Annual Report & Accounts 2005 DCC plc DCC House, Brewery Road, Stillorgan, Blackrock, Co. Dublin, Ireland. Tel: +353 1 279 9400 Fax: +353 1 283 1017 Email: info@dcc.ie www.dcc.ie 5 0 0 2 s t n u o c c A & t r o p e R l a u n n A C C D e i . g o d d e r . w w w : n g i s e D . t n e t n o c d e l c y c e r r e m u s n o c - e r p % 0 3 - 5 1 i g n n i a t n o c r e p a p e e r f e n i r o h c l n o d e t n i r p s i t r o p e r s i h T e c n a l g a t a p u o r g C C D Y G R E N E T I N O I T U B I R T S I D E R A C H T L A E H & D O O F E G A R E V E B L A T N E M N O R V N E I ) T N E M E G A N A M I N A H C Y L P P U S D N A I G N D L I U B E M O H ( R E H T O GROUP PBIT % DESCRIPTION GROWTH RECORD DCC MARKETS AND SELLS liquefied petroleum gas and oil products to commercial / industrial, domestic, catering and agricultural customers in Britain and Ireland. DCC MARKETS AND SELLS a broad range of computer hardware and software products in Britain, Ireland and Continental Europe to computer resellers, high street retailers, computer superstores, on-line retailers and mail order catalogues. DCC MARKETS AND SELLS medical, surgical, IV pharmaceutical, mobility & rehabilitation and laboratory products to the acute care, community care and laboratory sectors in Ireland and Britain. DCC is also a leading provider of contract manufacturing services to the nutraceuticals and cosmetics industries in Europe. DCC MARKETS AND SELLS food and beverages in Ireland and wine in the UK. These include healthy foods, snackfoods, fresh coffee and wine to a broad range of catering, convenience store, foods service and multiple grocer customers. DCC is also a leading player in frozen food distribution in Ireland. DCC provides specialist waste management services to the industrial/commercial sectors in Ireland including the treatment of waste oils, waste chemicals and contaminated soils and the marketing of effluent water treatment chemicals. DCC's other activities principally comprise a 49% shareholding in a leading Irish builder of houses, apartments and related commercial developments and a supply chain management business. 60 50 40 30 20 10 0 10 Year CAGR 18.0% 35 30 25 20 15 10 5 0 10 Year CAGR 23.9% 20 15 10 5 0 15 12 10 Year CAGR 20.3% 9 6 3 0 10 Year CAGR 13.9% 6 5 4 3 2 1 0 5 Year CAGR 53.0% 20 15 10 5 0 10 Year CAGR 8.0% 5 Year Review Profit & Loss Account Year ended 31 March Turnover Operating profit before operating exceptional items Operating exceptional items Operating profit Net interest payable Profit on ordinary activities before goodwill amortisation, non-operating net exceptional items and tax Goodwill amortisation Non-operating net exceptional items Profit before taxation Taxation Minority interests Profit attributable to Group shareholders Earnings per share - Basic (cent) - Basic adjusted (cent) Dividend per share (cent) Dividend cover (times) Interest cover (times) Consolidated Balance Sheet As at 31 March Tangible fixed assets Associated undertakings Goodwill Net current assets Net cash/(debt) Shareholders’ funds Minority interests Other long term creditors/provisions Movement in working capital Capital expenditure Acquisitions Development expenditure Operating cash flow 2001 €’m 2002 €’m 2003 €’m 2004 €’m 2005 €’m 1,870.1 2,048.9 2,272.4 2,198.0 2,731.5 102.7 - 102.7 (5.0) 97.7 (5.7) (1.1 ) 90.9 (13.7) (0.9) 76.3 90.26 98.30 24.50 4.0 20.5 2002 €’m 159.2 39.0 118.3 316.5 38.7 63.1 418.3 391.4 4.0 22.9 418.3 (6.9) 37.3 65.6 96.0 91.7 - 91.7 (4.4) 87.3 (4.9) - 82.4 (13.1) (1.2) 68.1 78.98 84.69 21.12 4.0 20.8 2001 €’m 135.2 38.5 84.5 258.2 31.1 83.2 372.5 353.7 3.5 15.3 372.5 19.9 34.1 20.2 74.2 83.4 114.3 (2.9) 111.4 (5.0) 106.4 (7.3) (1.7 ) 97.4 (15.3) (1.3) 80.8 120.9 (2.3) 118.6 (4.8) 113.8 (8.3) (5.9 ) 99.6 (14.5) (0.8) 84.3 96.66 111.00 101.98 121.89 131.5 (3.8) 127.7 (5.6) 122.1 (10.1) (12.1 ) 99.9 (15.1) (1.0) 83.8 104.69 137.25 28.18 32.40 37.26 3.9 23.0 2003 €’m 209.4 40.3 132.1 381.8 45.3 20.1 447.2 429.3 3.6 14.3 447.2 25.7 40.7 80.3 146.7 3.8 25.2 2004 €’m 212.3 53.8 129.6 395.7 25.3 62.7 483.7 469.6 4.1 10.0 483.7 (20.6) 30.5 9.2 19.1 3.7 23.6 2005 €’m 247.6 64.2 193.8 505.6 17.8 (8.2) 515.2 493.7 4.3 17.2 515.2 23.6 42.0 89.3 154.9 114.9 Return on tangible capital employed (%) Return on total capital employed (%) 48.1% 23.7% 46.3% 23.1% 42.2% 22.0% 39.8% 21.3% 40.5% 21.0% Average number of employees 3,056 3,361 3,685 3,768 4,441 120.3 98.5 151.9 MARKET POSITION GROWTH FOCUS STRONG BRANDS No 1 or 2 in most of its markets 345,500 customers 132 facilities 848 vehicles Organic market share growth in LPG and oil Consolidation opportunities in oil distribution in Britain Cawoods Oil*, Emo Oil*, Ergas*, Flogas*, Fuel Card Group*, Fuel Services*, Scottish Fuels*, Shell Y G R E N E (*DCC owned) Leading player in each of its markets No 1 distributor for many of the world's leading brands 16,000 customers 585,000 consignments annually No 1 in Irish medical, surgical and laboratory supplies No 1 in Irish specialist segments in IV pharmaceuticals and related devices Leading player in mobility and rehabilitation products Sole distributor in Ireland for key global brands 3 MHRA approved contract manufacturing facilities No 1 in healthy foods and savoury snacks in Ireland No 2 in freshly ground coffee in Ireland Strong position in wine 24% of sales are of owned brands Over 7,000 customers across Ireland 3 EPA/EHS licensed facilities in Ireland Leading specialist player in Irish environmental market Building c. 600 residential units annually Leading provider of supply chain management services to the technology, telecommunications and medical device sectors Organic market share growth Improving environment for acquisitions Broadening vendor / product portfolio Canon, Cisco Systems, Epson, Fujitsu Siemens, HP, IBM, Microsoft, Oracle, Samsung Electronics, Sony, StorageTek, Sun Microsystems, Symantec, Tivoli, Xbox, Xerox T I N O I T U B I R T S I D General market growth, particularly in non-acute sector Further development of own brands Vertical integration Further acquisitions in Britain and Ireland Days Healthcare*, Diagnostica, DiaMed, Fannin Healthcare*, Fresenius Kabi, Grifols, Molnlycke, Oxoid, Portex, Synthes, Strider* (*DCC owned) Expanding portfolio of strong niche brands Demand growth for healthy foods Pursuing further acquisition opportunities in Britain and Ireland Growing environmental services market Positioned to meet demand for skill-based services from industrial customers Expansion opportunities in Britain as legislation develops Substantial land bank available for future development Trend towards outsourcing supply chain solutions Bollinger, Brown Brothers, Dr Oetker, French Connection*, Hipp, Jordans, Kelkin*, KP, Kylemore, Lemons*, Phileas Fogg, Robinsons, Robt. Roberts*, Torres (*DCC owned) Atlas, Envirotech, Shannon Environmental Services (All DCC owned) Manor Park Homebuilders Apple, Canon, Medtronic, Mapinfo, Microsoft, Nortel Networks, Thompson Telecom E R A C H T L A E H E G A R E V E B & D O O F L A T N E M N O R V N E I ) T N E M E G A N A M I N A H C Y L P P U S D N A I G N D L I U B E M O H ( R E H T O DCC is a value added sales, marketing and business support services group that has delivered compound annual growth of 17% in adjusted earnings per share over the past 10 years. 2005 Summary Results % Growth Reported % Growth Constant Currency Sales € 2.7 billion Operating profit € 131.5 million Earnings (adjusted earnings per share) 137.25 cent Dividends (dividend per share) 37.26 cent +24.3 +8.8 +12.6 +15.0 +22.9 +11.2 +15.2 +15.0 Return on capital employed - excluding goodwill - including goodwill 40.5% (39.8%: 2004) 21.0% (21.3%: 2004) Inside Front Cover Group at a Glance 2-11 Board of Directors Management Chairman’s Statement Chief Executive’s Review 12 Operating Review 26 Financial Review 32 37 43 Corporate Social Responsibility Corporate Governance Directors’ Report and Financial Statements 89-94 Group Directory Shareholder Information Corporate Information Index Inside Back Cover Five Year Summary Board of Directors Alex Spain Alex Spain, B Comm, FCA (aged 72), 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 Nomination Committee and member of the Remuneration Committee. Jim Flavin Chief Executive/Deputy Chairman Jim Flavin, B Comm, DPA, FCA (aged 62), founded DCC in 1976 and is Chief Executive and Deputy Chairman. Prior to founding DCC, he was head of AIB Bank’s venture capital unit. Mr Flavin is a former Deputy Chairman and Senior Independent Director of eircom plc. Member of the Nomination Committee. Paddy Gallagher Maurice Keane Kevin Murray Paddy Gallagher, BL, DPA (aged 65), 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 Property Unit Trust and is Chairman of the Trustees of the An Post Superannuation Scheme. Mr Gallagher joined the Board in 1976. Chairman of the Audit Committee and member of the Nomination Committee. Maurice Keane, B Comm, M Econ Sc (aged 64), non-executive Director, was a member of the Court of Directors of Bank of Ireland up to February 2005, having been Chief Executive up to February 2002. He is a director of Axis Capital Holdings Limited and is Chairman of BUPA Ireland and of University College Dublin Foundation Limited. He was also Chairman of Bristol & West plc up to February 2005. Mr Keane joined the Board in 2002. Member of the Audit and Nomination Committees. Senior Independent Director. Kevin Murray, BE, FCA (aged 46), 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 Healthcare and of DCC Environmental, having previously been Managing Director of DCC Energy from 1996 to 2004 and Managing Director of DCC Food & Beverage from 1999 to 2004. Mr Murray joined the Board in 2000. 2 Tony Barry Tommy Breen Tommy Breen, B Sc (Econ), FCA (aged 46), executive Director, joined DCC in 1985, having previously worked with KPMG. He is Managing Director of DCC Energy, having previously been Managing Director of DCC SerCom from 1996 to 2004. Mr Breen joined the Board in 2000. Tony Barry, Chartered Engineer (aged 70), non-executive Director, was Chairman of CRH plc from 1994 to May 2000, having previously been Chief Executive. He was a member of the Court of Directors of Bank of Ireland from 1993 to 2003 and was Deputy Governor from October 1997 to September 2000. He was Chairman of Greencore Group plc up to February 2003. He is a past President of The Irish Business and Employers’ Confederation. Mr Barry joined the Board in 1995. Chairman of the Remuneration Committee and member of the Nomination Committee. Fergal O’Dwyer Bernard Somers Fergal O’Dwyer, FCA (aged 45), 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. Bernard Somers, B Comm, FCA (aged 56), non-executive Director, is a non-executive director of Independent News and Media plc, Irish Continental Group plc and Ardagh plc and is Chairman of eTel Group, a central European telecommunications company. He is a former director of the Central Bank of Ireland. Mr Somers is the founder of Somers & Associates, which has built a substantial practice in corporate restructuring. He has also been an investor in and a director of several start-up companies. Mr Somers joined the Board in 2003. Member of the Audit and Remuneration Committees. 3 senior management group and divisional Jim Flavin Deputy Chairman Group Chief Executive Tommy Breen Executive Director Kevin Murray Executive Director Fergal O’Dwyer Executive Director Managing Director DCC Energy Managing Director DCC Healthcare and DCC Environmental Chief Financial Officer Frank Fenn Donal Murphy Managing Director DCC Food & Beverage Managing Director DCC SerCom Ann Keenan Head of Group Human Resources Colman O’Keeffe Deputy Managing Director DCC Energy Peter Quinn Head of Group IT Michael Scholefield Managing Director Corporate Finance Gerard Whyte Group Secretary Compliance Officer Head of Enterprise Risk Management 4 senior management subsidiaries Energy DCC Energy Northern Ireland Emo Oil Flogas Ireland Flogas UK Fuel Card Group GB Oils IT Distribution Distrilogie Gem Distribution Micro Peripherals Sharptext Healthcare Days Healthcare DCC Nutraceuticals Fannin Healthcare Group Laleham Healthcare Virtus Food & Beverage Allied Foods Bottle Green Broderick Bros Kelkin Robt. Roberts Environmental Sam Chambers Gerry Wilson Pat Mercer Paddy Kilmartin Ben Jordan Tom Howley Managing Director Acting Managing Director Managing Director Managing Director Chief Operations Officer Chief Operating Officer Patrice Arzillier Paul Donnelly Anthony Catterson Paul White Managing Director Managing Director Managing Director Managing Director Barry O’Neill Stephen O’Connor Andrew O’Connell Vic Hilliard John Leonard Managing Director Managing Director Managing Director Managing Director Managing Director Mitchel Barry Jerry Lockspeiser Fintan Corrigan Bernard Rooney Ken Peare Chairman & Chief Executive Managing Director Managing Director Managing Director Managing Director Atlas Environmental Ireland Declan Ryan Managing Director Supply Chain Management SerCom Solutions Kevin Henry Managing Director 5 chairman’s statement DCC’s business model is focused on generating long term, quality growth in shareholder value. Compound annual growth in reported adjusted earnings per share of 14.8% over the last five years and 17.0% over the last ten years has been achieved while investing sensibly to support future growth and maintaining a strong financial position. Dividend increase of 15% The Directors are recommending price of €12.80 per share and at a total cost of €26.8 million. DCC announcement on 24 January 2002 in which it stated that it a final dividend of 23.75 cent per has bought back a total of 10.45% “is completely satisfied that none share which, when added to the of its issued share capital since of its officers was in possession interim dividend of 13.51 cent per share, gives a total dividend of 37.26 cent per share for the year, a 15% increase over the prior year July 2000 at an average price per share of €10.48 and a total cost of €97.7 million. of price sensitive information on Fyffes in February 2000, when Lotus Green accepted offers from the market for 87% dividend of 32.40 cent per share. Propriety of Fyffes share sales of its shareholding in Fyffes, The dividend is covered 3.7 times in February 2000 and believes that the sales by adjusted earnings per share On 24 January 2002 Fyffes plc were undertaken with (3.8 times: 2004). The final initiated legal action against DCC, absolute propriety”. dividend will be paid on 11 July its wholly owned subsidiary, Lotus 2005 to shareholders on the Green, and others in connection On 3 August 2004 DCC announced register at the close of business with the sale in February 2000 to the Stock Exchange that it had on 27 May 2005. by Lotus Green of 87% of the made an application to the High shareholding it held in Fyffes Court in Dublin to expedite the Share buybacks at that time. DCC bought back a further hearing of the legal action initiated by Fyffes. As a result, 2,065,000 of its own shares on The Board of DCC set out its the hearing of the action began 17 May 2004 (2.53% of the issued views on the Fyffes action in a in the High Court on 2 December share capital at that date) at a comprehensive Stock Exchange 2004. The hearing is expected 6 Dividend per share Compound annual growth rate: 5 years 10 years 16.2% 16.9% to conclude before the end of agricultural and small commercial Irish chilled and frozen foods July 2005 but it is likely to be and industrial customers distribution market. a number of months before a in Britain. judgement is delivered. The Group is actively pursuing DCC is now the largest further acquisitions in each of The action has been, and is independent oil marketing and its divisions. being, fully defended consistent distribution business in Britain. with the view of the Board as In January 2005, DCC Energy Corporate governance set out in DCC’s Stock Exchange acquired Dyneley Holdings The Board of DCC is committed announcement of 24 January Limited, a British company that to maintaining the highest 2002 and the Directors have sells motor fuel through fuel standards of corporate concluded that no provision cards under the BP, Esso and governance. The Board is satisfied should be made in respect of Texaco brands. that the Group has effective this matter, other than expensing ongoing processes for identifying, ongoing costs in relation to DCC Healthcare broadened its evaluating and managing risks the action. nutraceuticals business through faced by the Group. A detailed the acquisition, in December 2004, statement, set out on pages 37 to Acquisitions and development of 77.5% of Laleham Healthcare 42, describes how DCC has Acquisition and development expenditure amounted to €131.3 Limited, a contract manufacturer complied with all of the Principles and packer of creams and other of Good Governance and Code of million. DCC’s ongoing acquisition liquid products for the health and Best Practice as set out in the July programme resulted in a number beauty market. The enlarged 2003 Combined Code on of acquisitions being completed business is a leading supplier of Corporate Governance. during the year, at a total committed cost of €89.3 million, of which €11.1 million was deferred. Capital expenditure amounted to €42.0 million. The cash impact of acquisitions in the period was €81.1 million. contract services – product development, manufacturing and The future packaging – to the European DCC is commercially and nutraceuticals sector. financially well placed to generate ongoing growth both organically In August 2004, DCC Food & and by acquisition. Beverage completed the acquisition of Bottle Green In October 2004, DCC Energy Limited, a UK based wine sales completed the acquisition of and marketing business, and the business of Shell Direct UK increased its shareholding from Alex Spain which supplies heating oils and 51.5% to 100% in Allied Foods Chairman transport fuels to domestic, Limited, a leading player in the 13 May 2005 7 chief executive’s review It is pleasing to report another excellent year of growth, with sales increasing by 22.9% to €2.73 billion and adjusted earnings per share by 15.2% to 137.25 cent (constant currency). The return on capital employed was excellent at 40.5% on tangible assets and 21.0% on assets inclusive of acquisition goodwill. 8 Sales and marketing strengths Efficient service to suppliers and customers Concentration on business-to-business sales Focused sales teams Efficient telesales Tight control of working capital Excellent procurement Experienced management Strong market positions Sales and distribution reach Core competencies DCC has developed a track record channel and brand strategies of The core expertise of DCC is of excellence in identifying, third party principals. DCC’s business to business valued added executing and integrating bolt-on sourcing and procurement sales and marketing. In particular, providing an efficient service to acquisitions, to which it committed €89 million in the expertise is an important enabling factor supporting this strategy. both suppliers and customers, past year. The Group has applying effective sales practices succeeded in identifying UK - primary geographic focus for and ensuring tight control of businesses that fit with existing further expansion working capital are consistent operations and acquiring them at The proportion of DCC’s profits features throughout the Group. sensible operating profit generated in the UK has grown This expertise, combined with a multiples. The entrepreneurial significantly over recent years and depth of experience and skill in management teams that have in the last financial year executing shareholder value successfully built these acquired amounted to 53% of total enhancing acquisitions, has driven businesses normally remain with operating profit. The UK market DCC’s strong earnings growth DCC following acquisition and offers a considerable growth record, high returns on capital contribute both to the extraction opportunity for each of DCC’s employed and excellent of synergies through integration divisions and will, therefore, be shareholder returns. with DCC’s existing operations the primary geographic focus for and to future growth. DCC’s development in the next DCC has pursued a consistent number of years. strategy of applying its core skills Increasing focus on sales of DCC across different markets. The owned brands In Energy, DCC is now the largest success of this strategy is borne DCC seeks to deploy its sales and independent oil marketing and out by DCC’s shareholder return marketing expertise to add real distribution business in Britain. outperformance. DCC floated on value for the third party principals Following the acquisition during the Irish and London Stock whose brands it sells and markets, the year of the business of Shell Exchanges in May 1994 at a flotation price of €3.17 and on 31 March 2005 DCC’s shares closed at €17.94, an appreciation of 465%, and increasingly for DCC’s own Direct UK, DCC has an operating brands. Sales of DCC’s own brands structure that will enable it to be have grown to approximately 43% a consolidator in the downstream of total sales. The Group’s strategy oil sales and marketing business or 525% when dividends paid to continue growing the in Britain. during the period are included. proportion of total sales Over the same period the ISEQ represented by DCC’s own brands In IT Distribution, DCC has index appreciated by 231% and the will enhance margin opportunities achieved significant organic FTSE 100 index by 57%. and reduce exposure to changing growth in sales of software and 9 Adjusted earnings per share Compound annual growth rate: 5 years 10 years 14.8% 17.0% consumer products to the retail optimisation for the Healthcare of its total sales. In healthy foods, channel – which now account for division. The acquisition of DCC’s own Kelkin brand, the clear over 30% of DCC’s total IT sales. Laleham Healthcare, a British market leader in Ireland, has DCC is now the leading consumer based contract manufacturer and achieved consistently strong software distributor in Britain. This packer of creams and other liquid growth and DCC is seeking retail channel strength will products for the health and opportunities to develop a UK continue to provide opportunities beauty market, complements and healthy foods business from this for organic and acquisition further strengthens DCC’s strong base in Ireland. growth as the consumer digital nutraceuticals business. The product market continues to grow. enlarged business is a leading In Environmental, DCC has supplier of contract services – achieved strong growth in Ireland In Healthcare, DCC has a market product development, in recent years, particularly in the leading position in acute and manufacturing and packaging – to knowledge-intensive areas of community care products in the European nutraceuticals waste oils, chemicals and Ireland under its Fannin sector from its British base. contaminated soils treatment, and Healthcare brand. From this in the marketing of effluent water platform, DCC is well positioned to Healthy foods and wines now treatment chemicals under a DCC- pursue niche growth account for over 50% of DCC Food owned brand. DCC has a small but opportunities in acute care, & Beverage’s profits. Both areas growing business in the particularly intravenous have been growing faster than the marketing of water treatment pharmaceuticals, in Britain. DCC’s overall food and beverage market chemicals in Britain where it is community care business is well in recent years and offer continued seeking to leverage its skills to placed to continue the growth of above-average growth potential in replicate the success of the Irish its Days Healthcare brand, both in the years ahead. Following the environmental services business, Britain and in European markets. acquisition of Bottle Green during both organically and by The growth of both the Fannin the year, DCC has a strong presence acquisition. Healthcare and Days Healthcare and specialist skill-base in the UK businesses is supported by a wine market that leaves the Optimal use of shareholders’ strong procurement resource. DCC business well positioned to pursue funds has a team of six specialists in further organic growth DCC seeks to make optimal use of China who are creating opportunities. Over the past year shareholders’ funds through the competitive advantage in the Bottle Green has significantly development and acquisition of areas of supplier selection, cost increased sales of its own brands, businesses with low working management, maintenance of such as French Connection, which capital intensity. Working capital quality and supply chain now represent approximately 40% days at 31 March 2005 equated to 10 €'m 140 120 100 80 60 40 20 0 Market sector analysis of operating profit from continuing activities Compound annual growth rate: 5 years 10 years Continuing Reported 12.7% 11.1% 17.0% 14.9% Energy IT Distribution Healthcare Food & Beverage Environmental Other 96 97 98 99 00 01 02 03 04 05 10.5 days’ sales. This focus on cash expansion in the UK by each of generative businesses drives the Group’s divisions support this higher returns on capital view. Having completed several employed. In addition, DCC has acquisitions during the past year, adopted an opportunistic DCC is focused on leveraging its approach to earnings enhancing business platforms, management share buybacks, and has bought capacity and financial strength to back 10.45% of its issued share deliver continued organic and capital in recent years at an average price of €10.48 per share. acquisition growth, strong cash generation and excellent returns on capital. Outlook The long term outlook for DCC is exciting. The increasing proportion of the Group’s total sales Jim Flavin represented by DCC’s own brands Chief Executive/Deputy Chairman and the potential for further 13 May 2005 11 operating review DCC achieved excellent growth in the profitability of its Energy, Healthcare, Food & Beverage, Environmental and Other activities. IT Distribution profits declined due to very challenging market conditions. Tommy Breen Managing Director Energy Kevin Murray Managing Director Healthcare and Environmental Frank Fenn Managing Director Food & Beverage Donal Murphy Managing Director IT Distribution % Change Reported Constant Currency* +12.0 -11.9 +18.4 +21.7 +8.5 +25.0 +15.4 -8.9 +20.2 +22.6 +10.2 +25.0 2005 €’m 51.3 27.5 16.1 13.2 5.5 17.9 Energy IT Distribution Healthcare Food & Beverage Environmental Other (Homebuilding and Supply Chain Management) Total 131.5 +8.8 +11.2 * All constant currency figures quoted in this report are based on retranslating current year figures at the prior year translation rate 12 10 Year CAGR 18.0% energy 10 Year CAGR 23.9% IT distribution 60 50 40 30 20 10 0 35 30 25 20 15 10 5 0 20 15 10 5 0 10 Year CAGR 13.9% food & beverage 5 Year CAGR 53.0% environmental 15 12 9 6 3 0 6 5 4 3 2 1 0 20 15 10 5 0 10 Year CAGR 20.3% healthcare 10 Year CAGR 8.0% other (Homebuilding and Supply Chain Management) 13 Energy 2005 2004 % change % change Constant Currency Reported Sales Operating profit Return on capital employed - excluding goodwill - including goodwill €1,240.6m €51.3m €841.3m €45.8m +47.4 +12.0 +45.5 +15.4 47.2% 23.7% 39.4% 21.9% energy DCC Energy achieved strong growth in the year with operating profit increasing, on a constant currency basis, by 15.4%. During the year the business delivered 2.47 billion litres of product, an increase of 20%, further strengthening its position as the leading independent marketer of LPG and oil products in Britain and Ireland. DCC Energy now sells to approximately 345,500 customers from 132 facilities. DCC’s LPG business performed well in a challenging operating environment of increasing product prices and milder weather conditions. DCC’s oil business grew strongly, benefiting from good organic volume growth in Britain and the Republic of Ireland. The scale of the business was significantly increased by two acquisitions during the year and DCC is now the leading independent marketer of lpg and oil products in both Britain and Ireland. In October 2004, DCC acquired the trade, assets and goodwill of the business of Shell Direct UK, which supplies heating oils and transport fuels to domestic, agricultural and small commercial and industrial customers. In January 2005, DCC acquired Dyneley Holdings Limited, a British company that sells motor fuel, via fuel cards, under the BP, Esso and Texaco brands. Both of these acquisitions performed in line with expectations. 14 This page: DCC’s subsidiary, Emo Oil distributes Shell branded heating oils and transport fuels to domestic, agricultural and small commercial and industrial customers in Britain, including The House of Commons. Opposite page: Flogas UK, a DCC subsidiary, supplies LPG for domestic, commercial, transport, agricultural and industrial uses. Photographed here in Stapleford Park, one of England’s finest stately homes, Sous Chef, Matt Bird prepares dinner for guests, using Flogas. 15 IT distribution IT Distribution 2005 2004 % change % change Constant Currency Reported Sales Operating profit Operating margin Return on capital employed - excluding goodwill - including goodwill €878.2m €859.4m €31.3m 3.6% €27.5m 3.1% 34.2% 21.4% 41.9% 25.5% +2.2 -11.9 +0.8 -8.9 Following an excellent first half performance, the second half of the year was impacted by very difficult trading conditions in the IT distribution sector. The business achieved very good sales volume growth of approximately 15% during the year. However, this was offset by severe product price deflation, a highly competitive marketplace and adverse changes in terms and conditions with some key suppliers. DCC’s UK hardware distribution business achieved good sales volume growth, with particularly strong growth in both PCs and printers, but profits were impacted by severe product price deflation and margin pressure in a very competitive UK hardware marketplace. Trading was more difficult in the last quarter of the financial year and remains challenging. DCC’s UK software distribution business had an excellent year, with particularly strong growth in sales of computer games, security software and peripheral products into the major retailers. The Christmas trading period was strong, with the business distributing the number one game for each of the Xbox, Playstation and PC platforms. The business continues to broaden its product range in line with its strategy to be a specialist distributor to the retail channel of software, peripherals and consumer electronics. DCC’s Irish IT distribution business had a satisfactory performance, leveraging its position as the leading IT distributor in Ireland, to grow its market share in a very competitive marketplace. DCC’s Continental European IT distribution business had a very difficult year. Its performance was impacted by changes in terms with some key suppliers and significant levels of price deflation as the suppliers heavily discounted their products to grow market share in the very competitive European enterprise infrastructure market. 16 This page: Gem Distribution, a DCC subsidiary, is a leading supplier of leisure products to the retail sector in the UK, including Nintendo DS games consoles and Creative Labs MP3 players. Opposite page: DCC’s subsidiary, Distrilogie, markets and sells enterprise infrastructure including computer storage products in Europe. Here, Bertrand Bombe, HP’s Director of Storage - Business Units, meets with Patrice Arzillier, Managing Director of Distrilogie. 17 healthcare DCC Healthcare achieved good sales and profit growth and all areas of activity developed well. Healthcare 2005 2004 % change % change Constant Currency Reported Sales Operating profit Operating margin Return on capital employed - excluding goodwill - including goodwill €170.7m €16.1m 9.4% €149.0m €13.6m 9.1% 40.3% 13.0% 37.0% 12.1% +14.6 +18.4 +13.7 +20.2 Good profit growth was achieved in the acute and community care sector with particularly strong growth in the sales of IV pharmaceutical products, and related specialist delivery systems to support their use. These products, which are used in the management of critically ill patients, include haematology, oncology, anaesthesia and anti-infective compounds. Days Healthcare, the mobility and rehab business, achieved good sales growth in Germany, Britain and other European markets, aided by increased investment in procurement resources in China. The nutraceuticals business enjoyed excellent organic growth, benefiting from its success in broadening its branded customer base particularly in Britain, Scandinavia and the Benelux countries. In December 2004, DCC acquired 77.5% of Laleham Healthcare Limited, a contract manufacturer and packer of creams and other liquid products for the health and beauty market. The acquisition broadens DCC Nutraceuticals’ contract services offering, comprising product development, manufacturing and packaging, to the European nutraceuticals sector and creates opportunities to cross sell products and services. 18 This page: Technicians in the compounding unit of DCC’s subsidiary, Fannin Healthcare, prepare Ambisome infusions for use in intensive care units in Dublin hospitals. Opposite page: Well-known branded nutraceuticals in tablet, capsule, liquid and stick pack form, such as Equazen’s eye q capsules and sachets, are manufactured by DCC Nutraceuticals for the European market. 19 Food & Beverage 2005 2004 % change % change Constant Currency Reported Sales Operating profit Operating margin Return on capital employed - excluding goodwill - including goodwill €242.3m €13.2m 5.5% €170.7m €10.9m 6.4% 40.8% 18.2% 42.0% 21.4% +42.0 +21.7 +41.5 +22.6 food & beverage DCC Food & Beverage achieved strong sales and profit growth reflecting an increased shareholding (from 51.5% to 100%) in Allied Foods Limited, a leading player in the Irish chilled and frozen foods distribution market, and the acquisition of Bottle Green Limited. Bottle Green is a Leeds based wine sales and marketing business, supplying branded and exclusive label solutions to the UK wine market. The business is increasing the share of its profits coming from its own higher margin brands, such as French Connection. Both Bottle Green and Allied Foods have performed in line with expectations. There was good organic growth in wine and healthfoods, with the Kelkin brand performing particularly well. Kelkin is the number one healthfood business in Ireland and will continue to capitalise on the growing demand for healthy foods and beverages by expanding its product range and increasing selling and marketing activities behind the brand. Increased focus is being given to Northern Ireland and options are being explored to expand the business into Britain. The increasingly competitive environment in the Irish grocery and foodservice sectors continued to impact margins for the division as a whole. 20 This page: DCC’s subsidiary, Bottle Green supplies branded and exclusive label solutions to the UK multiple wine market. Here, Managing Director, Jerry Lockspeiser, presents the company’s French Connection brand. Opposite page: DCC markets and sells healthy foods and beverages, snackfoods and fresh coffee to a broad range of customers in Ireland under its own Kelkin and Robt. Roberts brands, as well as marketing and selling third party branded products such as KP and Robinsons. 21 environmental Environmental 2005 2004 % change % change Constant Currency Reported Sales Operating profit Operating margin Return on capital employed - excluding goodwill - including goodwill €25.8m €5.5m 21.2% €24.1m €5.0m 20.9% 41.1% 20.1% 50.8% 19.8% +7.0 +8.5 +6.5 +10.2 DCC Environmental is a leading specialist player in the Irish environmental market, operating from three EPA/EHS licensed facilities. The business achieved good sales and profit growth with steady progress made in all areas of activity. DCC Environmental continues to provide a broad range of services including waste chemical, water and oil treatment, soil remediation and emergency response to industrial and commercial customers in Ireland. The business is seeking to expand its activities in Britain, where business opportunities are opening up due to increased UK environmental regulations. 22 This page: DCC is committed to a cleaner environment and provides services for the treatment of water, waste chemicals and soil. Opposite page: DCC provides specialist waste management services to the industrial and commercial sectors in Ireland, including customers such as ESB. 23 Other (Homebuilding and Supply Chain Management) 2005 2004 % change % change Constant Currency Reported Sales Operating profit €174.0m €17.9m €153.4m €14.3m +13.4 +25.0 +13.4 +25.0 other homebuilding and supply chain management Manor Park Homebuilders (a 49% owned associate company), which is a leading Irish homebuilding company, contributed operating profit of €19.0 million (€15.2 million: 2004) from house and apartment sales and related commercial development. SerCom Solutions, the supply chain management business, reported an operating loss for the year of €1.1 million (operating loss of €0.9 million: 2004). The business has successfully completed the restructuring programme announced in January 2005 and has consolidated its Irish based kitting and assembly activities at its recently expanded facility in Limerick. The business is now profitably implementing its strategy of providing world-class supply chain management services. 24 25 financial review The year to 31 March 2005 was another year of growth and development at DCC plc and represented DCC’s eleventh year of uninterrupted profit growth since becoming a public company in 1994. Fergal O’Dwyer Chief Financial Officer 26 financial review Overview of Results important to note that this Turnover grew by 22.9% on a measurement of the overall Group development and share buyback expenditure of €142.0 million was constant currency basis (24.3% reported) to €2,731.5 million and margin is of limited relevance due to the influence of changes in oil partially offset by cash flow from operations of €114.9 million. operating profit increased by 11.2% product costs on the percentage. Interest cover was 23.6 times (25.2 on a constant currency basis (8.8% reported) to a record €131.5 million While changes in oil product costs times: 2004). will change percentage operating (as detailed in Table 1), margins, this has little relevance in Profit before net exceptional approximately 40% of which the downstream energy market in items, goodwill amortisation and growth was organic and the which DCC Energy operates, where tax rose by 11.0% on a constant balance from shareholder value profitability is driven by absolute enhancing bolt on acquisitions. contribution per litre (or tonne) of currency basis (8.5% reported) to €126.0 million. Organic profit growth was held product sold, and not a percentage back by the very challenging margin. Excluding Energy, the Net exceptional items market conditions in IT Group’s operating margin was Distribution which have prevailed 5.4% compared to 5.5% in the since late 2004. DCC’s five other previous year. areas of activity performed very As announced in January 2005, net exceptional charges of €16.0 million were incurred. These arose mainly in relation to the well, generating profit growth on a A detailed operating review is set restructuring of SerCom Solutions, constant currency basis of 18.3% out on pages 12 to 24. acquisition related restructuring in (16.0% reported). DCC Energy and legal costs. The Group’s operating margin was The net interest charge was €5.6 million, an increase of €0.8 million The consolidation of SerCom 4.8% (5.5%: 2004); however, it is on the prior year. Acquisition, Solutions’ kitting and assembly Table 1: Operating profit 2005 2004 Reported Constant Currency % Change H1 H2 FY €’m €’m €’m H1 FY H2 €’m €’m €’m H1 % H2 % FY % Energy IT Distribution Healthcare Food & Beverage Environmental Other 10.1 41.2 14.5 13.0 9.0 7.1 7.4 5.8 2.8 2.7 10.6 7.3 51.3 27.5 16.1 13.2 5.5 17.9 10.7 11.6 6.5 5.0 2.3 5.1 35.1 45.8 19.7 7.1 5.9 2.7 9.2 31.3 13.6 10.9 5.0 14.3 -5% +12% +17% -12% +13% -26% +10% +26% +18% +17% +26% +22% +16% +9% +2% +41% +16% +25% H1 % H2 % FY % -4% +21% +15% -9% +16% -23% +11% +28% +20% +17% +27% +23% +19% +3% +10% +41% +16% +25% Total 46.0 85.5 131.5 41.2 79.7 120.9 +12% +7% +9% +14% +10% +11% All constant currency figures quoted in this report are based on retranslating current year figures at the prior year translation rate. 27 financial review – continued activities at its recently extended a Taiwanese public company, Adjusted Earnings per Share Limerick facility resulted in the Donald Wu, its chairman and Adjusted earnings per share closure of its loss making Dublin major shareholder, and Jenny Wu, increased by 15.2% on a constant facility. Following this his wife and director (the currency basis (12.6% reported) to restructuring programme, the business is now profitable and Defendants). DCC has not recognised the €19.4 million due 137.25 cent. DCC has achieved compound annual growth in cash generative. from the Defendants in its reported adjusted earnings per Following the acquisition by DCC years and 17.0% over the last ten accounts pending its collection. share of 14.8% over the last five Energy of the business of Shell Taxation years. Direct UK, planned exceptional The Group’s taxation charge on restructuring costs were incurred ordinary activities, before goodwill Dividend in order to improve the overall amortisation and net exceptional The total dividend for the year of efficiency of the business. items, for the year represents an 37.26 cent per share represents an effective tax rate of 12.0%. The increase of 15% over the previous DCC incurred costs in relation to effective tax rate reflects, in part, year. The dividend is covered 3.7 the Fyffes plc legal action and in lower rates of tax in Ireland, times (3.8 times: 2004) by relation to the pursuit in Taiwan including manufacturing relief at adjusted earnings per share. of the damages, costs and interest (amounting to €19.4 million at 31 10.0%. The standard rate of corporation tax in Ireland is 12.5% Return on Capital Employed March 2005) awarded to DCC by since 1 January 2003. An analysis A core strength of DCC is the the High Court in London of the taxation charge is creation of shareholder value following the successful legal contained in note 11 to the through delivering consistent, long action against Pihsiang Machinery financial statements. term returns in excess of DCC’s cost Manufacturing Company Limited, of capital. In the year under review, Table 2: Return on capital employed 2005 2004 ROCE (excl Goodwill) ROCE (incl Goodwill) ROCE (excl Goodwill) ROCE (incl Goodwill) 47.2% 34.2% 40.3% 40.8% 41.1% 36.3% 40.5% 23.7% 21.4% 13.0% 18.2% 20.1% 31.1% 21.0% 39.4% 41.9% 37.0% 42.0% 50.8% 35.5% 39.8% 21.9% 25.5% 12.1% 21.4% 19.8% 29.5% 21.3% Energy IT Distribution Healthcare Food & Beverage Environmental Other Group 28 financial review – continued DCC again achieved excellent existing operations, returns on capital employed (as complementary bolt-on Acquisition and development expenditure amounted to €131.3 detailed in Table 2), generating a acquisitions, dividend payments million. DCC’s ongoing acquisition return of 40.5% excluding goodwill and selective share buybacks. programme resulted in a number and 21.0% including goodwill DCC’s record of excellent cash of acquisitions being completed (39.8% and 21.3% respectively: 2004). DCC’s return on capital employed has remained generation continued with operating cash flow of €114.9 million compared to €151.9 million during the year, at a total committed cost of €89.3 million, of which €11.1 million was consistently high due to a in the previous year, which combination of achieving attractive benefited from the correction of acquisition valuations and relatively unfavourable working excellent integration synergies. capital conditions which existed at Cash flow DCC focuses on operating cash 31 March 2003. Despite an increase in sales of €533.6 million, working capital increased by just €23.6 flow to maximise shareholder million, equating to 10.5 days’ sales value over the long term. at 31 March 2005, compared to 11.6 Operating cash flow is principally days’ at 31 March 2004, as detailed used to fund investment in in Table 4. deferred. The cash impact of acquisitions in the year was €81.1 million. Capital expenditure was €42.0 million (inclusive of expenditure of €13.9 million on land and buildings). Net of disposals, capital expenditure was €34.1 million. Table 3: Summary of Cash Flows Table 4: Working Capital Days Inflows Operating cash flow Share issues (net) Outflows Capital expenditure (net) Acquisitions Share buyback Interest and tax paid Dividends paid Net exceptional costs Net cash (outflow)/inflow Translation adjustment Opening net cash Closing net (debt)/cash Stocks Debtors Creditors 2005 €’m 114.9 6.8 121.7 34.1 81.1 26.8 12.0 27.2 6.6 187.8 (66.1) (4.8) 62.7 (8.2) 2004 €’m 151.9 1.2 153.1 28.1 14.3 25.0 8.9 24.8 10.7 111.8 41.3 1.3 20.1 62.7 2005 Days 13.8 46.4 (49.7) 2004 Days 15.8 46.5 (50.7) 10.5 11.6 29 financial review – continued Table 5: Analysis of Net (Debt)/Cash Cash and term deposits Bank and other debt repayable within one year Bank and other debt repayable after more than one year Unsecured notes due 2008 to 2016 2005 €’m 2004 €’m 352.4 320.6 (45.1) (143.7) (10.4) (305.1) (16.6) (97.6) Net (debt)/cash (8.2) 62.7 Balance sheet Reporting Standards (IFRS) for 17 as disclosed in note 32(b). DCC has a very strong balance reporting periods beginning on or The assets and liabilities of the sheet with shareholders’ funds of €493.7 million at 31 March 2005. after 1 January 2005. The Group Group’s pension schemes will will prepare its financial be recognised on the balance The composition of net debt at 31 statements for the year ending 31 sheet and pension expenses March 2005 is analysed in Table 5. March 2006 under IFRS, including will be charged to the Group Cash and term deposits are comparative information. Interim Income Statement; analysed in note 22 to the financial statements for the Financial instruments: IAS 39 financial statements. An analysis period to 30 September 2005, requires companies to of DCC’s debt at 31 March 2005, including comparatives, will be recognise all financial including currency, interest rates prepared under IFRS. instruments, including all and maturity periods, is shown in derivatives. Derivatives include notes 23 to 26 to the financial The principal changes for the forward foreign exchange statements. In April 2004 DCC Group arising from this transition contracts, currency and completed a private placement of from Irish GAAP to IFRS will be: interest rate swaps and must debt raising the equivalent of €212.1 million in 10 and 12 year Goodwill on acquisitions: IFRS 3 be measured at fair value. DCC requires the identification of does not take speculative funding (average maturity 10.3 intangible assets acquired on positions and where years) which further strengthens business combinations. These permissable, will apply hedge the Group’s capital structure and intangible assets will be accounting treatment which its capacity to pursue organic and amortised over an appropriate recognises the offsetting acquisition growth opportunities period. In addition, goodwill is effects of changes in the fair in all of its core business areas. no longer amortised, rather it values of the cash flows of the The strength of DCC’s business will be subject to annual hedging instrument and the model and attractive market reviews to test for impairment; hedged item. conditions at the time of the Share based payments: IFRS 2 placement led to the funds being requires share options to be As a result of a detailed review of raised on very good terms. expensed through the Group the full implications of the International Financial Reporting Loss Account); satisfied that it is prepared for the Standards Post employment benefits: introduction of IFRS. Income Statement (Profit and transition to IFRS, the Group is It is mandatory for all EU listed The requirements of companies to report their International Accounting consolidated financial statements Standard 19 (IAS 19) are under International Financial broadly similar to those of FRS 30 financial review – continued Treasury policy and management foreign currency exposures are Commodity price risk The principal objective of the generally hedged by using management Group’s treasury policy is the forward contracts to cover specific Commodity forwards and swaps minimisation of financial risk at or highly probable forecasted are frequently used to fully or reasonable cost. This policy is purchases and receivables. partly hedge potential price reviewed and approved annually Although over half of the Group’s movements in LPG products and by the Board. The Group does not operating profits are sterling oil products to be purchased by take speculative positions but denominated, certain natural the Group’s energy businesses in seeks, where considered economic hedges exist within the Britain and Ireland. All such appropriate, to hedge underlying Group, for example, a proportion contracts are entered into with trading and asset/liability of the purchases by certain of its counterparties approved by the exposures by way of derivative Irish businesses are sterling Board and usually for a period not financial instruments (such as denominated. The Group does not exceeding three months. interest rate and currency swaps consider it necessary to put in and forward contracts). DCC’s place further hedges in this Group Treasury function centrally respect. manages the Group’s funding and liquidity requirements. Divisional Interest rate risk management and subsidiary management, in The Group borrows at both fixed conjunction with Group Treasury, and floating rates of interest and manage foreign currency and utilises interest rate swaps to commodity price exposures within manage its exposure to interest approved guidelines. An analysis rate fluctuations. of the Group’s hedging positions is contained in note 27(b) to the Credit risk management financial statements. DCC transacts with a variety of financial institutions for the Currency risk management purpose of placing deposits and DCC’s reporting currency and that entering into derivative contracts. in which its share capital is The Group actively monitors its denominated is the euro. credit exposure to each Exposures to other currencies, counterparty within guidelines principally sterling and the US approved by the Board. dollar, arise in the course of ordinary trading. Trading related 31 corporate social responsibility The continued development of a best- practice framework underpins DCC’s proactive approach to Corporate Social Responsibility. This approach reflects DCC’s commitment to all key stakeholders - communities, customers, employees, the environment and shareholders. 32 corporate social responsibility Commitment DCC’s commitment to Corporate Social Responsibility (CSR) benefits DCC and its key stakeholders – communities, customers, employees, the environment and shareholders. Understanding the needs of all stakeholders strengthens DCC’s ability to take advantage of business opportunities, to contribute to the community at large, to support enduring, sustainable competitive advantage and to maximise shareholder value. Progress The continued development of a best-practice framework underpins the Group’s proactive approach to CSR within the following key areas: Marketplace Environment, Health and Safety Community Workplace A review of each of these areas is provided on the following pages. Plans DCC is continuing its strategy of building awareness and understanding of the implications and benefits of CSR throughout the Group. DCC encourages its management to lead by example and to be uncompromising in ensuring that its activities are undertaken in a socially responsible and ethically correct manner, in the interests of DCC and all its stakeholders. The Group is confident that this integration of CSR into key procedures and controls will lead to superior returns and enhance DCC’s reputation and success for the longer term. 33 corporate social responsibility – continued Marketplace this commitment by continuing should any unsafe working Products & Services DCC is committed to enhancing the lives of its stakeholders and to expand the Group’s CSR conditions occur, employees are measurement and encouraged to report this to benchmarking processes. management. reflects this in the design, delivery Recognition of excellence in EHS management systems and management of its products financial reporting DCC is committed to the continual and services. For example, in the Energy sector, Flogas distributes LPG, which is a non-toxic, clean burning, sulphur and smoke free fuel. In the Food & Beverage DCC’s commitment to best evolution of comprehensive financial reporting practice was EHS management systems again recognised during the year across the Group, reflecting the when DCC was short listed as a individual nature and scale of finalist by the Leinster Society of risks associated with the sector, Kelkin actively promotes Chartered Accountants in their different operations. “better for you” products, with annual Published Accounts strictly no additives, preservatives Awards. This is the most All subsidiaries operate or colourings. In the Environmental sector, DCC specialises in waste, effluent and chemical treatment, helping to provide a cleaner, safer environment for the benefit of all. Simply put, DCC regards socially prestigious award for excellence in comprehensive EHS management financial reporting in Ireland and systems, in many cases based was won by DCC in 2003. on the environmental ISO14001 Environment, Health and Safety (EHS) standard or the Occupational Health and Safety Assessment Series 18001 specification. These systems provide a robust and consistent approach for the and environmentally responsible Employee safety behaviour as an integral part of The safety of our employees is continuous, proactive good business management. paramount. All potentially identification and management Sustainable growth DCC’s commitment to the principles of CSR has been recognised in recent years by DCC’s inclusion in a number of CSR indices and ethical funds. In the interests of shareholders and other stakeholders, we will strive to achieve further recognition of hazardous activities are formally of risk. risk assessed. Where possible, processes are designed to Learning eliminate potential risk. Any DCC continually adds to its pool of residual exposure is minimised knowledge and expertise through through appropriate control training programmes, recruitment measures including mechanical of EHS professionals and the isolation, safe systems of work, acquisition of new businesses. training and the use of personal Sharing information, skills and protective equipment. In addition, experiences through formal and 34 corporate social responsibility – continued informal communication channels disadvantaged students, as well as employee engagement and improves DCC’s EHS performance a number of specific third level motivation, founded on respect and contributes to the overall education programmes. In the and equality of opportunity. financial performance of communities in which they DCC is strongly committed to the the Group. operate, DCC’s subsidiaries and principle of equal opportunity. their employees support many Diversity is valued and EHS auditing local initiatives in education, recruitment and progression Scheduled EHS audits of sports, job creation and general is based entirely on performance, subsidiaries continue to be carried social activities. skill and experience. DCC’s out by DCC’s Enterprise Risk employment policies demand, Management function. EHS DCC is a very active member of at a minimum, full compliance policies, procedures and the broader business community, with legal requirements and documentation are reviewed contributing to various industry the Group’s human resource by reference to regulatory and professional organisations. function facilitates the sharing compliance and the Many DCC executives dedicate and promotion of best human implementation of best practice. their own time to the support resource practices across and development of these the Group. Community organisations. Committed corporate neighbour Workplace DCC is sensitive to any impact Employee financial participation DCC values employee dedication and commitment to the business. its operations may have on its High performance culture Through its remuneration, neighbours and is committed People are the key element of incentive and share option to ensuring that the needs, DCC’s success – their talent, programmes, DCC employees views and interests of the local innovation and entrepreneurial share in the financial success of communities in which its flair have been the essential the business. An example of this subsidiaries operate are taken into ingredients in DCC’s consistent is the DCC Sharesave Scheme, consideration. This commitment strong growth. The nurturing of in which DCC employees were is reflected in well-established a high performance culture is at invited to participate. Through practices throughout the Group. the heart of DCC’s human this and other share schemes, a Philanthropic approach resource strategies. significant percentage of employees have become DCC supports a large number of Equal opportunity shareholders in DCC. charitable causes and a number of High performance can only be educational initiatives that target achieved through a culture of full 35 corporate social responsibility – continued Learning organisation Entrepreneurial leadership Sustained competitive advantage Strong entrepreneurial subsidiary is dependent on continuous management teams, whose deep employee development, which industry knowledge and market DCC addresses in various ways awareness have been critical to throughout the Group. DCC’s the Group’s success, support DCC’s continuous growth, both organic business model. DCC recognises and through acquisition, provides that it is essential to maintain an exceptional development environment and culture that will opportunities, allowing employees provide the flexibility and to experience and learn from the opportunity to promote Group’s increasing scale and from innovation and entrepreneurial its new customers, products and flair. DCC has a structured process markets. DCC has implemented to identify, nurture and develop training and performance talented, energised people who management systems to support will drive high performance and management and staff as the continued business growth. business develops and grows. 36 corporate governance The Board of DCC is committed to maintaining the highest standards of corporate governance. The following report describes how DCC has applied the Principles set out in the July 2003 Combined Code on Corporate Governance. 37 corporate governance – continued The Board of Directors Non-executive Directors who have Board Procedures Role served on the Board for more There is an established procedure than nine years are subject to for Directors to take independent The Board of DCC is responsible annual re-election in accordance professional advice in the for the leadership, strategic with Provision A.7.2 of the furtherance of their duties if they consider this necessary. All Directors have access to direction and overall management Combined Code. of the Group and has a formal schedule of matters specifically All of the Directors bring the advice and services of the reserved to it for decision, which independent judgement to bear Company Secretary who is covers key areas of the Group’s business including approval of financial statements, budgets (including capital expenditure), acquisitions and dividends. The on issues of strategy, risk, responsible to the Board for performance, resources, key ensuring that Board procedures appointments and standards. The are followed and that applicable Board has recently evaluated the rules and regulations are independence of each of its non- complied with. Board has delegated responsibility executive Directors. In the case of for the management of the Group, Alex Spain, Tony Barry and Paddy The Board recognises the need for through the Chief Executive, to Gallagher, the Board gave due Directors, in particular new executive management. There is a consideration to the fact that they Directors, to be aware of their clear division of responsibilities between the Chairman and the Chief Executive, which is set out have served on the Board for more legal responsibilities as directors than nine years from the date of and, in addition, the Board ensures their first election. The Board has that Directors are kept up to date in writing and has been approved concluded that all of the non- on the latest corporate by the Board. Certain additional matters are delegated to Board executive Directors are governance guidance and best independent of management and practice. There is a formal Committees. Composition free of any relationships which induction process for new non- could interfere with the exercise executive Directors, which of their independent judgement. includes detailed presentations on The Board consists of four the Group’s operations. executive and five non-executive The Board has appointed Maurice Directors. Brief biographies of the Keane as the Senior Independent Meetings Directors are set out on pages 2 Director. Mr. Keane is available to The Board holds regular meetings and 3. At least one third of the Directors retire at each Annual General Meeting and all of the shareholders who have concerns and there is contact as required that cannot be addressed through between meetings in order to the Chairman or the Chief progress the Group’s business. Directors are subject to re-election Executive/Deputy Chairman. During the year, the Board held at least every three years. five meetings. 38 corporate governance – continued Individual attendance at these meeting. The Committee also level of fees is appropriate to meetings is set out in the table on meets separately with the enable an adequate audit to page 41. external auditors and with the be conducted; Group Internal Auditor without assessing annually the Remuneration executive management present. independence and objectivity Details of remuneration paid to of the external auditors and the Directors are set out in the The role and responsibilities of the the effectiveness of the audit Report of the Remuneration Audit Committee are set out in its process, taking into Committee on pages 46 to 49. written terms of reference, which consideration relevant Board Committees the Company’s website requirements and the are available on request and on professional and regulatory www.dcc.ie, and include: relationship with the auditors Audit Committee as a whole, including the The Audit Committee comprises monitoring the integrity of the provision of any non-audit three non-executive Directors, financial statements of the services; Paddy Gallagher (Chairman), Company and any formal reviewing the operation and Maurice Keane and Bernard announcements relating to the the effectiveness of the Group Somers. The Board has determined Company’s financial Internal Audit function; that Bernard Somers is the performance and reviewing reporting to the Board on its Committee’s financial expert. The significant financial reporting annual assessment of the Committee normally meets three judgements contained in them; operation of the Group’s times during the year. In the year reviewing the half-year and system of internal control, ended 31 March 2005, the annual financial statements making any recommendations Committee met twice and before submission to the Board; to the Board thereon and individual attendance at these considering and making reviewing the Company’s meetings is set out in the table on recommendations to the Board statements on internal control page 41. in relation to the appointment, and risk management prior to re-appointment and removal of endorsement by the Board; and The Chief Executive/Deputy the external auditors and reviewing the Group’s Chairman, Chief Financial Officer, approving the audit fee and arrangements for its Head of Enterprise Risk terms of engagement of the employees to raise concerns, in Management, Group Internal external auditors; confidence, about possible Auditor, other Directors and approving the remuneration of wrongdoing in financial executives and representatives of the external auditors, whether reporting or other matters and the external auditors may be fees for audit or non-audit ensuring that these invited to attend all or part of any services, and ensuring that the arrangements allow 39 corporate governance – continued proportionate and Remuneration Committee Nomination Committee independent investigation of The Remuneration Committee The Nomination Committee such matters and appropriate comprises three non-executive comprises four non-executive follow up action. Directors, Tony Barry (Chairman), Directors, Alex Spain (Chairman), Bernard Somers and Alex Spain Tony Barry, Paddy Gallagher and These responsibilities are and its report is set out on pages Maurice Keane, and the Chief discharged through its meetings 46 to 49. The Committee met four Executive/Deputy Chairman, Jim and receipt of reports from the Risk times during the year. Individual Flavin. The Committee met once Committee and the Enterprise Risk attendance at these meetings is during the year. Individual Management function set out in the table on page 41. attendance at this meeting is set (incorporating Group Internal Audit out in the table on page 41. and Group Environmental, Health The role and responsibilities of the and Safety). Remuneration Committee are set The role and responsibilities of the out in its written terms of Nomination Committee are set out The Committee has a process in reference, which are available on in its written terms of reference, place to ensure that the request and on the Company’s which are available on request and independence of the audit is not website www.dcc.ie. The principal on the Company’s website compromised, which includes responsibilities of the Committee www.dcc.ie. The principal monitoring the nature and extent are determining the policy for the responsibilities of the Committee of services provided by the remuneration of the executive are keeping under review the external auditors through its Directors and determining their structure, size and composition annual review of fees paid to the remuneration packages, (including the skills, knowledge external auditors for audit and determining pension and experience) required of the non-audit work. The Committee arrangements for the executive Board and the leadership needs of also reviews the safeguards which Directors and the granting of share the organisation, both executive the external auditors have put in options under the DCC plc 1998 and non-executive, and giving full place to ensure their objectivity Employee Share Option Scheme. consideration to succession and independence in accordance planning for Directors, in with professional and regulatory The Chief Executive/Deputy particular the Chairman and requirements. Chairman is consulted about Chief Executive. remuneration proposals for the Details of the amounts paid to the other executive Directors. The The Committee has decided that external auditors during the year Remuneration Committee is two new non-executive directors for audit and other services are set authorised to obtain access to should be co-opted to the Board out in note 10 on page 64. professional advice if deemed in the current financial year. One desirable. high quality candidate has been 40 corporate governance – continued Directors’ Attendance at Meetings Number of meetings held during the year: 5 Board Audit Committee 2 Remuneration Nomination Committee 1 Committee 4 Director Alex Spain Jim Flavin Tony Barry Tommy Breen Morgan Crowe* Paddy Gallagher Maurice Keane Kevin Murray Fergal O’Dwyer Bernard Somers Number of meetings attended 4 5 5 4 1 4 5 5 5 4 - - - - - 2 2 - - 1 4 - 4 - - - - - - 3 1 1 1 - - 1 1 - - - * retired on 8 July 2004 identified and is expected to join Relations with Shareholders Executive/Deputy Chairman the Board later this year. makes a presentation at the Performance Evaluation shareholder communications and answers questions on the Group’s DCC is committed to excellent Annual General Meeting and has a well-established investor business and its performance during the prior year. Shareholders can meet with the Chairman or Performance evaluation of the relations function. Board, its Committees and individual Directors was The Board is kept informed of the the Senior Independent Director conducted during the year. views of shareholders through the on request. executive Directors’ attendance at The Directors evaluated the investor presentations and results Notice of the Annual General performance of the Board as a presentations and through a Meeting, the Form of Proxy and whole and the performance of its review of investor relations the Annual Report are sent to principal Committees, the Audit, reports at Board meetings. shareholders at least 20 working Remuneration and Nomination Brokers’ notes are circulated to the days before the meeting. At the Committees, using the ‘Performance Evaluation entire Board on a regular basis. meeting, after each resolution has been dealt with, details are given Guidance’ set out in the Higgs The Company’s web site, of the level of proxy votes cast on Suggestions for Good Practice. www.dcc.ie, provides the full text each resolution and the numbers of annual and interim reports as for and against. The Chairman appraised each of well as all press releases. It also the non-executive Directors incorporates audio and slide show The 2005 Annual General Meeting individually. The Chairman, with investor presentations. will be held at 11 a.m. on 5 July the non-executive Directors, 2005 at The Four Seasons Hotel, evaluated the performance of the The Company’s Annual General Simmonscourt Road, Ballsbridge, executive Directors. Meeting affords shareholders the Dublin 4, Ireland. The Senior Independent Director Chairman and the Board. The Internal Control held a meeting with the executive chairmen of the Audit, opportunity to question the Directors to seek their views on Remuneration and Nomination The Board is responsible for the the Chairman’s performance and Committees are also available to Group’s system of internal control then met with the non-executive answer questions at the Annual and for reviewing its effectiveness. Directors, in the absence of the General Meeting. The Chief Such a system is designed to Chairman, to evaluate his performance. manage rather than eliminate the risk of failure to achieve business 41 corporate governance – continued objectives and can provide only (including treasury and IT); management) and the procedures reasonable and not absolute a Risk Committee, comprising in place to monitor them. assurance against material Group senior management, misstatement or loss. whose main role is to keep Going Concern In accordance with the Turnbull under review and report to guidance for directors on internal the Audit Committee on the After making enquiries, the control, Internal Control: Guidance principal risks facing the Directors have formed a for Directors on the Combined Group, the controls in place to judgement, at the time of Code, the Board confirms that manage those risks and the approving the financial there is an ongoing process for monitoring procedures; statements, that there is a identifying, evaluating and an independent Enterprise reasonable expectation that the managing any significant risks Risk Management function, Company and the Group as a faced by the Group, that it has which incorporates Group whole have adequate resources to been in place for the year under Internal Audit and Group continue in operational existence review and up to the date of Environmental, Health and for the foreseeable future. For this approval of the financial Safety; and reason, they continue to adopt the statements and that this process a formally constituted Audit going concern basis in preparing is regularly reviewed by the Board. Committee which reviews the the financial statements. The operation of the Risk Directors’ responsibility for The key risk management and Committee and the Enterprise preparing the financial internal control procedures, which Risk Management function, statements is explained on page are supported by detailed controls liaises with the external 50 and the reporting and processes, include: auditors and reviews the responsibilities of the auditors are Group’s internal control set out in their report on pages 51 skilled and experienced Group systems. and 52. and divisional management; an organisation structure with The Board has reviewed the Compliance Statement clearly defined lines of effectiveness of the Group’s authority and accountability; system of internal control. This DCC has complied, during the year a comprehensive system of review took account of the ended 31 March 2005, with the financial reporting involving principal business risks facing the provisions as set out in Section 1 budgeting, monthly reporting Group, the controls in place to of the July 2003 Combined Code and variance analysis; manage those risks (including on Corporate Governance. the operation of approved risk financial, operational and management policies compliance controls and risk 42 directors’ report and financial statements report of the directors for the year ended 31 March 2005 The Directors present their report and the audited financial statements for the year ended 31 March 2005. Principal Activities DCC is a sales, marketing and business support services group focused on the energy, IT distribution, healthcare, food & beverage and environmental markets. A summary of the Group’s activities is set out on pages 12 to 24. 43 report of the directors for the year ended 31 March 2005 – continued Subsidiary and Associated Companies Dividends Details of the Company’s principal operating subsidiaries are set out An interim dividend of 13.51 cent per share, amounting to €10.80 million, was paid on 1 December on pages 89 to 91. Details of its 2004. The Directors recommend principal associated undertakings the payment of a final dividend of are set out on page 69, in note 18 to the financial statements. 23.75 cent per share, amounting to €19.07 million. Subject to shareholders’ approval at the A full list of subsidiary and Annual General Meeting on 5 July associated undertakings will be 2005, this dividend will be paid annexed to the Annual Return of on 11 July 2005 to shareholders the Company to be filed with the on the register on 27 May 2005. Irish Registrar of Companies. The total dividend for the year A total of 858,848 shares (0.97% of the issued share capital) with a nominal value of €0.215 million were re-issued during the year at prices ranging from €6.22 to €11.25 consequent to the exercise of share options, leaving a balance held in Treasury at 31 March 2005 of 7,873,886 shares (8.92% of the issued share capital) with a nominal value of €1.968 million. At the Company’s Annual General Meeting on 8 July 2004, the Company was granted authority ended 31 March 2005 amounts to purchase up to 8,822,940 of its Results and Business Review to 37.26 cent per share, a total of €29.87 million. The profit for the financial year The balance of profit attributable own shares (10% of the issued share capital) with a nominal value of €2.206 million. This authority has not been exercised attributable to Group shareholders amounted to €83.8 million as set out in the Consolidated Profit and Loss Account on page 55. The Chairman’s Statement on to Group shareholders, which is and will expire on 5 July 2005, the retained in the business, amounts to €54.3 million. Share Buyback and Treasury Shares date of the next Annual General Meeting of the Company. A special resolution will be proposed at the Annual General Meeting to renew this authority. pages 6 to 7, the Chief Executive’s The number of shares held in Research and Development Review on pages 8 to 11, the Treasury at the beginning of the Operating Review on pages 12 to year was 6,667,734 (7.56% of the 24 and the Financial Review on pages 26 to 31 contain a review of the development of the Group’s issued share capital) with a nominal value of €1.667 million. The maximum number of shares held in business during the year, of the Treasury was 8,732,734 (9.90% of state of affairs of the business at 31 March 2005, of recent events the issued share capital) with a nominal value of €2.183 million. and of likely future developments. 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 On 17 May 2004, the Company is incurred. purchased 2,065,000 of its own shares (2.34% of the issued share capital) with a nominal value of €0.516 million. The total consideration paid was €26.762 million. 44 report of the directors for the year ended 31 March 2005 – continued Substantial Shareholdings The Company has been advised of the following interests in its share capital as at 13 May 2005: No. of € 0.25 Ordinary Shares % of Issued Share Capital (including Treasury Shares) % of Issued Share Capital (excluding Treasury Shares) FMR Corp. and Fidelity International Limited and their direct and indirect subsidiaries * 9,011,460 Bank of Ireland Asset Management Limited * 8,699,679 Schroder Investment Management Limited and Schroder & Co. Limited * Jim Flavin 7,932,577 2,456,033 10.21% 9.86% 8.99% 2.78% 11.21% 10.83% 9.87% 3.06% * Notified as non-beneficial interests Directors Details of the Directors’ interests Political Contributions in the share capital of the The names of the Directors and a Company are set out in the Report There were no political short biographical note on each of the Remuneration Committee Director appear on pages 2 and 3. on pages 46 to 49. contributions which require to be disclosed under the Electoral Act, In accordance with Article 80 of Health and Safety 1997. Auditors the Articles of Association, Paddy Gallagher, Maurice Keane and Kevin Murray retire by rotation at the 2005 Annual General Meeting and, being eligible, offer themselves for re-election. In compliance with Provision A.7.2 of the Combined Code on Corporate Governance, Tony Barry and Alex Spain retire at the Meeting, each having served in excess of nine years, and, being eligible, offer themselves for re-election. None of the retiring Directors has a service contract with the Company or with 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. It is the policy of the Group to ensure the safety, health and The auditors, Pricewaterhouse- welfare of employees by maintaining a safe working Coopers, will continue in office in accordance with the provisions of environment and complying with Section 160(2) of the Companies the provisions and requirements Act, 1963. of the Safety, Health and Welfare at Work Act, 1989 and all other statutory provisions and codes of practice. Each operating company Alex Spain, Jim Flavin, Directors in the Group has documented and implemented comprehensive safety policies and procedures DCC House, Stillorgan, Blackrock, Co Dublin which are kept under regular 13 May 2005 review by company management and by the Group Environmental, Health and Safety function. 45 report of the remuneration committee Remuneration Committee Directors’ Service Agreements The Remuneration Committee comprises three independent non- Other than for the Chief divisional performance, Group and divisional development and an element related to individual performance and contribution. executive Directors, Tony Barry Executive/Deputy Chairman, there The maximum bonus potential, as (Chairman), Bernard Somers and are no service agreements a percentage of basic salary, for Alex Spain. between any Director of the each executive Director is Company and the Company or any reviewed and set annually and The role and responsibilities of the of its subsidiaries. The Chief Remuneration Committee are set Executive/Deputy Chairman’s amounted to 65% of basic salary for the year ended 31 March 2005. out in its written terms of service agreement provides for reference, which are available on one year’s notice of termination Pension Benefits request and on the Company’s by the Company. website www.dcc.ie. The principal The Company funds pension schemes which, for executive responsibilities of the Committee Directors’ Remuneration Directors, aim to provide, on the are determining the policy for the basis of actuarial advice, a pension remuneration of the executive Executive Directors’ Remuneration of two thirds of pensionable Directors and determining their The typical elements of the remuneration packages, remuneration package for determining pension arrange- executive Directors are basic ments for the executive Directors salary, performance related salary at normal retirement date. Pensionable salary is calculated as 105% of basic salary and does not include any performance related and the granting of share options remuneration consisting of bonuses or benefits. under the DCC plc 1998 Employee performance related annual Share Option Scheme. bonuses and share options, Non-Executive Directors’ pension benefits and a Remuneration The Chief Executive/Deputy company car. Chairman is consulted about remuneration proposals for the Salaries other executive Directors. The The salaries of executive Directors Remuneration Committee is are reviewed annually on 1 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 authorised to obtain access to January having regard to personal time demands of their Board and professional advice if deemed performance, Company Board Committee duties. desirable. performance and competitive market practice. No fees are Remuneration Policy payable to executive Directors. The Company’s remuneration Performance Related Annual policy recognises that employment Bonuses and remuneration conditions for Performance related annual the Group’s senior executives must bonuses are payable to the properly reward and motivate executive Directors, in respect of them to perform in the best the financial year to 31 March. The interests of the shareholders. In performance targets, which are formulating this policy, the reviewed annually, are tailored to Committee has given due regard to the responsibilities of each the provisions of the Combined executive Director and include Code on Corporate Governance. growth in Group earnings, 46 report of the remuneration committee Directors’ Remuneration Details The table below sets out the details of the remuneration payable in respect of Directors who held office for any part of the financial year. Salary and Fees2 Bonus Benefits3 Pension Contribution4 Total 2005 ’000 2004 ’000 2005 2004 ’000 ’000 2005 2004 ’000 ’000 2005 2004 ’000 € ’000 2005 2004 ’000 ’000 Executive Directors Jim Flavin Tommy Breen Morgan Crowe1 Kevin Murray Fergal O’Dwyer 768 329 115 329 299 734 314 334 314 284 384 175 52 175 175 220 140 167 140 130 37 20 7 19 20 35 18 20 18 14 115 98 33 90 85 155 86 88 86 79 1,304 622 207 613 579 1,144 558 609 558 507 Total for executive Directors 1,840 1,980 961 797 103 105 421 494 3,325 3,376 Non-executive Directors Alex Spain Tony Barry Paddy Gallagher Maurice Keane Bernard Somers 130 54 57 54 54 118 49 49 49 24 Total for non-executive Directors 349 289 Pension payment in respect of retired Director Total - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 27 - - - - 27 130 54 57 54 54 145 49 49 49 24 349 316 10 10 3,684 3,702 Notes 1 Morgan Crowe retired from the Board on 8 July 2004. 2 Fees are payable only to non-executive Directors and include Chairman’s and Board Committee fees. 3 4 Executive Director pension contributions in the year ended 31 March 2005 were made to a defined contribution In the case of the executive Directors, benefits relate principally to the use of a company car. arrangement for Jim Flavin and to a defined benefit scheme for the other executive Directors. Directors’ Defined Benefit Pensions The table below sets out the increase in the accrued pension benefits to which executive Directors have become entitled during the year ended 31 March 2005 and the transfer value of the increase in accrued benefit, under the Company’s defined benefit pension scheme: Increase in accrued pension benefit (excl inflation) during the year 2 Transfer value equivalent to the increase in accrued pension benefit 3 Total accrued pension benefit at year end 4 ’000 9 18 8 8 43 ’000 74 329 68 62 533 ’000 118 225 103 87 533 Executive Directors Tommy Breen Morgan Crowe1 Kevin Murray Fergal O’Dwyer Total Notes 1 Morgan Crowe ceased accruing benefits in July 2004. 2 Increases are after adjustment for inflation over the year and reflect additional pensionable service and salary. 3 The transfer value equivalent to the increase in accrued pension benefit has been calculated on the basis of actuarial advice in accordance with Actuarial Guidance Note GN11. The transfer values do not represent sums paid to or due to the Directors named, but are the amounts that would transfer to another pension scheme in respect of the increase in accrued pension benefit during the year. 4 Figures represent the total accrued pension payable from normal retirement date, based on pensionable service at 31 March 2005. 47 € € € € € € € € € € € € report of the remuneration committee – continued Share Options institutional investment the adjusted earnings per share associations. The Scheme provides over a period of at least five years DCC plc 1998 Employee Share for the grant of both basic and is such as would place the Option Scheme Executive Directors and other senior executives participate in second tier options, in each case up Company in the top quartile of to a maximum of 5% of the companies on the ISEQ index in Company’s issued share capital. terms of comparison of growth in the DCC plc 1998 Employee Share Basic tier options may not normally adjusted earnings per share and if Option Scheme, which was be exercised earlier than three there has been growth in the approved by shareholders in 1998. years from the date of grant and adjusted earnings per share of the The Scheme encourages second tier options not earlier than Company equivalent to the identification with shareholders’ five years from the date of grant. increase in the Consumer Price interests by enabling Index plus 10%, compound, per management to build, over time, a Basic tier options may normally be annum in that period. shareholding in the Company which is material to their net worth. exercised only if there has been growth in the adjusted earnings Directors are encouraged to hold per share of the Company their options beyond the earliest equivalent to the increase in the exercise date. The percentage of share capital Consumer Price Index plus 2%, which can be issued under the compound, per annum over a The following are details of share Scheme, the phasing of the grant period of at least three years options granted to Directors and of options and the limit on the value of options which may be following the date of grant. the Company Secretary under the DCC plc 1998 Employee Share granted to any individual comply Second tier options may normally Option Scheme: with guidelines published by the be exercised only if the growth in At 31 March 2004 Granted in year At 31 March 2005 Weighted Average Exercise Price € Normal Exercise Period Executive Directors Jim Flavin Basic Tier Second Tier Tommy Breen Basic Tier Second Tier Kevin Murray Basic Tier Second Tier Fergal O’Dwyer Basic Tier Second Tier Company Secretary Gerard Whyte Basic Tier Second Tier 350,000 395,000 25,000 - 375,000 395,000 165,000 190,000 165,000 190,000 140,000 165,000 15,000 - 15,000 - 15,000 - 180,000 190,000 180,000 190,000 155,000 165,000 8.3364 8.1063 9.0219 8.6786 9.0219 8.6786 8.8196 8.4366 June 2001 – Nov 2014 June 2003 – Nov 2012 June 2001 – Nov 2014 June 2003 – Nov 2012 June 2001 – Nov 2014 June 2003 – Nov 2012 June 2001 – Nov 2014 June 2003 – Nov 2012 65,000 80,000 10,000 - 75,000 80,000 9.4737 8.8716 June 2001 – Nov 2014 June 2003 – Nov 2012 No options were exercised by or allowed to lapse by Directors or the Company Secretary under the DCC plc 1998 Employee Share Option Scheme during the year. 48 report of the remuneration committee – continued DCC Sharesave Scheme The Group established the DCC Sharesave Scheme in 2000. On 15 June 2001, options were granted under the Scheme to those Group employees, including executive Directors, who entered into associated savings contracts. The options were granted at an option price of €8.79 per share, which represented a discount of 20% to the then market price as permitted by the rules of the Scheme. These options are exercisable between June 2004 and February 2007. On 10 December 2004, a second grant of options under this Scheme was approved. These options were granted to Group employees at an option price of €12.63 per share, which represented a discount of 20% to the then market price. These options are exercisable between March 2008 and February 2011. At 31 March 2005, Group employees held options to subscribe for 986,912 ordinary shares under the DCC Sharesave Scheme. The following are details of the share options granted to executive Directors and the Company Secretary under the DCC Sharesave Scheme: No. of Ordinary Shares At 31 March 2005 No. of Ordinary Shares At 31 March 2004 Executive Directors Jim Flavin Tommy Breen Kevin Murray Fergal O’Dwyer Company Secretary Gerard Whyte 2,383 2,383 2,383 2,383 2,006 2,383 2,383 2,383 2,383 1,877 The market price of DCC shares on 31 March 2005 was €17.94 and the range during the year was €12.10 to €18.50. Additional information in relation to the DCC plc 1998 Employee Share Option Scheme and the DCC Sharesave Scheme appears in note 33 on page 82. 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 2005, together with their interests at 31 March 2004, were: No. of Ordinary Shares At 31 March 2005 No. of Ordinary Shares At 31 March 2004 Directors Alex Spain Jim Flavin Tony Barry Tommy Breen Paddy Gallagher Maurice Keane Kevin Murray Fergal O’Dwyer Bernard Somers Company Secretary Gerard Whyte 25,634 2,456,033 17,000 211,512 5,040 5,000 187,306 212,506 - 125,353 20,634 2,456,033 17,000 211,512 5,040 5,000 212,306 212,506 - 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 2005 and 13 May 2005. Apart from the interests disclosed above, the Directors and the Company Secretary had no interests in the share capital or loan stock of the Company or any other Group undertaking at 31 March 2005. The Company’s Register of Directors’ Interests (which is open to inspection) contains full details of Directors’ shareholdings and share options. 49 statement of directors responsibilities The following statement, which financial statements which should be read in conjunction disclose with reasonable accuracy with the statement of auditors’ at any time the financial position responsibilities set out within of the Company and to enable their report on pages 51 and 52, them to ensure that the financial is made with a view to statements comply with the distinguishing for shareholders Companies Acts, 1963 to 2003 and the respective responsibilities of the European Communities the Directors and of the auditors (Companies: Group Accounts) in relation to the financial Regulations, 1992. The Directors statements. have a general duty to act in the best interests of the Company and The Directors are required by must, therefore, take such steps as company law to ensure that the are reasonably open to them to Company prepares financial safeguard the assets of the Group statements for each financial year and to prevent and detect fraud which give a true and fair view of and other irregularities. the state of affairs of the Company and the Group and of Books of Account the profit or loss of the Group for that year. The measures taken with regard to keeping proper books of Following discussions with the account include the use of auditors, the Directors consider systems and procedures that in preparing the financial appropriate to the business and statements on pages 53 to 88, the employment of competent which have been prepared on the and reliable persons. The books going concern basis, the Company of account are kept at DCC has used appropriate accounting House, Stillorgan, Blackrock, policies, consistently applied and Co. Dublin, Ireland. 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 50 report of the independent auditors for the year ended 31 March 2005 To the Members of DCC plc whom this report is shown or into directors’ remuneration and whose hands it may come save transactions is not disclosed. We have audited the financial where expressly agreed by our statements on pages 53 to 88 and prior consent in writing. We read the other information the detailed information on directors’ emoluments, pensions and interests in shares and share options on pages 46 to 49. The financial statements have been contained in the Annual Report We report to you our opinion as to and consider the implications for whether the financial statements our report if we become aware of give a true and fair view and are any apparent misstatements or properly prepared in accordance material inconsistencies with the prepared under the historical cost with Irish statute comprising the financial statements. The other convention and the accounting policies set out in the statement Companies Acts, 1963 to 2003, and information comprises only the the European Communities chairman’s statement, the chief of accounting policies on pages 53 (Companies: Group Accounts) executive’s review, the operating and 54. Regulations, 1992. We state review, the financial review, whether we have obtained all the the corporate social responsibility Respective responsibilities of directors and auditors information and explanations we statement, the corporate consider necessary for the governance statement and purposes of our audit and the directors’ report. The directors’ responsibilities for whether the Company balance preparing the annual report and sheet is in agreement with the We review whether the corporate the financial statements in accordance with applicable Irish law and accounting standards generally accepted in Ireland are set out on page 50 in the statement of directors’ responsibilities. books of account. We also report governance statement reflects the to you our opinion as to: Company’s compliance with the nine provisions of the Combined whether the Company has Code (issued 2003) specified for kept proper books of account; our review by the Listing Rules and we report if it does not. We whether the directors’ report is are not required to consider consistent with the financial whether the board’s statements Our responsibility is to audit the statements; and on internal control cover all risks financial statements in accordance with relevant legal and regulatory requirements, whether at the balance sheet on the effectiveness of the date there existed a financial Company’s or Group’s corporate and controls or to form an opinion auditing standards issued by the situation which may require governance procedures or its risk Auditing Practices Board applicable in Ireland and the Listing Rules of the Irish Stock the Company to convene an and control procedures. extraordinary general meeting; such a financial Basis of audit opinion Exchange. This report, including situation may exist if the net the opinion, has been prepared for assets of the Company, as We conducted our audit in and only for the Company’s members as a body in accordance with Section 193 of the Companies stated in the Company accordance with Auditing balance sheet, are not more Standards issued by the Auditing than half of its called-up share Practices Board. An audit includes Act 1990 and for no other capital. purpose. We do not, in giving this opinion, accept or assume responsibility for any other examination, on a test basis, of evidence relevant to the amounts We also report to you if, in our and disclosures in the financial opinion, information specified by statements. It also includes an purpose or to any other person to law or the Listing Rules regarding assessment of the significant 51 report of the independent auditors – continued estimates and judgements made We have obtained all the by the directors in the preparation information and explanations we of the financial statements, and of consider necessary for the whether the accounting policies purposes of our audit. In our are appropriate to the Company’s opinion, proper books of account circumstances, consistently have been kept by the Company. applied and adequately disclosed. The Company balance sheet is in agreement with the books of We planned and performed our account. audit so as to obtain all the information and explanations In our opinion, the information which we considered necessary in given in the Report of the order to provide us with sufficient Directors on pages 43 to 45 is evidence to give reasonable consistent with the financial assurance that the financial statements. statements are free from material misstatement, whether caused by The net assets of the Company, as fraud or other irregularity or error. stated in the balance sheet on In forming our opinion, we also page 58, are more than half of the evaluated the overall adequacy of amount of its called up share the presentation of information in capital and, in our opinion, on that the financial statements. basis there did not exist at 31 Opinion March 2005 a financial situation which, under Section 40(1) of the Companies (Amendment) Act, In our opinion, the financial 1983, would require the convening statements give a true and fair of an extraordinary general view of the state of affairs of the meeting of the Company. Company and the Group at 31 March 2005 and of the profit and PricewaterhouseCoopers cash flows of the Group for the Chartered Accountants and year then ended and have been Registered Auditors properly prepared in accordance Dublin with the Companies Acts, 1963 to 13 May 2005 2003, and the European Communities (Companies: Group Accounts) Regulations, 1992. 52 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 €. 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 2003. 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 identifiable 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 the associated undertakings. 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. 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: Annual Rate Freehold and long term leasehold buildings 2% Plant and machinery 5 - 331/3% Cylinders 62/3% Motor vehicles 10 - 331/3% Fixtures, fittings & office equipment 10 - 331/3% Land is not depreciated. 53 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. Liquid Resources Liquid Resources comprise short term deposits which are readily disposable stores of value. These deposits are typically placed on money markets for periods of up to six months. 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. 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. The disclosures required under the transitional arrangements of Financial Reporting Standard 17 ‘Retirement Benefits’ are shown in note 32(b). Accounting Policies – continued 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. 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 Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. 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. 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 the Statement of Total Recognised Gains and Losses 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 euro and sterling borrowings. Gains and losses on these derivatives are deferred and are recognised on the maturity of the underlying debt, together with the matching loss or gain on the debt. 54 Consolidated Profit and Loss Account for the year ended 31 March 2005 Turnover Group turnover Share of turnover of associated undertakings Total turnover Group turnover Continuing activities Acquisitions Cost of sales Gross profit Net operating costs before operating exceptional items and goodwill amortisation Operating profit before operating exceptional items and goodwill amortisation - parent and subsidiary undertakings Share of operating profit before goodwill amortisation - associated undertakings Operating profit before operating exceptional items and goodwill amortisation Continuing activities Acquisitions Operating exceptional items Goodwill amortisation Operating profit Non-operating net exceptional items 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 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) Earnings per ordinary share - diluted (cent) Adjusted earnings per ordinary share - basic (cent) Adjusted earnings per ordinary share - diluted (cent) Alex Spain, Jim Flavin, Directors Notes 2005 €’000 2004 €’000 1 1 2,627,927 103,597 2,074,465 123,500 2,731,524 2,197,965 2,345,470 282,457 2,051,441 23,024 2,627,927 (2,248,576) 2,074,465 (1,739,395) 379,351 (269,670) 335,070 (233,395) 109,681 101,675 21,855 19,201 131,536 123,293 8,243 131,536 (3,815) (10,089) 117,632 (12,152) 120,876 120,708 168 120,876 (2,288) (8,282) 110,306 (5,897) (5,207) (3,693) (369) 99,904 (15,115) 84,789 (1,022) 83,767 (10,388) (19,070) 54,309 104.69c 102.26c 137.25c 134.07c (1,109) 99,607 (14,509) 85,098 (771) 84,327 (9,748) (16,824) 57,755 101.98c 100.42c 121.89c 120.03c 1 2 2 2 1 1 7 6 2 7 8 9 10 11 12 13 14 14 36 15 15 15 15 55 Statement of Total Recognised Gains and Losses for the year ended 31 March 2005 Profit for the financial year Exchange adjustments - associated companies Exchange adjustments - subsidiaries Total recognised gains for the financial year 2005 €’000 83,767 (237) (10,084) 73,446 2004 €’000 84,327 (210) 6,652 90,769 Note of Historical Cost Profits and Losses for the year ended 31 March 2005 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 55. 56 Consolidated Balance Sheet as at 31 March 2005 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 to 2016 Deferred acquisition consideration Capital grants 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 Alex Spain, Jim Flavin, Directors Notes 2005 €’000 2004 €’000 16 17 18 20 21 22 23 28 14 23 23 29 30 33 34 35 36 37 38 193,762 247,647 64,192 505,601 123,734 421,534 352,399 897,667 45,127 471,283 37,122 19,070 572,602 129,566 212,252 53,780 395,598 110,577 330,385 320,616 761,578 143,732 362,688 36,077 16,824 559,321 325,065 202,257 830,666 597,855 10,370 305,094 10,839 958 327,261 16,555 97,612 6,799 1,112 122,078 5,361 2,084 332,622 124,162 22,042 124,506 1,400 345,748 493,696 4,348 498,044 22,035 124,438 1,400 321,739 469,612 4,081 473,693 830,666 597,855 57 Company Balance Sheet as at 31 March 2005 Fixed Assets Tangible fixed assets Financial assets - associated undertakings - subsidiary undertakings Current Assets Debtors Cash and term deposits Creditors: Amounts falling due within one year Trade and other creditors 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 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 Alex Spain, Jim Flavin, Directors Notes 2005 €’000 2004 €’000 17 18 19 21 22 28 14 - 983 1,300 145,814 147,114 277,799 248 278,047 226,615 19,070 245,685 1,300 145,814 148,097 291,088 367 291,455 15,669 16,824 32,493 32,362 258,962 179,476 407,059 10,387 139 10,526 187,711 2,016 189,727 30 972 827 11,498 190,554 33 34 35 36 22,042 124,506 344 21,086 167,978 22,035 124,438 344 69,688 216,505 179,476 407,059 58 Consolidated Cash Flow Statement for the year ended 31 March 2005 Cash flow from operating activities Returns on investments and servicing of finance Taxation paid Capital expenditure Acquisitions Equity dividends paid Cash (outflow)/inflow before management of liquid resources and financing Increase in liquid resources Financing Increase/(decrease) in cash for the year Notes 2005 €’000 2004 €’000 40 41 41 41 42 41 42 108,300 (2,904) (9,093) (34,146) (81,148) (27,212) (46,203) (33,245) 101,364 141,246 (3,609) (5,295) (28,092) (14,460) (24,765) 65,025 (27,105) (90,239) 21,916 (52,319) Reconciliation of Net Cash Flow to Movement in Net (Debt)/Cash for the year ended 31 March 2005 Increase/(decrease) in cash for the year Increase in liquid resources Unsecured Notes due 2014/16 issued Net loans repaid Capital element of finance lease payments Changes in net (debt)/cash resulting from cash flow Exchange movements Net (outflow)/inflow in the year Net cash at start of year Net (debt)/cash at end of year Notes 2005 €’000 2004 €’000 42 42 42 42 42 42 42 42 21,916 33,245 (212,064) 85,734 5,062 (66,107) (4,802) (70,909) 62,717 (52,319) 27,105 - 61,551 4,976 41,313 1,345 42,658 20,059 (8,192) 62,717 59 Notes to the Financial Statements for the year ended 31 March 2005 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: (i) Summary Energy IT Distribution Healthcare Food & Beverage Environmental Other Turnover €’000 1,240,551 878,153 170,686 242,332 25,823 173,979 2,731,524 Goodwill amortisation Net exceptional items (note 7) Interest (net) Net (debt)/cash Amounts due in respect of acquisitions Investments Capitalised goodwill - subsidiaries Capitalised goodwill - associates Minority interests Proposed dividend 2005 Profit Before Taxation €’000 51,292 27,562 16,097 13,240 5,472 17,873 131,536 (10,089) (15,967) (5,576) Net Assets €’000 112,788 82,459 42,769 37,237 15,731 55,331 Turnover €’000 841,344 859,441 148,961 170,665 24,131 153,423 2004 Profit Before Taxation €’000 45,791 31,274 13,595 10,876 5,044 14,296 Net Assets €’000 105,434 78,949 37,129 27,634 10,239 43,230 346,315 2,197,965 120,876 302,615 (8,282) (8,185) (4,802) (8,192) (17,923) 100 193,762 3,052 (4,348) (19,070) 62,717 (11,477) 100 129,566 6,996 (4,081) (16,824) 2,731,524 99,904 493,696 2,197,965 99,607 469,612 (ii) Split between Subsidiary Undertakings and Associated Undertakings Subsidiary 2005 Associated Undertakings Undertakings €’000 €’000 2004 Associated Total Undertakings Undertakings €’000 €’000 €’000 Subsidiary Total €’000 Turnover 2,627,927 103,597 2,731,524 2,074,465 123,500 2,197,965 Operating profit before goodwill amortisation Goodwill amortisation Operating profit Net exceptional items (note 7) Interest (net) 109,681 (9,746) 99,935 (15,967) (5,207) 21,855 (343) 21,512 - (369) 131,536 (10,089) 121,447 (15,967) (5,576) Profit before taxation 78,761 21,143 99,904 101,675 (7,794) 93,881 (8,185) (3,693) 82,003 19,201 (488) 18,713 - (1,109) 17,604 120,876 (8,282) 112,594 (8,185) (4,802) 99,607 Net assets (including capitalised goodwill) 429,504 64,192 493,696 415,832 53,780 469,612 60 Notes to the Financial Statements for the year ended 31 March 2005 1. Segmental Information - continued (iii) Other Other which includes Homebuilding and Supply Chain Management is analysed as follows: 2005 Operating Profit €’000 Turnover €’000 Net Assets €’000 Turnover €’000 2004 Operating Profit €’000 Net Assets €’000 Homebuilding Supply Chain Management 68,649 105,330 18,979 (1,106) 45,660 9,671 65,406 88,017 15,188 (892) 29,018 14,212 173,979 17,873 55,331 153,423 14,296 43,230 (iv) Acquisitions Acquisitions in the year contributed turnover of €282.457 million (2004: €23.024 million), operating profit before goodwill amortisation and operating exceptional items of €8.243 million (2004: €0.168 million) and profit before taxation of €4.263 million (2004: €87,000). (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 Goodwill amortisation Net exceptional items (note 7) Interest (net) Net (debt)/cash Amounts due in respect of acquisitions Investments Capitalised goodwill - subsidiaries Capitalised goodwill - associates Minority interests Proposed dividend (ii) Turnover by Destination Ireland United Kingdom Rest of Europe USA Other Share of associated undertakings Turnover by Origin €’000 845,657 1,782,270 2,627,927 103,597 2,731,524 2005 Profit Before Taxation €’000 39,006 70,675 109,681 21,855 131,536 (10,089) (15,967) (5,576) Net Assets €’000 Turnover by Origin €’000 2004 Profit Before Taxation €’000 Net Assets €’000 63,971 221,204 285,175 61,140 700,036 1,374,429 2,074,465 123,500 39,473 62,202 101,675 19,201 62,414 193,417 255,831 46,784 346,315 2,197,965 120,876 302,615 (8,192) (17,923) 100 193,762 3,052 (4,348) (19,070) (8,282) (8,185) (4,802) 62,717 (11,477) 100 129,566 6,996 (4,081) (16,824) 2,731,524 99,904 493,696 2,197,965 99,607 469,612 2005 €’000 2004 €’000 829,122 1,610,340 175,683 10,665 2,117 103,597 682,055 1,226,136 153,011 10,256 3,007 123,500 2,731,524 2,197,965 61 Notes to the Financial Statements for the year ended 31 March 2005 2. Cost of Sales and Net Operating Costs Continuing Continuing 2005 2004 Activities Acquisitions €’000 €’000 Total €’000 Activities Acquisitions €’000 €’000 Total €’000 (1,999,602) (248,974) (2,248,576) (1,718,370) (21,025) (1,739,395) 345,868 33,483 379,351 333,071 1,999 335,070 (130,146) (117,491) (15) (247,652) 3,222 (244,430) (1,640) (8,150) (13,858) (12,493) - (26,351) 1,111 (25,240) (2,175) (1,596) (144,004) (129,984) (15) (274,003) 4,333 (269,670) (3,815) (9,746) (120,270) (113,421) (17) (233,708) 2,144 (231,564) (2,288) (7,720) (1,093) (738) - (1,831) - (1,831) - (74) (121,363) (114,159) (17) (235,539) 2,144 (233,395) (2,288) (7,794) Cost of sales Gross profit Operating costs Distribution Administrative Other operating expenses Other operating income Operating exceptional items Goodwill amortisation Net operating costs (254,220) (29,011) (283,231) (241,572) (1,905) (243,477) Operating profit - parent and subsidiaries - associated undertakings (note 1(a)) 91,648 21,512 113,160 4,472 - 4,472 96,120 21,512 91,499 18,713 117,632 110,212 94 - 94 91,593 18,713 110,306 3. Acquisitions The profit on ordinary activities before taxation arising from acquisitions represents the aggregate of net incremental profit resulting from the acquisition of subsidiaries 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: Energy IT Distribution Healthcare Food & Beverage Environmental Supply Chain Management The staff costs for the above were: Wages and salaries Social welfare costs Pension costs 2005 Number 2004 Number 1,733 779 742 528 154 505 4,441 2005 €’000 1,414 773 685 350 141 405 3,768 2004 €’000 152,281 16,210 8,626 177,117 124,540 13,621 7,242 145,403 5. Directors’ Emoluments and Interests Directors’ emoluments and interests are given in the Report of the Remuneration Committee on pages 46 to 49. 62 Notes to the Financial Statements for the year ended 31 March 2005 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 Items Operating exceptional items Non-operating net exceptional items Net exceptional items 2005 €’000 9,746 343 10,089 2005 €’000 3,815 12,152 15,967 2004 €’000 7,794 488 8,282 2004 €’000 2,288 5,897 8,185 Operating exceptional items and non-operating net exceptional items in the year amounted to €16.0 million in relation to the restructuring of SerCom Solutions, acquisition related restructuring in DCC Energy and legal costs. SerCom Solutions, DCC’s supply chain management subsidiary, restructured its operations by consolidating its kitting and assembly activities at its Limerick facility and by closing its loss making Dublin facility. As part of the post acquisition integration of the business of Shell Direct UK, exceptional restructuring costs have been incurred, arising in part from an overlap of operations with DCC’s Scottish Fuels business, in order to improve the overall efficiency of its business. DCC incurred costs in relation to the Fyffes plc legal action referred to in the Chairman’s statement on page 6, and in relation to the pursuit in Taiwan of the damages, costs and interest awarded to DCC by the High Court in London following the successful legal action against Pihsiang Machinery Manufacturing Company Limited, a Taiwanese public company, Donald Wu, its chairman and major shareholder, and Jenny Wu, his wife and director (the Defendants). The total amount owing jointly and severally by the Defendents at 31 March 2005 was €19.4 million. DCC has not recognised this amount in its accounts pending its collection. 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 2008 to 2016 - repayable within 5 years, not by instalments - repayable wholly or partly in more than 5 years On loan notes - repayable within 5 years, not by instalments On finance leases Other interest 2005 €’000 14,062 9 14,071 (10,519) (7,113) (30) (1,122) (494) (19,278) (5,207) 2004 €’000 8,534 33 8,567 (10,454) (315) (29) (1,143) (319) (12,260) (3,693) 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. 63 Notes to the Financial Statements for the year ended 31 March 2005 10. Profit on Ordinary Activities Before Taxation Profit on ordinary activities before taxation is stated after charging/(crediting): Auditors’ remuneration - audit fees Amortisation of capital grants Operating leases - land and buildings - plant and machinery - motor vehicles Depreciation - owned assets - leased assets 2005 €’000 982 (155) 4,629 160 3,359 2004 €’000 804 (173) 4,144 138 2,174 26,820 5,226 25,926 3,475 Fees paid to the auditors, PricewaterhouseCoopers, for non-audit services amounted to €2.389 million (2004: €1.257 million). 11. Taxation Current Tax Irish Corporation Tax principally at 12.5% (2004: 12.5%) Less manufacturing relief United Kingdom Corporation Tax at 30% Other overseas tax Over provision in respect of prior years Total current taxation Deferred Tax Irish at 12.5% United Kingdom at 30% Other overseas deferred tax Under provision in respect of prior years Total deferred tax Total subsidiary undertakings tax charge Associated undertakings Manufacturing relief is scheduled to expire in the year 2010. Effective tax rate Profit on ordinary activities before taxation Goodwill amortisation (note 6) Net exceptional items (note 7) Taxation as a percentage of profit before goodwill amortisation, net exceptional items and taxation The following table relates the applicable Republic of Ireland statutory tax rate to the effective tax rate of the Group: Irish corporation tax rate Manufacturing relief Earnings taxed at higher rates Over provision in respect of prior years Other timing differences Adjustments for earnings taxed at lower rates and other 64 2005 €’000 2,394 (575) 7,538 619 (1,534) 8,442 213 2,182 - 1,037 3,432 11,874 3,241 15,115 2004 €’000 5,636 (533) 7,207 339 (619) 12,030 519 (1,158) 339 67 (233) 11,797 2,712 14,509 99,904 10,089 15,967 99,607 8,282 8,185 125,960 116,074 12.0% 12.5% 2005 (%) 12.5 (0.5) 9.9 (0.4) - (9.5) 12.0 2004 (%) 12.5 (0.5) 11.0 (0.6) (0.3) (9.6) 12.5 Notes to the Financial Statements for the year ended 31 March 2005 12. Minority Interests Subsidiary undertakings Associated undertakings 2005 €’000 573 449 1,022 2004 €’000 341 430 771 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 €835,000 (2004: €85.853 million). 14. Dividends Per Ordinary Share Interim dividend of 13.51 cent per share (2004: 11.75 cent per share) Dividend attaching to shares bought-back Proposed final dividend of 23.75 cent per share (2004: 20.65 cent per share) 2005 €’000 10,802 (414) 10,388 19,070 29,458 2004 €’000 9,823 (75) 9,748 16,824 26,572 The reduction in the interim dividend for the year ended 31 March 2005 of €414,000 primarily relates to the proposed final dividend for the year ended 31 March 2004 attaching to ordinary shares subsequently bought back by the Company. 15. Earnings per Ordinary Share and Adjusted Earnings per Ordinary Share Profit after taxation and minority interests Net exceptional items (note 7) Goodwill amortisation (note 6) 2005 €’000 83,767 15,967 10,089 2004 €’000 84,327 8,185 8,282 Adjusted profit after taxation and minority interests 109,823 100,794 Basic earnings per ordinary share Basic earnings per ordinary share Net exceptional items Goodwill amortisation Adjusted basic earnings per ordinary share cent 104.69 19.95 12.61 137.25 cent 101.98 9.90 10.01 121.89 Weighted average number of shares in issue during the year (’000) 80,018 82,690 Diluted earnings per ordinary share Diluted earnings per ordinary share Net exceptional items Goodwill amortisation Adjusted diluted earnings per ordinary share cent 102.26 19.49 12.32 134.07 cent 100.42 9.75 9.86 120.03 Diluted weighted average number of ordinary shares (’000) 81,913 83,974 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. 65 Notes to the Financial Statements for the year ended 31 March 2005 15. Earnings per Ordinary Share and Adjusted Earnings per Ordinary Share - continued The weighted average number of ordinary shares used in calculating the diluted earnings per share for the year ended 31 March 2005 was 81.913 million (2004: 83.974 million). A reconciliation of the weighted average number of ordinary shares used for the purposes of calculating the diluted earnings per share amounts is as follows: Weighted average number of shares in issue used for the calculation of basic earnings per share amounts Dilutive effect of options and partly paid shares Dilutive effect of shares potentially issuable under deferred contingent consideration arrangements Weighted average number of shares in issue used for the calculation of diluted earnings per share 2005 €’000 80,018 1,813 2004 €’000 82,690 1,240 82 44 81,913 83,974 The earnings used for the purpose of the diluted earnings per share calculations were €83.767 million (2004: €84.327 million) and €109.823 million (2004: €100.794 million) for the purposes of the adjusted diluted earnings per share calculation. 16. Intangible Assets - Goodwill Group The movement in goodwill arising on the acquisition of subsidiaries is as follows: 2005 €’000 157,184 75,523 - (1,581) 231,126 2004 €’000 151,868 7,881 (265) (2,300) 157,184 27,618 9,746 37,364 19,824 7,794 27,618 193,762 129,566 Cost At 1 April Additions (note 39) Disposals Other movements At 31 March Amortisation At 1 April Amortisation for the year (note 6) At 31 March Net Book Value At 31 March 66 Notes to the Financial Statements for the year ended 31 March 2005 17. Tangible Fixed Assets (a) Group Freehold & long term Plant & leasehold land machinery & cylinders €’000 & buildings €’000 82,276 20,099 13,866 (2,870) (1,287) 112,084 13,401 858 1,854 (890) (157) 15,066 260,457 13,612 14,897 (3,647) (5,739) 279,580 160,719 5,577 16,451 (3,211) (3,506) 176,030 Fixtures & fittings & office equipment €’000 47,610 2,225 6,343 (505) (603) 55,070 30,903 1,270 5,951 (504) (36) 37,584 Motor vehicles €’000 61,770 5,582 6,848 (4,711) (1,451) 68,038 34,838 390 7,790 (3,708) (865) 38,445 Total €’000 452,113 41,518 41,954 (11,733) (9,080) 514,772 239,861 8,095 32,046 (8,313) (4,564) 267,125 97,018 68,875 103,550 99,738 17,486 16,707 29,593 26,932 247,647 212,252 Cost At 1 April 2004 Acquisitions (note 39) Additions Disposals Exchange adjustments At 31 March 2005 Depreciation At 1 April 2004 Acquisitions (note 39) Charge for year Disposals Exchange adjustments At 31 March 2005 Net Book Value At 31 March 2005 At 31 March 2004 The net book value of tangible fixed assets includes an amount of €4.968 million (2004: €7.121 million) in respect of assets held under finance leases. (b) Company Cost At 1 April 2004 Additions Disposals At 31 March 2005 Depreciation At 1 April 2004 Charge for year Disposals At 31 March 2005 Net Book Value At 31 March 2005 At 31 March 2004 Fixtures & fittings & office equipment €’000 Motor vehicles €’000 1,288 31 (1,319) - 913 30 (943) - - 1,170 211 (1,381) - 562 64 (626) - - Total €’000 2,458 242 (2,700) - 1,475 94 (1,569) - - 375 608 983 67 Notes to the Financial Statements for the year ended 31 March 2005 18. Financial Assets - Associated Undertakings (a) Group At 1 April Additions Acquired as a subsidiary during the year (note 39) Retained profits less dividends Exchange adjustments Amortisation of goodwill (note 6) At 31 March The carrying value of associated undertakings is analysed as follows: Interest in net assets Share of post acquisition reserves Goodwill (net of amortisation) 2005 €’000 53,780 - (7,916) 18,908 (237) (343) 64,192 2005 €’000 6,687 54,475 61,162 3,030 64,192 2004 €’000 40,330 484 - 13,664 (210) (488) 53,780 2004 €’000 4,739 42,045 46,784 6,996 53,780 At 31 March 2005 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: 2005 €’000 8,940 72,701 (7,324) (13,155) 61,162 2005 €’000 10,114 - (5,447) 4,667 3,118 343 (1,824) 1,637 2004 €’000 13,565 65,732 (14,007) (18,506) 46,784 2004 €’000 9,890 224 - 10,114 2,630 488 - 3,118 3,030 6,996 Fixed assets Current assets Liabilities due within one year Liabilities due after more than one year and minority interests The movement in goodwill in associated undertakings is as follows: Cost At 1 April Additions Disposals At 31 March Amortisation At 1 April Amortisation for the year (note 6) Disposals At 31 March Net Book Value At 31 March 68 Notes to the Financial Statements for the year ended 31 March 2005 18. Financial Assets - Associated Undertakings - continued Details of the Group’s principal associated undertakings at 31 March 2005 are set out below. All of these companies are incorporated and operate in Ireland. Name and Registered Office Nature of Business % Ordinary Shareholding Food & Beverage KP (Ireland) Limited, 79 Broomhill Road, Tallaght, Dublin 24, Ireland. Manufacture of snack foods. Kylemore Foods Holdings Limited, DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland. Holding company for the Kylemore group of companies whose principal activities are the operation of restaurants and par bake bread manufacture. Other Manor Park Homebuilders Limited, The Gables, Torquay Road, Foxrock, Dublin 18, Ireland. Residential homebuilding and property development. (b) Company At 31 March 19. Financial Assets - Subsidiary Undertakings Company At 1 April Additions Disposals At 31 March 50.0% 50.0% 49.0% 2005 €’000 2004 €’000 1,300 1,300 2005 €’000 145,814 - - 145,814 2004 €’000 106,653 53,116 (13,955) 145,814 The Group’s principal operating subsidiary undertakings are shown on pages 89 to 91. All of these subsidiaries are wholly owned except Broderick Bros. Limited (93.8%), Virtus Limited (51.0%), Distrilogie SA (98.36%) where put and call options exist to acquire the remaining 1.64%, DCC Environmental Limited (97.15%) where put and call options exist to acquire the remaining 2.85% and Fannin Limited (96.6%) where put and call options exist to acquire the remaining 3.4%. The Group’s principal overseas holding company subsidiaries are DCC 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 Limited is at Days Healthcare U.K. Limited, Litchard Industrial Estate, Bridgend, Mid Glamorgan CF31 2AL, Wales. The registered office of DCC International Holdings B.V. is Teleport Boulevard 140, 1043 EJ Amsterdam, The Netherlands. 69 Notes to the Financial Statements for the year ended 31 March 2005 20. Stocks Group Raw materials and consumables Work in progress Finished goods and goods for resale 2005 €’000 5,783 1,855 116,096 123,734 2004 €’000 3,591 1,049 105,937 110,577 The replacement cost of stocks is not considered to be materially different from the amounts shown above. 21. Debtors Amounts falling due within one year: Trade debtors Amounts owed by subsidiary undertakings Corporation tax recoverable Deferred tax asset (note 30) Value added tax recoverable Prepayments and accrued income Other debtors Amounts falling due after more than one year: Amounts owed by subsidiary undertakings Investments Prepayments and other debtors 22. Cash and Term Deposits Cash in hand and at bank Term deposits Group 2005 €’000 2004 €’000 Company 2005 €’000 2004 €’000 366,340 - - 3,720 9,925 24,516 4,560 409,061 - 100 12,373 12,473 290,084 - - 4,527 1,517 17,160 1,877 315,165 - 100 15,120 15,220 - 267,985 - - 80 1,021 - 269,086 - - 8,713 8,713 421,534 330,385 277,799 - 2,019 5 - - 1,390 - 3,414 278,233 - 9,441 287,674 291,088 Group Company 2005 €’000 118,590 233,809 352,399 2004 €’000 115,198 205,418 320,616 2005 €’000 - 248 248 2004 €’000 - 367 367 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. 70 Notes to the Financial Statements for the year ended 31 March 2005 23. Bank and Other Debt Group Bank loans and overdrafts (note 24) Loan notes (note 25) Obligations under finance leases (note 26) Unsecured Notes due 2008 to 2016 (note 24) Bank and other loans and leases: - repayable within one year - repayable after more than one year Unsecured Notes due 2008 to 2016 2005 €’000 38,481 731 16,285 55,497 305,094 360,591 45,127 10,370 305,094 360,591 2004 €’000 137,446 827 22,014 160,287 97,612 257,899 143,732 16,555 97,612 257,899 In September 1996, the Group raised US$100.0 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 3 month sterling Libor. On 19 February 2004, the Group committed to the issuance of US$200.0 million and Stg£30.0 million senior unsecured notes in a private placement with US and UK institutional investors. Of these amounts, US$157.0 million and Stg£30.0 million are due in 2014 and US$43.0 million is due in 2016. The unsecured notes were subsequently issued on 19 April 2004 with funding equivalent to €212.1 million drawn down on that date. The Group has entered into currency and interest rate swaps with the effect that (i) the dollar denominated funds are swapped to euro at a margin over six month Euribor and (ii) the sterling denominated funds are swapped to a margin over six month sterling Libor. 24. Bank Loans, Overdrafts and Unsecured Notes due 2008 to 2016 Group Repayable as follows: Within one year Between two and five years After five years The above amounts are further analysed as follows: Wholly repayable within one year Repayable other than by instalments: - between two and five years - after five years 25. Loan Notes Group The loan notes are repayable as follows: Within one year 2005 €’000 38,481 87,327 217,767 343,575 2004 €’000 137,446 90,291 7,321 235,058 38,481 137,446 87,327 217,767 343,575 90,291 7,321 235,058 2005 €’000 2004 €’000 731 827 The above loan notes are unsecured and €0.731 million (2004: €0.827 million) 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. 71 Notes to the Financial Statements for the year ended 31 March 2005 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 2005 €’000 2004 €’000 5,915 5,459 4,894 5,476 10,370 5,960 10,595 16,555 16,285 22,014 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 of 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 exposures in relation 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 and currency swaps, forward foreign exchange and commodity contracts) are designed to manage risks without engaging in speculative transactions. (a) Interest Rate Risk Profile of Financial Assets and Financial Liabilities The following table analyses 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: 2005 € equivalent Financial Liabilities €’000 - (170,180) (170,180) (88,598) (101,807) (190,405) - (6) (6) Financial Assets €’000 - 90,036 90,036 88,598 168,095 256,693 - 5,670 5,670 Net €’000 - (80,144) (80,144) - 66,288 66,288 - 5,664 5,664 Financial Assets €’000 - 67,959 67,959 91,605 153,670 245,275 - 7,382 7,382 2004 € equivalent Financial Liabilities €’000 - (91,964) (91,964) (91,605) (74,330) (165,935) - - - Net €’000 - (24,005) (24,005) - 79,340 79,340 - 7,382 7,382 € Fixed € Floating € Total Stg£ Fixed Stg£ Floating Stg£ Total US$ Fixed US$ Floating US$ Total Total 352,399 (360,591) (8,192) 320,616 (257,899) 62,717 72 Notes to the Financial Statements for the year ended 31 March 2005 27. Derivative and Other Financial Instruments - continued The Group’s deferred acquisition consideration of €17.923 million (2004: €11.477 million) as stated on the balance sheet, consists of €7.708 million of € floating rate financial liabilities (2004: €9.859 million of € floating rate financial liabilities) and €10.215 million of Stg£ floating rate financial liabilities (2004: €1.618 million) payable as follows: Within one year Between one and two years Between two and five years 2005 €’000 7,084 2,375 8,464 2004 €’000 4,678 3,391 3,408 17,923 11,477 The Group’s floating rate financial assets and financial liabilities primarily bear interest rates based on: ■ 1-6 month Euribor ■ 1-6 month Sterling Libor ■ 0-1 month US$ Libor Details of the fixed interest rates and corresponding time periods for the Group’s fixed rate financial assets and financial liabilities, after taking interest rate swaps into account, are as follows: 2005 Weighted average interest rate % 2004 Weighted average interest rate % Fixed rate financial assets n/a 8.0% Fixed rate financial liabilities n/a 8.8% Fixed rate financial assets n/a 8.0% Fixed rate financial liabilities n/a 8.8% 2005 Weighted average period for which rate is fixed 2003 Weighted average period for which rate is fixed Fixed rate financial assets n/a 3.5 years Fixed rate financial liabilities n/a 3.5 years Fixed rate financial assets n/a 4.5 years Fixed rate financial liabilities n/a 4.5 years € Stg£ € Stg£ 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 2005 €’000 45,127 4,894 92,803 217,767 360,591 2004 €’000 143,732 5,960 100,886 7,321 257,899 73 Notes to the Financial Statements for the year ended 31 March 2005 27. Derivative and Other Financial Instruments - continued (b) Gains and Losses on Hedges The Group enters into forward foreign exchange contracts to eliminate the currency exposures that arise on revenues and costs denominated in foreign currencies. The Group also enters into commodity 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: Gains €’000 1,856 (1,856) 282 282 2005 Losses €’000 (563) 563 (129) (129) Total €’000 1,293 (1,293) 153 153 Gains €’000 6,398 (4,658) 116 1,856 2004 Losses €’000 (1,188) 1,161 (536) (563) Total €’000 5,210 (3,497) (420) 1,293 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 282 - 282 (129) - (129) 153 - 153 1,856 - 1,856 (563) - (563) 1,293 - 1,293 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 the Unsecured Notes 2008/11 or the Unsecured Notes 2014/16 as described in the accounting policy for derivative financial instruments and detailed in Note 27(c). (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: 2005 2004 Carrying amount €’000 Fair value €’000 Carrying amount €’000 Fair value €’000 352,399 352,399 320,616 320,616 (17,923) (45,127) (10,370) (305,094) (17,923) (45,127) (10,370) (305,094) (11,477) (143,732) (16,555) (97,612) (11,477) (143,732) (16,555) (97,612) - - - 2 151 - - - - 12 1,281 - (26,115) (25,962) 51,240 52,533 Assets: Cash and short term deposits Liabilities: Deferred acquisition consideration Short term debt Medium and long term debt Unsecured Notes due 2008 to 2016 Derivative financial instruments: Commodity swaps Forward foreign exchange contracts Interest rate contracts 74 Notes to the Financial Statements for the year ended 31 March 2005 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 generally approximates to fair value because the future amounts payable are discounted back to their present value. ■ Medium and long term debt: The carrying amount reported in the balance sheet approximates to fair value because interest rates on these instruments frequently reset to short term 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 2005, the cross currency interest rate swap had a fair value equating to a loss of €11.126 million (2004: loss of €1.855 million) and the fair value of the Unsecured Notes 2008/11 was lower (2004: lower) than the book value by the same amount. ■ Unsecured Notes due 2014/16: The fair value of the Group’s Unsecured Notes due 2014/16 is shown net of the gain or loss on the currency and interest rate swaps used to hedge these loan notes (note 23). At 31 March 2005, the currency and interest rate swaps had a fair value equating to a loss of €18.690 million and the fair value of the Unsecured Notes 2014/16 was lower than the book value by the same amount. At 31 March 2004, the currency and interest rate swaps had a fair value equating to a gain of €2.306 million and the fair value of the Unsecured Notes 2014/16, which were issued on 19 April 2004 pursuant to commitments entered into on 19 February 2004 (note 23), was higher by the same amount. ■ Commodity and forward foreign exchange 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 Borrowing Facilities While the Group had various bank borrowing facilities available at 31 March 2005, it had no undrawn committed bank facilities. (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) Treasury Policy The Group’s treasury policy and management of derivatives and financial instruments is discussed in the Financial Review on pages 26 to 31. 75 Notes to the Financial Statements for the year ended 31 March 2005 28. Trade and Other Creditors Amounts falling due within one year: Trade creditors Other creditors and accruals Deferred acquisition consideration PAYE and National Insurance Value added tax Capital grants (note 29) Interest payable Amounts due in respect of fixed assets Amounts due to subsidiary undertakings Amounts due to associated undertakings 29. Capital Grants Group At 1 April Amortisation in year Exchange and other adjustments At 31 March Disclosed as due within one year (note 28) Group Company 2005 €’000 367,221 62,516 7,084 5,274 16,693 128 5,332 499 - 6,536 471,283 2004 €’000 297,501 35,588 4,678 3,799 12,951 129 1,617 566 - 5,859 362,688 2005 €’000 - 761 2,824 11 - - - - 223,019 - 226,615 2005 €’000 1,241 (155) - 1,086 (128) 958 2004 €’000 - 1,836 1,885 268 619 - - - 11,061 - 15,669 2004 €’000 1,413 (173) 1 1,241 (129) 1,112 Total €’000 30. Provisions for Liabilities and Charges (a) Group 2005 Pension and similar obligations (note 32) €’000 Deferred taxation (note 31) €’000 Deferred taxation (note 31) €’000 Total €’000 2004 Pension and similar obligations (note 32) €’000 At 1 April Charged/(credited) to profit and loss account Acquisitions Exchange adjustments and other At 31 March Disclosed as: Deferred tax asset (note 21) Provisions for liabilities and charges (2,454) 11 (2,443) (1,875) 11 (1,864) 3,432 554 98 1,630 (3,720) 5,350 1,630 - - - 11 - 11 11 3,432 554 98 1,641 (233) - (346) (2,454) (3,720) (4,527) 5,361 1,641 2,073 (2,454) - - - 11 - 11 11 (233) - (346) (2,443) (4,527) 2,084 (2,443) 76 Notes to the Financial Statements for the year ended 31 March 2005 30. Provisions for Liabilities and Charges - continued (b) Company At 1 April Charged to profit and loss account At 31 March 31. Deferred Taxation 2005 €’000 827 145 972 2004 €’000 552 275 827 The net deferred taxation liability/(asset) provided in the financial statements is analysed as follows: (a) Group Tax effect of timing differences due to: Excess of accelerated capital allowances over depreciation Other short term timing differences (b) Company Tax effect of timing differences due to: Excess of accelerated capital allowances over depreciation Other short term timing differences 2005 €’000 4,940 (3,310) 1,630 2005 €’000 4 968 972 2004 €’000 361 (2,815) (2,454) 2004 €’000 4 823 827 32. Pension and Similar Obligations The Group has continued to account for pensions in accordance with SSAP 24 and the relevant disclosures are given in note (a) below. Financial Reporting Standard 17 - Retirement Benefits (FRS 17) was issued by the Accounting Standards Board in November 2000 and represents a significant change in the method of accounting for pension costs compared with the previous rules as set out in SSAP 24. Full implementation of the new accounting rules prescribed by FRS 17 has been deferred by the Accounting Standards Board. The Group has elected to avail of transitional provisions outlined in the standard which, for 2005, permit the use of the SSAP 24 regulations for determining pension cost but require the additional disclosure of the impact of the adoption of FRS 17 as at 31 March 2005, as shown in note (b). (a) SSAP 24 Disclosures The Group operates defined benefit and defined contribution 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 €8.626 million (2004: €7.242 million) of which €5.043 million (2004: €4.152 million) was paid in respect of defined benefit 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 2002 to 1 May 2004. 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. 77 Notes to the Financial Statements for the year ended 31 March 2005 32. Pension and Similar Obligations - continued At the dates of the most recent actuarial valuations, the market value of the assets of the Group’s defined benefit schemes totalled €50.715 million (2004: €45.350 million). After allowing for expected future increases in earnings and pension payments, the actuarial values of the various schemes’ assets were sufficient to cover between 47% and 102% (Group weighted average cover: 71%) 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 2005, €2.614 million (2004: €200,000) was included in creditors in respect of pension liabilities and €11.437 million (2004: €10.719 million) 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. (b) Financial Reporting Standard 17 'Retirement Benefits' disclosures The Group operates eight defined benefit schemes in the Republic of Ireland and three in the UK. Full actuarial valuations were carried out between 1 April 2002 and 1 May 2004 and updated to 31 March 2005 for Financial Reporting Standard 17 disclosure purposes by a qualified independent actuary. The main financial assumptions used in the valuations were: Irish Schemes 2005 2004 2003 Rate of increase in salaries Rate of increase in pensions in payment Discount rate Inflation assumption 4.00% 2.25% - 5.00% 4.00% - 4.80% 2.25% 4.00% 2.25% - 5.00% 5.25% 2.25% 4.00% 2.25% - 5.00% 5.50% 2.25% UK Schemes 2005 2004 2003 Rate of increase in salaries Rate of increase in pensions in payment Discount rate Inflation assumption 3.75% 2.75% - 4.00% 5.25% 2.75% 3.75% 2.75% - 4.00% 5.60% 2.75% 3.75% 2.25% - 4.00% 5.25% 2.25% The expected long term rates of return on the assets of the schemes were as follows: 2005 7.20% 3.70% 5.20% 2.40% 2005 8.10% 4.60% 6.10% 3.50% 2004 7.50% 4.50% 5.50% 3.00% 2004 7.50% 4.50% 5.50% 3.00% 2003 7.75% 4.75% 5.75% 4.00% 2003 7.50% 5.00% 6.00% 4.00% Irish Schemes Equities Bonds Property Cash UK Schemes Equities Bonds Property Cash 78 Notes to the Financial Statements for the year ended 31 March 2005 32. Pension and Similar Obligations - continued The market value of the assets of the schemes were as follows: Equities Bonds Property Cash Total market value at 31 March Present value of scheme liabilities Related deferred tax asset Net pension funding deficit at 31 March 2005 Equities Bonds Property Cash Total market value at 31 March Present value of scheme liabilities Related deferred tax asset Net pension funding deficit at 31 March 2004 Equities Bonds Property Cash Total market value at 31 March Present value of scheme liabilities Related deferred tax asset Net pension funding deficit at 31 March 2003 RoI €’000 31,920 9,884 2,006 1,900 45,710 (64,581) (18,871) RoI €’000 29,020 7,502 2,145 7,580 46,247 (58,035) (11,788) RoI €’000 19,777 7,753 2,045 6,383 35,958 (49,614) (13,656) 2005 UK €’000 7,150 1,389 7 552 9,098 (15,458) (6,360) 2004 UK €’000 6,504 1,161 9 159 7,833 (13,036) (5,203) 2003 UK €’000 4,633 998 9 167 5,807 (10,531) (4,724) Total €’000 39,070 11,273 2,013 2,452 54,808 (80,039) (25,231) 3,028 (22,203) Total €’000 35,524 8,663 2,154 7,739 54,080 (71,071) (16,991) 2,124 (14,867) Total €’000 24,410 8,751 2,054 6,550 41,765 (60,145) (18,380) 2,573 (15,807) 79 Notes to the Financial Statements for the year ended 31 March 2005 32. Pension and Similar Obligations - continued If FRS 17 had been adopted in the financial statements, the Group’s shareholders’ funds and profit and loss reserve would be as follows: 2005 2004 2003 €’000 €’000 €’000 €’000 €’000 €’000 Shareholders’ Funds Group shareholders’ funds excluding pension deficit Net pension funding deficit Net pension prepayment Related deferred tax asset Net pension prepayment Group shareholders’ funds including (8,910) 1,069 493,696 (22,203) (7,841) (10,538) 1,317 pension deficit and pension prepayment 463,652 Profit and Loss Reserve Profit and loss reserve excluding pension deficit Net pension funding deficit Net pension prepayment Related deferred tax asset Net pension prepayment Profit and loss reserve including pension deficit and pension prepayment Impact of FRS 17 on reported profit (8,910) 1,069 345,748 (22,203) (7,841) 315,704 (10,538) 1,317 469,612 (14,867) (9,221) 445,524 321,739 (14,867) (9,221) 297,651 (8,951) 1,119 (8,951) 1,119 429,279 (15,807) (7,832) 405,640 281,400 (15,807) (7,832) 257,761 The following is a pro-forma indication of the impact on the Group profit and loss account if the Group had implemented FRS 17 in full in relation to its defined benefit pension schemes: 2005 Total net Incremental profit pension SSAP 24 impact of pension cost under FRS 17 FRS 17 expense €’000 €’000 €’000 SSAP 24 pension expense €’000 2004 Total net pension cost under FRS 17 €’000 Incremental profit impact of FRS 17 €’000 Impact on Group operating profit Pension cost/current service cost Past service cost (benefit enhancements) Total operating charge (5,043) - (5,043) (3,029) (392) (3,421) 2,014 (392) 1,622 (4,152) - (4,152) (2,355) (30) (2,385) 1,797 (30) 1,767 Impact on other finance income Expected return on pension scheme assets Interest on pension scheme liabilities Net return - - - 3,517 (3,940) (423) 3,517 (3,940) (423) - - - 2,848 (3,303) (455) 2,848 (3,303) (455) Total net impact on reported profits (5,043) (3,844) 1,199 (4,152) (2,840) 1,312 80 Notes to the Financial Statements for the year ended 31 March 2005 32. Pension and Similar Obligations - continued Statement of total recognised gains and losses Actual return less expected return on pension scheme assets Experience gains and losses arising on the scheme liabilities Changes in assumptions underlying the present value of the scheme liabilities 2005 €’000 1,277 (1,608) (7,421) 2004 €’000 5,362 (3,424) (2,764) 2003 €’000 (13,394) (3,005) (5,869) Actuarial loss recognised in the statement of total recognised gains and losses (7,752) (826) (22,268) Movement in deficit during the year Deficit in scheme at 1 April Movement in year: Current service cost Past service cost Acquisitions and other Contributions paid Other finance (expense)/income Actuarial loss Exchange Deficit in scheme at 31 March Experience gains and losses Difference between the expected and actual return on scheme assets Percentage of scheme assets Experience gains and losses on scheme liabilities Percentage of the present value of the scheme liabilities Total recognised in statement of total recognised gains and losses Percentage of the present value of the scheme liabilities 2005 €’000 2004 €’000 2003 €’000 (16,991) (18,380) (3,164) (3,029) (392) (1,825) 4,998 (423) (7,752) 183 (2,355) (30) - 5,237 (455) (826) (182) (2,160) (141) - 8,275 672 (22,268) 406 (25,231) (16,991) (18,380) 2005 €’000 1,277 2% (1,608) 2% (7,752) 10% 2004 €’000 5,362 10% 2003 €’000 (13,394) (32%) (3,424) 5% (3,005) 5% (826) 1% (22,268) 37% 81 Notes to the Financial Statements for the year ended 31 March 2005 33. Called up Equity Share Capital Group and Company Authorised 152,368,568 ordinary shares of €0.25 each Issued 88,169,404 ordinary shares (including 7,873,886 ordinary shares held as Treasury Shares) of €0.25 each, fully paid (2004: 88,139,404 ordinary shares (including 6,667,734 ordinary shares held as Treasury Shares) of €0.25 each, fully paid) 60,000 ordinary shares of €0.25 each, €0.0025 paid (2004: 90,000 ordinary shares of €0.25 each, €0.0025 paid) 2005 €’000 2004 €’000 38,092 38,092 22,042 22,035 - - 22,042 22,035 Movements during year Ordinary shares of 0.25 each At 1 April 2004 Payment up of partly paid shares At 31 March 2005 No of shares (’000) 88,229 - 88,229 €’000 22,035 7 22,042 During the year the Group purchased 2,065,000 of its own ordinary shares of €0.25 each at a total cost of €26.762 million. 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, Group employees hold basic tier options to subscribe for 2,282,700 ordinary shares and second tier options to subscribe for 2,498,584 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 the total number of shares in issue in each case. Under the DCC Sharesave Scheme, Group employees hold options to subscribe for 986,912 ordinary shares. These options are exercisable between June 2004 and February 2011. Under the terminated DCC Employee Partly Paid Share Scheme, at 31 March 2005, 60,000 shares (2004: 90,000 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. 34. Share Premium Account Group and Company At 1 April Premium on issue of shares Share issue expenses At 31 March 82 2005 €’000 124,438 68 - 124,506 2004 €’000 124,444 - (6) 124,438 Notes to the Financial Statements for the year ended 31 March 2005 35. Other Reserves (a) Group Capital Conversion Reserve Fund €’000 Other Reserves €’000 Total €’000 At 31 March 2005 and 31 March 2004 344 1,056 1,400 (b) Company At 31 March 2005 and 31 March 2004 36. Profit and Loss (a) Group At 1 April Profit retained for the year Share buyback (inclusive of costs) Re-issue of Treasury Shares (net of expenses) Exchange adjustments - associated undertakings Exchange adjustments - subsidiaries At 31 March Capital Conversion Reserve Fund €’000 344 2005 €’000 321,739 54,309 (26,762) 6,783 (237) (10,084) 345,748 2004 €’000 281,400 57,755 (24,986) 1,128 (210) 6,652 321,739 In accordance with the Group’s accounting policy, goodwill arising on the acquisition of subsidiaries prior to 1 April 1998, eliminated from the balance sheet through reserves, amounts to €100.079 million. (b) Company At 1 April (Loss)/profit retained Share buyback (inclusive of costs) Re-issue of Treasury Shares (net of expenses) At 31 March 2005 €’000 69,688 (28,623) (26,762) 6,783 21,086 2004 €’000 34,265 59,281 (24,986) 1,128 69,688 The cost to the Group of €87.112 million to acquire the 7,873,886 shares held in Treasury has been deducted from the Group and Company Profit and Loss Reserves. These shares were acquired at prices ranging from €9.25 to €12.80 each between 28 July 2000 and 17 May 2004. 83 Notes to the Financial Statements for the year ended 31 March 2005 37. Reconciliation of Movements in Equity Shareholders’ Funds Group Profit for the financial year Dividends Equity share capital issued (net of expenses) Share buyback (inclusive of costs) Exchange adjustments - associated undertakings Exchange adjustments - subsidiaries Net movement in shareholders’ funds Opening equity shareholders’ funds Closing equity shareholders’ funds 38. Equity Minority Interests Group At 1 April Minority acquired on acquisition of subsidiary (note 39) Acquisition of minority interest in subsidiary undertakings (note 39) Share of profit for the financial year (note 12) Dividends to minorities Exchange and other adjustments At 31 March 2005 €’000 83,767 (29,458) 54,309 6,858 (26,762) (237) (10,084) 24,084 2004 €’000 84,327 (26,572) 57,755 1,122 (24,986) (210) 6,652 40,333 469,612 493,696 429,279 469,612 2005 €’000 4,081 359 (489) 573 (176) - 4,348 2004 €’000 3,632 - - 341 (151) 259 4,081 84 Notes to the Financial Statements for the year ended 31 March 2005 39. Acquisitions of Subsidiary Undertakings The principal acquisitions completed during the year were Bottle Green (a UK wine sales and marketing company), the business of Shell Direct UK (a Shell branded oil distributor), Dyneley Holdings Limited (a fuel card services company), Laleham Healthcare (a contract manufacturer and packer for the health and beauty market), and a number of small oil and LPG distributors. The Group also purchased the remaining 48.5% shareholding from minority shareholders in Allied Foods Limited. A summary of the effect of acquisitions is as follows: Acquisition of subsidiary undertakings €’000 Fair value of subsidiary Fair value undertakings adjustments at acquisition €’000 €’000 Acquisition of minority interest in subsidiaries €’000 33,423 6,927 33,671 16,528 (44,023) (3,407) (359) 42,760 - (100) (200) - (4,725) - - (5,025) 33,423 6,827 33,471 16,528 (48,748) (3,407) (359) 37,735 74,382 (7,916) 104,201 - - - - - - 489 489 1,141 - 1,630 Total €’000 33,423 6,827 33,471 16,528 (48,748) (3,407) 130 38,224 75,523 (7,916) 105,831 94,721 11,110 105,831 Tangible fixed assets Stocks Debtors Net cash Creditors Tax and deferred tax Minority interest Net assets acquired Goodwill Less: carrying value as an associate Cost Satisfied by: Cash Deferred consideration The fair values set out above include provisional values for certain acquisitions completed during 2004/2005. Any revisions to these provisional valuations will be reflected in the 2005/2006 financial statements. The fair value adjustments primarily relate to onerous contracts and defined benefit pension deficits of subsidiaries acquired. During the year, €1.675 million of the fair value provisions were utilised. An analysis of the net outflow of cash in respect of the acquisition of subsidiary undertakings is as follows: Cost Net cash acquired Deferred consideration Net outflow of cash Comprised of: Purchase of subsidiary undertakings (net of cash acquired) (note 41(c)) Purchase of minority interests (note 41(c)) €’000 105,831 (16,528) (11,110) 78,193 77,288 905 78,193 85 Notes to the Financial Statements for the year ended 31 March 2005 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 Amortisation of capital grants Profit on sale of tangible fixed assets Increase in stocks Increase in debtors Increase in creditors Other Operating cash flow before exceptional costs Exceptional costs Cash flow from operating activities 2005 €’000 2004 €’000 131,536 (21,855) 1,354 32,046 (155) (2,050) (8,506) (64,144) 49,100 (2,466) 114,860 (6,560) 108,300 120,876 (19,201) 3,094 29,401 (173) (879) (3,905) (539) 25,050 (1,808) 151,916 (10,670) 141,246 41. Analysis of Cashflows 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 Net cash outflow from capital expenditure (c) Acquisitions Purchase of subsidiary undertakings (net of cash acquired) (note 39) Investment in associated undertakings (note 18) Purchase of minority interests (note 39) Payment of deferred consideration in respect of acquisitions Net cash outflow from acquisitions (d) Financing Issues of share capital (including share premium) Share buyback Capital element of finance lease payments Unsecured Notes due 2014/16 issued Loans repaid Investment by minorities Net cash inflow/(outflow) from financing 2005 €’000 2004 €’000 12,833 (15,561) (176) (2,904) (42,021) 7,875 (34,146) (77,288) - (905) (2,955) (81,148) 6,858 (26,762) (5,062) 212,064 (85,734) - 101,364 8,540 (11,998) (151) (3,609) (32,084) 3,992 (28,092) (7,302) (484) - (6,674) (14,460) 1,122 (24,986) (4,976) - (61,551) 152 (90,239) 86 Notes to the Financial Statements for the year ended 31 March 2005 42. Analysis of Movement in Net Funds Cash in hand and at bank Overdrafts Term deposits Bank loans and loan notes Unsecured Notes due 2008 to 2016 Finance leases Total 43. Capital Commitments Group At 1 April 2004 €’000 115,198 (51,785) 63,413 205,418 (86,488) (97,612) (22,014) 62,717 Exchange Cash Flow Movements €’000 €’000 7,719 14,197 21,916 33,245 85,734 (212,064) 5,062 (66,107) (4,327) (893) (5,220) (4,854) 23 4,582 667 (4,802) At 31 March 2005 €’000 118,590 (38,481) 80,109 233,809 (731) (305,094) (16,285) (8,192) 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 2005 €’000 2004 €’000 10,897 3,732 35,212 28,758 44. Operating Lease Commitments At 31 March 2005 the Group had annual commitments under operating leases expiring as follows: Expiring within one year Expiring between two and five years Expiring after five years Land & buildings €’000 177 1,745 3,241 5,163 2005 Other €’000 890 2,468 - 3,358 Total €’000 1,067 4,213 3,241 8,521 Land & buildings €’000 436 1,109 3,331 4,876 2004 Other €’000 752 1,743 - 2,495 Total €’000 1,188 2,852 3,331 7,371 87 Notes to the Financial Statements for the year ended 31 March 2005 45. Contingent Liabilities (a) Bank and Other Loans The Company and certain subsidiaries have given guarantees of up to €343.247 million (2004: €256.036 million) in respect of borrowings by the Company and other Group undertakings. (b) Other Included in trade creditors is an amount of approximately €6.128 million (2004: €8.616 million) 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 the following subsidiaries; Alvabay Limited, Atlas Oil Refining Company Limited, Classic Fuel & Oil Limited, DCC Business Expansion Fund Limited, DCC Corporate Finance Limited, DCC Energy Limited, DCC Healthcare Limited, DCC Management Services Limited, DCC Nominees Limited, DCC SerCom Limited, Emo Oil Limited, Flogas Ireland Limited, Shannon Environmental Holdings Limited, Sharptext Limited and TechnoPharm Limited. As a result, these companies will be 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)* * Average exchange rates adjusted for the impact of profit and loss hedges. 2005 €1=Stg£ 2004 €1=Stg£ 0.689 0.672 0.666 0.647 47. Transactions with Related Parties On 22 June 2004, the Group increased its shareholding in SerCom Distribution Limited to 100.0% through the acquisition of 0.3% of the issued share capital from the management of that company at a cost of €0.938 million. On 23 June 2004, the Group increased its shareholding in DCC Environmental Limited to 97.2% by acquiring 2.9% of the issued share capital from the minority shareholder. The consideration amounted to €1.201 million and was satisfied in cash. The remaining 2.8% shareholding is subject to put and call options up to 2010. On 30 August 2004, the Group increased its shareholding in Allied Foods Limited to 100.0% by acquiring the remaining 48.5% of the issued share capital from the minority shareholders. The consideration amounted to €15.245 million and was satisfied in cash. 48. Approval of Financial Statements The financial statements were approved by the Board of Directors on 13 May 2005. 88 group directory shareholder information corporate information index Energy DCC Energy Limited DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland DCC Energy Limited Airport Road West, Sydenham, Belfast BT3 9ED, Northern Ireland Emo Oil Limited Clonminam Industrial Estate, Portlaoise, Co. Laois, Ireland Emo Oil Limited Tryst House, Glenbervie Business Park, Larbert, Stirlingshire FK5 4RB, Scotland Flogas UK Limited 81 Raynsway, Syston, Leicester LE7 1PF, England Flogas Ireland Limited Dublin Road, Drogheda, Co. Louth, Ireland Fuel Card Group Limited 8 Kerry Hill, Horsforth, Leeds LS18 4AY, England GB Oils Limited t/a Scottish Fuels Tryst House, Glenbervie Business Park, Larbert, Stirlingshire FK5 4RB, Scotland IT Distribution SerCom Distribution Limited DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland Holding and divisional management company Sales, marketing and distribution of petroleum products Sales, marketing and distribution of petroleum products Sales, marketing and distribution of petroleum products Sales, marketing and distribution of liquefied petroleum gas Sales, marketing and distribution of liquefied petroleum gas Sale of motor fuels through fuel cards Sales, marketing and distribution of petroleum products Tel: + 353 1 2799 400 Fax: + 353 1 2831 017 email: energy@dcc.ie www.dcc.ie Tel: + 44 28 9073 2611 Fax: + 44 28 9073 2020 email: enquiries@emooil.com www.emooil.com Tel: + 353 502 747 00 Fax: + 353 502 747 75 email: info@emo.ie www.emo.ie Tel: +44 1324 408 000 Fax: +44 1324 408 260 Email: info@emooil.co.uk www.emooil.co.uk Tel: +44 116 2649 000 Fax: +44 116 2649 001 Email: info@flogas.co.uk www.flogas.co.uk Tel: +353 41 9831 041 Fax: +353 41 9834 652 Email: info@flogas.ie www.flogas.ie Tel: +44 1132 390 490 Fax: +44 1132 098 764 Email: info@fuelcard-group.com www.fuelcard-group.com Tel: +44 8453 008 844 Fax: +44 1324 408 260 Email: info@scottishfuels.co.uk www.scottishfuels.co.uk Holding and divisional management company Tel: +353 1 2799 400 Fax: +353 1 2831 017 Email: sercom@dcc.ie www.sercomdistribution.com COMPANY NAME & ADDRESS PRINCIPAL ACTIVITY TEL/FAX/EMAIL/WEB 89 group directory – continued Distrilogie SA 12 rue des Frères Caudron, 78147 Vélizy Cedex, France Gem Distribution Limited St. George House, Parkway, Harlow Business Park, Harlow, Essex CM19 5QF, England Distribution of enterprise infrastructure products Sales, marketing and distribution of computer software Micro Peripherals Limited Shorten Brook Way, Altham Business Park, Altham, Accrington, Lancashire BB5 5YJ, England Sales, marketing and distribution of computer products Tel: +33 1 34 58 47 00 Fax: +33 1 34 58 47 27 Email: info@distrilogie.com www.distrilogie.com Tel: +44 1279 822 800 Fax: +44 1279 416 228 Email: info@gem.co.uk www.gem.co.uk Tel: +44 1282 776 776 Fax: +44 1282 770 001 Email: info@micro-p.com www.micro-p.com Sales, marketing and distribution of computer products Tel: +353 1 4087 171 Fax: +353 1 4193 111 Email: sharptext@sharptext.com www.sharptext.com Sharptext Limited M50 Business Park, Ballymount Road Upper, Dublin 12, Ireland Healthcare DCC Healthcare Limited DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland Days Healthcare GmbH Gewerbestraße 13, D-32584 Löhne, Germany Days Healthcare UK Limited Litchard Industrial Estate, Bridgend, Mid Glamorgan CF31 2AL, Wales EuroCaps Limited Crown Business Park, Dukes Town, Tredegar, Gwent NP22 4EF, Wales Fannin Healthcare Limited Blackthorn Road, Sandyford Industrial Estate, Dublin 18, Ireland Laleham Healthcare Limited Sycamore Park, Mill Lane, Alton, Hampshire GU34 2PR, England TechnoPharm Limited Pharmapark, Chapelizod, Dublin 20, Ireland Holding and divisional management company Manufacture, sales, marketing and distribution of mobility & rehabilitation products Manufacture, sales, marketing and distribution of mobility & rehabilitation products Contract manufacture of soft gel capsule nutraceuticals Sales, marketing and distribution of medical and laboratory equipment and consumables Contract manufacture and packing of nutraceuticals and cosmetics (liquids and creams) Sales, marketing and distribution of pharmaceutical products and medical devices Tel: +353 1 2799 400 Fax: +353 1 2831 017 Email: healthcare@dcc.ie www.dcc.ie Tel: +49 5731 786 50 Fax: +49 5731 786 520 Email: info@dayshealthcare.de www.dayshealthcare.de Tel: +44 1656 664 700 Fax: +44 1656 664 750 Email: info@dayshealthcare.com www.dayshealthcare.com Tel: +44 1495 308 900 Fax: +44 1495 308 990 Email: info@softgels.co.uk www.softgels.co.uk Tel: +353 1 2944 500 Fax: +353 1 2954 777 Email: information@fanninhealthcare.com www.fanninhealthcare.com Tel: +44 1420 566 500 Fax: +44 1420 566 566 Email: reception@laleham-healthcare.com www.laleham-healthcare.com Tel: +353 1 626 5006 Fax: +353 1 626 5071 Email: info@technopharm.com www.technopharm.com Tel: +44 1928 573 734 Fax: +44 1928 580 694 Email: enquiries@tablets2buy.com www.tablets2buy.com Thompson & Capper Limited 9-12 Hardwick Road, Astmoor Industrial Estate, Runcorn, Cheshire WA7 1PH, England Contract manufacture and packing of tablet and hard gel capsule nutraceuticals Virtus Limited Adamstown, Lucan, Co. Dublin, Ireland Manufacture and distribution of pneumatic healthcare appliances Tel: +353 1 628 0571 Fax: +353 1 628 0572 Email: info@virtus.ie www.virtus.ie COMPANY NAME & ADDRESS PRINCIPAL ACTIVITY TEL/FAX/EMAIL/WEB 90 group directory – continued Food & Beverage DCC Food & Beverage Limited 79 Broomhill Road, Tallaght, Dublin 24, Ireland Allied Foods Limited Kinsale Road, Cork, Ireland Bottle Green Limited 19 New Street, Horsforth, Leeds LS18 4BH, England Broderick Bros. Limited Cloverhill Industrial Estate, Clondalkin, Dublin 22, Ireland Kelkin Limited Unit 1, Crosslands Industrial Park, Ballymount Cross, Dublin 12, Ireland Robt. Roberts Limited 79 Broomhill Road, Tallaght, Dublin 24, Ireland Environmental DCC Environmental Limited DCC House, Stillorgan, Blackrock, Co. Dublin, Ireland Holding and divisional management company Chilled and frozen food distribution Sales, marketing and distribution of wine Sales and service of food equipment Sales, marketing and distribution of branded healthy food and beverages Sales, marketing and distribution of food and beverages Holding and divisional management company Atlas Environmental Ireland Limited Clonminam Industrial Estate, Portlaoise, Co. Laois, Ireland Specialist waste treatment/ management services Supply Chain Management Tel: +353 1 4047 300 Fax: +353 1 4599 369 Email: foods@dcc.ie www.dcc.ie Tel: +353 21 4947 300 Fax: +353 21 4961 488 Email: info@alliedfoods.ie Tel: +44 113 205 4500 Fax: +44 113 205 4501 Email: info@bottlegreen.com www.bottlegreen.com Tel: +353 1 4291 500 Fax: +353 1 4509 570 Email: info@broderickbros.ie Tel: +353 1 4600 400 Fax: +353 1 4600 411 Email: info@kelkin.ie www.kelkin.ie Tel: +353 1 4047 300 Fax: +353 1 4599 369 Email: info@robt-roberts.ie www.robt-roberts.ie Tel: +353 1 2799 400 Fax: +353 1 2831 017 Email: environmental@dcc.ie www.dcc.ie Tel: +353 502 786 00 Fax: +353 502 786 99 Email: info@atlasireland.ie www.atlasireland.ie SerCom Solutions Limited Sarsfield Road, Raheen Business Park, Limerick, Ireland Provision of supply chain services Tel: +353 1 405 6500 Fax: +353 1 405 6555 Email: sales@sercomsolutions.com www.sercomsolutions.com COMPANY NAME & ADDRESS PRINCIPAL ACTIVITY TEL/FAX/EMAIL/WEB 91 shareholder information Share Price Data Share price movement during the year High Low Share price at 31 March Market capitalisation at 31 March Shareholder Analysis at 13 May 2005 Range of shares held Over 250,000 100,001 – 250,000 10,001 – 100,000 Less than 10,000 Total 2005 € 18.50 12.10 17.94 1,442m 2004 € 12.25 9.79 12.15 991m Number of shares* % of shares 80.7 7.8 7.5 4.0 64,801,442 6,299,219 5,986,264 3,208,593 Number of accounts % of accounts 1.8 47 1.4 37 6.9 179 89.9 2,328 80,295,518 100.0 2,591 100.0 * Excludes 7,873,886 shares held as Treasury Shares. Share Listings DCC’s shares are traded on the Irish Stock Exchange and the London Stock Exchange. DCC’s shares are quoted on the official lists of both the Irish Stock Exchange and the UK Listing Authority. ISIN: IE0002424939 ISE Xetra: DCC plc Bloomberg: DCC ID, DCC LN Reuters: DCC.I, DCC.L Website - 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, analyse and download current and archived financial data and annual reports, register for news and other announcements and view audio and slideshow investor presentations. Registrar All administrative queries about the holding of DCC shares should be addressed to the Company’s Registrar: Computershare Investor Services (Ireland) Limited, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland. Tel: + 353 1 216 3100. Fax: + 353 1 216 3151. E-mail: web.queries@computershare.ie Amalgamation of Accounts Shareholders who receive duplicate sets of Company mailings owing to multiple accounts in their names may 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 by electronic funds transfer directly into their bank accounts, rather than by cheque. 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 non-individual shareholders resident in Ireland (e.g. companies, pension funds, charities etc.). An explanatory leaflet entitled ‘Dividend Withholding Tax – General Information Leaflet’ has been published by the Irish Revenue Commissioners and can be obtained by contacting the Company’s Registrar at the above address. This leaflet can also be downloaded from the Irish Revenue Commissioners web site at http://www.revenue.ie/pdf/dwtinfv3.pdf. Declaration forms for claiming an exemption are available from the Company’s Registrar. 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. Financial Calendar Preliminary results announced 16 May 2005 Ex-dividend date for the final dividend 25 May 2005 Record date for the final dividend 27 May 2005 Annual Report posted 2 June 2005 Annual General Meeting 5 July 2005 Proposed payment date for final dividend 11 July 2005 Interim results announced early November 2005 Payment date for the interim dividend early December 2005 Annual General Meeting The 2005 Annual General Meeting will be held at The Four Seasons Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland on Tuesday 5 July 2005 at 11.00 a.m. The Notice of Meeting together with an explanatory letter from the Chairman and a Form of Proxy accompany this Report. Electronic Proxy Voting Shareholders may lodge a Form of Proxy for the 2005 Annual General Meeting via the internet. Shareholders who wish to submit their proxy in this manner may do so by accessing the Company’s Registrar’s website at www.computershare.com/ie/voting/dcc and following the instructions which are set out on the Form of Proxy. Investor Relations For investor enquiries please contact: Kieran Conlon, Investor Relations Manager, DCC plc, DCC House, Brewery Road, Stillorgan, Blackrock, Co Dublin, Ireland. Tel: + 353 1 2799 400. Fax: + 353 1 2799 418. email: investorrelations@dcc.ie 92 corporate information Auditors Bankers Registered and Head Office PricewaterhouseCoopers Chartered Accountants & Registered Auditors George’s Quay Dublin 2 Ireland ABN AMRO Allied Irish Banks Bank of Ireland BNP Paribas Deutsche Bank IIB Bank KBC Bank Royal Bank of Scotland Ulster Bank Registrar Solicitors Computershare Investor Services (Ireland) Limited Heron House Corrig Road Sandyford Industrial Estate Dublin 18 Ireland William Fry Solicitors Fitzwilton House Wilton Place Dublin 2 Ireland DCC House Stillorgan Blackrock Co. Dublin Ireland Stockbrokers Davy Stockbrokers 49 Dawson Street Dublin 2 Ireland JPMorgan Cazenove 20 Moorgate London EC2R 6DA England 93 page page Health and Safety Interest Payable & Similar Charges Interest Rate Risk Management Internal Control International Financial Reporting Standards (IFRS) Investor Relations Minority Interests Net (Debt)/Cash Nomination Committee Note of Historical Cost Profits and Losses Notes to the Financial Statements Operating Cash Flow Operating Lease Commitments Operating Reviews Energy IT Distribution Healthcare Food & Beverage Environmental Other Pension and Similar Obligations Pensions - Directors Private Placement Provisions for Liabilities and Charges Proxy Voting, Electronic Reconciliation of Movements in Equity Shareholders’ Funds Reconciliation of Net Cash Flow to Movement in Net (Debt)/Cash Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities Registrar Related Party Transactions Remuneration Committee Report Reporting Currency Reserves Return on Capital Employed (ROCE) Segmental Information Senior Management Share Buybacks Share Capital Share Listings Share Premium Share Price Data Shareholder Information Shareholders’ Funds Statement of Directors’ Responsibilities Statement of Total Recognised Gains and Losses Stocks Subsidiary Undertakings Substantial Shareholdings Taxation Treasury Policy and Management Treasury Shares Undrawn Bank Borrowing Facilities Website 45 63 31 41 30 92 65 87 40 56 60 86 87 12 14 16 18 20 22 24 77 46 71 76 92 84 59 86 92 88 46 88 83 28 60 4 6, 44 82 92 82 92 92 84 50 56 70 69 45 64 31 44 75 92 index Accounting Convention Accounting Policies Acquisitions and Development Acquisitions of Subsidiary Undertakings Amalgamation of Accounts Annual General Meeting Approval of Financial Statements Associated Undertakings Audit Committee Auditors’ Report Bank and Other Debt Board Committees Capital Commitments Capital Grants Cash and Term Deposits Chairman’s Statement Chief Executive’s Review Combined Code Commodity Price Risk Management Company Balance Sheet Consolidated Balance Sheet Consolidated Cash Flow Statement Consolidated Profit and Loss Account Contingent Liabilities Corporate Governance Corporate Information Corporate Social Responsibility Cost of Sales and Net Operating Costs Creditors, Trade and Other Credit Risk Management CREST Currency Risk Management 53 53 7 85 92 92 88 68 39 51 71 39 87 76 70 6 8 37 31 58 57 59 55 88 37 93 32 62 76 31 92 31 Debtors Deferred Tax Depreciation Derivative Financial Instruments Directors’ and Company Secretary’s Interests Directors of the Company Directors’ Remuneration Directors’ Report Directors’ and Company Secretary’s Share Options Dividend Cover Dividends Dividend Withholding Tax 70 64, 77 67 72 49 2 47 43 48 28 65, 92 92 Earnings Per Share Employee Information Environment, Health and Safety Exceptional Items 65 62 34 63 Fair Value of Financial Instruments Finance Leases Financial Assets Financial Calendar Financial Review Five Year Summary and Key Ratios Fixed Assets Forward Contracts - currency and commodity 74 72 68 92 26 Inside Back Cover 67 75 Going Concern Goodwill Group at a Glance Group Directory 42 63, 66 Inside Front Cover 89 94 e c n a l g a t a p u o r g C C D Y G R E N E T I N O I T U B I R T S I D E R A C H T L A E H & D O O F E G A R E V E B L A T N E M N O R V N E I ) T N E M E G A N A M I N A H C Y L P P U S D N A I G N D L I U B E M O H ( R E H T O GROUP PBIT % DESCRIPTION GROWTH RECORD DCC MARKETS AND SELLS liquefied petroleum gas and oil products to commercial / industrial, domestic, catering and agricultural customers in Britain and Ireland. DCC MARKETS AND SELLS a broad range of computer hardware and software products in Britain, Ireland and Continental Europe to computer resellers, high street retailers, computer superstores, on-line retailers and mail order catalogues. DCC MARKETS AND SELLS medical, surgical, IV pharmaceutical, mobility & rehabilitation and laboratory products to the acute care, community care and laboratory sectors in Ireland and Britain. DCC is also a leading provider of contract manufacturing services to the nutraceuticals and cosmetics industries in Europe. DCC MARKETS AND SELLS food and beverages in Ireland and wine in the UK. These include healthy foods, snackfoods, fresh coffee and wine to a broad range of catering, convenience store, foods service and multiple grocer customers. DCC is also a leading player in frozen food distribution in Ireland. DCC provides specialist waste management services to the industrial/commercial sectors in Ireland including the treatment of waste oils, waste chemicals and contaminated soils and the marketing of effluent water treatment chemicals. DCC's other activities principally comprise a 49% shareholding in a leading Irish builder of houses, apartments and related commercial developments and a supply chain management business. 60 50 40 30 20 10 0 10 Year CAGR 18.0% 35 30 25 20 15 10 5 0 10 Year CAGR 23.9% 20 15 10 5 0 15 12 10 Year CAGR 20.3% 9 6 3 0 10 Year CAGR 13.9% 6 5 4 3 2 1 0 5 Year CAGR 53.0% 20 15 10 5 0 10 Year CAGR 8.0% 5 Year Review Profit & Loss Account Year ended 31 March Turnover Operating profit before operating exceptional items Operating exceptional items Operating profit Net interest payable Profit on ordinary activities before goodwill amortisation, non-operating net exceptional items and tax Goodwill amortisation Non-operating net exceptional items Profit before taxation Taxation Minority interests Profit attributable to Group shareholders Earnings per share - Basic (cent) - Basic adjusted (cent) Dividend per share (cent) Dividend cover (times) Interest cover (times) Consolidated Balance Sheet As at 31 March Tangible fixed assets Associated undertakings Goodwill Net current assets Net cash/(debt) Shareholders’ funds Minority interests Other long term creditors/provisions Movement in working capital Capital expenditure Acquisitions Development expenditure Operating cash flow 2001 €’m 2002 €’m 2003 €’m 2004 €’m 2005 €’m 1,870.1 2,048.9 2,272.4 2,198.0 2,731.5 102.7 - 102.7 (5.0) 97.7 (5.7) (1.1 ) 90.9 (13.7) (0.9) 76.3 90.26 98.30 24.50 4.0 20.5 2002 €’m 159.2 39.0 118.3 316.5 38.7 63.1 418.3 391.4 4.0 22.9 418.3 (6.9) 37.3 65.6 96.0 91.7 - 91.7 (4.4) 87.3 (4.9) - 82.4 (13.1) (1.2) 68.1 78.98 84.69 21.12 4.0 20.8 2001 €’m 135.2 38.5 84.5 258.2 31.1 83.2 372.5 353.7 3.5 15.3 372.5 19.9 34.1 20.2 74.2 83.4 114.3 (2.9) 111.4 (5.0) 106.4 (7.3) (1.7 ) 97.4 (15.3) (1.3) 80.8 120.9 (2.3) 118.6 (4.8) 113.8 (8.3) (5.9 ) 99.6 (14.5) (0.8) 84.3 96.66 111.00 101.98 121.89 131.5 (3.8) 127.7 (5.6) 122.1 (10.1) (12.1 ) 99.9 (15.1) (1.0) 83.8 104.69 137.25 28.18 32.40 37.26 3.9 23.0 2003 €’m 209.4 40.3 132.1 381.8 45.3 20.1 447.2 429.3 3.6 14.3 447.2 25.7 40.7 80.3 146.7 3.8 25.2 2004 €’m 212.3 53.8 129.6 395.7 25.3 62.7 483.7 469.6 4.1 10.0 483.7 (20.6) 30.5 9.2 19.1 3.7 23.6 2005 €’m 247.6 64.2 193.8 505.6 17.8 (8.2) 515.2 493.7 4.3 17.2 515.2 23.6 42.0 89.3 154.9 114.9 Return on tangible capital employed (%) Return on total capital employed (%) 48.1% 23.7% 46.3% 23.1% 42.2% 22.0% 39.8% 21.3% 40.5% 21.0% Average number of employees 3,056 3,361 3,685 3,768 4,441 120.3 98.5 151.9 Annual Report & Accounts 2005 DCC plc DCC House, Brewery Road, Stillorgan, Blackrock, Co. Dublin, Ireland. Tel: +353 1 279 9400 Fax: +353 1 283 1017 Email: info@dcc.ie www.dcc.ie 5 0 0 2 s t n u o c c A & t r o p e R l a u n n A C C D e i . g o d d e r . w w w : n g i s e D . t n e t n o c d e l c y c e r r e m u s n o c - e r p % 0 3 - 5 1 i g n n i a t n o c r e p a p e e r f e n i r o h c l n o d e t n i r p s i t r o p e r s i h T