment to long-term value creation is reflected in DCC’s focus on driving organic growth and seeking complementary acquisition and development opportunities. Strong growth Excellent organic profit growth and a further increase in DCC’s high return on capital employed are the key features of DCC's results for the year ended 31 March 2001. Turnover of continuing activities grew by 42.1% to d1,870.1 million, while operating profit of continuing activities increased by 24.3% to d91.7 million. The chart below shows the breakdown of operating profit by division and a detailed Operating Review is set out on pages 10 to 19. 20 ANNUAL REPORT AND ACCOUNTS 2001 Financial Review Operating profit - Divisional analysis was 20.8 times (2000: 12.1 times). Profit before net exceptional gains, goodwill amortisation and tax rose by IT 34% Energy 26% 22.4% to d87.3 million. Dividend The total dividend for the year of 21.12 cent per share represents an increase of 20.0% over the previous year. The dividend is covered 4.0 times (2000: 3.9 times) by adjusted earnings per share. Taxation Other Activities 18% Healthcare 22% The Group's taxation charge on ordinary activities for the year represents an effective tax rate of 15.0%, unchanged from last The Group's operating margin of 4.9% compared with 5.6% in year. The effective tax rate reflects the impact of Irish the prior year. However, the main reason for the change was a manufacturing relief and the international spread of DCC's substantial increase in oil product costs and in the downstream profits. Manufacturing relief results in an effective tax rate of energy market profitability is driven by a contribution per litre 10% being applied to manufacturing profits in Ireland and this of product sold and not a percentage margin. arrangement will continue until 2010. The standard rate of corporation tax in Ireland, set at 20% on 1 January 2001, will be The Group's return on tangible capital employed increased to reduced on a phased basis to 12.5% by 1 January 2003. An 48.1% from 40.6% in 2000, while the return inclusive of analysis of the taxation charge is contained in note 11 to the acquisition goodwill increased to 23.7% from 20.9%. financial statements. The net interest charge reduced to d4.4 million from d6.4 million, reflecting strong operating cash flow generation and disposals made in the second half of last year. Interest cover ANNUAL REPORT AND ACCOUNTS 2001 21 Financial Review Cash flow Balance sheet DCC focuses on increasing operating cash flow to maximise DCC has a very strong balance sheet with shareholders’ funds shareholder value over the long-term. Operating cash flow is of d354.7 million at 31 March 2001 and net cash of d83.2 used to fund investment in existing operations, million. The composition of net cash at 31 March 2001 is complementary bolt-on acquisitions and dividend payments. shown in the following table. Cash flow from operating activities was excellent at d83.4 Balance Sheet million, compared with operating profits from subsidiaries of d82.8 million. Strong organic sales growth resulted in an increased investment in working capital of d19.9 million. Cash and term deposits Bank and other debt repayable 2001 E’m 2000 E’m 454.6 551.3 within one year (200.6) (191.8) Working capital efficiency remained excellent and equated to Bank and other debt repayable 13.2 days’ sales at the year end. after more than one year (65.8) (161.7) Unsecured notes due 2008/11 (105.0) (108.6) The table below sets out a summary of cash flows. Net cash 83.2 89.2 The Group's cash is analysed in note 22 to the financial statements. An analysis of DCC's debt at 31 March 2001, including currency, interest rates and maturity periods, is shown in notes 23 to 26 to the financial statements. Cash Flow Summary Inflows Operating cash flow Disposal proceeds Share issues (net) Outflows Capital expenditure (net) Acquisitions Acquisition of own shares Interest paid Taxation paid Dividends paid Net cash (outflow)/inflow Translation adjustment Movement in net cash/(debt) Opening net cash/(debt) Closing net cash 2001 E’m 2000 E’m 83.4 16.0 1.9 96.3 109.7 - 101.3 206.0 29.5 26.0 24.7 2.6 9.1 16.4 108.3 24.7 37.6 - 5.6 9.4 13.7 91.0 (7.0) 115.0 1.0 (5.5) (6.0) 109.5 89.2 83.2 (20.3) 89.2 22 ANNUAL REPORT AND ACCOUNTS 2001 Financial Review Treasury policy and management are sterling denominated. In order to protect shareholders' The principal objective of the Group's treasury policy is the funds from material variations due to sterling exchange minimisation of financial risk at reasonable cost. This policy is movements, a proportion of the Group’s sterling net reviewed and approved annually by the Board. The Group operating assets are hedged by an equivalent amount of does not take speculative positions but seeks, where sterling denominated borrowings. considered appropriate, to hedge underlying trading and asset/liability exposures by way of derivative financial Interest rate risk management: The Group finances its instruments (such as interest rate and currency swaps and operations through a mixture of retained profit, cash and forward contracts). DCC's Group Treasury function centrally borrowings. The Group borrows in certain currencies at manages the Group’s funding and liquidity requirements. both fixed and floating rates of interest and utilises interest Divisional and subsidiary management, in conjunction with rate swaps to manage the Group's exposure to interest Group Treasury, manage foreign currency and commodity rate fluctuations. price exposures within approved guidelines. An analysis of the Group's hedging positions is contained in note 27(b) to the Credit risk management: DCC transacts with a variety of financial statements. financial institutions for the purpose of placing deposits and entering into derivative contracts. The Group actively Currency risk management: DCC's reporting currency and monitors its credit exposure to each counterparty within that in which its share capital is denominated is the euro. guidelines approved by the Board. Due to the nature of the Group's activities, exposures arise in the course of ordinary trading to other currencies, Commodity price risk management: Commodity forwards, principally sterling and the US dollar. Trading foreign swaps and options are used to hedge potential price currency exposures are generally hedged by using forward movements in liquefied petroleum gas products and oil contracts to cover specific or estimated purchases and products purchased by the Group's energy businesses in receivables. Approximately half of the Group's operating Britain and Ireland. All such contracts are entered into with profits are sterling denominated and, where appropriate, counterparties approved by the Board and hedge projected hedges are put in place to minimise the related exchange future purchases or sales of the commodity in question, rate volatility. However, certain natural hedges also exist usually for a period not exceeding two months. within the Group as a proportion of the Group's interest payments and of purchases by certain of its Irish businesses ANNUAL REPORT AND ACCOUNTS 2001 23 Management Senior GroupManagement Jim Flavin Chief Executive/ Deputy Chairman Tommy Breen Morgan Crowe Kevin Murray Fergal O'Dwyer Managing Director Managing Director Managing Director Chief Financial Officer SerCom Healthcare Energy & Food Ann Keenan Head of Group Human Resources Donal Murphy Colman O’Keeffe Head of Group IT Deputy Managing Director Healthcare Michael Scholefield Finance Director Energy & Food Gerard Whyte Group Secretary and Head of Group Risk Management Senior Subsidiary Company Management IT Patrice Arzillier Directeur General Distrilogie Gordon McDowell Managing Director Micro Peripherals Healthcare Mike Davies Managing Director Primacy Healthcare Barry Leonard Managing Director Virtus Barry O’Neill Managing Director Days Medical Aids Energy Paul Donnelly Managing Director Gem Distribution Sam Chambers Managing Director Paddy Kilmartin Managing Director DCC Energy Northern Ireland Flogas UK Paul White Pat Mercer Daniel Murray Managing Director Managing Director Managing Director Sharptext Flogas Ireland Emo Oil Declan Ryan Managing Director Atlas Environmental Other Activities Richard Godfrey Managing Director Designate Ken Peare DCC Nutraceuticals Food Managing Director Bernard Rooney Managing Director Processing Robt. Roberts Kelkin Stephen O’Connor General Manager EuroCaps Michael Scanlon Managing Director Broderick Bros. Dan Teeters President Supply Chain Management Services Kevin Henry and Ultan Reilly DCC Shoprider Inc Joint Managing Directors SerCom Solutions Frank Tiemann Reg Witheridge Managing Director Designate Managing Director CasaCare Thompson & Capper Peter Woods Chief Executive Fannin Healthcare & Deputy Managing Director DCC Healthcare 24 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 25 Directors’ Report & Financial Statements Directors' Report & Financial Statements 2001 ANNUAL REPORT AND ACCOUNTS 2001 25 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 26 Corporate Governance The Board of Directors Directors: The Board of DCC consists of five executive and three non-executive Directors and the roles of the Chairman and Chief Executive are separate. The Board has appointed Tony Barry as the senior independent Director. Brief biographies of the Directors are set out with their photographs on pages 2 and 3. All of the Directors bring independent judgement to bear on issues of strategy, risk, performance, resources, key appointments and standards. Directors are subject to re-election at least every three years. Board Procedures: The Board holds regular meetings (normally at least six per annum) and there is contact between meetings as required in order to progress the Group’s business. The Directors receive regular and timely information in a form and quality appropriate to enable the Board to discharge its duties. The Board has a formal schedule of matters specifically reserved to it for decision, which covers key areas of the Group’s business including approval of financial statements, budgets (including capital expenditure), acquisitions and dividends. Certain additional matters are delegated to Board Committees. There is an established procedure for Directors to take independent professional advice in the furtherance of their duties if they consider this necessary. All Directors have access to the advice and services of the Company Secretary who is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. The Board gives consideration as to whether new Directors require additional training for their role. Board Committees: There are three Board Committees with formal terms of reference: the Audit Committee, the Remuneration Committee and the Nomination Committee. The Audit Committee and the Remuneration Committee comprise the three non-executive Directors. The Nomination Committee comprises the non- executive Directors and the Chief Executive/Deputy Chairman. All of the non-executive Directors are considered by the Board to be independent of management and free of any relationships which could interfere with the exercise of their independent judgement. Directors’ Remuneration The Board’s report on Directors’ Remuneration is set out on pages 30 to 33. Relations with Shareholders DCC attaches considerable importance to shareholder communications and has a well established investor relations function. There is regular dialogue with institutional investors and shareholders as well as presentations after the interim and preliminary results. Results announcements are sent promptly to all shareholders and published on the Company’s web site at www.dcc.ie. The website contains additional information for investors which is regularly updated. At the Company’s Annual General Meeting the Chief Executive/Deputy Chairman makes a presentation and answers questions on the Group’s business and its performance during the prior year. The 2000 Annual Report and Notice of AGM were sent to shareholders 20 working days before the meeting and the level of proxy votes cast on each resolution, and the numbers for and against, were announced at the meeting. Similar arrangements have been made for the 2001 Annual Report and AGM. The 2001 AGM will be held on 6 July 2001 at 11am at the Burlington Hotel, Upper Leeson Street, Dublin 4. Accountability and Audit Audit Committee The written terms of reference of the Audit Committee deal clearly with its authority and duties which include, inter alia, consideration of the appointment of the external auditors and their fees and review of the scope and results of the work performed by the DCC Risk Committee and by both the Group Risk Management function (incorporating Internal Audit) and the external auditors. Internal Control The Board is ultimately responsible for the Group’s system of internal control and for reviewing its effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss. 26 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 27 Corporate Governance In accordance with the Turnbull guidance for directors on internal control, Internal Control: Guidance for Directors on the Combined Code, the Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group, that it has been in place for the year under review and up to the date of approval of the financial statements, and that this process is regularly reviewed by the Board. The key risk management and internal control procedures, which are supported by detailed controls and processes, include: • • • • • an organisation structure with clearly defined lines of authority and accountability; a comprehensive system of financial reporting involving budgeting, monthly reporting and variance analysis; a Risk Committee, comprising Group senior management, whose main role is to keep under review and report to the Audit Committee of the Board on the principal risks facing the Group, the controls in place to manage those risks and the monitoring procedures; an independent Group Risk Management function (incorporating Internal Audit); and a formally constituted Audit Committee which reviews the operation of the Risk Committee and the Group Risk Management function, liaises with the external auditors and reviews the Group’s internal control systems. The Board has reviewed the effectiveness of the Group’s system of internal control. This review covered all controls including financial, operational and compliance controls and risk management. Going Concern After making enquiries, the Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Company and the Group as a whole have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Directors’ responsibility for preparing the financial statements is explained on page 34 and the reporting responsibilities of the auditors is set out in their report on pages 35 and 36. Compliance DCC has complied, during the year ended 31 March 2001, with all of the Principles of Good Governance and Code of Best Practice set out in the Combined Code. ANNUAL REPORT AND ACCOUNTS 2001 27 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 28 Report of the Directors For the year ended 31 March 2001 The Directors present their report and the audited financial statements for the year ended 31 March 2001. Principal Activities DCC is a value added marketing and distribution group which operates principally in the IT, energy and healthcare markets. DCC holds strong positions in growth market sectors in the UK and Ireland and is expanding its IT and healthcare activities in Continental Europe. A summary of the Group’s activities is set out on pages 10 to 18. Subsidiary and Associated Companies Details of the Company’s principal subsidiaries are set out on pages 74 to 76. Details of its principal associated undertakings are set out on page 56, in note 18 to the financial statements. Results and Business Review The profit for the financial year attributable to Group shareholders amounted to €68.1 million as set out in the Consolidated Profit and Loss Account on page 40. The Chairman’s Statement on pages 4 and 5, the Chief Executive/Deputy Chairman’s Review on pages 6 to 9, the Financial Review on pages 20 to 23 and the Operating Review on pages 10 to 19 contain a review of the development of the Group’s business during the year, of the state of affairs of the business at 31 March 2001, of recent events and of likely future developments. Dividends An interim dividend of 7.74 cent per share, amounting to €6.7 million was paid on 8 December 2000. The Directors recommend the payment of a final dividend of 13.38 cent per share, amounting to €11.4 million. Subject to shareholders’ approval at the Annual General Meeting on 6 July 2001, this dividend will be paid on 10 July 2001 to shareholders on the register on 25 May 2001. The total dividend for the year ended 31 March 2001 amounts to 21.12 cent per share, a total of €18.1 million. The balance of profit attributable to Group shareholders, which is retained in the business, amounts to €49.9 million. Research and Development Certain Group companies carry out development work aimed at improving the quality, competitiveness and range of their products. This expenditure is not material in relation to the size of the Group and is written off to the profit and loss account as it is incurred. Substantial Shareholdings At 11 May 2001, the Company had been advised of the following interests in its issued share capital: No. of €0.25 Ordinary Shares % of Issued Share Capital FMR Corp. and its direct and indirect subsidiaries* Bank of Ireland Asset Management Limited** Merril Lynch Investment Managers Limited Allied Irish Banks plc and its subsidiaries** 3i Group plc Aberdeen Asset Managers Limited 9,402,894 9,208,877 4,599,678 4,408,253 3,340,796 2,706,475 10.7% 10.4% 5.2% 5.0% 3.8% 3.1% Under Irish and UK law the shares are held by non-beneficial holders. * ** Notified as non-beneficial interests. Apart from these holdings, the Company has not been notified of any other interest of 3% or more in its issued ordinary share capital. 28 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 29 Report of the Directors For the year ended 31 March 2001 Directors There was no change in the Directors of the Company during the year. The names of the Directors and a short biographical note on each Director appear on pages 2 and 3. In accordance with Article 80 of the Articles of Association, Alex Spain, Jim Flavin and Paddy Gallagher retire by rotation at the 2001 Annual General Meeting and, being eligible, offer themselves for re-election. None of the retiring Directors has a service contract with the Company or any member of the Group with a notice period in excess of one year or with provisions for predetermined compensation on termination which exceeds one year’s salary and benefits in kind. Details of the Directors’ interests in the share capital of the Company are set out in the Board’s Report on Directors’ Remuneration on pages 30 to 33. Health and Safety It is the policy of the Group to ensure the safety, health and welfare of employees by maintaining safe places and systems of work. This policy is based on the requirements of the Safety, Health and Welfare at Work Act, 1989. Safety statements have been prepared by each of the relevant companies in the Group and the policies set out in these statements are kept under regular review. Euro DCC’s preparation for euro changeover is proceeding satisfactorily with most companies in the Group already in a position to engage in dual currency trading. Costs of preparation for the euro are not expected to have a significant impact on the Group’s financial position or its trading activities. Political Contributions There were no political contributions which would require disclosure under the Electoral Act, 1997. Auditors The auditors, PricewaterhouseCoopers, will continue in office in accordance with the provisions of Section 160(2) of the Companies Act, 1963. Alex Spain, Jim Flavin, Directors DCC House, Stillorgan, Blackrock, Co. Dublin 11 May 2001 ANNUAL REPORT AND ACCOUNTS 2001 29 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 30 Report on Directors’ Remuneration Remuneration Committee The Remuneration Committee comprises the three independent non-executive Directors - Alex Spain (Chairman), Tony Barry and Paddy Gallagher. The terms of reference of the Remuneration Committee are to determine the remuneration packages of the executive Directors and to approve the grant of share options. The Chief Executive is consulted about remuneration proposals for the other executive Directors and the Remuneration Committee is authorised to obtain access to professional advice if deemed desirable. Executive Directors’ Remuneration The Company’s remuneration policy recognises that employment and remuneration conditions for the Group’s senior executives must properly reward and motivate them to perform in the best interests of the shareholders. The typical elements of the remuneration package for executive Directors are basic salary, performance related remuneration consisting of annual performance related bonuses and share options, pension benefits and a company car. Salaries The salaries of executive Directors are reviewed annually on 1 January having regard to personal performance, Company performance and competitive market practice. No fees are payable to executive Directors. Performance Related Bonuses Performance related bonuses are paid, in respect of the financial year to 31 March, to executive Directors as to a maximum of one half based on trading performance and to a maximum of one half based on corporate development in their areas of responsibility. The total bonus potential for the year ended 31 March 2001 for individual Directors ranged from 5% to 33% of basic salary. Share Options Executive Directors and other senior executives participate in the DCC plc 1998 Employee Share Option Scheme, which was approved by shareholders in 1998. The Scheme encourages identification with shareholders’ interests by enabling senior management to build, over time, a shareholding in the Company which is material to their net worth. The percentage of share capital which can be issued under the Scheme, the phasing of the grant of options and the individual grant limits comply with guidelines published by the institutional investment associations. The Scheme provides for the grant of both basic and second tier options, in each case up to a maximum of 5% of the Company’s issued share capital. Basic tier options may not normally be exercised earlier than three years from the date of grant nor second tier options earlier than five years from the date of grant. Basic tier options may normally only be exercised if there has been growth in the adjusted earnings per share of the Company equivalent to the increase in the Consumer Price Index plus 2%, compound, per annum over the period following the date of grant. Second tier options may normally only be exercised if the growth in the adjusted earnings per share over the previous five years is such as would place the Company in the top quartile of companies on the ISEQ index in terms of comparison of growth in adjusted earnings per share and if there has been growth in the adjusted earnings per share of the Company equivalent to the increase in the Consumer Price Index plus 10%, compound, per annum in that period. Additional information in relation to the DCC plc 1998 Employee Share Option Scheme appears in note 32 on page 66 of the financial statements. Directors are encouraged to hold their options beyond the earliest exercise date. Information on share options held by each Director and details of exercise prices and dates are set out on page 33. Pension Benefits Pensions for executive Directors are calculated on pensionable salary (being salary plus 5% bonus) - no benefit elements are included - and aim to provide for two thirds of pensionable salary at normal retirement date. 30 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 31 Report on Directors’ Remuneration Non-Executive Directors’ Remuneration The remuneration of the non-executive Directors is determined by the Board. The fees paid to non-executive Directors reflect their experience and ability and the time demands of their Board and Board Committee duties. A pension is funded for the Chairman, based on his annual fee, to provide a 1/60th accrual for each year of pensionable service. Directors’ Service Agreements Other than for the Chief Executive, there are no service agreements between any Director of the Company and the Company or any of its subsidiaries. The Chief Executive’s service agreement provides for one year’s notice of termination by the Company. Directors’ Remuneration The remuneration payable in respect of Directors who held office for any part of the financial year is as follows: Salary and Fees1 Bonus 2000 2001 €’000 €’000 2000 2001 €’000 €’000 Benefits2 2000 2001 €’000 €’000 Pension Contribution3 2000 2001 €’000 €’000 Total 2000 2001 €’000 €’000 Executive Directors Jim Flavin Morgan Crowe Tommy Breen * Kevin Murray * Fergal O’Dwyer * Total for executive Directors 538 230 198 198 197 473 214 28 28 28 25 29 57 57 45 - - 4 4 3 30 17 17 17 15 31 16 2 2 2 161 72 62 62 64 135 61 7 7 8 754 348 334 334 321 639 291 41 41 41 1,361 771 213 11 96 53 421 218 2,091 1,053 Non-executive Directors Alex Spain Tony Barry Paddy Gallagher 79 32 32 73 29 29 Total for non-executive Directors 143 131 Pension payment to retired Director Total - - - - - - - - - - - - - - - - 22 - - 22 - - 101 32 32 95 29 29 22 22 165 153 15 15 2,271 1,221 * In respect of the year ended 31 March 2000, remuneration for Tommy Breen, Kevin Murray and Fergal O’Dwyer is included only for the period from the date of their appointment to the Board, on 7 February 2000, to 31 March 2000. Notes 1 Fees are only payable to non-executive Directors and include Chairman’s and Board Committee fees. 2 Benefits relate principally to the use of a company car. 3 Pension contributions represent payments to a defined benefit pension scheme, in accordance with actuarial advice, to provide pension benefits. ANNUAL REPORT AND ACCOUNTS 2001 31 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 32 Report on Directors’ Remuneration Directors’ Pensions The table below shows the increase in the accrued pension benefits to which the Directors have become entitled during the year ended 31 March 2001 and the transfer value of the increase in accrued benefit: Increase in accrued pension benefit (excl inflation) during the year €’000 Transfer value equivalent to the increase in accrued pension benefit €’000 Accumulated accrued pension benefit at year end €’000 48 14 11 11 10 94 4 715 189 67 62 56 1,089 50 334 127 51 46 42 600 36 Executive Directors Jim Flavin Morgan Crowe Tommy Breen Kevin Murray Fergal O’Dwyer Total Non-executive Chairman Alex Spain The transfer value has been calculated on the basis of actuarial advice in accordance with Actuarial Guidance Note GN11. The transfer value represents a liability of a pension scheme operated by the Group and not a sum paid to or due to the Director noted. Directors’ and Company Secretary’s Interests The interests of the Directors and the Company Secretary (including their respective family interests) in the share capital of DCC plc at 31 March 2001, together with their interests at 31 March 2000 (or date of appointment, if later), were: Alex Spain Jim Flavin Tony Barry Tommy Breen Morgan Crowe Paddy Gallagher Kevin Murray Fergal O’Dwyer Gerard Whyte (Secretary) * At date of appointment – 28 August 2000 No. of Ordinary Shares At 31 March 2001 At 31 March 2000 15,634 2,456,033 7,000 211,512 807,640 2,540 212,306 212,506 124,667 15,634 2,284,355 7,000 173,362 731,339 1,040 164,618 113,765 124,667* All of the above interests were beneficially owned. There were no changes in the interests of the Directors and the Company Secretary between 31 March 2001 and 11 May 2001. Apart from the interests disclosed above neither the Directors nor the Company Secretary were interested at any time in the year in the share capital or loan stock of the Company or other Group undertakings. 32 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 33 Report on Directors’ Remuneration Directors’ Share Options The following are details of share options granted to Directors under the DCC plc 1998 Employee Share Option Scheme: Executive Directors At 31 March 2000 and 2001 Weighted Average Exercise Price € Normal Exercise Period Jim Flavin Basic Tier Second Tier Basic Tier Second Tier Morgan Crowe Basic Tier Second Tier Basic Tier Second Tier Tommy Breen Basic Tier Second Tier Basic Tier Second Tier Kevin Murray Basic Tier Second Tier Basic Tier Second Tier Fergal O’Dwyer Basic Tier Second Tier Basic Tier Second Tier 200,000 200,000 75,000 75,000 550,000 50,000 50,000 50,000 50,000 200,000 45,000 45,000 50,000 50,000 190,000 45,000 45,000 50,000 50,000 190,000 45,000 45,000 50,000 50,000 190,000 7.206 7.206 7.000 7.000 7.004 7.009 7.000 7.000 7.091 7.096 7.000 7.000 7.091 7.096 7.000 7.000 7.091 7.096 7.000 7.000 June 2001 - Nov 2008 June 2003 - Nov 2008 Nov 2002 - Nov 2009 Nov 2004 - Nov 2009 June 2001 - Nov 2008 June 2003 - Nov 2008 Nov 2002 - Nov 2009 Nov 2004 - Nov 2009 June 2001 - Nov 2008 June 2003 - Nov 2008 Nov 2002 - Nov 2009 Nov 2004 - Nov 2009 June 2001 - Nov 2008 June 2003 - Nov 2008 Nov 2002 - Nov 2009 Nov 2004 - Nov 2009 June 2001 - Nov 2008 June 2003 - Nov 2008 Nov 2002 - Nov 2009 Nov 2004 - Nov 2009 No options were granted to, exercised by or allowed to lapse by Directors under the DCC plc 1998 Employee Share Option Scheme during the year. The market price of DCC shares on 31 March 2001 was €10.55 and the range during the year was €9.00 to €12.35. The Company’s Register of Directors’ Interests (which is open to inspection) contains full details of Directors’ shareholdings and share options. The following are details of share options exercised during the year which had been granted to Directors under the terminated 1986 DCC Executive Share Option Scheme which applied before DCC became a public company: Executive Directors 31 March 2000 Jim Flavin Morgan Crowe Tommy Breen Kevin Murray Fergal O’Dwyer 225,000 100,000 50,000 62,500 137,500 No. of Options Exercised 31 March 2001 Exercise price € Expiry date (225,000) (100,000) (50,000) (62,500) (137,500) - - - - - 2.539 2.539 2.539 2.539 2.539 14 February 2001 14 February 2001 14 February 2001 14 February 2001 14 February 2001 All of the above options were exercised on 23 May 2000 when the market price was €10.80. ANNUAL REPORT AND ACCOUNTS 2001 33 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 34 Statement of Directors’ Responsibilities The following statement, which should be read in conjunction with the statement of auditors’ responsibilities set out within their report on pages 35 and 36, is made with a view to distinguishing for shareholders the respective responsibilities of the Directors and of the auditors in relation to the financial statements. The Directors are required by company law to ensure that the Company prepares financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that year. Following discussions with the auditors, the Directors consider that in preparing the financial statements on pages 37 to 73, which have been prepared on the going concern basis, the Company has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and that all accounting standards which they consider applicable have been followed (subject to any explanations or material departures disclosed in the notes to the financial statements). The Directors are required to take all reasonable steps to secure compliance by the Company with its obligations in relation to the preparation and maintenance of proper books of account and financial statements which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Acts, 1963 to 1999 and the European Communities (Companies: Group Accounts) Regulations, 1992. The Directors have a general duty to act in the best interests of the Company and must, therefore, take such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. 34 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 35 Report of the Auditors for the year ended 31 March 2001 To the Members of DCC plc We have audited the financial statements on pages 37 to 73 and the detailed information on Directors’ emoluments, pensions and interests in shares and share options on pages 30 to 33. Respective Responsibilities of Directors and Auditors The Directors are responsible for preparing the Annual Report. As described on page 34, this includes responsibility for preparing the financial statements in accordance with Accounting Standards generally accepted in Ireland. Our responsibilities, as independent auditors, are established in Ireland by statute, the Auditing Practices Board, the Listing Rules of the Irish Stock Exchange and our profession’s ethical guidance. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with Irish statute comprising the Companies Acts, 1963 to 1999, and the European Communities (Companies: Group Accounts) Regulations, 1992. We state whether we have obtained all the information and explanations we consider necessary for the purposes of our audit and whether the Company balance sheet is in agreement with the books of account. We also report to you our opinion as to: • • • whether the Company has kept proper books of account; whether the Directors’ report is consistent with the financial statements; and whether at the balance sheet date there existed a financial situation which may require the Company to convene an extraordinary general meeting; such a financial situation may exist if the net assets of the Company, as stated in the Company balance sheet, are not more than half of its called-up share capital. We also report to you if, in our opinion, information specified by law or the Listing Rules regarding Directors’ remuneration and transactions is not disclosed. We read the other information contained in the Annual Report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. We review whether the statement on page 27 reflects the Company’s compliance with the seven provisions of the Combined Code specified for our review by the Irish Stock Exchange, and we report if it does not. We are not required to consider whether the Board’s statements on internal control cover all risks and controls or to form an opinion on the effectiveness of the Company’s or Group’s corporate governance procedures or its risk and control procedures. Basis of Audit Opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements. ANNUAL REPORT AND ACCOUNTS 2001 35 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 36 Report of the Auditors for the year ended 31 March 2001 Opinion In our opinion, the financial statements give a true and fair view of the state of affairs of the Company and the Group at 31 March 2001 and of the profit and cash flows of the Group for the year then ended and have been properly prepared in accordance with the Companies Acts, 1963 to 1999, and the European Communities (Companies: Group Accounts) Regulations, 1992. We have obtained all the information and explanations we consider necessary for the purposes of our audit. In our opinion, proper books of account have been kept by the Company. The Company balance sheet is in agreement with the books of account. In our opinion, the information given in the Report of the Directors on pages 28 and 29 is consistent with the financial statements. The net assets of the Company, as stated in the balance sheet on page 43, are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at 31 March 2001 a financial situation which, under Section 40(1) of the Companies (Amendment) Act, 1983, would require the convening of an extraordinary general meeting of the Company. PricewaterhouseCoopers Chartered Accountants and Registered Auditors Dublin 11 May 2001 36 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 37 Accounting Policies Accounting Convention The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. The currency used in these financial statements is the euro, denoted by the symbol €. Comparative amounts have been regrouped and restated, where necessary, on the same basis as the amounts for the current year. Basis of Preparation The financial statements have been prepared in accordance with accounting standards generally accepted in Ireland and Irish statute comprising the Companies Acts, 1963 to 1999. Accounting standards generally accepted in Ireland in preparing financial statements giving a true and fair view are those published by the Institute of Chartered Accountants in Ireland and issued by the Accounting Standards Board. Basis of Consolidation The consolidated financial statements include the Company and all its subsidiaries. The results of subsidiary and associated undertakings acquired or disposed of during the year are included in the consolidated profit and loss account from the date of their acquisition or up to the date of their disposal. Goodwill Goodwill comprises the excess of consideration paid to acquire new businesses over the fair value of the net assets acquired. Goodwill arising on the acquisition of subsidiaries prior to 1 April 1998 was eliminated from the balance sheet through reserves in the year in which it arose. Goodwill arising on the acquisition of subsidiaries since 1 April 1998 is capitalised on the balance sheet and amortised on a straight line basis over its estimated useful economic life. On disposal of an undertaking acquired prior to 1 April 1998, goodwill eliminated against reserves in respect of that undertaking is included in the determination of the profit or loss on disposal. In the case of interests acquired by the Group in associated undertakings, goodwill is capitalised as part of their carrying value and amortised over its expected useful economic life. In the case of similar interests acquired by associated undertakings of the Group, the accounting treatment followed in respect of goodwill is that adopted by that associated undertaking. The useful economic life of capitalised goodwill arising on acquisitions since 1 April 1998 is estimated to be 20 years. Subsidiaries Subsidiaries are included in the Company balance sheet at cost less provision for any impairment in value. Associated Undertakings Associated undertakings are companies other than subsidiaries in which the Group holds, on a long-term basis, a participating interest in the voting equity share capital and exercises significant influence. Associated undertakings are included in the Company balance sheet at cost less provision for any impairment in value. Income from associated undertakings included in the Company profit and loss account comprises dividends received and receivable. The appropriate share of results of associated undertakings is included in the consolidated profit and loss account by way of the equity method of accounting. Associated undertakings are stated in the consolidated balance sheet at cost plus the attributable portion of their retained reserves from the date of acquisition less goodwill amortised. Provision is made, where appropriate, where the Directors consider there has been an impairment in value. ANNUAL REPORT AND ACCOUNTS 2001 37 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 38 Accounting Policies Turnover Turnover comprises the invoiced value, including excise duty and excluding value added tax, of goods supplied and services rendered. Stocks Stocks are valued at the lower of cost and net realisable value. Cost is determined on a first in first out basis and in the case of raw materials, bought-in goods and expense stocks, comprises purchase price plus transport and handling costs less trade discounts and subsidies. Cost, in the case of products manufactured by the Group, consists of direct material and labour costs together with the relevant production overheads based on normal levels of activity. Net realisable value represents the estimated selling price less costs to completion and appropriate selling and distribution costs. Provision is made, where necessary, for slow moving, obsolete and defective stocks. Tangible Fixed Assets Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is provided on a straight line basis at the rates stated below, which are estimated to reduce the assets to their residual level values by the end of their expected working lives: Freehold and Long Term Leasehold Buildings Plant and Machinery Cylinders Motor Vehicles Fixtures, Fittings and Office Equipment Annual Rate 2% 5% - 33⅓% 6⅔% 10% - 33⅓% 10% - 33⅓% Land is not depreciated. Leased Assets Tangible fixed assets, acquired under a lease which transfers substantially all of the risks and rewards of ownership to the Group, are capitalised as fixed assets. Amounts payable under such leases (finance leases), net of finance charges, are shown as short, medium or long term lease obligations, as appropriate. Finance charges on finance leases are charged to the profit and loss account over the term of the lease on an actuarial basis. The annual rentals under operating leases are charged to the profit and loss account as incurred. Capital Grants Capital grants received and receivable by the Group are credited to capital grants and are amortised to the profit and loss account on a straight line basis over the expected useful lives of the assets to which they relate. Deferred Consideration Where acquisitions involve further payments which are deferred or contingent on levels of performance achieved in the years following the acquisition, a discounted deferred acquisition creditor is accrued. Notional interest is charged to the profit and loss account over the relevant period by reference to the period of deferral, current interest rates and the amount of the likely payments. Deferred Taxation Full provision under the liability method is made for deferred taxation on timing differences to the extent that, in the opinion of the Directors, it is probable that a liability will crystallise in the foreseeable future. Timing differences are temporary differences between profit as computed for taxation purposes and profit as stated in the financial statements which arise because certain items of income and expenditure in the financial statements are dealt with in different periods for taxation purposes. 38 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 39 Accounting Policies Foreign Currencies Assets and liabilities denominated in foreign currencies are translated into euro at the exchange rates ruling at the balance sheet date or at contracted rates, where appropriate. The trading results of overseas subsidiaries are translated into euro at the average rate of exchange for the year. Profits and losses arising on transactions in foreign currencies during the year are included in the profit and loss account at the exchange rate ruling on the date of the transactions. Exchange differences arising from a re-translation of the opening net investment in subsidiary and associated undertakings are dealt with in retained profits net of differences on related currency borrowings. Derivative Financial Instruments The Group is a party to derivative financial instruments (derivatives), primarily to manage its exposure to fluctuations in foreign currency exchange rates and interest rates and to manage its exposure to changes in the prices of certain commodity products. Gains and losses on derivative contracts used to hedge foreign exchange and commodity price trading exposures are recognised in the profit and loss account when the hedged transactions occur. As part of exchange rate risk management, foreign currency swap agreements are used to convert US dollar borrowings into sterling borrowings. Gains and losses on these derivatives are deferred and will be recognised on the maturity of the underlying debt, together with the matching gain or loss on the debt. Interest rate swap agreements and similar contracts are used to manage interest rate exposures. Amounts payable or receivable in respect of these derivatives are recognised as adjustments to interest expense over the period of the contracts. Pension Costs Pension costs are accounted for on the basis of charging the expected cost of providing pensions over the period during which the Group benefits from the employees’ services. The effect of variations from regular cost are spread over the expected average remaining service lives of the members in the schemes. The basis of contributions are determined on the advice of independent qualified actuaries. ANNUAL REPORT AND ACCOUNTS 2001 39 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 40 Consolidated Profit and Loss Account For the year ended 31 March 2001 Notes €’000 €’000 €’000 €’000 2001 2000 Turnover Subsidiary undertakings Share of turnover of associated undertakings Total turnover - continuing activities Discontinued activities Total turnover Turnover - subsidiary undertakings Continuing activities Acquisitions Discontinued activities Cost of sales Gross profit Net operating costs Operating profit before goodwill amortisation - parent and subsidiary undertakings Share of operating profit before goodwill amortisation of associated undertakings Operating profit before goodwill amortisation Continuing activities Acquisitions Discontinued activities Goodwill amortisation Operating profit Net exceptional gains on sale of associated and subsidiary undertakings - discontinued activities Net interest payable and similar charges - parent and subsidiary undertakings Share of net interest payable and similar charges - associated undertakings Profit on ordinary activities before taxation Continuing activities Acquisitions Discontinued activities Taxation Profit after taxation Minority interests Profit for the financial year attributable to Group shareholders Dividends paid Dividends proposed Profit retained for the year Earnings per ordinary share - basic (cent) - diluted (cent) Adjusted earnings per ordinary share - basic (cent) - diluted (cent) 1 1 1 1 2 2 2 2 1 1 6 1 7 8 9 10 3 11 12 13 14 14 15 15 15 15 1,712,402 157,739 1,870,141 - 1,870,141 1,643,194 69,208 1,712,402 - 1,712,402 (1,452,786) 259,616 (176,829) 82,787 8,950 91,737 (4,923) 86,814 - (3,121) (1,281) 82,412 (13,100) 69,312 (1,230) 68,082 (6,691) (11,449) 49,942 78.98c 78.28c 84.69c 83.94c 90,659 1,078 91,737 - 91,737 81,342 1,070 82,412 - 82,412 1,203,758 112,353 1,316,111 210,889 1,527,000 1,154,860 48,898 1,203,758 16,480 1,220,238 (1,005,720) 214,518 (152,654) 61,864 15,879 77,743 (3,535) 74,208 71,365 (6,132) (268) 139,173 (18,701) 120,472 (631) 119,841 (5,631) (9,735) 104,475 137.39c 133.43c 68.80c 66.89c 73,187 598 73,785 3,958 77,743 63,333 306 63,639 75,534 139,173 Alex Spain, Jim Flavin, Directors 40 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 41 Profit for the financial year Other movements on associated company reserves Exchange adjustments Total recognised gains for the financial year Statement of Total Recognised Gains and Losses For the year ended 31 March 2001 2001 €’000 68,082 (25) (2,356) 65,701 2000 €’000 119,841 2,307 4,968 127,116 Note of Historical Cost Profits and Losses For the year ended 31 March 2001 There is no difference between the profit on ordinary activities before taxation and the profit retained for the year on an historical cost basis and the amounts shown in the consolidated profit and loss account on page 40. ANNUAL REPORT AND ACCOUNTS 2001 41 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 42 Consolidated Balance Sheet As at 31 March 2001 Fixed Assets Intangible assets - goodwill Tangible fixed assets Financial assets - associated undertakings Current Assets Stocks Debtors Cash and term deposits Creditors: Amounts falling due within one year Bank and other debt Trade and other creditors Corporation tax Proposed dividend Net Current Assets Total Assets less Current Liabilities Financed by: Creditors: Amounts falling due after more than one year Bank and other debt Unsecured Notes due 2008/11 Deferred acquisition consideration Provisions for Liabilities and Charges Capital and Reserves Called up equity share capital Share premium account Other reserves Profit and loss Equity Shareholders’ Funds Equity minority interests Capital grants Alex Spain, Jim Flavin, Directors Notes 2001 €’000 2000 €’000 16 17 18 20 21 22 23 28 23 23 29 32 33 34 35 36 37 38 84,447 135,241 38,458 258,146 93,063 296,804 454,582 844,449 200,621 328,328 18,959 11,449 559,357 75,559 123,094 34,598 233,251 76,016 248,401 551,276 875,693 191,781 266,133 17,937 9,735 485,586 285,092 390,107 543,238 623,358 65,753 104,977 11,464 182,194 1,801 183,995 22,034 124,450 1,400 206,802 354,686 3,493 1,064 359,243 161,725 108,611 17,569 287,905 2,090 289,995 21,827 121,987 1,400 183,909 329,123 3,274 966 333,363 543,238 623,358 42 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 43 Fixed Assets Tangible fixed assets Financial assets - associated undertakings - subsidiary undertakings Current Assets Debtors: Amounts falling due within one year Debtors: Amounts falling due after more than one year Cash and term deposits Creditors: Amounts falling due within one year Bank and other debt Trade and other creditors Corporation tax Proposed dividend Net Current Assets Total Assets less Current Liabilities Financed by: Creditors: Amounts falling due after more than one year Amounts owed to subsidiary undertakings Provisions for Liabilities and Charges Capital and Reserves Called up equity share capital Share premium account Other reserves Profit and loss Equity Shareholders’ Funds Alex Spain, Jim Flavin, Directors Company Balance Sheet As at 31 March 2001 Notes 2001 €’000 2000 €’000 17 18 19 21 21 22 23 28 29 32 33 34 35 1,077 733 1,522 82,715 85,314 1,233 70,860 72,826 7,138 203,084 3,178 213,400 1,359 1,331 4 11,449 14,143 3,396 226,944 4,792 235,132 644 1,176 4 9,735 11,559 199,257 223,573 284,571 296,399 117,773 107,104 4 117,777 4 107,108 22,034 124,450 344 19,966 166,794 21,827 121,987 344 45,133 189,291 284,571 296,399 ANNUAL REPORT AND ACCOUNTS 2001 43 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 44 Consolidated Cash Flow Statement For the year ended 31 March 2001 Cash flow from operating activities Returns on investments and servicing of finance Taxation paid Capital expenditure Acquisitions and disposals Equity dividends paid Cash inflow before management of liquid resources and financing Increase in liquid resources Financing (Decrease)/increase in cash for the year Reconciliation of Net Cash Flow to Movement in Net Cash/(Debt) For the year ended 31 March 2001 (Decrease)/increase in cash for the year Increase in liquid resources Net loans repaid/(drawn down) Capital element of finance lease payments Changes in net cash resulting from cash flow Exchange movements Net (outflow)/inflow in the year Net cash/(debt) at start of year Net cash at end of year Notes 2001 €’000 2000 €’000 40 41 41 41 42 41 42 83,369 (2,587) (9,073) (29,506) (9,943) (16,426) 15,834 (165,894) (137,704) 96,297 (5,635) (9,400) (24,736) 72,170 (13,701) 114,995 (46,231) 95,255 (287,764) 164,019 Notes 2001 €’000 2000 €’000 42 42 42 42 42 42 42 (287,764) 165,894 110,853 4,113 (6,904) 976 (5,928) 89,159 164,019 46,231 (99,116) 3,870 115,004 (5,548) 109,456 (20,297) 83,231 89,159 44 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 45 Notes to the Financial Statements For the year ended 31 March 2001 1. Segmental Information (a) Segmental Analysis by Class of Business An analysis by class of business of turnover, profit before taxation and net assets is set out below: 2001 Profit Before Taxation €’000 31,203 23,617 20,313 16,604 91,737 - 91,737 (4,923) - (4,402) (i) Summary IT Energy Healthcare Other Activities Continuing activities Discontinued activities Turnover €’000 753,887 610,257 182,657 323,340 1,870,141 - 1,870,141 Goodwill amortisation Net exceptional gains Interest (net) Net cash Amounts due in respect of acquisitions Investments Disposal proceeds receivable Capitalised goodwill - subsidiaries Capitalised goodwill - associates Minority interests Proposed dividend Net Assets €’000 53,775 57,447 49,728 46,994 207,944 - 207,944 83,231 (21,976) 7,128 - 84,447 8,854 (3,493) (11,449) Turnover €’000 542,298 369,812 155,555 248,446 1,316,111 210,889 1,527,000 2000 Profit Before Taxation €’000 20,458 20,053 15,951 17,323 73,785 3,958 77,743 (3,535) 71,365 (6,400) Net Assets €’000 38,645 48,044 44,207 42,449 173,345 - 173,345 89,159 (28,569) 7,128 16,100 75,559 9,410 (3,274) (9,735) 1,870,141 82,412 354,686 1,527,000 139,173 329,123 (ii) Split between Subsidiary Undertakings and Associated Undertakings Subsidiary 2001 Associated Undertakings Undertakings €’000 €’000 2000 Associated Total Undertakings Undertakings €’000 €’000 Subsidiary €’000 Total €’000 Turnover - continuing activities - discontinued activities 1,712,402 - 1,712,402 157,739 - 157,739 1,870,141 - 1,870,141 1,203,758 16,480 1,220,238 112,353 194,409 306,762 1,316,111 210,889 1,527,000 Operating profit before goodwill amortisation - continuing activities - discontinued activities Goodwill amortisation Operating profit Net exceptional gains Interest (net) 82,787 - 82,787 (4,367) 78,420 - (3,121) 8,950 - 8,950 (556) 8,394 - (1,281) 91,737 - 91,737 (4,923) 86,814 - (4,402) 66,256 (4,392) 61,864 (2,710) 59,154 10,365 (6,132) 7,529 8,350 15,879 (825) 15,054 61,000 (268) 73,785 3,958 77,743 (3,535) 74,208 71,365 (6,400) Profit before taxation 75,299 7,113 82,412 63,387 75,786 139,173 Net assets (including capitalised goodwill) 316,228 38,458 354,686 294,525 34,598 329,123 ANNUAL REPORT AND ACCOUNTS 2001 45 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 46 Notes to the Financial Statements For the year ended 31 March 2001 1. Segmental Information continued (iii) Other Activities Other Activities are analysed as follows: 2001 Profit Before Taxation €’000 Turnover €’000 Net Assets €’000 Turnover €’000 2000 Profit Before Taxation €’000 Net Assets €’000 Food Supply Chain Management Services Other Interests 182,367 8,464 17,483 160,372 8,916 15,489 103,558 37,415 2,791 5,349 15,915 13,596 61,551 26,523 3,812 4,595 16,035 10,925 323,340 16,604 46,994 248,446 17,323 42,449 (iv) Acquisitions Acquisitions in the year contributed turnover of €69.208 million (2000: €48.898 million) and operating profit before goodwill amortisation of €1.078 million (2000: €0.598 million). 46 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 47 Notes to the Financial Statements For the year ended 31 March 2001 1. Segmental Information continued (b) Segmental Analysis by Geographical Area An analysis by geographical area of turnover, profit before taxation and net assets is set out below: (i) Summary Ireland Rest of the World Associated undertakings Continuing activities Discontinued activities Turnover by Origin €’000 709,425 1,002,977 1,712,402 157,739 1,870,141 - 1,870,141 Goodwill amortisation Net exceptional gains Interest (net) Net cash Amounts due in respect of acquisitions Investments Disposal proceeds receivable Capitalised goodwill - subsidiaries Capitalised goodwill - associates Minority interests Proposed dividend 2001 Profit Before Taxation €’000 36,130 46,657 82,787 8,950 91,737 - 91,737 (4,923) - (4,402) Net Assets €’000 Turnover by Origin €’000 61,964 116,376 178,340 29,604 207,944 - 207,944 515,921 687,837 1,203,758 112,353 1,316,111 210,889 1,527,000 2000 Profit Before Taxation €’000 35,451 30,805 66,256 7,529 73,785 3,958 77,743 (3,535) 71,365 (6,400) 83,231 (21,976) 7,128 - 84,447 8,854 (3,493) (11,449) 354,686 1,527,000 139,173 Net Assets €’000 47,155 101,002 148,157 25,188 173,345 - 173,345 89,159 (28,569) 7,128 16,100 75,559 9,410 (3,274) (9,735) 329,123 1,870,141 82,412 (ii) Turnover by Destination - Continuing Activities Ireland United Kingdom Rest of Europe USA Other Share of associated undertakings 2001 €’000 2000 €’000 681,722 872,860 127,795 24,807 5,218 157,739 1,870,141 502,875 636,394 44,883 15,259 4,347 112,353 1,316,111 ANNUAL REPORT AND ACCOUNTS 2001 47 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 48 Notes to the Financial Statements For the year ended 31 March 2001 2. Cost of Sales and Net Operating Costs 2001 2000 Continuing Continuing Discontinued Activities Acquisitions €’000 €’000 Total €’000 Activities Acquisitions €’000 €’000 Activities €’000 Total €’000 Cost of sales (1,390,624) (62,162) (1,452,786) (953,410) (41,153) (11,157) (1,005,720) Gross profit 252,570 7,046 259,616 201,450 7,745 5,323 214,518 Operating costs Distribution Administrative Other operating expenses (83,295) (90,394) (212) (3,640) (2,328) - (86,935) (92,722) (212) (72,163) (67,307) (214) (5,143) (2,024) (8) - (9,312) (403) (77,306) (78,643) (625) (173,901) (5,968) (179,869) (139,684) (7,175) (9,715) (156,574) Other operating income 3,040 - 3,040 3,920 - - 3,920 Net operating costs (170,861) (5,968) (176,829) (135,764) (7,175) (9,715) (152,654) Operating profit before goodwill amortisation - parent and subsidiaries 81,709 1,078 82,787 65,686 570 (4,392) 61,864 3. Acquisitions The profit on ordinary activities before taxation arising from acquisitions represents the aggregate of net incremental profit resulting from the acquisition of subsidiary and associated undertakings in the relevant financial year. 4. Employee Information The average weekly number of persons (including executive Directors) employed by subsidiaries of the Group during the year analysed by class of business was: IT Energy Healthcare Other Activities The staff costs for the above were: Wages and salaries Social welfare costs Pension costs 2001 Number 2000 Number 737 620 832 867 3,056 2001 €’000 97,717 10,321 4,228 112,266 704 515 759 955 2,933 2000 €’000 86,114 8,408 3,875 98,397 5. Directors’ Emoluments and Interests Directors’ emoluments and interests are given in the Report on Directors’ Remuneration on pages 30 to 33. 48 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 49 Notes to the Financial Statements For the year ended 31 March 2001 6. Goodwill Amortisation Amortisation of capitalised goodwill arising on the acquisition of subsidiaries after 1 April 1998 (note 16) Amortisation of goodwill included in the carrying value of associated undertakings (note 18) 7. Net Exceptional Gains on Sale of Associated and Subsidiary Undertakings Profit on sale of associated undertaking Profit on sale of subsidiary net tangible assets Other Goodwill previously eliminated against reserves 8. Net Interest Payable and Similar Charges - Parent and Subsidiary Undertakings Interest receivable and similar income Interest on cash and term deposits Other interest and similar income receivable Interest payable and similar charges On bank loans, overdrafts and Unsecured Notes due 2008/11 - repayable within 5 years, not by instalments - repayable within 5 years, by instalments - repayable wholly or partly in more than 5 years On loan notes - repayable within 5 years, not by instalments - repayable wholly or partly in more than 5 years On finance leases Notional interest 2001 €’000 2000 €’000 4,367 2,710 556 4,923 825 3,535 2001 €’000 2000 €’000 - - - - - - 2001 €’000 25,010 512 25,522 (14,150) (54) (9,352) (48) (1,694) (2,891) (454) (28,643) 76,000 18,000 (1,902) 92,098 (20,733) 71,365 2000 €’000 19,496 4 19,500 (11,968) (73) (9,042) (50) (1,551) (2,637) (311) (25,632) (3,121) (6,132) ANNUAL REPORT AND ACCOUNTS 2001 49 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 50 Notes to the Financial Statements For the year ended 31 March 2001 9. Share of Net Interest Payable and Similar Charges - Associated Undertakings This comprises the Group’s share of the net interest payable and similar charges of its associated undertakings. 10. Profit on Ordinary Activities Before Taxation Profit on ordinary activities before taxation is stated after charging/(crediting): Auditors’ remuneration Revenue grants Amortisation of capital grants Operating leases - land and buildings - plant and machinery - motor vehicles Depreciation - owned assets - leased assets 11. Taxation Irish Corporation Tax at 23% (2000: 27%) - current - deferred - less: manufacturing relief United Kingdom Corporation Tax at 30% - current - deferred Other overseas tax Capital gains tax Tax on net exceptional gains (Over)/under provision in respect of prior years - current - deferred Associated undertakings 2001 €’000 470 (264) (327) 1,791 62 1,173 13,989 6,777 2001 €’000 7,931 (107) (2,062) 5,635 102 1,610 98 - (1,535) (280) 11,392 1,708 13,100 2000 €’000 444 (79) (296) 2,316 12 988 13,655 5,235 2000 €’000 5,368 (244) (2,625) 4,003 40 947 - 8,000 (202) 26 15,313 3,388 18,701 Manufacturing relief is scheduled to expire in the year 2010. The standard rate of corporation tax in Ireland will be reduced on a phased basis to 12.5% by 1 January 2003. 50 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 51 12. Minority Interests Subsidiary undertakings Associated undertakings Notes to the Financial Statements For the year ended 31 March 2001 2001 €’000 489 741 1,230 2000 €’000 3 628 631 13. Profit for the Financial Year Attributable to Group Shareholders As permitted by Section 3(2) of the Companies (Amendment) Act, 1986, a separate profit and loss account for the holding company has not been included in these financial statements. The profit for the financial year attributable to DCC shareholders dealt with in the financial statements of the holding company amounted to €17,641,000 (2000: €15,502,000). 14. Dividends Per Ordinary Share Interim dividend of 7.74 cent per share (2000: 6.45 cent per share) Proposed final dividend of 13.38 cent per share (2000: 11.15 cent per share) Additional dividend 2001 €’000 2000 €’000 6,619 5,631 11,449 72 18,140 9,735 - 15,366 The additional dividend of €72,000 is in respect of shares issued after the date of approval of the 31 March 2000 financial statements but qualifying for receipt of the final dividend declared. ANNUAL REPORT AND ACCOUNTS 2001 51 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 52 Notes to the Financial Statements For the year ended 31 March 2001 15. Earnings per Ordinary Share and Adjusted Earnings per Ordinary Share Profit after taxation and minority interests Net exceptional gains (net of taxation) Goodwill amortisation Adjusted profit after taxation and minority interests Basic earnings per ordinary share Basic earnings per ordinary share Net exceptional gains Goodwill amortisation Adjusted basic earnings per ordinary share 2001 €’000 68,082 - 4,923 73,005 cent 78.98 - 5.71 84.69 2000 €’000 119,841 (63,365) 3,535 60,011 cent 137.39 (72.64) 4.05 68.80 Weighted average number of ordinary shares in issue during the year (’000) 86,202 87,225 Diluted earnings per ordinary share Diluted earnings per ordinary share Net exceptional gains Goodwill amortisation Adjusted diluted earnings per ordinary share cent 78.28 - 5.66 83.94 cent 133.43 (70.46) 3.92 66.89 Diluted weighted average number of ordinary shares (’000) 87,030 89,925 The adjusted figures for basic earnings per ordinary share and diluted earnings per ordinary share are intended to demonstrate the results of the Group after eliminating the impact of goodwill amortisation and net exceptional items which are not expected to recur regularly. The weighted average number of ordinary shares used in calculating the diluted earnings per ordinary share for the year ended 31 March 2001 was 87.030 million (2000: 89.925 million). A reconciliation of the weighted average number of ordinary shares used for the purpose of calculating the diluted earnings per share amounts is as follows: Weighted average number of ordinary shares in issue used for the calculation of basic earnings per ordinary share amounts Dilutive effect of options and partly paid shares Dilutive effect of ordinary shares potentially issuable under deferred contingent consideration arrangements Weighted average number of ordinary shares in issue used for the 2001 ’000 86,202 601 2000 ’000 87,225 943 227 1,757 calculation of diluted earnings per ordinary share amounts 87,030 89,925 The earnings used for the purpose of the diluted earnings per ordinary share calculations were €68.131 million (2000: €119.989 million) and €73.054 million (2000: €60.159 million) for the purpose of the adjusted diluted earnings per ordinary share calculations. 52 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 53 Notes to the Financial Statements For the year ended 31 March 2001 16. Intangible Assets - Goodwill The movement in goodwill arising on the acquisition of subsidiaries is as follows: Cost At 1 April Additions (note 39) At 31 March Amortisation At 1 April Amortisation for the year (note 6) At 31 March Net Book Value At 31 March 17. Tangible Fixed Assets (a) Group Cost At 1 April 2000 Acquisitions (note 39) Additions Reclassifications Disposals Exchange adjustments At 31 March 2001 Depreciation At 1 April 2000 Charge for year Disposals Exchange adjustments At 31 March 2001 Net Book Value At 31 March 2001 At 31 March 2000 2001 €’000 2000 €’000 79,099 13,255 92,354 3,540 4,367 7,907 46,858 32,241 79,099 830 2,710 3,540 84,447 75,559 Freehold & long term Fixtures Plant & & fittings leasehold land machinery & & office & buildings €’000 cylinders €’000 equipment €’000 Motor vehicles €’000 49,840 558 5,464 - (504) (504) 54,854 8,245 1,242 (144) (94) 9,249 157,513 1,129 13,633 (84) (3,848) (2,785) 165,558 98,664 11,405 (3,090) (1,670) 105,309 27,124 - 8,031 84 (1,367) (351) 33,521 16,875 3,622 (860) (190) 19,447 26,873 1,807 6,934 - (3,874) (493) 31,247 14,472 4,497 (2,735) (300) 15,934 Total €’000 261,350 3,494 34,062 - (9,593) (4,133) 285,180 138,256 20,766 (6,829) (2,254) 149,939 45,605 41,595 60,249 58,849 14,074 10,249 15,313 12,401 135,241 123,094 The net book value of tangible fixed assets includes an amount of €15,101,000 (2000: €20,361,000) in respect of assets held under finance leases. ANNUAL REPORT AND ACCOUNTS 2001 53 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 54 Notes to the Financial Statements For the year ended 31 March 2001 17. Tangible Fixed Assets continued (b) Company Cost At 1 April 2000 Additions Disposals At 31 March 2001 Depreciation At 1 April 2000 Charge for year Disposals At 31 March 2001 Net Book Value At 31 March 2001 At 31 March 2000 18. Financial Assets - Associated Undertakings (a) Group At 1 April Additions Disposals/transfer to investments Retained profits less dividends Other movements in reserves Amortisation of goodwill (note 6) At 31 March Fixtures & fittings & office equipment €’000 Motor vehicles €’000 1,142 283 (22) 1,403 898 93 (22) 969 434 244 740 342 (148) 934 251 173 (133) 291 643 489 Total €’000 1,882 625 (170) 2,337 1,149 266 (155) 1,260 1,077 733 2001 €’000 34,598 325 - 4,116 (25) (556) 38,458 2000 €’000 56,844 726 (34,144) 9,505 2,492 (825) 34,598 54 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 55 18. Financial Assets - Associated Undertakings continued The carrying value of associated undertakings is analysed as follows: Interest in net assets Share of post acquisition reserves Goodwill (net of amortisation) Notes to the Financial Statements For the year ended 31 March 2001 2001 €’000 7,404 22,200 29,604 8,854 38,458 2000 €’000 7,079 18,109 25,188 9,410 34,598 At 31 March 2001 the Group’s aggregate share of its associated undertakings’ fixed assets, current assets, liabilities due within one year and liabilities due after more than one year was as follows: Fixed assets Current assets Liabilities due within one year Liabilities due after more than one year and minority interests The movement in goodwill of associated undertakings is as follows: Cost At 1 April Additions Disposals At 31 March Amortisation At 1 April Amortisation for the year Disposals At 31 March Net Book Value At 31 March 2001 €’000 2000 €’000 20,765 69,721 (40,600) (20,282) 29,604 17,155 62,586 (35,942) (18,611) 25,188 2001 €’000 10,680 - - 10,680 1,270 556 - 1,826 2000 €’000 16,137 685 (6,142) 10,680 2,272 825 (1,827) 1,270 8,854 9,410 ANNUAL REPORT AND ACCOUNTS 2001 55 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 56 Notes to the Financial Statements For the year ended 31 March 2001 18. Financial Assets - Associated Undertakings continued Details of the Group’s principal associated undertakings at 31 March 2001 are set out below. All of these companies are incorporated and operate principally in their country of registration. Name and Registered Office Nature of Business Shareholding Healthcare Merits Health Products Company Limited, Manufacture of mobility aids. 45.0% 9 Road 36, Taichung Industrial Park, Taichung, Taiwan. Other Activities KP (Ireland) Limited, 79 Broomhill Road, Tallaght, Dublin 24, Ireland. Manufacture of snack foods. 50.0% Kylemore Foods Holdings Limited, Holding company for the Kylemore group of 50.0% DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland. Millais Investments Limited, Kinsale Road, Cork, Ireland. companies whose principal activities are the baking, wholesale and retailing of bakery products and the operation of restaurants. Holding company for Allied Foods Limited, a distributor of frozen and chilled foods. 51.5% * * The Group holds 50% of the voting share capital of Millais Investments Limited. Manor Park Homebuilders Limited, Residential house building. 49.0% “The Gables”, Torquay Road, Dublin 18, Ireland. (b) Company At April 1 Additions At 31 March 2001 €’000 1,233 289 1,522 2000 €’000 1,233 - 1,233 56 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 57 19. Financial Assets - Subsidiary Undertakings Company At 1 April Additions At 31 March Notes to the Financial Statements For the year ended 31 March 2001 2001 €’000 70,860 11,855 82,715 2000 €’000 67,385 3,475 70,860 The Group’s principal operating subsidiary undertakings are shown on pages 74 to 76. All of these subsidiaries are wholly owned except Broderick Holdings Limited (82.5%), Virtus Limited (51.0%), EuroCaps Limited (85.0%) where put and call options exist to acquire the remaining 15.0%, Distrilogie SA (55.0%) where put and call options exist to acquire the remaining 45.0% and Fannin Limited (88.0%), where put and call options exist to acquire the remaining 12.0%. The Group’s principal overseas holding company subsidiaries are DCC Holdings (UK) Limited, a company operating, incorporated and registered in England and Wales and DCC International Holdings B.V., a company operating, incorporated and registered in the Netherlands. The registered office of DCC Holdings (UK) Limited is at Days Medical Aids Limited, Litchard Industrial Estate, Bridgend, Mid Glamorgan CF31 2AL, Wales. The registered office of DCC International Holdings B.V. is Drentestraat 24, 1083 HK Amsterdam, the Netherlands. 20. Stocks Group Raw materials and consumables Work in progress Finished goods and goods for resale 2001 €’000 7,825 1,280 83,958 93,063 2000 €’000 6,873 1,852 67,291 76,016 The replacement cost of stocks is not considered to be materially different from the amounts shown above. ANNUAL REPORT AND ACCOUNTS 2001 57 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 58 Notes to the Financial Statements For the year ended 31 March 2001 21. Debtors Amounts falling due within one year: Trade debtors Amounts owed by subsidiary undertakings Disposal proceeds receivable Corporation tax recoverable Value added tax recoverable Prepayments and accrued income Other debtors Amounts falling due after more than one year: Amounts owed by subsidiary undertakings Investments Other debtors 22. Cash and Term Deposits Cash in hand and at bank Term deposits 2001 €’000 259,327 - - - 3,263 16,283 6,950 285,823 - 7,128 3,853 10,981 Group Company 2000 €’000 201,816 - 16,100 1,492 2,413 12,771 3,043 237,635 2001 €’000 1,591 2,453 - - - 3,094 - 7,138 2000 €’000 866 1,812 - - 11 707 - 3,396 - 7,128 3,638 10,766 203,084 - - 203,084 226,944 - - 226,944 296,804 248,401 210,222 230,340 Group Company 2001 €’000 127,972 326,610 454,582 2000 €’000 389,247 162,029 551,276 2001 €’000 - 3,178 3,178 2000 €’000 85 4,707 4,792 For the purposes of the consolidated cash flow statement, cash in hand and at bank comprises cash on demand. The movements in cash in hand and at bank and term deposits are set out in note 42. 58 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 59 23. Bank and Other Debt Bank loans and overdrafts (note 24) Loan notes (note 25) Obligations under finance leases (note 26) Unsecured Notes due 2008/11 (note 24) Bank and other loans and leases: - repayable within one year - repayable after more than one year Unsecured Notes due 2008/11 Notes to the Financial Statements For the year ended 31 March 2001 Group Company 2001 €’000 198,764 32,013 35,597 266,374 104,977 371,351 200,621 65,753 104,977 371,351 2000 €’000 279,271 33,205 41,030 353,506 108,611 462,117 191,781 161,725 108,611 462,117 2001 €’000 846 513 - 1,359 - 1,359 1,359 - - 1,359 2000 €’000 - 644 - 644 - 644 644 - - 644 In September 1996 the Group raised US$100 million of senior unsecured notes in a private placement with US institutional investors. Of this amount US$92.5 million is due in 2008 and US$7.5 million is due in 2011. The funds have been swapped to sterling at a margin over LIBOR. 24. Bank Loans, Overdrafts and Unsecured Notes due 2008/11 Repayable as follows: Within one year Between one and two years Between two and five years After five years 2001 €’000 195,217 2,413 542 105,569 303,741 Group 2000 €’000 186,324 79,652 12,675 109,231 387,882 Company 2001 €’000 2000 €’000 846 - - - 846 The above amounts are further analysed as follows: Wholly repayable within one year Repayable by instalments: - between one and two years - between two and five years - after five years Repayable other than by instalments: - between one and two years - after five years 195,217 186,324 846 2,413 542 592 - 104,977 303,741 630 12,675 620 79,022 108,611 387,882 - - - - - 846 ANNUAL REPORT AND ACCOUNTS 2001 59 - - - - - - - - - - - - DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 60 Notes to the Financial Statements For the year ended 31 March 2001 25. Loan Notes The loan notes are repayable as follows: Within one year After five years Loan notes are further analysed as follows: Wholly repayable within one year Repayable other than by instalments: - after five years Group 2000 €’000 1,251 31,954 33,205 2001 €’000 1,128 30,885 32,013 1,128 1,251 30,885 32,013 31,954 33,205 Company 2001 €’000 2000 €’000 513 - 513 513 - 513 644 - 644 644 - 644 The above loan notes are unsecured and €10,911,000 (2000: €33,152,000) are supported by bank guarantees. The Company and certain of its subsidiaries have guaranteed the obligations of the relevant banks in respect of the loan notes which are guaranteed by the banks. 26. Finance Leases The net finance lease obligations to which the Group is committed are: Within one year Between one and two years Between two and five years After five years 2001 €’000 2000 €’000 4,276 4,206 5,135 14,469 11,717 31,321 4,418 14,900 17,506 36,824 35,597 41,030 27. Derivative and Other Financial Instruments The Group’s treasury activities are designed to finance its operations and to reduce or eliminate the financial risks arising from those operations. A number of the Group’s operating and financial revenues and costs are exposed to movements in the financial and commodity markets which are outside the Group’s control. In particular, interest rates can fluctuate, affecting the cost of borrowings, and commodity price movements can impact on the cost of certain raw materials purchased. Furthermore, foreign exchange movements can impact on the cost of products sourced and revenues generated from overseas markets and can also impact on the translation of the results and net operating assets or operating liabilities of the Group’s overseas operations save to the extent that they are hedged by borrowings or deposits in the same currency. In order to reduce these exposures and to bring both stability and more certainty to the Group’s revenues and costs, the Group uses various derivative financial instruments to hedge its positions going forward. All transactions in derivatives (which are mainly interest rate swaps, forward foreign currency and commodity contracts and purchased currency and commodity options) are designed to manage risks without engaging in speculative transactions. 60 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 61 Notes to the Financial Statements For the year ended 31 March 2001 27. Derivative and Other Financial Instruments continued (a) Interest Rate Risk Profile of Financial Assets and Financial Liabilities The following tables analyse the currency and interest rate composition of the Group’s gross cash and debt portfolio, as stated on the balance sheet, after taking cross currency and interest rate swaps into account: 2001 € equivalent Financial Liabilities €’000 (1,655) (33,232) (34,887) (98,759) (236,982) (335,741) - (723) (723) Financial Assets €’000 - 135,765 135,765 98,517 213,069 311,586 - 7,231 7,231 Net €’000 (1,655) 102,533 100,878 (242) (23,913) (24,155) - 6,508 6,508 Financial Assets €’000 - 201,792 201,792 101,921 241,584 343,505 - 5,979 5,979 2000 € equivalent Financial Liabilities €’000 (1,983) (77,979) (79,962) (101,929) (279,697) (381,626) - (529) (529) Net €’000 (1,983) 123,813 121,830 (8) (38,113) (38,121) - 5,450 5,450 € Fixed € Floating € Total Stg£ Fixed Stg£ Floating Stg£ Total US$ Fixed US$ Floating US$ Total Total 454,582 (371,351) 83,231 551,276 (462,117) 89,159 The Group’s deferred acquisition consideration of €21,976,000 as stated on the balance sheet, comprises €20,102,000 of € floating rate financial liabilities and €1,874,000 of Stg£ floating rate financial liabilities (2000: €28,569,000 of € floating rate financial liabilities) payable as follows: Within one year Between one and two years Between two and five years 2001 €’000 10,512 7,428 4,036 21,976 2000 €’000 11,000 7,166 10,403 28,569 The Group’s floating rate financial assets and financial liabilities primarily bear interest rates based on: • 1 - 6 month EURIBOR • 1 - 12 month LIBOR • US$ prime rate At 31 March the interest rate profile of the Group’s fixed rate financial assets and financial liabilities was as follows: 2001 Weighted average interest rate Fixed rate Fixed rate financial liabilities financial assets 2000 Weighted average interest rate Fixed rate Fixed rate financial liabilities financial assets n/a 8.0% 4.7% 8.8% n/a 8.0% 5.2% 8.8% 2001 Weighted average period for which rate is fixed 2000 Weighted average period for which rate is fixed Fixed rate financial assets Fixed rate financial liabilities Fixed rate financial assets Fixed rate financial liabilities n/a 7.5 years 8.3 years 7.5 years n/a 8.5 years 6.9 years 8.5 years € Stg£ € Stg£ ANNUAL REPORT AND ACCOUNTS 2001 61 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 62 Notes to the Financial Statements For the year ended 31 March 2001 27. Derivative and Other Financial Instruments continued The maturity profile of the Group’s financial liabilities is set out in notes 24 to 26 and can be summarised as follows: Within one year Between one and two years Between two and five years After five years 2001 €’000 200,621 7,548 15,011 148,171 371,351 2000 €’000 191,781 84,070 27,575 158,691 462,117 (b) Gains and Losses on Hedges The Group enters into forward foreign currency contracts to eliminate the currency exposures that arise on revenues and costs denominated in foreign currencies. The Group also enters into commodity swap contracts in order to eliminate the exposure to price movements of oil and LPG. Changes in the fair value of instruments used as hedges are not recognised in the financial statements until the hedged position matures. An analysis of these unrecognised gains and losses is as follows: At 1 April Portion recognised in current year Arising in current year At 31 March Of which, expected to be recognised: - within one year - after one year Gains €’000 429 (429) 5,100 5,100 2,650 2,450 5,100 2001 Losses €’000 (6,393) 5,898 (490) (985) Total €’000 (5,964) 5,469 4,610 4,115 (673) (312) (985) 1,977 2,138 4,115 Gains €’000 356 (356) 429 429 429 - 429 2000 Losses €’000 (3,332) 1,879 (4,940) (6,393) (5,898) (495) (6,393) Total €’000 (2,976) 1,523 (4,511) (5,964) (5,469) (495) (5,964) The above table does not include cross currency interest rate swaps where unrecognised gains or losses on the swaps are matched by equal and opposite gains or losses in the fair value of Unsecured Notes due 2008/11 as described in the accounting policy for derivative financial instruments. (c) Fair Value of Financial Instruments The carrying amounts and estimated fair values of the financial assets and financial liabilities of the Group are as follows: Assets: Cash and short term deposits Liabilities: Deferred acquisition consideration Short term debt Medium and long term debt Unsecured Notes due 2008/11 Derivative financial instruments: Commodity swaps Forward exchange rate contracts Interest rate contracts 2001 2000 Carrying amount €’000 Fair value €’000 Carrying amount €’000 Fair value €’000 454,582 454,582 551,276 551,188 (21,976) (200,621) (65,753) (104,977) (21,976) (200,621) (65,682) (104,977) (28,569) (191,781) (161,725) (108,611) (28,569) (191,781) (161,637) (108,611) - - - 61,255 575 3,540 - 65,441 - - - 60,590 (1,199) (4,765) - 54,626 62 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 63 Notes to the Financial Statements For the year ended 31 March 2001 27. Derivative and Other Financial Instruments continued The following methods and assumptions were used by the Group in estimating its fair value disclosures for financial instruments: Cash, short term deposits and short term debt: The carrying amount reported in the balance sheet generally approximates to fair value because of the short maturity of these instruments. Deferred acquisition consideration: The carrying amount reported in the balance sheet approximates to fair value because the future amounts payable are discounted back to their present value. Medium and long term debt: The fair value of the Group’s medium and long term debt generally approximates to fair value because these instruments re-price frequently at market rates. Unsecured Notes due 2008/11: The fair value of the Group’s Unsecured Notes due 2008/11 is shown net of the gain or loss on the sterling cross currency interest rate swap used to hedge these loan notes (note 23). At 31 March 2001 the cross currency interest rate swap had a fair value equating to a profit of €19,821,000 (2000: loss of €3,338,000) and the fair value of the Unsecured Notes 2008/11 was lower than the book value by the same amount. Commodity and forward exchange rate contracts: The fair value of these instruments is based on the estimated replacement cost of equivalent instruments at the balance sheet date. Interest rate contracts: The fair value of these instruments is based on the estimated replacement cost of equivalent instruments at the balance sheet date. The Group uses interest rate contracts to swap floating rate assets and liabilities into fixed rate assets and liabilities. The fair value of the interest rate contracts attributable to financial assets is offset by the fair value of the interest rate contracts attributable to financial liabilities. (d) Undrawn Bank Borrowing Facilities The Group has various borrowing facilities available to it. At 31 March 2001 the Group has no undrawn committed bank borrowing facilities (2000: €4,250,000). (e) Short Term Debtors and Creditors Short term debtors and creditors are not included in the above disclosures of financial assets and financial liabilities. (f) Currency Exposures At 31 March 2001, after taking into account the effects of foreign currency contracts, the Group had no material currency exposures. (g) Treasury Policy The Group’s treasury policy and management of derivatives and of financial instruments is discussed in the Financial Review on pages 20 to 23. ANNUAL REPORT AND ACCOUNTS 2001 63 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 64 Notes to the Financial Statements For the year ended 31 March 2001 28. Trade and Other Creditors Amounts falling due within one year: Trade creditors Other creditors and accruals Deferred acquisition consideration PAYE and PRSI Value added tax Capital grants (note 38) Interest payable Amounts due in respect of fixed assets Amounts due to associated undertakings 29. Provisions for Liabilities and Charges (a) Group At 1 April Credited to profit and loss account Exchange adjustments At 31 March (b) Company Deferred taxation at 31 March (note 30) 30. Deferred Taxation Group Company 2001 €’000 254,278 38,099 10,512 2,535 14,939 305 2,744 1,163 3,753 328,328 2000 €’000 199,454 34,900 11,000 2,450 12,049 235 2,401 905 2,739 266,133 2001 €’000 155 1,002 - - 174 - - - - 1,331 2000 €’000 73 941 - 162 - - - - - 1,176 Total €’000 2,244 (179) 25 2,090 2001 €’000 2000 €’000 4 4 2001 Pension Deferred and similar taxation obligations (note 31) (note 30) €’000 €’000 2000 Pension Deferred and similar taxation obligations (note 31) (note 30) €’000 €’000 Total €’000 2,047 (285) (4) 1,758 43 - - 43 2,090 2,200 (285) (4) 1,801 (178) 25 2,047 44 (1) - 43 Deferred taxation provided in the financial statements and the full potential liability are as follows: (a) Group Tax effect of timing differences due to: Excess of accelerated capital allowances over depreciation Other short term timing differences Amount Provided 2000 2001 €’000 €’000 Full Potential Liability 2000 €’000 2001 €’000 2,112 (354) 1,758 2,097 (50) 2,047 2,577 (354) 2,223 2,204 (50) 2,154 No provision is made for potential taxation liabilities amounting to €465,000 (2000: €107,000) arising from accelerated capital allowances as it is considered that the related taxation will not become payable in the foreseeable future. No provision is made for taxation liabilities which would arise on the distribution of profits retained by overseas subsidiaries as there is no intention in the foreseeable future to remit such profits. 64 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 65 Notes to the Financial Statements For the year ended 31 March 2001 30. Deferred Taxation continued (b) Company Tax effect of timing differences due to: Excess of accelerated capital allowances over depreciation Other short term timing differences Amount Provided 2000 2001 €’000 €’000 Full Potential Liability 2000 €’000 2001 €’000 3 1 4 3 1 4 3 1 4 3 1 4 31. Pension and Similar Obligations The Group operates defined benefit and defined contribution pension schemes in the parent and subsidiary undertakings. The pension scheme assets are held in separate trustee administered funds. Total pension costs for the year amounted to €4,228,000 (2000: €3,875,000) of which €1,493,000 (2000: €1,332,000) was paid in respect of defined contribution schemes. The pension costs relating to the Group’s defined benefit schemes are assessed in accordance with the advice of independent qualified actuaries. Either the attained age or the projected unit benefits method are used to assess pension costs. The most recent actuarial valuations range from 1 April 1997 to 1 April 2000. The assumptions which have the most significant effect on the results of the actuarial valuations are those relating to the rates of return on investments and the rates of increase in remuneration and pensions. It was assumed that the rates of return on investments would, on average, exceed annual remuneration increases by 2% and pension increases by 3% per annum. At the dates of the most recent actuarial valuations, the market value of the assets of the Group’s defined benefit schemes totalled €33,220,000 (2000: €24,643,000). After allowing for expected future increases in earnings and pension payments, the actuarial values of the various schemes’ assets were sufficient to cover between 84% and 110% (Group weighted average cover: 100%) of the benefits that had accrued to the members of the individual schemes. Any actuarial deficits are being spread over the average remaining service lives of current employees. At 31 March 2001, €48,000 (2000: €71,000) was included in creditors in respect of pension liabilities and €2,486,000 (2000: €566,000) was included in debtors in respect of pension prepayments. In general, actuarial valuations are not available for public inspection, although the results of valuations are advised to the members of the various pension schemes. ANNUAL REPORT AND ACCOUNTS 2001 65 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 66 Notes to the Financial Statements For the year ended 31 March 2001 32. Called up Equity Share Capital Group and Company Authorised 152,368,568 ordinary shares of €0.25 each Issued 88,134,404 ordinary shares (including 2,563,045 ordinary shares held as Treasury Shares) of €0.25 each, fully paid (2000: 87,306,376 ordinary shares of €0.25 each, fully paid) 90,000 ordinary shares of €0.25 each, €0.0025 paid (2000: 205,000 ordinary shares of €0.25 each, €0.0025 paid) Movements during year Ordinary shares of €0.25 each At 1 April 2000 Exercise of share options Acquisition issues Payment up of partly paid shares At 31 March 2001 2001 €’000 2000 €’000 38,092 38,092 22,034 21,827 - 22,034 - 21,827 No of shares (’000) 87,511 650 63 - 88,224 €’000 21,827 162 16 29 22,034 During the year the Group purchased 2,563,045 of its own ordinary shares of €0.25 each at a total cost of €24,668,000. These shares are held as Treasury Shares and they are not included in the calculation of earnings per share from the date they were purchased by the Group. Under the DCC plc 1998 Employee Share Option Scheme, employees hold basic tier options to subscribe for 2,095,500 ordinary shares and second tier options to subscribe for 1,913,500 ordinary shares. The number of shares in respect of which basic tier and second tier options may be granted under this scheme may not exceed 5% of all numbers of shares in issue in each case. Under the terminated DCC Employee Partly Paid Share Scheme, at 31 March 2001, 90,000 shares (2000: 205,000 shares) remain partly paid. All shares, whether fully or partly paid, carry equal voting rights and rank for dividends to the extent to which the total amount payable on each share is paid up. 66 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 67 33. Share Premium Account Group and Company At 1 April Premium on issue of shares Share issue expenses At 31 March 34. Other Reserves (a) Group Notes to the Financial Statements For the year ended 31 March 2001 2001 €’000 2000 €’000 121,987 2,493 (30) 124,450 120,796 1,203 (12) 121,987 Capital Conversion Reserve Fund €’000 Other Reserves €’000 Total €’000 At 31 March 2001 and 31 March 2000 344 1,056 1,400 (b) Company At 31 March 2001 and 31 March 2000 35. Profit and Loss (a) Group At 1 April 2000 Profit retained for the year Share buyback (note 32) Movement on other reserves - associated undertakings Exchange adjustments At 31 March 2001 Capital Conversion Reserve Fund €’000 344 Profit and Loss Account €’000 183,909 49,942 (24,668) (25) (2,356) 206,802 In accordance with the Group’s accounting policy, goodwill arising on the acquisition of the subsidiaries prior to 1 April 1998, eliminated from the balance sheet through reserves, amounts €100.079 million. (b) Company At 1 April 2000 Profit retained Share buyback (note 32) At 31 March 2001 Profit and Loss Account €’000 45,133 (499) (24,668) 19,966 ANNUAL REPORT AND ACCOUNTS 2001 67 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 68 Notes to the Financial Statements For the year ended 31 March 2001 36. Reconciliation of Movements in Equity Shareholders’ Funds Profit for the financial year Dividends Movement on associated undertaking reserves Goodwill realised previously eliminated against reserves (note 7) Equity share capital issued (net of expenses) Share buyback (note 32) Exchange adjustments Net movement in shareholders’ funds Opening equity shareholders’ funds Closing equity shareholders’ funds 37. Equity Minority Interests At 1 April Acquisitions Acquisition of minority interest in subsidiary undertakings Disposal of minority interest in subsidiary undertaking Share of profit for the financial year (note 12) Dividends to minorities Exchange adjustments At 31 March 38. Capital Grants At 1 April Received in year Amortisation in year Exchange adjustments At 31 March Disclosed as due within one year (note 28) 2001 €’000 2000 €’000 68,082 (18,140) 49,942 (25) - 2,670 (24,668) (2,356) 25,563 329,123 354,686 119,841 (15,366) 104,475 2,492 20,733 1,234 - 4,968 133,902 195,221 329,123 2001 €’000 3,274 - (61) - 489 (173) (36) 3,493 2001 €’000 1,201 502 (327) (7) 1,369 (305) 1,064 2000 €’000 3,902 326 - (947) 3 (86) 76 3,274 2000 €’000 1,426 62 (296) 9 1,201 (235) 966 68 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 69 Notes to the Financial Statements For the year ended 31 March 2001 39. Acquisitions of Subsidiary Undertakings The principal acquisition completed during the year was Fuel Services. A number of smaller oil and LPG distributors were also acquired. A summary of the effect of these acquisitions is as follows: Tangible fixed assets Stocks Debtors Net debt Creditors Net assets acquired Goodwill Cost Satisfied by: Cash Shares Deferred consideration and deferred contingent consideration Acquisition of subsidiary undertakings €’000 3,494 922 3,777 (3,140) (2,001) 3,052 13,255 16,307 10,726 740 4,841 16,307 Acquisition accounting has been adopted in respect of the above acquisitions. No fair value adjustments were made to the assets acquired. An analysis of the net outflow of cash in respect of the acquisition of subsidiary undertakings is as follows: Cost Net debt acquired Shares issued Deferred consideration and deferred contingent consideration Net outflow of cash 2001 €’000 16,307 3,140 (740) (4,841) 13,866 ANNUAL REPORT AND ACCOUNTS 2001 69 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 70 Notes to the Financial Statements For the year ended 31 March 2001 40. Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities Operating profit before goodwill amortisation Operating profit of associated undertakings Dividends received from associated undertakings Depreciation of tangible fixed assets Increase in stocks Increase in debtors Increase in creditors Other Cash flow from operating activities 2001 €’000 2000 €’000 91,737 (8,950) 1,896 20,766 (17,650) (66,961) 64,682 (2,151) 83,369 77,743 (15,879) 2,768 18,890 (11,081) (45,941) 72,845 (3,048) 96,297 41. Analysis of Cash Flows for Headings netted in the Consolidated Cash Flow Statement (a) Returns on Investments and Servicing of Finance Interest received and similar receipts Interest paid and similar payments Dividends paid to minority interests Net cash outflow from returns on investments and servicing of finance (b) Capital Expenditure Expenditure on tangible fixed assets Proceeds on sale of tangible fixed assets Grants received Net cash outflow from capital expenditure (c) Acquisitions and Disposals Purchase of subsidiary undertakings (net of debt/cash acquired) (note 39) Investment in associated undertakings (note 18) Purchase of minority interests Sale of subsidiary Sale of associated undertaking Payment of deferred consideration in respect of acquisitions Net cash (outflow)/inflow from acquisitions and disposals (d) Financing Issues of share capital (including share premium) Share buyback Capital element of finance lease payments Loans (repaid)/drawn down Net cash (outflow)/inflow from financing 2001 €’000 2000 €’000 25,432 (27,846) (173) (2,587) (33,804) 3,796 502 (29,506) (13,866) (325) (61) 16,026 - (11,717) (9,943) 1,930 (24,668) (4,113) (110,853) (137,704) 19,432 (24,981) (86) (5,635) (28,815) 4,017 62 (24,736) (28,427) (726) - 3,456 106,289 (8,422) 72,170 9 - (3,870) 99,116 95,255 70 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 71 42. Analysis of Movement in Net Cash Cash in hand and at bank Overdrafts Term deposits Bank loans and loan notes Unsecured Notes due 2008/11 Finance leases Total 43. Capital Commitments Group Notes to the Financial Statements For the year ended 31 March 2001 At 1 April 2000 €’000 389,247 (33,763) 355,484 162,029 (278,713) (108,611) (41,030) 89,159 Cash Exchange flow movements €’000 €’000 (251,321) (36,443) (287,764) 165,894 110,853 - 4,113 (6,904) (9,954) 767 (9,187) (1,313) 6,522 3,634 1,320 976 At 31 March 2001 €’000 127,972 (69,439) 58,533 326,610 (161,338) (104,977) (35,597) 83,231 Capital expenditure that has been contracted for but has not been provided for in the financial statements Capital expenditure that has been authorised by the Directors but has not yet been contracted for 2001 €’000 2000 €’000 5,264 4,248 18,037 12,707 44. Operating Lease Commitments At 31 March 2001 the Group had annual commitments under operating leases as follows: Expiring within one year Expiring between two and five years Expiring after five years Land and Buildings €’000 155 460 1,339 1,954 2001 Other €’000 434 519 11 964 Land and Total Buildings €’000 €’000 589 979 1,350 2,918 178 173 1,547 1,898 2000 Other €’000 73 648 - 721 Total €’000 251 821 1,547 2,619 ANNUAL REPORT AND ACCOUNTS 2001 71 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 72 Notes to the Financial Statements For the year ended 31 March 2001 45. Contingent Liabilities (a) Bank and Other Loans The parent undertaking and certain subsidiaries have given guarantees of up to €339,776,000 (2000: €454,280,000) in respect of borrowings by the parent undertaking itself and other group undertakings. (b) Grants In certain circumstances capital grants amounting to a maximum of €84,000 (2000: €4,759,000) may become repayable. (c) Other Included in trade creditors is an amount of approximately €14,193,000 (2000: €8,909,000) due to creditors who have reserved title to goods supplied. Since the extent to which these creditors are effectively secured at any time depends on a number of conditions, the validity of some of which is not readily determinable, it is not possible to indicate how much of the above amount was effectively secured by reservation of title. However, the amount referred to above is matched in terms of net book value of fixed assets and stocks of raw materials in the possession of the Group which were supplied subject to reservation of title and accordingly the creditors referred to could be regarded as effectively secured to the extent of at least this amount. Pursuant to the provisions of Section 17, Companies (Amendment) Act, 1986, the Company has guaranteed the liabilities of Alvabay Limited, Atlas Oil Refining Company Limited, Classic Fuel & Oil Limited, DCC Energy Limited, DCC SerCom Limited, Emo Oil Limited and Flogas Ireland Limited and, as a result, these companies have been exempted from the filing provisions of Section 7, Companies (Amendment) Act, 1986. 46. Reporting Currency The primary currency used in these financial statements is the euro which is denoted by the symbol €. The exchange rates used in translating sterling balance sheets and profit and loss account amounts were as follows: Balance sheet (closing rate) Profit and loss (average rate) 2001 €1=Stg£ 2000 €1=Stg£ 0.619 0.613 0.599 0.643 72 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 73 Notes to the Financial Statements For the year ended 31 March 2001 47. Transactions with Related Parties On 3 July 2000, DCC acquired 3.7% of the share capital of SerCom Distribution Limited from the management of that company at a cost of €7,298,000. These shareholdings arose from the exercise of options by management over 4.7% of the share capital of SerCom Distribution Limited. Put and call options exist over the remaining shares, exercisable up to 2004. On 16 August 2000, the Company increased its shareholding in EuroCaps Limited to 85.0% through the acquisition of 5.0% of the issued share capital from the minority shareholders. The total value of the consideration amounted to Stg£412,000 which was satisfied in cash. The remaining 15.0% is also subject to put and call options exercisable up to 2002. On 26 September 2000, the Company increased its shareholding in Fannin Limited to 88% by acquiring 6% of the issued share capital from the minority shareholders in Fannin Limited, which was subject to put and call options exercisable by DCC and the Fannin minority shareholders. The total value of the consideration amounted to €3,277,000 of which €3,276,000 was satisfied in cash and €1,000 in shares. The remaining 12% shareholding is also subject to put and call options exercisable up to 2003. On 26 February 2001, the Company acquired the remaining 10% shareholding held by minority shareholders in BM Browne (UK) Limited for a consideration of Stg£463,000 satisfied through the issue of shares. 48. Approval of Financial Statements The financial statements were approved by the Board of Directors on 11 May 2001. ANNUAL REPORT AND ACCOUNTS 2001 73 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 74 Group Directory Name and Registered Office Address Principal Activity Holding and divisional management company Holding and divisional management company Distribution of computer products and office equipment Distribution of computer products Distribution of computer software IT (SerCom Distribution) DCC SerCom Limited DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland SerCom Distribution Limited DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland Sharptext Limited M50 Business Park, Ballymount Road Upper, Dublin 12, Ireland Micro Peripherals Limited * Shorten Brook Way, Altham Business Park, Altham, Accrington, Lancashire BB5 5YJ, England Gem Distribution Limited * Lovet Road, The Pinnacles, Marlow, Essex CM19 5TB, England Distrilogie SA 12, Rue des Frères Caudron, 78147 Vélizy Cedex, France Energy DCC Energy Limited DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland Flogas Ireland Limited Dublin Road, Drogheda, Manufacture and distribution of liquified petroleum gas Co. Louth, Ireland DCC Energy (NI) Limited Airport Road West, Sydenham, Belfast BT3 9ED, Northern Ireland Flogas (UK) Limited * Merrylees, Leicestershire LE9 9FE, England Marketing and distribution of petroleum products Processing and distribution of liquified petroleum gas Atlas Environmental Ireland Limited Clonminam Industrial Estate, Provision of environmental services including recycling of oils Portlaoise, Co. Laois, Ireland 74 Telephone/Fax/email and website if applicable Tel: + 353 1 2799 400 Fax: + 353 1 2831 017 email: sercom@dcc.ie www.dcc.ie Tel: + 353 1 2799 400 Fax: + 353 1 2831 017 email: sercom@dcc.ie www.dcc.ie Tel: + 353 1 4087 171 Fax: + 353 1 4599 421 email: info@sharptext.com www.sharptext.com Tel: + 44 1282 776 776 Fax: + 44 1282 770 001 email: info@micro-p.com www.micro-p.com Tel: + 44 1279 822 800 Fax: + 44 1279 416 228 email: info@gem.co.uk www.gem.co.uk Tel: + 353 1 2799 400 Fax: + 353 1 2831 017 email: energy@dcc.ie www.dcc.ie Tel: + 353 41 9831 041 Fax: + 353 41 9834 652 email: info@flogas.ie www.flogas.ie Tel: + 44 28 9073 2611 Fax: + 44 28 9073 2020 email: enquiries@emooil.com www.emooil.com Tel: + 44 1530 230 352 Fax: + 44 1530 230 253 email: info@flogas.co.uk www.flogas.co.uk Tel: + 353 502 747 47 Fax: + 353 502 747 57 email: info@atlasireland.com www.atlasireland.com ANNUAL REPORT AND ACCOUNTS 2001 Distribution of computer storage products Tel: + 33 1 34 58 47 00 Fax: + 33 1 34 58 47 27 email: distrilogie@distrilogie.com www.distrilogie.com Holding and divisional management company DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 75 Name and Registered Office Address Principal Activity Emo Oil Limited Clonminam Industrial Estate, Portlaoise, Co. Laois, Ireland Healthcare DCC Healthcare Limited DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland Marketing and distribution of petroleum products Holding and divisional management company Days Medical Aids Limited * Litchard Industrial Estate, Bridgend, Manufacture and distribution of rehabilitation and mobility products Mid Glamorgan CF31 2AL, Wales DCC Shoprider Inc. 3540 Northwest 56th Street, Suite 206, Fort Lauderdale, Florida 33309, USA Fannin Limited Blackthorn Road, Sandyford Industrial Estate, Foxrock, Dublin 18, Ireland Virtus Limited Adamstown, Lucan, Co. Dublin, Ireland Healthilife Limited * Charleston House, Otley Road, Baildon, Shipley, West Yorkshire BD17 7JS, England EuroCaps Limited * Crown Business Park, Dukestown, Tredegar, Gwent NP22 4EF, Wales Distribution of mobility scooters and power chairs Distribution of medical and scientific equipment and consumables Manufacture and distribution of vitamin and mineral supplements Manufacture and distribution of soft gelatine capsules CasaCare GmbH & Co KG Gewerbestraße 13, Manufacture and distribution of rehabilitation and mobility products 32584 Löhne, Germany Primacy Healthcare Limited * 9-12 Hardwick Road, Astmoor Industrial Estate, Runcorn, Cheshire WA7 1PH, England Manufacture and distribution of tablets and capsules Group Directory Telephone/Fax/email and website if applicable Tel: + 353 502 747 00 Fax: + 353 502 747 50 email: emo@iol.ie www.emo.ie Tel: + 353 1 2799 400 Fax: + 353 1 2831 017 email: healthcare@dcc.ie www.dcc.ie Tel: + 44 1656 657 495 Fax: + 44 1656 767 178 email: sales@daysmedical.com Tel: + 1 954 535 0781 Fax: + 1 954 535 0956 email: sales@dcc-shoprider.com www.dcc-shoprider.com Tel: + 353 1 294 4500 Fax: + 353 1 295 3818 email: info@fanninhealthcare.com Tel: + 44 1274 595 021 Fax: + 44 1274 581 515 email: enquiries@healthilife.com www.healthilife.com Tel: + 44 1495 308 900 Fax: + 44 1495 308 990 email: enquiries@softgels.co.uk www.softgels.co.uk Tel: + 49 5731 786 50 Fax: + 49 5731 786 520 email: sales@casacare.de www.casacare.de Tel: +44 1928 573734 Fax: +44 1928 580694 email: enquiries@tablets2buy.com www.tablets2buy.com Manufacture and distribution of pneumatic healthcare appliances Tel: + 353 1 628 0571 Fax: + 353 1 628 0572 email: info@virtus.ie ANNUAL REPORT AND ACCOUNTS 2001 75 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 76 Group Directory Name and Registered Office Address Principal Activity Other Activities DCC Foods Limited DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland Robt. Roberts Limited 79 Broomhill Road, Tallaght, Dublin 24, Ireland Holding and divisional management company Marketing and distribution of branded food and beverage products Kelkin Limited Unit 1, Crosslands Industrial Park, Marketing and distribution of branded healthy foods Ballymount Cross, Dublin 12, Ireland Telephone/Fax/email and website if applicable Tel: + 353 1 2799 400 Fax: + 353 1 2831 017 email: foods@dcc.ie www.dcc.ie Tel: + 353 1 4047 300 Fax: + 353 1 4599 369 email: info@robt-roberts.ie Tel: + 353 1 4600 400 Fax: + 353 1 4600 411 email: info@kelkin.ie Broderick Holdings Limited JFK Industrial Estate, Naas Road, Marketing, distribution and service of equipment for the food processing and Tel: + 353 1 4509 083 Fax: + 353 1 4509 570 Dublin 12, Ireland SerCom Solutions Limited Cloverhill Industrial Estate, Clondalkin, Dublin 22, Ireland catering industries email: broderickbros@eircom.net Provision of manufacturing services to the computer industry Tel: + 353 1 405 6500 Fax: + 353 1 405 6555 email: info@sercomsolutions.com www.sercomsolutions.com All of the above companies are incorporated and operate principally in the Republic of Ireland except those indicated with * which are incorporated and operate principally in England and Wales, Distrilogie SA incorporated and operating principally in France, DCC Energy (NI) Limited incorporated and operating principally in Northern Ireland, DCC Shoprider Inc. incorporated and operating principally in the United States of America and CasaCare GmbH & Co KG incorporated and operating principally in Germany. A full list of subsidiary and associated undertakings will be annexed to the Annual Return of the Company to be filed with the Irish Registrar of Companies. 76 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 77 Shareholder Analysis at 11 May 2001 Number of accounts % of accounts 1 – 1,000 1,001 – 10,000 10,001 – 50,000 50,001 – 100,000 100,001 – 250,000 Over 250,000 Total Share Price Data (€) Year ended 31 March 2001 Year ended 31 March 2000 1,626 1,127 95 26 33 39 2,946 55.2 38.3 3.2 0.9 1.1 1.3 100.0 High 12.35 13.00 Shareholder Information Number of shares 867,038 3,055,114 2,176,395 1,888,070 5,350,526 72,234,216 85,571,359 % of shares 1.0 3.6 2.5 2.2 6.3 84.4 100.0 Low 9.00 6.55 31 March 10.55 11.15 The market capitalisation of DCC plc at 31 March 2001 was €904 million (2000: €976 million) and at 11 May 2001 was €890 million (€10.40 per share). Website DCC’s website address is www.dcc.ie. DCC’s website provides comprehensive corporate and financial information to the investment community and other interested parties. It incorporates a variety of useful features which enable users to access and analyse current and archived financial data, download this and archived annual reports, register for news and other announcements and view interactive audio and video investor presentations. Investor Relations For investor enquiries please contact: Conor Costigan, Investor Relations Manager, DCC plc, DCC House, Brewery Road, Stillorgan, Co. Dublin, Ireland. Tel: +353 1 2799 400. Fax: +353 1 2831 018. email: investorrelations@dcc.ie Registrar Administrative enquiries about the holding of DCC shares should be directed in the first instance to the Company’s Registrar: Computershare Investor Services (Ireland) Limited, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland. Tel: +353 1 2163 100. Fax: +353 1 2163 151. email: web.queries@computershare.ie ANNUAL REPORT AND ACCOUNTS 2001 77 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 78 Shareholder Information Amalgamation of Accounts Shareholders who receive duplicate sets of Company mailings owing to multiple accounts in their names should write to the Company’s Registrar to have their accounts amalgamated. Dividends Shareholders are offered the option of having dividends paid in euro or pounds sterling. Shareholders may also elect to receive dividend payments either by cheque or by electronic funds transfer directly into their bank accounts. Shareholders should contact the Company’s Registrar for details. Dividend Withholding Tax ("DWT") The Company is obliged to deduct tax at the standard rate of income tax in Ireland (currently 20%) from dividends paid to its shareholders, unless a particular shareholder is entitled to an exemption from DWT and has completed and returned to the Company’s Registrar a declaration form claiming entitlement to the particular exemption. Exemption from DWT may be available to shareholders resident in another EU Member State, or in a country with which the Republic of Ireland has a double taxation agreement in place, and to certain non-individual shareholders resident in Ireland (e.g. companies, pension funds, charities). An explanatory leaflet entitled "Dividend Withholding Tax Information Leaflet" has been published by the Irish Revenue Commissioners and can be obtained by contacting the Company’s Registrar. This leaflet can also be downloaded from the Irish Revenue Commissioners website at http://www.revenue.ie/pdf/dwtinfv2.pdf. Declaration forms for claiming an exemption are available from the Company’s Registrar. Annual General Meeting The Annual General Meeting will be held at the Burlington Hotel, Upper Leeson Street, Dublin 4 on Friday 6 July 2001 at 11.00 a.m. The Notice of Meeting together with an explanatory letter from the Chairman and a Proxy Card accompany this Report. CREST DCC is a member of the CREST share settlement system. Shareholders may continue to hold paper share certificates or hold their shares in electronic form. Share Listings DCC’s shares are traded on the Irish Stock Exchange (symbol: DCC.I) and the London Stock Exchange (symbol: DCC.L). DCC’s shares are quoted on the official lists of both the Irish Stock Exchange and the UK Listing Authority. Financial Calendar Preliminary results announced Ex-dividend date for the final dividend Record date for the final dividend Annual Report posted Annual General Meeting Proposed final dividend payment date Interim results announced Payment date for the interim dividend 14 May 2001 23 May 2001 25 May 2001 7 June 2001 6 July 2001 10 July 2001 early November 2001 early December 2001 78 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 79 Solicitors William Fry Fitzwilton House Wilton Place Dublin 2 Stockbrokers Davy Stockbrokers 49 Dawson Street Dublin 2 Cazenove 12 Tokenhouse Yard London EC2R 7AN Auditors PricewaterhouseCoopers Chartered Accountants & Registered Auditors Wilton Place Dublin 2 Corporate Information Registered and Head Office DCC House Stillorgan Blackrock Co. Dublin Registrar and Transfer Office Computershare Investor Services (Ireland) Limited Heron House Corrig Road Sandyford Industrial Estate Dublin 18 Bankers ABN AMRO Bank Allied Irish Banks Bank of Ireland IIB Bank KBC Bank Royal Bank of Scotland Ulster Bank ANNUAL REPORT AND ACCOUNTS 2001 79 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 80 Index Page Financial Review 20 Accounting Convention Accounting Policies Acquisitions 37 37 5 Five Year Summary and Key Ratios 1997 - 2001 Fixed Assets (note 17) Inside Back Cover Acquisitions of Subsidiary Undertakings (note 39) 69 Forward Contracts - currency and commodity 78 73 54 26 35 59 8 71 5 68 58 4 6 43 42 44 40 72 7 5,26 79 64 23,60 23,60 78 23,60 58 50,64 50,53 23,60 7 32 2 30 28 33 21 Annual General Meeting Approval of Financial Statements (note 48) Associated Undertakings (note 18) Audit Committee Auditors' Report Bank and Other Debt (notes 23) Best Practice Capital Commitments (note 43) Capital Expenditure Capital Grants (note 38) Cash and Term Deposits (note 22) Chairman's Statement Chief Executive/Deputy Chairman's Review Company Balance Sheet Consolidated Balance Sheet Consolidated Cash Flow Statement Consolidated Profit and Loss Account Contingent Liabilities (note 45) Core Strengths and Values Corporate Governance Corporate Information Creditors, Trade and Other (note 28) Credit Risk Management Commodity Price Risk Management CREST Currency Risk Management Debtors (note 21) Deferred Tax (note 30) Depreciation Derivative Financial Instruments (note 27) Development Focus Directors' and Company Secretary's Interests Directors of the Company Directors' Remuneration Directors' Report Directors' Share Options Dividend Cover Dividends (note 14) Dividend Withholding Tax Earnings Per Share (note 15) Employee Information (note 4) Euro Exceptional Gains on Sale of Associated and Subsidiary Undertakings (note 7) Fair Value of Financial Instruments Finance Leases (note 26) Financial Assets (note 18) Financial Calendar Financial Highlights Financial Strength Going Concern Goodwill Group at a Glance Group Directory Growth Strategy Health and Safety Human Resources Inside Front Flap Interest Payable & Similar Charges (note 8) Interest Rate Risk Management Internal Control Investor Relations Information Technology Minority Interests (note 12) Net Cash/(Debt) (note 43) Note of Historical Cost Profits and Losses Notes to the Financial Statements Operating Cash Flow Operating Lease Commitments (note 44) Operating Profit - geographical split Operating Reviews IT (SerCom Distribution) Energy Healthcare Other Activities Pension and Similar Obligations (note 31) Pensions - Directors Provisions for Liabilities and Charges (note 29) Quality and Best Practice Reconciliation of Movements in Equity Shareholders' Funds (note 36) 53 62 27 49,53 74 7 29 9 49 23,61 26 9,77 8 51 22,44,71 41 45 22,70 71 6 11 13 15 16 65 32 64 8 68 44 77 73 30 72 67 21 45 24 66 78 67 28,51 Reconciliation of Net Cash Flow to 78 52 48 29 49 62 60 54 78 Movement in Net Cash/(Debt) Registrar Related Party Transactions (note 47) Remuneration Committee Reporting Currency (note 46) Reserves (note 34) Return on Capital Employed (ROCE) Segmental Information (note 1) Senior Group and Subsidiary Company Management Share Capital (note 32) Inside Front Cover Share Listings 5 Share Premium (note 33) 80 ANNUAL REPORT AND ACCOUNTS 2001 DCC 2001 Accounts - Final 28/5/01 11:58 AM Page 81 Index Share Price Data Shareholder Information Shareholders' Funds Statement of Directors' Responsibilities Statement of Total Recognised Gains and Losses Stocks (note 20) Subsidiary Undertakings (note 19) Substantial Shareholdings Taxation (note 11) Treasury Policy and Management Undrawn Bank Borrowing Facilities 77 77 68 34 41 57 57 28 50 23 63 Website 9,77 ANNUAL REPORT AND ACCOUNTS 2001 81 

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