Annual Report
and Accounts
2006
DCC has five core businesses:
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DCC Energy
DCC SerCom
DCC Healthcare
DCC Food & Beverage
DCC Environmental
DCC also has a significant associate company investment, a 49% shareholding in Manor Park
Homebuilders, a leading Irish house, apartment and commercial building and development company.
In the year to March 2006, DCC achieved profit before tax of €138.8 million on revenue
of €3.4 billion.
Over the last 10 years the Group has achieved compound annual growth in adjusted earnings
per share of 17.3%.
2.4%
41.8%
Group operating profit* -
geographic split
UK
Ireland
Rest of world
55.8%
* Excludes share of after tax profit of associates
157.2
137.2
121.9
111.0
98.3
84.7
68.8
57.2
45.4
37.5
97
98
99
00
01
02
03
04
05
06
Adjusted earnings per share (cent)
1997 - 2006
Group at a Glance
Board of Directors
Senior Management
Chairman’s Statement
Chief Executive’s Review
2
6
8
10
12
Operating Review
Financial Review
Corporate & Social
Responsibility
16
28
33
Corporate Governance
Report of the Directors
38
42
Report of the Remuneration 44
Committee
Statement of Directors’
Responsibilities
Report of the Independent
Auditors
Financial Statements
Group Directory
Shareholder Information
Corporate Information
Index
48
49
51
113
117
118
119
DCC is a sales, marketing and business support
services group headquartered in Dublin, with
operations in Ireland, Britain and Continental
Europe. The Group employs 5,400 people across 12
countries and is listed on both the Irish and London
Stock Exchanges under Business Support Services.
2
DCC group at a glance
5 core businesses1
(managed and controlled subsidiaries and joint ventures)
Description
Strong brands (*DCC owned)
DCC Energy markets and sells liquefied petroleum gas
(LPG) and oil products for commercial/industrial,
transport and domestic use in Britain and Ireland.
Emo Oil*, Ergas*, Flogas*, Fuel Services*,
Scottish Fuels*, Shell
DCC SerCom comprises two businesses, SerCom
Distribution and SerCom Solutions.
SerCom Distribution markets and sells a broad range of
IT and entertainment products in Ireland, Britain and
Continental Europe to computer resellers, high street
retailers, computer superstores, online retailers and
mail order companies.
SerCom Solutions is a provider of outsourced
procurement and supply chain management solutions
to the IT industry.
DCC Healthcare markets and sells healthcare products to
the acute care, community care and laboratory sectors
in Ireland, Britain, Germany and export markets. DCC’s
broad product range includes own and third party branded
medical, surgical, laboratory, intravenous pharmaceutical,
rehabilitation and independent living products.
DCC Healthcare is also a leading provider of contract
services to the health and beauty industry, principally the
nutraceuticals, hair and skin care sectors, in Britain and
Continental Europe.
DCC Food & Beverage markets and sells food and
beverages in Ireland and wines in Britain. In Ireland,
DCC Food & Beverage distributes healthfoods,
snackfoods, fresh coffee and tea, soft drinks, wine
and other indulgence products to a broad range of
food service and retail customers.
DCC Food & Beverage is also a leading player in frozen
and chilled food distribution in Ireland.
SerCom Distribution
20th Century Fox, Canon, Cisco Systems, Disney
Home Video, Entertainment in Video, Epson,
Fujitsu Siemens, HP, IBM, Logitech, Microsoft,
Netgear, Oracle, Samsung Electronics, Sony,
Sun Microsystems, Symantec, TakeTwo,
Xbox 360, Xerox
Days Healthcare*, Diagnostica Stago, DiaMed,
Fannin*, Fresenius Kabi, Grifols, Molnlycke,
Oxoid, Physio-Med*, Smiths, Strider*, Theraband
Alpro, Bollinger, Brown Brothers, Dr Oetker,
French Connection*, Jordans, Kelkin*, KP,
Kylemore, Lemon’s*, McVities / Mars Cakes,
Phileas Fogg, Robinsons, Robt. Roberts*, Torres,
Vitabiotics
DCC Environmental provides a broad range of waste
management services to the industrial/commercial
sectors and local authorities in Britain and Ireland.
Enva* (Atlas*, Envirotech*, Shannon
Environmental Services*), William Tracey
The recent acquisition of a 50% shareholding in the
William Tracey Group of companies, a Scottish based
recycling and waste management business, makes
DCC Environmental the leader in recycling and waste
management in Scotland.
)
2
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1. DCC also has a significant associate company investment, a 49% shareholding in Manor Park Homebuilders,
a leading Irish house, apartment and commercial building and development company.
Market position
Growth focus
Growth record
10 Year CAGR 18.4%
•
•
Strong number 2 in
LPG distribution
in Britain and Ireland
Largest independent
oil distributor in Britain
• A leading player in oil
distribution in Ireland
• Organic growth in both
Britain and Ireland
•
•
Supplemented by
acquisitions in both
LPG and oil
Particular focus on a
consolidation strategy in
the highly fragmented
British oil market
• A leading player in each
• Organic growth driven by
10 Year CAGR 10.4%
of its markets
• Number 1 distributor for many
of the world’s leading brands
broadening product and
vendor portfolios
97
98
99
00
01
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05
06
• A leading Irish headquartered
specialist provider of outsourced
procurement and supply chain
management services
97
98
99
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05
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€m
€m
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• Number 1 distributor to the
acute care sector in Ireland
• Organic growth
opportunities
10 Year CAGR 18.9%
25 €m
• A leading distributor of
rehabilitation and independent
living products in Britain with
a growing business in
Continental Europe
• A leading supplier of contract
services to the nutraceutical and
cosmetic industries
•
•
Further development
of own brands
Supplemented by
acquisitions in Britain
and Ireland
• Number 1 in healthy
foods and savoury
snacks in Ireland
• No 2 in freshly ground
coffee in Ireland
• A leading player in frozen and
chilled food distribution in Ireland
• Organic growth through
expansion of portfolio of
branded indulgent and
healthy foods and
beverages
•
Supplemented by
acquisitions of healthy
foods, beverage and wine
businesses in Britain
and Ireland
97
98
99
00
01
02
03
04
05
06
10 Year CAGR 15.1%
• Number 1 hazardous
• Organic growth
7 Year CAGR 81.5%
97
98
99
00
01
02
03
04
05
06
waste treatment business
in Ireland
•
The leading player in recycling
and waste management in
Scotland
opportunities arising from
increased enforcement
of environmental
legislation and increasing
landfill costs
•
Supplemented by
acquisitions in Britain
and Ireland
99
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2. Excludes share of after tax profit of associates.
[
customer service
DCC Energy has a fleet of 825 road tankers that delivers
an excellent service throughout Britain and Ireland.
6
board of directors
7
Jim Flavin
Chief Executive/Deputy Chairman
Jim Flavin, B Comm., DPA, FCA (aged
63), founded DCC in 1976. Prior to
founding DCC, he was head of AIB
Bank’s venture capital unit. From
1999 to 2001 Mr. Flavin was Deputy
Chairman and Senior Independent
Director of eircom plc.
Audit
Committee
Bernard Somers
(Chairman)
Róisín Brennan
Paddy Gallagher
Nomination
Committee
Alex Spain
(Chairman)
Michael Buckley
Jim Flavin
Maurice Keane
Bernard Somers
Remuneration
Committee
Maurice Keane
(Chairman)
Tony Barry
Róisín Brennan
Michael Buckley
Alex Spain
Chairman
Alex Spain, B Comm., FCA (aged 73),
non-executive Chairman, 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.
Tony Barry
Non-executive Director
Tony Barry, Chartered Engineer
(aged 71), 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.
Tommy Breen
Executive Director
Tommy Breen, B Sc (Econ), FCA
(aged 47), joined DCC in 1985, having
previously worked with KPMG. He is
Managing Director of DCC Energy
and DCC Environmental, having
previously been Managing Director
of DCC SerCom. Mr. Breen joined
the Board in 2000.
Róisín Brennan
Non-executive Director
Róisín Brennan, BCL, FCA, MSI (aged
41), is an executive director and
Chief Executive designate of IBI
Corporate Finance, where she has
had extensive experience advising
public companies in Ireland,
principally in relation to strategy and
mergers & acquisitions. Ms. Brennan
also served as a non-executive
director of the Irish Takeover Panel
during 2000/2001. Ms. Brennan joined
the Board in 2005.
Michael Buckley
Non-executive Director
Michael Buckley, MA. LPh, MSI (aged
61) was Group Chief Executive of AIB
from 2001 to 2005 having served as
Managing Director of AIB Capital
Markets and AIB Poland. Previously,
he was Managing Director of the
NCB Group and a senior public
servant in Ireland and the EU. He is a
non-executive director of M&T Bank
Corporation in the USA and advises
Irish and international companies.
Mr. Buckley joined the Board in 2005
and is the Senior Independent Director.
Paddy Gallagher
Non-executive Director
Maurice Keane
Non-executive Director
Paddy Gallagher, BL, DPA (aged 66),
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 Chairman
of the Trustees of the An Post
Superannuation Schemes and of the
Guinness Ireland Group Pension
Scheme. Mr. Gallagher joined the
Board in 1976.
Maurice Keane, B Comm., M Econ Sc
(aged 65), 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.
Kevin Murray
Executive Director
Fergal O’Dwyer
Executive Director
Kevin Murray, BE, FCA (aged 47),
joined DCC in 1988. Previously he
worked with Shell Chemicals in
London and Arthur Andersen in
Dublin. He is Managing Director of
DCC Healthcare having previously
been Managing Director of DCC
Environmental, DCC Energy and DCC
Food & Beverage. Mr. Murray joined
the Board in 2000.
Fergal O’Dwyer, FCA (aged 46),
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
Non-executive Director
Bernard Somers, B Comm., FCA
(aged 57), is a non-executive director
of Independent News and Media plc,
Irish Continental Group plc and
South Wharf 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.
8
senior management
group and divisional
Jim Flavin
Deputy CChairman
Group Chief Executive
Tommy Breen
Executive DDirector
Kevin Murray
Executive DDirector
Fergal O’Dwyer
Executive DDirector
Frank Fenn
Donal Murphy
Ann Keenan
Colman O’Keeffe
Peter Quinn
Michael Scholefield
Gerard Whyte
Managing Director
DCC Energy and
DCC Environmental
Managing Director
DCC Healthcare
Chief Financial Officer
Managing Director
DCC Food & Beverage
Managing Director
DCC SerCom
Head of Group Human Resources
Deputy Managing Director
DCC Energy
Head of Group IT
Managing Director
Corporate Finance
Group Secretary
Compliance Officer
Head of Enterprise Risk Management
senior management
subsidiaries and joint ventures
9
>
DCC Energy
DCC Energy N I
Emo Oil
Flogas Ireland
Flogas UK
Fuel Card Group
Scottish Fuels
>
DCC SerCom
Distrilogie
Gem Distribution
Micro Peripherals
Pilton
SerCom Solutions
Sharptext
>
DCC Healthcare
Days Healthcare
DCC Nutraceuticals
Fannin Healthcare Group
Laleham Healthcare
Physio-Med Services
Virtus
Sam Chambers
Gerry Wilson
Richard Martin
Paddy Kilmartin
Ben Jordan
Tom Howley
Managing Director
Managing Director
Managing Director
Managing Director
Chief Operations Officer
Managing Director
Patrice Arzillier
Chris Peacock
Mike Alden
Nick Furlong
Kevin Henry
Paul White
Directeur Général
Managing Director
Managing Director
Managing Director
Chief Executive Officer
Managing Director
Barry O’Neill
Stephen O’Connor
Andrew O’Connell
Vic Hilliard
John Gregory
John Leonard
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
DCC Food & Beverage
Allied Foods
Bottle Green
Broderick Bros
Kelkin
Kylemore Foods Group Brian Hogan Managing Director
Managing Director
Robt. Roberts Ken Peare
Managing Director
Managing Director
Managing Director
Managing Director
John Casey
Jerry Lockspeiser
Richard Kieran
Bernard Rooney
>
>
*
DCC Environmental
Atlas Environmental Ireland
Managing Director
William Tracey Group Michael Tracey Managing Director
Declan Ryan
*
* joint ventures
10
10
chairman’s statement
“ Over the past twelve months the robustness
of DCC’s balanced business model has again
been demonstrated.”
Overview
DCC achieved growth in adjusted
earnings per share in the year to 31
March 2006 of 14.6% to 157.23 cent.
Over the past ten years the business
has achieved compound annual
growth in adjusted earnings per
share of 17.3%.
Dividend increase of 15%
The Directors are recommending a
final dividend of 27.31 cent per share
which, when added to the interim
dividend of 15.54 cent per share,
gives a total dividend of 42.85 cent
for the year, an increase of 15.0%
over the prior year. DCC has grown
its dividends at a compound rate of
17.2% over the last ten years and
15.2% over the last five years. The
dividend is covered 3.7 times by
adjusted earnings per share (3.7
times in 2005). The final dividend
will be paid on 14 July 2006 to
shareholders on the register at the
close of business on 26 May 2006.
Acquisitions and
development
Acquisition and development
expenditure in the year amounted
to €120.8 million, of which €57.9
million related to capital expenditure.
DCC’s ongoing acquisition search
process resulted in the completion
of a number of acquisitions at a total
committed cost of €62.9 million.
The cash impact of acquisitions in
the year was €54.7 million.
DCC Energy acquired a number of
smaller British oil distributors during
the year, as part of the ongoing
planned expansion of its British
based oil business.
On 13 June 2005, DCC Healthcare
expanded its acute and community
care business through the acquisition
of British based Physio-Med
Services, a market-leading supplier of
a broad range of physiotherapy and
rehabilitation equipment and
consumables to physiotherapists,
occupational therapists, podiatrists,
chiropractors and end users.
On 15 June 2005, DCC SerCom
acquired Pilton Company, a leading
distributor of DVDs, computer games
and other products to the home
entertainment market in Ireland, with
a developing business in Britain.
On 6 July 2005, DCC SerCom
expanded its Continental European
operations into Belgium, Holland and
Luxembourg through the acquisition
of the trade, goodwill and certain
assets of AB Computing. This
business is complementary to DCC
SerCom’s operations in France,
Spain and Portugal.
In May 2006, DCC Environmental
acquired a 50% shareholding in the
William Tracey group of companies,
Scotland’s leading recycling and
waste management business. The
acquisition increases the scale
and technical expertise of DCC
Environmental and also achieves the
dual objective of expanding into the
non-hazardous waste business and
entering the British market.
The Group is actively pursuing
further acquisition opportunities in
all core areas.
11
11
the Principles of Good Governance
and Code of Best Practice as set
out in the Combined Code on
Corporate Governance.
The future
DCC’s balanced business model, its
experienced management and its
financial strength leave the Group
well placed to generate ongoing
organic and acquisition growth.
Alex Spain
Chairman
26 May 2006
Board renewal
The Nomination Committee keeps
Board renewal, structure, size and
composition under regular review,
including the skills, knowledge and
experience required. The Committee
has particular regard to the leadership
needs of the organisation, both
executive and non-executive, and
therefore gives full consideration to
succession planning for the Chairman
and Chief Executive. In this regard,
I have informed the Committee that
this is the last year I will seek
re-election to the Board, as I intend
to retire as Chairman and from the
Board in advance of the Annual
General Meeting in 2007.
On the recommendation of the
Nomination Committee, the Board
co-opted four new non-executive
Directors in recent years - Maurice
Keane in 2002, Bernard Somers in
2003 and Róisín Brennan and Michael
Buckley in September 2005. Róisín is
an executive director and Chief
Executive designate of IBI Corporate
Finance, where she has had
extensive experience advising public
companies principally in relation to
strategy and mergers & acquisitions.
Róisín is a member of the Audit
Committee and the Remuneration
Committee. Michael was formerly
Group Chief Executive of Allied Irish
Banks plc. Michael is a member of
the Nomination Committee and the
Remuneration Committee and has
been appointed Senior Independent
Director.
As previously announced, Mr Kevin
Murray, executive Director, is
resigning from the Board and from
his position as Managing Director of
DCC Healthcare on 30 June 2006.
Kevin has been with DCC for
18 years and has made a great
contribution to the Group. Kevin will
leave DCC with the friendship and
good wishes of the Board and his
colleagues across the Group.
Fyffes’ failed legal action
and subsequent appeal
On 21 December 2005, the Irish High
Court found in favour of DCC and
Others in the case taken against
them by Fyffes plc, under Part V of
the Irish Companies Act 1990, in
relation to the sale of shares by
Lotus Green in February 2000. In
dismissing Fyffes’ claim against all of
the defendants, the Court held that
the share sales were entirely lawful
and that none of the defendants had
any liability arising from the sales of
the shares in Fyffes in February 2000.
On 10 February 2006, the Irish High
Court decided that Fyffes should pay
most of DCC’s costs in relation to its
failed legal action against the Group.
DCC expects to recoup approximately
€8.5 million from Fyffes following
this High Court order and, accordingly,
has accrued this amount as a credit
under exceptional operating costs.
On 7 April 2006, Fyffes announced
its intention to lodge an appeal to
the Irish Supreme Court seeking to
overturn the decision of the Irish
High Court in relation to Fyffes’ failed
legal action against DCC plc and
Others. This appeal will be challenged
vigorously and comprehensively and
DCC is confident that there are no
good grounds of appeal and that the
detailed and considered decision of
the High Court will be upheld.
Corporate governance
The Board of DCC is committed to
maintaining the highest standards of
corporate governance. The Board is
satisfied that the Group has effective
ongoing processes for identifying,
evaluating and managing risks faced
by the Group. A detailed statement,
set out on pages 38 to 41, describes
how DCC has complied with all of
12
chief executive’s review
“ The quality of DCC’s businesses is better today,
measured in terms of scale, strategic positioning
and management skills and know-how, than at
any earlier time.”
Overview of 2006
The year to 31 March 2006 was
another year of double-digit profit
growth, resulting in cumulative
earnings per share growth of 16.6%
per annum since DCC shares were
listed on the Irish and London stock
exchanges in 1994.
On a constant currency basis,
revenues grew by 30.0% to €3.4
billion, while profit before exceptional
items, amortisation of intangible
assets and tax increased by 16.5% to
€142.0 million and adjusted earnings
per share for the year was 157.23
cent, growth of 15.5%.
Excellent profit growth was achieved
in DCC Energy, DCC Healthcare, DCC
Food & Beverage and in DCC’s share
of associates’ profit after tax. DCC
SerCom also achieved strong profit
growth in the second half after a
difficult first half.
DCC’s cash generation in the year
was strong, with cash generated
from Group operations, excluding
associates, of €141.9 million, an
increase of 23.3% over last year.
At 31 March 2006, DCC had net
debt of just €32.7 million.
Return on capital employed (ROCE)
is the key performance measure in
all the businesses of the Group.
For the year to March 2006, ROCE
(excluding intangible assets) was
43.0% (2005: 44.9%) and ROCE
(including intangible assets) was
19.1% (2005: 20.4%).
Business review
DCC’s rate of profit growth was
stronger in the seasonally more
important second half of the year,
as set out in the table below.
Operating profit*
DCC Energy
DCC SerCom
DCC Healthcare
DCC Food & Beverage
DCC Environmental
Group operating profit
Share of associates’ profit after tax
Net financing costs
Profit before exceptional items,
amortisation of intangibles and tax
Second half
€’m
Change
First half
€’m Change
45.3
17.4
11.5
8.1
2.7
85.0
19.8
(3.9)
+9.8% 10.7
+22.0%
7.6
+33.8% 10.1
7.4
2.8
+8.1%
-0.3%
+1.2%
-37.0%
+48.1%
+37.9%
+2.6%
+14.4% 38.6
+2.9%
+104.8%
-20.7%
5.7
(3.2)
100.9
+25.3% 41.1
-3.0%
Adjusted EPS* (cent)
111.89
+24.6% 45.34
-4.4%
*excluding net exceptional items and amortisation of intangible assets
Strategy for
continued growth
DCC’s strategy has been
demonstrably successful in
generating excellent shareholder
returns. The principal elements
of the strategy are:
•
•
•
To focus on two broad business
activities:
- sales, marketing and distribution
- business support services;
To constantly seek to
maximise organic growth;
To constantly seek complementary
bolt-on acquisitions;
• A rigorous focus on return
on capital employed;
• A rigorous focus on
cash generation.
DCC applies a core competence
in the management of sales,
marketing and distribution
businesses across diverse
market sectors, i.e. in energy,
IT & entertainment products,
healthcare and food & beverage.
DCC provides business support
services, specifically contract
services to the health and
beauty market, environmental
services and out-sourced
procurement and supply-chain
management services to the
IT industry.
DCC also has a significant
associate company investment,
a 49% shareholding in Manor Park
Homebuilders, a leading Irish house,
apartment and commercial building
and development company.
13
DCC’s broad business base reduces
industry specific risk and provides a
range of platforms for growth.
We are alive to the need to regularly
review DCC’s strategy for growth in
a rapidly changing global business
environment. We seek to position
DCC for consistent and resilient
growth that optimises returns for
shareholders over the long term.
The achievement of long-term
growth requires both correct
strategic positioning and superior
operational effectiveness.
The quality of DCC’s businesses is
better today, measured in terms of
scale, strategic positioning and
management skills and know-how,
than at any earlier time.
DCC Energy is a resilient, highly
cash-generative business, with
strong market positions in Ireland
and Britain. There is a considerable
opportunity to substantially increase
the scale of the oil distribution
business in Britain.
DCC SerCom, a high-growth
business for DCC up to 2001, has
been challenged by product price
deflation in the IT industry in recent
years. However, the business in
Britain and Ireland has consistently
achieved strong organic sales volume
growth, has best-in-class operational
metrics and achieves a good return
on capital employed. Amelioration in
product price deflation should reveal
a growing business and renewed
profit growth.
DCC Healthcare is a business with
considerable growth potential based
on a clear strategy to build a
European business on the foundation
of product knowledge and expertise.
DCC Food & Beverage operates in
higher growth, niche areas within the
food industry and has demonstrated
resilient growth in Ireland.
DCC Environmental is a rapidly
developing, newer business area for
DCC, with significant growth
opportunities, particularly in Britain.
These businesses position DCC for
continued growth but, as ever, there
will be a relentless focus on
excellence in operations in each
business area to maintain
competitive advantage.
Management changes
Kevin Murray, executive Director and
Managing Director of DCC Healthcare,
is resigning with effect from 30 June
2006 to pursue involvement in the
private company arena in preference
to the continuation of a senior
management role in a public company.
During his 18 years with DCC, Kevin’s
commitment to the Group has been
unstinting and his contribution has
been outstanding. Kevin will continue
to have some part-time involvement
with the Group on selected projects.
A number of senior management
changes, to take effect from 1 July
2006, were recently announced:
•
Tommy Breen, currently Managing
Director of DCC Energy and DCC
Environmental, will become
DCC’s Chief Operating Officer.
This will allow me, as Group
Chief Executive, to devote
additional time to strategic and
developmental matters.
• Donal Murphy, currently
Managing Director of DCC
SerCom, will become Managing
Director of DCC Energy and DCC
Environmental.
• Niall Ennis, currently Finance and
Development Director of DCC
SerCom, will become Managing
Director of DCC SerCom.
• Conor Costigan, currently Finance
and Development Director of DCC
Healthcare, will become Managing
Director of DCC Healthcare.
The senior management team in DCC,
together with the highly experienced
and committed operating management
teams in subsidiaries, give DCC the
management strength and business
area focus to drive the Group forward.
Employees
DCC currently employs approximately
5,400 people. We seek to foster a
management culture that gives
enlightened leadership to employees.
We recognise that employees are
key to DCC’s success and that they
can all be ambassadors for the Group.
Corporate and social
responsibility
Stakeholders correctly have higher
expectations in relation to corporate
and social responsibility. Set out on
pages 33 to 35 is DCC’s corporate
and social responsibility statement,
which reports on how we relate to
our marketplace, our environment,
our workplace, our community and
on health & safety.
Outlook
DCC has budgeted for continued
good operating profit growth from
subsidiaries in the current year to 31
March 2007. As announced on 3 April
2006, the share of associates’ profit
after tax may be materially less in the
current year, based on DCC’s current
expectation of a short term reduction
in the profit contribution from its
49% shareholding in Manor Park
Homebuilders due to planning delays.
Manor Park has a large land bank
for housing development and other
development projects in the pipeline
from which it should earn substantial
profits in the future.
Jim Flavin
Chief Executive/Deputy Chairman
12 May 2006
[
people
We recognise that our employees are key
to our success.
16
16
operating review
DCC Energy
business review
Tommy Breen
Managing Director
DCC Energy
DCC Energy markets and sells liquefied petroleum gas (LPG)
and oil products for commercial/industrial, transport and
domestic uses in Britain and Ireland. In the year to 31 March
2006, DCC Energy sold in excess of 2.9 billion litres of LPG
and oil products (2005: 2.5 billion litres). DCC Energy
currently employs approximately 1,900 people.
The LPG business has an approximate
22% share of the British market and
an approximate 35% share of the
Irish market. The business supplies
approximately 130,000 customers,
using 450 road tankers and other
special purpose vehicles from 65
facilities throughout Britain and
Ireland.
The oil business has an approximate
7% market share (excluding petrol
retailing) in Britain making it the
leading independent distributor and
has an approximate 11% share of
the Irish market. A fleet of 375 road
tankers services approximately
215,000 customers from 67 facilities
throughout Britain and Ireland.
DCC Energy purchases its LPG and
oil from the major oil companies.
Product is shipped either directly
from the major oil companies’
refineries into DCC Energy’s own
importation facilities or is collected
directly from the oil majors’ terminals
and refineries. DCC’s financial strength
enables DCC Energy to be a preferred
partner of the major oil companies
and strong relationships have been
built with these suppliers over
many years.
DCC Energy distributes under many
strong brands including Emo Oil*,
Ergas*, Flogas*, Fuel Services*,
Scottish Fuels* and Shell.
*DCC owned brands
Performance management
DCC has almost 30 years’
involvement in the energy distribution
business and with this comes a
depth of experience and industry
knowledge that have enabled DCC
to drive superior returns from this
business. The performance of the
business is constantly monitored
through a broad range of key indicators
principally focused on sales volume
growth, operational and cost
efficiencies, cash flow and capital
utilisation.
Over the past ten years, DCC
Energy has achieved a compound
annual growth rate of 18.4% in
operating profit.
56.0
51.8
45.8
42.3
33.1
22.5
19.4
18.1
13.2
9.3
97
98
99
00
01
02
03
04
05
06
DCC Energy - operating profit (€m)
1997 - 2006
Performance for the year to 31 March 2006
Change on prior year
2006
2005
Reported Constant
currency
Revenue
€1,831.6m €1,240.6m +47.6% +47.7%
Operating profit
€56.0m
€51.8m
+8.0%
+9.4%
Return on capital employed
- excluding intangible assets
- including intangible assets
53.8%
24.5%
53.4%
25.3%
A number of smaller oil distributors
were acquired during the year.
2.9
2.5
2.1
2.0
1.7
1.4
1.1
0.8
0.7
0.6
97
98
99
00
01
02
03
04
05
06
DCC Energy - sales volume
billion litres
1997 - 2006
DCC Energy achieved excellent profit
growth in the year. The business
delivered 2.9 billion litres of fuel
products, a volume increase of
19.0% over the prior year.
The LPG business performed
satisfactorily against a challenging
background of significantly increasing
product costs.
The oil business generated strong
growth benefiting from the successful
integration of the acquisitions in the
prior year of Shell Direct UK and
Dyneley Holdings. Both of these
acquisitions performed ahead of
expectations and have provided the
oil business in Britain with a good
platform for further growth.
DCC Energy is a highly cash
generative business, generating
high returns on capital.
Strategy and development
The Group’s strategy for the business
is to maximise shareholder value
through organic and acquisition growth.
Over the past five years
approximately €150 million has
been spent on acquisitions.
Following the acquisitions of BP’s
Scottish business in September 2001
and of Shell Direct in November 2004,
DCC Energy now has a nationwide oil
distribution infrastructure in Britain.
This provides an excellent platform
from which to grow in the highly
fragmented oil distribution industry.
17
Queen Elizabeth lights the Trafalgar
Beacon. Flogas supplied the gas and
technical expertise for the beacon.
27%
45%
28%
DCC Energy - product split
Industrial/Commercial
Transport
Domestic
DCC markets and sells significant
volumes of transport fuels via a
range of branded fuel cards.
18
18
operating review
DCC SerCom
business review
Donal Murphy
Managing Director
DCC SerCom
DCC SerCom comprises two businesses, SerCom Distribution
and SerCom Solutions. DCC SerCom currently employs
approximately 1,350 people.
SerCom Distribution
SerCom Distribution is a leading
European sales, marketing and
distribution business for a wide range
of IT and entertainment products to
a broad customer base including
retailers, e-tailers, computer stores,
value added resellers and computer
dealers.
SerCom Distribution has five business
units operating across eight countries:
•
The leading British distributor of
business and consumer software,
computer games and peripherals
to the retail channel.
• A leading British distributor of a
broad range of IT hardware
products to the IT reseller channel.
•
•
Ireland’s leading distributor of IT
hardware and software products
to the reseller channel.
Ireland’s leading distributor of
DVDs, computer games and
associated accessories to the
retail sector.
• A leading distributor of enterprise
infrastructure products operating in
six Continental European countries.
SerCom Distribution partners with the
world’s leading IT and entertainment
companies and is typically the number
one or the number two distributor in the
market for the brands that it represents.
SerCom Distribution distributes many
strong brands including 20th Century
Fox, Canon, Cisco Systems, Disney
Home Video, Entertainment in Video,
Epson, Fujitsu Siemens, HP, IBM,
Logitech, Microsoft, Netgear, Oracle,
Samsung Electronics, Sony, Sun
Microsystems, Symantec, TakeTwo,
Xbox 360 and Xerox.
SerCom Solutions
SerCom Solutions is a leading Irish-
headquartered specialist provider of
outsourced procurement and supply
chain management services. The
company has expertise in procurement,
sourcing, demand management,
consigned stock programmes,
contract hardware assembly,
customisation, fulfilment,
pick & pack and desktop publishing.
The business operates as a global
outsourcing partner to many of the
world’s leading technology and
telecommunications companies
including Apple, Canon, Microsoft,
Nortel and Thomson Telecom.
Increasingly, these companies are
entrusting key aspects of their supply
chain to SerCom Solutions, in order to
achieve cost effective and efficient
manufacturing/distribution, shorter
lead times to market, reduced cost
bases and reduced inventory levels.
Performance management
The operational performance metrics
of SerCom Distribution are well ahead
of industry norms for the IT
distribution business.
Through a high turnover of capital
employed, leveraging the breadth of
products, ensuring that margins are
maximised through highly incentivised
sales teams and tight control of
operating costs and working capital,
the business generates an excellent
return on capital employed,
notwithstanding low operating
margins in the industry.
Over the past ten years, DCC SerCom
has achieved a compound annual
growth rate of 10.4% in operating
profit.
8%
7%
21%
10%
30%
SerCom Distribution -
revenue product mix
Software
PCs & servers
Printers & peripherals
Storage
Networking
Other
24%
18%
67%
15%
SerCom Distribution -
geographic revenue split
UK
Ireland
Continental Europe
19
Microsoft launched its next
generation game console, Xbox
360, in December 2005. Gem, a
DCC SerCom subsidiary, is the
sole distribution partner for the
Xbox 360 in the UK.
SerCom Solutions provides a range of
supply chain management services
including LCD sub-assembly for
notebook products
Performance for the year to 31 March 2006
Change on prior year
2006
2005
Reported Constant
currency
Revenue
€1,084.6m €983.5m +10.3% +10.3%
Operating profit
€25.0m €26.3m
-4.9%
-4.0%
Operating margin
2.3%
2.7%
Return on capital employed
- excluding intangible assets
- including intangible assets
24.4%
14.3%
30.3%
18.4%
market in Ireland. Pilton has excellent
long-standing relationships with some
of the world’s leading film studios and
has deep distribution reach into the
Irish retail market, which includes
supermarkets, retail chains, rental
chains and independent retailers. The
business is expanding its presence in
the British market by leveraging
SerCom Distribution’s strong market
position for computer games and
peripherals in that market.
With its strong market positions,
deep distribution reach, excellent
management teams and industry
leading operating metrics, SerCom
Distribution is well positioned to
generate renewed profit growth.
The key drivers of growth this year
will be:
After a difficult first half, DCC
SerCom’s profits grew by 22.0%
in the second half.
SerCom Distribution was particularly
impacted in the first half by product
price deflation, a rapid deterioration
in the retail trading environment in
Britain and a significant decline in
demand in the Continental European
enterprise infrastructure market. The
business enjoyed a much improved
second half, benefiting from strong
sales volume growth, an increased
focus on consumer digital products,
the launch of Xbox 360 and the
acquisitions of Pilton Company and
AB Computing.
The restructuring of SerCom
Solutions, announced in January 2005,
was successfully completed in the
first half of the year. Since the
restructuring, the business has
performed strongly and contributed
€2.8 million operating profit this year
compared to a loss of €1.1 million in
the prior year. The business achieved
excellent top line growth, with
revenue up 19.9% to €126.3 million.
During the year, the business
strengthened its position with a
number of its customers outsourcing
further elements of their supply chains
to SerCom Solutions.
Strategy and development
In July 2005, DCC SerCom
significantly strengthened its position
in the home entertainment sector with
the acquisition of Pilton, the leading
distributor of DVDs and computer
games to the home entertainment
•
•
•
•
new generation game consoles
11%
Far East sourcing at cheaper prices
expansion in the British DVD market
new technology, products and
operating systems
89%
34.0
32.9
30.5
30.4
26.3
25.0
DCC SerCom - operating profit split
SerCom Distribution
SerCom Solutions
24.3
20.4
16.7
9.7
97
98
99
00
01
02
03
04
05
06
DCC SerCom - operating profit (€m)
1997 - 2006
DCC’s newly acquired subsidiary
Pilton is Ireland’s leading
distributor of DVDs.
20
20
operating review
DCC Healthcare
business review
Approximately 65% of DCC Healthcare’s revenue and 55% of
its operating profits are derived from marketing and selling a
range of healthcare products to the acute and community
care sectors in Ireland, Britain and export markets. The
remaining 45% of operating profits arise from contract
services to the nutraceutical and cosmetic sectors. DCC
Healthcare currently employs approximately 900 people.
Sales and marketing of
acute and community
care products
In Ireland, DCC Healthcare is the
leading supplier of third party and
own brand products to the acute care
sector, selling and marketing a broad
range of medical, surgical, laboratory
and intravenous pharmaceuticals and
related devices through its specialist
field sales teams. DCC Healthcare
also sells and markets a range of
rehabilitation and independent living
products in Ireland, Britain, Germany
and other markets, principally under
its own “Days Healthcare” and
“Physio-Med” brands. The acquisition
of Physio-Med Services in June 2005
has expanded the range of products
sold and broadened the channels to
market to include catalogue sales.
DCC Healthcare distributes many
strong brands including Days
Healthcare*, Diagnostica Stago,
DiaMed, Fannin*, Fresenius Kabi,
Grifols, Molnlycke, Oxoid, Physio-
Med*, Smiths, Strider* and Theraband.
*DCC owned brands
During the year, DCC Healthcare
enhanced its distribution capacity and
efficiency by moving its operations
in Bridgend in Wales and Bad
Oeynhausen in Germany to new
facilities. Together with premises in
Glossop and Reading in England
and Dublin and Belfast in Ireland,
customers are now serviced from
six facilities.
DCC Healthcare has invested further
in its sourcing capability in China,
with the establishment earlier in the
year of a permanent procurement
and quality control office in Shenzhen.
The strength of the sourcing
capability, the breadth of the product
range and the depth of the distribution
reach leaves DCC Healthcare’s sales
and marketing activities well placed
for continued growth.
Contract services
DCC is a leading supplier of contract
services to the nutraceutical and
cosmetic industries. The business
has three MHRA licensed facilities in
Britain and supplies a broad range of
customers, principally brand owners
in Britain and Northern Europe. As
a result of the increasing use of
nutraceuticals in cosmetic products,
it was decided to broaden the
contract services business into that
market through the acquisition of
Laleham Healthcare in December
2004. Laleham Healthcare has been
successfully integrated into the
contract services business, which
now provides outsourced product
development, manufacturing and
packaging to both the nutraceutical
and cosmetic markets.
Performance management
The performance of DCC Healthcare’s
businesses is constantly monitored
through a broad range of performance
indicators, principally focused on
sales growth, margin management,
operational and cost efficiencies, cash
flow and return on capital employed.
Over the past ten years, DCC
Healthcare has achieved a compound
annual growth rate of 18.9% in
operating profit.
Kevin Murray
Managing Director
DCC Healthcare
35%
65%
DCC Healthcare - revenue split
Sales & marketing
Contract services
45%
55%
DCC Healthcare -
operating profit split
Sales & marketing
Contract services
Performance for the year to 31 March 2006
Performance of the business for the year to 31 March 2006
Change on prior year
2006
2005
Reported Constant
currency
Revenue
€211.7m €162.3m +30.5% +30.5%
Operating profit
€21.6m €15.4m +40.1% +41.2%
Operating margin
10.2%
9.5%
Return on capital employed
- excluding intangible assets
- including intangible assets
60.5%
16.7%
50.3%
13.6%
DCC Healthcare achieved excellent
revenue and operating profit growth.
Excellent profit growth was achieved
in DCC Healthcare’s sales and
marketing activities, benefiting from
the acquisition of Physio-Med
Services in June 2005 and from good
organic growth. Particularly good
growth was achieved in intravenous
pharmaceutical products and related
devices and in DCC’s own branded
rehabilitation and independent living
products, which was facilitated by
DCC’s procurement and quality
control office in Shenzhen, China.
DCC’s contract services to the health
and beauty sector achieved excellent
profit growth, benefiting from a first
full-year contribution from Laleham
Healthcare and from continuing
strong organic growth. The business
deepened its relationships with
existing customers by providing
continuing high service levels and
support in new product development.
Additional business development
personnel have been recruited to
further accelerate the expansion of
its customer base.
Strategy and development
In its sales and marketing activities,
DCC Healthcare’s strategy is to be a
supplier of a broad range of healthcare
products, both own brand and third
party, to the healthcare industry in
Europe and to provide outsourced
services to customers where this
adds value to the product offering.
The business sells to a broad range
of customers in the primary, acute
and community care sectors using
field, telephone and catalogue sales
channels. DCC Healthcare supplies
the Irish, British and German markets
directly while other markets will initially
be supplied through distributors.
Continued addition of innovative
products will enhance the development
of the business’ portfolio. Through
effective sourcing, particularly in
the Far East, DCC Healthcare
plans to improve the quality and
competitiveness of its product offering.
In contract services, DCC
Healthcare’s strategy is to be the
preferred provider of services to the
functional health and beauty sector in
Europe. The services provided include
product development, manufacturing
and packaging. The business
provides a world-class service to
existing customers and uses its
responsive product development
capability and excellent service levels
to attract new business.
21.6
18.5
15.8
14.8
15.4
12.8
10.7
9.0
6.8 6.8
97
98
99
00
01
02
03
04
05
06
DCC Healthcare - operating profit (€m)
1997 - 2006
21
Fannin, a DCC Healthcare subsidiary,
has a specialist field sales force that
markets a wide range of medical,
surgical, pharmaceutical and laboratory
products.
Physio-Med, a DCC Healthcare
subsidiary, is Britain’s leading supplier
of a broad range of physiotherapy and
rehabilitation equipment.
Laleham Healthcare, a DCC Healthcare
subsidiary, manufactures both health
and beauty and pharmaceutical
products.
22
operating review
Frank Fenn
Managing Director
DCC Food & Beverage
DCC Food & Beverage
business review
DCC Food & Beverage markets and sells a wide range of
company owned and agency branded food and beverage
products in Ireland and has a developing wine business in
Britain. DCC Food & Beverage currently employs
approximately 900 people.
The business has a deep distribution
reach and offers extensive customer
service to the retail and foodservice
sectors on the island of Ireland.
Customers include multiples, symbol
and independent retailers, pharmacies,
off licences, cafes and restaurants. In
Britain, wines are sold to multiple
retailers and wholesale cash and carry.
DCC Food & Beverage operates in a
number of niche market segments,
principally the health / "better for you"
food and beverages, indulgence and
chilled & frozen logistics.
Within these sectors, DCC Food &
Beverage has a number of leading
brands and leading market positions:
•
•
Leader in healthy foods and
healthy beverages in Ireland
under the company owned
Kelkin brand.
Leader in savoury snacks in
Ireland through the KP range
of products.
• Number 2 supplier of freshly
ground coffee to both the retail
and foodservice sectors in Ireland
under the Robt. Roberts* brand.
• Market leader in the Irish dilutable
beverage sector with Robinsons.
• Strong position in the wine
market in both Ireland and Britain
with a number of major brands
including Torres, Brown Brothers
and Bollinger champagne in
Ireland and French Connection*,
Andrew Peace, Riverview*, Inti*
and PKNT in Britain.
• A leading provider of innovative
solutions in the design,
development and operation of
supply chain services in chilled,
frozen and ambient foods in
Ireland to a number of major
retailers and manufacturers.
• A leading supplier of branded
vitamins, mineral and
supplements to the Irish
pharmacy sector under the
Kelkin* brand and other brands
including Vitabiotics, Lanes
and Ortis.
• A leading supplier in the provision
of equipment and solutions for
the preparation, preservation and
presentation of quality food in the
Irish market.
• A leading player in the Quick
Service Restaurant sector and
par-bake bread manufacture
through a 50% stake in the
Kylemore Group.
*DCC owned brands
Performance management
DCC Food & Beverage’s operating
performance is managed and
monitored through key indicators.
These include sales volumes, gross
margins, operational cost efficiencies,
customer service levels, cash flow
and return on capital employed.
Over the past ten years, DCC Food &
Beverage has achieved a compound
annual growth rate of 15.1% in
operating profit.
23
Performance for the year to 31 March 2006
Change on prior year
2006
2005
Reported Constant
currency
Revenue
€276.9m €232.6m +19.0% +19.0%
Operating profit
€15.5m €12.8m +20.6% +20.9%
Operating margin
5.6%
5.5%
Return on capital employed
- excluding intangible assets
- including intangible assets
55.2%
18.7%
57.1%
21.3%
DCC Food & Beverage achieved
excellent revenue and operating
profit growth in the year, benefiting
from the acquisition of Bottle Green
and the full buyout of Allied Foods in
the first half of the prior year and
from good organic growth.
The healthfoods business continued
to achieve good organic revenue
growth. Investment in the Kelkin
healthfood brand and new Kelkin
product development resulted in a
small short-term reduction in its
profits. The British based wine
business, which enjoyed strong
growth in the first half, performed
below expectation in the second half.
Snackfoods, the Irish wine business,
the restaurant operations and the
frozen and chilled business all
achieved good growth.
Strategy and development
The Group’s strategy is to develop
DCC Food & Beverage into a leading
business that satisfies consumer and
customer needs in the health and
indulgence sectors and delivers an
above average return on capital.
This will be achieved by building
organically and by acquisition.
The business continues to increase
focus on brands, building on the good
progress being made with French
Connection (Bottle Green), Robt.
Roberts’ speciality teas, Lemon’s
confectionery, Bollinger champagne,
Torres wines, KP snacks and
Vitabiotics, among others. The
marketing investment in the Kelkin
brand this year has been significant
and the business is well placed to
take advantage of the growing
healthfoods market.
DCC Food & Beverage aims to
deliver acquisitions in Ireland and
Britain that will exploit the growing
demand for healthy food and
beverage products and will assist the
development of the wine business.
DCC Food & Beverage provides the
complete coffee solution - Robt.
Roberts' excellent coffee, premium
machinery and a top quality service.
15.5
12.8
10.2
9.4
9.0
8.2
7.6
6.1
5.0
4.2
97
98
99
00
01
02
03
04
05
06
DCC Food & Beverage
- operating profit (€m)
1997 - 2006
DCC has a strong position in
the wine market in both Ireland
and Britain.
24
24
operating review
DCC Environmental
business review
Tommy Breen
Managing Director
DCC Environmental
DCC Environmental provides a broad range of waste
management services to the industrial/commercial sectors
and local authorities in both Britain and Ireland. DCC
Environmental currently employs approximately 310 people.
DCC Environmental is the leading
hazardous waste treatment business
in Ireland. The business operates
three Environmental Protection
Agency licenced waste facilities in
the Republic of Ireland and two
Environment & Heritage Service
licenced hazardous waste facilities in
Northern Ireland. These facilities offer
a wide range of services including
soil remediation, oil recycling, metal
recovery and waste transfer. The
business also has a field services
team that carries out waste
treatment on customers’ sites. This
team also offers an emergency
response function to deal with
environmental incidents on a 24 hour
basis. DCC Environmental’s Irish
businesses will operate under a new
brand, enva, which is being launched
at the end of June 2006.
In May 2006, DCC announced the
acquisition of a 50% shareholding
in the William Tracey group of
companies, Scotland’s leading
recycling and waste management
business. Founded in 1948,
William Tracey has a reputation for
innovation and creativity in recycling.
The group operates from six freehold
sites in Scotland and carries out a
broad range of activities including
materials recycling, hazardous waste
treatment, landfill and renewable
energy generation from landfill gas.
The group has an extensive fleet
of specialist waste management
vehicles that collects waste from
industrial and commercial customers
for processing. The group also
processes waste on behalf of local
authorities and other third parties.
Performance management
DCC Environmental is focused on
maximising shareholders’ returns
through organic and acquisition
growth. The performance of the
business is closely monitored
through a range of key indicators
including sales volumes, incoming
material tonnage, gross margins, cost
of treatment, operating profit, cash
flow and capital utilisation.
Over the seven years since the
business was established, DCC
Environmental has achieved a
compound annual growth rate of
81.5% in operating profit.
5.5
5.5
5.0
3.2
1.9
1.2
0.7
0.1
99
00
01
02
03
04
05
06
DCC Environmental -
operating profit (€m)
1999 - 2006
Performance for the year to 31 March 2006
Performance for the year to 31 March 2006
Change on prior year
Change on prior year
2006
2006
2005
2005
Reported Constant
Reported Constant
currency
currency
Revenue
Revenue
€31.5m €25.8m +22.0% +22.0%
€31.5m €25.8m +22.0% +22.0%
Operating profit
Operating profit
€5.5m
€5.5m
€5.5m
€5.5m
+1.2%
+1.2%
+1.7%
+1.7%
Operating margin
Operating margin
17.5%
17.5%
21.1%
21.1%
Return on capital employed
Return on capital employed
- excluding intangible assets
- excluding intangible assets
- including intangible assets
- including intangible assets
31.8%
31.8%
17.4%
17.4%
45.7%
45.7%
20.7%
20.7%
DCC Environmental achieved strong
revenue growth in the year.
Operating profit growth was held
back by tighter margins in some
areas of the business.
Strategy and development
DCC’s strategy is to build on the
recent investment in the William
Tracey group of companies to further
develop the business in Britain and to
expand the business in Ireland into
non-hazardous waste management.
Associate Companies
DCC’s principal associate is Manor Park Homebuilders,
a leading Irish house, apartment and commercial
building and development company, in which it holds
a 49% shareholding.
Profit contribution for the year to 31 March 2006
Change on prior year
2006
2005
Reported Constant
currency
€25.5m €16.8m +51.6% +51.6%
Share of associates’ profit
after tax
Manor Park has a large land bank
for housing development and other
development projects in the pipeline
from which it should earn substantial
profits in the future.
25
25252525
All the Irish environmental businesses
are being re-branded enva.
Segregated recyclables at the Tracey
materials recycling facility.
[
caring
DCC Healthcare supplies a broad range of
rehabilitation and independent living products.
2828
financial review
Overview of results/key
performance indicators
Revenue grew by 30.0% on a
constant currency basis (29.9%
reported) to €3,436.3 million and
operating profit of subsidiaries and
joint ventures increased by 11.6%
on a constant currency basis (10.5%
reported) to a record €123.6 million
(as detailed in Table 1). Most of the
growth was from shareholder value
enhancing bolt-on acquisitions, as
organic profit growth was held back
by the very challenging market
conditions in DCC SerCom which
have prevailed since late 2004.
Excluding DCC SerCom, DCC’s other
core areas of activity performed very
well, generating operating profit
growth, on a constant currency basis,
of 16.4% (15.2% reported) broadly
split evenly between organic growth
and growth from acquisitions.
The Group’s operating margin was
3.6% (4.2%: 2005); however,
it is important to note that this
measurement of the overall Group
margin is of limited relevance due to
the influence of changes in oil product
costs on the percentage. While
changes in oil product costs will
change percentage operating margins,
this has little relevance in the
Table 1: Operating profit
downstream energy market in which
DCC Energy operates, where
profitability is driven by absolute
contribution per litre (or tonne) of
product sold, and not a percentage
margin. Excluding DCC Energy, the
Group’s operating margin was 4.2%
compared to 4.3% in the previous year.
development projects in the pipeline
from which it should earn substantial
profits in the future.
The net financing cost was €7.1
million, an increase of €1.4 million
on the prior year. Interest cover was
17.6 times (19.6 times: 2005).
A detailed review of the operating
performance of each of the Group’s
divisions in set out on pages 16 to 25.
The profit after tax contribution
from associates (mainly the 49%
shareholding in Manor Park
Homebuilders) increased significantly
(51.6%) during the year. This amount
was considerably higher than the
Group’s earlier expectation due to
Manor Park Homebuilders earning a
significant profit on a transaction that
it completed on 31 March 2006 which
DCC had expected would more likely
arise in the year to 31 March 2007.
As announced on 3 April 2006, the
Group’s share of associates’ profit
after tax may be materially less in the
current year based on DCC’s current
expectation of a short term reduction
in the profit contribution from Manor
Park Homebuilders due to planning
delays. Manor Park Homebuilders
has a large landbank for housing
development and has other
Profit before net exceptional items,
amortisation of intangible assets and
tax rose by 16.5% on a constant
currency basis (15.5% reported) to
€142.0 million.
Exceptional items gave rise to a net
credit of €1.7 million as follows:
Costs of legal actions with
Fyffes plc and others
Provision for recovery of
legal costs from Fyffes plc
Other
€’m
(5.2)
8.5
(0.5)
Operating exceptional items
2.8
Foreign exchange losses on
intercompany financing loans
to 30 September 2005
(1.1)
1.7
2006
2005
Reported
Constant Currency
Change
H2
H1
FY
€’m €’m €’m €’m €’m €’m
H1
H2
FY
H1
%
H2
%
FY
%
H1
%
H2
%
FY
%
DCC Energy
DCC SerCom
DCC Healthcare
DCC Food
& Beverage
DCC
Environmental
Total
10.7
7.6
10.1
45.3
17.4
11.5
56.0
25.0
21.6
10.6
12.0
6.8
41.2
14.3
8.6
+1.2% +9.8% +8.0% +6.4% +10.2% +9.4%
51.8
26.3
-37.0% +22.0% -4.9% -34.0% +21.1% -4.0%
15.4 +48.1% +33.8% +40.1% +53.2% +31.8% +41.2%
7.4
8.1
15.5
5.4
7.4
12.8 +37.9% +8.1% +20.6% +39.9% +7.1% +20.9%
2.8
38.6
2.7
85.0
5.5
123.6
2.8
37.5
2.7
74.3
5.5
111.8
+2.6% -0.3% +1.2% +4.7% -1.4% +1.7%
+2.9% +14.4% +10.5% +6.7% +14.1% +11.6%
All constant currency figures quoted in this report are based on retranslating current year figures at the prior year
translation rate.
financial review
29292929
On 21 December 2005, the Irish High
Court found in favour of DCC and
Others in the case taken against them
by Fyffes plc, under Part V of the Irish
Companies Act 1990, in relation to
the sale of shares by Lotus Green in
February 2000. In dismissing Fyffes’
claim against all of the defendants,
the Court held that the share sales
were entirely lawful and that none of
the defendants had any liability arising
from the sales of the shares in Fyffes
in February 2000.
On 10 February 2006, the Irish High
Court decided that Fyffes should pay
most of DCC’s costs in relation to
Fyffes’ failed legal action against the
Group. DCC expects to recoup
approximately €8.5 million from
Fyffes following this High Court order
and, accordingly, has accrued this
amount as a credit under exceptional
operating costs.
On 29 November 2005, the Hsinchu
District Court in Taiwan issued a
judgment ordering that the London
High Court order obtained by DCC’s
subsidiary, Days Healthcare, against
Pihsiang Machinery Manufacturing
Company Limited (a Taiwanese public
company), Donald Wu (its chairman
and major shareholder) and Jenny Wu
(his wife and director) be enforced in
Taiwan. Accordingly, as at 31 March
Table 2: Return on capital employed
Under Irish GAAP (accounting
practices generally accepted in the
Republic of Ireland) certain
intercompany loans had been
treated as part of net investment in
foreign operations and foreign
exchange gains or losses arising on
these loans had been recognised
directly in reserves. On transition
from Irish GAAP, certain of these
loans between fellow subsidiaries do
not qualify under IFRS as part of net
investment in foreign operations and
therefore gains or losses on these
loans must be recognised in the
Income Statement.
The financial impact of the above is
a charge to the Income Statement of
€1.145 million for the year ended 31
March 2006 (charge of €4.809
million: 2005) in respect of foreign
exchange losses and these amounts
are included in exceptional items.
The majority of the intercompany
balances which gave rise to these
accounting charges (previously taken
to reserves) were restructured
during the year ended 31 March
2005 and the half year ended 30
September 2005 so as to eliminate
accounting volatility from 30
September 2005 onwards.
basis (14.6% reported) to 157.23 cent.
DCC has achieved compound annual
growth in reported adjusted earnings
per share of 13.2% over the last five
years and 17.3% over the last ten
years.
Dividend
The total dividend for the year of
42.85 cent per share represents an
increase of 15% over the previous
year. The dividend is covered 3.7
times (3.7 times: 2005) by adjusted
earnings per share.
Return on capital employed
A core strength of DCC is the creation
of shareholder value through the
delivery of consistent, long-term
returns in excess of DCC’s cost of
capital. In the year under review,
DCC again achieved excellent returns
on capital employed (as detailed in
Table 2), generating a return of
43.0% excluding intangible assets and
19.1% including intangible assets
(44.9% and 20.4% respectively: 2005).
DCC’s return on capital employed has
remained consistently high through a
combination of good organic growth,
attractive acquisition valuations and
excellent integration synergies.
2006
2005
ROCE
(excl intangible assets)
ROCE
(incl intangible assets)
ROCE
(excl intangible assets)
ROCE
(incl intangible assets)
DCC Energy
DCC SerCom
DCC Healthcare
DCC Food
& Beverage
DCC
Environmental
Group
53.8%
24.4%
60.5%
55.2%
31.8%
43.0%
2006, these parties are jointly and
severally liable to pay the DCC Group
Stg£14.3 million (€20.5 million),
including Stg£2.1 million in accrued
interest. DCC has not accrued any of
this amount due pending the outcome
of an appeal by the defendants to the
Taiwanese High Court, but has
expensed all the litigation costs.
24.5%
14.3%
16.7%
18.7%
17.4%
19.1%
53.4%
30.3%
50.3%
57.1%
45.7%
44.9%
25.3%
18.4%
13.6%
21.3%
20.7%
20.4%
Taxation
Cash flow
The effective tax rate for the Group,
including associates, increased
marginally to 12.7% from 12.0%.
Adjusted earnings per share
Adjusted earnings per share increased
by 15.5% on a constant currency
DCC focuses on operating cash flow
to maximise shareholder value over
the long term. Operating cash flow is
principally used to fund investment in
existing operations, complementary
bolt-on acquisitions, dividend payments
and selective share buybacks. DCC’s
record of excellent cash generation
continued with operating cash flow
30
financial review
generated from operations of €142.9
million, an increase of 22.8% on the
previous year. This cashflow
substantially relates to cash
generated by DCC’s subsidiaries and
joint ventures. While cash generation
in DCC’s associates increased
substantially in the year, dividends
received by DCC from these
associates amounted to just €1.0
million.
Despite a 29.9% (€791.6 million)
increase in revenue, working capital
increased by just €11.2 million which
equates to 9.5 days’ revenue at 31
March 2006, and compares favourably
to 10.2 days’ at 31 March 2005, as
detailed in Table 3. A summary of
DCC’s cashflow is set out in Table 4.
Table 3: Working capital days
Stocks
Debtors
Creditors
Table 4: Summary of cash flows
Inflows
Cash generated from operations
Share issues (net)
Grants received
Outflows
Capital expenditure (net)
Acquisitions
Share buyback
Interest and tax paid
Dividends paid
Net exceptional costs
Net cash outflow
Translation adjustment and other
Opening net (debt)/cash
Closing net debt
was deferred. The cash impact of
acquisitions in the year was €54.7
million when payments of deferred
acquisition consideration of €5.6
million are taken into account. Capital
expenditure was €57.9 million
(inclusive of expenditure of €13.4
million on land and buildings). Net
of disposals and capital grants
received, net capital expenditure
was €45.2 million.
Balance sheet and group
financing
DCC has a very strong balance sheet
with total equity of €585.4 million at
31 March 2006. The composition of
net debt at 31 March 2006 of €32.7
International Financial
Reporting Standards
The results for 2006 have been
prepared in accordance with the
Group’s policies under International
Financial Reporting Standards (IFRS).
Financial statements for the year
ended 31 March 2005, which were
prepared in accordance with Irish
GAAP, have been restated under
IFRS, with the exception of IAS 32
Financial Instruments: Disclosure and
Presentation and IAS 39 Financial
Instruments: Recognition and
Measurement, with effect from the
transition date of 1 April 2004. The
Group adopted IAS 32 and IAS 39
with effect from 1 April 2005.
2006
Days
11.6
42.9
(45.0)
9.5
2006
€’m
142.9
3.3
1.2
147.4
(46.4)
(54.7)
-
(19.1)
(31.8)
(15.4)
167.4
(20.0)
(3.8)
(8.9)
(32.7)
2005
Days
13.9
45.7
(49.4)
10.2
2005
€’m
116.4
6.9
-
123.3
(35.8)
(81.1)
(26.7)
(12.1)
(27.4)
(6.6)
189.7
(66.4)
(4.9)
62.4
(8.9)
Acquisition and development
expenditure amounted to €120.8
million. DCC’s ongoing acquisition
programme resulted in a number of
acquisitions being completed during
the year at a total committed cost of
€62.9 million, of which €13.8 million
million is analysed in Table 5. An
analysis of DCC’s cash, debt and
financial derivative instrument balances
at 31 March 2006, including maturity
periods and currency and interest rate
profiles, is shown in Notes 27 to 30 to
the financial statements.
The adoption of IFRS had a limited
impact on the 2006 full year results
and net assets of the Group. The
change to IFRS represents an
accounting change only and does not
affect the underlying operations or
cashflow generation of the Group.
financial review
313131
Table 5: Analysis of net debt
Non-current assets:
Derivative financial instruments
Current assets:
Derivative financial instruments
Cash and short term bank deposits
Non-current liabilities:
Interest-bearing loans and borrowings
Derivative financial instruments
Unsecured Notes due 2008 to 2016
Current liabilities:
Interest-bearing loans and borrowings
Derivative financial instruments
Net debt
The principal changes for the Group
arising from the introduction of IFRS
were as follows:
•
IFRS 2 Share-based Payment
requires expensing the cost of
employee and executive rewards
under the Group’s share schemes
through the Group Income
Statement using option valuation
models. The share based
payments charge in the 2006
Group Income Statement is €1.8
million (€1.0 million: 2005).
• Under IFRS 3 Business
•
Combinations, goodwill is no
longer amortised but must be
tested annually for impairment.
Under IAS 38, Intangible Assets
there is a requirement to
separately identify and amortise
other intangibles acquired. The
Group Income Statement for 2006
includes a charge of €5.0 million
(€1.3 million: 2005) in respect of
the amortisation of intangible
assets (mainly comprising
customer relationships) associated
with acquisitions completed since
1 April 2004.
• Under IAS 12 Income Taxes,
deferred tax is recognised in
respect of all temporary timing
differences at the balance sheet
date between the tax bases of
assets and liabilities and their
carrying value for financial
reporting purposes. The Group
2006
€’m
9.0
0.1
345.3
345.4
(6.3)
(27.1)
(286.5)
(319.9)
(67.1)
(0.1)
(67.2)
(32.7)
Balance Sheet at 31 March 2006
includes an additional net deferred
tax liability of €0.7 million (€1.4
million: 2005). This results
primarily from the creation of
deferred tax in respect of defined
benefit pension liabilities,
intangible assets acquired on
business combinations, fair value
revaluations of assets and
liabilities in the balance sheets of
businesses acquired and gains on
property disposals which were
rolled over.
IAS 19 Employee Benefits
requires the assets and liabilities
of defined benefit pension schemes
to be shown on the face of the
Group Balance Sheet. Actuarial
gains and losses are charged to
equity and, as a result, the net
deficit of the Group’s defined
benefit pension schemes is
carried in full on the Group
Balance Sheet. The Group
Balance Sheet at 31 March 2006
includes a net pension scheme
liability of €20.7 million (€25.4
million: 2005) after recording
actuarial gains of €1.8 million that
arose in the year and were
credited in the Group’s Statement
of Recognised Income and
Expense.
• Under IAS 21 The Effects of
Changes in Foreign Exchange
Rates, certain intercompany loans,
which had been treated under
2005
€’m
-
-
353.3
353.3
(11.6)
-
(305.1)
(316.7)
(45.5)
-
(45.5)
(8.9)
Irish GAAP as part of net
investment in foreign operations,
do not qualify for such treatment.
Accordingly, foreign exchange
gains or losses arising on these
loans which had been recognised
directly in reserves must, on
transition from Irish GAAP to
IFRS, be recognised in the Group
Income Statement. The financial
impact of the above is a charge to
the Group Income Statement of
€1.145 million for the year ended
31 March 2006 (charge of €4.809
million: 2005) in respect of foreign
exchange losses and these
amounts are included in
exceptional items.
Financial risk management
Financial risk management within the
Group is governed by policies and
guidelines reviewed and approved
annually by the Board of Directors.
These policies and guidelines
primarily cover foreign exchange risk,
commodity price risk, credit risk,
liquidity risk and interest rate risk.
The principal objective of these
policies and guidelines is the
minimisation of financial risk at
reasonable cost. The Group does not
trade in financial instruments nor does
it enter into any leveraged derivative
transactions. DCC’s Group Treasury
function centrally manages the
Group’s funding and liquidity
requirements. Divisional and
32
financial review
anticipated LPG commodity price
exposure for the subsequent month,
with such transactions qualifying as
‘highly probable’ forecast transactions
for IAS 39 hedge accounting purposes.
Certain customers occasionally require
fixed price oil supply contracts
generally for periods of less than six
months. In such circumstances, the
Group enters into matching forward
commodity contracts, not designated
as hedges under IAS 39.
All commodity hedging counterparties
are approved by the Board.
Credit risk management
DCC transacts with a variety of high
credit quality financial institutions for
the purpose of placing deposits and
entering into derivative contracts. The
Group actively monitors its credit
exposure to each counterparty to
ensure compliance with limits
approved by the Board.
Interest rate risk
and debt/liquidity management
The Group maintains a strong balance
sheet with long-term debt funding and
cash balances with deposit maturities
up to six months. In addition, the
Group maintains significant
uncommitted credit lines with its
relationship banks. DCC borrows at
both fixed and floating rates of
interest. It has swapped its fixed rate
borrowings to floating interest rates,
using interest rate and cross currency
interest rate swaps which qualify for
fair value hedge accounting under IAS
39. The Group mitigates interest rate
risk on its borrowings by matching, to
the extent possible, the maturity of its
cash balances with the interest rate
reset periods on the swaps related
to its borrowings.
subsidiary management, in
conjunction with Group Treasury,
manage foreign exchange and
commodity price exposures within
approved policies and guidelines.
Further detail in relation to the Group’s
financial risk management and its
derivative financial instrument position
is contained in Note 2 and Note 28
respectively to the financial
statements.
Foreign exchange risk
management
DCC’s reporting currency and that in
which its share capital is denominated
is the euro. Exposures to other
currencies, principally sterling and the
US dollar, arise in the course of
ordinary trading. The Group generally
hedges between 50% and 90% of
transactions in each major currency
for the subsequent 2 months. The
Group also hedges approximately
50% of anticipated transactions in
certain subsidiaries, generally for
periods up to 6 months with such
transactions qualifying as ‘highly
probable’ forecast transactions for IAS
39 hedge accounting purposes.
Although over half of the Group’s
operating profits are sterling
denominated, certain natural
economic hedges exist within the
Group, for example, a proportion of
the purchases by certain of its Irish
businesses are sterling denominated.
The Group did not hedge the
remaining retranslation exposure
during the financial year ended
31 March 2006.
The Group has investments in sterling
operations which are highly cash
generative. The Group seeks to
manage the resultant foreign currency
translation risk through borrowings
denominated in or swapped (utilising
currency swaps or cross currency
interest rate swaps) into sterling,
although this is more than offset
by the strong cumulative cash
flow generated from the Group’s
sterling operations.
Commodity price risk
management
The Group is exposed to commodity
price risk in its LPG and oil distribution
businesses. The Group generally
hedges approximately 50% of its
corporate & social responsibility
33333333
Plans
DCC has a long established
practice of ensuring that social and
environmental matters are addressed
in its business operations and in
interactions with all stakeholders.
DCC continues to monitor CSR best
practice. Current developments, such
as third generation Global Reporting
Initiative guidelines for sustainability
reporting, have been reviewed and
DCC plans to reflect these
developments in appropriate
corporate policies, objectives and key
performance indicators.
Marketplace
Products and services
DCC regards socially and
environmentally responsible behaviour
as an integral part of good business
management. The Group is
committed to enhancing the lives of
its stakeholders and reflects this in
the design, delivery and management
of its products and services. In the
Healthcare sector, both Days
Healthcare and Physio-Med provide
rehabilitation and independent living
products that assist their customers
in leading independent lives. In the
Energy sector, Flogas distributes LPG,
which is a non-toxic, clean burning,
sulphur and smoke free fuel. In the
Food & Beverage sector, Kelkin
actively promotes "better for you"
products, with strictly no additives,
preservatives or colourings. DCC
Environmental specialises in recycling
and waste treatment, helping to
provide a cleaner, safer environment
for the benefit of all.
Sustainable growth
DCC’s commitment to the principles
of CSR has been recognised in recent
years by the Group’s inclusion in a
number of CSR indices and ethical
funds. In the interests of shareholders
and other stakeholders, DCC will
strive to achieve further recognition of
this commitment by continuing to
expand the Group’s CSR measurement
and benchmarking processes.
Recognition of excellence in
financial reporting
DCC’s commitment to financial
reporting best practice was again
recognised during the year when
DCC was short-listed as a finalist by
the Leinster Society of Chartered
Accountants in their annual Published
Accounts Awards, the most
prestigious award for excellence in
financial reporting in Ireland.
Environment, health
and safety
DCC is committed to operating in a
safe, ethical and responsible manner,
safeguarding the health and safety of
its employees as well as protecting
the environment.
Compliance with environmental,
health and safety (‘EHS’) regulatory
requirements is considered a minimum
standard for all Group businesses.
New legislation, for example the 2005
Safety, Health and Welfare at Work
Act in Ireland, is implemented to
ensure timely compliance.
Environmental, health and safety
management systems
Moving beyond compliance, Group
businesses strive to implement best
practice in their operations. All
the Group’s businesses operate
comprehensive environmental, health
and safety management systems,
primarily based on the internationally
recognised ISO14001 and
OHSAS18001 management system
standards. The complexity of the
management systems is determined
by the nature and scale of the risks at
each business location.
Within DCC Environmental, three
subsidiaries are formally certified by
SGS (an independent accreditation
body) to the ISO14001 environmental
standard. A case study of the
successful implementation by a DCC
subsidiary, Atlas Northern Ireland, of
the OHSAS18001 health and safety
standard in April 2005 is included
below. DCC believes that a structured
approach to managing EHS risk
promotes continuous improvement of
EHS performance while recognising
that certification is a milestone and
not an end in itself.
DCC’s businesses continue to invest
in their environmental, health and
safety management systems with
progress regularly reviewed by senior
management and by the Group
environmental, health and safety
function.
Health and Safety Case Study
of a DCC subsidiary - Atlas
Northern Ireland
Atlas Northern Ireland (‘Atlas’), a
specialist waste management
business, has operated an
ISO14001 certified environmental
management system since 2001.
In 2005, Atlas made the decision
to reassess existing health and
safety policies and procedures
with a view to obtaining
certification to the OHSAS18001
health and safety management
system standard.
The implementation of the
OHSAS18001 system provides a
structured and consistent
approach to hazard identification
and risk management allowing
Atlas to proactively identify risks,
enhance employee safety
standards and improve operational
efficiencies.
Following a successful audit by
SGS, Atlas received formal
OHSAS18001 certification in April
2005, a significant achievement for
its health and safety team.
Certification by SGS reflects
ongoing commitment by Atlas to
a policy of compliance and best
practice implementation and
provides customers and regulatory
authorities with assurance and
confidence in the professionalism
of Atlas’ operations.
34
corporate & social responsibility
Business community
DCC is a very active member of
the broader business community,
contributing to various industry and
professional organisations. Many DCC
employees dedicate their own time to
the support and development of
these organisations.
Workplace
Communication and a high
performance culture
DCC employees are the key element
of its success – their talent,
innovation and entrepreneurial flair
have been the essential ingredients in
the Group’s consistent and strong
growth. DCC’s decentralised culture
empowers local management and
staff to use their skills, experience
and deep industry knowledge to
provide a first class service to
customers and to be highly
responsive to market needs.
DCC strives for excellence and ‘best
in class’ performance across all its
businesses. Business processes and
employment practices are regularly
reviewed, benchmarked, improved
and updated to reflect current
legislation. Strong, open and regular
communication practices at all levels
throughout the Group reflect a culture
of empowerment and inclusiveness.
As illustrated by the case study on a
DCC subsidiary, Flogas UK, DCC’s
businesses strive to ensure they have
excellent employee communication
processes, including employee
committees, focus groups,
newsletters and suggestion schemes.
Employee safety
The safety of the Group’s employees
continues to be paramount. In so far
as is reasonably practical, risks are
eliminated, minimised or mitigated
to provide safe working conditions.
Workplace hazards are formally risk
assessed and appropriate control
measures (physical and procedural)
are implemented. A culture of
personal safety awareness is an
important element in the prevention
of accidents and the importance of
individual responsibility for safety
is stressed at every level and
communicated to employees.
Waste packaging legislation
All Group businesses with obligations
under waste packaging legislation are
members of group compliance
schemes, for example Repak in
Ireland and Valpak in the UK. DCC’s
businesses typically segregate on-site
waste packaging, including cardboard,
plastics and wood, for collection by
authorised recycling contractors.
Community
Committed corporate neighbour
DCC is sensitive to any impact its
operations may have on its
neighbours and is committed to
ensuring that the needs, views and
interests of the local communities
in which its businesses operate
are taken into consideration. This
commitment is reflected in well-
established practices throughout
the Group.
Philanthropic approach
DCC supports a large number of
charitable causes and a number of
educational initiatives that target
disadvantaged students, as well
as a number of specific third level
education programmes. DCC’s
businesses and their employees
support many local initiatives in
education, sports, job creation and
general social activities in the
communities in which they operate.
Employee Communication
Case Study of a DCC
subsidiary - Flogas UK
Flogas UK (‘Flogas’), DCC’s largest
subsidiary, has grown substantially
over the last number of years,
mainly through acquisition, and
now has 800 employees across
57 depots throughout the UK.
Flogas has successfully
implemented a structured
communication process to
maintain the spirit of open
participation, communication and
high performance that has been
central to its success.
A key component of this process
is the Flogas employee conference,
a highly motivational biannual
event for all employees that
focuses on strategy and provides
a platform to acknowledge the
achievements of individuals,
depots across the country and the
company. During alternate years
all employees are invited in
smaller groups to communication
evenings with a similar focus.
Flogas publishes an in-house
employee magazine "People with
Energy" on a quarterly basis,
keeping everyone informed of
events, staff changes and
company news.
Flogas has also established
a company-wide Employee
Relations Council, comprising
regional employee representatives
who attend quarterly regional
meetings and an annual national
meeting.
Beyond these formal
communication structures,
Flogas puts great emphasis on
one to one communication
between employees to ensure
that ideas or concerns are
promptly addressed.
corporate & social responsibility
353535
Employee diversity
DCC has always fully embraced the
value of diversity, recognising the
strengths and benefits of a diverse
workforce. DCC’s employment
policies respect and value all
employees, with selection and
progression based only on skills,
experience and performance.
Employee financial participation
DCC values employee dedication
and commitment to the business.
Through its remuneration, incentive
and share option programmes, DCC
employees share in the financial
success of the business. In 2001,
DCC established the DCC Sharesave
Scheme, in which all employees in
Ireland and the UK were invited to
participate. As a result, a significant
percentage of employees are now
shareholders or option holders in DCC.
Learning organisation
As an organisation, DCC places great
emphasis on continuous learning
and development and encourages
employees to develop and enhance
their skills and knowledge. This is
done in a variety of ways throughout
the Group, including company
secondments, training programmes,
on the job training and more formal
technical, management and executive
development courses.
DCC continually reviews and updates
performance management practices
across its businesses to reflect best
practice and to support managers and
employees in the development of
their business skills and personal
effectiveness.
products.[
quality
DCC Food & Beverage
markets quality food
38
corporate governance
The Board of DCC continues to be
committed to maintaining the highest
standards of corporate governance.
The following report describes how
DCC has applied the principles set out
in Section 1 of the Combined Code on
Corporate Governance.
The Board of Directors
Role
The Board of DCC is responsible for
the leadership, strategic direction and
overall management of the Group and
has a formal schedule of matters
specifically reserved to it for decision,
which covers key areas of the Group’s
business including approval of
financial statements, budgets
(including capital expenditure),
acquisitions and dividends. The Board
has delegated responsibility for the
management of the Group, through
the Chief Executive, to executive
management. There is a clear division
of responsibilities between the
Chairman and the Chief Executive,
which is set out in writing and has
been approved by the Board. Certain
additional matters are delegated to
Board Committees.
Composition
The Board consists of four executive
and seven non-executive Directors.
Brief biographies of the Directors are
set out on pages 6 and 7.
Non-executive Directors are appointed
by the Board for an initial term of
three years and the expectation is
that they will be invited to serve a
second three-year term. The Board
may also invite non-executive
Directors to serve an additional period
thereafter. The terms and conditions
of appointment of non-executive
Directors are set out in their letters of
appointment, which are available for
inspection at the Company’s
registered office during normal office
hours and at the Annual General
Meeting of the Company.
Following appointment, Directors are
subject to re-election at the next
Annual General Meeting. At least one
third of the Directors retire at each
Annual General Meeting and all of the
Directors are subject to re-election at
least every three years. Non-executive
Directors who have served on the
Board for more than nine years are
subject to annual re-election.
All of the Directors bring independent
judgement to bear on issues of
strategy, risk, performance, resources,
key appointments and standards.
The Board has recently evaluated
the independence of each of its non-
executive Directors. In the case of
Alex Spain, Tony Barry and Paddy
Gallagher, the Board gave due
consideration to the fact that they
have served on the Board for more
than nine years from the date of their
first election. The Board has concluded
that all of the non-executive Directors
are independent of management and
free of any relationships which could
interfere with the exercise of their
independent judgement.
The Board has appointed Michael
Buckley as the Senior Independent
Director. Mr. Buckley is available to
shareholders who have concerns
that cannot be addressed through
the Chairman or the Chief
Executive/Deputy Chairman.
Board procedures
There is an established procedure for
Directors to take independent
professional advice in the furtherance
of their duties if they consider this
necessary. All Directors have access
to the advice and services of the
Company Secretary who is responsible
to the Board for ensuring that Board
procedures are followed and that
applicable rules and regulations are
complied with.
as directors and, in addition, the
Board ensures that Directors are kept
up to date on the latest corporate
governance guidance and best
practice. There is a full, formal and
tailored induction process for new
non-executive Directors, which
includes detailed presentations on
the Group’s operations.
Meetings
The Board holds regular meetings and
there is contact as required between
meetings in order to progress the
Group’s business. During the year, the
Board held nine meetings. Individual
attendance at these meetings is set
out in the table on page 40.
Remuneration
Details of remuneration paid to the
Directors are set out in the Report of
the Remuneration Committee on
pages 44 to 47.
Board Committees
Audit Committee
The Audit Committee comprises
three non-executive Directors,
Bernard Somers (Chairman), Róisín
Brennan and Paddy Gallagher. The
Board has determined that Bernard
Somers is the Committee’s financial
expert. The Committee met five
times during the year. Individual
attendance at these meetings is set
out in the table on page 40.
The Chief Executive/Deputy
Chairman, Chief Financial Officer,
Head of Enterprise Risk Management,
Group Internal Auditor, other Directors
and executives and representatives of
the external auditors may be invited
to attend all or part of any meeting.
The Committee also meets separately
with the external auditors and with
the Group Internal Auditor without
executive management present.
The Board recognises the need for
Directors, in particular new Directors, to
be aware of their legal responsibilities
The role and responsibilities of the
Audit Committee are set out in its
corporate governance
39
written terms of reference, which
are available on request and on the
Company’s website www.dcc.ie, and
include:
• monitoring the integrity of the
financial statements of the
Company and any formal
announcements relating to the
Company’s financial performance
and reviewing significant financial
reporting judgements contained
in them;
•
•
•
•
•
•
reviewing the half-year and annual
financial statements before
submission to the Board;
considering and making
recommendations to the Board
in relation to the appointment,
re-appointment and removal of the
external auditors and approving
the audit fee and terms of
engagement of the external
auditors;
approving the remuneration of the
external auditors, whether fees
for audit or non-audit services, and
ensuring that the level of fees is
appropriate to enable an adequate
audit to be conducted;
assessing annually the
independence and objectivity of
the external auditors and the
effectiveness of the audit
process, taking into consideration
relevant professional and
regulatory requirements and the
relationship with the auditors as a
whole, including the provision of
any non-audit services;
reviewing the operation and the
effectiveness of the Group
Internal Audit function;
reporting to the Board on its
annual assessment of the
operation of the Group's system
of internal control, making any
recommendations to the Board
thereon and reviewing the
Company’s statements on internal
control and risk management prior
to endorsement by the Board; and
•
reviewing the Group’s
arrangements for its employees
to raise concerns, in confidence,
about possible wrongdoing in
financial reporting or other
matters and ensuring that these
arrangements allow proportionate
and independent investigation of
such matters and appropriate
follow up action.
These responsibilities are discharged
through its meetings and receipt of
reports from the Risk Committee and
the Enterprise Risk Management
function (incorporating Group Internal
Audit and Group Environmental,
Health and Safety).
The Committee has a process
in place to ensure that the
independence of the audit is not
compromised, which includes
monitoring the nature and extent of
services provided by the external
auditors through its annual review
of fees paid to the external auditors
for audit and non-audit work.The
Committee also reviews the
safeguards which the external
auditors have put in place to ensure
their objectivity and independence
in accordance with professional
and regulatory requirements.
Details of the amounts paid to the
external auditors during the year for
audit and other services are set out in
note 6 on page 73.
Nomination Committee
The Nomination Committee
comprises four non-executive
Directors, Alex Spain (Chairman),
Michael Buckley, Maurice Keane
and Bernard Somers, and the Chief
Executive/Deputy Chairman, Jim Flavin.
The Committee met three times
during the year. Individual attendance
at these meetings is set out in the
table on page 40.
The role and responsibilities of the
Nomination Committee are set out in
its written terms of reference, which
are available on request and on the
Company’s website www.dcc.ie.
The principal responsibilities of the
Committee are to keep Board
renewal, structure, size and
composition under regular review,
including the skills, knowledge and
experience required. The Committee
has particular regard to the leadership
needs of the organisation, both
executive and non-executive, and
therefore gives full consideration to
succession planning for the Chairman
and Chief Executive.
On 5 September 2005, upon the
recommendation of the Nomination
Committee, the Board appointed
Róisín Brennan and Michael Buckley
to the positions of non-executive
Directors. This followed an extensive
and rigorous process undertaken by
the Nomination Committee which
carefully considered the Board’s
requirements, identified suitable
candidates, in terms of quality of
individual, age profile, qualification
and business background, and made
a recommendation to the Board.
The Nomination Committee did not
consider that the process would have
been enhanced by an external search
consultancy or open advertising.
Remuneration Committee
The Remuneration Committee
comprises four non-executive
Directors, Maurice Keane (Chairman),
Tony Barry, Róisín Brennan and
Michael Buckley and its report is set
out on pages 44 to 47. The Committee
met four times during the year.
Individual attendance at these
meetings is set out in the table on
page 40.
The role and responsibilities of the
Remuneration Committee are set
out in its written terms of reference,
which are available on request and on
the Company’s website www.dcc.ie.
The principal responsibilities of the
Committee are determining the policy
for the remuneration of the executive
Directors and determining their
remuneration packages, determining
pension arrangements for the
executive Directors and the granting
of share options under the DCC plc
1998 Employee Share Option Scheme.
The Chief Executive/Deputy Chairman
is consulted about remuneration
proposals for the other executive
Directors. The Remuneration
Committee is authorised to obtain
access to professional advice if
deemed desirable.
40
corporate governance
Attendance at Board and Board Committee meetings during the year ended 31 March 2006
Director
Board
Alex Spain
Jim Flavin
Tony Barry
Tommy Breen
Róisín Brennan
Michael Buckley
Paddy Gallagher
Maurice Keane
Kevin Murray
Fergal O’Dwyer
Bernard Somers
A
9
9
9
9
5
5
9
9
9
9
9
B
9
9
9
9
5
5
9
9
9
8
9
Audit
Committee
A
B
Nomination
Committee
B
A
Remuneration
Committee
A
B
-
-
-
-
3
-
5
2
-
-
5
-
-
-
-
3
-
5
2
-
-
5
3
3
2
-
-
1
2
3
-
-
1
3
3
2
-
-
1
2
3
-
-
1
2
-
4
-
2
2
-
2
-
-
2
2
-
4
-
2
2
-
2
-
-
2
Column A indicates the number of scheduled meetings
held during the period the Director was a member of the
Board and/or Committee.
Column B indicates the number of scheduled meetings
attended during the period the Director was a member of
the Board and/or Committee.
Performance evaluation
The Board undertakes a formal annual
evaluation of its own performance and
that of each of its principal committees,
the Audit, Nomination and
Remuneration committees, using the
‘Performance Evaluation Guidance’
set out in the Higgs Suggestions
for Good Practice.
The Chairman conducts evaluations
of the performance of each non-
executive Director on an annual basis
and the non-executive Directors
evaluate the performance of each
executive Director. These evaluations
are designed to determine whether
each Director continues to contribute
effectively and continues to
demonstrate commitment to the role.
The non-executive Directors, led by
the Senior Independent Director,
meet annually without the Chairman
present to evaluate his performance,
having taken into account the views
of the executive Directors.
particular the Chairman and Chief
Executive, taking into account the
skills, expertise and experience
required and the leadership needs
of the organisation.
Relations with shareholders
Communications with shareholders
are given high priority and DCC has
a well-established investor relations
function.
The Board is kept informed of the
views of shareholders through the
executive Directors’ attendance at
investor presentations and results
presentations. Furthermore, relevant
feedback from such meetings,
investor relations reports and brokers
notes are provided to the entire Board
on a regular basis.
The Company’s web site www.dcc.ie
provides the full text of annual and
interim reports as well as all press
releases. It also incorporates audio
and slide show investor presentations.
Committees are also available to
answer questions at the Annual
General Meeting. The Chief
Executive/Deputy Chairman makes a
presentation at the Annual General
Meeting and answers questions on the
Group’s business and its performance
during the prior year. Shareholders
can meet with the Chairman or the
Senior Independent Director on request.
Notice of the Annual General
Meeting, the Form of Proxy and the
Annual Report are sent to shareholders
at least 20 working days before the
Meeting. At the Meeting, after each
resolution has been dealt with, details
are given of the level of proxy votes
cast on each resolution and the
numbers for and against.
The 2006 Annual General Meeting will
be held at 11 a.m. on 10 July 2006
at The Four Seasons Hotel,
Simmonscourt Road, Ballsbridge,
Dublin 4, Ireland.
Internal control
Board succession planning
The Board, with the assistance of the
Nomination Committee, plans for
the succession of its Directors, in
The Company’s Annual General
Meeting affords shareholders the
opportunity to question the Chairman
and the Board. The chairmen of the
Audit, Nomination and Remuneration
The Board is responsible for the
Group’s system of internal control and
for reviewing its effectiveness. Such a
system is designed to manage rather
than eliminate the risk of failure to
corporate governance
41
Going concern
After making enquiries, the Directors
have formed a judgement, at the time
of approving the financial statements,
that there is a reasonable expectation
that the Company and the Group as
a whole have adequate resources to
continue in operational existence for
the foreseeable future. For this
reason, they continue to adopt the
going concern basis in preparing the
financial statements. The Directors’
responsibility for preparing the
financial statements is explained on
page 48 and the reporting
responsibilities of the auditors are set
out in their report on pages 49 and 50.
Compliance statement
DCC has complied, throughout the
year ended 31 March 2006, with the
provisions as set out in Section 1 of
the Combined Code on Corporate
Governance.
achieve business objectives and can
provide only reasonable and not
absolute assurance against material
misstatement or loss.
In accordance with the revised
Turnbull guidance for directors on
internal control published in October
2005, Internal Control: Revised
Guidance for Directors on the
Combined Code, the Board confirms
that there is an ongoing process for
identifying, evaluating and managing
any significant risks faced by the
Group, that it has been in place for
the year under review and up to the
date of approval of the financial
statements and that this process is
regularly reviewed by the Board.
The key risk management and internal
control procedures, which are
supported by detailed controls and
processes, include:
•
•
•
skilled and experienced Group and
divisional management;
an organisation structure with
clearly defined lines of authority
and accountability;
a comprehensive system of
financial reporting involving
budgeting, monthly reporting and
variance analysis;
•
•
•
•
the operation of approved risk
management policies (including
treasury and IT);
a Risk Committee, comprising
Group senior management,
whose main role is to keep under
review and report to the Audit
Committee on the principal risks
facing the Group, the controls in
place to manage those risks and
the monitoring procedures;
an independent Enterprise Risk
Management function, which
incorporates Group Internal Audit
and Group Environmental, Health
and Safety; and
a formally constituted Audit
Committee which reviews the
operation of the Risk Committee
and the Enterprise Risk
Management function, liaises with
the external auditors and reviews
the Group’s internal control
systems.
The Board has reviewed the
effectiveness of the Group’s system
of internal control. This review took
account of the principal business risks
facing the Group, the controls in place
to manage those risks (including
financial, operational and compliance
controls and risk management)
and the procedures in place to
monitor them.
42
report of the directors
for the year ended 31 March 2006
The Directors of DCC plc present
their report and the audited financial
statements for the year ended 31
March 2006.
Group results
The profit for the financial year
attributable to Group shareholders
amounted to €123.8 million as set
out in the Group Income Statement
on page 51.
Dividends
An interim dividend of 15.54 cent per
share, amounting to €12.50 million,
was paid on 1 December 2005. The
Directors recommend the payment of
a final dividend of 27.31 cent per
share, amounting to €22.04 million.
Subject to shareholders’ approval at
the Annual General Meeting on 10
July 2006, this dividend will be paid
on 14 July 2006 to shareholders on
the register on 26 May 2006. The
total dividend for the year ended 31
March 2006 amounts to 42.85 cent
per share, a total of €34.54 million.
The balance of profit attributable to
Group shareholders, which is retained
in the business, amounts to €92.2
million.
Purchase of shares and
treasury shares
The number of shares held in
Treasury at the beginning of the year
(and the maximum amount held) was
7,873,886 (8.92% of the issued share
capital) with a nominal value of
€1.968 million.
A total of 363,708 shares (0.41%
of the issued share capital) with a
nominal value of €0.091 million were
re-issued during the year at prices
ranging from €6.22 to €12.20
consequent to the exercise of share
options under the DCC plc 1998
Employee Share Option Scheme and
the DCC Sharesave Scheme 2001,
leaving a balance held in Treasury at
31 March 2006 of 7,510,178 shares
(8.51% of the issued share capital)
with a nominal value of €1.878 million.
At the Company’s Annual General
Meeting on 5 July 2005, the Company
was granted authority to purchase up
to 8,822,940 of its own shares (10%
of the issued share capital) with a
nominal value of €2.206 million. This
authority has not been exercised and
will expire on 10 July 2006, the 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.
Review of activities and
events since the year end
The Chairman’s Statement on pages
10 to 11, the Chief Executive’s
Review on pages 12 to 13, the
Operating Review on pages 16 to 25
and the Financial Review on pages
28 to 32 contain a review of the
development of the Group’s business
during the year, of the state of affairs
of the business at 31 March 2006,
of recent events and of likely future
developments. Information in respect
of events since the year end as required
by the Companies (Amendment) Act,
1986 is also included in these sections.
Principal risks and
uncertainties
Under Section 13 of the Companies
(Amendment) Act, 1986 as amended
by Statutory Instrument 116 of 2005 -
European Communities (International
Financial Reporting Standards and
Miscellaneous Amendments)
Regulations 2005, DCC is required to
give a description of the principal risks
and uncertainties facing the Company
and the Group.
As detailed throughout this Annual
Report, DCC’s businesses operate in
a broad range of business areas. This
broad business base means that the
Group is not exposed to significant
risks connected with any particular
industry. DCC has a broad customer
base and the profitability of the
Group is not dependent on any single
customer. Similarly, DCC has a broad
supplier base and the Group is
committed to ensuring that suppliers
continue to choose DCC as the
partner of choice, however, no one
supplier would be considered material
to the Group.
The principal risks and uncertainties
faced by the Group’s businesses
relate to the macro economic
environment in Ireland, Britain and
Continental Europe. The level of
activity in these markets is sensitive
to economic conditions generally,
including, inter alia, economic growth,
interest rates and inflation.
During 2006, the price of a barrel of
oil reached record prices on world
markets. DCC Energy is the Group’s
largest profit contributor and constant
and rigorous margin management
is maintained.
The principal financial risks facing the
Group are addressed in the Financial
Review under ‘Financial Risk
Management’ on pages 31 to 32.
The Group has a comprehensive
system of risk management and
internal controls as detailed under
‘Internal Control’ in the Corporate
Governance section of this Report
on pages 38 to 41.
Subsidiary, joint venture
and associated companies
Details of the Company’s principal
operating subsidiaries, principal joint
ventures and principal associates are
set out on pages 113 to 116.
report of the directors
43
Substantial shareholdings
The Company has been advised of the following interests in its share capital as at 12 May 2006:
No. of €0.25
ordinary shares
% of issued
share capital
(including
treasury shares)
% of issued
share capital
(excluding
treasury shares)
Bank of Ireland Asset Management Limited *
9,233,951
10.47%
11.44%
FMR Corp. on behalf of certain of
its direct and indirect subsidiaries*
Schroder Investment Management Limited
and Schroder Investment Management
North America Limited*
AIM Trimark Investments*
Jim Flavin
* Notified as non-beneficial interests
Directors
The names of the Directors and a
short biographical note on each
Director appear on pages 6 and 7.
Róisín Brennan and Michael Buckley
were co-opted to the Board on 5
September 2005. In accordance with
Article 83 (b) of the Articles of
Association, both will retire from the
Board at the Annual General Meeting
on 10 July 2006 and being eligible,
offer themselves for re-election.
In accordance with Article 80 of the
Articles of Association, Tommy Breen,
Fergal O’Dwyer and Bernard Somers
retire by rotation at the 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, Paddy
Gallagher and Alex Spain retire at the
Meeting, each having served on the
Board for a period in excess of nine
years, and, being eligible, offer
themselves for re-election.
Kevin Murray will resign from his
position as an executive Director of DCC
plc with effect from 30 June 2006.
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
8,900,000
10.09%
11.03%
7,946,347
3,177,620
2,456,033
9.01%
3.60%
2.78%
9.84%
3.94%
3.04%
with provisions for predetermined
compensation on termination which
exceeds one year’s salary and
benefits in kind.
Details of the Directors’ interests in
the share capital of the Company
are set out in the Report of the
Remuneration Committee on pages
44 to 47.
Corporate governance
Statements by the Directors in
relation to the Company’s appliance
of the principles and compliance with
the provisions of the Combined Code
on Corporate Governance, the Group’s
system of internal control and the
adoption of the going concern basis in
preparing the financial statements are
set out on pages 38 to 41.
Research and development
Certain Group companies carry
out development work aimed at
improving the quality, competitiveness
and range of their products. This
expenditure is not material in relation
to the size of the Group and is written
off to the profit and loss account as
it is incurred.
Political contributions
There were no political contributions
which require to be disclosed under
the Electoral Act, 1997.
Accounting records
The Directors are responsible for
ensuring that proper books and
accounting records, as outlined in
Section 202 of the Companies Act,
1990, are kept by the Company. The
Directors believe that they have
complied with this requirement by
providing adequate resources to
maintain proper books and accounting
records throughout the Group including
the appointment of personnel with
appropriate qualifications, experience
and expertise. The books and
accounting records of the Company
are maintained at the Company’s
registered office, DCC House,
Brewery Road, Stillorgan, Blackrock,
Co. Dublin, Ireland.
Auditors
The auditors, PricewaterhouseCoopers,
will continue in office in accordance
with the provisions of Section 160(2)
of the Companies Act, 1963.
Alex Spain, Jim Flavin
Directors
12 May 2006
44
report of the remuneration committee
Remuneration Committee
The Remuneration Committee
comprises four independent non-
executive Directors, Maurice Keane
(Chairman), Tony Barry, Róisín
Brennan and Michael Buckley.
The role and responsibilities of the
Remuneration Committee are set
out in its written terms of reference,
which are available on request and on
the Company’s website www.dcc.ie.
The principal responsibilities of the
Committee are determining the policy
for the remuneration of the executive
Directors and determining their
remuneration packages, determining
pension arrangements for the
executive Directors and the granting
of share options under the DCC plc
1998 Employee Share Option Scheme.
The Chief Executive/Deputy Chairman
is consulted about remuneration
proposals for the other executive
Directors. The Remuneration
Committee is authorised to obtain
access to professional advice if
deemed desirable.
Remuneration policy
The Company’s remuneration policy
recognises that employment and
remuneration conditions for the
Group’s senior executives must
properly reward and motivate them
to perform in the best interests of
the shareholders. In formulating this
policy, the Committee has given
due regard to the provisions of the
Combined Code on Corporate
Governance.
Directors’ remuneration
Executive Directors’ remuneration
The typical elements of the
remuneration package for
executive Directors are basic salary,
performance related remuneration
consisting of performance related
annual bonuses and share options,
pension benefits and other taxable
benefits (principally the use of a
company car).
Salaries
The salaries of executive Directors are
reviewed annually on 1 January having
regard to personal performance,
Company performance and competitive
market practice. No fees are payable
to executive Directors.
Performance related annual
bonuses
Performance related annual bonuses
are payable to the executive
Directors, in respect of the financial
year to 31 March. The performance
targets, which are reviewed annually,
are tailored to the responsibilities of
each executive Director and include
growth in Group earnings, divisional
performance, Group and divisional
development and an element related
to individual performance and
contribution. The maximum bonus
potential, as a percentage of basic
salary, for each executive Director
is reviewed and set annually and
amounted to 65% of basic salary for
the year ended 31 March 2006.
Pension benefits
The Company funds pension
schemes which, for executive
Directors, aim to provide, on the basis
of actuarial advice, a pension of two
thirds of pensionable salary at normal
retirement date. Pensionable salary is
calculated as 105% of basic salary
and does not include any performance
related bonuses or benefits.
Non-Executive Directors’
remuneration
The remuneration of the non-executive
Directors is determined by the Board.
The fees paid to non-executive
Directors reflect their experience and
ability and the time demands of their
Board and Board Committee duties.
report of the remuneration committee
45
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 fees
1
Bonus
2006
2005
€’000 €’000
2006
2005
€’000 €’000
Special
bonus
2
2006
€’000
Benefits3
Pension
contribution4
Total
2006
2005
€’000 €’000
2006
2005
€’000 €’000
2006
2005
€’000 €’000
Executive Directors
Jim Flavin
Tommy Breen
Kevin Murray
Fergal O’Dwyer
Total for executive
Directors
806
346
346
314
768
329
329
299
510
218
218
198
384
175
175
175
1,812
1,725
1,144
909
Non-executive
Directors
Alex Spain
Tony Barry
Róisín Brennan5
Michael Buckley5
Paddy Gallagher
Maurice Keane
Bernard Somers
Total for
non-executive
Directors
142
55
35
33
61
60
66
130
54
-
-
57
54
54
452
349
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Pension payment in respect of retired Director
Total
150
-
-
100
250
-
-
-
-
-
-
-
-
38
21
20
21
100
-
-
-
-
-
-
-
-
37
20
19
20
96
-
-
-
-
-
-
-
-
121
94
94
86
115
98
90
85
1,625 1,304
622
613
579
679
678
719
395
388
3,701 3,118
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
142
55
35
33
61
60
66
130
54
-
-
57
54
54
452
349
10
10
4,163 3,477
Notes
1
2
3
4
Fees are payable only to non-executive Directors and include Chairman’s and Board Committee fees.
Special bonus to Mr. Flavin and Mr. O’Dwyer in recognition of the exceptional demands that had been placed on them during the year
arising from the successful defence of the action taken by Fyffes plc against DCC plc and Others.
In the case of the executive Directors, benefits relate principally to the use of a company car.
Executive Director pension contributions in the year ended 31 March 2006 were made to a defined contribution arrangement for
Jim Flavin and to a defined benefit scheme for the other executive Directors.
5 Róisín Brennan and Michael Buckley were appointed to the Board on 5 September 2005.
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 2006 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 year1
€’000
Transfer value equivalent
to the increase in accrued
pension benefit2
€’000
Total
accrued pension
benefit at year end3
€’000
Executive Directors
Tommy Breen
Kevin Murray
Fergal O’Dwyer
Total
8
16
7
31
69
161
55
285
131
123
97
351
Notes
1
2
3
Increases are after adjustment for inflation over the year and reflect additional pensionable service and salary.
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.
Figures represent the total accrued pension payable from normal retirement date, based on pensionable service at 31 March 2006.
46
report of the remuneration committee
Share options
DCC plc 1998 Employee Share
Option Scheme
Executive Directors and other senior
executives participate in the DCC plc
1998 Employee Share Option Scheme,
which was approved by shareholders
in 1998. The Scheme encourages
identification with shareholders’
interests by enabling management to
build, over time, a shareholding in the
Company which is material to their
net worth.
The percentage of share capital which
can be issued under the Scheme, the
phasing of the grant of options and
the limit on the value of options which
may be granted to any individual
comply with guidelines published
by the institutional investment
associations. The Scheme provides
for the grant of both basic and second
tier options, in each case up to a
maximum of 5% of the Company’s
issued share capital. Basic tier options
may not normally be exercised earlier
than three years from the date of
grant and second tier options not
earlier than five years from the date
of grant.
Basic tier options may normally be
exercised only if there has been
growth in the adjusted earnings per
share of the Company equivalent to
the increase in the Consumer Price
Index plus 2%, compound, per annum
over a period of at least three years
following the date of grant.
Second tier options may normally be
exercised only if the growth in the
adjusted earnings per share over a
period of at least five years is such
as would place the Company in the
top quartile of companies on the
ISEQ index in terms of comparison
of growth in adjusted earnings per
share and if there has been growth in
the adjusted earnings per share of the
Company equivalent to the increase in
the Consumer Price Index plus 10%,
compound, per annum in that period.
Directors are encouraged to hold
their options beyond the earliest
exercise date.
The following are details of share options granted to Directors and the Company Secretary under the DCC plc 1998
Employee Share Option Scheme:
At 31 March
2005
Granted in At 31 March Weighted average
exercise price
2006
year
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
375,000
395,000
-
-
375,000
395,000
8.3364
8.1063
June 2001 – Nov 2014
June 2003 – Nov 2012
180,000
190,000
10,000
-
190,000
190,000
9.4260
8.6786
June 2001 – Dec 2015
June 2003 – Nov 2012
180,000
190,000
10,000
-
190,000
190,000
9.4260
8.6786
June 2001 – Dec 2015
June 2003 – Nov 2012
155,000
165,000
10,000
-
165,000
165,000
9.2972
8.4366
June 2001 – Dec 2015
June 2003 – Nov 2012
75,000
80,000
7,500
-
82,500
80,000
10.1307
8.8716
June 2001 – Dec 2015
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.
report of the remuneration committee
47
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
provided for by the rules of the Scheme. These options are exercisable between June 2004 and September 2007. On 10
December 2004, a second grant of options under this Scheme was made to Group employees, not including executive
Directors, 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 December 2007 and March 2011. At 31 March 2006, Group employees held options to
subscribe for 884,988 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:
Executive Directors
Jim Flavin
Tommy Breen
Kevin Murray
Fergal O’Dwyer
Company Secretary
Gerard Whyte
No. of ordinary shares
at 31 March 2006
No. of ordinary shares
at 31 March 2005
2,383
2,383
2,383
2,383
2,006
2,383
2,383
2,383
2,383
2,006
The market price of DCC shares on 31 March 2006 was €19.20 and the range during the year was €14.92 to €19.65.
Additional information in relation to the DCC plc 1998 Employee Share Option Scheme and the DCC Sharesave Scheme
appears in note 10 on pages 75 to 78.
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 2006, together with their interests at 31 March 2005, were:
Directors
Alex Spain
Jim Flavin
Tony Barry
Róisín Brennan
Michael Buckley
Tommy Breen
Paddy Gallagher
Maurice Keane
Kevin Murray
Fergal O’Dwyer
Bernard Somers
Company Secretary
Gerard Whyte
No. of ordinary shares
at 31 March 2006
No. of ordinary shares
at 31 March 2005*
25,634
2,456,033
17,000
-
10,000
211,512
5,040
5,000
187,306
212,506
-
125,353
25,634
2,456,033
17,000
-
-
211,512
5,040
5,000
187,306
212,506
-
125,353
*At 5 September 2005 in respect of Róisín Brennan and Michael Buckley, being the date of their appointment.
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 2006 and 12 May 2006.
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 2006.
The Company’s Register of Directors Interests (which is open to inspection) contains full details of Directors’ shareholdings
and share options.
Directors’ service agreements
Other than for the Chief Executive/Deputy Chairman, there are no service agreements between any Director of the
Company and the Company or any of its subsidiaries. The Chief Executive/Deputy Chairman’s service agreement provides
for one year’s notice of termination by the Company.
48
statement of directors’
responsibilities
•
prepare the financial statements
on the going concern basis unless
it is inappropriate to presume that
the Group will continue in business.
The Directors confirm that they
have complied with the above
requirements in preparing the
financial statements.
The Directors are responsible for
keeping proper books of account
which disclose with reasonable
accuracy at any time the financial
position of the Company and to
enable them to ensure that the
financial statements are prepared in
accordance with IFRS and comply
with the provisions of the Companies
Acts, 1963 to 2005 and Article 4 of
the IAS Regulation.
The Directors have a general duty
to act in the best interests of the
Company and must, therefore, take
such steps as are reasonably open to
them to safeguard the assets of the
Group and to prevent and detect
fraud and other irregularities.
The following statement, which
should be read in conjunction with the
statement of Auditors’ responsibilities
set out within their report on pages
49 and 50, is made with a view to
distinguishing for shareholders the
respective responsibilities of the
Directors and of the Auditors in
relation to the financial statements.
The Directors are responsible for
preparing the Annual Report and the
financial statements in accordance
with International Financial Reporting
Standards (IFRS), the Companies
Acts, 1963 to 2005 and Article 4 of
the IAS Regulation.
Irish company law requires the
Directors to prepare financial
statements for each financial year
which give a true and fair view of the
state of affairs of the Company and
the Group and of the profit or loss of
the Group for that year.
In preparing the financial statements
of the Group, the Directors are
required to:
•
select and use suitable accounting
policies and apply them
consistently;
• make judgements and estimates
that are reasonable and prudent;
•
comply with applicable IFRS
subject to any material departures
disclosed and explained in the
financial statements; and
49
report of the independent auditors
for the year ended 31 March 2006
To the Members of DCC plc
We have audited the Group and
Parent Company financial statements
(the ‘financial statements’) of DCC plc
for the year ended 31 March 2006
which comprise the Group Income
Statement, the Group and Parent
Company Balance Sheets, the Group
and Parent Company Cash Flow
Statements, the Group and Parent
Company Statement of Recognised
Income and Expense and the related
notes. These financial statements
have been prepared under the
accounting policies set out therein.
Respective responsibilities
of Directors and Auditors
The Directors’ responsibilities for
preparing the Annual Report and
the Group financial statements in
accordance with applicable law and
International Financial Reporting
Standards (IFRS) as adopted by
the European Union, are set out
in the Statement of Directors’
Responsibilities.
Our responsibility is to audit the
financial statements in accordance
with relevant legal and regulatory
requirements and International
Standards on Auditing (UK and
Ireland). This report, including the
opinion, has been prepared for and
only for the Company’s members as a
body in accordance with Section 193
of the Companies Act, 1990 and for
no other purpose. We do not, in
giving this opinion, accept or assume
responsibility for any other purpose or
to any other person to whom this
report is shown or into whose hands
it may come save where expressly
agreed by our prior consent in writing.
We report to you our opinion as
to whether the Group financial
statements give a true and fair view,
in accordance with IFRS as adopted
by the European Union. We report to
you our opinion as to whether the
Parent Company financial statements
give a true and fair view, in accordance
with IFRS as adopted by the European
Union, as applied in accordance with
the provisions of the Companies Acts,
1963 to 2005. We also report to you
whether the financial statements
have been properly prepared in
accordance with Irish statute
comprising the Companies Act, 1963
to 2005 and Article 4 of the IAS
Regulation. We state whether we
have obtained all the information and
explanations we consider necessary
for the purposes of our audit, and
whether the financial statements are
in agreement with the books of
account. We also report to you our
opinion as to:
• whether the Company has kept
proper books of account;
• whether the Directors’ Report is
consistent with the financial
statements; and
• whether at the balance sheet date
there existed a financial situation
which may require the Company
to convene an extraordinary
general meeting of the Company;
such a financial situation may
exist if the net assets of the
Company, as stated in the
Company Balance Sheet, are not
more than half of its called-up
share capital.
We also report to you if, in our
opinion, any information specified by
law or the Listing Rules of the Irish
Stock Exchange regarding Directors’
remuneration and Directors’
transactions is not disclosed and,
where practicable, include such
information in our report.
and we report if it does not. We are
not required to consider whether the
Board’s statements on internal control
cover all risks and controls, or form an
opinion on the effectiveness of the
Group’s corporate governance
procedures or its risk and control
procedures.
We read the other information
contained in the Annual Report and
consider whether it is consistent with
the audited financial statements. The
other information comprises only the
Chairman’s Statement, the Chief
Executive’s Review, the Operating
and Financial Review, the Corporate
Social Responsibility Statement, the
Corporate Governance Statement and
the Directors’ Report. We consider
the implications for our report if we
become aware of any apparent
misstatements or material
inconsistencies with the financial
statements. Our responsibilities do
not extend to any other information.
Basis of audit opinion
We conducted our audit in
accordance with International
Standards on Auditing (UK and
Ireland) issued by the Auditing
Practices Board. An audit includes
examination, on a test basis, of
evidence relevant to the amounts
and disclosures in the financial
statements. It also includes an
assessment of the significant
estimates and judgments made by
the Directors in the preparation of the
financial statements, and of whether
the accounting policies are appropriate
to the Group’s and Company’s
circumstances, consistently applied
and adequately disclosed.
We review whether the Corporate
Governance statement reflects the
Company’s compliance with the nine
provisions of the Financial Reporting
Council’s 2003 Combined Code
specified for our review by the Listing
Rules of the Irish Stock Exchange,
We planned and performed our audit
so as to obtain all the information and
explanations which we considered
necessary in order to provide us with
sufficient evidence to give reasonable
assurance that the financial
statements are free from material
50
report of the independent auditors
its called-up share capital and, in our
opinion, on that basis there did not
exist at 31 March 2006 a financial
situation which under Section 40(1)
of the Companies (Amendment) Act,
1983 would require the convening of
an extraordinary general meeting of
the Company.
PricewaterhouseCoopers
Chartered Accountants and
Registered Auditors
Dublin
12 May 2006
misstatement, whether caused by
fraud or other irregularity or error.
In forming our opinion we also
evaluated the overall adequacy of
the presentation of information in
the financial statements.
Opinion
In our opinion:
•
•
the Group financial statements
give a true and fair view, in
accordance with IFRS as adopted
by the European Union, of the
state of the Group’s affairs as at
31 March 2006 and of its profit
and cash flows for the year then
ended;
the Parent Company financial
statements give a true and fair
view, in accordance with IFRS as
adopted by the European Union,
as applied in accordance with the
provisions of the Companies Acts,
1963 to 2005, of the state of the
Parent Company’s affairs as at 31
March 2006 and cash flows for
the year then ended;
•
the financial statements have
been properly prepared in
accordance with the Companies
Acts, 1963 to 2005 and Article 4
of the IAS Regulation.
We have obtained all the information
and explanations which we consider
necessary for the purposes of our
audit. In our opinion proper books of
account have been kept by the
Company. The Company Balance
Sheet is in agreement with the books
of account.
In our opinion the information given in
the Directors’ Report is consistent
with the financial statements.
The net assets of the Company, as
stated in the Company Balance Sheet
are more than half of the amount of
financial statements
51
group income statement
for the year ended 31 March 2006
2006
2005
exceptionals
€’000
Pre Exceptionals
(note 11)
€’000
Total exceptionals
€’000
€’000
Pre Exceptionals
(note 11)
€’000
Total
€’000
Note
3,436,292
(2,992,240)
444,052
(320,457)
-
-
-
2,841
3,436,292
(2,992,240)
444,052
(317,616)
2,644,728
(2,258,200)
386,528
(274,715)
-
-
-
(15,967)
2,644,728
(2,258,200)
386,528
(290,682)
123,595
2,841
126,436
111,813
(15,967)
95,846
(4,956)
118,639
(22,947)
15,906
25,474
137,072
-
2,841
(1,145)
-
-
1,696
(4,956)
121,480
(24,092)
15,906
25,474
138,768
(13,479)
125,289
123,764
1,525
125,289
153.92c
150.46c
(1,261)
110,552
(23,284)
17,590
16,807
121,665
-
(15,967)
(4,809)
-
-
(20,776)
(1,261)
94,585
(28,093)
17,590
16,807
100,889
(12,107)
88,782
87,760
1,022
88,782
109.68c
107.16c
Revenue
Cost of sales
Gross profit
Operating costs
Operating profit before
amortisation of
intangible assets
Amortisation of
intangible assets
Operating profit
Finance costs
Finance revenue
Share of associates’
profit after tax
Profit before tax
Income tax expense
4
5
4
4
12
12
14
15
Profit after tax for the financial year
Profit attributable to:
Equity holders of the Company
Minority interest
Earnings per ordinary share
Basic
Diluted
18
18
Alex Spain, Jim Flavin, Directors
52
financial statements
group statement of recognised
income and expense
for the year ended 31 March 2006
Note
32
15
15
15
Items of income and expense recognised directly within equity:
Currency translation effects
Group defined benefit pension obligations:
- actuarial gain/(loss)
- deferred tax asset
Deferred tax on share based payment
Gains relating to cash flow hedges (net)
Deferred tax liability on cash flow hedges
Net expense recognised directly in equity
Profit after tax for the financial year
Total recognised income and expense for the financial year
Attributable to:
Equity holders of the Company
Minority interest
Total recognised income and expense for the financial year
group statement of changes
in equity
for the year ended 31 March 2006
At 31 March
Impact of adoption of IAS 32 and 39
At 1 April
Issue of share capital
Share based payment
Share buyback
Dividends
Movement in minority interest
Note
10
17
Total recognised income and expense for the financial year attributable
to equity holders
At 31 March
2006
€’000
(4,779)
1,779
82
25
23
(3)
(2,873)
125,289
122,416
120,891
1,525
122,416
2006
€’000
492,219
(1,689)
490,530
3,344
1,840
-
(31,568)
366
120,891
585,403
2005
€’000
(5,565)
(7,742)
771
25
-
-
(12,511)
88,782
76,271
75,249
1,022
76,271
2005
€’000
462,816
-
462,816
6,858
1,003
(26,762)
(27,212)
267
75,249
492,219
financial statements
53
group balance sheet
as at 31 March 2006
Note
2006
€’000
2005
€’000
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments in associates
Deferred income tax assets
Derivative financial instruments
Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total assets
EQUITY
Capital and reserves attributable to equity holders
of the Company
Equity share capital
Share premium account
Other reserves
Other reserves - share options
Cash flow hedge reserve
Foreign currency translation reserve
Retained earnings
Minority interest
Total equity
LIABILITIES
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred income tax liabilities
Retirement benefit obligations
Deferred acquisition consideration
Capital grants
Current liabilities
Trade and other payables
Current income tax liabilities
Borrowings
Derivative financial instruments
Provisions for liabilities and charges
Deferred acquisition consideration
Total liabilities
Total equity and liabilities
Alex Spain, Jim Flavin, Directors
19
20
21
31
28
23
24
28
27
36
37
38
38
38
38
39
40
29
28
31
32
33
35
25
29
28
34
33
267,494
248,475
76,789
4,596
8,989
606,343
138,734
522,143
144
345,280
1,006,301
1,612,644
22,057
124,687
1,400
3,392
20
(10,344)
439,477
580,689
4,714
585,403
292,793
27,077
10,718
20,679
18,808
1,991
372,066
543,913
36,697
67,151
73
3,785
3,556
655,175
1,027,241
1,612,644
254,791
208,053
51,384
6,957
-
521,185
124,049
410,190
-
353,304
887,543
1,408,728
22,042
124,506
1,400
1,552
-
(5,565)
343,936
487,871
4,348
492,219
316,644
-
9,996
25,380
10,839
958
363,817
447,717
37,189
45,553
-
15,149
7,084
552,692
916,509
1,408,728
54
financial statements
group cash flow statement
for the year ended 31 March 2006
Cash generated from operations
Exceptional items
Interest paid
Income tax paid
Net cash flows from operating activities
Investing activities
Inflows
Proceeds from disposal of fixed assets
Capital grants received
Interest received
Outflows
Purchase of property, plant and equipment
Acquisition of subsidiaries
Purchase of minority interests
Deferred acquisition consideration paid
Net cash flows from investing activities
Financing activities
Inflows
Proceeds from issue of shares
Increase in interest-bearing loans and borrowings
Outflows
Share buyback
Repayment of interest-bearing loans and borrowings
Repayment of finance lease liabilities
Dividends paid to equity holders of the Company
Dividends paid to minority interests
Net cash flows from financing activities
Change in cash and cash equivalents
Translation adjustment
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash and cash equivalents consists of:
Cash and short term bank deposits
Overdrafts
Note
41
35
17
40
30
27
30
30
2006
€’000
142,922
(15,377)
(20,573)
(12,157)
94,815
11,223
1,174
13,650
26,047
(57,652)
(48,625)
(506)
(5,580)
(112,363)
(86,316)
3,344
36,624
39,968
-
(663)
(5,973)
(31,568)
(201)
(38,405)
1,563
10,062
(4,541)
314,397
319,918
345,280
(25,362)
319,918
2005
€’000
116,396
(6,560)
(15,627)
(9,289)
84,920
7,875
-
12,833
20,708
(43,647)
(77,288)
(905)
(2,955)
(124,795)
(104,087)
6,858
213,244
220,102
(26,762)
(88,918)
(5,062)
(27,212)
(176)
(148,130)
71,972
52,805
(10,074)
271,666
314,397
353,304
(38,907)
314,397
financial statements
55
company balance sheet
as at 31 March 2006
ASSETS
Non-current assets
Investments in associates
Investments in subsidiary undertakings
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
EQUITY
Capital and reserves attributable to equity holders
of the Company
Equity share capital
Share premium account
Other reserves
Retained earnings
Total equity
LIABILITIES
Non-current liabilities
Amounts due to subsidiary undertakings
Deferred acquisition consideration
Current liabilities
Trade and other payables
Deferred acquisition consideration
Total liabilities
Total equity and liabilities
Alex Spain, Jim Flavin, Directors
Note
2006
€’000
2005
€’000
21
22
24
27
36
37
38
39
33
25
33
1,300
161,072
162,372
263,187
157
263,344
425,716
22,057
124,687
344
55,556
202,644
10,387
-
10,387
212,685
-
212,685
223,072
425,716
1,300
145,814
147,114
277,799
248
278,047
425,161
22,042
124,506
344
41,128
188,020
10,387
139
10,526
223,791
2,824
226,615
237,141
425,161
56
financial statements
company statement of changes
in equity
for the year ended 31 March 2006
At 1 April
Profit after tax for the financial year
Issue of share capital
Share buyback
Dividends
At 31 March
Note
16
17
2006
€’000
188,020
42,848
3,344
-
(31,568)
202,644
2005
€’000
234,156
980
6,858
(26,762)
(27,212)
188,020
financial statements
57
company cash flow statement
for the year ended 31 March 2006
Profit for the year
Add back non-operating (income)/expense
- Tax
- Net finance costs
Operating profit
Depreciation
Profit on sale of property, plant and equipment
Changes in working capital:
- Trade and other receivables
- Trade and other payables
Cash generated from operations
Interest paid
Income tax (paid)/received
Net cash flows from operating activities
Investing activities
Inflows
Proceeds from disposal of fixed assets
Interest received
Outflows
Purchase of property, plant and equipment
Deferred acquisition consideration paid
Additional investment in subsidiary undertakings
Net cash flows from investing activities
Financing activities
Inflows
Dividends received
Proceeds from issue of shares
Outflows
Share buyback
Dividends paid to equity holders of the Company
Net cash flows from financing activities
Change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
26
26
22
17
2006
€’000
(1,651)
1,199
(4,168)
(4,620)
-
-
14,612
(11,106)
(1,114)
(907)
(1,199)
(3,220)
-
5,075
5,075
-
(2,963)
(15,258)
(18,221)
(13,146)
44,499
3,344
47,843
-
(31,568)
(31,568)
16,275
(91)
248
157
2005
€’000
915
(53)
(3,830)
(2,968)
94
(15)
14,420
32,683
44,214
(867)
53
43,400
15
4,697
4,712
(242)
(938)
-
(1,180)
3,532
65
6,858
6,923
(26,762)
(27,212)
(53,974)
(47,051)
(119)
367
248
58
notes to the financial statements
1. Summary of significant accounting policies
Statement of compliance
The consolidated financial statements of DCC plc have been prepared in accordance with International Financial Reporting
Standards (‘IFRS’) and their interpretations approved by the International Accounting Standards Board (‘IASB’) as adopted
by the European Union (‘EU’) and those parts of the Companies Acts, 1963 to 2005 applicable to companies reporting
under IFRS. Both the Parent Company and the Group financial statements have been prepared in accordance with IFRS as
adopted by the EU. In presenting the Parent Company financial statements together with the Group financial statements,
the Company has availed of the exemption in Section 148(8) of the Companies Act 1963 and section 7(1A) of the
Companies (Amendment) Act 1986 not to present its individual Income Statement and related notes that form part of the
approved Company financial statements.
The accounting policies applied in the preparation of the financial statements for the year ended 31 March 2006 are set
out below. These policies have been applied consistently with the exception of those accounting policies pertaining to IAS
32 Financial Instruments: Disclosure and Presentation and IAS 39 Financial Instruments: Recognition and Measurement
which in accordance with the transitional provisions of IFRS 1 First-time Adoption of International Financial Reporting
Standards were not applied in the restatement of the 2005 comparatives presented in these financial statements.
These consolidated financial statements are the Group’s first financial statements to be prepared in accordance with IFRS.
The IFRS adopted by the EU applied by the Company and Group in the preparation of these financial statements are those
that were effective at 31 March 2006 together with the early adoption of the Amendment to IAS 19 Actuarial
Gains and Losses, Group Plans and Disclosures.
Basis of preparation
The consolidated financial statements, which are presented in euro, rounded to the nearest thousand, have been prepared
under the historical cost convention, as modified by the measurement at fair value of share options and derivative financial
instruments. The carrying values of recognised assets and liabilities that are hedged are adjusted to record changes in the
fair values attributable to the risks that are being hedged.
The accounting policies set out below have been applied consistently by Group entities to all periods presented in these
consolidated financial statements and in preparing the opening IFRS Balance Sheet as at 1 April 2004 for the purposes of
the transition to IFRS reporting with the exception of IAS 32 and IAS 39 which, as noted above, were not applied in the
restatement of the 2005 comparatives.
The transition to IFRS is accounted for in accordance with IFRS 1. This standard sets out how to adopt IFRS for the first
time and mandates that most standards are to be fully applied retrospectively. There are certain limited exemptions from
this requirement. The impact of IFRS on the financial statements for the year ended 31 March 2005 and the significant
decisions taken in respect of availing, or otherwise, of the exemptions available on the transition to IFRS are outlined in
note 47 to the financial statements.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. In
addition, it requires management to exercise judgement in the process of applying the Company’s accounting policies.
The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant
to the consolidated financial statements, relate primarily to accounting for defined benefit pension schemes and goodwill
impairment and are documented in the relevant accounting policies below.
Standards, interpretations and amendments to published standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards which are relevant to the Group have been
published that are mandatory for the Group’s accounting periods beginning on or after 1 April 2006 or later periods but
which the Group has not early adopted. These include the following:
IFRS 7 Financial Instruments: Disclosures;
Amendment to IAS 1 Capital Disclosures;
Amendment to IAS21 Net Investment in a Foreign Operation;
Amendment to IAS 39 Cash Flow Hedge Accounting of Forecast Intragroup Transactions;
notes to the financial statements
59
1. Summary of significant accounting policies - continued
Amendment to IAS 39 The Fair Value Option;
Amendment to IAS 39 Transition and Initial Recognition of Financial Assets and Financial Liabilities;
Amendment to IAS 39 and IFRS 4 Financial Guarantee Contracts;
IFRIC Interpretation 4 Determining whether an Arrangement contains a Lease; and
IFRIC Interpretation 8 Scope of IFRS 2.
Adoption of IFRS
The Group and Company are required to determine their IFRS accounting policies and apply them retrospectively to
establish their opening balance sheets under IFRS at the date of transition. The transitional impact of the recognition and
measurement of IFRS as disclosed in the Restatement of Financial Information under IFRS was published by the Group
on 30 September 2005. IFRS 1 First-time Adoption of International Financial Reporting Standards allows a number of
exemptions on adoption of IFRS for the first time. The date of transition to IFRS for the Group and Company is 1 April 2004.
Standards adopted during the financial year
The Group has adopted the following standards during the financial year ended 31 March 2006 and comparative figures
have been amended as required: IAS 1 Presentation of Financial Statements; IAS 2 Inventories; IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors; IAS 10 Events after the Balance Sheet Date; IAS 16 Property, Plant and
Equipment; IAS 17 Leases; IAS 21 The Effects of Changes in Foreign Exchange Rates; IAS 24 Related Party Disclosures;
IAS 27 Consolidated and Separate Financial Statements; IAS 28 Investments in Associates; IAS 31 Interests in Joint
Ventures and IAS 33 Earnings per Share.
As permitted under IFRS1, the Group applied hedge accounting in accordance with Irish GAAP for the year ended 31
March 2005 and adopted IAS 32 Financial Instruments: Disclosure and Presentation and IAS 39 Financial Instruments:
Recognition and Measurement from 1 April 2005.
Early adoption
The Group decided to avail of early application of the Amendment to IAS 19 Actuarial Gains and Losses, Group Plans and
Disclosures, which enables the recognition of actuarial gains and losses through retained income. Accordingly, the
revised disclosure requirements inherent in this Amendment have been reflected in the Group financial statements for the
year ended 31 March 2006.
Basis of consolidation
Subsidiaries
The results of subsidiary undertakings acquired or disposed of during the year are included in the consolidated Income
Statement from the date of their acquisition or up to the date of their disposal.
A subsidiary is one where the Group has the power, directly or indirectly, to govern the financial and operating policies of
the entity, so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered in assessing whether the Group controls the entity.
Joint ventures
In accordance with IAS 31 Interests in Joint Ventures, the Group’s share of results and net assets of joint ventures, which
are entities in which the Group holds an interest on a long-term basis and which are jointly controlled by the Group and one
or more other ventures under a contractual arrangement, are accounted for on the basis of proportionate consolidation
from the date on which the contractual agreements stipulating joint control are finalised and are derecognised when joint
control ceases. All of the Group’s joint ventures are jointly controlled entities within the meaning of IAS 31. The Group
combines its share of the joint ventures’ individual income and expenses, assets and liabilities and cash flows on a
line-by-line basis with similar items in the Group’s financial statements.
Associates
Associates 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 has a significant influence.
Associates are included in the Company Balance Sheet at cost less provision for any impairment in value. Income from
associates included in the Company Income Statement comprises dividends received and receivable.
The appropriate share of results of associates is included in the Group Income Statement by way of the equity method of
accounting. Associates are stated in the Group Balance Sheet at cost plus the attributable portion of their retained
reserves from the date of acquisition.
Goodwill attributable to investments in associates is treated in accordance with the accounting policy for goodwill.
60
notes to the financial statements
1. Summary of significant accounting policies - continued
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains arising from such transactions, are eliminated in preparing
the consolidated financial statements. Unrealised gains arising from transactions with joint ventures and associates are
eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same manner as
unrealised gains, but only to the extent that there is no evidence of impairment.
Revenue recognition
Revenue comprises the invoiced value, including excise duty and excluding value added tax, of goods supplied and
services rendered. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Group, that it can be reliably measured and that the significant risks and rewards of ownership of the goods have passed
to the buyer.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable.
Dividend income from investments is recognised when shareholders’ rights to receive payment have been established.
Segment reporting
A segment is a distinguishable component of the Group that is engaged either in providing products or services (business
segment), or in providing products or services within a particular economic environment (geographical segment), which is
subject to risks and rewards that are different from those other segments. Arising from the Group’s internal organisational
structure and its system of internal financial reporting, segmentation by business is regarded as being the predominant
source and nature of the risks and returns facing the Group and is thus the primary segment. Geographical segmentation
is the secondary segment.
Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in euro which is the Company’s functional and the Group’s
presentation currency. Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates.
Transactions and balances
Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet
date. Currency translation differences on monetary assets and liabilities are taken to the consolidated Income Statement
except where hedge accounting is applied.
Group companies
Results and cash flows of subsidiaries, joint ventures and associates which do not have the euro as their functional
currency are translated into euro at average exchange rates for the year, and the related balance sheets are translated at
the rates of exchange ruling at the balance sheet date. Adjustments arising on translation of the results of such
subsidiaries, joint ventures and associates at average rates, and on the restatement of the opening net assets at closing
rates, are dealt with in a separate translation reserve within equity, net of differences on related currency instruments
designated as hedges of such investments.
On disposal of a foreign operation, such cumulative currency translation differences are recognised in the Income
Statement as part of the overall gain or loss on disposal. Cumulative currency translation differences arising prior to the
transition date have been set to zero for the purposes of ascertaining the gain or loss on disposal of a foreign operation
subsequent to 1 April 2004.
Goodwill and fair value adjustments arising on acquisition of a foreign operation are regarded as assets and liabilities of
the foreign operation, are expressed in the functional currency of the foreign operation and are recorded at the exchange
rate at the date of the transaction and subsequently retranslated at the applicable closing rates.
Exceptional items
The Group has adopted an Income Statement format which seeks to highlight significant items within the Group results
for the year. Such items may include restructuring, profit or loss on disposal or termination of operations, litigation costs
and settlements, profit or loss on disposal of investments and impairment of assets. Judgement is used by the Group in
assessing the particular items, which by virtue of their scale and nature, should be disclosed in the Income Statement and
related notes as exceptional items.
notes to the financial statements
61
1. Summary of significant accounting policies - continued
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is provided on a straight-line basis at the rates stated below, which are estimated to reduce each item of
property, plant and equipment to its residual value level by the end of its useful life:
Freehold and long term leasehold buildings
Plant and machinery
Cylinders
Motor vehicles
Fixtures, fittings & office equipment
Annual rate
2%
5 - 331/3%
62/3%
10 - 331/3%
10 - 331/3%
Land is not depreciated. The residual values and useful lives of property, plant and equipment are reviewed, and adjusted
if appropriate, at each balance sheet date.
In accordance with IAS 36 Impairment of Assets, the carrying amounts of items of property, plant and equipment are
reviewed at each balance sheet date to determine whether there is any indication of impairment. An impairment loss is
recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in the Income Statement. Following the recognition of an impairment loss, the
depreciation charge applicable to the asset or cash-generating unit is adjusted prospectively in order to systematically
allocate the revised carrying amount, net of any residual value, over the remaining useful life.
Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the replaced
item can be measured reliably. All other repair and maintenance costs are charged to the Income Statement during the
financial period in which they are incurred.
Borrowing costs directly attributable to the construction of property, plant and equipment are capitalised as part of the
cost of those assets.
Business combinations
The purchase method of accounting is employed in accounting for the acquisition of subsidiaries by the Group. The Group
has elected to avail of the exemption under IFRS 1 First-time Adoption of International Financial Reporting Standards
whereby business combinations prior to the transition date of 1 April 2004 are not restated. IFRS 3 Business Combinations
has been applied with effect from the transition date of 1 April 2004 and goodwill amortisation ceased from that date.
The cost of a business combination is measured as the aggregate of the fair value at the date of exchange of assets
given, liabilities incurred or assumed and equity instruments issued in exchange for control together with any directly
attributable expenses. Where acquisitions involve further payments which are deferred or contingent on levels of
performance achieved in the years following the acquisition, the fair value of the deferred component is determined
through discounting the amounts payable to their present value. The discount component is unwound as an interest
charge in the Income Statement over the life of the obligation. When the initial accounting for a business combination is
determined provisionally, any adjustments to the provisional values allocated to assets and liabilities are made within
twelve months of the acquisition date and reflected as a restatement of the acquisition balance sheet.
Minority interests
The interest of minority shareholders is stated at the minority’s proportion of the fair values of the assets and liabilities
recognised. Subsequently, any losses applicable to the minority interest in excess of the minority interest are allocated
against interests of the parent.
Goodwill
Goodwill arising in respect of acquisitions completed prior to 1 April 2004 (being the transition date to IFRS) is included at
its carrying amount, which equates to its net book value recorded under previous GAAP. In line with the provisions
applicable to a first-time adopter under IFRS the accounting treatment of business combinations undertaken prior to the
transition date has not been reconsidered in preparing the opening IFRS Balance Sheet at 1 April 2004 and goodwill
amortisation has ceased with effect from the transition date.
Goodwill written off to reserves under Irish GAAP prior to 1 April 1998 has not been reinstated and is not included in
determining any subsequent profit or loss on disposal. Goodwill on acquisitions is initially measured at cost being the
excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities.
62
notes to the financial statements
1. Summary of significant accounting policies - continued
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill relating to
acquisitions from 1 April 2004 and goodwill carried in the Balance Sheet at 1 April 2004 is not amortised. Goodwill is
reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value
may be impaired.
The carrying amount of goodwill in respect of associates, net of any impairment, is included in investments in associates
under the equity method in the Group Balance Sheet.
Goodwill was tested for impairment as at 1 April 2004, the date of transition to IFRS, and no impairment resulted from
this exercise.
Goodwill acquired in a business combination is allocated, from the acquisition date, to the respective cash-generating
units. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is subject to impairment testing on an annual basis and at any time during the year if an indicator of impairment
is considered to exist; the goodwill impairment tests are undertaken at a consistent time in each annual period.
Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates.
Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is
recognised. Impairment losses arising in respect of goodwill are not reversed following recognition.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit are disposed of, the
goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining
the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on the basis of the
relative values of the operation disposed of and the proportion of the cash-generating unit retained.
Intangible assets (other than goodwill)
Intangible assets acquired separately are capitalised at cost. Intangible assets acquired in the course of a business
combination are capitalised at fair value being their deemed cost as at the date of acquisition.
Following initial recognition, intangible assets which have a finite life are carried at cost less any applicable accumulated
amortisation and any accumulated impairment losses. Where amortisation is charged on assets with finite lives this
expense is taken to the Income Statement.
The amortisation of intangible assets is calculated to write-off the book value of intangible assets over their useful lives on
a straight-line basis on the assumption of zero residual value. In general, definite-lived intangible assets are amortised over
periods ranging from three to five years, depending on the nature of the intangible asset.
Leases
Property, plant and equipment, acquired under a lease which transfers substantially all of the risks and rewards of
ownership to the Group, are capitalised as property, plant and equipment and are depreciated over their useful lives with
any impairment being recognised in the Income Statement. 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 Income Statement over the term of the lease so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. The
annual rentals under operating leases are charged to the Income Statement on a straight-line basis over the lease term.
Inventories
Inventories 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 inventories
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 inventories.
notes to the financial statements
63
1. Summary of significant accounting policies - continued
Trade and other receivables and payables
Trade and other receivables and payables are stated at cost, which approximates to fair value given the short-dated nature
of these assets and liabilities.
A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be
able to collect all amounts due according to the original terms of receivables. The amount of the provision is the
difference between the asset’s carrying amount and the present value of estimated future cash flows. The amount of the
provision is recognised in the Income Statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity of three
months or less.
Derivative financial instruments - accounting policy for the year ended 31 March 2006
The Group uses derivative financial instruments (principally interest rate, currency and cross currency interest rate swaps
and forward foreign exchange and commodity contracts) to hedge its exposure to interest rate and foreign exchange risks
and to changes in the prices of certain commodity products arising from operational, financing and investment activities.
Derivative financial instruments are recognised on inception at fair value, being the present value of estimated future cash
flows. The method of recognition of gains or losses on subsequent re-measurement of fair value depends on the nature
of the item being hedged.
Hedging
For the purposes of hedge accounting, hedges are designated either as fair value hedges (which entail hedging the
exposure to movements in the fair value of a recognised asset or liability or a firm commitment that are attributable to
hedged risks) or cash flow hedges (which hedge exposure to fluctuations in future cash flows derived from a particular
risk associated with a recognised asset or liability or a highly probable forecast transaction).
Fair value hedge
In the case of fair value hedges which satisfy the conditions for hedge accounting, any gain or loss arising from the re-
measurement of the fair value of the hedging instrument is reported in the Income Statement within ‘Finance Costs’. In
addition, any gain or loss on the hedged item which is attributable to the hedged risk is adjusted against the carrying
amount of the hedged item and reflected in the Income Statement within ‘Finance Costs’.
If a hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of the hedged item is
amortised to the Income Statement over the period to maturity.
Cash flow hedge
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset
or liability or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial
instrument is recognised as a separate component of equity with the ineffective portion being reported in the Income
Statement. When a forecast transaction results in the recognition of an asset or a liability, the cumulative gain or loss is
removed from equity and included in the initial measurement of the asset or liability. Otherwise, the associated gains or
losses that had previously been recognised in equity are transferred to the Income Statement in the same reporting
period as the hedged transaction.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the Income Statement. When a forecast transaction is no longer expected to occur, the
cumulative gain or loss that was reported in equity is immediately transferred to the Income Statement.
Derivative financial instruments - accounting policy for the year ended 31 March 2005
Gains and losses on derivative contracts used to hedge foreign exchange and commodity price trading exposures were
recognised in the Income Statement when the hedged transactions occurred.
Gains and losses on foreign currency swap agreements used to convert US dollar borrowings into euro and sterling
borrowings were deferred to be recognised on the maturity of the underlying debt, together with the matching loss or
gain on the debt.
Amounts payable or receivable in respect of interest rate swap agreements and similar contracts used to manage interest
rate exposures were recognised as adjustments to interest expense over the period of the contracts.
64
notes to the financial statements
1. Summary of significant accounting policies - continued
Interest-bearing loans and borrowings
All loans and borrowings are initially recorded at cost being the fair value of the consideration received net of transaction
costs associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost employing
the effective interest yield method. Amortised cost is calculated by taking into account any issue costs and any discount
or premium on settlement. Gains and losses are recognised in the Income Statement when the liabilities are
derecognised or impaired, as well as through the amortisation process.
Provisions
A provision is recognised in the Balance Sheet when the Group has a present obligation (either legal or constructive) as a
result of a past event, and it is probable that a transfer of economic benefits will be required to settle the obligation.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan and
announced its main provisions.
Provisions arising on business combinations are only recognised to the extent that they would have qualified for
recognition in the financial statements of the acquirer prior to the acquisition.
A contingent liability is not recognised but is disclosed where the existence of the obligation will only be confirmed by
future events or where the amount of the obligation cannot be measured with reasonable reliability. Contingent assets are
not recognised but are disclosed where an inflow of economic benefits is probable.
Income tax
Current tax
Current tax represents the expected tax payable or recoverable on the taxable profit for the year using tax rates enacted
or substantively enacted at the balance sheet date and taking into account any adjustments stemming from prior years.
Deferred tax
Deferred tax is provided using the liability method on all temporary differences at the balance sheet date which is defined
as the difference between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax assets and liabilities are not subject to discounting and are measured at the tax rates that are anticipated to
apply in the year in which the asset is realised or the liability is settled.
Deferred tax liabilities are recognised for all taxable temporary differences with the exception of the following:
(i) where the deferred tax liability arises from the initial recognition of goodwill or the initial recognition of an asset or a
liability in a transaction that is not a business combination and affects neither the accounting profit nor the taxable
profit or loss at the time of the transaction; and
(ii) where, in respect of taxable temporary differences associated with investments in subsidiaries and joint ventures, the
timing of the reversal of the temporary difference is subject to control and it is probable that reversal will not occur in
the foreseeable future.
Deferred tax assets are recognised in respect of all deductible temporary differences, carry-forward of unused tax credits
and unused tax losses to the extent that it is probable that taxable profits will be available against which to offset these
items except:
(i) where the deferred tax asset arises from the initial recognition of an asset or a liability in a transaction that is not a
business combination and affects neither the accounting profit nor the taxable profit or loss at the time of the
transaction; and
(ii) where, in respect of deductible temporary differences associated with investment in subsidiaries, joint ventures and
associates, a deferred tax asset is recognised only if it is probable that the deductible temporary difference will
reverse in the foreseeable future and that sufficient taxable profits will be available against which the temporary
difference can be utilised.
The carrying amounts of deferred tax assets are reviewed at each balance sheet date and are reduced to the extent
that it is no longer probable that sufficient taxable profit would be available to allow all or part of the deferred tax asset
to be utilised.
notes to the financial statements
65
1. Summary of significant accounting policies - continued
Pension and other post employment obligations
The Group operates defined contribution and defined benefit pension schemes.
The costs arising in respect of the Group’s defined contribution schemes are charged to the Income Statement in the
period in which they are incurred. The Group has no legal or constructive obligation to pay further contributions after
payment of fixed contributions.
The Group operates a number of defined benefit pension schemes which require contributions to be made to separately
administered funds. The liabilities and costs associated with the Group’s defined benefit pension schemes are assessed
on the basis of the projected unit credit method by professionally qualified actuaries and are arrived at using actuarial
assumptions based on market expectations at the balance sheet date. The Group's net obligation in respect of defined
benefit pension schemes is calculated separately for each plan by estimating the amount of future benefits that
employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine
its present value, and the fair value of any plan asset is deducted.
The discount rate employed in determining the present value of the schemes' liabilities is determined by reference to
market yields at the balance sheet date on high quality corporate bonds of a currency and term consistent with the
currency and term of the associated post-employment benefit obligations.
The net surplus or deficit arising in the Group's defined benefit pension schemes are shown within either non-current
assets or liabilities on the face of the Group Balance Sheet. The deferred tax impact of pension scheme surpluses and
deficits is disclosed separately within deferred tax liabilities or assets as appropriate. The Group has elected to avail of the
Amendment to IAS 19 Employee Benefits to recognise post transition date actuarial gains and losses immediately in the
Statement of Recognised Income and Expense.
When the benefits of a defined benefit plan are improved, the portion of the increased benefit relating to past service by
employees is recognised as an expense in the Income Statement on a straight-line basis over the average period until the
benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the
Income Statement.
Share-based payment transactions
Employees (including Directors) of the Group receive remuneration in the form of share-based payment transactions,
whereby employees render service in exchange for shares or rights over shares.
The fair value of share entitlements granted is recognised as an employee expense in the Income Statement with a
corresponding increase in equity. The fair value is determined using a binomial model for the DCC plc 1998 Employee
Share Option Scheme and the Black Scholes option valuation model for the DCC Sharesave Scheme. Non-market based
vesting conditions are not taken into account when estimating the fair value of entitlements as at the grant date. The
expense in the Income Statement represents the product of the total number of options anticipated to vest and the fair
value of those options. This amount is allocated on a straight-line basis over the vesting period to the Income Statement
with a corresponding credit to Other Reserves - Share Options. The cumulative charge to the Income Statement is only
reversed where entitlements do not vest because non-market performance conditions have not been met or where an
employee in receipt of share entitlements relinquishes service before the end of the vesting period.
The proceeds received by the Company on the vesting of share entitlements are credited to Share Capital (nominal value)
and Share Premium when the share entitlements are exercised. When the share-based payments give rise to the re-issue
of shares from treasury shares, the proceeds of issue are credited to shareholders equity.
In line with the transitional arrangements set out in IFRS 2 Share-based Payment the recognition and measurement
principles of this standard have been applied only in respect of share entitlements granted after 7 November 2002 and
which have not vested by 1 January 2005. The Group does not operate any cash-settled share-based payment schemes
or share-based payment transactions with cash alternatives as defined in IFRS 2.
Grants
Grants are recognised at their fair value when there is a reasonable assurance that the grant will be received and all
attaching conditions have been complied with.
Capital grants received and receivable by the Group are credited to capital grants and are amortised to the Income
Statement on a straight-line basis over the expected useful lives of the assets to which they relate.
Revenue grants are recognised as income over the periods necessary to match the grant on a systematic basis to the
costs that it is intended to compensate.
66
notes to the financial statements
1. Summary of significant accounting policies - continued
Share capital
Treasury shares
Where the Company purchases the Company’s equity share capital, the consideration paid is deducted from total
shareholders’ equity and classified as treasury shares until they are cancelled. Where such shares are subsequently sold
or reissued, any consideration received is included in total shareholders’ equity.
Dividends
Dividends on Ordinary Shares are recognised as a liability in the Group’s financial statements in the period in which they
are approved by the shareholders of the Company. Dividends declared after the balance sheet date are disclosed in the
dividends note.
2. Financial risk management
Financial risk factors
The Group uses derivative financial instruments (principally interest rate, currency and cross currency interest rate swaps
and forward foreign exchange and commodity contracts) to hedge certain risk exposures, as detailed below, arising from
operational, financing and investment activities. The Group does not trade in financial instruments nor does it enter into
any leveraged derivative transactions.
Financial risk management within the Group is governed by policies and guidelines reviewed and approved annually by the
Board of Directors. These policies and guidelines primarily cover foreign exchange risk, commodity price risk, credit risk,
liquidity risk and interest rate risk. Monitoring of compliance with the policies and guidelines is managed by the Enterprise
Risk Management function.
(i) Market risk
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to sterling and the US dollar. Foreign exchange risk arises from future commercial transactions,
recognised assets and liabilities and net investments in foreign operations.
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a
currency that is not the entity’s functional currency. Divisional and subsidiary management, in conjunction with Group
Treasury, manage foreign currency exposures within approved policies and guidelines using forward currency contracts.
The Group generally hedges between 50% and 90% of transactions in each major currency for the subsequent 2 months.
The Group also hedges approximately 50% of anticipated transactions in certain subsidiaries generally for periods up to 6
months with such transactions qualifying as ‘highly probable’ forecast transactions for IAS 39 hedge accounting purposes.
The Group has investments in sterling operations which are highly cash generative. The Group seeks to manage the
resultant foreign currency translation risk through borrowings denominated in or swapped (utilising currency swaps or
cross currency interest rate swaps) into sterling, although this is more than offset by the strong cumulative cash flow
from the Group’s sterling operations.
Price risk
The Group is exposed to commodity price risk in its LPG and oil distribution businesses. The Group generally hedges
approximately 50% of its anticipated LPG commodity price exposure for the subsequent month with such transactions
qualifying as ‘highly probable’ forecast transactions for IAS 39 hedge accounting purposes.
Certain customers occasionally require fixed price oil supply contracts generally for periods less than six months. In such
circumstances, the Group enters into matching forward commodity contracts, not designated as hedges under IAS 39.
The Group is not exposed to equity securities price risk.
(ii) Credit risk
The Group has no significant concentrations of credit risk. The Group primarily sells to business customers and has
policies in place to ensure that customers have an appropriate credit history. Sales, principally comprising home heating
fuels, to non-business customers are made in cash, by direct debit or via major credit cards. Derivative counterparties and
cash transactions are limited to high credit quality financial institutions. The Group has policies that limit the amount of
credit exposure to any financial institution.
notes to the financial statements
67
2. Financial risk management - continued
(iii) Liquidity risk
The Group maintains a strong balance sheet with long term debt funding and cash balances with deposit maturities up to
six months. In addition, the Group maintains significant uncommitted credit lines with its relationship banks.
(iv) Cash flow and fair value interest rate risk
The Group borrows at both fixed and floating rates of interest. The Group has swapped its fixed rate borrowings to
floating interest rates, using interest rate and cross currency interest rate swaps which qualify for fair value hedge
accounting under IAS 39. The Group mitigates interest rate risk on its borrowings by matching, to the extent possible, the
maturity of its cash balances with the interest rate reset periods on the swaps related to its borrowings.
The Group also utilises interest rate swaps to swap certain floating rate sterling assets and liabilities into fixed rate sterling
assets and liabilities. The notional principal amounts on these swaps offset.
Fair value estimation
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.
The quoted market price used for financial assets held by the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined by using valuation techniques. The Group uses a variety of techniques and makes assumptions that are based
on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for similar instruments
are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value
for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the
estimated future cash flows. The fair value of forward foreign exchange contracts is determined using quoted forward
exchange rates at the balance sheet date.
The nominal value less impairment provision of trade receivables and payables are assumed to approximate their fair values.
68
notes to the financial statements
3. Critical accounting estimates and judgements
The Group’s main accounting policies affecting its results of operations and financial condition are set out on pages 58 to
66. Judgements and assumptions have been made by management in applying the Group’s accounting policies in certain
areas. Actual results may differ from the estimates calculated using these judgements and assumptions. Key sources of
estimation uncertainty and critical accounting judgements are as follows:
Goodwill
The Group has capitalised goodwill of €234.7 million at 31 March 2006. Goodwill is required to be tested for impairment
at least annually or more frequently if changes in circumstances or the occurrence of events indicating potential impairment
exist. The Company uses the present value of future cash flows to determine implied fair value. In calculating the implied
fair value, management judgement is required in forecasting cash flows of reporting units, in estimating terminal growth
values and in selecting an appropriate discount rate. No impairment resulted from the annual impairment test in 2006.
Post-retirement benefits
The Group operates a number of defined benefit retirement plans. The Group’s total obligation in respect of defined
benefit plans is calculated by independent, qualified actuaries, updated at least annually and totals €88.0 million. The
Group also has plan assets totalling €67.3 million giving a net pension liability of €20.7 million for the Group. The size of
the obligation is sensitive to actuarial assumptions. These include demographic assumptions covering mortality and
longevity, and economic assumptions covering price inflation, benefit and salary increases together with the discount rate
used. The size of the plan assets is also sensitive to asset return levels and the level of contributions from the Group.
4. Segment information
Analysis by business segment and by geography
The Group is analysed into five main business segments: DCC Energy, DCC SerCom, DCC Healthcare, DCC Food &
Beverage and DCC Environmental.
> DCC Energy markets and sells liquefied petroleum gas and oil products for commercial/industrial, transport and
domestic use in Britain and Ireland. DCC Energy also includes a fuel card services business.
> DCC SerCom markets and sells a broad range of IT and entertainment products in Britain, Ireland and Continental
Europe to computer resellers, high street retailers, computer superstores, on-line retailers and mail order companies.
DCC SerCom also includes a supply chain management business.
> DCC Healthcare markets and sells medical, surgical, laboratory, intravenous pharmaceutical, rehabilitation and
independent living products to the acute care, community care and laboratory sectors in Britain and Ireland. DCC
Healthcare is also a leading provider of contract manufacturing services to the health and beauty industry in Europe.
> DCC Food & Beverage markets and sells food and beverages in Ireland and wine in Britain. These include healthy
foods, snackfoods, fresh coffee and wine to a broad range of catering, convenience store, food service and multiple
grocer customers. DCC Food & Beverage is also a leading provider of frozen food distribution in Ireland.
> DCC Environmental provides a broad range of waste management services to the industrial/commercial sectors in
Britain and Ireland.
Intersegment revenue is not material and thus not subject to separate disclosure.
notes to the financial statements
69
4. Segment information - continued
The segment results for the year ended 31 March 2006 are as follows:
Income statement items
Year ended 31 March 2006
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage
€’000
DCC
Environmental
€’000
Total
€’000
Segment revenue
1,831,608
1,084,606
211,701
276,917
31,460
3,436,292
Operating profit*
Amortisation of
intangible assets
55,965
25,015
21,636
15,467
5,512
123,595
(1,043)
54,922
(1,580)
23,435
(1,325)
20,311
(1,008)
14,459
-
5,512
Operating exceptional items (note 11)
Operating profit
Finance costs (including non-operating exceptional items)
Share of associates’ profit after tax
Profit before income tax
Income tax expense
Profit for the year
*Operating profit before amortisation of intangible assets and exceptional items
(4,956)
118,639
2,841
121,480
(8,186)
25,474
138,768
(13,479)
125,289
Year ended 31 March 2005
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage
€’000
DCC
Environmental
€’000
Total
€’000
Segment revenue
1,240,551
983,483
162,279
232,635
25,780
2,644,728
Operating profit*
Amortisation of
intangible assets
51,806
26,292
15,441
12,827
(260)
51,546
-
26,292
(355)
15,086
(646)
12,181
5,447
-
5,447
Operating exceptional items (note 11)
Operating profit
Finance costs (including non-operating exceptional items)
Share of associates’ profit after tax
Profit before income tax
Income tax expense
Profit for the year
*Operating profit before amortisation of intangible assets and exceptional items
111,813
(1,261)
110,552
(15,967)
94,585
(10,503)
16,807
100,889
(12,107)
88,782
70
notes to the financial statements
4. Segment information - continued
Balance sheet items
As at 31 March 2006
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage
€’000
DCC
Environmental
€’000
Total
€’000
Segment assets
483,616
372,834
151,076
128,894
40,426
1,176,846
Reconciliation to total assets as reported in the Group Balance Sheet
Investment in associates
Derivative financial instruments (current and non-current)
Deferred income tax assets
Cash and cash equivalents
Total assets as reported in the Group balance sheet
76,789
9,133
4,596
345,280
1,612,644
Segment liabilities
278,138
185,090
40,746
59,567
4,836
568,377
Reconciliation to total liabilities as reported in the Group balance sheet
Interest-bearing loans and borrowings (current and non-current)
Derivative financial instruments (current and non-current)
Income tax liabilities (current and deferred)
Deferred acquisition consideration
Capital grants
Total liabilities as reported in the Group balance sheet
359,944
27,150
47,415
22,364
1,991
1,027,241
Net tangible capital employed
As at 31 March 2006
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage
€’000
DCC
Environmental
€’000
Total
€’000
Segment assets
Intangible assets
Deferred income tax
assets
Assets employed
483,616
(75,827)
1,141
408,930
372,834
(59,898)
-
312,936
151,076
(63,621)
2,811
90,266
128,894
(35,987)
644
93,551
40,426
(13,142)
1,176,846
(248,475)
-
27,284
4,596
932,967
Segment liabilities
Income tax liabilities
(current and deferred)
Capital grants
Liabilities employed
Net tangible
capital employed
278,138
185,090
40,746
59,567
4,836
568,377
21,853
-
299,991
8,485
322
193,897
9,866
1,246
51,858
5,486
-
65,053
1,725
423
6,984
47,415
1,991
617,783
108,939
119,039
38,408
28,498
20,300
315,184
notes to the financial statements
71
4. Segment information - continued
Balance sheet items
As at 31 March 2005
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage
€’000
DCC
Environmental
€’000
Total
€’000
Segment assets
430,822
267,739
133,736
130,368
34,418
997,083
Reconciliation to total assets as reported in the Group balance sheet
Investment in associates
Deferred income tax assets
Cash and cash equivalents
Total assets as reported in the Group Balance Sheet
51,384
6,957
353,304
1,408,728
Segment liabilities
238,862
145,260
39,234
59,902
4,988
488,246
Reconciliation to total liabilities as reported in the Group balance sheet
Interest-bearing loans and borrowings (current and non-current)
Income tax liabilities (current and deferred)
Deferred acquisition consideration
Capital grants
Total liabilities as reported in the Group balance sheet
Net tangible capital employed
As at 31 March 2005
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage
€’000
DCC
Environmental
€’000
Segment assets
Intangible assets
Deferred income tax
assets
Assets employed
430,822
(71,842)
1,234
360,214
267,739
(27,772)
1,067
241,034
133,736
(56,402)
4,066
81,400
130,368
(39,893)
411
90,886
34,418
(12,144)
179
22,453
362,197
47,185
17,923
958
916,509
Total
€’000
997,083
(208,053)
6,957
795,987
Segment liabilities
Income tax liabilities
(current and deferred)
Capital grants
Liabilities employed
Net tangible
capital employed
238,862
145,260
39,234
59,902
4,988
488,246
22,420
-
261,282
9,806
368
155,434
8,940
114
48,288
3,418
-
63,320
2,601
476
8,065
47,185
958
536,389
98,932
85,600
33,112
27,566
14,388
259,598
72
notes to the financial statements
4. Segment information - continued
Other segment information
Year ended 31 March 2006
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage
€’000
DCC
Environmental
€’000
Capital expenditure
26,884
11,303
10,305
Depreciation
21,321
2,748
4,194
5,028
3,491
4,332
2,388
Total
€’000
57,852
34,142
Amortisation of
intangible assets
(1,043)
(1,580)
(1,325)
(1,008)
-
(4,956)
Year ended 31 March 2005
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage
€’000
DCC
Environmental
€’000
Capital expenditure
17,303
11,036
Depreciation
19,997
4,314
4,427
3,302
3,940
3,234
6,875
2,020
Total
€’000
43,581
32,867
Amortisation of
intangible assets
(260)
-
(355)
(646)
-
(1,261)
Geographical analysis
The following is a geographical analysis of the segment information presented above.
Year ended 31 March
Ireland
UK
2006
€’000
2005
€’000
2006
€’000
2005
€’000
Rest of the World
2006
2005
€’000
€’000
Total
2006
€’000
2005
€’000
Income statement items
Revenue
995,848
861,149
2,259,954 1,633,374
180,490
150,205
3,436,292
2,644,728
51,683
40,917
68,904
69,719
3,008
1,177
123,595
111,813
(1,703)
49,980
(178)
40,739
(3,071)
65,833
(1,083)
68,636
(182)
2,826
-
1,177
(4,956)
118,639
(1,261)
110,552
Operating profit*
Amortisation of
intangible assets
Segment result
Balance sheet items
Segment assets
Segment liabilities
435,089
215,994
379,156
204,068
670,101
330,018
561,809
267,806
71,656
22,365
56,118
16,372
1,176,846
568,377
997,083
488,246
Other segment information
Capital expenditure
18,667
17,723
38,823
25,386
Depreciation
12,060
13,516
21,597
18,779
362
485
472
572
57,852
43,581
34,142
32,867
*Operating profit before amortisation of intangible assets and exceptional items
notes to the financial statements
73
5. Operating costs
Selling and distribution costs
Administrative expenses
Other expenses
Other income
Total operating costs*
* before operating exceptional items (note 11)
Other operating expenses and income comprise the following charges/(credits):
Other expenses
Expensing of employee share options
Other operating expenses
Other income
Fair value gains on undesignated derivative financial instruments
- forward foreign exchange contracts (net)
- commodity contracts (net)
Other operating income
6. Group operating profit
2006
€’000
168,758
157,349
1,931
(7,581)
320,457
2005
€’000
144,562
133,468
1,018
(4,333)
274,715
1,840
91
1,931
(297)
(55)
(7,229)
(7,581)
1,003
15
1,018
-
-
(4,333)
(4,333)
Group operating profit has been arrived at after charging/(crediting) the following amounts (including the Group’s share of
joint ventures accounted for on the basis of proportionate consolidation):
Amortisation of capital grants
Operating lease rentals
- land and buildings
- plant and machinery
- motor vehicles
Audit fees
Acquisition related due diligence and litigation support
Tax compliance and advisory services
7. Directors’ emoluments and interests
2006
€’000
2005
€’000
(112)
(155)
5,758
265
3,079
9,102
1,075
166
1,711
2,952
4,629
160
3,359
8,148
982
809
1,580
3,371
Directors’ emoluments and interests (which are included in operating costs above) are presented in the Report of the
Remuneration Committee on pages 44 to 47.
74
notes to the financial statements
8. Proportionate consolidation of joint ventures
Impact on group income statement
Year ended 31 March
Group share of:
Revenue
Cost of sales
Gross profit
Operating costs
Operating profit
Finance costs (net)
Profit before income tax
Income tax expense
Group profit for the financial year
Impact on group balance sheet
As at 31 March
Group share of:
Non-current assets
Current assets
Total assets
Total equity
Non-current liabilities
Current liabilities
Total liabilities
Total equity and liabilities
Impact on group cash flow statement
Year ended 31 March
Group share of:
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Reconciliation of cash and cash equivalents to net cash/(debt)
Cash and cash equivalents as above
Interest-bearing loans and borrowings (current and non-current)
Net cash/(debt) at 31 March
Details of the Group’s principal joint ventures are shown on page 116.
2006
€’000
20,283
(11,985)
8,298
(5,495)
2,803
(66)
2,737
(404)
2,333
9,597
2,983
12,580
8,077
1,224
3,279
4,503
12,580
2,484
(1,314)
(125)
1,045
479
1,524
1,524
(1,055)
469
2005
€’000
16,801
(9,624)
7,177
(5,387)
1,790
(64)
1,726
(288)
1,438
8,902
9,172
18,074
13,151
1,332
3,591
4,923
18,074
1,274
(1,626)
(2,004)
(2,356)
2,835
479
479
(1,180)
(701)
notes to the financial statements
75
9. Employment
The average weekly number of persons (including executive Directors and the Group’s share of employees of joint
ventures, applying proportionate consolidation) employed by the Group during the year analysed by class of business was:
DCC Energy
DCC SerCom
DCC Healthcare
DCC Food & Beverage
DCC Environmental
The staff costs for the above were:
Wages and salaries
Social welfare costs
Share based payment expense (note 10)
Pension costs - defined contribution plans
Pension costs - defined benefit plans (note 32)
10. Employee share options
2006
number
2005
number
1,779
1,321
929
907
173
5,109
2006
€’000
174,860
18,033
1,840
4,816
3,062
202,611
1,733
1,284
742
833
154
4,746
2005
€’000
157,924
16,679
1,003
3,639
3,421
182,666
The Group’s employee share options are equity-settled share-based payments as defined in IFRS 2 Share-based Payment.
The IFRS requires that a recognised valuation methodology be employed to determine the fair value of share options
granted. The expense reported in the Income Statement of €1.840 million (2005: €1.003 million) has been arrived at
through applying the binomial model, which is a lattice option-pricing model, for options issued under the DCC plc 1998
Employee Share Option Scheme and the Black Scholes option valuation model for options issued under the DCC
Sharesave Scheme 2001.
Impact on income statement
In compliance with the transitional provisions set out in IFRS 2 Share-based Payment the Group has elected to implement
the measurement requirements of the IFRS in respect of share options that were granted after 7 November 2002 that
had not vested as at 1 January 2005, the effective date of the standard.
The total expense is analysed as follows:
Date of grant
Grant
price
€
Duration
of vesting
period
Number of
options
granted
Weighted
average
fair value
€
Expense in
income statement
2006
€’000
2005
€’000
DCC plc 1998 Employee Share Option Scheme
12 November 2002
22 December 2003
18 May 2004
9 November 2004
15 December 2005
3 and 5 years
3 and 5 years
3 and 5 years
3 and 5 years
3 and 5 years
10.38
10.70
12.75
15.65
16.70
609,500
132,000
162,500
219,500
215,000
DCC Sharesave Scheme 2001
10 December 2004
Total expense
12.63
3 and 5 years
716,010
2.81
2.76
3.42
4.15
4.52
4.67
349
94
150
269
79
941
899
1,840
394
94
125
90
-
703
300
1,003
76
notes to the financial statements
10. Employee share options - continued
Share options
DCC plc 1998 Employee Share Option Scheme
Under the DCC plc 1998 Employee Share Option Scheme, Group employees hold basic tier options to subscribe for
2,281,244 ordinary shares and second tier options to subscribe for 2,308,000 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.
Basic tier options may normally be exercised only if there has been growth in the adjusted earnings per share of the
Company equivalent to the increase in the Consumer Price Index plus 2%, compound, per annum over a period of at least
three years following the date of grant.
Second tier options may normally be exercised only if the growth in the adjusted earnings per share over a period of at
least five years is such as would place the Company in the top quartile of companies on the ISEQ index in terms of
comparison of growth in adjusted earnings per share and if there has been growth in the adjusted earnings per share of
the Company equivalent to the increase in the Consumer Price Index plus 10%, compound, per annum in that period.
A summary of activity under the DCC plc 1998 Employee Share Option Scheme over the year is as follows:
At 1 April
Granted
Exercised
Lapsed
At 31 March
2006
2005
Average
exercise
price in €
per share
9.11
16.70
8.64
11.42
9.47
Average
exercise
price in €
per share
8.52
14.42
7.65
9.55
9.11
Options
4,781,284
215,000
(354,040)
(53,000)
4,589,244
Options
5,104,084
382,000
(666,300)
(38,500)
4,781,284
Total exercisable at 31 March
8.07
3,032,744
7.76
2,994,784
The weighted average fair values assigned to options granted under the DCC plc 1998 Employee Share Option Scheme,
which were computed in accordance with the binomial valuation methodology, were as follows:
Granted during the year ended 31 March 2003
Granted during the year ended 31 March 2004
Granted during the year ended 31 March 2005
Granted during the year ended 31 March 2006
3 year
€
2.66
2.67
3.79
4.52
5 year
€
2.86
2.84
3.93
4.52
Weighted
average
€
2.81
2.76
3.84
4.52
The fair values of options granted under the DCC plc 1998 Employee Share Option Scheme were determined using the
following assumptions:
Weighted average exercise price (in €)
Risk-free interest rate (%)
Dividend yield (%)
Expected volatility (%)
Expected life in years
2006
2005
3 year
5 year
3 year
5 year
16.70
4.40
2.50
25.0
8.0
16.70
4.40
2.50
25.0
8.0
14.62
3.84
2.09
25.0
8.0
14.04
3.92
2.14
25.0
8.0
The expected volatility is based on historic volatility over the past 8 years. The expected life is the average expected
period to exercise. The risk free rate of return is the yield on zero coupon government bonds of a term consistent with
the assumed option life.
notes to the financial statements
77
10. Employee share options - continued
Analysis of closing balance – outstanding at end of year
Date of grant
26 June 1998
27 July 1998
4 August 1998
6 August 1998
10 November 1998
11 May 1999
9 November 1999
16 May 2000
21 November 2000
15 May 2001
13 November 2001
10 June 2002
12 November 2002
22 December 2003
18 May 2004
9 November 2004
15 December 2005
Total outstanding at 31 March
Date of expiry
26 June 2008
27 July 2008
4 August 2008
6 August 2008
10 November 2008
11 May 2009
9 November 2009
16 May 2010
21 November 2010
15 May 2011
13 November 2011
10 June 2012
12 November 2012
22 December 2013
18 May 2014
9 November 2014
15 December 2015
Analysis of closing balance – exercisable at end of year
Date of grant
26 June 1998
27 July 1998
4 August 1998
6 August 1998
10 November 1998
11 May 1999
9 November 1999
16 May 2000
21 November 2000
15 May 2001
13 November 2001
12 November 2002
Total exercisable at 31 March
Date of expiry
26 June 2008
27 July 2008
4 August 2008
6 August 2008
10 November 2008
11 May 2009
9 November 2009
16 May 2010
21 November 2010
15 May 2011
13 November 2011
12 November 2012
Exercise
price in €
per share
8.19
8.13
7.43
7.43
6.22
8.75
7.00
10.65
11.25
-
10.25
12.20
10.38
10.70
12.75
15.65
16.70
Exercise
price in €
per share
8.19
8.13
7.43
7.43
6.22
8.75
7.00
10.65
11.25
-
10.25
10.38
2006
2005
Exercise
price in €
per share
8.19
8.13
7.43
7.43
6.22
8.75
7.00
10.65
11.25
10.95
10.25
12.20
10.38
10.70
12.75
15.65
-
Options
468,000
73,000
60,000
29,510
689,000
12,000
847,500
50,000
258,500
-
815,734
5,000
567,500
132,000
152,000
214,500
215,000
4,589,244
2006
2005
Exercise
price in €
per share
8.19
8.13
7.43
7.43
6.22
8.75
7.00
10.65
11.25
10.95
10.25
-
Options
468,000
73,000
60,000
29,510
689,000
12,000
847,500
50,000
258,500
-
402,234
143,000
3,032,744
Options
537,000
81,000
60,000
57,784
783,500
12,000
867,500
57,500
353,500
15,000
835,500
10,000
597,000
132,000
162,500
219,500
-
4,781,284
Options
537,000
81,000
60,000
57,784
783,500
12,000
867,500
25,000
146,500
7,500
417,000
-
2,994,784
78
notes to the financial statements
10. Employee share options - continued
DCC Sharesave Scheme 2001
Under the DCC Sharesave Scheme 2001, Group employees hold options to subscribe for 884,988 ordinary shares.
Options are granted at a discount of 20% to the market price as provided for by the rules of the Scheme. Movements in
the number of share options outstanding and their related weighted average exercise prices are as follows:
At 1 April
Granted
Exercised
Lapsed
At 31 March
Total exercisable at 31 March
Analysis of closing balance – outstanding at end of year
Date of grant
Date of expiry
15 June 2001
15 June 2001
10 December 2004
10 December 2004
Total outstanding at 31 March
1 September 2005
1 September 2007
1 March 2009
1 March 2011
Analysis of closing balance – exercisable at end of year
Date of grant
Date of expiry
Average
exercise
price in €
per share
11.53
-
9.23
12.35
11.47
-
Exercise
price in €
per share
-
8.79
12.63
12.63
Exercise
price in €
per share
15 June 2001
Total exercisable at 31 March
1 September 2005
-
2006
2005
Average
exercise
price in €
per share
8.79
12.63
8.79
9.52
11.53
8.79
Options
986,912
-
(9,667)
(92,257)
884,988
-
2006
2005
Exercise
price in €
per share
8.79
8.79
12.63
12.63
Options
-
268,036
326,352
290,600
884,988
2006
2005
Exercise
price in €
per share
8.79
Options
-
-
Options
528,746
716,010
(192,548)
(65,296)
986,912
1,592
Options
1,592
281,641
385,817
317,862
986,912
Options
1,592
1,592
The weighted average fair values assigned to options granted under the DCC Sharesave Scheme 2001 which were
computed in accordance with the Black Scholes option valuation model were as follows:
Granted during year ended 31 March 2005
3 year
€
4.43
5 year
€
4.95
Weighted
average
€
4.67
The fair values of options granted under the DCC Sharesave Scheme 2001 were determined using the following
assumptions:
Exercise price (in €)
Risk-free interest rate (%)
Dividend yield (%)
Expected volatility (%)
Expected life in years
2005
3 year
12.63
4.40
2.50
25.0
3.0
5 year
12.63
4.40
2.50
25.0
5.0
The expected volatility is based on historic volatility. The expected life is the average expected period to exercise. The
risk free rate of return is the yield on zero coupon government bonds of a term consistent with the assumed option life.
notes to the financial statements
79
11. Exceptional items
Costs of legal action with Fyffes plc and others
Provision for recovery of legal costs from Fyffes plc
Restructuring costs and other
Operating exceptional items
Foreign exchange losses on intercompany financing loans to 30 September 2005
2006
€’000
(5,147)
8,500
(512)
2,841
(1,145)
1,696
2005
€’000
(6,154)
-
(9,813)
(15,967)
(4,809)
(20,776)
On 21 December 2005, the Irish High Court found in favour of DCC and Others in the case taken against them by Fyffes
plc, under Part V of the Irish Companies Act 1990, in relation to the sale of shares by Lotus Green in February 2000. In
dismissing Fyffes’ claim against all of the defendants, the Court held that the share sales were entirely lawful and that
none of the defendants had any liability arising from the sales of the shares in Fyffes in February 2000.
On 10 February 2006, the Irish High Court decided that Fyffes should pay most of DCC’s costs in relation to Fyffes’ failed
legal action against the Group. DCC expects to recoup approximately €8.5 million from Fyffes following this High Court
order and, accordingly, has accrued this amount as a credit under exceptional operating costs.
On 7 April 2006, Fyffes announced its intention to lodge an appeal to the Irish Supreme Court seeking to overturn the
decision of the Irish High Court in relation to Fyffes’ failed legal action against DCC plc and Others. Fyffes’ appeal will be
challenged vigorously and comprehensively and DCC is confident that there are no good grounds of appeal and that the
detailed and considered decision of the High Court will be upheld.
On 29 November 2005, the Hsinchu District Court in Taiwan issued a judgement ordering that the London High Court
order obtained by DCC’s subsidiary, Days Healthcare, against Pihsiang Machinery Manufacturing Company Limited (a
Taiwanese public company), Donald Wu (its chairman and major shareholder) and Jenny Wu (his wife and director) be
enforced in Taiwan. Accordingly, as at 31 March 2006, these parties are jointly and severally liable to pay the DCC Group
Stg£14.3 million (€20.5 million), including Stg£2.1 million in accrued interest. DCC has not accrued any of this amount
due pending the outcome of an appeal by the Defendants to the Taiwanese High Court, but has expensed all the litigation
costs.
Certain intercompany loans had been treated under Irish GAAP as part of net investment in foreign operations and foreign
exchange gains or losses arising on these loans had been recognised directly in reserves. On transition from Irish GAAP,
certain of these loans between fellow subsidiaries do not qualify under IFRS as part of net investment in foreign
operations and therefore gains or losses on these loans must be recognised in the Income Statement.
The financial impact of the above is a charge to the Income Statement of €1.145 million for the year ended 31 March
2006 (2005: charge of €4.809 million) in respect of foreign exchange losses and the amounts are included in exceptional
items.
The majority of the intercompany balances which gave rise to these accounting charges (previously taken to reserves)
were restructured during the year ended 31 March 2005 and the half year ended 30 September 2005 so as to eliminate
accounting volatility from 30 September 2005 onwards.
80
notes to the financial statements
12. Finance costs and finance revenue
Finance costs
On bank loans, overdrafts and Unsecured Notes due 2008 to 2016
- repayable within 5 years, not by instalments
- repayable within 5 years, by instalments
- repayable wholly or partly in more than 5 years
On loan notes
- repayable within 5 years, not by instalments
On finance leases
Other interest
Other finance costs:
Interest on defined benefit pension scheme liabilities
Unwinding of discount applicable to deferred acquisition consideration
Net foreign exchange transaction gains
Mark-to-market of swaps and related debt
- interest rate swaps designated as fair value hedges*
- cross currency interest rate swaps designated as fair value hedges*
- adjusted hedged fixed rate debt*
- currency swaps not designated as hedges
- interest rate swaps not designated as hedges
Finance revenue
Interest on cash and term deposits
Other interest and similar income receivable
Expected return on defined benefit pension scheme assets
2006
€’000
2005
€’000
(11,144)
(35)
(7,618)
(16)
(845)
(242)
(19,900)
(3,804)
(298)
297
(3,644)
3,786
(10,996)
11,569
43
(22,947)
12,381
46
3,479
15,906
(10,585)
-
(7,113)
(30)
(1,122)
(494)
(19,344)
(3,940)
-
-
-
-
-
-
-
(23,284)
14,064
9
3,517
17,590
Net finance cost before exceptional item
Net finance cost - exceptional item (note 11)
(7,041)
(5,694)
(1,145)
(4,809)
* The Group has adopted fair value hedge accounting under IAS 39 (note 29) in relation to fixed rate debt and related
interest rate and cross currency interest rate swaps.
13. Foreign currency
The exchange rates used in translating sterling Balance Sheets and Income Statement amounts were as follows:
Balance Sheet (closing rate)
Income Statement (average rate)*
2006
€1=Stg£
2005
€1=Stg£
0.697
0.682
0.689
0.672
* The average exchange rate for the year ended 31 March 2005 has been adjusted for the impact of forward foreign
exchange contracts used to hedge sterling profits for that year.
notes to the financial statements
81
14. Share of associates’ profit after tax
The Group’s share of associates’ profit after tax is equity-accounted and is presented as a single line item in the Group
Income Statement. The profit after tax generated by the Group’s associates is analysed as follows:
Group share of:
Revenue
Profit before finance costs
Finance costs (net)
Profit before income tax
Income tax expense
Profit after tax
15. Income tax expense
(i) Income tax expense recognised in the income statement
Current taxation
Irish Corporation Tax at 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
(Over)/under provision in respect of prior years
Total deferred tax
Total income tax expense
(ii) Deferred tax liability/(asset) recognised directly in equity
Defined benefit pension obligations
Share based payments
Cash flow hedges
2006
€’000
2005
€’000
92,672
86,796
30,795
(94)
30,701
(5,227)
25,474
20,065
(305)
19,760
(2,953)
16,807
2006
€’000
2005
€’000
7,142
(657)
3,494
1,457
-
11,436
(59)
2,567
113
(578)
2,043
2,582
(575)
7,538
619
(1,529)
8,635
253
2,182
-
1,037
3,472
13,479
12,107
2006
€’000
(82)
(25)
3
(104)
2005
€’000
(771)
(25)
-
(796)
82
notes to the financial statements
15. Income tax expense - continued
(iii) Reconciliation of effective tax rate
Profit on ordinary activities before taxation
Share of associates’ profit after tax
Amortisation of intangible assets
Total income tax expense
Deferred tax attaching to amortisation of intangible assets
Taxation as a percentage of profit before share of associates’ profit after tax and
amortisation of intangible assets
Impact of non-taxable exceptional items
Taxation as a percentage of profit before share of associates’ profit after tax,
amortisation of intangible assets and exceptional items
2006
€’000
138,768
(25,474)
4,956
118,250
13,479
595
14,074
2005
€’000
100,889
(16,807)
1,261
85,343
12,107
-
12,107
11.9%
0.2%
14.2%
(2.8%)
12.1%
11.4%
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
Effect of earnings taxed at higher rates
Over provision in respect of prior years
2006
%
12.5
(0.5)
(0.1)
-
11.9
2005
%
12.5
(0.5)
2.6
(0.4)
14.2
(iv) Factors that may affect future tax rates and other disclosures
The standard rate of corporation tax in Ireland is 12.5%. Manufacturing relief is scheduled to expire in the year 2010.
No provision for tax has been recognised in respect of the unremitted earnings of subsidiaries as there is no commitment
to remit earnings. Similarly, no deferred tax assets or liabilities have been recognised in respect of temporary differences
associated with investments in subsidiaries.
16. Profit attributable to DCC plc
Profit after taxation for the year attributable to equity shareholders amounting to €42.848 million (2005: €0.980 million)
has been accounted for in the financial statements of the Company. In accordance with Section 148(8) of the Companies
Act 1963 and Section 7(1A) of the Companies (Amendment) Act 1986, the Company is availing of the exemption from
presenting its individual Income Statement to the Annual General Meeting and from filing it with the Registrar of
Companies.
17. Dividends
Dividends paid and proposed per Ordinary Share are as follows:
Final - paid 23.75 cent per share on 11 July 2005
(paid 20.65 cent per share on 14 July 2004)
Interim - paid 15.54 cent per share on 1 December 2005
(2005: paid 13.51 cent per share on 1 December 2004)
2006
€’000
2005
€’000
19,073
16,401
12,495
10,811
31,568
27,212
The Directors are proposing a final dividend in respect of the year ended 31 March 2006 of 27.31 cent per ordinary share
(€22.044 million). This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.
notes to the financial statements
83
18. Earnings per ordinary share
Profit attributable to equity holders of the Company
Amortisation of intangible assets after tax
Exceptional items (note 11)
Adjusted profit after taxation and minority interests
Basic earnings per ordinary share
Basic earnings per ordinary share
Amortisation of intangible assets after tax
Exceptional items
Adjusted basic earnings per ordinary share
2006
€’000
123,764
4,361
(1,696)
126,429
2006
cent
153.92c
5.42c
(2.11c)
157.23c
2005
€’000
87,760
1,261
20,776
109,797
2005
cent
109.68c
1.58c
25.96c
137.22c
Weighted average number of ordinary shares in issue during the year (thousands)
80,408
80,018
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and
held as treasury shares. The adjusted figures for basic earnings per ordinary share are intended to demonstrate the
results of the Group after eliminating the impact of amortisation of intangible assets and exceptional items.
Diluted earnings per ordinary share
Diluted earnings per ordinary share
Amortisation of intangible assets after tax
Exceptional items
Adjusted diluted earnings per ordinary share
2006
cent
150.46c
5.30c
(2.06c)
153.70c
2005
cent
107.16c
1.54c
25.37c
134.07c
Diluted weighted average number of ordinary shares (thousands)
82,255
81,898
The earnings used for the purpose of the diluted earnings per share calculations were €123.764 million (2005: €87.760
million) and €126.429 million (2005: €109.797 million) for the purposes of the adjusted diluted earnings per share
calculations.
The weighted average number of ordinary shares used in calculating the diluted earnings per share for the year ended 31
March 2006 was 82.255 million (2005: 81.898 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:
2006
2005
Weighted average number of ordinary shares in issue
Dilutive effect of options and partly paid shares
Dilutive effect of shares potentially issuable under deferred contingent consideration arrangements
Weighted average number of ordinary shares for diluted earnings per share
80,408
1,794
53
82,255
80,018
1,798
82
81,898
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to
assume conversion of all dilutive potential ordinary shares. The Company has two categories of dilutive potential ordinary
shares, share options and shares potentially issuable under deferred contingent consideration arrangements.
Employee share options, which are performance-based, are treated as contingently issuable shares because their issue is
contingent upon satisfaction of specified performance conditions in addition to the passage of time. These contingently
issuable shares are excluded from the computation of diluted earnings per ordinary share where the conditions governing
exercisability have not been satisfied as at the end of the reporting period. The shares potentially issuable under deferred
contingent consideration arrangements are assumed to have been converted into ordinary shares.
The adjusted figures for diluted earnings per ordinary share are intended to demonstrate the results of the Group after
eliminating the impact of amortisation of intangible assets and exceptional items.
84
notes to the financial statements
19. Property, plant and equipment
Group
Year ended 31 March 2006
Opening net book amount
Exchange differences
Acquisition of subsidiaries (note 45)
Additions
Disposals
Depreciation charge
Reclassifications
Closing net book amount
At 31 March 2006
Cost
Accumulated depreciation
Net book amount
Year ended 31 March 2005
Opening net book amount
Exchange differences
Acquisition of subsidiaries (note 45)
Additions
Disposals
Depreciation charge
Closing net book amount
At 31 March 2005
Cost
Accumulated depreciation
Net book amount
At 1 April 2004
Cost
Accumulated depreciation
Net book amount
Land &
buildings
€’000
Plant &
machinery
& cylinders
€’000
Fixtures &
fittings &
office
equipment
€’000
100,166
(610)
290
13,404
(6,608)
(2,167)
(7,431)
97,044
110,384
(13,340)
97,044
72,027
(1,136)
19,241
13,928
(1,980)
(1,914)
100,166
116,319
(16,153)
100,166
86,458
(14,431)
72,027
106,850
(1,073)
358
20,441
(3,049)
(15,920)
(287)
107,320
283,516
(176,196)
107,320
102,331
(2,242)
8,035
16,256
(449)
(17,081)
106,850
286,376
(179,526)
106,850
265,918
(163,587)
102,331
18,185
(334)
479
11,905
(624)
(6,646)
7,840
30,805
71,500
(40,695)
30,805
17,330
(569)
955
6,549
(1)
(6,079)
18,185
57,730
(39,545)
18,185
50,076
(32,746)
17,330
Motor
vehicles
€’000
29,590
(319)
1,610
12,102
(1,127)
(9,409)
(122)
32,325
Total
€’000
254,791
(2,336)
2,737
57,852
(11,408)
(34,142)
-
267,494
75,674
(43,349)
32,325
541,074
(273,580)
267,494
26,932
(586)
5,192
6,848
(1,003)
(7,793)
29,590
68,038
(38,448)
29,590
61,770
(34,838)
26,932
218,620
(4,533)
33,423
43,581
(3,433)
(32,867)
254,791
528,463
(273,672)
254,791
464,222
(245,602)
218,620
Assets held under finance leases
The net carrying amount and the depreciation charge during the year in respect of assets held under finance leases and
accordingly capitalised in property, plant and equipment are as follows:
Cost
Accumulated depreciation
Net carrying amount
Depreciation charge for the year
2006
€’000
64,004
(60,434)
3,570
2005
€’000
65,085
(60,117)
4,968
1,178
2,404
20. Intangible assets
Group
Year ended 31 March 2006
Opening net book amount
Exchange differences
Arising on acquisition (note 45)
Other movements
Amortisation charge
Closing net book amount
At 31 March 2006
Cost
Accumulated amortisation
Net book amount
Year ended 31 March 2005
Opening net book amount
Arising on acquisition (note 45)
Other movements
Amortisation charge
Closing net book amount
At 31 March 2005
Cost
Accumulated amortisation
Net book amount
At 1 April 2004
Cost
Accumulated amortisation
Net book amount
notes to the financial statements
85
Goodwill
€’000
Customer
relationships
€’000
Total
€’000
208,053
(886)
49,607
(3,343)
(4,956)
248,475
282,310
(33,835)
248,475
131,446
79,571
(1,703)
(1,261)
208,053
236,932
(28,879)
208,053
11,333
(45)
7,450
-
(4,956)
13,782
19,999
(6,217)
13,782
-
12,594
-
(1,261)
11,333
12,594
(1,261)
11,333
-
-
-
159,064
(27,618)
131,446
196,720
(841)
42,157
(3,343)
-
234,693
262,311
(27,618)
234,693
131,446
66,977
(1,703)
-
196,720
224,338
(27,618)
196,720
159,064
(27,618)
131,446
Goodwill acquired in business combinations is allocated, at acquisition, to the cash-generating units (CGUs) that are
expected to benefit from that business combination. A summary of the allocation of the carrying value of goodwill by
segment is as follows:
DCC Energy
DCC SerCom
DCC Healthcare
DCC Food & Beverage
DCC Environmental
2006
€’000
72,075
55,005
61,129
33,342
13,142
234,693
2005
€’000
67,035
27,708
53,672
36,161
12,144
196,720
Impairment testing of goodwill
Goodwill acquired through business combinations is monitored for impairment by review of the underlying performance of
each individual acquisition compared to pre-acquisition objectives and budgets. Goodwill is also tested for impairment by
review of profit and cash flow forecasts and budgets.
Goodwill acquired through business combinations has been allocated to cash-generating units (CGUs) for the purpose of
impairment testing. The CGUs represent the lowest level within the Group at which the associated goodwill is monitored
for management purposes and are not larger than the primary and secondary segments determined in accordance with
IAS 14 Segment Reporting.
86
notes to the financial statements
20. Intangible assets - continued
The recoverable amount of each CGU is based on a value in use computation. The cash flow forecasts employed for this
computation are extracted from a three year plan and specifically exclude future acquisition activity. Cash flows for a
further two years are based on the assumptions underlying the three year plan. A terminal value reflecting inflation is
applied to the year five cash flows. A present value of the future cash flows is calculated using a before-tax discount rate
representing the Group’s estimated before-tax average cost of capital (6.8%). Applying these techniques, no impairment
arose in 2006 (2005: nil).
Key assumptions include management’s estimates of future profitability, capital expenditure requirements, working capital
investment and tax considerations. Forecasts are generally based on historical performance together with management’s
expectation of future trends affecting the industry and other developments and initiatives in the business.
Useful lives of intangible assets
The useful lives of all intangible assets (excluding goodwill) are finite and range from three to five years depending on the
nature of the asset.
21. Investments in associates
Group
At 1 April
Acquired as a subsidiary (note 45)
Share of profit less dividends
Exchange adjustments and other
At 31 March
2006
€’000
51,384
-
26,098
(693)
76,789
2005
€’000
42,001
(7,916)
17,470
(171)
51,384
Details of the Group’s principal associates are shown on page 116.
Investments in associates at 31 March 2006 includes goodwill of €1.201 million (2005: €1.201 million).
The Group’s geographical share of the assets (including goodwill) and liabilities of its associates is as follows:
As at 31 March 2006
Ireland
USA
As at 31 March 2005
Ireland
USA
Company
At 31 March
Non-current
assets
€’000
Current Non-current
liabilities
€’000
assets
€’000
Current
liabilities
€’000
1,681
818
2,499
2,625
786
3,411
105,044
2,082
107,126
(1,858)
-
(1,858)
(29,760)
(1,218)
(30,978)
62,015
2,476
64,491
(13,017)
-
(13,017)
(2,459)
(1,042)
(3,501)
Net
assets
€’000
75,107
1,682
76,789
49,164
2,220
51,384
2006
€’000
2005
€’000
1,300
1,300
notes to the financial statements
87
22. Investments in subsidiary undertakings
Company
At 1 April
Additions
At 31 March
2006
€’000
145,814
15,258
161,072
2005
€’000
145,814
-
145,814
Details of the Group’s principal operating subsidiaries are shown on pages 113 to 116. All of these subsidiaries are wholly
owned except Broderick Bros. Limited (93.8%), Virtus Limited (51.0%), Laleham Healthcare Limited (80.5%) where put
and call options exist to acquire the remaining 19.5%, Physio-Med Services Limited (76.0%) where put and call options
exist to acquire the remaining 24.0% and Distrilogie SA (98.36%) where put and call options exist to acquire the
remaining 1.64%.
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 UK Limited, North Road, Bridgend Industrial
Estate, Bridgend, CF31 3TP, Wales. The registered office of DCC International Holdings B.V. is Teleport Boulevard 140,
1043 EJ Amsterdam, The Netherlands.
23. Inventories
Group
Raw materials
Work in progress
Finished goods
24. Trade and other receivables
Group
Amounts falling due within one year:
Trade receivables
Provision for impairment of trade receivables
Prepayments and other debtors
Value added tax recoverable
Other debtors
Amounts falling due after more than one year:
Prepayments and other debtors
Company
Amounts falling due within one year:
Amounts owed by subsidiary undertakings
Prepayments
Value added tax recoverable
2006
€’000
5,105
1,730
131,899
138,734
2005
€’000
5,935
1,855
116,259
124,049
2006
€’000
2005
€’000
487,231
(11,673)
29,367
7,458
7,379
519,762
2,381
522,143
378,563
(11,151)
24,505
9,953
4,560
406,430
3,760
410,190
2006
€’000
2005
€’000
261,646
120
1,421
263,187
276,698
1,021
80
277,799
88
notes to the financial statements
25. Trade and other payables
Group
Trade payables
Other creditors and accruals
PAYE and National Insurance
Value added tax
Capital grants (note 35)
Interest payable
Amounts due in respect of fixed assets
Company
Other creditors and accruals
PAYE and National Insurance
Amounts due to subsidiary undertakings
26. Movement in working capital
Group
Year ended 31 March 2006
At 1 April 2005
Translation adjustment
Arising on acquisition (note 45)
Interest accruals and other
Increase/(decrease) in working capital (note 41)
At 31 March 2006
Year ended 31 March 2005
At 1 April 2004
Translation adjustment
Arising on acquisition (note 45)
Interest accruals and other
Increase/(decrease) in working capital (note 41)
At 31 March 2005
2006
€’000
453,694
57,707
4,589
22,054
131
5,039
699
543,913
2006
€’000
1,614
-
211,071
212,685
Trade
and other
receivables
€’000
Trade
and other
payables
€’000
Inventories
€’000
124,049
(905)
8,289
-
7,301
138,734
110,884
(2,176)
6,827
-
8,514
124,049
410,190
(3,835)
24,861
7,269
83,658
522,143
316,632
(6,895)
33,471
2,864
64,118
410,190
(447,717)
3,582
(20,460)
479
(79,797)
(543,913)
(356,541)
7,347
(46,936)
(3,633)
(47,954)
(447,717)
2005
€’000
369,234
50,467
5,283
16,774
128
5,332
499
447,717
2005
€’000
761
11
223,019
223,791
Total
€’000
86,522
(1,158)
12,690
7,748
11,162
116,964
70,975
(1,724)
(6,638)
(769)
24,678
86,522
notes to the financial statements
89
26. Movement in working capital - continued
Company
Year ended 31 March 2006
At 1 April 2005
Increase/(decrease) in working capital
At 31 March 2006
Year ended 31 March 2005
At 1 April 2004
Other
Increase/(decrease) in working capital
At 31 March 2005
27. Cash and cash equivalents
Group
Cash at bank and in hand
Short-term bank deposits
Trade
and other
receivables
€’000
Trade
and other
payables
€’000
277,799
(14,612)
263,187
(234,178)
11,106
(223,072)
291,088
1,131
(14,420)
277,799
(201,495)
-
(32,683)
(234,178)
Total
€’000
43,621
(3,506)
40,115
89,593
1,131
(47,103)
43,621
2006
€’000
105,955
239,325
345,280
2005
€’000
119,495
233,809
353,304
Cash at bank earns interest at floating rates based on daily bank deposit rates. The short-term deposits are for periods up
to three months and earn interest at the respective short-term deposit rates.
Cash and cash equivalents include the following for the purposes of the Group Cash Flow Statement:
Cash and short-term bank deposits
Bank overdrafts
Bank overdrafts are included within current borrowings (note 29) in the Group Balance Sheet.
Company
Cash at bank and in hand
2006
€’000
2005
€’000
345,280
(25,362)
319,918
353,304
(38,907)
314,397
2006
€’000
2005
€’000
157
248
90
notes to the financial statements
28. Derivative financial instruments
Group
Interest rate swaps - fair value hedges
Interest rate swaps - not designated as hedges
Currency swaps - not designated as hedges
Cross currency interest rate swaps - fair value hedges
Forward foreign exchange contracts - cash flow hedges
Forward foreign exchange contracts - not designated as hedges
Commodity price forward contracts - cash flow hedges
Commodity price forward contracts - not designated as hedges
Total
Less non–current portion
Interest rate swaps - fair value hedges
Interest rate swaps - not designated as hedges
Currency swaps - not designated as hedges
Cross currency interest rate swaps - fair value hedges
Current portion
As at 31 March 2006
Liabilities
€’000
Assets
€’000
926
6,805
1,258
-
2
69
45
28
9,133
926
6,805
1,258
-
8,989
144
(9,167)
(6,921)
(3,786)
(7,203)
(24)
(21)
-
(28)
(27,150)
(9,167)
(6,921)
(3,786)
(7,203)
(27,077)
(73)
Net
€’000
(8,241)
(116)
(2,528)
(7,203)
(22)
48
45
-
(18,017)
(8,241)
(116)
(2,528)
(7,203)
(18,088)
71
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged
item is more than twelve months and as a current asset or liability if the maturity of the hedged item is less than twelve months.
Interest rate swaps
The notional principal amounts of the outstanding interest rate swap contracts designated as fair value hedges under
IAS 39 at 31 March 2006 total €210.149 million. At 31 March 2006, the fixed interest rates vary from 5.12% to 5.76%
and the floating rates are based on US$ LIBOR and sterling LIBOR.
The Group also utilises interest rate swaps, not designated as fair value hedges under IAS 39, to swap floating rate sterling
assets and liabilities into fixed rate sterling assets (8.05%) and fixed rate sterling liabilities (8.1%). The notional principal
amounts of these swaps (Stg£61.000 million) offset.
Currency swaps
The Group utilises currency swaps in conjunction with interest rate swaps designated as fair value hedges (as noted
above) to swap fixed rate US$ denominated debt into floating rate euro debt. The currency swaps (which swap floating
US$ denominated debt based on US$ LIBOR into floating euro denominated debt based on EURIBOR) have notional
principal amounts of €167.113 million and are not designated as hedges under IAS 39.
Cross currency interest rate swaps
The Group utilises cross currency interest rate swaps to swap fixed rate (7.82%) US$ denominated debt of US$100.000
million into floating rate sterling debt of Stg£65.000 million. These swaps are designated as fair value hedges under IAS 39.
Forward foreign exchange contracts
The notional principal amounts of outstanding forward foreign exchange contracts at 31 March 2006 total €17.638 million.
Gains and losses recognised in the cash flow hedge reserve in equity (note 38) at 31 March 2006 on forward foreign
exchange contracts designated as cash flow hedges under IAS 39 will be released to the Income Statement at various
dates up to four months after the balance sheet date.
Commodity price forward contracts
The notional principal amounts of outstanding forward commodity contracts at 31 March 2006 total €2.654 million. The gain
recognised in the cash flow hedge reserve in equity (note 38) on forward commodity contracts designated as cash flow hedges
under IAS 39 will be released to the Income Statement at various dates up to two months after the balance sheet date.
Adoption of IAS 32 and IAS 39
The Group adopted IAS 32 and IAS 39 from 1 April 2005. Derivative balances at 31 March 2005 were, in accordance with
Irish GAAP, disclosed rather than recognised in the financial statements for the year then ended. The fair value loss on
derivatives at 31 March 2005 amounted to €29.974 million with €29.816 million of this balance relating to derivatives
associated with the Group’s Unsecured Notes due 2008 to 2016. Under Irish GAAP at 31 March 2006, the Group’s
Unsecured Notes due 2008 to 2016 were carried at cost of €305.094 million, not recognising fair value gains (note 29). The
movement in the Group’s net debt balance during the financial year, including the adoption of IAS 32 and IAS 39, is included
in note 30.
notes to the financial statements
91
29. Borrowings
Group
Non-current:
Bank borrowings
Finance leases*
Unsecured Notes due 2008 to 2016
Current:
Bank borrowings
Finance leases*
Loan notes
Total borrowings
*Secured on specific plant and equipment
The maturity of non-current borrowings is as follows:
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
2006
€’000
2005
€’000
885
5,442
286,466
292,793
62,151
4,801
199
67,151
1,180
10,370
305,094
316,644
38,907
5,915
731
45,553
359,944
362,197
2006
€’000
5,613
80,486
206,694
292,793
2005
€’000
6,074
92,803
217,767
316,644
Bank borrowings, finance leases and loan notes
Interest on bank borrowings, finance leases and loan notes is at floating rates set in advance for periods ranging from
overnight to less than three months by reference to inter-bank interest rates (EURIBOR, sterling LIBOR and US$ LIBOR)
and consequently fair value approximates carrying amounts.
While the Group had various bank borrowing facilities available at 31 March 2006, it had no undrawn committed bank
facilities.
Unsecured Notes due 2008 to 2016
The Group’s Unsecured Notes due 2008 to 2016 comprise fixed rate debt of US$100.000 million issued in 1996 and
maturing in 2008 and 2011 (the ‘2008/11 Notes’) and debt of US$200.000 million and Stg£30.000 million issued in 2004
and maturing in 2014 and 2016 (the ‘2004/16 Notes’).
The 2008/11 Notes have been swapped (using cross currency interest rate swaps designated as fair value hedges under
IAS39) from fixed US$ to floating sterling rates, repricing quarterly based on sterling LIBOR.
The 2004/16 Notes denominated in US$ have been swapped from fixed to floating US$ rates (using interest rate swaps
designated as fair value hedges under IAS 39) and further swapped (using currency swaps not designated as hedges
under IAS 39) from floating US$ to floating euro rates, repricing semi-annually based on EURIBOR. The 2014/16 Notes
denominated in sterling have been swapped from fixed to floating sterling rates (using an interest rate swap designated
as a fair value hedge under IAS 39), repricing semi-annually based on sterling LIBOR.
The maturity and interest profile of the Unsecured Notes due 2008 to 2016 is as follows:
Average maturity
Average fixed interest rates*
- US$ denominated
- sterling denominated
Average floating rate including swaps
- euro denominated
- sterling denominated
* Issued and repayable at par
2006
2005
6.8 years
7.8 years
6.04%
5.76%
2.84%
5.30%
6.04%
5.76%
2.85%
5.61%
92
notes to the financial statements
29. Borrowings - continued
Adoption of IAS 32 and IAS 39
Under Irish GAAP at 31 March 2005, the Unsecured Notes due 2008 to 2016 were carried at cost of €305.094 million, not
recognising fair value gains. Similarly, at 31 March 2005, the fair value loss of €29.816 million on the related interest rate,
currency and cross currency interest rate swaps was disclosed rather than recognised in the financial statements.
The Group adopted IAS 32 and IAS 39 from 1 April 2005. The Group has recognised at 31 March 2006 a net fair value
loss of €17.972 million on these swaps. The interest rate and cross currency interest rate swaps have been designated
as fair value hedges under IAS 39 and the gains attributable to these hedged risks have been adjusted against the
Unsecured Notes due 2008 to 2016 and reflected in the Income Statement. A reconciliation of the movement in the
balance on the Unsecured Notes due 2008 to 2016 and in the balance on derivatives is included in note 30.
The fair value at 31 March 2006 of the Unsecured Notes due 2008 to 2016 approximates their fair value adjusted
amortised cost of €286.466 million (the amount at which they are carried at 31 March 2006 as above). The equivalent
approximate fair value at 31 March 2005 was €277.039 million.
30. Analysis of net debt
Reconciliation of opening to closing net debt
The reconciliation of opening to closing net debt for the year ended 31 March 2006 is as follows:
Group
At 1
April 2005
€’000
Transition
adjustment
€’000
Cash flow
€’000
Mark-to-
market
€’000
Translation
At 31
adjustment March 2006
€’000
€’000
353,304
Cash and short term bank deposits
(38,907)
Overdrafts
314,397
Cash and cash equivalents
(1,911)
Bank loans and loan notes
(16,285)
Finance leases
Unsecured Notes due 2008 to 2016 (305,094)
-
Derivative financial instruments (net)
Group net debt (including share of net
(debt)/cash in joint ventures)
(8,893)
-
-
-
-
-
28,055
(29,974)
(4,357)
14,419
10,062
(35,961)
5,973
-
-
-
-
-
-
-
(10,996)
11,824
(3,667)
(874)
(4,541)
(1)
69
1,569
133
345,280
(25,362)
319,918
(37,873)
(10,243)
(286,466)
(18,017)
(1,919)
(19,926)
828
(2,771)
(32,681)
Group net debt (excluding share of net
(debt)/cash in joint ventures)
(8,192)
(1,919)
(21,096)
828
(2,771)
(33,150)
The reconciliation of opening to closing net cash/(debt) for the year ended 31 March 2005 is as follows:
Group
At 1 April
2004
€’000
Cash flow
€’000
Translation At 31 March
adjustment
2005
€’000
€’000
Cash and short term bank deposits
Overdrafts
Cash and cash equivalents
Bank loans and loan notes
Finance leases
Unsecured Notes due 2008 to 2016
Group net cash/(debt) (including share of net debt in joint ventures)
323,466
(51,800)
271,666
(89,672)
(22,014)
(97,612)
62,368
39,019
13,786
52,805
87,738
5,062
(212,064)
(66,459)
(9,181)
(893)
(10,074)
23
667
4,582
(4,802)
353,304
(38,907)
314,397
(1,911)
(16,285)
(305,094)
(8,893)
Group net cash/(debt) (excluding share of net debt in joint ventures)
62,717
(66,107)
(4,802)
(8,192)
notes to the financial statements
93
30. Analysis of net debt - continued
Currency profile
The currency profile of net debt at 31 March 2006 is as follows:
Cash and cash equivalents
Borrowings
Derivatives
The currency profile of net debt at 31 March 2005 is as follows:
Cash and cash equivalents
Borrowings
Euro
€’000
Sterling
€’000
US Dollar
€’000
Total
€’000
61,530
(196,083)
(11,685)
(146,238)
276,216
(162,568)
(6,388)
107,260
7,534
(1,293)
56
6,297
345,280
(359,944)
(18,017)
(32,681)
Euro
€’000
Sterling
€’000
US Dollar
€’000
Total
€’000
90,941
(171,786)
(80,845)
256,693
(190,405)
66,288
5,670
(6)
5,664
353,304
(362,197)
(8,893)
Interest rate profile
Cash and cash equivalents at 31 March 2006 and 31 March 2005 have maturity periods up to three months (note 27).
Bank borrowings and finance leases are at floating interest rates for periods less than three months while the Group’s
Unsecured Notes due 2008 to 2016 have been swapped to floating rates which reset on a quarterly or semi-annual basis
(note 29).
The Group also utilises interest rate swaps to swap floating rate sterling assets and liabilities into fixed sterling rate assets
(8.05%) and fixed rate sterling liabilities (8.1%). The notional principal amounts of these swaps (Stg£61.000 million) offset.
31. Deferred income tax
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The offset amounts are
as follows:
Group
Deferred income tax assets (deductible temporary differences):
Deficits on Group defined benefit pension obligations
Employee share options
Other deductible temporary differences
Deferred income tax liabilities (taxable temporary differences):
Excess of accelerated capital allowances over depreciation and fair value
adjustments arising on acquisition
Rolled-over capital gains
The gross movement on the deferred income tax account is as follows:
At 1 April
Exchange differences
Deferred tax on adoption of IAS 32 and 39
Acquisition of subsidiary (note 45)
Income Statement charge (note 15)
Tax charged to equity (note 15)
At 31 March
2006
€’000
3,940
382
274
4,596
10,473
245
10,718
2006
€’000
3,039
44
(230)
1,330
2,043
(104)
6,122
2005
€’000
3,046
191
3,720
6,957
9,751
245
9,996
2005
€’000
(4,312)
73
-
4,602
3,472
(796)
3,039
94
notes to the financial statements
32. Retirement benefit obligations
Group
The Group operates eight defined benefit pension schemes in the Republic of Ireland and three in the UK. The projected
unit credit method has been employed in determining the present value of the defined benefit obligation arising, the related
current service cost and, where applicable, past service cost.
The Group has elected to avail of early implementation of the Amendment to IAS 19 Actuarial Gains and Losses, Group
Plans and Disclosures which enables the recognition of actuarial gains and losses and the associated movement in the
deferred tax asset in retained income via the Statement of Recognised Income and Expense.
Full actuarial valuations were carried out between 31 December 2002 and 1 April 2005. 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.
Actuarial valuations have been updated to 31 March 2006 for International Accounting Standard 19 by a qualified actuary.
The principal actuarial assumptions used were as follows:
Republic of Ireland Schemes
Rate of increase in salaries
Rate of increase in pensions in payment
Discount rate
Inflation assumption
UK schemes
Rate of increase in salaries
Rate of increase in pensions in payment
Discount rate
Inflation assumption
The expected long term rates of return on the assets of the schemes were as follows:
Republic of Ireland schemes
Equities
Bonds
Property
Cash
UK schemes
Equities
Bonds
Property
Cash
2006
2005
3.50% - 4.00% 3.50% - 4.00%
2.25% - 3.00% 2.25% - 5.00%
4.00% - 4.70% 4.00% - 4.80%
2.25%
2.25%
2006
2005
3.75%
3.75%
2.75% - 4.00% 2.75% - 4.00%
5.25%
2.75%
4.70%
2.75%
2006
7.40%
3.50%
6.30%
3.00%
2006
7.90%
4.00%
6.80%
3.50%
2005
7.20%
3.70%
5.20%
2.40%
2005
8.10%
4.60%
6.10%
3.50%
Assumptions regarding future mortality experience are set based on advice from published statistics and experience in both
geographic regions. The average life expectancy in years of a pensioner retiring at age 65 is as follows:
Male
Female
The Group does not operate any post-employment medical benefit schemes.
2006
19.5
22.5
2005
19.5
22.5
notes to the financial statements
95
32. Retirement benefit obligations - continued
The market value of the assets of the schemes were as follows:
Equities
Bonds
Property
Cash
Total market value at 31 March 2006
Present value of scheme liabilities
Net pension liability at 31 March 2006
Equities
Bonds
Property
Cash
Total market value at 31 March 2005
Present value of scheme liabilities
Net pension liability at 31 March 2005
ROI
€’000
40,747
10,109
2,540
1,897
55,293
(67,755)
(12,462)
ROI
€’000
31,811
9,854
1,996
1,900
45,561
(64,581)
(19,020)
The total expense charged to the Group Income Statement in respect of defined
benefit pension schemes is as follows:
Current service cost
Past service cost
Gain on settlement
Total, included in staff costs (note 9)
Interest cost
Expected return on plan assets
Total, included in finance costs (note 12)
The actuarial gain/(loss) recognised in the Statement of Recognised Income and Expense
is as follows:
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
Total, included in the Statement of Recognised Income and Expense
The movement in the fair value of plan assets is as follows:
At 1 April
Acquired on business combinations
Actual return on plan assets
Contributions by employers
Contributions by members
Benefits paid
Exchange
At 31 March
2006
UK
€’000
8,951
2,404
293
353
12,001
(20,218)
(8,217)
2005
UK
€’000
7,150
1,389
7
552
9,098
(15,458)
(6,360)
2006
€’000
3,308
-
(246)
3,062
(3,804)
3,479
(325)
2006
€’000
8,697
(383)
(6,535)
1,779
2006
€’000
54,659
-
12,176
6,190
428
(6,017)
(142)
67,294
Total
€’000
49,698
12,513
2,833
2,250
67,294
(87,973)
(20,679)
Total
€’000
38,961
11,243
2,003
2,452
54,659
(80,039)
(25,380)
2005
€’000
3,029
392
-
3,421
(3,940)
3,517
(423)
2005
€’000
1,277
(1,598)
(7,421)
(7,742)
2005
€’000
53,907
4,112
4,794
4,998
399
(13,278)
(273)
54,659
96
notes to the financial statements
32. Retirement benefit obligations - continued
The movement in the present value of defined benefit obligations is as follows:
At 1 April
Acquired on business combinations
Current service cost
Interest cost
Actuarial loss
Contributions by members
Benefits paid
Settlements
Exchange
At 31 March
Experience gains and losses:
Difference between the expected and actual return on scheme assets
As a percentage of scheme assets
Experience gains and losses on scheme liabilities
As a percentage of the present value of the scheme liabilities
Total recognised in Statement of Recognised Income and Expense
As a percentage of the present value of the scheme liabilities
33. Deferred acquisition consideration
Group
2006
€’000
80,039
-
3,308
3,804
6,918
428
(6,017)
(246)
(261)
87,973
2006
€’000
8,697
12.9%
(383)
0.4%
1,779
(2.0%)
2005
€’000
71,071
5,924
3,421
3,940
9,019
399
(13,278)
-
(457)
80,039
2005
€’000
1,277
2.3%
(1,598)
2.0%
(7,742)
9.7%
The Group’s deferred acquisition consideration of €22.364 million (2005: €17.923 million) as stated on the Balance Sheet
consists of €12.193 million of € floating rate financial liabilities (2005: €7.708 million) and €10.171 million of Stg£ floating
rate financial liabilities (2005: €10.215 million) payable as follows:
Within one year
Between one and two years
Between two and five years
Analysed as:
Non-current liabilities
Current liabilities
Company
Within one year
Between one and two years
2006
€’000
3,556
9,838
8,970
22,364
18,808
3,556
22,364
2006
€’000
-
-
-
2005
€’000
7,084
2,375
8,464
17,923
10,839
7,084
17,923
2005
€’000
2,824
139
2,963
notes to the financial statements
97
34. Provisions for liabilities and charges
Group
Current liabilities
Rationalisation and redundancy
Insurance and other
2006
€’000
-
3,785
3,785
2005
€’000
8,616
6,533
15,149
Rationalisation and redundancy
These provisions were fully utilised during the year. The provisions related to irrevocable commitments under various
rationalisation and redundancy programmes throughout the Group.
Insurance and other
The insurance provision relates to employers liability and public and products liability and reflects the excess not
recoverable from insurers arising from claims against Group companies. A significant element of the provision is subject
to external assessments. Other provisions relate to fair value provisions arising from business combinations.
35. Capital grants
Group
At 1 April
Amortisation in year
Received in year
Exchange and other adjustments
At 31 March
Disclosed as due within one year (note 25)
36. Equity share capital
Group and Company
Authorised
152,368,568 ordinary shares of €0.25 each
Issued
88,229,404 ordinary shares (including 7,510,178 ordinary shares held as Treasury Shares)
of €0.25 each, fully paid (2005: 88,169,404 ordinary shares (including 7,873,886 ordinary
shares held as Treasury Shares) of €0.25 each, fully paid)
Nil ordinary shares of €0.25 each, €0.0025 paid (2005: 60,000 ordinary shares of
€0.25 each, €0.0025 paid)
Movements during the year
Ordinary shares of €0.25 each
At 1 April 2005
Payment up of partly paid shares
At 31 March 2006
2006
€’000
1,086
(112)
1,174
(26)
2,122
(131)
1,991
2005
€’000
1,241
(155)
-
-
1,086
(128)
958
2006
€’000
2005
€’000
38,092
38,092
22,057
22,042
-
22,057
No. of shares
‘000
88,229
-
88,229
-
22,042
€’000
22,042
15
22,057
98
notes to the financial statements
36. Equity share capital - continued
As at 31 March 2006, the total authorised number of ordinary shares is 152,368,568 shares (2005: 152,368,568 shares)
with a par value of €0.25 per share (2005: €0.25 per share).
During the year the Company reissued 363,708 Treasury Shares for a total consideration of €3.148 million.
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.
Details of share options granted under the Company’s share option schemes and the terms attaching thereto are provided
in note 10 to the financial statements and in the Report of the Remuneration Committee on pages 44 to 47.
37. Share premium account
Group and Company
At 1 April
Premium on issue of shares
At 31 March
38. Other reserves
Group
At 1 April 2004
Currency translation
Share based payment
At 31 March 2005
Currency translation
Cash flow hedges
- fair value gains in year
- tax on fair value gains
- transfers to net profit
- tax on transfers to net profit
Share based payment
At 31 March 2006
Company
At 31 March 2006 and 31 March 2005
2006
€’000
124,506
181
124,687
2005
€’000
124,438
68
124,506
Share
options
€’000
Cash
flow hedge
reserve
€’000
Foreign
currency
translation
reserve
€’000
Other
reserves
€’000
549
-
1,003
1,552
-
-
-
-
-
1,840
3,392
-
-
-
-
-
451
(85)
(447)
101
-
20
-
(5,565)
-
(5,565)
(4,779)
-
-
-
-
-
(10,344)
1,400
-
-
1,400
-
-
-
-
-
-
1,400
Total
€’000
1,949
(5,565)
1,003
(2,613)
(4,779)
451
(85)
(447)
101
1,840
(5,532)
Other
reserves
€’000
344
notes to the financial statements
99
39. Retained earnings
Group
At 31 March
Impact of adoption of IAS 32 and 39
At 1 April
Net income recognised in Income Statement
Net income recognised directly in equity
- actuarial gain/(loss) on Group defined benefit pension schemes
- deferred tax asset on actuarial loss
Deferred tax on employee share options
Share buyback (inclusive of costs)
Re-issue of Treasury Shares (net of expenses)
Dividends
At 31 March
Company
At 1 April
Profit/(loss) retained for the year
Share buyback (inclusive of costs)
Re-issue of Treasury Shares (net of expenses)
At 31 March
2006
€’000
343,936
(1,689)
342,247
123,764
1,779
82
25
-
3,148
(31,568)
439,477
2006
€’000
41,128
11,280
-
3,148
55,556
2005
€’000
310,313
-
310,313
87,760
(7,742)
771
25
(26,762)
6,783
(27,212)
343,936
2005
€’000
87,339
(26,232)
(26,762)
6,783
41,128
The cost to the Group and the Company of €83.965 million to acquire the 7,510,178 shares held in Treasury has been
deducted from the Group and Company Retained Earnings. These shares were acquired at prices ranging from €9.25 to
€12.80 each (average €10.48) between 28 July 2000 and 17 May 2004.
40. Minority interest
Group
At 1 April
Arising on acquisition (note 45)
Share of profit for the financial year (less attributable to associates)
Dividends to minorities
Exchange and other adjustments
At 31 March
2006
€’000
4,348
24
548
(201)
(5)
4,714
2005
€’000
4,081
(130)
573
(176)
-
4,348
100
notes to the financial statements
41. Cash generated from operations
Group
Profit for the financial year
Add back non-operating (income)/expense
- Tax (note 15)
- Share of profit from associates (note 14)
- Exceptional items (note 11)
- Net finance costs (note 12)
Operating profit
- Share-based payments expense (note 10)
- Depreciation (note 19)
- Amortisation (note 20)
- Profit on sale of property, plant and equipment
- Amortisation of capital grants (note 35)
- Dividends received from associates
- Other
Changes in working capital (excluding the effects of acquisition and
exchange differences on consolidation):
- Inventories (note 26)
- Trade and other receivables (note 26)
- Trade and other payables (note 26)
Cash generated from operations
42. Contingencies
2006
€’000
2005
€’000
125,289
88,782
13,479
(25,474)
(1,696)
7,041
118,639
1,840
34,142
4,956
(1,295)
(112)
1,028
(5,114)
(7,301)
(83,658)
79,797
142,922
12,107
(16,807)
20,776
5,694
110,552
1,003
32,867
1,261
(2,050)
(155)
1,354
(3,758)
(8,514)
(64,118)
47,954
116,396
Guarantees
The Company and certain subsidiaries have given guarantees of €458.619 million (2005: €343.247 million) in respect of
borrowings and other obligations arising in the ordinary course of business of the Company and other Group undertakings.
It is not anticipated that any material liabilities will arise from these contingent liabilities.
Other
Included in trade payables is an amount of approximately €10.514 million (2005: €6.128 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 Partners Limited, DCC Energy Limited, DCC Financial Services
Holdings Limited, DCC Healthcare Limited, DCC Management Services Limited, DCC Nominees Limited, DCC SerCom
Limited, Emo Oil Limited, Flogas Ireland Limited, SerCom Property 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.
43. Capital expenditure commitments
Group
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
2006
€’000
2005
€’000
3,876
44,866
48,742
10,897
35,212
46,109
notes to the financial statements
101
44. Commitments under operating and finance leases
Group
Operating leases
Future minimum rentals payable under non-cancellable operating leases at 31 March are as follows:
Within one year
After one year but not more than five years
More than five years
2006
€’000
945
7,668
63,537
72,150
2005
€’000
1,011
7,098
64,738
72,847
The Group leases a number of properties under operating leases. The leases typically run for a period of 15 to 25 years.
Rents are generally reviewed every five years.
During the year ended 31 March 2006 €9.102 million (2005: €8.148 million) was recognised as an expense in the Income
Statement in respect of operating leases.
Finance leases
Future minimum lease payments under finance leases together with the present value of the net minimum lease
payments are as follows:
2006
2005
Minimum
payments
€’000
Present
value of
payments
€’000
5,292
5,756
11,048
(805)
10,243
4,801
5,442
10,243
-
10,243
Minimum
payments
€’000
6,646
11,156
17,802
(1,517)
16,285
Present
value of
payments
€’000
5,915
10,370
16,285
-
16,285
Within one year
After one year but not more than five years
Less: amounts allocated to future finance costs
Present value of minimum lease payments
45. Business combinations
The principal acquisitions completed by the Group during the year, together with percentages acquired were as follows:
- Physio-Med Services Limited (76%): a supplier of physiotherapy and related products, acquired on 13 June 2005. Put
and call options exist to acquire the remaining 24%;
- Pilton Company (100%): a distributor of DVD’s, computer games and other products, acquired on 15 June 2005; and
- AB Computing (100%): a value added distributor of IT infrastructure solutions headquartered in Belgium, acquired
on 6 July 2005.
In addition, a number of small oil and LPG distributors were acquired during the year.
102
notes to the financial statements
45. Business combinations - continued
Identifiable net assets acquired (excluding net cash acquired) were as follows:
Assets
Non-current assets
Property, plant and equipment (note 19)
Intangible assets - goodwill (note 20)
Intangible assets - other intangible assets (note 20)
Investments in associates (note 21)
Total non-current assets
Current assets
Inventories (note 26)
Trade and other receivables (note 26)
Total current assets
Equity
Minority interest (note 40)
Total equity
Liabilities
Non-current liabilities
Deferred income tax liabilities (note 31)
Retirement benefit obligations
Total non-current liabilities
Current liabilities
Trade and other payables (note 26)
Current income tax liabilities
Total current liabilities
Total consideration (enterprise value)
Satisfied by:
Cash
Cash acquired
Net cash outflow
Deferred and contingent acquisition consideration
Total consideration
2006
€’000
2005
€’000
2,737
42,157
7,450
-
52,344
8,289
24,861
33,150
33,423
66,977
12,594
(7,916)
105,078
6,827
33,471
40,298
(24)
(24)
130
130
(1,330)
-
(1,330)
(4,602)
(1,812)
(6,414)
(20,460)
(701)
(21,161)
(46,936)
(2,853)
(49,789)
62,979
89,303
62,669
(13,538)
49,131
13,848
62,979
94,721
(16,528)
78,193
11,110
89,303
None of the business combinations completed during the period were considered sufficiently material to warrant separate
disclosure of the fair values attributable to those combinations. The carrying amounts of the assets and liabilities acquired
determined in accordance with IFRS before completion of the combination together with the adjustments made to those
carrying values disclosed above were as follows:
Non-current assets (excluding goodwill)
Current assets
Non-current liabilities and minority interest
Current liabilities
Identifiable net assets acquired
Goodwill arising on acquisition
Total consideration (enterprise value)
Book
value
€’000
Fair value
adjustments
€’000
2,737
33,843
(273)
(21,161)
15,146
47,833
62,979
7,450
(693)
(1,081)
-
5,676
(5,676)
-
Fair
value
€’000
10,187
33,150
(1,354)
(21,161)
20,822
42,157
62,979
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis. Any
amendments to these fair values within the twelve month timeframe from the date of acquisition will be disclosable in
the 2007 Annual Report as stipulated by IFRS 3.
notes to the financial statements
103
45. Business combinations - continued
The post-acquisition impact of business combinations completed during the year on Group profit for the financial year was
as follows:
Revenue
Cost of sales
Gross profit
Operating costs
Group operating profit
Finance costs (net)
Share of associates’ profit after tax
Profit before tax
Income tax expense
Group profit for the financial year
46. Related party transactions
2006
€’000
119,348
(98,771)
20,577
(12,456)
8,121
49
-
8,170
(1,487)
6,683
2005
€’000
312,253
(271,174)
41,079
(33,658)
7,421
(209)
(1,529)
5,683
(1,725)
3,958
The principal related party relationships requiring disclosure in the consolidated financial statements of the Group under
IAS 24 Related Party Disclosures relate to the existence of subsidiaries, joint ventures and associates and transactions
with these entities entered into by the Group and the identification and compensation of key management personnel as
addressed in more detail below:
Group
Subsidiaries, joint ventures and associates
The consolidated financial statements include the financial statements of the Company and its subsidiaries, joint ventures
and associates as documented in the accounting policies on pages 58 to 66. A listing of the principal subsidiaries, joint
ventures and associates is provided in the Group Directory on pages 113 to 116 of this Annual Report.
Transactions are entered into in the normal course of business on an arm’s length basis.
Sales to and purchases from, together with outstanding payables and receivables to and from subsidiaries and joint
ventures are eliminated in the preparation of the consolidated financial statements.
On 21 October 2005, the Group increased its shareholding to 100.0% in Fannin Limited by acquiring the remaining 3.4%
of the issued share capital from the minority shareholder. The consideration amounted to €3.000 million and was settled
in cash.
On 2 September 2005, the Group increased its shareholding to 100.0% in DCC Environmental by acquiring the remaining
2.85% of the issued share capital from the minority shareholder. The consideration amounted to €1.094 million and was
settled in cash.
Compensation of key management personnel
For the purposes of the disclosure requirements under IAS 24, the term ‘key management personnel’ (i.e. those persons
having authority and responsibility for planning, directing and controlling the activities of the Company) comprises the
Board of Directors which manages the business and affairs of the Company. Full disclosure in relation to the
compensation entitlements of the Board of Directors is provided in the Report of the Remuneration Committee on pages
44 to 47 of this Annual Report.
Company
Subsidiaries and associates
During the year the Company received €44.499 million (2005:€nil) in dividends from its subsidiaries and €nil (2005:
€65,000) in dividends from its associates. Details of loan balances to/from subsidiaries are provided in the Company
Balance Sheet on page 55, in note 24 ‘Trade and Other Receivables’ and in note 25 ‘Trade and Other Payables’.
During the year the Company was charged a management fee of €3.705 million (2005: €2.174 million) by its subsidiary,
DCC Management Services Limited.
104
notes to the financial statements
47. Reconciliations from Irish GAAP to IFRS
Up to and including 31 March 2005, the Group prepared its financial statements in accordance with generally accepted
accounting practices in Ireland ('Irish GAAP'). Detailed explanations of the adjustments made to the full-year 2005 Group
Income Statement and the Balance Sheet as at 31 March 2005 have been provided in the Restatement of Financial
Information under IFRS published on 30 September 2005. The following is a summary of the principal changes on
transition to IFRS:
Overview
It is a requirement that the first IFRS financial statements include full comparative information for the year ended 31 March
2005. The date of transition to IFRS for all standards, other than IAS 32 and IAS 39, is 1 April 2004, being the start of the
comparative period in the Group's first IFRS financial statements. As permitted under IFRS 1, the Group applied hedge
accounting in accordance with Irish GAAP for the year ended 31 March 2005 and adopted IAS 32 and IAS 39 from 1 April 2005.
A summary of the effect of IFRS on the Group's and Company's Balance Sheets as at 1 April 2004 and 31 March 2005 as
well as on the Group's Income Statement for the year ended 31 March 2005 is set out in the following sections:
(1) Optional exemptions availed of on transition to IFRS
(2) Impact of transition to IFRS
(3) Group Income Statement for the year ended 31 March 2005 - reconciliation from Irish GAAP to IFRS
(4) Group Balance Sheet as at 31 March 2005 - reconciliation from Irish GAAP to IFRS
(5) Group Balance Sheet as at 1 April 2004 - reconciliation from Irish GAAP to IFRS
(6) Company Balance Sheet as at 31 March 2005 - reconciliation from Irish GAAP to IFRS
(7) Company Balance Sheet as at 1 April 2004 - reconciliation from Irish GAAP to IFRS
(1) Optional exemptions availed of on transition to IFRS
IFRS 1 sets out the procedures that the Group must follow when adopting IFRS for the first time as the basis for
preparing its consolidated financial statements. This standard permits a number of optional exemptions from the general
principle of retrospective restatement and the Group elected, in common with other listed companies, to avail of a
number of these exemptions as follows:
(i) Business combinations
Business combinations undertaken prior to the transition date of 1 April 2004 have not been subject to restatement.
Goodwill as at the transition date is carried forward at its carrying amount and, together with goodwill arising on business
combinations subsequent to the transition date, is subject to annual impairment testing in accordance with IAS 36
Impairment of Assets. As required by IFRS 1, an impairment review of goodwill was carried out at the transition date.
This review indicated that no impairment provision was required.
(ii) Property, plant & equipment
The Group retained its existing carrying value of occupied properties, plant and equipment at 1 April 2004 as deemed cost,
rather than either reverting to historical cost or carrying out a valuation at the date of transition as permitted by IFRS 1.
(iii) Employee benefits
The Group elected to recognise all cumulative actuarial gains and losses applicable to defined benefit pension schemes in
the transition balance sheet and adjusted them against retained income.
(iv) Currency translation adjustments
IFRS requires that on disposal of a foreign operation, the cumulative amount of currency translation differences previously
recognised directly in reserves for that operation be transferred to the Income Statement as part of the profit or loss on
disposal. The Group elected to deem the cumulative currency translation differences applicable to foreign operations to be
zero as at the transition date. The cumulative currency translation differences arising after the transition date have been
re-classified from retained income to a separate component of equity (termed the 'foreign currency translation reserve')
with no net impact on capital and reserves attributable to the Group's equity holders.
(v) IAS 32 / IAS 39
Given the delay encountered in receiving EU approval, the effective date of the revised versions of IAS 32 and IAS 39 was
1 April 2005 and therefore the Group adopted these standards with effect from that date. The Group availed of the
exemption under the transition rules of IFRS 1 not to restate the comparative information under IAS 32 and IAS 39.
Comparative information on financial instruments for the year ended 31 March 2005 in the financial statements at 31
March 2006 are presented on the existing Irish GAAP basis.
notes to the financial statements
105
47. Reconciliations from Irish GAAP to IFRS - continued
Other options availed of on transition
In compliance with the transitional arrangements set out in IFRS 2 Share-based Payment, this standard was applied in
respect of share options granted after 7 November 2002 and not vested before 1 January 2005.
On the introduction of FRS 17 Retirement Benefits in 2001, DCC together with the majority of publicly-listed entities,
elected to continue to account for its pension obligations under SSAP 24 Accounting for Pension Costs and to disclose
the impact of FRS 17 in the notes to the financial statements. FRS 17 requires immediate recognition of actuarial gains
and losses on defined benefit pension schemes in the Statement of Total Recognised Gains and Losses. The Group
elected to avail of early application of the amendment to IAS 19 which enables the recognition of actuarial gains and
losses through retained income via the Statement of Changes in Shareholders' Equity.
(2) Impact of transition to IFRS
The adoption of IFRS resulted in the following significant changes to the Group's accounting policies and the financial
impact of each as at the date of transition to IFRS is summarised below.
(i) IFRS 2 share-based payment
IFRS 2 Share-based Payment requires the recognition of an expense in the Income Statement representing the fair value
at the date of grant of share-based payments (mainly share options in the case of DCC). This expense is recognised over
the vesting period of the options. In accordance with the transitional arrangements contained in the standard, only share
options granted after 7 November 2002 and not vested before 1 January 2005 are included in the calculations.
The fair value of the share-based payments have been calculated using a binomial model for the DCC plc 1998 Employee
Share Option Scheme and Black Scholes for the DCC Sharesave Scheme. The following are the main inputs used in
determining the fair value of share options:
• The exercise price which is the market price at the grant date except in the case of the DCC Sharesave Scheme 2001
share options which were issued at a 20% discount to the market price at the date of grant;
• Future share price volatility is based on historical volatility over a period consistent with the expected term of the option;
• The risk free interest rate used is the rate applicable to zero-coupon euro-denominated Government bonds with a
remaining term equal to the expected term of the option;
• Expected dividend payments.
An expense of €1.0 million was recognised in the Group Income Statement in respect of the year ended 31 March 2005.
(ii) IFRS 3 business combinations / IAS 38 Intangible assets
The Group availed of the exemption under IFRS 1 enabling non-restatement of business combinations prior to the date of
transition to IFRS.
Under IFRS 3, goodwill is no longer amortised but rather is subject to annual impairment testing. At 1 April 2004, the date
of transition, the Group had a net goodwill asset of €129.6 million which is carried forward and, together with goodwill
arising on subsequent business combinations, is subject to annual impairment testing. Accordingly, the goodwill
amortisation charge of €10.1 million for the year ended 31 March 2005 was not charged under IFRS.
Under IAS 38 Intangible Assets, there is a requirement to separately identify intangible assets acquired, other than
goodwill. Intangible assets (mainly comprising customer relationships) are capitalised and subsequently amortised over
their economic lives.
The acquisition balance sheets for business combinations completed in the year ended 31 March 2005 have been
restated to recognise intangible assets which resulted in a reduction in the goodwill figure in the acquisition balance
sheets. The amortisation charge recognised in respect of intangible assets amounted to €1.3 million for the year ended
31 March 2005. Net intangible assets at 31 March 2005 amounted to €11.3 million.
(iii) IAS 19 Employee benefits
IAS 19 Employee Benefits requires the assets and liabilities of defined benefit pension schemes to be recognised on the
face of the balance sheet. In accordance with the exemption available under IFRS 1, the Group elected to recognise all
cumulative actuarial gains and losses attributable to its defined benefit pension schemes as at the transition date. In
addition, in line with the amendment to IAS 19, actuarial gains and losses arising after the date of transition are dealt with
in the Statement of Changes in Shareholders' Equity.
106
notes to the financial statements
47. Reconciliations from Irish GAAP to IFRS - continued
The amounts reflected in the Group's transition Balance Sheet as at 1 April 2004 and the Group's Balance Sheet as at 31
March 2005 are in accordance with the FRS 17 disclosures previously provided in the Annual Reports at 31 March 2004
and 31 March 2005 save for the recording of assets at bid value under IAS 19 as opposed to mid-market value.
Application of IAS 19 resulted in a pre-tax reduction in net assets of €27.7 million as at 1 April 2004 and a pre-tax
reduction of €34.3 million as at 31 March 2005. The decrease in the pre-tax charge to the Income Statement arising from
the adoption of IAS 19 for the year ended 31 March 2005 was €1.2 million.
(iv) Current and deferred tax
Under Irish GAAP, deferred tax is recognised in respect of all timing differences that have originated but not reversed by
the balance sheet date and which could give rise to an obligation to pay more or less taxation in the future.
Deferred tax under IAS 12 Income Taxes is recognised in respect of all temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying value for financial reporting purposes. IAS 12 also required
that deferred tax assets and liabilities must be disclosed separately on the balance sheet. IAS 12 results in an overall
increase in the net deferred tax liability of the Group. The adjustments made to deferred tax assets and liabilities as at the
transition date of 1 April 2004, and reflected in the transition Balance Sheet, principally related to the following issues:
• Under Irish GAAP, deferred tax was not provided on fair value asset adjustments in business combinations if these
adjustments did not give rise to timing differences between the tax base and the book value of the assets acquired. The
requirement under IAS 12 to provide deferred tax on the differences arising from the assets acquired gave rise to a
deferred tax liability of €1.3 million as at the transition date. This liability increased to €1.8 million as at 31 March 2005.
• IAS 12 requires that a deferred tax provision be made for all rolled-over capital gains rather than those expected to
crystallise. The IFRS transition balance sheet included a deferred tax liability of €0.2 million in respect of rolled-over
capital gains, which did not arise under Irish GAAP.
• The deferred tax impact of defined benefit pension scheme surpluses and deficits accounted for in accordance with IAS
19 Employee Benefits resulted in the creation of a deferred tax asset of €2.1 million in the transition balance sheet.
The deferred tax liability reduced by €1.3 million as a result of a reversal of the SSAP 24 pension prepayment in the
Irish GAAP balance sheet.
A net deferred tax asset of €1.9 million, as set out above, was provided in the transition Balance Sheet.
IAS 12 requires deferred tax to be provided in respect of undistributed profits of overseas subsidiaries unless the parent is
able to control the timing of remittances and it is probable that such remittances will not be made in the foreseeable
future. As the Group is able to control the timing of remittances from overseas subsidiaries and no such remittances are
anticipated in the foreseeable future, no provision has been made for any tax on undistributed profits of overseas
subsidiaries. Similarly, no deferred tax assets or liabilities have been recognised in respect of temporary differences
associated with investments in subsidiaries.
In addition to the provisions of IAS 12 described above, IAS 1 Presentation of Financial Statements requires separate
disclosure of deferred tax assets and liabilities on the face of the balance sheet. The Group's restated Balance Sheets
therefore contained re-classifications of deferred tax assets previously netted within the Group's overall deferred tax
liability; these amounts were €6.7 million and €7.0 million as at the transition date and 31 March 2005 respectively.
(v) Dividend payments
IAS 10 Events after the Balance Sheet Date, requires that dividends declared after the balance sheet date should not be
recognised as a liability at the balance sheet date as the liability does not represent a present obligation as defined by IAS 37.
Instead, dividends will be recognised in the period in which they are declared and approved. This had the effect of
increasing the opening net assets at 1 April 2004 by €16.8 million. The results for the year ended 31 March 2005, as
restated under IFRS, include the 2003/2004 final dividend of €16.8 million and the 2004/2005 interim dividend of €10.8
million. The 2004/2005 final dividend of €19.1 million is reflected in the results for the year ended 31 March 2006.
(vi) Exceptional items
Under IFRS, all exceptional items of an operating nature, apart from the results of discontinued operations, are disclosed
in the appropriate operating line item before operating profit, with separate disclosure for items which are material by
virtue of their size or nature.
This resulted in a reclassification of exceptional items reported by the Group for the year ended 31 March 2005.
notes to the financial statements
107
47. Reconciliations from Irish GAAP to IFRS - continued
(vii) Joint ventures
Subsequent to the transition to IFRS, the Group undertook a review to ascertain whether certain associates may be more
correctly treated as joint ventures. The result of this review was that the Group's 50% shareholdings in Kylemore Foods
Holdings Limited and KP (Ireland) Limited are both required under IAS 31 Interests in Joint Ventures to be treated as joint
ventures.
In accordance with IAS 31, the Group has opted to apply proportionate consolidation in accounting for its interests in joint
ventures. Under proportionate consolidation the Income Statements, Balance Sheets and Cash Flow Statements of these
entities are included on a line-by-line basis in the consolidated accounts. Comparative amounts have been regrouped and
restated where necessary. The reclassification of certain associates as joint ventures has no net effect on total equity,
retained earnings or adjusted earnings per share.
(viii) Associates
Under Irish GAAP, the appropriate share of the results of associates (split between sales, operating profit, interest, tax and
minority interest) was included in the consolidated Profit and Loss Account by way of the equity method of accounting.
Associates were stated in the consolidated Balance Sheet at cost plus the attributable portion of their retained reserves
from the date of acquisition less goodwill amortised.
Under IAS 28, a single figure (being profit after tax) for results of associates is disclosed after operating profit. Given the
importance of the contributions of associates to the Group, sufficient information will be provided to allow operating profit
to be calculated on a basis that is consistent with previous statements.
(ix) Foreign currencies
Under Irish GAAP currency translation differences on foreign currency net investments have been written off to revenue
reserves.
Under IAS 21, translation differences are recorded in a separate currency translation reserve. On disposal of a foreign
operation, the cumulative translation differences relating to that operation are transferred to the Income Statement as part
of the profit or loss on disposal.
The Group availed of the IFRS 1 exemption allowing it to deem all cumulative translation differences that arose up to the
transition date to be equal to zero. These translation differences will therefore remain written off against revenue
reserves and will no longer be separately disclosed in the notes to the accounts.
IAS 21 provides specific guidance on how the functional currency (i.e. the currency that an entity should use to record its
transactions) of a company should be determined and the functional currencies of a small number of group companies
have altered as a result of the application of this guidance.
Certain intercompany loans had been treated under Irish GAAP as part of net investment in foreign operations and foreign
exchange gains or losses arising on these loans had been recognised directly in reserves. On transition from Irish GAAP,
certain of these loans between fellow subsidiaries did not qualify under IFRS as part of net investment in foreign
operations and therefore gains or losses on these loans must be recognised in the Income Statement.
The financial impact of the above was a charge to the Income Statement of €4.8 million for the year ended 31 March 2005
in respect of foreign exchange losses previously charged to reserves and the amounts are included in exceptional items.
The majority of the intercompany balances which gave rise to these accounting charges (previously taken to reserves)
were eliminated during the year ended 31 March 2005 and the half year ended 30 September 2005 so as to eliminate
accounting volatility from 30 September 2005 onwards.
(x) Other
There are a number of other items which are not individually material including accruals for holiday pay which have been
reflected in the restatement of financial information under IFRS.
108
notes to the financial statements
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4
notes to the financial statements
111
47. Reconciliations from Irish GAAP to IFRS - continued
(6) Company balance sheet as at 31 March 2005 - reconciliation from Irish GAAP to IFRS
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
Effect of
transition to
to IFRS
2005
€’000
Irish GAAP
2005
€’000
1,300
145,814
147,114
277,799
248
278,047
226,615
19,070
245,685
-
-
-
-
-
-
-
(19,070)
(19,070)
IFRS
2005
€’000
1,300
145,814
147,114
277,799
248
278,047
226,615
-
226,615
Net current assets
32,362
19,070
51,432
Total assets less current liabilities
179,476
19,070
198,546
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
10,387
139
10,526
972
11,498
22,042
124,506
344
21,086
167,978
-
-
-
(972)
(972)
-
-
-
20,042
20,042
10,387
139
10,526
-
10,526
22,042
124,506
344
41,128
188,020
179,476
19,070
198,546
The only changes to the Company Balance Sheet relate to the exclusion of the closing dividend liability and the write off
of a deferred tax liability.
112
notes to the financial statements
47. Reconciliations from Irish GAAP to IFRS - continued
(7) Company balance sheet as at 1 April 2004 - reconciliation from Irish GAAP to IFRS
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
Effect of
transition to
to IFRS
1 April 2004
€’000
Irish GAAP
1 April 2004
€’000
IFRS
1 April 2004
€’000
983
1,300
145,814
148,097
291,088
367
291,455
15,669
16,824
32,493
-
-
-
-
-
-
-
-
(16,824)
(16,824)
983
1,300
145,814
148,097
291,088
367
291,455
15,669
-
15,669
Net current assets
258,962
16,824
275,786
Total assets less current liabilities
407,059
16,824
423,883
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
187,711
2,016
189,727
827
190,554
22,035
124,438
344
69,688
216,505
-
-
-
(827)
(827)
-
-
-
17,651
17,651
187,711
2,016
189,727
-
189,727
22,035
124,438
344
87,339
234,156
407,059
16,824
423,883
The only changes to the Company Balance Sheet relate to the exclusion of the closing dividend liability and the write off
of a deferred tax liability.
48. Approval of financial statements
The financial statements were approved by the Board of Directors on 12 May 2006.
group directory
113
Principal subsidiaries (all 100% owned except for those detailed in note 22 on page 87)
>
DCC Energy
Company name & address
Principal activity
Contact details
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
Scottish Fuels
Tryst House,
Glenbervie Business Park,
Larbert, Stirlingshire FK5 4RB,
Scotland
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 5786 747 00
Fax: + 353 5786 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: enquiries@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
114
group directory
>
DCC SerCom
Company name & address
Principal activity
Contact details
SerCom Distribution Limited
DCC House,
Stillorgan, Blackrock,
Co. Dublin, Ireland
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
Micro Peripherals Limited
Shorten Brook Way,
Altham Business Park,
Altham, Accrington,
Lancashire BB5 5YJ, England
Pilton Company Limited
Unit 2, Loughlinstown
Industrial Estate,
Ballybrack, Co. Dublin, Ireland
SerCom Solutions Limited
M50 Business Park,
Ballymount Road Upper,
Dublin 12, Ireland
Sharptext Limited
M50 Business Park,
Ballymount Road Upper,
Dublin 12, Ireland
>
DCC Healthcare
Holding and divisional management company
Distribution of enterprise infrastructure products
Sales, marketing and distribution of
computer software
Sales, marketing and distribution of
computer products
Tel: + 353 1 2799 400
Fax: + 353 1 2831 017
Email: sercom@dcc.ie
www.sercomdistribution.com
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: enquiries@micro-p.com
www.micro-p.com
Sales, marketing and distribution of DVDs
and computer games and accessories
Tel: + 353 1 2826 444
Fax: + 353 1 2826 532
Provision of supply chain services
Sales, marketing and distribution of
computer products
Tel + 353 1 4056 500
Fax: + 353 1 4056 555
Email:kevin.vaughan@sercomsolutions.com
www.sercomsolutions.com
Tel: + 353 1 4087 171
Fax: + 353 1 4193 111
Email: sharptext@sharptext.com
www.sharptext.com
Company name & address
Principal activity
Contact details
DCC Healthcare Limited
DCC House,
Stillorgan, Blackrock,
Co. Dublin, Ireland
Days Healthcare GmbH
Oberbecksener Str. 68,
D-32547 Bad Oeynhausen,
Germany
Holding and divisional management company
Manufacture, sales, marketing and distribution of
mobility & rehabilitation products
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
Days Healthcare UK Limited Manufacture, sales, marketing and distribution of
North Road,
Bridgend Industrial Estate,
Bridgend CF31 3TP, Wales
mobility & rehabilitation products
Tel: + 44 1656 664 700
Fax: + 44 1656 664 750
Email: info@dayshealthcare.com
www.dayshealthcare.com
EuroCaps Limited
Crown Business Park,
Dukes Town, Tredegar,
Gwent NP22 4EF, Wales
Contract manufacture of
soft gel capsule nutraceuticals
Tel: + 44 1495 308 900
Fax: + 44 1495 308 990
Email: info@softgels.co.uk
www.softgels.co.uk
group directory
115
>
DCC Healthcare - continued
Company name & address
Principal activity
Contact details
Fannin Healthcare Limited
Blackthorn Road,
Sandyford Industrial Estate,
Dublin 18, Ireland
Sales, marketing and distribution of
medical and laboratory equipment
and consumables
Tel: + 353 1 2944 500
Fax: + 353 1 2954 777
Email: information@fanninhealthcare.com
www.fanninhealthcare.com
Laleham Healthcare Limited Contract manufacture and packing of
Sycamore Park,
Mill Lane, Alton,
Hampshire GU34 2PR, England
nutraceuticals and cosmetics (liquids and creams)
Tel: + 44 1420 566 500
Fax: + 44 1420 566 566
Email: reception@laleham-healthcare.com
www.laleham-healthcare.com
Physio-Med Services Limited Marketing and distribution of rehabilitation
7-23 Glossop Brook
Business Park,
Surrey Street, Glossop,
Derbyshire SK13 7AJ, England
equipment and consumables
TechnoPharm Limited
Pharmapark,
Chapelizod,
Dublin 20, Ireland
Sales, marketing and distribution of
pharmaceutical products and medical devices
Thompson & Capper Limited Contract manufacture and packing of tablet and
9-12 Hardwick Road,
Astmoor Industrial Estate,
Runcorn,
Cheshire WA7 1PH, England
hard gel capsule nutraceuticals
Tel: + 44 1457 860 444
Fax: + 44 1457 860 555
Email: sales@physio-med.com
www.physiomedhomecare.co.uk
Tel: + 353 1 626 5006
Fax: + 353 1 626 5071
Email: information@technopharm.com
www.technopharm.com
Tel: + 44 1928 573 734
Fax: + 44 1928 580 694
Email: enquiries@tablets2buy.com
www.tablets2buy.com
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
>
DCC Food & Beverage
Company name & address
Principal activity
Contact details
DCC Food & Beverage Limited Holding and divisional management company
79 Broomhill Road,
Tallaght,
Dublin 24, Ireland
Tel: + 353 1 4047 300
Fax: + 353 1 4599 369
Email: foods@dcc.ie
www.dcc.ie
Allied Foods Limited
Kinsale Road,
Cork, Ireland
Bottle Green Limited
19 New Street,
Horsforth,
Leeds LS18 4BH, England
Chilled and frozen food distribution
Sales, marketing and distribution of wine
Broderick Bros. Limited
Cloverhill Industrial Estate,
Clondalkin, Dublin 22, Ireland
Manufacture, distribution and service of
food equipment
Kelkin Limited
Unit 1, Crosslands
Industrial Park,
Ballymount Cross,
Dublin 12, Ireland
Sales, marketing and distribution of
branded healthy food and beverages
Robt. Roberts Limited
79 Broomhill Road,
Tallaght, Dublin 24, Ireland
Sales, marketing and distribution of
food and beverages
Tel: + 353 21 4947 300
Fax: + 353 21 4961 488
Email: info@alliedfoods.ie
Tel: + 44 113 2054 500
Fax: + 44 113 2054 501
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
116
group directory
>
DCC Environmental
Company name & address
Principal activity
Contact details
DCC Environmental Limited
DCC House,
Stillorgan, Blackrock,
Co. Dublin, Ireland
Atlas Environmental
Ireland Limited
Clonminam Industrial Estate,
Portlaoise, Co. Laois, Ireland
Holding and divisional management company
Specialist waste treatment/management services
Tel: + 353 1 2799 400
Fax: + 353 1 2831 017
Email: environmental@dcc.ie
www.dcc.ie
Tel: + 353 5786 786 00
Fax: + 353 5786 786 99
Email: info@atlasireland.ie
www.atlasireland.ie
>
Company name & address
Principal activity
% held
Principal Joint Ventures
KP (Ireland) Limited
79 Broomhill Road,Tallaght,
Dublin 24, Ireland
Kylemore Foods
Holdings Limited
DCC House, Stillorgan,
Blackrock, Co. Dublin,
Ireland
William Tracey Limited*
49 Burnbrae Road,
Linwood, Paisley,
Renfrewshire PA3 3BD,
Scotland
*acquired since the year end
Principal associates
Manor Park
Homebuilders Limited
The Gables, Torquay Road,
Foxrock, Dublin 18, Ireland
Manufacture of snack foods
Holding company for the Kylemore group of
companies whose principal activities are the
operation of restaurants, contract catering
and par bake bread manufacture
50%
50%
Recycling and waste management company
50%
Residential homebuilding and
property development
49%
117
shareholder information
Share price data
Share price movement during the year
- High
- Low
Share price at 31 March
Market capitalisation at 31 March
Share price at 12 May
Market capitalisation at 12 May
Shareholder analysis at 12 May 2006
2005
€
18.50
12.10
17.94
1,442m
2006
€
19.65
14.92
19.20
1,550m
19.40
1,566m
Range of shares held
Number of shares*
% of shares
Number of accounts
% of accounts
Over 250,000
100,001 – 250,000
10,001 – 100,000
Up to 10,000
Total
63,939,073
6,802,100
6,527,247
3,450,806
80,719,226
79.2
8.4
8.1
4.3
100.0
45
41
188
2,579
2,853
1.6
1.4
6.6
90.4
100.0
*Excludes 7,510,178 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
Email: 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 and
charities).
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 website at
http://www.revenue.ie/leaflets/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.
Shareholders should consult their
stockbroker if they wish to hold shares in
electronic form.
Financial calendar
• Preliminary results announced
15 May 2006
• Ex-dividend date for the final dividend
24 May 2006
• Record date for the final dividend
26 May 2006
• Annual Report posted
7 June 2006
• Annual General Meeting
10 July 2006
• Proposed payment date for final dividend
14 July 2006
• Interim results announced
early November 2006
• Payment date for the interim dividend
early December 2006
Annual General Meeting
The 2006 Annual General Meeting will be
held at The Four Seasons Hotel,
Simmonscourt Road, Ballsbridge,
Dublin 4, Ireland on Monday 10 July 2006
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 and
CREST voting
Shareholders may lodge a Form of Proxy
for the 2006 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.
CREST members who wish to appoint a
proxy or proxies via the CREST electronic
proxy appointment service should refer to
footnote 4 of the Notice of Annual General
Meeting for instructions on how to do so.
Investor relations
For investor enquiries please contact:
Conor Murphy,
Investor Relations Manager,
DCC plc, DCC House, Brewery Road,
Stillorgan, Blackrock, Co Dublin, Ireland.
Tel: + 353 1 2799 400
Fax: + 353 1 2799 422
Email: investorrelations@dcc.ie
118
corporate information
Auditors
Bankers
Registered and Head Office
PricewaterhouseCoopers
Chartered Accountants
& Registered Auditors
George’s Quay
Dublin 2
Ireland
Registrar
Computershare Investor Services
(Ireland) Limited
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
Ireland
ABN AMRO Bank
Allied Irish Banks
Bank of Ireland
BNP Paribas
Deutsche Bank
IIB Bank
KBC Bank
Royal Bank of Scotland
Ulster Bank
Solicitors
William Fry
Fitzwilton House
Wilton Place
Dublin 2
Ireland
DCC House
Stillorgan
Blackrock
Co. Dublin
Ireland
Stockbrokers
Davy
49 Dawson Street
Dublin 2
Ireland
JPMorgan Cazenove Limited
20 Moorgate
London EC2R 6DA
England
index
Accounting Policies
Acquisitions and Development
Amalgamation of Accounts
Annual General Meeting
Approval of Financial Statements
Associates
Audit Committee
Auditors' Report
Board Renewal
Board Committees
Borrowings
Business Combinations
Capital Commitments
Capital Grants
Cash and Cash Equivalents
Cash Generated from Operations
Chairman's Statement
Chief Executive's Review
Combined Code
Commodity Price Risk Management
Company Balance Sheet
Company Cash Flow Statement
Company Statement of Changes in Equity
Contingencies
Corporate Governance
Corporate Information
Corporate & Social Responsibility
Credit Risk Management
CREST
Critical Accounting Estimates and Judgements
Current Tax
Deferred Acquisition Consideration
Deferred Income Tax
Depreciation
Derivative Financial Instruments
Directors' and Company Secretary's Interests
Directors of the Company
Directors' Remuneration
Directors' Report
Directors' Share Options
Dividend Cover
Dividend Withholding Tax
Dividends
Earnings Per Share
Employment
Environment, Health and Safety
Events Since the Year End
Exceptional Items
page
58
10
117
117
112
86
38
49
11
38
91
101
100
97
89
100
10
12
38
32
55
57
56
100
38
118
33
32
117
68
81
96
81, 93
84
90
47
6
44
42
46
29
117
82, 117
83
75
33
42
79
119
Finance Costs and Finance Revenue
Finance Leases
Financial Calendar
Financial Review
Financial Risk Management
Five Year Review
Foreign Currency
Foreign Exchange Risk Management
page
80
101
117
28
31, 66
Inside Back Cover
80
32
41
Going Concern
2
Group at a Glance
53
Group Balance Sheet
54
Group Cash Flow Statement
113
Group Directory
51
Group Income Statement
Group Statement of Changes in Equity
52
Group Statement of Recognised Income and Expense 52
Health and Safety
Income Tax
Intangible Assets
Interest Rate Risk and Debt/Liquidity Management
Internal Control
International Financial Reporting Standards (IFRS)
Inventories
Investor Relations
Joint Ventures
Minority Interest
Movement in Working Capital
Net Debt
Nomination Committee
Notes to the Financial Statements
Operating Costs
Operating Leases
Operating Reviews
DCC Energy
DCC SerCom
DCC Healthcare
DCC Food & Beverage
DCC Environmental
Associates
Other Reserves
Payables, Trade and Other
Pensions - Directors
Performance Evaluation
Principal Risks and Uncertainties
Property, Plant and Equipment
Provisions for Liabilities and Charges
33
81
85
32
40
30
87
117
74
99
88
92
39
58
73
101
16
16
18
20
22
24
25
98
88
44
40
42
84
97
120
index
Receivables, Trade and Other
Reconciliations from Irish GAAP to IFRS
Registrar
Related Party Transactions
Remuneration Committee Report
Retained Earnings
Retirement Benefit Obligations
Return on Capital Employed (ROCE)
Segment Information
Senior Management
Share Capital
Share Listings
Share Options
Share Premium
Share Price Data
Shareholder Information
Statement of Directors' Responsibilities
Subsidiaries
Substantial Shareholdings
Treasury Shares
Website
page
87
104
117
103
44
99
94
29
68
8
97
117
75
98
117
117
48
87
43
42
117
5 year review
Group income statement
Year ended 31 March
Irish GAAP
IFRS
2002
€’m
2003
€’m
2004
€’m
2005
€’m
2006
€’m
Revenue
1,901.4
2,125.4
2,089.4
2,644.7
3,436.3
Operating profit before operating exceptional
items and amortisation of intangible assets
Operating exceptional items
Amortisation of intangible assets
Operating profit
Finance costs (net)
Share of associates' profit after tax
Non-operating exceptional items
Profit before tax
Income tax expense
Minority interests
Profit attributable to Group shareholders
Earnings per share
- basic (cent)
- basic adjusted (cent)
Dividend per share
Dividend cover (times)
Interest cover (times)
Group balance sheet
As at 31 March
Non-current and current assets
Property, plant and equipment
Intangible assets
Investments in associates
Cash/derivatives
Other assets
Total assets
Equity
Non-current and current liabilities
Borrowings/derivatives
Retirement benefit obligations
Other liabilities
Total liabilities
Total equity and liabilities
98.8
(2.9)
(7.3)
88.6
(3.9)
10.1
(1.7)
93.1
(11.0)
(1.3)
80.8
103.4
(2.3)
(8.3)
92.8
(3.8)
14.0
(5.9)
97.1
(12.0)
(0.8)
84.3
111.8
(16.0)
(1.2)
94.6
(5.7)
16.8
(4.8)
100.9
(12.1)
(1.0)
87.8
123.6
2.8
(4.9)
121.5
(7.0)
25.5
(1.2)
138.8
(13.5)
(1.5)
123.8
96.66
111.00
101.98
121.89
109.68
137.22
153.92
157.23
28.18
32.40
37.26
42.85
91.5
-
(5.7)
85.8
(3.2)
7.1
(1.1)
88.6
(11.4)
(0.9)
76.3
90.26
98.30
24.50
4.0
28.6
3.9
25.3
3.8
27.2
Irish GAAP
2002
€’m
159.2
118.3
39.0
304.7
447.1
1,068.3
2003
€’m
209.4
132.1
40.3
354.0
424.7
1,160.5
2004
€’m
218.6
131.4
42.0
323.5
434.2
1,149.7
3.7
19.6
IFRS
2005
€’m
254.8
208.1
51.4
353.3
541.1
1,408.7
3.7
17.6
2006
€’m
267.5
248.5
76.8
354.4
665.4
1,612.6
395.4
432.9
462.8
492.2
585.4
241.6
-
431.3
672.9
1,068.3
333.9
-
393.7
727.6
1,160.5
261.1
17.2
408.6
686.9
1,149.7
362.2
25.4
528.9
916.5
1,408.7
387.1
20.7
619.4
1,027.2
1,612.6
Net cash/(debt) included above
63.1
20.1
62.4
(8.9)
(32.7)
Group cash flow
Year ended 31 March
Operating cash flow
Capital expenditure
Acquisitions
Irish GAAP
IFRS
2002
€’m
120.3
37.9
59.6
2003
€’m
98.5
39.2
88.2
2004
€’m
151.9
32.1
14.5
2005
€’m
116.4
43.6
81.2
Other information
Irish GAAP
IFRS
Return on tangible capital employed (%)
Return on total capital employed (%)
2002
2003
46.3%
23.1%
42.2%
22.0%
2004
39.8%
21.3%
2005
44.9%
20.4%
Working capital (days)
11.5
15.4
11.6
10.2
Average number of employees
3,361
3,685
3,768
4,746
2006
€’m
142.9
57.7
54.7
2006
43.0%
19.1%
9.5
5,109
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
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