DCC ANNUAL REPORT AND ACCOUNTS 2009
1
Annual Report and Accounts 2009
DCC ANNUAL REPORT AND ACCOUNTS 2009
DCC is a broadly based Group, operating across five focused
divisions:
- DCC Energy
- DCC SerCom (IT & entertainment products)
- DCC Healthcare
- DCC Food & Beverage
- DCC Environmental
85% of DCC’s profits are derived from procurement, sales,
marketing and distribution businesses, with 15% from business
support service activities.
DCC Energy
DCC SerCom
DCC Healthcare
DCC Food & Beverage
DCC Environmental
Procurement, sales,
marketing and
distribution businesses
• Oil
• LPG
• Fuel cards
Business support
services
SerCom Distribution
IT & entertainment
products to
• Retailers
• Resellers
• Enterprise markets
SerCom Solutions
• Outsourced
procurement and
supply chain
management
services
• Hospital supplies
• Mobility & Rehab
products
• Healthfoods
• Indulgence foods
• Outsourced
solutions to the
health & beauty
sector
• Chilled and frozen
logistics
• Waste management
and recycling
services
DCC currently employs approximately 7,200 people and is listed under Support Services on
the Irish and London stock exchanges.
DCC’s strategy is to generate sustainable, superior returns on capital through
• growing as a diversified Group in its two broad business activities:
- procurement, sales, marketing and distribution
- business support services;
• seeking, over time, to concentrate its focus on those businesses in which it has already
established, or has the opportunity in the medium term to establish, leadership positions
(typically No. 1 or No. 2 in their respective markets);
• focusing its acquisition activity on strengthening existing market positions and on carefully
extending its geographic footprint where it believes that leadership positions can be built;
• attracting and empowering leaderships teams;
• maintaining a strong balance sheet and a prudent capital structure.
strength through diversity
Highlights
for the year ended 31 March 2009
Revenue
€6,400.1m
Operating profit*
€180.4m
Adjusted earnings per share*
169.13 cent
Dividend per share
62.34 cent
Operating Cash Flow
€304.9m
DCC ANNUAL REPORT AND ACCOUNTS 2009
1
Reported
Constant Currency†
+15.7%
+31.0%
Reported
Constant Currency†
+7.9%
+22.4%
Reported
Constant Currency†
+2.5%
+17.0%
Reported
+10.0%
(2008: €129.0 million)
† Constant currency figures quoted are based on retranslating 2008/09 figures at prior year rates
* excluding net exceptionals and amortisation of intangible assets
Operating profit (€m)
10 year CAGR 12.9%
Operating profit
geographic split
Operating profit
sector split
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Contents
Highlights
Group at a Glance
Board of Directors
Chairman’s Statement
Chief Executive’s Review
Strategy Review
Business Review
Financial Review
Sustainability Report
Report of the Directors
Principal Risks & Uncertainties
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1
2
4
6
8
12
14
34
40
44
46
Corporate Governance
Report on Directors’ Remuneration and Interests
Statement of Directors’ Responsibilities
Report of the Independent Auditors
Financial Statements
Group Directory
Shareholder Information
Corporate Information
Senior Management
Index
Five Year Review
48
52
56
57
58
112
115
117
118
119
120
strength through performance
Strong brands (*DCC owned)
Market position
2
DCC ANNUAL REPORT AND ACCOUNTS 2009
DCC Group at a Glance
DCC Energy
DCC Energy is the leading oil and liquefied
petroleum gas (LPG) procurement, sales,
marketing and distribution business in Britain
and Ireland.
DCC SerCom
SerCom Distribution markets and sells IT
and entertainment products to the Retail,
Reseller and Enterprise markets.
SerCom Solutions provides outsourced
procurement and supply chain management
services in Ireland, Poland, China and the USA.
DCC Healthcare
DCC Healthcare is a broadly based
healthcare products and services group.
% of Group operating profit
Volume split
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DCC Food & Beverage
DCC Food & Beverage markets and sells a
wide range of owned and agency branded
food and beverage products in Ireland and
has a wine business in Britain.
% of Group operating profit
Revenue split
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DCC Environmental
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DCC Environmental provides a broad range
of waste management and recycling services
to the industrial, commercial, construction
and public sectors in Britain and Ireland.
DCC ANNUAL REPORT AND ACCOUNTS 2009
3
Strong brands (*DCC owned)
Market position
• Oil
Carlton Fuels*, CPL*, Emo Oil*, Scottish Fuels*, Shell, Texaco.
• Gas
Flogas*.
• Fuel card
BP, Esso, Diesel Direct, Fastfuels, ReD, Shell.
• Oil
No. 1 oil distributor in Britain.
No. 1 oil distributor in Northern Ireland and a leading oil distributor in the
Republic of Ireland.
• Gas
No. 2 LPG distributor in Britain and Ireland.
• Fuel card
No. 1 in the “agency” fuel card business in Britain.
• Retail
Disney, EA, Entertainment in Video, Exspect*, Garmin, Linx*, Logitech,
• Retail
The No.1 specialist distributor of consumer IT & entertainment products to a
Microsoft, Nintendo, Paramount, Symantec, Take Two, Warner.
broad range of retailers in Britain, Ireland and France.
• Reseller
Acer, Canon, D-Link, Fujitsu Siemens, IBM, Lenovo, Netgear, Samsung,
• Reseller
A leading distributor of IT products to a broad range of resellers in Britain and
Sharp, Sony, Toshiba, Western Digital.
• Enterprise
EMC2, Fortinet, HP, IBM, Network Appliance, Oracle, Red Hat, SonicWall,
Sun, Symantec and VMware.
• Supply Chain Management
SerCom Solutions*.
Ireland.
• Enterprise
The No.1 specialist distributor of enterprise products to resellers and
independent software vendors in France, Iberia, Belux and Ireland, with a
developing presence in Britain.
• Supply Chain Management
A leading provider of outsourced procurement and supply chain management
services.
• Hospital Supplies and Services
Cardinal, Diagnostica Stago, Diamed, Ebewe, Fannin*, Fresenius, Grifols,
• Hospital Supplies and Services
The No.1 hospital supply business in Ireland.
Molnlycke, Oxoid, Smiths Medical, Synthes.
• Health & Beauty Solutions
Body Shop#, Healthspan#, Merck (Seven Seas, Natures Best, Lamberts)#,
Nutrahealth plc#, Sara Lee#, Vitabiotics#.
• Mobility & Rehab
Ausmedic*, Biofreeze, Chattanooga, Days Healthcare*, Metron*,
Physio-Med*, Thera-Band.
A leading provider of value-added distribution services to the hospital sector
in Britain.
• Health & Beauty Solutions
A leading European provider of outsourced solutions to health & beauty
companies.
• Mobility & Rehab
The No.1 provider of physiotherapy products in Britain, Australia and New
Zealand.
A leading provider of rehabilitation products in Britain.
# Customers of DCC Health & Beauty Solutions.
• Healthfood
Alpro, Baxters, Biofreeze, Filippo Berio, Hipp, Kallo, Kelkin*, Nairns, Olbas,
Ortis, Pomegreat, St Dalfour, Vitabiotics, Whole Earth.
• Indulgence
Andrew Peace, Antinori, Baron Philippe de Rothschild, Bollinger, Chapoutier,
Cono Sur, Elizabeth Shaw, French Connection*, Freixenet, Hula Hoops,
KP, Lemons*, Louis Jadot, McCoys, McVities / Mars Cakes, Masi, Mateus,
Moreau, Phileas Fogg, Ritter, Robert Roberts*, Sacla, Sutter Home, Topps,
Torres, Wakefield.
• Logistics
Allied Foods*.
• Other
Brodericks*, Kylemore.
Enva* Wastecycle*, Tracey.
• Healthfood
The No.1 ambient healthfood business in Ireland.
• Indulgence
A leading independent wine distributor in Ireland.
No.2 brand in freshly ground coffee in Ireland.
No.3 supplier in savoury snacks in Ireland.
• Logistics
No.1 in frozen food logistics in Ireland with a developing chilled food
business.
• No.1 recycling and waste management business in Scotland.
• A leading Nottingham based recycling and waste management business.
• No.1 hazardous waste treatment business in Ireland.
4
DCC ANNUAL REPORT AND ACCOUNTS 2009
Board of Directors
Michael Buckley
Non–executive Chairman
Michael Buckley, MA, LPh, MSI, (64) was
appointed non-executive Chairman on 27
May 2008. He is a non-executive director of
M and T Bank Corporation, listed in the USA,
and of Bramdean Alternatives Limited, listed
in the UK. Mr. Buckley is a non-executive
director of Enterprise Ireland and of Bradford
and Bingley, the nationalised UK mortgage
bank, and is senior adviser to a number
of privately owned Irish and international
companies. He is an adjunct professor at the
Department of Economics in UCC and chairs
the Board of the Irish Chamber Orchestra.
Mr. Buckley was Group Chief Executive of
Allied Irish Banks plc from 2001 to 2005
having served as Managing Director of AIB
Capital Markets and AIB Poland. Previously,
he was Managing Director of NCB Group and
a senior public servant in Ireland and the EU.
Mr. Buckley joined the Board in 2005.
Róisín Brennan
Non-executive Director
Róisín Brennan, BCL, FCA, MSI, (44) is
Executive Chairman 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.
David Byrne
Non-executive Deputy Chairman
and Senior Independent Director
David Byrne, SC, (62) joined the Board
and was appointed non-executive Deputy
Chairman and Senior Independent Director
on 1 January 2009. He is a non-executive
director of Kingspan plc and serves on a
number of commercial international advisory
boards. Mr. Byrne is also Chancellor of Dublin
City University, chairs the National Treasury
Management Agency Advisory Committee
and is Chairman of the National Concert Hall.
Following 27 years of practice as a barrister,
he was Attorney General of Ireland from
1997 to 1999. Mr. Byrne served as the first
EU Commissioner for Health and Consumer
Protection from 1999 to 2004. Following this,
he served as Special Envoy of the Director-
General of the World Health Organisation.
John Moloney
Non Executive Director
Donal Murphy
Executive Director
Donal Murphy, B Comm, BFS, MBA, (43)
joined DCC in 1998 having previously
worked with Allied Irish Banks plc. He was
appointed Managing Director of DCC Energy
in 2006 having been Managing Director of
DCC SerCom for a number of years. Prior to
this Mr. Murphy was Head of Group IT. Mr.
Murphy joined the Board in December 2008.
John Moloney, B.Agr.Sc., MBA, (54) is Group
Managing Director of Glanbia plc where he
has been a board member since 1997. He
joined Glanbia in 1987 and held a number
of senior management positions including
Chief Executive of the Food Ingredients and
Agricultural Trading divisions. Previously, Mr.
Moloney worked with the Department of
Agriculture, Food and Forestry as well as in
the meat industry in Ireland. He is a director of
the Irish Dairy Board Co-operative Limited and
a council member of the Irish Business and
Employers Confederation. Mr. Moloney joined
the Board in February 2009.
DCC ANNUAL REPORT AND ACCOUNTS 2009
5
Maurice Keane
Non-executive Director
Kevin Melia
Non Executive Director
Maurice Keane, B Comm, M Econ Sc, (67)
was a member of the Court of Directors of
Bank of Ireland from 1983 to 2005, and Chief
Executive from 1998 to 2002. In January
2009 he was appointed a director of Anglo
Irish Bank Corporation Limited after it was
nationalised. He is a director of Axis Capital
Holdings Limited, listed in the USA, and is
a member of the National Pension Reserve
Fund Commission. Previously, Mr. Keane was
Chairman of BUPA Ireland and of Bristol &
West plc. Mr. Keane joined the Board in 2002.
Kevin Melia, FCMA, JDIPMA, (61) is a former
Non-executive Chairman of Iona Technologies
and Authorize.Net and was the Co-founder,
Chairman and CEO of Manufacturers Services
Ltd. Previous positions held include Chief
Financial Officer and Executive Vice President
of Operations of Sun Micro Systems and
President of its computer hardware division.
Mr. Melia also held a number of senior
management positions at Digital Equipment
Corporation. He is Co Managing Director of
Boulder Brook Partners, a private investment
company and is non-executive director
of Analogic Corporation, Greatbatch Inc,
RadiSys Corp and C&S Wholesale Grocers
and Distributors. Mr. Melia joined the Board in
December 2008.
Tommy Breen
Chief Executive
Tommy Breen, B Sc (Econ), FCA, (50) was
appointed Chief Executive on 27 May 2008
having been Group Managing Director
since July 2007. He was previously Chief
Operating Officer having held a number of
senior management positions in the Group,
including those of Managing Director of DCC’s
Energy and SerCom divisions and he retains
responsibility for DCC Environmental. Mr.
Breen joined DCC in 1985, having previously
worked with KPMG. Mr. Breen joined the
Board in 2000.
Fergal O’Dwyer
Executive Director
Bernard Somers
Non-executive Director
Fergal O’Dwyer, FCA, (49) has been Chief
Financial Officer since 1994. He joined DCC
in 1989 having previously worked with KPMG
in Johannesburg and Price Waterhouse in
Dublin. Mr. O’Dwyer joined the Board in 2000.
Bernard Somers, B Comm, FCA, (60) is
the founder of Somers & Associates, which
has built a substantial practice in corporate
restructuring. He is a non-executive director
of Irish Continental Group plc and has been
an investor in and a director of several start-
up companies. Mr. Somers joined the Board
in 2003.
Audit Committee
Bernard Somers (Chairman)
Kevin Melia
John Moloney
Nomination Committee
Michael Buckley (Chairman)
David Byrne
Maurice Keane
Remuneration Committee
Maurice Keane (Chairman)
Róisín Brennan
Michael Buckley
David Byrne
6
DCC ANNUAL REPORT AND ACCOUNTS 2009
Chairman’s Statement
“ In the year ended March 2009, DCC
extended its track record of unbroken
operating profit growth to 15 years,
completed a thorough strategic review and
undertook a substantial Board renewal
programme.”
On behalf of the Board, I am happy to report
a strong set of results for the year ended 31
March 2009. DCC has extended to 15 years
its track record of unbroken operating profit
growth. Its balance sheet, funding and liquidity
are in very good shape. A thorough strategic
review has been brought to a conclusion
by year end, as promised. A substantial
Board renewal programme has also been
successfully undertaken during the year.
Results Highlights
The year ended 31 March 2009 has seen
DCC deliver strong revenue, operating profit
and earnings per share growth. There was
a good balance between organic growth
and acquisition elements and an excellent
return on capital employed was achieved
against the backdrop of extremely disruptive
economic and trading conditions, including
a dramatic decline in the value of sterling
against the euro. Highlights of the financial
results include:
• 31% growth in revenue, in constant
currency terms
• 22.4% growth in operating profit in
constant currency terms and 7.9% growth
in reported terms
• 17% growth in earnings per share on a
constant currency basis and 2.5% growth
on a reported basis
• Net debt of €90.7 million at year end,
compared with equity of €726.2 million
• Free cash flow after interest and tax of
€218.5 million
Financial performance is analysed in much
more detail in the Chief Executive’s Review,
the Business Review and Financial Review
sections of this Annual Report.
Dividend Increase
The Board is recommending a final dividend
of 39.73 cent per share which, when
added to the interim dividend of 22.61 cent
per share, gives a total dividend of 62.34
cent for the year. This represents a 10%
increase over the prior year. The dividend
is covered 2.7 times by adjusted earnings
per share (2.9 times in 2008). It is proposed
to pay the final dividend on 23 July 2009 to
shareholders on the register at the close of
business on 29 May 2009.
Board
On Jim Flavin’s resignation as Executive
Chairman and Chief Executive on 27 May
2008, I was appointed Non-Executive
Chairman. Board renewal was a major
agenda item during the year. Three new
non-executive directors and one new
executive director were co-opted to the
Board. Two non-executive directors retired.
The Board now consists of seven non-
executive directors and three executive
directors. On becoming Chairman, I
ceased, under the Combined Code, to be
defined as independent. The Board has
determined that each of the other non-
executive directors meets the criteria for
independence.
The Board is fortunate in the personal
qualities, wide ranging capabilities and
highly relevant experience that our new
non-executive directors, David Byrne (who
has been appointed Deputy Chairman and
Senior Independent Director), Kevin Melia
and John Moloney bring to the table. I
warmly welcome them to DCC.
Donal Murphy, who joined the Board as
an executive Director, has management
responsibility for DCC’s Energy division and
has extensive previous experience in other
parts of the Group. DCC Energy is by far
the largest division in the Group and has in
recent years established a clear leadership
position in Britain and Ireland.
DCC ANNUAL REPORT AND ACCOUNTS 2009
7
Dividend - years ended 31 March
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CAGR 10yrs 15.6%
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CAGR 5yrs 14.0%
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to the periods between early February
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1995 and end September 1995, and early
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November 1999 to end April 2000). The
High Court Order does not relate to the
ongoing business of the Group.
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As the Inspector’s work is still under way, it
would be inappropriate for me to comment
any further on this matter, other than to
say that DCC’s focus is to facilitate a
timely conclusion of the inspection, given
the very specific issues and timeframe
involved in the inspection. The Inspector,
in presenting an interim report to the High
Court on 28 January 2009, said that “I wish
to record and acknowledge that to date
the companies, their directors, officers and
advisers have been providing me with the
utmost cooperation and have responded
promptly to my requests for assistance.”
The Group continues to cooperate fully with
the Inspector.
Outlook
All current indications are that, in the year
to 31 March 2010, a troubled economic
and business environment will continue
to create headwinds. At best, operating
conditions may begin to show signs of
improvement towards the end of the period.
But we are well prepared, and will continue
to focus on, operating efficiencies and cash
generation. Those same conditions will
bring to us opportunities for acquisition and
development at good value levels. We are
better positioned than most to capitalise on
them when they arise.
Micheal Buckley
Chairman
18 May 2009
Dividend
62.34 cent
+10%
Tony Barry and Paddy Gallagher retired from
the Board during the year. They each made
a major contribution to the development of
the Group and to robust Board discussion
over the years. In last year’s annual report, I
paid tribute to the outstanding contribution
Jim Flavin made as founder and leader of
DCC over a 32 year period and I would
once again like to reaffirm those sentiments.
At year-end I conducted a formal evaluation
of the performance of all Directors and
can confirm that each Director performed
effectively during the period and continues
to show strong commitment.
In line with the practice I initiated last year,
all directors will offer themselves for re-
election at the Annual General Meeting.
Management and Staff
Tommy Breen was appointed Chief Executive
on 27 May 2008. I said in last year’s Annual
Report, which was written shortly after that
event, that I had been struck by the quality,
focus and cohesiveness of the management
team. Those qualities continue to be strikingly
evident today. The results achieved in the year
just ended demonstrate just how smoothly the
succession process has worked.
DCC operates a highly devolved
management system within a framework
of very specific performance measures.
This ensures that both the small Group-
level team and operating management
in individual businesses remain focussed
on operational improvements and cost
efficiencies, while staying very close to
opportunities that might arise for valuable
acquisitions. There are approximately
7,200 people employed by the Group
in 15 countries. I want to thank each of
them warmly for their contribution to the
continued success of DCC.
Strategic Review
The extensive strategic review of the
business, which was undertaken over the
past year, occupied a very considerable
amount of Board and management time.
The conclusions reached by the Board are
set out on page 12.
Corporate Sustainability
DCC established a new Corporate
Sustainability Working Group in 2008
comprising senior group, divisional and
subsidiary executives. The group decided
to focus in the period immediately ahead
on the following four aspects of Corporate
Sustainability as they have a high business
value to DCC as well as a high economic,
environmental or social value: Direct
Economic Value Added, Climate Change,
Occupational Health & Safety and Business
Ethics. Specific objectives and KPIs will be
implemented in respect of these aspects.
Further detail is provided in the Sustainability
Report on pages 40 to 43.
Appointment of Inspector/Fyffes Case
In last year’s Annual Report I gave a detailed
account of developments arising from
the Fyffes case, including the intention
expressed by the Director of Corporate
Enforcement to apply to the High Court
for the appointment of Inspectors, under
Section 8 of the Companies Act 1990, to
investigate and report on whether certain
provisions of the Companies Acts were
breached in the transactions relating to
the intra-group transfer of the Fyffes’
shares by DCC in 1995 and their ultimate
disposal in 2000. On 29 July 2008 the High
Court appointed Mr Bill Shipsey SC as an
Inspector to examine specific issues relating
to the legal and beneficial interests of DCC
and two of its subsidiaries S&L Investments
Limited and Lotus Green Limited, in the
shares of Fyffes plc between February 1995
and April 2000 (with particular reference
8
DCC ANNUAL REPORT AND ACCOUNTS 2009
Chief Executive’s Review
“ DCC achieved excellent constant currency
growth of 22.4% in operating profit to
€180.4 million in a year characterised by a
rapidly deteriorating economic and business
climate. The Group’s strong financial
position has been reinforced through a year
of record cash generation.”
Results highlights
Revenue
Operating profit*
Profit before exceptional items, amortisation of intangible assets and tax
Adjusted earnings per share*
Dividend per share
Free cash flow**
Net debt at 31 March 2009
Return on capital employed
€
6,400.1m
180.4m
159.5m
169.13 cent
62.34 cent
218.5m (2008: €12.4m)
90.7m (2008: €123.7m)
17.8% (2008: 17.5%)
† all constant currency figures quoted in this report are based on retranslating 2008/09 figures at prior year translation rates
* excluding net exceptionals and amortisation of intangible assets
** after interest and tax payments
Change on prior year
Constant
currency†
Reported
+15.7%
+7.9%
+6.3%
+2.5%
+10.0%
+31.0%
+22.4%
+21.3%
+17.0%
DCC achieved another year of excellent
underlying growth despite the rapidly
deteriorating economic and business
climate. Group operating profit of €180.4
million represented growth, on a constant
currency basis, of 22.4% over the prior year
of which approximately half was organic. On
a reported basis, operating profit was up
7.9%, reflecting the fact that approximately
76% of the Group’s operating profit in the
year was denominated in sterling and that
there was a 15% adverse movement in the
average sterling translation rate . Adjusted
earnings per share of 169.13 cent was
17.0% ahead of the prior year on a constant
currency basis and 2.5% ahead on a
reported basis.
Dividend per share is up 10% to 62.34 cent
with dividend cover at 2.7 times (2.9 times
in 2008).
As the year progressed there was a
heightened focus throughout the Group
on cash generation and, in particular, on
the quality of the Group’s working capital
profile. It is pleasing to note that free cash
flow in the year was a record €218.5 million
and that a reduction in debtors days to
41.3 compared to 45.7 in the prior year,
resulted in an overall reduction in working
capital days to 11.9 from 16.4 last year. The
Group’s strong financial position has been
reinforced with debt declining by €33.0
million in the year to €90.7 million at 31
March 2009 which left gearing at 12.5%
and a net debt/EBITDA ratio of 0.4%.
Return on capital employed (including
intangibles) was 17.8% compared to 17.5%
in the prior year.
DCC ANNUAL REPORT AND ACCOUNTS 2009
9
Adjusted earnings per share
- years ended 31 March
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CAGR 10yrs 11.8%
CAGR 5yrs 9.8%
Adjusted earnings per share
169.13 cent +2.5%
Free cash flow
€218.5m
(2008: €12.4m)
Divisional Highlights
Detailed business reviews for each of the
five divisions are set out on pages 14 to
33. Some of the key features of the year
include:
DCC Energy had an exceptional year in
terms of profit growth, cash generation
and development across each of its
business areas. The business sold 5.3
billion litres of product throughout Britain
and Ireland and, aided by the successful
integration of a number of acquisitions, a
more favourable product cost environment
than in recent years and a very cold winter,
grew its operating profit by 59.3% on
a constant currency basis. Substantial
progress was achieved in the pursuit of a
number of strategic objectives, including the
acquisition, in August 2008, of Chevron’s
UK oil distributor business, the impact of
which was to increase DCC Energy’s annual
oil volumes in the UK by approximately 30%
on a full year basis. DCC Energy now has
an approximate 12% share of the UK oil
distribution market and continues to target
the achievement of a 20% market share
in the medium term. We are also pleased
to have announced that we have reached
conditional agreement with Shell Denmark
to acquire the trade, assets and goodwill of
Shell’s oil distribution business in Denmark,
which distributes heating oils and transport
fuels to domestic and small commercial
and industrial companies throughout
Denmark. This is an initial modest step for
DCC Energy in expanding its oil distribution
business beyond Britain and Ireland.
DCC SerCom achieved strong profit growth
in the year of 9.2%, on a constant currency
basis, despite challenging conditions in
some of its markets. This result continues
the business’s long track record of
outperforming almost all of its industry
peers. The growth was achieved in large
part due to the success of DCC SerCom’s
strategic focus on expanding its product
range (including its own brand) and market
coverage in the Retail market and through
further progress in the development of a
pan-European presence in the Enterprise
market. Continued expansion of the product
portfolio across the businesses is targeted
for the current financial year.
DCC Healthcare experienced difficult
market conditions across its businesses
and was particularly impacted by budgetary
constraints in the Irish Health Service
Executive and by significant raw material
price increases in its Health & Beauty and
Mobility & Rehab businesses. The German
mobility and rehabilitation market has
proved particularly difficult over a number
of years and led to DCC taking the decision
to close its subsidiary there. International
customers who have been dealing with our
German business will now be serviced from
our British subsidiary. Other initiatives have
been taken to address the trading issues
experienced in DCC Healthcare, including
cost reductions and the implementation of
price increases in the Health & Beauty and
Mobility & Rehab businesses.
10
DCC ANNUAL REPORT AND ACCOUNTS 2009
Chief Executive’s Review
(continued)
DCC Food & Beverage experienced a
particularly challenging market environment
in the second half of the financial year. The
economic downturn in Ireland has led to
changes in both consumer buying patterns
and in the procurement strategy by one
of the business’s major retail customers.
Action to adapt the cost base in the
business to new activity levels is ongoing.
During the year DCC Food & Beverage
acquired Findlater Grants, a leading Irish
wine and spirits distribution business. The
integration of this business has gone well
and we are confident of achieving the twin
objectives of creating a powerful new force
in wine and spirits distribution in Ireland
and of realising significant commercial and
operating synergies.
DCC Environmental’s profits were impacted
by the deteriorating economic environment
and the dramatic decline in recyclate prices.
Cost reductions have been implemented in
those parts of the division where volumes
have reduced and our businesses are
focussed on maintaining their respective
market leading positions. While activity
levels are lower, the momentum towards
more sustainable waste management
solutions leaves DCC Environmental, with its
particular focus on recycling, well placed for
future development.
Exceptional Charge
DCC incurred a net exceptional charge
before tax in the year of €15.9 million,
principally relating to:
• redundancy costs incurred both in relation
to the integration of recently acquired
businesses and the implementation of a
number of cost reduction programmes
across the Group;
Acquisition and capital expenditure
DCC Energy
DCC SerCom
DCC Healthcare
DCC Food & Beverage
DCC Environmental
Total
• the costs associated with the closure of
DCC Healthcare’s German subsidiary;
• a non cash goodwill impairment charge in
relation to certain Food & Beverage and
Healthcare subsidiaries; and
• the profit on the sale of a US associate
company.
Acquisition and Capital Expenditure
Acquisition and capital expenditure in the
year amounted to €154.5 million as set out
below.
Acquisition expenditure in the year
amounted to €98.4 million. Acquisition
activity levels slowed throughout the year
which is a reflection of a shift in the short
term focus of many potential vendors in
reacting to the impact of the economic
downturn on their businesses as well as a
period of adjustment required for valuation
expectations. DCC’s strong financial
position leaves the Group well placed to
take advantage of an increased flow of
opportunities which is likely to arise in the
current environment.
During the year DCC spent €56.1 million
on capital expenditure down from €87.6
million in the prior year. A further reduction
in capital expenditure is anticipated in the
current year.
Financial Strength
At 31 March 2009 DCC had net debt
of €90.7 million (2008: €123.7 million)
and total equity of €726.2 million (2008:
€742.4 million). The Group’s net debt levels
averaged €236 million compared to €242
million in the prior year. Interest cover in the
year amounted to 8.5 times.
Acquisitions
€’m
65.3
10.9
7.0
12.0
3.2
98.4
Capex
€’m
31.5
3.9
6.7
4.1
9.9
56.1
Total
€’m
96.8
14.8
13.7
16.1
13.1
154.5
DCC ANNUAL REPORT AND ACCOUNTS 2009
11
“ DCC’s diversified
business model,
strong financial
position and
excellent cash
generation leave the
Group in a strong
position to benefit
from acquisition
and development
opportunities that
are likely to arise
in the current
environment.”
Strategy Review
The Board and management have carried
out a detailed review of DCC’s overall
strategic direction over the last year. An
extensive analysis was carried out of the
current performance and future potential of
all material aspects of the Group’s business.
A review was also undertaken, with the
benefit of external independent advice, to
consider whether any significant changes
in the current composition or structure of
the Group are warranted at this time. The
outcome of the Strategy Review is set out
on page 12.
Outlook
The outlook for the current financial
year is set against the background of an
exceptionally difficult economic environment
which it is anticipated will continue
throughout the year.
In particular, while the first half of the
Group’s financial year is seasonally much
less significant (33.6% of operating profit
last year), results for this period will be
challenged by the continuing impact of
the marked economic slowdown which
particularly affected some of the Group’s
businesses in the second half of last year.
In addition, DCC Energy, DCC’s largest
division, achieved exceptional profit growth
in the first half last year (82.3% in constant
currency terms) benefiting from particularly
cold weather conditions in April (seasonally
DCC Energy’s most important trading
month in the first half), which were not
repeated in April 2009.
For the full year to 31 March 2010, it is
currently anticipated that Group operating
profit, on a constant currency basis, will be
modestly behind to broadly in line with last
year. However, the impact of the translation
into euro of the significant proportion of
DCC’s profit which is earned in sterling
(2009: 76%) at the approximate current
exchange rate of Stg£0.90 = €1 (compared
to an average translation rate last year of
Stg£0.8262 = €1) would result in reported
operating profit being approximately 5% to
10% behind last year.
The Group will benefit from a significant
reduction in its net finance costs as a result
of lower prevailing interest rates although
this will be largely offset by a higher tax
charge due to lower available interest
deductions in the UK against the Group’s
taxable profits.
Consequently, at this early stage DCC
anticipates adjusted earnings per share,
on a constant currency basis, will be
modestly behind to broadly in line with the
year ended 31 March 2009, resulting in
reported adjusted earnings per share being
approximately 5% to 10% behind.
DCC’s diversified business model, strong
financial position and excellent cash
generation leave the Group in a strong
position to benefit from acquisition and
development opportunities that are likely to
arise in the current environment.
Tommy Breen
Chief Executive
18 May 2009
12
DCC ANNUAL REPORT AND ACCOUNTS 2009
Strategy Review
Background and Business Environment
In its preliminary announcement on 19 May 2008, DCC stated that it would undertake a
reappraisal of the overall strategic direction of the Group so that it is best positioned for
sustainable, long term growth and to maximise shareholder value. Accordingly, DCC has
carried out an extensive analysis of the current performance and future potential of all
material aspects of the Group’s business. A review was also undertaken, with the benefit
of external independent advice, to consider whether any significant changes in the current
composition or structure of the Group are warranted at this time. This work has been
carried out against the backdrop of severe turmoil in financial markets and the worst
recession in decades.
DCC’s Historical and Recent Performance
Since DCC’s shares were listed on the Irish and London Stock Exchanges in 1994, the
Group has delivered strong earnings growth and returns to shareholders. The Group’s strong
cash flows have allowed it to increase dividends to shareholders, to buy back 11.6% of its
shares and to maintain a strong balance sheet.
Having operated in recent years against a background of strong economic growth in
its principal markets, the resilience of DCC’s business model has been tested by the
deteriorating economic environment in its most recent financial year. Despite this more
difficult background, DCC has generated excellent constant currency growth in operating
profits, maintained its return on capital employed and again increased its dividend. The
Group’s financial position remains very strong as a result of its excellent cash flow, low
gearing and well managed debt maturity profile.
DCC ANNUAL REPORT AND ACCOUNTS 2009
13
Outcome of the Strategy Review
The strategy review has concluded as follows:-
The Board believes that DCC’s diversified business model, strong balance sheet,
financial discipline and acquisition skills have been significant factors in the Group’s
robust performance and management of risk over an extended period. Given the scale
and composition of the Group today and the current market environment, the Board has
concluded that a material change to the structure or composition of the Group at this
point would not enhance shareholder value.
The management of diversity is a core competence of the DCC Group and will remain
integral to DCC’s strategy. However, DCC will seek, over time, to concentrate its focus
on those businesses in which it has already established, or has the opportunity in the
medium term to establish, leadership positions (typically no. 1 or 2 in their respective
markets) and which are most likely to generate attractive and sustainable returns on
capital, through a combination of organic growth and acquisitions.
DCC will focus its acquisition activity on strengthening existing market positions and on
carefully extending its geographic footprint where it believes that leadership positions
can be built. DCC has extensive experience in identifying value enhancing acquisitions,
in structuring transactions to retain management incentive post acquisition and in the
integration of bolt-on acquisitions with existing businesses.
A devolved management structure and the experience and quality of its people have
been key to DCC’s success. The Group will continue to place significant emphasis on
attracting and empowering leadership teams capable of delivering superior performance
in each of its businesses.
DCC will maintain a strong balance sheet and a prudent capital structure, both of which
have been key strengths of the Group in developing relationships with key customers,
suppliers and vendors of businesses. The Board believes that DCC’s strong financial
position leaves it well placed to take advantage of the increased level of acquisition
opportunities which are likely to arise in the current environment.
The Board will keep the Group’s structure and strategic direction under periodic review in
order to ensure that value continues to be maximised for shareholders.
14
DCC ANNUAL REPORT AND ACCOUNTS 2009
Business Review
DCC Energy
DCC Energy is the leading oil and liquefied petroleum gas
(LPG), sales, marketing and distribution business in Britain
and Ireland. DCC sold 5.3 billion litres of product to
c.600,000 domestic, commercial, industrial and agricultural
customers from its extensive network of 230 depots
throughout Britain and Ireland.
DCC Energy currently employs 2,960 people.
Revenue
€4,130.8m
Operating profit
€100.7m
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Revenue
Operating profit
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2009
2008
€4,130.8m €3,420.0m
€74.3m
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Change on prior year
Constant
Currency
Reported
+20.8%
+35.5%
+39.9%
+59.3%
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DCC ANNUAL REPORT AND ACCOUNTS 2009
15
billion litres
of product sold during the year
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16
DCC ANNUAL REPORT AND ACCOUNTS 2009
Business Review
DCC Energy
Business and Markets
Oil
DCC Energy’s oil distribution business
supplies heating oils, transport fuels and fuel
oils to domestic, commercial, agricultural
and industrial customers in Britain and
Ireland. DCC is the largest distributor in
Britain, selling c. 4 billion litres of product
per annum, which gives DCC approximately
12% of the market*. DCC has been a
consolidator of the highly fragmented
oil distribution market in Britain, having
first entered the market in 2001 with the
acquisition of BP’s oil distribution business
in Scotland. DCC significantly increased
the scale of its oil distribution business
through the acquisition of Chevron’s UK oil
distributor business in September 2008.
The Chevron business has now been fully
integrated into DCC’s existing oil distribution
business in Britain. DCC Energy sells oil
under a portfolio of strong brands including
Carlton Fuels, CPL Petroleum, Shell and
Texaco.
In Northern Ireland, DCC Energy is the
largest oil distributor, with a market share of
approximately 20%, while in the Republic of
Ireland, DCC Energy has approximately 6%
of the market.
DCC Energy announced on 19 May 2009
that it has reached conditional agreement
with Shell Denmark to acquire the trade,
assets and goodwill of Shell’s oil distribution
business in Denmark, which distributes
heating oils and transport fuels to domestic
and small commercial and industrial
customers throughout Denmark.
LPG
DCC Energy is the second largest LPG
sales, marketing and distribution business
in Britain and Ireland. The LPG business
supplies propane and butane in bulk and
in cylinders to domestic, commercial,
agricultural and industrial customers for
heating, cooking, transport and industrial
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Volume Split
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having established
leading market
positions in Britain
and Ireland, DCC
Energy is seeking to
extend its business into
continental Europe
DCC ANNUAL REPORT AND ACCOUNTS 2009
17
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Performance Management - key performance indicators
Volumes
Organic volume growth
Operating profit per litre
Operating cash flow
Working capital
ROCE incl. tangible assets
ROCE excl. tangible assets
10 year CAGR
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2009
5.3bn litres
-2.8%
1.90 cent
€200.7m
1.5 days
24.9%
63.7%
18.7%
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4.3bn litres
6.2%
1.75 cent
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8.0 days
20.6%
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18.9%
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processes. Trading under the Flogas brand,
DCC has approximately 20% of the market
in Britain and 37% of the market in Ireland.
Unlike the oil market, which remains highly
fragmented, the LPG market in both Britain
and Ireland is relatively consolidated. The
LPG business also distributes a range of
LPG fuel appliances such as mobile heaters,
barbecues and patio heaters.
DCC Energy sold 5.3 billion litres of product,
an increase of 24.9% on the prior year,
further strengthening its position as the
leading oil and LPG distribution business
in Britain and Ireland. Organic volumes
declined by 2.8% due to both the weaker
economic environment and management
taking a more prudent approach towards
the extension of credit.
Fuel Cards
DCC Energy is one of the leading sales and
marketing businesses for branded fuel cards
in Britain. The business now sells in excess
of 500 million litres of motor fuel annually via
its portfolio of fuel cards under the BP, Esso,
Shell, Texaco, Diesel Direct and ReD brands.
Fuel cards have become an essential tool for
commercial organisations to manage their
transport fuel costs. DCC Energy provides its
customers with access to the breadth of the
UK retail petrol station and bunker networks
through its portfolio of branded fuel cards and
with detailed information on their fuel utilisation
to enable them to minimise their spend on
transport fuels.
The oil business in Britain benefited from
continued operating cost efficiencies
derived from the growth of its extensive
infrastructure. The Chevron UK oil
distributor business, acquired during the
year, performed well ahead of expectations.
The Irish oil business was impacted by the
particularly weak economic environment
and action is being taken to significantly
reduce the cost base of this business.
The LPG distribution business in Britain
and Ireland generated good sales volume
growth as it benefited from the colder
weather conditions and the more favourable
product cost environment.
DCC Energy purchases its oil and LPG
from the major oil companies with which
it has established excellent long standing
relationships. DCC Energy’s supply strategy
is to maintain a portfolio approach to
sourcing of its oil and LPG products. DCC’s
significant financial strength enables DCC
Energy to obtain more favourable credit
terms to manage its working capital.
Performance for the Year Ended
31 March 2009
DCC Energy achieved exceptionally strong
constant currency operating profit growth of
59.3% in the year, of which approximately
two thirds was organic. Each of the
division’s businesses generated excellent
operating profit growth. The overall result
benefited from the successful integration of
a number of acquisitions, a more favourable
product cost environment than in recent
years and a particularly cold winter. The
temperatures during the key weather
dependent months of April and from
October through March were below the 30
year average and significantly colder than
the prior year.
The Fuel Card business had an excellent
year driven by strong organic growth and
the first time contribution from the Cooke
Fuel Cards business, which performed in
line with expectations.
Strategy and Development
DCC Energy’s strategy is to continue
to grow and develop its business both
organically and through acquisition in each
of the sectors in which it operates.
In oil distribution, DCC’s strategy is to
achieve a 20% share of the British market.
DCC Energy will continue to leverage
its extensive nationwide operational
infrastructure to drive high levels of organic
growth with a particular focus on the non
heating dependent segments of the market
and on national accounts. DCC Energy
is also focused on cross-selling add-on
products and services such as lubricants
and boiler maintenance services to its
extensive customer base.
In the LPG market, DCC Energy will
continue to leverage its strong market
positions to drive organic growth on a
sector by sector basis in both Britain and
Ireland.
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Sales Volumes (litres billions)
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In fuel cards, DCC will continue to target
high levels of organic growth through its
extensive portfolio of branded fuel cards
by investing in new telesales teams and
cross selling fuel cards to its extensive oil
distribution customer base. DCC Energy
will continue to position itself as the partner
of choice for all the providers of branded
fuel cards in both the retail and bunker card
networks.
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Having established strong market positions
in both Britain and Ireland, DCC Energy
is seeking to extend its business into
continental Europe. The acquisition of
Shell’s oil distribution business in Denmark,
while modest, is an important step in this
strategic development.
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Outlook
After an exceptionally strong performance
in the year to 31 March 2009, DCC Energy
currently expects operating profit, on a
constant currency basis, to be broadly in
line with the prior year, as it is anticipated
that the weather pattern and the product
cost environment will not be as favourable.
* The market is defined as fuels sold to the domestic, commercial, agriculture, industrial and
haulage sectors of the transport fuels market (i.e. excluding the retail petrol station market).
18
DCC ANNUAL REPORT AND ACCOUNTS 2009
Business Review
DCC SerCom
SerCom Distribution markets and sells IT and entertainment
products to the Retail market, the Reseller market and the
Enterprise market. SerCom Solutions provides outsourced
procurement and supply chain management services in
Ireland, Poland, China and the USA.
DCC SerCom currently employs 1,340 people.
Revenue
€1,551.3m
Operating profit
€40.1m
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Change on prior year
Constant
Currency
Reported
+9.0%
+0.2%
+18.7%
+9.2%
2009
2008
€1,551.3m €1,423.4m
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2.6%
2.8%
Revenue
Operating profit
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DCC ANNUAL REPORT AND ACCOUNTS 2009
19
m i l l i o n e u r o
o p e r a t i n g c a s h fl o w a c h i e v e d i n t h e y e a r
20
DCC ANNUAL REPORT AND ACCOUNTS 2009
Business Review
DCC SerCom
Business and Markets
Retail
DCC SerCom’s Retail business distributes
a broad range of consumer products,
including games consoles and software,
consumer electronics and home
entertainment products, to retailers, e-tailers
and catalogue resellers in Britain, Ireland
and France. DCC SerCom represents
many of the leading brands in the computer
games, entertainment and consumer
electronics markets such as Electronic
Arts, Entertainment in Video, Garmin,
Logitech, Microsoft, Nintendo, Paramount,
Seagate, Symantec, Take Two and Warner
Brothers. The business is the leading
specialist distributor of home entertainment
products in Ireland, the leading specialist
distributor of games hardware, software
and accessories, consumer electronics and
software in Britain and the leading specialist
distributor of IT peripherals and consumer
electronics in France. The Retail business
provides a range of value added services to
its customers and suppliers including end-
user fulfillment, third party logistics, category
management and merchandising, security
tagging and cross vendor bundling.
Reseller
DCC SerCom’s Reseller business distributes
a broad range of IT products focused on
the SME and home markets to a very wide
customer base of IT resellers, dealers and
retailers in Britain and Ireland. The products
distributed include PCs, peripherals,
printers, and network products. The
Reseller business is a distribution partner of
many of the leading brands in the IT market
such as Acer, Canon Cisco, IBM, Lenovo,
Microsoft, Netgear, Samsung, Sony and
Toshiba. The business provides its partners
with an exceptionally broad customer reach
and proactively markets IT products to the
channel through product focused sales
teams with strong technical expertise. DCC
SerCom’s Reseller business has strong
market positions in its core markets in
Britain and Ireland and is typically the No. 1
distributor for the brands it represents.
Niall Ennis - Managing Director
extending product
and market coverage
in the Retail market,
including the further
development of
own brand
products
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DCC ANNUAL REPORT AND ACCOUNTS 2009
21
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Performance Management - key performance indicators
Revenue growth (constant currency)
Organic revenue growth (constant currency)
Operating cash flow
Working capital
ROCE including intangible assets
ROCE excluding intangible assets
10 year CAGR
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2009
+18.7%
+8.7%
€46.0m
32.9 days
15.5%
26.2%
7.0%
2008
+18.8%
+9.6%
€64.5m
34.9 days
15.3%
24.2%
9.2%
Enterprise
DCC SerCom’s Enterprise business
distributes a range of data management,
security and virtualisation software,
servers and storage products which are
typically utilised in medium-sized and large
organisations. The business’s customers
are value added resellers, large account
resellers and independent software vendors
in France, Iberia, Benelux and Britain.
The Enterprise business has developed a
supplier portfolio of the leading hardware
and software vendors in the industry
including Adobe, Appliance EMC, Fortinet,
HP, IBM, Network, Oracle, Red Hat,
SonicWall, Sun, Symantec and VMware.
This allows its highly trained sales teams
to offer integrated IT solutions and related
services to its customers. The business
is the leading specialist distributor of
enterprise and mid-market products in its
core markets of France, Spain, Portugal,
Belgium and Luxembourg and has a
developing presence in Britain and the
Netherlands.
Supply Chain Management
DCC SerCom’s supply chain management
business, SerCom Solutions, provides
a range of specialist procurement and
sourcing services from its operations in
Ireland, Poland, China and the United
States, employing state of the art IT
systems and procurement processes. The
business is a strategic supply chain partner
for some of the world’s leading technology
and telecommunications companies. The
business delivers global supply chain
solutions encompassing vendor hubbing,
consignment stock programmes, supplier
identification and qualification, quality
assurance and compliance and supplier and
customer fulfillment to effectively reduce
its partners’ cost of production and reduce
obsolescence and wastage. SerCom
Solutions has developed partnerships
with leading logistics firms to enable the
business to deliver its services in a flexible,
cost effective manner in its core markets in
Europe, North America and the Far East.
Revenue split 2009
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SerCom Distribution’s principal medium
term objectives are:
• to extend its product and market
coverage in the Retail market, providing
an integrated multi-country service,
including the further development of own
brand products;
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• to extend its pan-European presence in
the Enterprise market with an increased
focus on software and security products;
• to expand the Reseller business in Britain
and Ireland in complementary product
markets, such as mobile telephony and
communications.
SerCom Solution’s primary strategic
objectives are to expand its customer base
in East Asia, Europe and North America
through strategic partnership arrangements
and the extension of its procurement and
sourcing services and capability.
Outlook
For the year to 31 March 2010, DCC
SerCom anticipates that operating profit
will be broadly in line with the prior year
on a constant currency basis. While it is
expected that SerCom Distribution will
achieve good constant currency operating
profit growth, operating profit in the Supply
Chain Management business is likely to
decline.
Performance for the year ended
31 March 2009
DCC SerCom achieved strong constant
currency operating profit growth of 9.2%,
despite challenging trading conditions in
some of its markets. This strong growth
was driven primarily by excellent growth
from the Retail business in Britain, a full year
contribution from Banque Magnetique (the
French Retail business) and the successful
integration of a number of small bolt-on
acquisitions in the Enterprise business.
The Retail business had a strong year,
achieving good operating profit growth. The
business performed particularly well in Britain,
increasing its share of the games market
and benefiting from the continuing strong
demand for games consoles, software and
associated products. The business also saw
very good growth in its own brand product
range, which continues to develop well.
The French business performed in line with
expectations, despite weakening consumer
demand. In Ireland, the business suffered from
a significant decline in consumer demand,
which resulted in a reduction in profits.
The Reseller business had a good year
driven by strong sales growth in Britain,
achieved through market share gains,
particularly in PCs. Operating profit declined
in the Irish business, with market conditions
deteriorating throughout the year; significant
restructuring has been implemented in this
business to appropriately align its cost base
with current revenue levels.
The Enterprise business achieved excellent
operating profit growth. The business
grew its market share and strengthened its
product portfolio particularly in software.
The business also benefited from the
successful integration of a number of
modest bolt-on acquisitions completed in
the current year.
Although operating profit declined in DCC
SerCom’s Supply Chain Management
business, trading was ahead of
expectations, due to the slower than
anticipated change in the procurement
strategy of a major customer.
Strategy and Development
DCC SerCom’s strategy is to deliver
consistent long-term profit growth and
industry leading returns on capital employed
by building strong commercial and market
positions in each of its focused business units.
22
DCC ANNUAL REPORT AND ACCOUNTS 2009
Business Review
DCC Healthcare
DCC Healthcare is a broadly based healthcare products and
services business focused on:
• Sales and marketing of healthcare products and provision
of services to the hospital sector in Ireland and Britain;
• Provision of outsourced product development,
manufacturing and packing services to the health and
beauty industry in Europe;
• Sales and marketing of mobility and rehabilitation products
in Britain, Ireland, Australia, New Zealand and other
markets.
DCC Healthcare currently employs 1,350 people.
Revenue
€331.2m
Operating profit
€17.3m
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Constant
Currency
Reported
+15.5%
-26.2%
+27.9%
-20.5%
2009
2008
€331.2m
€17.3m
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DCC ANNUAL REPORT AND ACCOUNTS 2009
23
record
sales of
million euro
were achieved during the year
24
DCC ANNUAL REPORT AND ACCOUNTS 2009
Business Review
DCC Healthcare
Business and Markets
Hospital Supplies & Services
In Ireland, DCC’s subsidiary, Fannin, is the
market leader in sales and marketing of
healthcare products to the hospital sector
– intravenous (IV) pharmaceuticals, medical,
surgical and laboratory products – and also
provides a range of complementary value
added services. Fannin markets and sells a
broad range of leading brands – including
Cardinal, Grifols, Molnlycke, Oxoid and
Synthes – through its extensive field sales
force of highly trained professionals. Products
are typically single use/consumable in nature.
Fannin is increasingly focused on developing
its range of value-added services; for
example, it has built a growing business in the
provision of IV pharmaceutical compounding
services to Irish hospitals. The compounding
activities involve the aseptic filling of oncology,
pain management, antibiotic and paediatric
nutrition products into patient ready dosage
forms, i.e. syringes or IV bags, within a
licensed facility.
In Britain, following the acquisition of
Squadron Medical and TPS Healthcare in
the last eighteen months, DCC is building
a growth platform in the provision of value
added distribution services to British hospitals
and leading healthcare brand owners. This
is a developing sector as British acute care
hospitals increasingly look for customised just-
in-time distribution solutions to deliver cost
savings, free up space currently occupied
by stores and ultimately to contribute to
the delivery of better service levels to their
patients.
Health & Beauty Solutions
DCC Health & Beauty Solutions is a leading
provider of “source to shelf” outsourced
solutions to the health and beauty industry,
principally in the areas of nutraceuticals
(vitamin and health supplements), skin
care and hair care. Customers include
leading premium brand owners, mail order
companies, specialist health and beauty
retailers and private label suppliers in Britain,
continental Europe and other markets.
DCC provides a wide range of product
formats (tablets, soft gel and hard shell
capsules, creams and liquids), packing
and other services from its three MHRA
licensed facilities in Britain. The quality of
these facilities, together with the strength
and depth of DCC’s business development
and technical resources, enables DCC to
assist its customers in rapidly bringing new
products from marketing concept through
to finished, shelf-ready product. DCC’s
key strength is the highly responsive and
flexible service it provides to its customers.
This service typically involves product
Conor Costigan - Managing Director
increasingly
focusing on the
provision of
value-added
services
to hospitals
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DCC ANNUAL REPORT AND ACCOUNTS 2009
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25
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Performance Management - key performance indicators
Revenue growth (constant currency)
Revenue per employee (constant currency)
Operating cash flow
Working capital
ROCE incl. tangible assets
ROCE excl. tangible assets
10 year CAGR
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2009
+27.9%
€272k
€23.3m
39.8 days
9.4%
31.9%
6.8%
2008
+24.5%
€247k
€22.4m
47.4 days
13.9%
48.8%
13.2%
development, formulation, stability and other
testing and regulatory compliance, as well as
manufacturing and packing.
Mobility & Rehab
DCC Mobility & Rehab is involved in the
design, development, procurement, sales
and marketing of mobility and rehabilitation
products with operations in Britain, Ireland,
Australia, and New Zealand as well as a
network of international distributors. DCC
is the market leader in the physiotherapy
product sector in Britain, Australia and New
Zealand. DCC has a broad product portfolio
principally marketed under its own Days
Healthcare, Physio-Med and Metron brands,
along with leading third party international
physiotherapy brands including Thera-Band,
Biofreeze and Chattanooga. Own brand
products are designed and developed in-
house, with manufacturing mainly outsourced
to partners in Asia, who are managed by
DCC’s procurement and quality control team
based in Shenzhen, China. DCC Mobility &
Rehab’s extensive customer base of hospitals,
community loan stores, specialist retailers,
private practitioners and nursing homes is
serviced through field and telesales teams and
supported by a range of product catalogues
and websites.
Performance for the Year Ended
31 March 2009
DCC Healthcare’s constant currency
operating profits declined by 20.5% due to
the impact of difficult trading conditions across
its businesses.
DCC’s Hospital Supplies & Services business
had a challenging year. The Irish Health
Service Executive’s budgetary constraints
have significantly reduced demand in
the marketplace. This has led to a more
competitive operating environment for the
business with sales in the non-acute sector
particularly impacted. Significant headcount
reductions were implemented over the course
of the year to address this. DCC achieved
continued good growth in the provision of
intravenous pharma compounding services to
Irish hospitals. DCC’s value added distribution
services business in Britain grew its sales
strongly and invested in its operational
infrastructure, leaving it well placed in this
developing sector of the British market.
DCC Health & Beauty Solutions’ profits
declined due to a reduction in contribution
from the beauty sector. While strong growth
in sales into the sector was achieved, margins
were impacted by a lag in the recovery of
significant input cost increases (raw materials
and currency). Sales price increases were
achieved in the last quarter of the financial
year. In the nutraceuticals sector, good
sales and profit growth was achieved and
operational capability was further enhanced by
the expansion of DCC’s tabletting facility and
by the development of new products, which
have resulted in a number of material new
business wins for the current year.
DCC Mobility & Rehab suffered from a
deterioration in the trading environment in
each of its geographic markets. This was most
pronounced in the German market and led to
DCC Healthcare taking the decision to close
its German subsidiary. Margins in all areas
were significantly impacted by unfavourable
currency movements and price increases from
Far Eastern suppliers. Sales price increases,
sourcing of product from alternate suppliers and
cost price reductions have now been achieved
in order to recover margins.
Strategy and Development
DCC Healthcare’s strategy is to build a
substantial, broadly based, healthcare
business focused on the sales and marketing
of healthcare products and the provision
of value added services to the healthcare
industry, including the health & beauty sector.
DCC Healthcare is increasingly focusing on
developing its activities in the value-added
services area. In the markets in which DCC
Healthcare operates, healthcare provision is
primarily funded by governments. As fiscal
budgets tighten and the burden of ageing
populations increases, public healthcare
systems are increasingly looking to the
private sector for cost effective value added
solutions. In addition, individual hospitals and
hospital trusts are reviewing their activities
and increasingly outsourcing those activities
deemed to be non-core. DCC Healthcare is
working to meet this demand by providing a
range of value added services to hospitals,
including IV pharmaceutical compounding
services and distribution services.
Revenue by Activity
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Similar outsourcing trends are visible in the
health and beauty sector, where brand owners
are increasingly outsourcing more of their
non-sales and marketing activities (including
product development) and streamlining their
supply chains. With its high quality licensed
facilities and its technical, regulatory and
financial strengths, DCC Health & Beauty
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these trends.
DCC Healthcare’s primary focus is the
generation of strong organic profit growth
and superior returns in its existing businesses
by continually developing and expanding
its product and service offering through
more effective development, sourcing and
procurement. In addition to driving continuing
growth through existing channels to market,
the business is also focused on growing in
new and developing channels, leveraging the
expertise of its sales teams and the reach of
its comprehensive product catalogues.
Outlook
The trading environment for DCC Healthcare
remains challenging given that the majority of
its revenues are derived from public healthcare
spending in Ireland and Britain. However the
unprecedented changes in input costs which
impacted results in the year under review
are not expected to recur. As a result, DCC
Healthcare anticipates a strong recovery in
constant currency operating profit in the year
to 31 March 2010.
26
DCC ANNUAL REPORT AND ACCOUNTS 2009
Business Review
DCC Food & Beverage
DCC Food & Beverage markets and sells a wide range of
company owned and third party branded food and beverage
products in Ireland and has a wine business in Britain. It is
a market leader in a number of niche market segments in
healthfoods, indulgence foods and frozen & chilled logistics.
DCC Food & Beverage currently employs 1,060 people.
Revenue
€305.0m
Operating profit
€12.1m
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Constant
Currency
Reported
-1.7%
-21.3%
+2.1%
-20.4%
2009
2008
€305.0m
€12.1m
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DCC ANNUAL REPORT AND ACCOUNTS 2009
27
million
bottles of wine sold
during the year
28
DCC ANNUAL REPORT AND ACCOUNTS 2009
Business Review
DCC Food & Beverage
Business and Markets
DCC Food & Beverage’s businesses have
a strong track record in brand building
and offer deep distribution reach with
extensive customer service to the retail
and foodservice sectors throughout
Ireland. Services provided include
marketing, category management, selling
(key account management, direct sales
representation and van sales), distribution
and merchandising. Principal customers
include multiples, symbol and independent
retailers, pharmacies, off licences, hotels,
restaurants and cafes. In Britain, wines are
sold to multiple retailers and wholesale cash
and carry customers.
Healthfoods
In Ireland, Kelkin is the leading and most
comprehensive supplier of owned and
agency brands of healthy foods and
beverages, fine foods and vitamins, minerals
& supplements (“VMS”), selling directly to
both the grocery and pharmacy sectors.
The Kelkin brand is recognised as the
leading brand in the ambient health / “better
for you” food sector and offers a healthy
choice in many food categories. It is also a
strong brand in the VMS sector.
Indulgence Foods
Robert Roberts is a value-added distributor
of indulgence products in the grocery,
impulse and food service sectors. The
business has a strong, complementary
range of owned and agency brands,
specialising in wine, snacks, hot beverages,
confectionery, cakes and soft drinks. In
the Irish market, Robert Roberts is the
number two supplier of freshly ground
coffee to both the retail and foodservice
sectors, the number three supplier of
savoury snacks (through the KP range)
and a leading independent distributor of
sugar confectionery products. Through its
wine distribution business, Findlater Wine
& Spirit Group, Robert Roberts is a leading
distributor of wine in Ireland providing an
satisfying customer and
consumer needs
in the health and
indulgence sectors
Frank Fenn - Managing Director
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DCC ANNUAL REPORT AND ACCOUNTS 2009
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29
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Performance Management - key performance indicators
Operating cash flow
Revenue per employee (constant currency)
Working capital
ROCE incl. tangible assets
ROCE excl. tangible assets
10 year CAGR
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2009
€13.7m
€300k
12.5 days
14.1%
35.8%
7.1%
2008
€25.5m
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18.6%
51.2%
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extensive portfolio of international wine
brands. This business was developed
following the integration of its well
established wine business, Woodford
Bourne, with Findlater Grants, which was
acquired during the second half of the year.
Findlater Wine & Spirit Group offers its
principals the largest on trade reach in the
Irish marketplace.
In Britain, Bottle Green is a leading supplier
of branded (owned and agency) and
exclusive retail solutions to the multiple off
trade sector of the UK wine market.
shopping in Northern Ireland. The decision
by a major retailer to source third party
agency brands directly from Britain has
also had a negative impact. DCC Food
& Beverage’s Indulgence and Healthfood
businesses in Ireland were impacted by
these changes and consequently operating
profit declined in both businesses. The
Findlater Wine & Spirit Group performed in
line with expectations.
The frozen and chilled logistics business
performed satisfactorily and continues to
achieve operational efficiencies.
Logistics/Other
Allied Foods is the number one frozen food
distributor in Ireland, with a developing
chilled food distribution business. It offers
a full range of temperature controlled
supply chain solutions (procurement, brand
management and selling, warehousing and
distribution) to major retailers, manufacturers
and food service customers.
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 through acquisition.
Kylemore Foods Group (50% owned
by DCC) is a leading operator of retail
restaurants and contract catering services
in Ireland.
Performance for the Year Ended
31 March 2009
As anticipated, DCC Food & Beverage
experienced a deterioration in trading in
the second half of the year and as a result
operating profit declined in the year by
20.4% on a constant currency basis.
The economic downturn in Ireland has
led to changes in buying patterns in the
food and beverage sector with consumers
spending less and seeking greater value
offerings, including increased cross border
The business will continue to increase its
focus on brands, building on the progress
that has been made to date with Kelkin
(healthy foods and beverages), Robert
Roberts (coffee & speciality teas), Lemon’s
confectionery, and its extensive range
of third party agency brands across its
healthfoods and indulgence categories.
The UK wine business remains focused
on developing its own range of brands
including French Connection and Andrew
Peace.
Outlook
The trading environment for DCC Food &
Beverage is likely to remain difficult and it is
anticipated that operating profit will decline
in the current year.
30
DCC ANNUAL REPORT AND ACCOUNTS 2009
Business Review
DCC Environmental
DCC Environmental is a leading UK and Irish provider of
recycling and waste management services to the industrial,
commercial, construction and public sectors, operating in both
the non-hazardous and hazardous segments of the market.
• DCC owns 50% of the William Tracey Group, Scotland’s
leading recycling and waste management business.
• DCC’s subsidiary, Wastecycle, is a leading recycling and
waste management business in the East Midlands region of
the UK.
• DCC’s subsidiary, Enva, is the leading hazardous waste
management business in Ireland.
DCC Environmental currently employs 490 people.
Revenue
€81.8m
Operating profit
€10.2m
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Change on prior year
Constant
Currency
Reported
-10.8%
-27.2%
-0.1%
-17.6%
2009
2008
€81.8m
€10.2m
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DCC ANNUAL REPORT AND ACCOUNTS 2009
31
c.
of waste diverted
from landfill in Britain
32
DCC ANNUAL REPORT AND ACCOUNTS 2009
Business Review
DCC Environmental
Business and markets
Britain
Britain is making significant strides in
reducing the volume of waste sent to
landfill in an effort to match best practice in
continental Europe. The British Government
is actively encouraging the development
of a sustainable waste infrastructure in a
number of ways. The development of new
technologies for the treatment and ultimate
disposal of waste is being promoted
through traditional grant funding. In addition,
initiatives are in place to ensure that energy
produced from waste receives a premium
price. Simultaneously, landfill, the traditional
end disposal outlet, is being rendered less
competitive through increased taxation. As
of 1 April 2009 landfill tax now amounts to
£40 per tonne (up from £24 per tonne two
years ago) and it has been indicated that it
will continue to increase by £8 per tonne per
annum until 2013, when it will amount to
£72 per tonne. Currently approximately 35%
of waste is recycled but the Government’s
target is to increase this to at least 50% with
suggestions that this target may be pushed
as high as 75%. This gives significant
impetus to DCC’s strategy to further
develop as a leading player in the British
waste management and recycling industry.
Both William Tracey’s and Wastecycle’s
focus is on the industrial, commercial and
construction waste segments of the market,
while also handling waste arising on behalf
of local authorities, including domestic
recyclables. Together, these businesses
handle approximately one million tonnes of
waste of which c.70% is currently diverted
from landfill.
Operating from nine sites, William Tracey
is recognised as Scotland’s leading waste
management company with a reputation
for innovation and creativity in the recycling
and management of a wide range of both
non hazardous and hazardous waste
products. The business operates a number
Tommy Breen
- Acting Managing Director
taking advantage of the
trend towards more
sustainable waste
management with a
particular emphasis on
recovery and recycling
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DCC ANNUAL REPORT AND ACCOUNTS 2009
33
Performance Management - key performance indicators
Tonnages*
Recycling %
Operating cash flow
Working capital
ROCE incl. tangible assets
ROCE excl. tangible assets
2009
720k
64%
€21.2m
23.9 days
12.9%
29.5%
63.7%
2008
810k
58%
€18.1m
38.3 days
17.4%
40.4%
79.1%**
** 9 year
Revenue split
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Outlook
While each of its businesses has reacted
to the current market conditions through
operating cost reductions and there is some
evidence of the market stabilising in Britain,
DCC Environmental anticipates a decline
in constant currency operating profit for
the year principally reflecting the full year
impact of the slowdown in activity levels
experienced in the second half of last year.
of fully integrated facilities to treat, recover
and dispose of waste and recycles a wide
range of materials. William Tracey has an
extensive fleet of specialist vehicles which
collect waste from industrial and commercial
customers and it also processes waste on
behalf of local authorities and other third
parties.
Wastecycle is a leading recycling and
waste management company, based in
Nottingham in England. Operating from
a fifteen acre site, the company provides
a comprehensive waste collection and
recycling service to industrial, commercial
and local authority customers. Through
some of the most innovative techniques
in the industry, using both automated and
semi-automated equipment, Wastecycle
separates waste and recovers recyclable
materials such as cardboard, metals, timber,
plastics, paper, aggregates, soils, glass and
plasterboard. In the past year, Wastecycle
has increased the proportion of waste
diverted from landfill by processing certain
waste streams to create a fuel which can be
used as a direct substitute for fossil fuels.
The importance given to health and
safety in DCC Environmental is reflected
in Wastecycle recently being awarded a
second Royal Society for the Prevention
of Accidents (RoSPA) medal for health and
safety.
DCC Environmental is dedicated to helping
its customers reduce the impact of their
businesses on the environment. This is
being achieved through investment in new
technologies to broaden the scope of its
re-processing services as well as developing
sustainable markets for secondary
materials.
Ireland
Hazardous waste in Ireland is generated
by a wide range of industries such as
the pharmaceutical/chemicals sector,
power generation and utilities. Ireland has
historically exported approximately 50% of
its hazardous waste but is now seeking to
become more self sufficient in dealing with
this waste. Given its extensive infrastructure
of hazardous waste facilities, DCC
Environmental is ideally positioned to benefit
from this trend.
Enva is a leading-edge company providing
innovative, efficient and cost-effective
solutions for the treatment and disposal
of a diverse range of hazardous wastes.
10 year CAGR
* only 50% of Traceys
Operating from six licensed sites, Enva
has the most comprehensive waste
infrastructure in Ireland, providing a range
of services including oil recycling, chemical
treatment, water treatment, metal recovery
and soil remediation.
Performance for the Year Ended
31 March 2009
DCC Environmental was impacted by the
deteriorating economic environment and, in
particular, the slowdown in the construction
sector in both Britain and Ireland. This was
further compounded by a dramatic decline
in recyclate prices in the second half of the
financial year. Constant currency operating
profit declined by 17.6%.
William Tracey was impacted by a decline
in waste volumes in the Scottish market
as a result of the general economic
slowdown and by lower recyclate prices.
While Wastecycle was also impacted by
the difficult trading environment, it achieved
increased recycling rates thereby diverting a
greater proportion of waste from landfill and
maintained operating profit in line with the
prior year.
In Ireland, Enva was impacted by the
deterioration in the economy in the second
half, leading to a reduction in demand
from customers and considerable margin
pressure.
Strategy and Development
DCC Environmental’s strategy continues to
be to grow its position as a leading broadly
based waste management and recycling
business in Britain and Ireland by positioning
the business to take advantage of the
trend towards more sustainable waste
management with a particular emphasis
on recovery and recycling. This growth
strategy will be driven both organically and
by acquisition.
Despite the current difficult market
environment, DCC Environmental has
maintained its strong market positions.
While activity levels have reduced, longer-
term Government policy remains unaltered;
in fact, recent measures introduced in both
Britain and Ireland reinforce the commitment
to reducing landfill activities and to driving
improved rates of recovery and recycling.
Against this background, DCC believes its
strategy continues to offer the prospect of
excellent returns to its shareholders.
34
DCC ANNUAL REPORT AND ACCOUNTS 2009
Financial Review
Excellent Growth in Profits and Cash Flow
– Strong Well Funded and Liquid Balance
Sheet
DCC achieved an excellent profit and cash flow result, in
what were very challenging economic conditions, benefiting
from its diversified business model. The DCC balance sheet is
strong, well funded, liquid and lowly geared leaving the Group
well placed to take advantage of acquisition and development
opportunities that will arise.
Excellent Growth in Profits
On a constant currency basis operating profit grew by 22.4%
(7.9% on a reported basis).
Fergal O’Dwyer
- Chief Financial Officer
... and Cash Flow
Operating cash flow of €304.9 million was 136.3% higher
than the €129.0 million in the prior year and free cash flow of
€218.5 million was €206.1 million higher than the €12.4 million
generated in the prior year.
Strong Balance Sheet
At 31 March 2009 the Group had net debt of €90.7 million
and total equity of €726.2 million which equates to gearing of
12.5%.
...which is well Funded and Liquid
The Group’s strong funding and liquidity position at 31 March
2009 can be summarised as follows:
Cash and short term bank deposits
Overdrafts
Cash and cash equivalents
Bank debt repayable within 1 year
US Private Placement debt repayable:
Other debt
Debt
Net debt
Y/e 31/3/2012
Y/e 31/3/2014
Y/e 31/3/2015
Y/e 31/3/2016
Y/e 31/3/2017
Y/e 31/3/2018
Y/e 31/3/2020
€’m
426.8
(51.3)
(49.6)
(5.6)
(58.9)
(163.5)
(13.4)
(36.7)
(50.1)
(84.4)
(412.6)
(4.0)
€’m
375.5
(466.2)
(90.7)
DCC ANNUAL REPORT AND ACCOUNTS 2009
35
“ Net finance costs
for the year
increased by €3.3
million to €21.1
million (€17.8 million
in 2008) primarily
due to the increase
in interest rates,
which reduced
significantly during
the second half.”
Accounting Policies
The Group financial statements have been
prepared in accordance with International
Financial Reporting Standards (IFRS)
as adopted by the European Union and
their interpretations as issued by the
International Accounting Standards Board
(IASB) and the International Financial
Reporting Interpretations Committee (IFRIC),
applicable Irish law and the Listing Rules
of the Irish and London Stock Exchanges.
Details of the basis of preparation and the
significant accounting policies of the Group
are included in pages 64 to 72.
Overview of Results
Revenue of €6.4 billion grew by 31.0%
on a constant currency basis. (15.7% on
a reported basis) and operating profit of
€180.4 million increased by 22.4% on
a constant currency basis (7.9% on a
reported basis) as set out in Tables 1 and 2.
The growth in revenue and operating profit,
analysed as between organic growth,
growth from acquisitions and the impact of
currency, is as follows:-
Organic
Acquisitions
Constant currency
Currency impact
on translation
Reported
Revenue Operating
7.1%
23.9%
31.0%
Profit
10.7%
11.7%
22.4%
( 15.3%)
15.7%
(14.5%)
7.9%
The average Stg£/€ exchange rate for the
year ended 31 March 2009 was Stg£0.8262
= €1 compared to Stg£0.7021 = €1 in the
previous year. This 15% weakening of the
sterling exchange rate adversely impacted
operating profits in the year ended 31 March
2009 by €24.2 million.
Although DCC’s operating margin (excluding
exceptionals) was 2.8% (3.0% in 2008), 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 downstream energy market
in which DCC Energy operates, where
profitability is driven by absolute contribution
per litre (or tonne) of product sold and not
by a percentage margin.
A detailed review of the operating
performance of each of DCC’s divisions is
set out on pages 14 to 33.
Finance Costs (net)
Net finance costs for the year increased by
€3.3 million to €21.1 million (€17.8 million
in 2008) primarily due to the increase in
interest rates, which reduced significantly
during the second half. The Group’s average
net debt was €236 million during the year,
a modest decline from the average of €242
million in the prior year. Interest was covered
8.5 times by Group operating profit before
amortisation of intangible assets (9.4 times
in 2008).
Profit before Net Exceptionals,
Amortisation of Intangible Assets and Tax
Profit before net exceptionals, amortisation
of intangible assets and tax of €159.5
million increased by 21.3% on a constant
currency basis. On a reported basis the
increase was 6.3%.
Exceptional Charge (net)
The Group incurred a net exceptional
charge before tax of €15.9 million as
follows:
€’m
(13.0)
Restructuring costs
Closure of DCC Healthcare’s
German subsidiary
(9.1)
(2.4)
Goodwill impairments
Profit on sale of US associate company 6.2
2.4
Other
(15.9)
Net exceptional charge
The restructuring costs were incurred
in relation to the integration of
recently acquired businesses and
the implementation of cost reduction
programmes across the Group. The non-
cash goodwill impairment charge related
to certain DCC Food & Beverage and DCC
Healthcare subsidiaries.
Amortisation of Intangible Assets
The charge for the amortisation of intangible
assets decreased from €7.9 million to €5.7
million as a result of the weakening of the
Stg£/€ exchange rate and certain intangible
assets having been fully amortised.
36
DCC ANNUAL REPORT AND ACCOUNTS 2009
Financial Review
(continued)
Taxation
The effective tax rate for the Group was
13.0% compared to 11.0% in the prior year.
The compound annual growth rate in DCC’s
adjusted earnings per share over the last
15, 10 and 5 years is as follows;
Adjusted earnings per share
Reported adjusted earnings per share
of 169.13 cent increased by 2.5%. On a
constant currency basis the increase was
17.0%.
15 years
10 years
5 years
(i.e. since 1994)
(i.e. since 1999)
(i.e. since 2004)
CAGR %
13.6%
11.8%
9.8%
Dividend
The total dividend for the year of 62.34
cent per share represents an increase of
10% over the previous year. The dividend
is covered 2.7 times (2.9 times in 2008) by
adjusted earnings per share. Over the last
10 years DCC’s dividend has grown at a
compound annual rate of 15.6%.
Table 1: Revenue - constant currency
2009
2008
Change
H1
€’m
H2
€’m
FY
€’m
H1
€’m
H2
€’m
FY
€’m
H1
%
H2
%
FY
%
DCC Energy
2,412.1
2,370.8
4,782.9
1,343.4 2,076.6
3,420.0 +79.5% +14.2% +39.9%
DCC SerCom
750.1
939.6
1,689.7
575.6
847.8
1,423.4
+30.3%
+10.8%
+18.7%
DCC Healthcare
190.4
176.3
366.7
132.3
154.5
286.8
+43.9%
+14.1%
+27.9%
DCC Food & Beverage
175.0
141.8
316.8
161.5
148.6
310.1
+8.3%
-4.6%
+2.1%
DCC Environmental
52.7
38.9
91.6
45.9
45.8
91.7
+14.9%
-15.1%
-0.1%
Total
Weighting %
3,580.3
49.4%
3,667.4
50.6%
7,247.7
100.0%
2,258.7 3,273.3
59.2%
40.8%
5,532.0 +58.7% +12.0% +31.0%
100.0%
Table 2: Operating profit - constant currency
2009
2008
Change
H1
€’m
H2
€’m
FY
€’m
H1
€’m
H2
€’m
FY
€’m
H1
%
H2
%
FY
%
DCC Energy
26.5
92.0
118.5
14.5
59.8
74.3 +82.3% +53.8% +59.3%
DCC SerCom
14.6
29.1
43.7
12.5
27.6
40.1
+17.1%
+5.6%
+9.2%
DCC Healthcare
DCC Food & Beverage
DCC Environmental
10.6
7.4
8.2
8.0
4.8
3.4
18.6
10.4
13.1
23.5
+2.1%
-38.4%
-20.5%
12.2
11.6
7.0
7.2
8.3
15.3
+5.6%
-42.1%
-20.4%
6.8
14.0
+12.8%
-50.1%
-17.6%
Total
Weighting %
67.3
32.9%
137.3
67.1%
204.6
100.0%
51.6
30.9%
115.6
69.1%
167.2 +30.3% +18.9% +22.4%
100.0%
DCC ANNUAL REPORT AND ACCOUNTS 2009
37
“ DCC again achieved
excellent returns on
capital employed,
generating a return
of 17.8% including
intangible assets
and 41.6% excluding
intangible assets
(17.5% and 38.0%
respectively in
2008).”
Return on Capital Employed
The creation of shareholder value through
the delivery of consistent, long-term returns
well in excess of cost of capital is one of
DCC’s core strengths. DCC again achieved
excellent returns on capital employed (as
detailed in Table 3), generating a return
of 17.8% including intangible assets and
41.6% excluding intangible assets (17.5%
and 38.0% respectively in 2008).
DCC’s return on capital employed has
remained consistently high through a
combination of good organic growth,
well executed acquisitions and excellent
integration synergies.
Cash Flow
A summary of DCC’s cashflow is set out in
Table 4.
Operating cash flow is principally used to
fund investment in existing operations,
complementary bolt-on acquisitions,
dividend payments and selective share
buybacks.
Operating cash flow was exceptionally
strong at €304.9 million, compared to
€129.0 million in 2008, benefiting from the
significant reduction in working capital of
€80 million which was due to the decline in
the price of oil and, as the year progressed,
a heightened focus on cash generation
throughout the Group. As set out in Table 5,
working capital days reduced to 11.9 from
16.4 driven by a reduction in debtor days
of 4.4 days to 41.3 from 45.7. Free cash
flow was €218.5 million compared to €12.4
million in 2008.
DCC’s ongoing acquisition programme
resulted in a number of acquisitions
being completed during the year at a
total committed cost of €98.4 million, of
which €8.7 million was deferred. The cash
impact of acquisitions in the year was
€101.7 million when payments of deferred
acquisition consideration of €12.0 million
are taken into account. Capital expenditure
was €56.1 million, significantly below the
€87.6 million spent in the previous year
and compares to a depreciation charge of
€45.5 million. Net of fixed asset disposals
and grants received the cash outflow from
capital expenditure was €50.4 million. The
disposal of a small US associate company
gave rise to a receipt of €8.5 million. The
exceptional cash outflow of €60.9 million
primarily relates to the settlement of the
Fyffes case in April 2008 and restructuring
costs.
Table 3: Return on capital employed
2009
2008
ROCE
(incl intangible assets)
ROCE
(excl intangible assets)
ROCE
(incl intangible assets)
ROCE
(excl intangible assets)
DCC Energy
DCC SerCom
DCC Healthcare
DCC Food & Beverage
DCC Environmental
Group
24.9%
15.5%
9.4%
14.1%
12.9%
17.8%
63.7%
26.2%
31.9%
35.8%
29.5%
41.6%
20.6%
15.3%
13.9%
18.6%
17.4%
17.5%
45.8%
24.2%
48.8%
51.2%
40.4%
38.0%
38
DCC ANNUAL REPORT AND ACCOUNTS 2009
Financial Review
(continued)
Table 4: Summary of cash flows
Operating Profit
Decrease/(increase) in working capital:
DCC Energy
DCC Sercom
DCC Healthcare
DCC Food & Beverage
DCC Environmental
2009
€’m
72.3
4.1
1.3
(1.9)
4.2
Depreciation
Other
Cash generated from operations
Capital expenditure (net)
Interest and tax paid
Free cash flow
Dividend received from an associate
Proceeds on disposal of associates
Share issues (net)
Acquisitions
Dividend paid
Exceptionals
Net cash inflow/(outflow)
Translation adjustments and other
Net debt at start of year
Net debt at end of year
Table 5: Working capital days
Stocks
Debtors
Creditors
Table 6: Analysis of net debt
Non-current assets:
Derivative financial instruments
Current assets:
Derivative financial instruments
Cash and cash equivalents
Non-current liabilities
Borrowings
Derivative financial instruments
Unsecured Notes due 2011 to 2019
Current liabilities:
Borrowings
Derivative financial instruments
Unsecured Notes due 2008
2009
€’m
180.4
80.0
45.5
(1.0)
304.9
(50.4)
(36.0)
218.5
-
8.5
10.2
(101.7)
(48.7)
(60.9)
25.9
7.1
(123.7)
(90.7)
2008
€’m
(101.6)
20.5
(6.3)
5.2
(2.2)
2009
Days
12.8
41.3
(42.2)
11.9
2009
€’m
128.3
0.3
426.8
427.1
(1.8)
(17.4)
(523.6)
(542.8)
(101.6)
(1.7)
-
(103.3)
2008
€’m
167.2
(84.4)
45.4
0.8
129.0
(79.7)
(36.9)
12.4
172.0
8.9
4.1
(176.6)
(44.5)
(4.2)
(27.9)
4.7
(100.5)
(123.7)
2008
Days
12.4
45.7
(41.7)
16.4
2008
€’m
25.4
1.5
485.8
487.3
(4.5)
(43.6)
(353.6)
(401.7)
(157.7)
(17.2)
(59.8)
(234.7)
Net debt
(90.7)
(123.7)
Balance Sheet and Group Financing
DCC has a very strong balance sheet with
total equity of €726.2 million at 31 March
2009 and net debt at the same date of €90.7
million. Net debt as a percentage of total
equity was 12.5% compared to 16.7% at 31
March 2008. The composition of net debt at
31 March 2009 and 2008 is analysed in Table
6. Further analysis of DCC’s cash, debt and
financial derivative instrument balances at 31
March 2009 is set out in Notes 27 to 30 to the
financial statements.
At a time of increased focus on funding and
liquidity, DCC has significant cash resources
and relatively long term debt maturities.
Approximately 90% of the Group’s debt has
been raised in the US Private Placement
market where longer term maturities are
available.
Financial Risk Management
Group financial risk management is
governed by policies and guidelines which
are 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
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 47
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.
A significant proportion of the Group’s
profits and net assets are denominated in
sterling. The sterling:euro exchange rate
weakened by 14.5% from 0.7953 at 31
March 2008 to 0.9299 at 31 March 2009.
The average rate at which the Group
translates its UK operating profits declined
by 15.0% from 0.7021 in 2008 to 0.8262 in
2009.
DCC ANNUAL REPORT AND ACCOUNTS 2009
39
Interest Rate Risk and Debt/Liquidity
Management
DCC 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 both
committed and 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.
Summary
As the key financial performance indicators
set out in Table 7 show, the Group
performed strongly in 2009 delivering an
improvement in revenues and operating
profits and excellent cash flow and returns
on capital employed. After total acquisition
and capital expenditure, dividends and other
exceptional expenditure of €261.6 million,
DCC ended the year with reduced net debt
levels and a conservatively geared balance
sheet. This will facilitate the Group in its
development plans, both organic and by
way of acquisitions.
Approximately 76% of the Group’s operating
profit for the year ended 31 March 2009
was denominated in sterling and this is
offset to a limited degree by certain natural
economic hedges that exist within the
Group, for example, a proportion of the
purchases by certain of its Irish businesses
are sterling denominated. DCC does not
hedge the remaining translation exposure
on the translation of the profits of foreign
currency subsidiaries on the basis and to
the extent that they are not intended to
be repatriated. The 15% reduction in the
average translation rate of sterling, referred
to above, adversely impacted the Group’s
reported operating profit by €24.2 million in
the year ended 31 March 2009.
DCC has investments in sterling operations
which are highly cash generative and
cash generated from these operations
are reinvested in sterling denominated
development activities rather than being
repatriated into euro. 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
hedge is offset by the strong ongoing
cash flow generated from the Group’s
sterling operations leaving DCC with a net
investment in sterling assets. The 14.5%
reduction in the value of sterling against the
euro during the year ended 31 March 2009,
referred to above, gave rise to a translation
loss of €85.8 million on the translation
of DCC’s sterling denominated net asset
position at 31 March 2009 as set out in the
reconciliation of the Group’s Total Equity in
note 41 to the financial statements. €34.6
million of this amount related to DCC’s
sterling denominated intangible assets.
Where sales or purchases are invoiced
in other than the local currency, and
there is not a natural hedge with other
activities within the Group, DCC generally
hedges between 50% and 90% of those
transactions for the subsequent two
months.
Commodity Price Risk Management
The Group is exposed to commodity cost
price risk in its oil distribution and LPG
businesses. Market dynamics are such that
these commodity cost price movements
are immediately reflected in oil commodity
sales prices and, within a short period, in
LPG commodity sales prices. Fixed price oil
supply contracts are occasionally provided
to certain customers for periods of less
than one year. To manage this exposure,
the Group enters into matching forward
commodity contracts, not designated as
hedges under IAS 39. While LPG price
changes are being implemented, the Group
hedges a proportion of its anticipated
LPG commodity exposure, with such
transactions qualifying as ‘highly probable’
forecast transactions for IAS 39 hedge
accounting purposes. In addition, to cover
certain customer segments for whom it
is commercially beneficial to avoid price
increases, a proportion of LPG commodity
price and related foreign exchange
exposure is hedged. All commodity hedging
counterparties are approved by the Board.
Credit Risk Management
DCC transacts with a variety of high credit
rated 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.
Table 7: Key financial performance indicators
Revenue growth – constant currency
Operating profit growth* – constant currency
Interest cover (times)
Net debt as a percentage of total equity
Working capital as a percentage of total revenue
Working capital – days
Debtors – days
Operating cash flow (€’m)
Free cash flow after interest and tax (€’m)
Return on capital employed
- Including intangible assets
- Excluding intangible assets
*excluding exceptionals and amortisation of intangible assets.
2009
31.0%
22.4%
8.5
12.5%
3.0%
11.9
41.3
304.9
218.5
17.8%
41.6%
2008
39.9%
21.8%
9.4
16.7%
5.2%
16.4
45.7
129.0
12.4
17.5%
38.0%
“ The key first step
undertaken by the
Working Group was
the identification
of sustainability
aspects that are
material, i.e. have a
high business value
to DCC and have
a high economic,
environmental or
social value”
40
DCC ANNUAL REPORT AND ACCOUNTS 2009
Sustainability Report
Structures and Processes
In 2008, DCC established a Corporate
Sustainability Working Group comprising
senior Group, divisional and subsidiary
executives, which reports directly to the Chief
Executive.
The key first step undertaken by the Working
Group was the identification of sustainability
aspects that are material, i.e. have a high
business value to DCC and have a high
economic, environmental or social value.
Following from this, four sustainability aspects
were prioritised, namely direct economic value
added, climate change, health and safety and
business ethics. The Working Group intends
to focus on additional sustainability aspects as
the process is developed.
Specific objectives have been established
in respect of the four aspects selected and
progress on those objectives will be monitored
by the Working Group using appropriate KPIs.
The Working Group will continue to refine
and develop our management approach to
sustainability at all levels throughout DCC.
Stakeholders
At a corporate level we have identified two
key stakeholder groups – investors and
employees. Other stakeholder groups, such
as customers, suppliers, regulators and
local communities, are specific to individual
businesses and so are engaged with at
subsidiary level.
Consultations will be undertaken with
members of both of the key stakeholder
groups identified.
DCC defines Corporate Sustainability as
a business strategy to create long term
shareholder value by generating economic,
environmental and social value. In order
to sustain our business, it is critical that
our activities have a positive impact on
the wider community; business success
and sustainable development are mutually
supportive ambitions.
Our complex interactions with the
economy, the environment and society
are already governed by a combination
of legislative compliance, best practice,
reporting requirements, customer demand,
risk management and company culture.
However, we have now formally committed
to implementing a more systematic internal
management process to identify and focus
on those aspects of sustainability which
are material to DCC, using the structure
provided by the GRI1 Sustainability Reporting
Guidelines.
This Sustainability Report sets out our evolving
management approach and reports on a
number of sustainability aspects of material
importance to the DCC Group. We intend to
develop our internal processes and reporting
and, through clearly defined key performance
indicators (KPIs), we will demonstrate how
DCC is implementing sustainable business
practices, thereby delivering value to our
shareholders and to society as a whole. As we
live in a time of global economic and climate
crises it is even more critical to ensure that
our activities visibly contribute to the goal of
sustainable development.
Strategy
DCC will implement its sustainability
strategy by:
• raising internal awareness and
understanding of what corporate
sustainability means to our businesses,
• integrating sustainability processes into
existing business structures,
• actively engaging with our stakeholders, and
• regularly communicating our progress.
DCC ANNUAL REPORT AND ACCOUNTS 2009
41
“ DCC is focused
on value creation
within the supply
chain which is
then passed on to
various stakeholders
including investors,
employees, suppliers,
governments and
lenders”
2. Climate Change
Our energy businesses sell LPG and oil to
customers who rely on these products for
heating, cooking and transportation, in most
cases where there are no viable alternative
energy sources. While we believe that a mix of
energy sources will continue to be necessary
in the future, we are conscious of the need to
reduce carbon emissions and consequently
we promote, both internally and externally, the
efficient use of energy products.
In August 2008 a Group wide Carbon
Management Plan (CMP) was initiated. Its
purpose is to increase understanding and
awareness of climate change impacts and to
develop a range of operational and strategic
measures in response to the emergence of a
low carbon economy.
The CMP has two operational objectives.
The first is to measure carbon emissions, in
accordance with the methodology provided
by the Greenhouse Gas Protocol2. In the
year ended 31 March 2009 our transport
fleet contributed over 70% (approximately
60,000 tonnes CO2) of our carbon emissions.
Electricity consumption accounted for 21% of
total emissions with heating and on-site fuel
use making up the remaining 9%.
The second operational objective is to carry
out a detailed analysis of the data in order to
develop a range of energy saving initiatives
focusing on the major sources of emissions in
the first instance. This is already being done
to a significant extent, driven by financial
savings. For example, Allied Foods and Flogas
UK have invested in new technologies to
monitor vehicle use and establish efficient
routing systems and Wastecycle has trained
its drivers in fuel efficient driving techniques to
reduce fuel consumption, so reducing costs
and carbon emissions simultaneously.
During the year we will improve our
measurement systems and identify
appropriate KPIs and targets to increase
energy efficiency and reduce carbon
emissions.
Material Aspects
1. Direct Economic Value Added
DCC is focused on value creation within
the supply chain which is then passed on
to various stakeholders including investors,
employees, suppliers, governments and
lenders. In economic terms these are the
most significant contributions we make to
society.
In the year ended 31 March 2009, DCC
generated revenue of €6,400m in return for
the goods and services it provided. Once the
cost of inputs from suppliers totaling €5,913m
is taken into account the remaining value
added of €487m was distributed to various
stakeholders.
During the year a total of €306m was
expended on payroll costs in respect of DCC’s
approximately 7,200 employees across 16
countries.
Governments received corporate taxes of
€19m and €21m in value was distributed
to banks and other lenders. As a return for
the capital they provide to the business,
shareholders, including many employees,
will receive €51m in the form of dividends.
The remaining €90m will be retained in the
business to fund further growth.
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1. The Global Reporting Initiative is a not for profit organisation which has developed the most commonly used sustainability reporting framework.
2.The Greenhouse Gas Protocol is a corporate reporting standard developed by the World Resources Institute and the World Business Council for Sustainable Development.
“ The health and
safety of our
employees,
contractors and
members of the
public with whom
we interact is
paramount and is
a responsibility we
take very seriously.”
42
DCC ANNUAL REPORT AND ACCOUNTS 2009
Sustainability Report
(continued)
Every subsidiary compiles an annual health
and safety report for divisional management,
the detail of which reflects the hazard profile
of that subsidiary. All reports include a review
of health and safety policies and procedures,
an assessment of performance against prior
year objectives and the establishment of new
objectives.
Reflecting the higher hazard profile of the
LPG, oil and environmental businesses,
management meet in respective fora at least
three times annually to review legislation, share
best practice and develop common technical,
health and safety standards. Two committees
of the Energy and Environmental boards,
chaired by the respective divisional Managing
Director, meet bi-annually to review health and
safety performance.
All subsidiaries have in place formal health
and safety management systems which are
appropriate to the nature and scale of the
hazards within those businesses. In the LPG
businesses, safety management systems
have been developed in line with guidance
from the UK Health and Safety Executive
and are contained within the COMAH4 Safety
Reports. In most other businesses, health and
safety management systems are based on
the OHSAS180015 standard with a number of
sites achieving formal certification.
An objective has been set to have all health
and safety management systems within the
DCC Environmental businesses certified to the
OHSAS18001 standard by end March 2011.
DCC’s energy and environmental businesses
already report a wide range of health and
safety KPIs, for example, lost time injury
rates. We will extend this requirement to
other divisions and report on Group wide
performance next year.
The CMP also has a strategic objective,
which requires each subsidiary to formally
identify and assess the regulatory, physical
and commercial risks and opportunities for
their businesses arising from the transition
towards a low carbon economy. For example,
by recycling waste streams into new products,
our environmental businesses make a
significant contribution to the conservation of
natural resources and the reduction of carbon
emissions.
From a regulatory perspective, DCC’s UK
based subsidiaries will be included in the
UK’s Carbon Reduction Commitment
scheme commencing in April 2010.
The implementation of the CMP has
already prepared us for the measurement
requirements of this scheme and additional
actions are being taken to ensure that we not
only fully comply with its requirements but
also benefit from the process by reducing our
emissions and costs.
3. Health & Safety
The health and safety of our employees,
contractors and members of the public with
whom we interact is paramount and is a
responsibility we take very seriously.
The profile of health and safety hazards
varies considerably across the Group with
businesses in the Energy and Environmental
divisions at the higher end due to the nature
of the material they handle and the degree
of interaction between equipment and
individuals.
Health and safety is clearly established as
a line management function and is a fixed
agenda item at management meetings.
Senior executives are expected to
demonstrate personal leadership, continually
improving health and safety culture by their
individual actions. In May and June 2008 thirty
senior managers and directors from across
DCC Energy participated in a bespoke health
and safety leadership workshop delivered
by DNV3. As a direct result of this initiative,
subsidiary directors in the energy division now
complete a minimum of two site visits per
annum to inspect, observe and listen to local
HSE concerns or suggestions.
DCC ANNUAL REPORT AND ACCOUNTS 2009
43
“ Our intention is
to publish annual,
concise and relevant
Sustainability
Reports which
address the
economic,
environmental and
social aspects
which are material
to our business and
important to our
stakeholders”
Reporting
Our intention is to publish annual, concise and
relevant Sustainability Reports which address
the economic, environmental and social
aspects which are material to our business
and important to our stakeholders. We will
report openly on our management approach
to sustainability, our progress against past
objectives and the determination of new
objectives. The report will have the same
reporting cycle as the Annual Report and
will be integrated where appropriate to avoid
repetition of information.
We accept the need to adopt a consistent
and credible reporting structure. The Working
Group has reviewed the G3 Sustainability
Report Guidelines, developed by the Global
Reporting Initiative, and it is our intention to
achieve a GRI application level of at least C for
the Sustainability Report for the year ended 31
March 2010.
We recognise that this report is only a first
step and we would welcome any feedback
and suggestions for improvement.
4. Business Ethics
DCC is diversified both by sector and by
geography. Freedom to manage and make
decisions locally has been critical to our
success. This has been possible because the
business has always had at its core a culture
built on openness, honesty, trust, respect
and accountability. When acquisitions are
made, a key part of the integration process
is the extension of this culture into the newly
acquired business.
Wherever we operate, we strive to be fully
compliant with the laws and regulations
that apply to our business. In addition, each
subsidiary has articulated its own internal
standards of business conduct, as well as
policies and processes to ensure compliance
with them.
In light of DCC’s substantial expansion in
recent years, the Working Group has now
decided to embark on a comprehensive
Group wide review of best practices in the
conduct of business. We will approach this
in a practical way by examining, for instance,
best practices within the Group in areas
such as the business conduct modules
in employee induction processes and the
ethical selling modules in sales training
programmes. We will also look afresh at the
way we measure performance in respect of
each area of business conduct. We will also
carry out external benchmarking. Out of this
work, we will articulate a set of guidelines for
all subsidiaries and at corporate level, in a way
that is relevant and practical for our business
environment and the ever more complex
world in which we live and work. This will then
become a key governing document for all our
businesses.
3. Det Norske Veritas is a leading provider of safety risk management solutions.
4. Control of Major Accident Hazards.
5. Occupational Health and Safety Assessment Series.
44
DCC ANNUAL REPORT AND ACCOUNTS 2009
Report of the Directors
The Directors of DCC plc present their
report and the audited financial statements
for the year ended 31 March 2009.
Results for the Year
The results of the Group for the year are
set out in the Group Income Statement on
page 58. The profit for the year attributable
to equity holders of the Company
amounted to €116.3 million.
Dividends
An interim dividend of 22.61 cent per share,
amounting to €18.56 million, was paid on 5
December 2008. The Directors recommend
the payment of a final dividend of 39.73
cent per share, amounting to €32.63
million. Subject to shareholders’ approval
at the Annual General Meeting on 17 July
2009, this dividend will be paid on 23 July
2009 to shareholders on the register on 29
May 2009. The total dividend for the year
ended 31 March 2009 amounts to 62.34
cent per share, a total of €51.19 million.
The profit attributable to equity holders of
the Company, which has been transferred
to reserves, and the dividends paid during
the year ended 31 March 2009 are shown
in note 39 on page 102.
Share Capital and Treasury Shares
DCC’s authorised share capital is
152,368,568 ordinary shares of €0.25
each, of which 82,139,005 shares
(excluding treasury shares) were in issue
and 6,090,399 shares were held in
Treasury at 31 March 2009.
The number of shares held in Treasury
at the beginning of the year (and the
maximum number held during the year)
was 7,414,239 (8.40% of the issued share
capital) with a nominal value of €1.854
million.
A total of 1,323,840 shares (1.50% of the
issued share capital) with a nominal value
of €0.331 million were re-issued during the
year at prices ranging from €6.22 to €15.65
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 2009 of 6,090,399
shares (6.90% of the issued share capital)
with a nominal value of €1.523 million.
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 17 July 2009,
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.
At each Annual General Meeting, in addition
to the authority to buy back shares referred
to above, the Directors seek authority to
exercise all the powers of the Company to
allot shares up to an aggregate amount of
€7,352,400, representing approximately
one third of the issued share capital of the
Company.
The Directors also seek authority to allot
shares for cash, other than strictly pro-rata
to existing shareholdings. This proposed
authority is limited to the allotment of shares
in specific circumstances relating to rights
issues and other issues up to approximately
5% of the issued share capital of the
Company.
Review of Activities and Events since
the Year End
The Chairman’s Statement on pages 6 to 7,
the Chief Executive’s Review on pages 8 to
11, the Business Reviews on pages 14 to
33 and the Financial Review on pages 34
to 39 contain a review of the development
and performance of the Group’s business
during the year, of the state of affairs of
the business at 31 March 2009, 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 Irish Company law (Regulation 37 of
the European Communities (Companies:
Group Accounts) Regulations 1992,
as amended), DCC is required to give
a description of the principal risks and
uncertainties facing the Group. These
are addressed in the Principal Risks &
Uncertainties report on pages 46 to 47.
Directors
The names of the Directors and a short
biographical note on each Director appear
on pages 4 to 5.
At the Annual General Meeting held on
18 July 2008, the Company was granted
authority to purchase up to 8,822,940 of
Jim Flavin resigned from his position as
Executive Chairman and Director on 27
May 2008. On the same date, Michael
Buckley was appointed Chairman and
Tommy Breen, previously Group Managing
Director, was appointed Chief Executive.
Paddy Gallagher and Tony Barry retired
from the Board with effect from 1
December 2008 and 28 February 2009
respectively.
Kevin Melia and Donal Murphy were
appointed to the Board with effect from
1 December 2008, David Byrne was
appointed to the Board with effect from
1 January 2009 and John Moloney was
appointed to the Board with effect from 2
February 2009.
The Board has adopted the practice that all
Directors will submit to re-election at each
Annual General Meeting.
With the exception of Tommy Breen, who
has a service agreement with a minimum
notice period of twelve months, none of
the other retiring Directors has a service
contract with the Company or with any
member of the Group.
Details of the Directors’ interests in the
share capital of the Company are set out in
the Report on Directors’ Remuneration and
Interests on pages 52 to 55.
Corporate Governance
The Corporate Governance statement on
pages 48 to 51 sets out 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.
Specific details concerning the appointment
and the re-election of Directors are
contained in the Corporate Governance
statement.
Report of the Directors (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
45
Substantial shareholdings
The Company has been advised of the following interests in its share capital as at 18 May 2009:
FMR LLC on behalf of certain of its direct and indirect subsidiaries *
12,200,800
14.85%
No. of €0.25
Ordinary Shares
% of Issued
Share Capital
(excluding
treasury shares)
7,699,992
5,334,803
2,700,000
2,630,815
9.37%
6.49%
3.29%
3.20%
Prudential plc group of companies*
Invesco Limited *
Jim Flavin
Irish Life Investment Managers *
* Notified as non-beneficial interests
Principal subsidiaries and joint ventures
Details of the Company’s principal operating
subsidiaries and joint ventures are set out
on pages 112 to 114.
Research and development
Certain Group companies are involved
in ongoing development work aimed at
improving the quality, competitiveness,
technology and range of their products.
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.
Articles of Association
The Company’s Articles of Association
may be amended by a special resolution
passed by the shareholders at an annual
or extraordinary general meeting of the
Company.
Takeover regulations
The Company has certain banking facilities
which may require repayment in the event
that a change in control occurs with respect
to the Company. In addition, the Company’s
share option scheme contains change of
control provisions which can allow for the
acceleration of the exercisability of share
options in the event that a change of control
occurs with respect to the Company.
Auditors
The auditors, PricewaterhouseCoopers,
will continue in office in accordance
with the provisions of Section 160(2) of
the Companies Act, 1963. A resolution
authorising the Directors to fix their
remuneration will be proposed at the
Annual General Meeting.
Michael Buckley, Tommy Breen
Directors
18 May 2009
46
DCC ANNUAL REPORT AND ACCOUNTS 2009
Principal Risks & Uncertainties
The Board of DCC is responsible for the Group’s risk management
systems, which are designed to identify, manage and mitigate
potential material risks to the achievement of the Group’s strategic
and business objectives. Details of the Group’s risk management
systems and internal controls are set out under ‘Internal Control’ in
the Corporate Governance statement on pages 48 to 51.
Further detail on the principal risks facing the Group is set out
below.
Strategic Risks
Impact
Mitigation
Global economic downturn
Demand for goods and services in the
Group’s businesses will be impacted by the
current economic downturn.
Competitor activity
Acquisitions
The Group’s businesses face strong
competition in their relevant markets. Failure to
compete successfully will lead to a decline in
market share and profitability.
Poor acquisition selection could lead to a
loss of value. In addition a failure to properly
integrate acquisitions could lead to operational
and financial difficulties.
The Group has operations across a number
of different markets. Whilst the current
economic downturn will affect all businesses
the impact will vary according to the markets
in which they operate. The Group will focus
on operating efficiencies and business
development.
Competitor activity is formally discussed at
regular divisional board meetings. Subsidiary
management are constantly focused on
providing an efficient value added service to
meet the demands of both customers and
suppliers.
The Group conducts a stringent internal
evaluation process prior to completing an
acquisition. Only acquisitions which add value
and are a strategic fit are considered. Group
and subsidiary management have significant
expertise in and experience of integrating
acquisitions.
DCC ANNUAL REPORT AND ACCOUNTS 2009
47
Operational Risks
Impact
Mitigation
Key supplier
The loss of a key supplier could have a
serious operational and financial impact on the
Group’s business.
The Group trades with a broad supplier base.
Excellent commercial relationships exist with
suppliers and there is a constant focus on
providing a value added service.
Environmental, Health & Safety incident
A serious environmental, health & safety
incident, particularly in the Energy or
Environmental divisions, could endanger
the lives of employees and seriously disrupt
operations.
Loss of major site
The loss or serious destruction of any one of
the Group’s key sites would present significant
financial and operational difficulties for the
Group.
Management resources
Strong and effective management has been
fundamental to the Group’s success. The
continued attraction, retention and motivation
of high quality management throughout the
Group is critical if this success is to continue.
Product quality
The Group has certain subsidiaries which
operate manufacturing or processing facilities.
Poor product quality could have significant
consequences for customer or public
safety and lead to financial, operational and
reputational difficulties for the Group.
All Group subsidiaries operate EHS
management systems appropriate to the
nature and scale of their EHS risk profile.
Identification of hazards, assessment of the
risks and the introduction of control
measures form the basis of these systems.
Furthermore, monitoring, measurement and
review of the control measures ensures a
continuous improvement cycle is maintained.
All Group subsidiaries have implemented
business continuity plans to manage
disruptions. An insurance cover programme
is in place for all significant insurable risks and
major catastrophes to mitigate the financial
consequences.
The Group maintains a constant focus
on succession planning, remuneration
programmes, including long and short
term incentive initiatives and management
development. This focus is maintained
through a structured review process in which
Group Human Resources supports divisional
management and the Chief Executive.
All manufacturing and processing facilities
operate quality management systems
appropriate and specific to the nature of the
products they manufacture or process.
Compliance Risks
Impact
Mitigation
Regulation
Financial Risks
DCC has operations in 15 countries. Failure to
comply with statutory obligations could result
in regulatory action, legal liability and damage
to the Group’s reputation.
All statutory requirements are managed by
local management. Formal confirmation
of compliance with statutory and other
obligations is received by the Compliance
Officer of DCC plc twice a year.
The principal financial risks facing the Group are addressed in detail under ‘Financial Risk Management’ in the Financial Review on
pages 34 to 39.
48
DCC ANNUAL REPORT AND ACCOUNTS 2009
Corporate Governance
This statement describes how DCC has
applied the principles set out in Section
1 of the Combined Code on Corporate
Governance (‘Combined Code’) published
by the Financial Reporting Council in the UK.
The Board of Directors
Roles
The Board of DCC is responsible for the
leadership, strategic direction and overall
management of the Group. It has a formal
schedule of matters specifically reserved to
it for decision, which covers key areas of
the Group’s business including approval of
the annual strategy statement, the financial
statements, budgets (including capital
expenditure), acquisitions and dividends.
The Board has delegated responsibility for
the management of the Group to the Chief
Executive and executive management.
Chairman
The Chairman’s primary responsibility is
to lead the Board, to ensure that it has a
common purpose, is effective as a group
and at individual director level and that it
upholds and promotes high standards of
integrity, probity and corporate governance.
The Chairman is the link between the
Board and the Company. He is specifically
responsible for establishing and maintaining
an effective working relationship with the
Chief Executive, for ensuring effective
and appropriate communications with
shareholders and for ensuring that
members of the Board develop and
maintain an understanding of the views of
shareholders.
Deputy Chairman and Senior
Independent Director
The Deputy Chairman (who is also the
Senior Independent Director) chairs
meetings of the Board if the Chairman is
unavailable or is conflicted in relation to
any agenda item. The Senior Independent
Director is available to shareholders who
have concerns that cannot be addressed
through the Chairman or Chief Executive
and leads the annual Board review of the
performance of the Chairman.
Membership
The Board consists of three executive
and seven non-executive Directors. Brief
biographies of the Directors are set out
on pages 4 to 5. The Board, with the
assistance of the Nomination Committee,
keeps Board composition under review to
ensure that it includes the necessary mix
of relevant skills and experience required to
perform its role.
Jim Flavin resigned from his position as
Executive Chairman and Director on 27 May
2008. On the same date, Michael Buckley
was appointed Chairman and Tommy Breen,
previously Group Managing Director, was
appointed Chief Executive. On 4 June 2008,
Bernard Somers replaced Michael Buckley
as Senior Independent Director. Kevin
Melia and Donal Murphy were appointed
to the Board with effect from 1 December
2008. Paddy Gallagher and Tony Barry
retired from the Board with effect from 1
December 2008 and 28 February 2009
respectively. David Byrne was appointed
to the Board with effect from 1 January
2009 as Deputy Chairman and Senior
Independent Director. Bernard Somers
resigned as Senior Independent Director
on the same date. John Moloney was
appointed to the Board with effect from 2
February 2009.
Appointment
Non-executive Directors are appointed by
the Board and following appointment are, in
accordance with the Articles of Association,
subject to re-election at the next Annual
General Meeting. The Board has adopted
the practice that all Directors will submit to
re-election at each Annual General Meeting.
The expectation is that non-executive
Directors would serve for a term of six
years and may also be invited 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.
Independence
The Board has carried out its annual
evaluation of the independence of each of
its non-executive Directors, taking account
of the relevant provisions of the Combined
Code, namely, whether the Directors are
independent in character and judgment and
free from relationships or circumstances
which are likely to affect, or could appear to
affect, the Directors’ judgment. Each of the
current non-executive Directors fulfilled the
independence requirements of the Code.
Michael Buckley has been Chairman of
the Company since May 2008. On his
appointment as Chairman, Mr Buckley met
the independence criteria as set out in the
Combined Code. Thereafter, as noted in
the Code, the test of independence is not
appropriate in relation to the Chairman.
While Mr Buckley holds a number of other
directorships outside of the DCC Group, the
Board considers that these do not interfere
with the discharge of his duties to DCC.
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.
The Board recognises the need for
Directors, in particular new Directors, to
be aware of their legal responsibilities
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. At the beginning of the financial
year, the Chairman sets a schedule of
Board meetings to be held in the following
twelve months, which includes the key
agenda items for each meeting, having
consulted with the other Directors and the
Company Secretary. The current schedule
envisages seven Board meetings each year
but additional meetings are arranged as
necessary.
During the year ended 31 March 2009, the
Board held thirteen meetings. Individual
attendance at these meetings is set out in
the table on page 50.
The non-executive Directors meet
periodically without executives being
present.
Corporate Governance (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
49
Remuneration
Details of remuneration paid to the Directors
are set out in the Report on Directors’
Remuneration and Interests on pages 52 to
55.
Share Ownership and Dealing
Details of the Directors’ interests in DCC
shares are set out in the Report on Directors’
Remuneration and Interests on pages 52 to
55. The Board has adopted The Model Code,
as set out in the Listing Rules of the Irish
Stock Exchange and the UK Listing Authority,
as the code of dealings applicable to dealings
in DCC shares by Directors and relevant
Group employees. Under the policy, Directors
and relevant Group employees are required
to obtain clearance from the Chairman or
Chief Executive before dealing in DCC shares
and are prohibited from dealing in the shares
during prohibited periods as defined by the
Listing Rules.
Board Committees
Audit Committee
The Audit Committee comprises three
independent non-executive Directors,
Bernard Somers (Chairman), Kevin
Melia and John Moloney. The Board has
determined that Bernard Somers is the
Committee’s financial expert. Maurice
Keane resigned from the Committee on
1 December 2008 and was replaced by
Kevin Melia. Roisin Brennan resigned from
the Committee on 30 March 2009 and was
replaced by John Moloney. The Committee
met four times during the year ended 31
March 2009. Individual attendance at these
meetings is set out in the table on page 50.
The Chief Executive, 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 at least
once a year with the external auditors and with
the Group Internal Auditor without executive
management being present.
The role and responsibilities of the Audit
Committee are set out in its written terms
of reference, which are available 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
judgments 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,
reappointment and removal of the external
auditors;
• approving the 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 external 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 of the Committee are
discharged in the following ways:
• The Committee reviews the interim and
annual reports as well as any formal
announcements relating to the financial
statements before submission to the Board.
The review focuses particularly on any
changes in accounting policy and practices,
major judgmental areas and compliance
with stock exchange, legal and regulatory
requirements;
• The Committee regularly reviews reports
from the Risk Committee and the Enterprise
Risk Management function (incorporating
Group Internal Audit and Group
Environmental, Health and Safety);
• The Committee conducts an annual
assessment of the operation of the Group’s
system of internal control based on a
detailed review carried out by Group Internal
Audit. The results of this assessment are
reviewed by the Committee and are reported
to the Board;
• The Committee makes recommendations
to the Board in relation to the appointment
of the external auditor. Each year, the
Committee meets with the external auditor
and reviews their procedures and the
safeguards which have been put in place to
ensure their objectivity and independence in
accordance with regulatory and professional
requirements;
• The Committee reviews the external audit
plan and the findings from the external audit
of the financial statements;
• 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. 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 78; and
• The Committee has approved a policy on
the engagement of the external auditors
to provide non-audit services. The policy
provides that the external auditor is
permitted to provide non-audit services that
are not, or are not perceived to be, in conflict
with auditor independence, providing they
have the skill, competence and integrity to
carry out the work and are considered to
be the most appropriate to undertake such
work in the best interests of the DCC Group.
Nomination Committee
The Nomination Committee comprises
Michael Buckley (Chairman) and two
independent non-executive Directors,
David Byrne and Maurice Keane. Jim Flavin
resigned from the Committee on 27 May
2008. Bernard Somers resigned from the
Committee on 30 March 2009 and was
replaced by David Byrne. The Committee
met four times during the year ended 31
March 2009. Individual attendance at these
meetings is set out in the table on page 50.
The role and responsibilities of the
Nomination Committee are set out in
its written terms of reference, which are
available on the Company’s website www.
dcc.ie. The principal responsibilities of the
Committee are to keep Board renewal,
structure, size and composition under
constant 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.
50
DCC ANNUAL REPORT AND ACCOUNTS 2009
Corporate Governance
(continued)
During the year, upon the recommendations
of the Nomination Committee, the Board
appointed David Byrne, Kevin Melia and
John Moloney to the positions of non-
executive Directors and Donal Murphy
to the position of executive Director. This
followed a thorough 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
recommendations to the Board.
The Nomination Committee did not use
an external search consultancy or open
advertising in the appointment of the
new non-executive Directors. Rather,
the Committee utilised industry and
professional contacts to identify suitable
candidates and, as such, did not require
the additional assistance that an external
search consultancy or open advertising
might offer.
Remuneration Committee
The Remuneration Committee comprises
three independent non-executive Directors,
Maurice Keane (Chairman), Róisín Brennan
and David Byrne, and the Chairman of the
Board, Michael Buckley. Bernard Somers
resigned from the Committee on 1 January
2009 and was replaced by David Byrne.
The Committee met nine times during the
year ended 31 March 2009. Individual
attendance at these meetings is set out in
the table below.
The role and responsibilities of the
Remuneration Committee are set out in
its written terms of reference, which are
available on the Company’s website www.
dcc.ie. The principal responsibilities of the
Committee are determining the policy for
the remuneration of the Chairman, the Chief
Executive, the other executive Directors
and certain senior Group management and
determining their remuneration packages,
including salary, bonuses, pension rights
and compensation payments, and the
granting of awards under the Company’s
long term incentive schemes.
The Remuneration Committee consults with
the Chief Executive on remuneration for
the other executive Directors and for senior
Group management. The Remuneration
Committee is authorised to obtain access
to professional advice if deemed desirable.
The Committee has engaged Mercer to
make recommendations in relation to and
assist in the implementation of a proposed
new long term incentive plan which will
be put before the 2009 Annual General
Meeting.
Oversight Committee
In August 2007, the Board established
an ad hoc Committee of non-executive
Directors to oversee issues arising from
the Supreme Court judgment in the Fyffes
case and the subsequent Inspectorship
process. Meetings are held as required.
The Committee comprises Michael Buckley,
David Byrne and Maurice Keane. Bernard
Somers resigned from the Committee on
1 January 2009 and was replaced by
David Byrne.
Attendance at Board and Committee meetings during the year ended 31 March 2009:
Director
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Michael Buckley
Tommy Breen
Tony Barry1
Róisín Brennan
David Byrne2
Jim Flavin3
Paddy Gallagher4
Maurice Keane
Kevin Melia5
John Moloney6
Donal Murphy7
Fergal O’Dwyer
Bernard Somers
A
13
13
12
13
2
4
10
13
3
2
3
13
13
B
13
13
12
13
2
4
10
13
3
2
3
13
13
A
-
-
-
4
-
-
2
1
1
-
-
-
4
B
-
-
-
4
-
-
2
1
1
-
-
-
4
A
4
-
-
-
-
1
-
4
-
-
-
-
4
B
4
-
-
-
-
1
-
4
-
-
-
-
4
A
9
-
2
9
2
-
-
9
-
-
-
-
4
B
9
-
2
9
2
-
-
9
-
-
-
-
2
Column A indicates the number of meetings held during the period the Director was a member of the Board and/or Committee.
Column B indicates the number of meetings attended during the period the Director was a member of the Board and/or Committee.
1 Tony Barry retired on 28 February 2009.
2
David Byrne was appointed to the Board and to the Remuneration Committee on 1 January 2009 and to the Nomination Committee on
30 March 2009.
Jim Flavin resigned on 27 May 2008.
3
4 Paddy Gallagher retired on 1 December 2008.
5 Kevin Melia was appointed to the Board and to the Audit Committee on 1 December 2008.
6
7 Donal Murphy was appointed to the Board on 1 December 2008.
John Moloney was appointed to the Board on 2 February 2009 and to the Audit Committee on 30 March 2009.
Corporate Governance (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
51
Performance Evaluation
The Board undertakes a formal annual
evaluation of its own performance, that of
each of its principal committees, the Audit,
Nomination and Remuneration committees,
and that of individual directors, using the
‘Performance Evaluation Guidance’ set out
in the Higgs Suggestions for Good Practice.
As part of the Board evaluation of its own
performance, a questionnaire is circulated
to all Directors. The questionnaire is
designed to obtain Directors’ comments
regarding the performance of the Board
including any recommendations for
improvement.
The Chairman, on behalf of the Board,
conducts evaluations of performance with
each of the non-executive Directors on an
annual basis.
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. The
non-executive Directors also evaluate the
performance of each executive Director.
These evaluations are designed to
determine whether each Director continues
to contribute effectively and to demonstrate
commitment to the role.
The Audit, Nomination and Remuneration
committees carry out annual reviews of their
own performance and terms of reference
to ensure they are operating at maximum
effectiveness and recommend any changes
they consider necessary to the Board for
approval.
The Board considers the results of the
evaluation process and any issues identified.
Relations with Shareholders
DCC recognises the importance of
communications with shareholders.
Presentations are made to both existing
and prospective institutional shareholders
principally after the release of the interim
and annual results. DCC issues an Interim
Management Statement twice yearly in
February and July. Major acquisitions
are also notified to the market and the
Company’s website www.dcc.ie provides
the full text of all press releases. The
website also contains annual and interim
reports and incorporates audio and slide
show investor presentations.
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. In addition, the Board determines, on
a case by case basis, specific issues where
it would be appropriate for the Chairman
and/or Senior Independent Director to
communicate directly with shareholders
or to indicate that they are available to
communicate if shareholders so wish. If any
of the non-executive Directors wishes to
attend meetings with major shareholders,
arrangements are made accordingly. If major
shareholders request meetings with new non-
executive Directors, this is also facilitated.
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 Committees are also
available to answer questions at the Annual
General Meeting. The Chief Executive
presents at the Annual General Meeting on
the Group’s business and its performance
during the prior year and answers questions
from shareholders. 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, against and withheld.
The 2009 Annual General Meeting will be
held at 11 a.m. on 17 July 2009 at The
Four Seasons Hotel, Simmonscourt Road,
Ballsbridge, Dublin 4, Ireland.
Internal Control
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 achieve business objectives
and can provide only reasonable and
not absolute assurance against material
misstatement or loss.
In accordance with the revised FRC
(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 senior
Group 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.
Going Concern
After making enquiries, the Directors have
formed a judgment, 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 56 and the reporting
responsibilities of the auditors are set out in
their report on page 57.
Compliance Statement
DCC has complied, throughout the year
ended 31 March 2009, with the provisions
set out in Section 1 of the Combined Code
on Corporate Governance.
52
DCC ANNUAL REPORT AND ACCOUNTS 2009
Report on Directors’ Remuneration
and Interests
The basic non-executive Director fee
amounts to €60,000 per annum. Additional
fees are paid to members and the
Chairmen of Board committees.
The Chairman of the Board receives a total
fee of €225,000 and the Deputy Chairman/
Senior Independent Director receives a total
fee of €103,000, in both cases inclusive of
the basic fee and committee fees.
There have been no increases in the fees
of non-executive Directors for the year
commencing on 1 April 2009.
Non-executives Directors do not participate
in the Company’s long term incentive
schemes and do not receive any pension
benefits from the Company.
An office is provided for the use of the
Chairman.
Remuneration Committee
The Remuneration Committee comprises
three independent non-executive Directors,
Maurice Keane (Chairman), Róisín Brennan
and David Byrne, and the Chairman of the
Board, 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 Chairman, the Chief
Executive, the other executive Directors
and certain senior Group management,
• determining their remuneration packages,
including salary, bonuses, pension rights
and compensation payments, and
• the granting of awards under the
Company’s long term incentive schemes.
The Remuneration Committee consults with
the Chief Executive on remuneration for
the other executive Directors and for senior
Group management. The Remuneration
Committee is authorised to obtain
access to professional advice if deemed
desirable. It has engaged Mercer to make
recommendations in relation to and assist in
the implementation of a proposed new long
term incentive plan, as detailed on page 55.
Remuneration Policy
The Company’s policy in relation to
remuneration is to ensure that employment
and remuneration conditions for the
Group’s senior executives properly reward
and motivate them to perform in the best
interests of the shareholders in the long
term, within the framework set out in the
Combined Code on Corporate Governance.
The typical elements of the remuneration
package for senior executives are basic
salary, performance related annual bonuses,
pension benefits and other taxable benefits
(principally the use of a company car) and
participation in the Company’s long term
incentive schemes.
Directors’ Remuneration
Executive Directors’ Remuneration
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.
There have been no increases in the
salaries of executive Directors for the year
commencing on 1 January 2009.
Performance related annual bonuses
Performance related annual bonuses
are payable to the executive Directors
in respect of the financial year to 31
March. The maximum bonus potential,
as a percentage of basic salary, for each
executive Director is reviewed and set
annually and ranged between 60% and
100% of basic salary for the year ended 31
March 2009.
The performance targets, which are set
annually, are based on growth in Group
earnings and in divisional operating
profit, measured on a constant currency
basis, against a pre-determined range,
and the overall contribution and personal
performance of each executive Director,
including Group development. The
approximate weighting of the performance
targets is 60% to 80% for profit and 20% to
40% for personal contribution.
Pension benefits
The Company funds pension schemes for
executive Directors which 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 on Directors’ Remuneration and Interests (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
53
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
Fees1
Bonus
Benefits2
2009
€’000
2008
€’000
2009
€’000
2008
€’000
2009
€’000
2008
€’000
Pension
Contribution3
2009
€’000
2008
€’000
Total
2009
€’000
2008
€’000
Executive Directors
Tommy Breen
Donal Murphy4
Fergal O’Dwyer
Jim Flavin5
677
100
365
133
514
-
347
832
642
180
246
-
411
-
240
-
Total for executive Directors
1,275
1,693
1,068
651
Non-executive Directors
Michael Buckley6
Tony Barry7
Róisín Brennan
David Byrne8
Paddy Gallagher9
Maurice Keane
Kevin Melia4
John Moloney10
Bernard Somers
Alex Spain11
201
56
73
25
41
77
23
10
93
-
69
61
69
-
64
69
-
-
79
41
Total for non-executive Directors
599
452
Ex gratia pension to dependant of retired Director
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25
7
22
5
59
-
-
-
-
-
-
-
-
-
-
-
22
-
21
38
81
-
-
-
-
-
-
-
-
-
-
-
189
34
123
20
149
-
116
119
1,533
321
756
158
1,096
-
724
989
366
384
2,768
2,809
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
201
56
73
25
41
77
23
10
93
-
69
61
69
-
64
69
-
-
79
41
599
452
10
10
3,377
3,271
Notes
1 Fees are payable only to non-executive Directors and include Board Committee fees.
2
3
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 2009 were made to a defined benefit scheme for Tommy Breen,
Donal Murphy and Fergal O’Dwyer and to a defined contribution arrangement for Jim Flavin.
Jim Flavin resigned as a Director on 27 May 2008.
4 Kevin Melia and Donal Murphy were appointed as Directors on 1 December 2008.
5
6 Michael Buckley was appointed Chairman on 27 May 2008.
7 Tony Barry retired as a Director on 28 February 2009.
8 David Byrne was appointed as a Director on 1 January 2009.
9 Paddy Gallagher retired as a Director on 1 December 2008.
10 John Moloney was appointed as a Director on 2 February 2009.
11 Alex Spain retired as a Director on 30 June 2007.
Executive 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 2009 and the transfer value of the increase in accrued benefit, under the Company’s defined benefit pension scheme:
Executive Directors
Tommy Breen
Donal Murphy4
Fergal O’Dwyer
Total
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
64
2
16
82
761
17
168
946
255
70
145
470
Notes
1
2
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.
3 Figures represent the total accrued pension payable from normal retirement date, based on pensionable service at 31 March 2009.
4
The increase in accured pension benefit and the transfer value in the case of Donal Murphy relate to the period from his appointment as
a Director on 1 December 2008.
54
DCC ANNUAL REPORT AND ACCOUNTS 2009
Report on Directors’ Remuneration
and Interests
(continued)
Share Options
DCC plc 1998 Employee Share
Option Scheme
Executive Directors and other senior
executives participated in the DCC plc
1998 Employee Share Option Scheme.
As the ten year period during which share
options could be granted under this
Scheme expired in June 2008, no further
grant of such options will be made.
The percentage of share capital which
could be issued under the Scheme, the
phasing of the grant of options and the
limit on the value of options which could
be granted to any individual complied with
guidelines published by the institutional
investment associations. The Scheme
provided 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.
Over the life of the Scheme, the total
number of basic and second tier options
granted, net of options lapsed, amounted
to 7.1% of issued share capital, of which
3.4% is currently outstanding.
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.
Details as at 31 March 2009 of the
executive Directors’ and the Company
Secretary’s options to subscribe for shares
under the DCC plc 1998 Employee Share
Option Scheme are set out in the table
below.
Number of options
Options exercised
in year
At 31
March Granted Exercised
in year
in year
2008
Lapsed
in year
Weighted
average
option
price
at 31
2009 March 2009
€
At 31
March
Weighted
average
Weighted market
average price at
date of
exercise
price exercise
€
€
Normal Exercise Period
Executive Directors
Tommy Breen
Basic Tier
Second Tier
Donal Murphy1
Basic Tier
Second Tier
Fergal O’Dwyer
Basic Tier
Second Tier
Jim Flavin2
Basic Tier
Second Tier
Company Secretary
Gerard Whyte
Basic Tier
Second Tier
245,000
190,000
20,000
-
45,000
45,000
- 220,000
- 145,000
13.59
9.17
June 2001 – May 2018
June 2003 – Nov 2012
7.09
7.10
13.52
13.52
85,000
45,000
-
-
-
-
-
-
85,000
45,000
13.77
9.70
Aug 2001 – May 2018
Aug 2003 – Nov 2012
-
-
-
-
197,500
165,000
15,000
-
45,000
45,000
- 167,500
- 120,000
12.87
8.94
June 2001 – May 2018
June 2003 – Nov 2012
7.09
7.10
13.52
13.52
428,416
395,000
- 333,416
95,000
- 275,000 120,000
-
-
-
-
-
-
8.60
7.15
15.53
15.44
100,000
80,000
10,000
-
14,000
14,000
-
-
96,000
66,000
13.13
9.22
June 2001 – May 2018
June 2003 – Nov 2012
7.21
7.21
13.74
13.74
1
2
Donal Murphy was appointed as a Director on 1 December 2008. The opening balances above relate to the position at the date
of his appointment.
Jim Flavin resigned as a Director on 27 May 2008.
The market price of DCC shares on 31 March 2009 was €11.40 and the range during the year was €10.05 to €17.00.
Report on Directors’ Remuneration and Interests (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
55
DCC Sharesave Scheme
The Group established a Revenue approved save as you earn scheme, 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. There are no options outstanding under the June 2001 grant. 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 2009, Group employees held options to subscribe for 223,398 ordinary shares under the DCC Sharesave Scheme.
Details of the executive Directors’ and the Company Secretary’s options to subscribe for shares under the DCC Sharesave Scheme are set
out below:
Executive Directors
Tommy Breen
Donal Murphy
Fergal O’Dwyer
Company Secretary
Gerard Whyte
* or date of appointment if later.
No. of options
At 31 March 2009
No. of options
At 31 March 2008*
-
653
-
815
-
653
-
815
Additional information in relation to the DCC plc 1998 Employee Share Option Scheme and the DCC Sharesave Scheme appears in note 10
on page 80.
Review of Long Term Incentive Arrangements
Following the termination of the DCC plc 1998 Employee Share Option Scheme in 2008, the Remuneration Committee undertook a review
of long term incentive arrangements for executive Directors and senior management, in which it was advised by independent consultants
Mercer. Arising from the review, it was concluded that the Company should introduce a new long term incentive plan. Accordingly, following
consultation with the Irish Association of Investment Managers and other significant shareholders, the DCC plc Long Term Incentive Plan 2009
(‘the Plan’) will be put to shareholders for approval at the forthcoming Annual General Meeting. Executive Directors will be eligible to participate
in the Plan if approved. Further details of the proposed Plan are set out in the Notice of Annual General Meeting and explanatory letter from the
Chairman.
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 2009 (together with their interests at 31 March 2008 or date of appointment, if later) were:
Directors
Michael Buckley
Tommy Breen
Róisín Brennan
David Byrne
Maurice Keane
Kevin Melia
John Moloney
Donal Murphy
Fergal O’Dwyer
Bernard Somers
Company Secretary
Gerard Whyte
* or date of appointment if later.
All of the above interests were beneficially owned.
No. of Ordinary Shares
At 31 March 2009
No. of Ordinary Shares
At 31 March 2008*
10,000
279,395
-
-
5,000
-
-
70,460
254,889
1,000
137,200
10,000
214,395
-
-
5,000
-
-
70,460
214,889
1,000
126,544
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 2009.
The Company’s Register of Directors Interests (which is open to inspection) contains full details of Directors’ shareholdings and share options.
Directors’ Service Agreements
With the exception of Tommy Breen, Chief Executive, who has a service agreement with a minimum notice period of twelve months, none of
the other Directors has a service contract with the Company or with any member of the Group.
56
DCC ANNUAL REPORT AND ACCOUNTS 2009
Statement of Directors’ Responsibilities
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 the
Group and to enable them to ensure that
the financial statements comply with the
Companies Acts 1963 to 2006 and, as
regards the Group financial statements,
Article 4 of the IAS Regulation. They are
also responsible for safeguarding the
assets of the Company and the Group
and for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on
the Company’s website. Legislation in
the Republic of Ireland governing the
preparation and dissemination of financial
statements may differ from legislation in
other jurisdictions.
Directors’ Statement Pursuant to the
Transparency Regulations
Each of the Directors, whose names
and functions are listed on pages 4 to 5,
confirms that, to the best of each person’s
knowledge and belief:
• the financial statements, prepared in
accordance with IFRSs as adopted by the
European Union, give a true and fair view
of the assets, liabilities, financial position
and profit of the Company and the Group;
and
• the Report of the Directors includes
a fair review of the development and
performance of the Group’s business and
the position of the Company and Group,
together with a description of the principal
risks and uncertainties facing the Group.
The Directors are responsible for preparing
the Annual Report and the financial
statements in accordance with applicable
laws and regulations.
Irish company law requires the Directors
to prepare financial statements for
each financial year. Under that law the
Directors have prepared the Group and
Parent Company financial statements in
accordance with International Financial
Reporting Standards (IFRSs) as adopted
by the European Union. The financial
statements are required by law to 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.
In preparing these financial statements the
Directors are required to:
• select suitable accounting policies and
then apply them consistently;
• make judgments and estimates that are
reasonable and prudent;
• state that the financial statements comply
with IFRSs as adopted by the European
Union; and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the Group
and the Parent Company will continue in
business.
The Directors confirm that they have
complied with the above requirements in
preparing the financial statements.
The Directors are also required by
applicable law and the Listing Rules issued
by the Irish Stock Exchange, to prepare
a Report of the Directors and reports
relating to Directors’ remuneration and
corporate governance. In accordance with
the Transparency (Directive 2004/109/EC)
Regulations 2007 (‘the Transparency
Regulations’), the Directors are required to
include a management report containing a
fair review of the business and a description
of the principal risks and uncertainties
facing the Group.
On behalf of the Board
Michael Buckley
Non-executive Chairman
Tommy Breen
Chief Executive
Report of the Independent Auditors
For the year ended 31 March 2009
DCC ANNUAL REPORT AND ACCOUNTS 2009
57
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 2009 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
financial statements in accordance with
applicable law and International Financial
Reporting Standards (IFRSs) 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 IFRSs 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 IFRSs
as adopted by the European Union, as
applied in accordance with the provisions
of the Companies Acts, 1963 to 2006. We
also report to you whether the financial
statements have been properly prepared
in accordance with Irish statute comprising
the Companies Acts, 1963 to 2006 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 Parent Company Balance Sheet is in
agreement with the books of account. We
also report to you our opinion as to:
• whether the Company has kept proper
books of account;
• whether the Directors’ Report is consistent
with the financial statements; and
• whether at the balance sheet date there
existed a financial situation which may
require the Company to convene an
extraordinary general meeting 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.
We review whether the Corporate
Governance statement reflects the
Company’s compliance with the nine
provisions of the Financial Reporting
Council’s 2006 Combined Code specified
for our review by the Listing Rules of the
Irish Stock Exchange, and we report if it
does not. We are not required to consider
whether the Board’s statements on internal
control cover all risks and controls, or
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 Sustainability Report, the
Corporate Governance Statement, the Report
on Directors’ Remuneration and Interests
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 planned and performed our audit
so as to obtain all the information and
explanations which we considered
necessary in order to provide us with
sufficient evidence to give reasonable
assurance that the financial statements are
free from material misstatement, whether
caused by fraud or other irregularity or error.
In forming our opinion we also evaluated
the overall adequacy of the presentation of
information in the financial statements.
Opinion
In our opinion:
• the Group financial statements give a true
and fair view, in accordance with IFRSs
as adopted by the European Union, of the
state of the Group’s affairs as at 31 March
2009 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 IFRSs as adopted by the European
Union as applied in accordance with the
provisions of the Companies Acts, 1963 to
2006, of the state of the Parent Company’s
affairs as at 31 March 2009 and cash flows
for the year then ended; and
• the financial statements have been
properly prepared in accordance with
the Companies Acts, 1963 to 2006 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 its called-up share
capital and, in our opinion, on that basis there
did not exist at 31 March 2009 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
18 May 2009
58
DCC ANNUAL REPORT AND ACCOUNTS 2009
Group Income Statement
For the year ended 31 March 2009
Pre
exceptionals
€’000
Note
2009
Exceptionals
(note 11)
€’000
Total
€’000
Pre
exceptionals
€’000
2008
Exceptionals
(note 11)
€’000
Revenue
Cost of sales
Gross profit
Administration expenses
Selling and distribution expenses
Other operating income
Other operating expenses
Operating profit before
amortisation of intangible assets
Amortisation of intangible assets
Operating profit
Finance costs
Finance income
Share of associates’ profit after tax
Profit before tax
Income tax expense
4
5
5
4
4
12
12
14
15
6,400,126
(5,735,419)
664,707
(244,227)
(252,307)
14,320
(2,097)
180,396
(5,719)
174,677
(41,262)
20,152
168
153,735
(19,436)
-
-
-
-
-
6,176
(26,015)
(19,839)
-
(19,839)
-
3,919
-
(15,920)
(1,500)
6,400,126
(5,735,419)
664,707
(244,227)
(252,307)
20,496
(28,112)
5,531,962
(4,940,247)
591,715
(205,118)
(230,470)
14,564
(3,511)
160,557
(5,719)
154,838
(41,262)
24,071
168
137,815
(20,936)
167,180
(7,928)
159,252
(44,912)
27,120
639
142,099
(14,774)
-
-
-
-
-
94,763
(55,158)
39,605
-
39,605
-
-
-
39,605
(1,756)
Total
€’000
5,531,962
(4,940,247)
591,715
(205,118)
(230,470)
109,327
(58,669)
206,785
(7,928)
198,857
(44,912)
27,120
639
181,704
(16,530)
Profit after tax for the financial year
134,299
(17,420)
116,879
127,325
37,849
165,174
Profit attributable to:
Equity holders of the Company
Minority interest
Earnings per ordinary share
Basic
Diluted
18
18
Michael Buckley, Tommy Breen, Directors
116,314
565
116,879
142.36c
141.36c
164,491
683
165,174
204.28c
200.31c
Group Statement of Recognised
Income and Expense
For the year ended 31 March 2009
DCC ANNUAL REPORT AND ACCOUNTS 2009
59
Items of income and expense recognised directly within equity:
Currency translation effects
Group defined benefit pension obligations:
- actuarial loss
- movement in deferred tax asset
Deferred tax on share based payment
(Losses)/gains relating to cash flow hedges
Movement in 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
Note
2009
€’000
2008
€’000
32
15
15
15
(85,812)
(64,310)
(9,517)
911
-
(1,600)
204
(95,814)
116,879
21,065
(9,086)
1,200
25
385
(46)
(71,832)
165,174
93,342
20,500
565
21,065
92,659
683
93,342
60
DCC ANNUAL REPORT AND ACCOUNTS 2009
Group Balance Sheet
As at 31 March 2009
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 - share options
Cash flow hedge reserve
Foreign currency translation reserve
Other reserves
Retained earnings
Minority interest
Total equity
LIABILITIES
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred income tax liabilities
Retirement benefit obligations
Provisions for liabilities and charges
Deferred acquisition consideration
Government 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
Michael Buckley, Tommy Breen, Directors
Note
19
20
21
31
28
23
24
28
27
36
37
38
38
38
38
39
40
41
29
28
31
32
34
33
35
25
29
28
34
33
2009
€’000
319,301
443,188
2,208
9,435
128,313
902,445
2008
€’000
337,058
416,883
4,678
10,199
25,347
794,165
208,759
672,782
322
426,789
1,308,652
2,211,097
219,752
807,433
1,523
485,840
1,514,548
2,308,713
22,057
124,687
7,807
(1,174)
(153,036)
1,400
720,909
722,650
3,581
726,231
22,057
124,687
6,651
222
(67,224)
1,400
650,871
738,664
3,771
742,435
525,405
17,372
15,827
29,498
5,309
15,057
1,995
610,463
696,294
54,948
101,657
1,660
13,754
6,090
874,403
1,484,866
2,211,097
358,119
43,558
11,706
21,851
5,399
16,155
1,941
458,729
796,902
53,895
217,546
17,206
7,964
14,036
1,107,549
1,566,278
2,308,713
Group Cash Flow Statement
For the year ended 31 March 2009
DCC ANNUAL REPORT AND ACCOUNTS 2009
61
Cash generated from operations
Exceptionals
Interest paid
Income tax paid
Net cash flows from operating activities
Investing activities
Inflows
Dividends received from associates
Proceeds from disposal of property, plant and equipment
Government grants received
Proceeds on disposal of associate
Interest received
Outflows
Purchase of property, plant and equipment
Acquisition of subsidiaries
Deferred acquisition consideration paid
Net cash flows from investing activities
Financing activities
Inflows
Re-issue of treasury shares
Increase in finance lease liabilities
Increase in interest-bearing loans and borrowings
Outflows
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
42
35
17
40
30
27
30
30
2009
€’000
304,874
(60,940)
(38,274)
(14,147)
191,513
-
5,484
1,130
8,481
16,417
31,512
(56,970)
(89,725)
(11,987)
(158,682)
(127,170)
10,267
-
84,348
94,615
(92,938)
(1,129)
(47,937)
(766)
(142,770)
(48,155)
16,188
(36,717)
396,046
375,517
2008
€’000
129,043
(4,168)
(38,541)
(21,902)
64,432
172,000
7,781
92
8,880
23,560
212,313
(87,526)
(166,584)
(9,987)
(264,097)
(51,784)
4,060
873
202,049
206,982
(43,490)
(6,523)
(41,813)
(2,725)
(94,551)
112,431
125,079
(39,220)
310,187
396,046
426,789
(51,272)
375,517
485,840
(89,794)
396,046
62
DCC ANNUAL REPORT AND ACCOUNTS 2009
Company Balance Sheet
As at 31 March 2009
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
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
Michael Buckley, Tommy Breen, Directors
Note
21
22
24
27
36
37
38
39
41
25
2009
€’000
1,244
161,065
162,309
452,817
815
453,632
615,941
22,057
124,687
344
194,317
341,405
10,387
10,387
264,149
264,149
274,536
615,941
2008
€’000
1,244
161,065
162,309
494,630
2,664
497,294
659,603
22,057
124,687
344
230,285
377,373
10,387
10,387
271,843
271,843
282,230
659,603
Company Statement of Recognised
Income and Expense
For the year ended 31 March 2009
DCC ANNUAL REPORT AND ACCOUNTS 2009
63
Profit after tax for the financial year
Total recognised income and expense for the financial year
Attributable to:
Equity holders of the Company
Company Cash Flow Statement
For the year ended 31 March 2009
Cash generated from operations
Interest paid
Income tax received/(paid)
Net cash flows from operating activities
Investing activities
Inflows
Proceeds on disposal of associate
Interest received
Outflows
Capital contribution to subsidiary undertaking
Net cash flows from investing activities
Financing activities
Inflows
Re-issue of treasury shares
Outflows
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
16
Note
42
17
2009
€’000
1,702
1,702
2008
€’000
221,280
221,280
1,702
221,280
2009
€’000
31,207
(1,069)
1
30,139
-
5,682
5,682
-
-
5,682
10,267
10,267
(47,937)
(47,937)
(37,670)
(1,849)
2,664
815
2008
€’000
46,156
(1,868)
(1,750)
42,538
8,880
4,991
13,871
(16,000)
(16,000)
(2,129)
4,060
4,060
(41,813)
(41,813)
(37,753)
2,656
8
2,664
64
DCC ANNUAL REPORT AND ACCOUNTS 2009
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 2006 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 not to present its individual Income Statement and related notes that form part of the approved Company financial statements.
The Company has also availed of the exemption from filing its individual Income Statement with the Registrar of Companies as permitted by
Section 7(1A) of the Companies (Amendment) Act 1986.
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 applied in the preparation of the financial statements for the year ended 31 March 2009 are set out below. These
policies have been applied consistently by the Group’s subsidiaries, joint ventures and associates for all periods presented in these
consolidated 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 judgment in the process of applying the Company’s accounting policies. The areas involving a high
degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are
documented in note 3.
Standards, interpretations and amendments to published standards that are not yet effective
The Group has not applied certain new standards, amendments and interpretations to existing standards that have been issued but are not
yet effective. These include the following:
• Improvements to IFRSs (effective date: DCC financial year beginning 1 April 2009). The improvements include changes in presentation,
recognition and measurement plus terminology and editorial changes. These improvements are not expected to have a significant impact
on the Group’s accounts.
• IFRS 1 Revised First-time Adoption of International Financial Reporting Standards (effective date: DCC financial year beginning 1 April
2010). This revised standard clarifies the requirements for first-time adoption of new and amended IFRSs. This standard will not have a
significant impact on the Group’s accounts.
• Amendment to IFRS 2 Share-based Payments: Vesting Conditions and Cancellations (effective date: DCC financial year beginning 1 April
2009). This amendment clarifies the accounting treatment of cancellations and vesting conditions. This amendment will have no impact on
the Group’s accounts.
• IFRS 3 Revised Business Combinations (effective date: DCC financial year beginning 1 April 2010). This standard establishes principles for
how an acquirer recognises, measures and discloses in its financial statements the goodwill acquired in the business combination and the
identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The impact on the Group’s accounts
will be dependent on future acquisitions.
• IFRS 8 Operating Segments (effective date: DCC financial year beginning 1 April 2009). IFRS 8 replaces IAS 14 and uses a ‘management
approach’ under which segment information is presented on the same basis as that used for internal reporting purposes. Whilst the
application of IFRS 8 will result in amendments to the segment information note, this amendment will not be of a recognition and
measurement nature.
• Amendment to IAS 1 Presentation of Financial Statements (Revised) (effective date: DCC financial year beginning 1 April 2009). This
amendment sets overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements
for their content. IAS 1 will have an impact on the presentation of the financial statements of the Group, however, this is not expected to
be significant.
• Amendment to IAS 23 Borrowing Costs (effective date: DCC financial year beginning 1 April 2009). This amendment requires an entity to
capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, as part of the
cost of that asset. This amendment will not have any effect on the Group’s financial statements.
• Amendment to IAS 27 Consolidated and Separate Financial Statements (effective date: DCC financial year beginning 1 April 2010). The
objective of this amendment is to enhance the relevance, reliability and comparability of the information that a parent entity provides in its
separate financial statements and in its consolidated financial statements for a group of entities under its control. The introduction of this
amendment will impact on Group reporting but this is not expected to be significant.
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
65
1. Summary of Significant Accounting Policies (continued)
• Amendment to IAS 32 Puttable Financial Instruments and Obligations Arising on Liquidation (effective date: DCC financial year beginning 1
April 2009). This amendment will have no effect on the Group’s financial statements.
• Amendment to IAS 39 Eligible Hedged Items (effective date: DCC financial year beginning 1 April 2010). This amendment clarifies how the
principles that determine whether a hedged risk (or portions of cash flows) is eligible for designation should be applied. This amendment
will not have a significant impact on the Group’s financial statements.
• IFRIC Interpretation 13 Customer Loyalty Programmes (effective date: DCC financial year beginning 1 April 2009). This interpretation gives
guidance on accounting for customer loyalty award credits. This IFRIC will have no effect on the Group’s financial statements.
• IFRIC Interpretation 15 Agreements for the Construction of Real Estate (effective date: DCC financial year beginning 1 April 2009). This
interpretation gives guidance on determining the recognition of revenue among real estate developers. This IFRIC will have no effect on the
Group’s financial statements.
• IFRIC Interpretation 16 Hedges of a Net Investment in a Foreign Operation (effective date: DCC financial year beginning 1 April 2009). This
interpretation provides guidance on accounting for the hedge of a net investment in a foreign operation in an entity’s consolidated financial
statements. This IFRIC will have no effect on the Group’s financial statements.
• IFRIC Interpretation 17 Distributions of Non-cash Assets to Owners (effective date: DCC financial year beginning 1 April 2010). This
interpretation gives guidance on measuring the distribution of assets, other than cash, when paying a dividend to the owners of the entity.
This IFRIC will have no effect on the Group’s financial statements.
• IFRIC Interpretation 18 Transfers of Assets from Customers (effective date: DCC financial year beginning 1 April 2010). This interpretation
gives guidance for utility companies on receipt from customers of property, plant and equipment that must be used to connect those
customers to a utilities network. This IFRIC will have no effect on the Group’s financial statements.
Basis of Consolidation
Subsidiaries
Subsidiaries are entities that are controlled by the Group. Control exists 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. In assessing control, potential voting rights that are
currently exercisable or convertible are taken into account.
The results of subsidiary undertakings acquired or disposed of during the year are included in the Group Income Statement from the date
of their acquisition or up to the date of their disposal. Where necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with those used by the Group.
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 venturers
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 all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between
20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially
recognised at cost. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment
loss. Goodwill attributable to investments in associates is treated in accordance with the accounting policy for goodwill.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the Group Income Statement, and its share of post-
acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying
amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any
other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of
the associate.
The results of associates are included from the effective date on which the Group obtains significant influence and are excluded from the
effective date on which the Group ceases to have significant influence.
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.
66
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
1. Summary of Significant Accounting Policies (continued)
Revenue Recognition
Revenue comprises the fair value of the sale of goods and services to external customers net of value added tax, rebates and discounts.
Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the buyer,
which generally arises on delivery, or in accordance with specific terms and conditions agreed with customers. Revenue from the rendering
of services is recognised in the period in which the services are rendered.
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 Group Income Statement except when cash flow and net investment 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. Average exchange rates are a reasonable approximation of the cumulative effect of
the rates on the transaction dates. 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. In accordance with IFRS 1, cumulative currency translation differences arising prior to the transition date to
IFRS (1 April 2004) have been set to zero for the purposes of ascertaining the gain or loss on disposal of a foreign operation.
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, profit or loss on disposal of property, plant and equipment, IAS 39 ineffective mark to market movements and
impairment of assets. Judgment is used by the Group in assessing the particular items, which by virtue of their scale and nature, should be
presented in the Income Statement and disclosed in the related notes as exceptional items.
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.
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
67
1. Summary of Significant Accounting Policies (continued)
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 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 was therefore 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.
The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to
minority interests result in gains and losses for the Group that are recorded in the Income Statement. Purchases from minority interests
result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of the net
assets of the subsidiary.
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 accordance with IFRS 1, the accounting treatment of
business combinations undertaken prior to the transition date (1 April 2004) was not reconsidered and goodwill amortisation ceased with
effect from the transition date.
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. Goodwill acquired in a business combination is allocated,
from the acquisition date, to the cash-generating units or groups of cash-generating units that are expected to benefit from the business
combination in which the goodwill arose.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. 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 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.
68
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
1. Summary of Significant Accounting Policies (continued)
Where a subsidiary is sold, any goodwill arising on acquisition, net of any impairments, is included in determining the profit or loss arising on
disposal.
Where goodwill forms part of a cash-generating unit and part of the operations 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, finite-lived intangible assets are amortised over periods ranging from two to six
years, depending on the nature of the intangible asset.
The carrying amount of finite-lived intangible assets are reviewed for indicators of impairment at each reporting date and are subject to
impairment testing when events or changes in circumstances indicate that the carrying values may not be recoverable. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the
asset to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are capitalised as assets of the Group at the inception of the lease at the lower of the fair value of the
leased asset and the present value of the minimum lease payments. The corresponding liability to the lessor is included in the Balance
Sheet as a short, medium or long term lease obligation as appropriate. Lease payments are apportioned between finance charges and
reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
recognised in the Income Statement.
Rentals payable under operating leases (net of any incentives received from the lessor) are charged to the Income Statement on a straight
line basis over the term of the relevant lease.
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.
Trade Receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method less provision for impairment.
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. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default in payments are considered indicators that the trade receivable is impaired. 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.
Trade Payables
Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost, which approximates to fair
value given the short-dated nature of these liabilities.
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
69
1. Summary of Significant Accounting Policies (continued)
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.
For the purpose of the Group Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above net
of bank overdrafts.
Derivative Financial Instruments
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 recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, 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).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its
risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at
hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting
changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note 28 and the movements on the hedging
reserve in shareholders’ equity are shown in note 38. 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 remaining maturity of the
hedged item is less than twelve months.
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’ or ‘Finance Income’.
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’ or ‘Finance Income’.
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.
Interest-Bearing Loans and Borrowings
All loans and borrowings are initially recorded at fair value, net of transaction costs incurred. Loans and borrowings are subsequently stated
at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Income
Statement over the period of the borrowings using the effective interest method.
70
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
1. Summary of Significant Accounting Policies (continued)
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. Provisions are measured at the
Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value
where the effect is material.
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 acquiree 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 it is not probable that an outflow of resources will be required to settle the obligation 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.
Environmental Provisions
The Group’s waste management and recycling activities are subject to various laws and regulations governing the protection of the
environment. Full provision is made for the net present value of the Group’s estimated costs in relation to restoration liabilities at its landfill
sites. The net present value of the estimated costs is capitalised as property, plant and equipment and the unwinding of the discount
element on the restoration provision is reflected in the Income Statement.
Finance Costs
Finance costs comprise interest payable on borrowings calculated using the effective interest rate method, gains and losses on hedging
instruments that are recognised in the Income Statement and the unwinding of discounts on provisions. The interest expense component of
finance lease payments is recognised in the Income Statement using the effective interest rate method. The finance cost on defined benefit
pension scheme liabilities is recognised in the Income Statement in accordance with IAS 19.
Finance Income
Interest income is recognised in the Income Statement as it accrues, using the effective interest method. The expected return on defined
benefit pension scheme assets is recognised in the Income Statement in accordance with IAS 19.
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, joint ventures and associates, the
timing of the reversal of the temporary difference is subject to control by the Group 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 (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
71
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. Plan assets are measured at bid values.
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. In accordance with IAS 19 Employee Benefits the Group recognises 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 at the grant date 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 exercise 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.
The measurement requirements of IFRS 2 have been implemented in respect of share options entitlements granted after 7 November
2002. In accordance with the standard, the disclosure requirements of IFRS 2 have been applied to all outstanding share-based payments
regardless of their grant date. 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.
Government 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 government 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.
72
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
1. Summary of Significant Accounting Policies (continued)
Shareholders’ Equity
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. Proposed dividends that are approved after the balance sheet date are not recognised as a liability at that
balance sheet date, but 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 Group Risk Management function.
The Group’s financial risks are detailed in note 47.
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 approximate to their fair values.
3. Critical Accounting Estimates and Judgments
The Group’s main accounting policies affecting its results of operations and financial condition are set out on pages 64 to 72. In determining
and applying accounting policies, judgment is often required in respect of items where the choice of specific policy, accounting estimate or
assumption to be followed could materially affect the reported results or net asset position of the Group should it later be determined that a
different choice would be more appropriate. Management considers the accounting estimates and assumptions discussed below to be its
critical accounting estimates and judgments:
Goodwill
The Group has capitalised goodwill of €429.3 million at 31 March 2009. 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 Group uses the present
value of future cash flows to determine recoverable amount. In calculating the fair value, management judgment is required in forecasting
cash flows of reporting units, in determining terminal growth values and in selecting an appropriate discount rate. Sensitivities to changes in
assumptions are detailed in note 20.
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 €81.8 million at 31 March 2009. At 31 March 2009 the
Group also has plan assets totalling €52.3 million, giving a net pension liability of €29.5 million. 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. Sensitivities to changes in assumptions are detailed in note 32.
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
73
3. Critical Accounting Estimates and Judgments (continued)
Taxation
The Group is subject to income taxes in a number of jurisdictions. Provisions for tax liabilities require management to make judgments and
estimates in relation to tax issues and exposures. Amounts provided are based on management’s interpretation of country specific tax laws
and the likelihood of settlement. Where the final tax outcome is different from the amounts that were initially recorded, such differences will
impact the current tax and deferred tax provisions in the period in which such determination is made.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax
losses and unused tax credits can be utilised. The Group estimates the most probable amount of future taxable profits, using assumptions
consistent with those employed in impairment calculations, and taking into account applicable tax legislation in the relevant jurisdiction.
These calculations require the use of estimates.
Business Combinations
The Group uses the purchase method of accounting for acquisitions which requires that the assets and liabilities assumed are recorded at
their respective fair values at the date of acquisition. The application of the purchase method requires certain estimates and assumptions
particularly concerning the determination of the fair values of the acquired assets and liabilities assumed at the date of acquisition.
For intangible assets acquired, the Group bases valuations on expected future cash flows. This method employs a discounted cash flow
analysis using the present value of the estimated after-tax cash flows expected to be generated from the purchased intangible asset using
risk adjusted discount rates and revenue forecasts as appropriate. The period of expected cash flows is based on the expected useful life of
the intangible asset acquired.
Provision for Impairment of Trade Receivables
The Group trades with a large and varied number of customers on credit terms. Some debts due will not be paid through the default of a
small number of customers. The Group uses estimates based on historical experience and current information in determining the level of
debts for which a provision for impairment is required. The level of provision required is reviewed on an ongoing basis.
Useful Lives for Property, Plant and Equipment and Intangible Assets
Long-lived assets comprising primarily of property, plant and equipment and intangible assets represent a significant portion of total
assets. The annual depreciation and amortisation charge depends primarily on the estimated lives of each type of asset and, in certain
circumstances, estimates of residual values. Management regularly review these useful lives and change them if necessary to reflect current
conditions. In determining these useful lives management consider technological change, patterns of consumption, physical condition and
expected economic utilisation of the assets. Changes in the useful lives can have a significant impact on the depreciation and amortisation
charge for the period.
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 consumer electronic 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 and recycling services to the industrial, commercial, construction and
public sectors in Britain and Ireland.
Intersegment revenue is not material and thus not subject to separate disclosure.
74
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
4. Segment Information (continued)
The segment results for the year ended 31 March 2009 are as follows:
Income Statement items
Year ended 31 March 2009
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage Environmental
€’000
€’000
DCC
Segment revenue
4,130,842
1,551,316
331,223
304,973
81,772
Operating profit*
Amortisation of
intangible assets
Net operating
exceptionals (note 11)
100,694
40,138
17,300
12,040
10,224
(2,830)
(882)
(704)
(496)
(5,803)
(2,768)
(6,077)
(3,974)
(807)
(467)
Unallocated
€’000
Total
€’000
-
-
-
6,400,126
180,396
(5,719)
(750)
(19,839)
92,061
36,488
10,519
7,570
8,950
(750)
Operating profit
Finance costs
Finance income
Share of associates’ profit after tax
Profit before income tax
Income tax expense
Profit for the year
154,838
(41,262)
24,071
168
137,815
(20,936)
116,879
* Operating profit before amortisation of intangible assets and net operating exceptionals
Year ended 31 March 2008
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage Environmental
€’000
€’000
DCC
Segment revenue
3,420,026
1,423,357
286,782
310,119
91,678
Operating profit*
Amortisation of
intangible assets
Net operating
exceptionals (note 11)
Operating profit
Finance costs
Finance income
Share of associates’ profit after tax
Profit before income tax
Income tax expense
Profit for the year
74,339
40,062
23,440
15,301
14,038
(2,389)
(2,216)
(1,586)
(986)
(751)
(4,807)
(1,260)
(665)
3,538
(1,392)
44,191
39,605
67,143
36,586
21,189
17,853
11,895
44,191
198,857
(44,912)
27,120
639
181,704
(16,530)
165,174
Unallocated
€’000
Total
€’000
-
-
-
5,531,962
167,180
(7,928)
* Operating profit before amortisation of intangible assets and net operating exceptionals
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
75
4. Segment Information (continued)
Balance Sheet items
As at 31 March 2009
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC
DCC Food
& Beverage Environmental
€’000
€’000
Total
€’000
Segment assets
732,332
466,079
204,628
144,877
96,114
1,644,030
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
2,208
128,635
9,435
426,789
2,211,097
Segment liabilities
370,951
227,801
56,305
72,779
17,019
744,855
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 (current and non-current)
Government grants
Total liabilities as reported in the Group Balance Sheet
627,062
19,032
70,775
21,147
1,995
1,484,866
As at 31 March 2008
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage
€’000
DCC
Environmental
€’000
Total
€’000
Segment assets
814,025
502,010
213,207
142,596
109,288
1,781,126
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
4,678
26,870
10,199
485,840
2,308,713
Segment liabilities
411,721
260,290
59,302
76,581
24,222
832,116
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 (current and non-current)
Government grants
Total liabilities as reported in the Group Balance Sheet
575,665
60,764
65,601
30,191
1,941
1,566,278
76
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
4. Segment Information (continued)
Net tangible capital employed
The denominator in the Group’s return on tangible capital employed calculations is the average of the Group’s opening and closing net
tangible capital employed. The following tables provide an analysis of the net tangible capital employed positions at 31 March 2009 and 31
March 2008.
As at 31 March 2009
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
DCC
& Beverage Environmental
€’000
€’000
Total
€’000
Segment assets
Intangible assets
Deferred income tax assets
Assets employed
Segment liabilities
Income tax liabilities (current and deferred)
Government grants
Liabilities employed
732,332
(211,436)
2,144
523,040
370,951
31,407
-
402,358
466,079
(73,178)
1,492
394,393
227,801
18,097
183
246,081
204,628
(89,018)
3,684
119,294
56,305
9,052
1,385
66,742
144,877
(31,128)
1,930
115,679
72,779
5,573
-
78,352
96,114
(38,428)
185
57,871
1,644,030
(443,188)
9,435
1,210,277
17,019
6,646
427
24,092
744,855
70,775
1,995
817,625
Net tangible capital employed
120,682
148,312
52,552
37,327
33,779
392,652
As at 31 March 2008
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
Segment liabilities
Income tax liabilities (current and deferred)
Government grants
Liabilities employed
814,025
(183,952)
3,368
633,441
411,721
26,473
-
438,194
502,010
(68,207)
1,140
434,943
260,290
16,218
228
276,736
213,207
(90,512)
4,076
126,771
59,302
10,579
1,022
70,903
142,596
(32,736)
1,376
111,236
76,581
4,683
-
81,264
109,288
(41,476)
239
68,051
1,781,126
(416,883)
10,199
1,374,442
24,222
7,648
691
32,561
832,116
65,601
1,941
899,658
Net tangible capital employed
195,247
158,207
55,868
29,972
35,490
474,784
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
77
4. Segment Information (continued)
Other segment information
Year ended 31 March 2009
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC
DCC Food
& Beverage Environmental
€’000
€’000
Total
€’000
Capital expenditure
31,447
3,952
6,737
4,108
9,876
56,120
Depreciation
25,391
3,745
5,071
4,601
6,601
45,409
Intangible assets acquired
54,181
10,586
8,689
2,266
2,085
77,807
Impairment of goodwill
-
-
3,346
2,115
-
5,461
Year ended 31 March 2008
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
€’000
DCC Food
& Beverage
€’000
DCC
Environmental
€’000
Total
€’000
Capital expenditure
38,246
3,182
15,084
17,094
14,010
87,616
Depreciation
25,558
3,457
4,861
4,719
6,850
45,445
Intangible assets acquired
90,124
11,272
18,465
Impairment of goodwill
-
-
-
-
-
1,166
121,027
-
-
Geographical analysis
The following is a geographical analysis of the segment information presented above.
Republic of Ireland
2008
2009
€’000
€’000
UK
2009
€’000
2008
€’000
Rest of the World
2009
€’000
2008
€’000
Total
2009
€’000
2008
€’000
Year ended 31 March
Income Statement items
Revenue
1,004,169
1,112,936
4,819,165
3,982,215
576,792
436,811
6,400,126
5,531,962
Operating profit*
44,277
Amortisation of intangible assets (1,741)
Net operating exceptionals
(4,867)
Segment result
37,669
61,999
(3,009)
45,404
104,394
121,580
(3,887)
(11,145)
106,548
95,521
(4,646)
(5,331)
85,544
14,539
(91)
(3,827)
10,621
9,660
(273)
(468)
8,919
180,396
(5,719)
(19,839)
154,838
167,180
(7,928)
39,605
198,857
Balance Sheet items
Segment assets
424,271
537,000
1,050,120
1,126,567
169,639
117,559
1,644,030
1,781,126
Segment liabilities
190,961
265,645
456,414
515,793
97,480
50,678
744,855
832,116
Other segment information
Capital expenditure
14,955
33,525
39,476
52,915
1,689
1,176
56,120
87,616
Depreciation
14,986
14,573
29,470
30,152
953
720
45,409
45,445
Intangible assets acquired
7,953
8,935
62,485
110,841
7,369
1,251
77,807
121,027
Impairment of goodwill
115
-
2,318
-
3,028
-
5,461
-
* Operating profit before amortisation of intangible assets and net operating exceptionals
78
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
5. Other Operating Income/Expenses
Other operating income and expenses comprise the following charges/(credits):
Other income
Fair value gains on non-hedge accounted derivative financial instruments
- forward foreign exchange contracts
Other operating income
Other expenses
Expensing of employee share options (note 10)
Fair value losses on undesignated derivative financial instruments
- forward foreign exchange contracts
Other operating expenses
2009
€’000
2008
€’000
(1,245)
(13,075)
(14,320)
-
(14,564)
(14,564)
1,156
1,844
-
941
2,097
495
1,172
3,511
6. Group Operating Profit
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):
Provision for impairment of trade receivables (note 47)
Directors’ fees and salaries
Amortisation of government grants (note 35)
Operating lease rentals
- land and buildings
- plant and machinery
- motor vehicles
During the year the Group obtained the following services from the Group’s auditors (PricewaterhouseCoopers):
Audit fees
Acquisition related due diligence and litigation support
Tax compliance and advisory services
2009
€’000
18,996
1,874
(830)
11,457
513
8,228
20,198
1,351
303
2,186
3,840
2008
€’000
5,638
2,145
(288)
8,388
774
4,907
14,069
1,476
338
1,902
3,716
7. Directors’ Emoluments and Interests
Directors’ emoluments and interests (which are included in operating costs) are presented in the Report on Directors’ Remuneration and
Interests on pages 52 to 55.
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
79
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
Exceptional items
Amortisation of intangible assets
Operating profit
Finance income (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 (decrease)/increase in cash and cash equivalents
(Overdraft)/cash acquired on acquisition
Translation adjustment
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
Cash and cash equivalents as above
Interest-bearing loans and borrowings (current and non-current)
Net cash at 31 March
2009
€’000
43,510
(30,125)
13,385
(9,206)
(336)
(428)
3,415
199
3,614
(1,237)
2,377
23,745
9,574
33,319
20,423
5,440
7,456
12,896
33,319
(2,206)
(4,511)
69
(6,648)
(15)
(339)
9,040
2,038
2,038
(61)
1,977
2008
€’000
48,026
(31,592)
16,434
(8,874)
3,628
(157)
11,031
183
11,214
(1,960)
9,254
24,800
19,094
43,894
26,401
6,582
10,911
17,493
43,894
11,491
(7,329)
-
4,162
204
(569)
5,243
9,040
9,040
-
9,040
The Group’s share of the capital commitments of its joint ventures at 31 March 2009 is €2.858 million (2008: €3.798 million).
Details of the Group’s principal joint ventures are shown in the Group directory on pages 112 to 114.
80
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
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 employee benefit expenses (excluding termination payments - note 11) 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)
2009
Number
2008
Number
2,833
1,403
1,347
1,055
544
7,182
2009
€’000
264,585
29,905
1,156
7,570
3,090
306,306
2,392
1,513
1,183
1,044
506
6,638
2008
€’000
246,114
27,385
1,844
6,645
3,246
285,234
10. Employee Share Options
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 €1.156 million (2008: €1.844 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 IFRS 2 Share-based Payment, the Group has implemented the measurement requirements of the IFRS in respect of
share options that were granted after 7 November 2002 and had not vested by 1 April 2004.
The total share option expense is analysed as follows:
Date of grant
Grant
price
€
Duration of
Number of
vesting period options granted
Weighted
average
fair value
€
Expense in
Income Statement
2009
€’000
2008
€’000
DCC plc 1998 Employee Share Option Scheme
12 November 2002
22 December 2003
18 May 2004
9 November 2004
15 December 2005
23 June 2006
23 July 2007
20 December 2007
20 May 2008
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
3 and 5 years
3 and 5 years
3 and 5 years
3 and 5 years
3 and 5 years
3 years
3 years
3 years
3 years
609,500
132,000
162,500
219,500
215,000
223,500
323,000
25,000
315,500
2.81
2.76
3.42
4.15
4.52
4.54
6.35
5.22
4.32
DCC Sharesave Scheme 2001
10 December 2004
Total expense
12.63
3 and 5 years
716,010
4.67
(213)
29
33
19
181
222
419
43
379
1,112
44
1,156
81
35
64
179
261
326
456
11
-
1,413
431
1,844
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
81
10. Employee Share Options (continued)
Share options
DCC plc 1998 Employee Share Option Scheme
At 31 March 2009, under the DCC plc 1998 Employee Share Option Scheme, Group employees hold basic tier options to subscribe for
1,902,000 ordinary shares and second tier options to subscribe for 1,131,000 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
2009
2008
Average
exercise
price in €
per share
11.12
15.68
7.54
14.83
12.75
Options
4,262,128
315,500
(1,267,128)
(277,500)
3,033,000
Average
exercise
price in €
per share
10.00
23.07
8.44
11.24
11.12
Options
4,172,712
348,000
(202,584)
(56,000)
4,262,128
Total exercisable at 31 March
10.45
1,520,000
8.65
2,632,628
The weighted average share price at the dates of exercise for share options exercised during the year under the DCC plc 1998 Employee
Share Option Scheme was €14.73 (2008: €19.39). The share options outstanding at the year end have a weighted average remaining
contractual life of 4.4 years (2008: 3.8 years).
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 2009
Granted during the year ended 31 March 2008
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
2009
3 year
15.68
4.60
2.50
25.0
8.0
3 year
€
4.32
6.26
2008
3 year
23.07
4.70
2.50
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.
82
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
10. Employee Share Options (continued)
Analysis of closing balance - outstanding at end of year
Date of grant
Date of expiry
26 June 1998
27 July 1998
4 August 1998
6 August 1998
10 November 1998
9 November 1999
16 May 2000
21 November 2000
13 November 2001
12 November 2002
22 December 2003
18 May 2004
9 November 2004
15 December 2005
23 June 2006
23 July 2007
20 December 2007
20 May 2008
Total outstanding at 31 March
26 June 2008
27 July 2008
4 August 2008
6 August 2008
10 November 2008
9 November 2009
16 May 2010
21 November 2010
13 November 2011
12 November 2012
22 December 2013
18 May 2014
9 November 2014
15 December 2015
23 June 2016
23 July 2017
20 December 2017
20 May 2018
Analysis of closing balance - exercisable at end of year
Date of grant
Date of expiry
26 June 1998
27 July 1998
4 August 1998
6 August 1998
10 November 1998
9 November 1999
16 May 2000
21 November 2000
13 November 2001
12 November 2002
22 December 2003
18 May 2004
9 November 2004
15 December 2005
Total exercisable at 31 March
26 June 2008
27 July 2008
4 August 2008
6 August 2008
10 November 2008
9 November 2009
16 May 2010
21 November 2010
13 November 2011
12 November 2012
22 December 2013
18 May 2014
9 November 2014
15 December 2015
Exercise
price in €
per share
-
-
-
-
-
7.00
10.65
11.25
10.25
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
Exercise
price in €
per share
-
-
-
-
-
7.00
10.65
11.25
10.25
10.38
10.70
12.75
15.65
16.70
2009
2008
Options
-
-
-
-
-
557,500
50,000
166,500
494,500
374,000
119,500
142,500
166,500
183,000
190,500
248,000
25,000
315,500
3,033,000
Exercise
price in €
per share
8.19
8.13
7.43
7.43
6.22
7.00
10.65
11.25
10.25
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
-
Options
391,160
53,000
60,000
11,052
492,916
707,500
50,000
166,500
654,500
451,000
122,500
149,500
199,500
189,500
215,500
323,000
25,000
-
4,262,128
2009
2008
Options
-
-
-
-
-
557,500
50,000
166,500
241,000
95,500
52,000
76,000
113,500
168,000
1,520,000
Exercise
price in €
per share
8.19
8.13
7.43
7.43
6.22
7.00
10.65
11.25
10.25
10.38
10.70
12.75
15.65
-
Options
391,160
53,000
60,000
11,052
492,916
707,500
50,000
166,500
321,000
102,500
55,000
79,500
142,500
-
2,632,628
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
83
10. Employee Share Options (continued)
DCC Sharesave Scheme 2001
Under the DCC Sharesave Scheme 2001, Group employees hold options to subscribe for 223,398 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
Exercised
Lapsed
At 31 March
2009
2008
Average
exercise
price in €
per share
12.63
12.63
12.63
12.63
Average
exercise
price in €
per share
12.63
12.63
12.63
12.63
Options
328,679
(57,452)
(47,829)
223,398
Options
563,635
(199,433)
(35,523)
328,679
The weighted average share price at the dates of exercise for share options exercised during the year under the DCC Sharesave Scheme
2001 was €15.62 (2008: €16.01). The share options outstanding at the year end have a weighted average remaining contractual life of 1.9
years (2008: 2.4 years).
Analysis of closing balance - outstanding at end of year
Date of grant
Date of expiry
10 December 2004
10 December 2004
Total outstanding at 31 March
1 March 2009
1 March 2011
2009
2008
Exercise
price in €
per share
12.63
12.63
Exercise
price in €
per share
12.63
12.63
Options
86,891
241,788
328,679
Options
-
223,398
223,398
Analysis of closing balance - exercisable at end of year
As at 31 March 2009, none (2008: 86,891) of the outstanding options under the DCC Sharesave Scheme 2001 were exercisable.
11. Exceptionals
Restructuring costs and other
Closure of Days Healthcare Germany
Impairment of goodwill
Legal fees
Profit on disposal of associate
Profit on disposal of Manor Park Homebuilders
Costs of legal actions with Fyffes plc
Operating exceptional items
Mark to market gains (included in interest)
Net exceptional items before taxation
Exceptional taxation charge
Net exceptional items after taxation
2009
€’000
(13,045)
(9,046)
(2,433)
(1,491)
6,176
-
-
(19,839)
3,919
(15,920)
(1,500)
(17,420)
2008
€’000
(5,158)
-
-
-
-
94,763
(50,000)
39,605
-
39,605
(1,756)
37,849
Exceptional restructuring costs, mainly comprising redundancy costs, were incurred in relation to recently acquired and existing Group
businesses.
DCC Healthcare closed its subsidiary in Germany at a cost of €9.046 million, which includes redundancies and other exit costs, asset write
offs and an impairment of acquisition goodwill of €3.028 million.
84
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
11. Exceptionals (continued)
There was a non-cash goodwill impairment charge. An impairment review is performed annually for each cash-generating unit to which a
carrying amount of goodwill has been allocated. The Group has written down the carrying value of goodwill amounts in relation to certain
Healthcare and Food & Beverage subsidiaries and accordingly a charge of €2.433 million has been taken in the year ended 31 March 2009.
The disposal of a small US associate company gave rise to an exceptional profit of €6.176 million and a cash inflow of €8.481 million.
Most of the Group’s debt has been raised in the US Private Placement debt market and swapped, using long term interest, currency and
cross currency derivatives to floating rate sterling and euro. Under IAS 39, after ‘marking to market’ swaps designated as fair value hedges
and the related fixed rate debt, the level of ineffectiveness is taken to the Income Statement. The recent volatility in capital markets has
given rise to a mark to market ineffectiveness gain of €3.919 million. This significant gain will unwind as a loss over the remaining life of the
relevant swaps and the Group regards this gain and similar movements in the future as exceptional in nature.
An exceptional deferred tax charge of €1.500 million arises in relation to a recent change in UK tax legislation providing for the withdrawal of
industrial building allowances.
12. Finance Costs and Finance Income
Finance costs
On bank loans, overdrafts and Unsecured Notes
- 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 (note 32)
Unwinding of discount applicable to deferred acquisition consideration
Mark-to-market of swaps and related debt*
Finance income
Interest on cash and term deposits
Other income receivable
Expected return on defined benefit pension scheme assets (note 32)
Mark-to-market of swaps and related debt* (note 11)
Net finance cost
* 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
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)
2009
€’000
2008
€’000
(13,116)
(165)
(21,373)
(74)
(157)
(946)
(35,831)
(5,006)
(425)
-
(41,262)
15,724
156
4,272
3,919
24,071
(18,880)
(72)
(19,727)
(3)
(532)
(547)
(39,761)
(4,405)
(648)
(98)
(44,912)
21,886
245
4,989
-
27,120
(17,191)
(17,792)
15,649
104,431
(140,928)
24,744
23
3,919
15,056
18,140
(9,043)
(24,301)
50
(98)
2009
€1=Stg£
2008
€1=Stg£
0.930
0.826
0.795
0.702
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
85
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)/income (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
Exceptional taxation charge (note 11)
United Kingdom Corporation Tax at 28% (2008: 30%)
Other overseas tax
Total current taxation
Deferred tax
Irish at 12.5%
United Kingdom at 28%
Exceptional taxation charge (note 11)
Other overseas deferred tax
Under/(over) provision in respect of prior years
Total deferred tax charge/(credit)
2009
€’000
2008
€’000
9,725
14,609
340
(52)
288
(120)
168
1,041
2
1,043
(404)
639
2009
€’000
2008
€’000
5,589
(308)
-
2,353
5,869
13,503
(555)
4,990
1,500
(158)
1,656
7,433
10,859
(251)
1,756
6,973
2,708
22,045
(2,080)
(444)
-
(91)
(2,900)
(5,515)
Total income tax expense
20,936
16,530
(ii) Deferred tax recognised directly in Equity
Defined benefit pension obligations
Share based payments
Cash flow hedges
(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, amortisation of intangible assets and net exceptionals
Impact of net exceptionals
Taxation as a percentage of profit before share of associates’
profit after tax and amortisation of intangible assets
2009
€’000
(911)
-
(204)
(1,115)
2009
€’000
137,815
(168)
5,719
143,366
20,936
1,271
22,207
13.0%
2.5%
2008
€’000
(1,200)
(25)
46
(1,179)
2008
€’000
181,704
(639)
7,928
188,993
16,530
1,659
18,189
11.0%
(1.4%)
15.5%
9.6%
86
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
15. Income Tax Expense (continued)
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 different rates and other
2009
%
12.5
(0.1)
3.1
15.5
2008
%
12.5
(0.1)
(2.8)
9.6
(iv) Factors that may affect future tax rates and other disclosures
The standard rate of corporation tax in Ireland is 12.5% and in the UK the standard rate of corporation tax is 28%.
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 €1.702 million (2008: €221.280 million) has been
accounted for in the financial statements of the Company. In accordance with Section 148(8) of the Companies Act 1963, the Company is
availing of the exemption from presenting its individual Income Statement to the Annual General Meeting. The Company has also availed of
the exemption from filing its individual Income Statement with the Registrar of Companies as permitted by Section 7(1A) of the Companies
(Amendment) Act 1986.
17. Dividends
Dividends paid and proposed per Ordinary Share are as follows:
Final - paid 36.12 cent per share on 24 July 2008
(2008: paid 31.41 cent per share on 26 July 2007)
Interim - paid 22.61 cent per share on 5 December 2008
(2008: paid 20.55 cent per share on 7 December 2007)
2009
€’000
2008
€’000
29,373
25,258
18,564
16,555
47,937
41,813
The Directors are proposing a final dividend in respect of the year ended 31 March 2009 of 39.73 cent per ordinary share (€32.634 million).
This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.
18. Earnings per Ordinary Share
Profit attributable to equity holders of the Company
Amortisation of intangible assets after tax
Exceptionals after tax (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
Exceptionals after tax
Adjusted basic earnings per ordinary share
Weighted average number of ordinary shares in issue (thousands)
2009
€’000
2008
€’000
116,314
4,448
17,420
138,182
164,491
6,269
(37,849)
132,911
2009
cent
2008
cent
142.36c
5.45c
21.32c
169.13c
204.28c
7.79c
(47.01c)
165.06c
81,704
80,522
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 net exceptionals.
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
87
18. Earnings per Ordinary Share (continued)
Diluted earnings per ordinary share
Diluted earnings per ordinary share
Amortisation of intangible assets after tax
Exceptionals after tax
Adjusted diluted earnings per ordinary share
Weighted average number of ordinary shares in issue (thousands)
2009
cent
2008
cent
141.36c
5.40c
21.17c
167.93c
200.31c
7.63c
(46.09c)
161.85c
82,284
82,119
The earnings used for the purpose of the diluted earnings per share calculations were €116.314 million (2008: €164.491 million) and
€138.182 million (2008: €132.911 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 2009
was 82.284 million (2008: 82.119 million). A reconciliation of the weighted average number of ordinary shares used for the purposes of
calculating the diluted earnings per share amounts is as follows:
Weighted average number of ordinary shares in issue
Dilutive effect of options and partly paid shares
Weighted average number of ordinary shares for diluted earnings per share
2009
‘000
81,704
580
82,284
2008
‘000
80,522
1,597
82,119
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. Share options are the Company’s only category of dilutive potential ordinary shares.
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 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 net exceptionals.
88
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
19. Property, Plant and Equipment
Group
Year ended 31 March 2009
Opening net book amount
Exchange differences
Acquisition of subsidiaries (note 46)
Additions
Disposals
Depreciation charge
Reclassifications
Closing net book amount
At 31 March 2009
Cost
Accumulated depreciation
Net book amount
Year ended 31 March 2008
Opening net book amount
Exchange differences
Acquisition of subsidiaries (note 46)
Additions
Disposals
Depreciation charge
Reclassifications
Closing net book amount
At 31 March 2008
Cost
Accumulated depreciation
Net book amount
Land &
buildings
€’000
Plant &
machinery
& cylinders
€’000
Fixtures &
fittings &
office
equipment
€’000
Motor
vehicles
€’000
Total
€’000
122,851
(9,625)
4,864
4,241
(1,088)
(2,891)
-
118,352
125,198
(13,901)
3,954
26,716
(1,904)
(20,073)
(66)
119,924
33,595
(3,104)
370
7,992
(254)
(9,303)
68
29,364
55,414
(6,414)
153
17,171
(1,519)
(13,142)
(2)
51,661
337,058
(33,044)
9,341
56,120
(4,765)
(45,409)
-
319,301
135,610
(17,258)
118,352
315,171
(195,247)
119,924
85,457
(56,093)
29,364
106,776
(55,115)
51,661
643,014
(323,713)
319,301
106,002
(9,337)
6,599
24,640
(2,861)
(2,189)
(3)
122,851
126,283
(14,693)
3,072
32,530
(1,887)
(21,584)
1,477
125,198
34,186
(3,807)
998
11,148
(142)
(8,788)
-
33,595
53,150
(5,997)
5,461
19,298
(2,140)
(12,884)
(1,474)
55,414
319,621
(33,834)
16,130
87,616
(7,030)
(45,445)
-
337,058
139,419
(16,568)
122,851
324,381
(199,183)
125,198
85,162
(51,567)
33,595
115,601
(60,187)
55,414
664,563
(327,505)
337,058
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 book amount
Depreciation charge for the year
2009
€’000
49,225
(47,296)
1,929
2008
€’000
57,525
(53,999)
3,526
1,461
2,252
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
89
20. Intangible Assets
Group
Year ended 31 March 2009
Opening net book amount
Exchange differences
Arising on acquisition (note 46)
Revisions to prior year acquisitions (note 46)
Impairment charge
Other movements
Amortisation charge
Closing net book amount
At 31 March 2009
Cost
Accumulated amortisation
Net book amount
Year ended 31 March 2008
Opening net book amount
Exchange differences
Arising on acquisition (note 46)
Revisions to prior year acquisitions
Other movements
Amortisation charge
Closing net book amount
At 31 March 2008
Cost
Accumulated amortisation
Net book amount
Goodwill
€’000
403,269
(33,206)
69,896
(754)
(5,461)
(4,445)
-
429,299
Customer
relationships
€’000
13,614
(1,409)
7,911
-
-
(508)
(5,719)
13,889
Total
€’000
416,883
(34,615)
77,807
(754)
(5,461)
(4,953)
(5,719)
443,188
456,917
(27,618)
429,299
40,413
(26,524)
13,889
497,330
(54,142)
443,188
307,405
(15,091)
112,545
(1,000)
(590)
-
403,269
13,964
(904)
8,482
-
-
(7,928)
13,614
321,369
(15,995)
121,027
(1,000)
(590)
(7,928)
416,883
430,887
(27,618)
403,269
34,419
(20,805)
13,614
465,306
(48,423)
416,883
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
2009
€’000
201,470
72,285
87,583
30,999
36,962
429,299
2008
€’000
177,259
66,873
88,112
32,103
38,922
403,269
In accordance with IAS 36 Impairment of Assets, the cash generating units to which significant amounts of goodwill have been allocated are
as follows:
GB Oils Group
Fannin Healthcare Group
2009
€’000
2008
€’000
126,817
64,154
121,734
59,321
90
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
20. Intangible Assets (continued)
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 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.
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 (2009: 2.5%; 2008: 2.5%) 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 (2009: 8.0%; 2008: 7.2%).
Applying these techniques, an impairment charge of €5.461 million arose in 2009 (2008: nil). The impairment charge arose in the Group’s
Healthcare division primarily on the closure of the Days Healthcare Germany operation, and in Food & Beverage, due to competitive
pressures in the UK wine market.
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.
A sensitivity analysis was performed using a discount rate of 10.0% and resulted in an excess in the recoverable amount of all CGUs over
their carrying amount after the impairment charge noted above.
21. Investments in Associates
Group
At 1 April
Share of profit less dividends
Disposals
Exchange adjustments and other
At 31 March
2009
€’000
4,678
168
(2,194)
(444)
2,208
2008
€’000
90,332
419
(85,617)
(456)
4,678
Investments in associates at 31 March 2009 includes goodwill of €0.534 million (2008: €1.201 million).
The Group’s geographical share of the assets (including goodwill) and liabilities of its associates is as follows:
Non-current
assets
€’000
Current
assets
€’000
Non-current
liabilities
€’000
Current
liabilities
€’000
As at 31 March 2009
Ireland
USA
As at 31 March 2008
Ireland
USA
1,002
-
1,002
1,096
760
1,856
3,399
-
3,399
3,974
1,904
5,878
(504)
-
(504)
(264)
-
(264)
Net
assets
€’000
2,208
-
2,208
(1,689)
-
(1,689)
(2,093)
(699)
(2,792)
2,713
1,965
4,678
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
91
21. Investments in Associates (continued)
Company
At 1 April
Disposal
At 31 March
22. Investments in Subsidiary Undertakings
Company
At 31 March
2009
€’000
1,244
-
1,244
2008
€’000
1,300
(56)
1,244
2009
€’000
2008
€’000
161,065
161,065
Details of the Group’s principal operating subsidiaries are shown on pages 112 to 114. Non-wholly owned subsidiaries include Broderick
Bros. Limited (93.8%), Virtus Limited (51.0%), Ausmedic Australia Pty Limited (60.0%), Metron Medical Australia Pty Limited (60.0%),
Aukbritt International Pty Limited (60%), Wastecycle Limited (90%), Physio-Med Services Limited (94.0%) where put and call options exist to
acquire the remaining 6.0% and SerCom Holdings Limited (98.5%) where put and call options exist to acquire the remaining 1.5%.
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
Trade receivables
Provision for impairment of trade receivables (note 47)
Prepayments and accrued income
Value added tax recoverable
Other debtors
Company
Amounts owed by subsidiary undertakings
Prepayments and accrued income
Value added tax recoverable
2009
€’000
8,287
2,104
198,368
208,759
2008
€’000
9,224
1,560
208,968
219,752
2009
€’000
2008
€’000
643,470
(30,753)
39,547
5,447
15,071
672,782
2009
€’000
452,582
111
124
452,817
747,044
(15,624)
50,099
14,903
11,011
807,433
2008
€’000
494,175
351
104
494,630
92
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
25. Trade and Other Payables
Group
Trade payables
Other creditors and accruals
PAYE and National Insurance
Value added tax
Government grants (note 35)
Interest payable
Amounts due in respect of property, plant and equipment
Company
Amounts due to subsidiary undertakings
Other creditors and accruals
26. Movement in Working Capital
Group
Year ended 31 March 2009
At 1 April 2008
Translation adjustment
Arising on acquisition (note 46)
Exceptional items, interest accruals and other
(Decrease)/increase in working capital (note 42)
At 31 March 2009
Year ended 31 March 2008
At 1 April 2007
Translation adjustment
Arising on acquisition (note 46)
Exceptional items, interest accruals and other
Increase/(decrease) in working capital (note 42)
At 31 March 2008
Company
Year ended 31 March 2009
At 1 April 2008
(Decrease)/increase in working capital (note 42)
At 31 March 2009
Year ended 31 March 2008
At 1 April 2007
Increase/(decrease) in working capital (note 42)
Other
At 31 March 2008
2009
€’000
548,098
116,159
8,749
15,271
141
7,484
392
696,294
2009
€’000
262,887
1,262
264,149
Trade
and other
receivables
€’000
Trade
and other
payables
€’000
Inventories
€’000
219,752
(22,841)
16,125
126
(4,403)
208,759
177,450
(17,454)
48,244
100
11,412
219,752
807,433
(82,889)
113,140
(519)
(164,383)
672,782
597,257
(66,175)
139,071
(6,573)
143,853
807,433
(796,902)
79,327
(118,362)
50,858
88,785
(696,294)
(601,404)
60,746
(140,828)
(44,531)
(70,885)
(796,902)
Trade
and other
receivables
€’000
Trade
and other
payables
€’000
2008
€’000
584,778
175,407
8,376
17,034
129
9,926
1,252
796,902
2008
€’000
270,607
1,236
271,843
Total
€’000
230,283
(26,403)
10,903
50,465
(80,001)
185,247
173,303
(22,883)
46,487
(51,004)
84,380
230,283
Total
€’000
494,630
(41,813)
452,817
(282,230)
7,694
(274,536)
212,400
(34,119)
178,281
296,303
198,327
-
494,630
(264,830)
(17,520)
120
(282,230)
31,473
180,807
120
212,400
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
93
27. Cash and Cash Equivalents
Group
Cash at bank and in hand
Short-term bank deposits
2009
€’000
152,182
274,607
426,789
2008
€’000
180,627
305,213
485,840
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
28. Derivative Financial Instruments
Group
Non-current assets
Interest rate swaps - fair value hedges
Cross currency interest rate swaps - fair value hedges
Current assets
Interest rate swaps - not designated as hedges
Forward contracts - cash flow hedges
Commodity contracts - cash flow hedges
Forward contracts - not designated as hedges
Total assets
Non-current liabilities
Currency swaps - not designated as hedges
Cross currency interest rate swaps - fair value hedges
Current liabilities
Interest rate swaps - not designated as hedges
Cross currency interest rate swaps - fair value hedges
Forward contracts - cash flow hedges
Commodity contracts - cash flow hedges
Forward contracts - not designated as hedges
Total liabilities
Net asset/(liability) arising on derivative financial instruments
2009
€’000
2008
€’000
426,789
(51,272)
375,517
485,840
(89,794)
396,046
2009
€’000
2008
€’000
815
2,664
2009
€’000
2008
€’000
24,304
104,009
128,313
-
215
-
107
322
128,635
(17,372)
-
(17,372)
-
-
(1,100)
(451)
(109)
(1,660)
(19,032)
109,603
8,655
16,692
25,347
985
41
350
147
1,523
26,870
(42,116)
(1,442)
(43,558)
(1,008)
(15,672)
(127)
-
(399)
(17,206)
(60,764)
(33,894)
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
2009 total US$200.0 million and Stg£55.0 million. At 31 March 2009, the fixed interest rates vary from 5.12% to 6.18% and the floating
rates are based on US$ LIBOR and sterling LIBOR.
94
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
28. Derivative Financial Instruments (continued)
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 US$200.0 million/€167.113 million and
are not designated as hedges under IAS 39.
Cross currency interest rate swaps
The Group utilises cross currency interest rate swaps to swap fixed rate US$ denominated debt of US$320.0 million into floating rate
sterling debt of Stg£170.341 million. At 31 March 2009 the fixed interest rates vary from 5.67% to 6.19%. These swaps are designated as
fair value hedges under IAS 39.
Forward foreign exchange contracts
The notional principal amounts of outstanding forward foreign exchange contracts at 31 March 2009 total €34.322 million (2008: €21.366
million). Gains and losses recognised in the cash flow hedge reserve in equity (note 38) at 31 March 2009 on forward foreign exchange
contracts designated as cash flow hedges under IAS 39 will be released to the Income Statement at various dates up to twelve months
after the balance sheet date.
Commodity price forward contracts
The notional principal amounts of outstanding forward commodity contracts at 31 March 2009 total €1.5 million (31 March 2008: €0.5 million).
Gains and losses recognised in the cash flow hedge reserve in equity (note 38) at 31 March 2009 on forward commodity contracts designated
as cash flow hedges under IAS 39 will be released to the Income Statement at various dates up to six months after the balance sheet date.
29. Borrowings
Group
Non-current:
Bank borrowings
Finance leases*
Unsecured Notes due 2011 to 2019
Current:
Bank borrowings
Finance leases*
Loan notes
Unsecured Notes due 2008
Total borrowings
*Secured on specific plant and equipment
The maturity of non-current borrowings is as follows:
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
2009
€’000
2008
€’000
1,029
799
523,577
525,405
100,854
800
3
-
101,657
627,062
2009
€’000
1,361
84,334
439,710
525,405
3,040
1,508
353,571
358,119
156,165
1,426
127
59,828
217,546
575,665
2008
€’000
1,459
7,939
348,721
358,119
Bank borrowings, finance leases and loan notes
Interest on bank borrowings, finance leases and loan notes is at floating rates set in advance for periods ranging from overnight to less than
three months by reference to inter-bank interest rates (EURIBOR, sterling LIBOR and US$ LIBOR) and consequently fair value approximates
carrying amounts.
The Group had various bank borrowing facilities available at 31 March 2009, including an undrawn committed bank facility.
Unsecured Notes due 2011 to 2019
The Group’s Unsecured Notes due 2011 to 2019 is comprised of fixed rate debt of US$7.5 million issued in 1996 and maturing in 2011
(the ‘2011 Notes’), fixed rate debt of US$200.0 million and Stg£30.0 million issued in 2004 and maturing in 2014 and 2016 (the ‘2014/16
Notes’), fixed rate debt of US$200.0 million and Stg£25.0 million issued in 2007 and maturing in 2017 and 2019 (the ‘2017/19 Notes’) and
fixed rate debt of US$120.0 million issued in 2008 and maturing in 2013 and 2015 (the ‘2013/15 Notes’).
The 2013/15 Notes denominated in US$ have been swapped (using cross currency interest rate swaps designated as fair value hedges
under IAS 39) from fixed US$ to floating sterling rates, repricing quarterly based on sterling LIBOR.
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
95
29. Borrowings (continued)
The 2014/16 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 2017/19 Notes denominated in US$ have been swapped (using cross currency interest rate swaps designated as fair value hedges
under IAS 39) from fixed US$ to floating sterling rates, repricing quarterly based on sterling LIBOR. The 2017/19 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 quarterly based on sterling LIBOR.
The maturity and interest profile of the Unsecured Notes 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
2009
2008
6.9 years
7.2 years
5.70%
5.95%
5.96%
3.91%
6.09%
5.95%
5.41%
6.36%
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 2009 is as follows:
Group
Cash and short term bank deposits
Overdrafts
Cash and cash equivalents
Bank loans and loan notes
Finance leases
Unsecured Notes due 2011 to 2019
Derivative financial instruments (net)
Group net debt (including share of net cash in joint ventures)
At 1
April 2008
€’000
485,840
(89,794)
396,046
(69,538)
(2,934)
(413,399)
(33,894)
(123,719)
Cash flow
€’000
Fair value
adjustment
€’000
Translation
adjustment
€’000
At 31
March 2009
€’000
(17,330)
33,518
16,188
19,376
1,129
(9,632)
(1,154)
25,907
-
-
-
-
-
(140,928)
144,847
3,919
(41,721)
5,004
(36,717)
(452)
206
40,382
(196)
3,223
426,789
(51,272)
375,517
(50,614)
(1,599)
(523,577)
109,603
(90,670)
Group net debt (excluding share of net cash in joint ventures)
(132,759)
32,639
3,919
3,554
(92,647)
The reconciliation of opening to closing net debt for the year ended 31 March 2008 is as follows:
Group
Cash and short term bank deposits
Overdrafts
Cash and cash equivalents
Bank loans and loan notes
Finance leases
Unsecured Notes due 2008 to 2019
Derivative financial instruments (net)
Group net debt (including share of net cash in joint ventures)
At 1
April 2007
€’000
337,079
(26,892)
310,187
(92,954)
(9,249)
(265,462)
(43,038)
(100,516)
Cash flow
€’000
195,269
(70,190)
125,079
21,727
5,650
(180,286)
187
(27,643)
Fair value
adjustment
€’000
Translation
adjustment
€’000
At 31
March 2008
€’000
-
-
-
-
-
(9,043)
8,957
(86)
(46,508)
7,288
(39,220)
1,689
665
41,392
-
4,526
485,840
(89,794)
396,046
(69,538)
(2,934)
(413,399)
(33,894)
(123,719)
Group net debt (excluding share of net cash in joint ventures)
(105,759)
(32,009)
(86)
5,095
(132,759)
96
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
30. Analysis of Net Debt (continued)
Currency profile
The currency profile of net debt at 31 March 2009 is as follows:
Cash and cash equivalents
Borrowings
Derivatives
The currency profile of net debt at 31 March 2008 is as follows:
Cash and cash equivalents
Borrowings
Derivatives
Euro
€’000
Sterling
€’000
US Dollar
€’000
143,924
(240,082)
(709)
(96,867)
265,707
(377,848)
110,235
(1,906)
16,658
(7,049)
77
9,686
Euro
€’000
Sterling
€’000
US Dollar
€’000
199,113
(239,616)
(35,542)
(76,045)
278,550
(332,652)
1,908
(52,194)
7,837
(1,059)
(260)
6,518
Other
€’000
500
(2,083)
-
(1,583)
Other
€’000
340
(2,338)
-
(1,998)
Total
€’000
426,789
(627,062)
109,603
(90,670)
Total
€’000
485,840
(575,665)
(33,894)
(123,719)
Interest rate profile
Cash and cash equivalents at 31 March 2009 and 31 March 2008 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
2011 to 2019 have been swapped to floating rates which reset on a quarterly or semi-annual basis (note 29).
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):
Accelerated tax 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
Acquisition of subsidiary (note 46)
Income Statement charge/(credit) (note 15)
Tax credited to equity (note 15)
At 31 March
2009
€’000
2008
€’000
4,109
515
4,811
9,435
15,607
220
15,827
2009
€’000
1,507
(303)
(1,130)
7,433
(1,115)
6,392
3,610
785
5,804
10,199
11,453
253
11,706
2008
€’000
6,443
193
1,565
(5,515)
(1,179)
1,507
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.
Full actuarial valuations were carried out between 31 December 2005 and 31 March 2009. 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 2009 for International Accounting Standard 19 by a qualified actuary.
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
97
32. Retirement Benefit Obligations (continued)
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
2009
3.75% - 4.00%
2.00% - 3.00%
5.95%
2.00%
2009
4.40%
3.40%
6.90%
3.40%
2009
8.00%
4.00%
7.00%
3.00%
2009
7.50%
4.00%
6.50%
0.50%
2008
3.75% - 4.25%
2.50% - 3.00%
5.60%
2.50%
2008
4.50%
3.50% - 4.50%
5.85%
3.50%
2008
7.40%
3.90%
6.40%
3.00%
2008
8.10%
4.60%
7.10%
3.50%
The expected rate of return for equities and property has been calculated assuming that equities and property will outperform bonds by
4.0% and 3.0% per annum respectively over the long term in the Republic of Ireland schemes and 3.5% and 2.5% per annum respectively
over the long term in the UK schemes. The expected rate of return for bonds has been based on bond indices as at 31 March.
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:
Current Pensioners
Male
Female
Future Pensioners
Male
Female
The Group does not operate any post-employment medical benefit schemes.
The net pension liability recognised in the Balance Sheet is analysed as follows:
Equities
Bonds
Property
Cash
Total market value at 31 March 2009
Present value of scheme liabilities
Net pension liability at 31 March 2009
2009
21.5
24.5
22.5
25.5
ROI
€’000
25,086
12,317
2,167
2,485
42,055
(68,843)
(26,788)
2008
21.1
24.1
22.1
25.1
Total
€’000
30,234
16,601
2,194
3,236
52,265
(81,763)
(29,498)
2009
UK
€’000
5,148
4,284
27
751
10,210
(12,920)
(2,710)
98
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
32. Retirement Benefit Obligations (continued)
Equities
Bonds
Property
Cash
Total market value at 31 March 2008
Present value of scheme liabilities
Net pension liability at 31 March 2008
The amounts recognised in the Group Income Statement
in respect of defined benefit pension schemes is as follows:
Current service cost
Total, included in employee benefit expenses (note 9)
Interest cost, included in finance costs (note 12)
Expected return on plan assets, included in finance income (note 12)
Total
The actuarial gain recognised in the Group 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 Group Statement of Recognised Income and Expense
The movement in the fair value of plan assets is as follows:
At 1 April
Expected return on assets
Actuarial loss
Contributions by employers
Contributions by members
Benefits paid
Exchange
At 31 March
The actual return on plan assets was a loss of €17.632 million (2008: loss of €8.946 million).
The movement in the present value of defined benefit obligations is as follows:
At 1 April
Current service cost
Interest cost
Actuarial gain
Contributions by members
Benefits paid
Exchange
At 31 March
ROI
€’000
37,515
12,393
3,084
1,944
54,936
(70,989)
(16,053)
2008
UK
€’000
7,415
4,323
171
1,062
12,971
(18,769)
(5,798)
2009
€’000
3,090
3,090
(5,006)
4,272
(734)
2009
€’000
(21,904)
(589)
12,976
(9,517)
2009
€’000
67,907
4,272
(21,904)
5,137
384
(1,766)
(1,765)
52,265
2009
€’000
89,758
3,090
5,006
(12,387)
384
(1,766)
(2,322)
81,763
Total
€’000
44,930
16,716
3,255
3,006
67,907
(89,758)
(21,851)
2008
€’000
3,246
3,246
(4,405)
4,989
584
2008
€’000
(13,935)
(3,737)
8,586
(9,086)
2008
€’000
74,980
4,989
(13,935)
5,269
393
(1,604)
(2,185)
67,907
2008
€’000
91,352
3,246
4,405
(4,849)
393
(1,604)
(3,185)
89,758
The level of contributions for the forthcoming financial year are expected to be in line with the current year amounts.
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
99
32. Retirement Benefit Obligations (continued)
History of scheme assets, liabilities and actuarial gains and losses
The five-year history in respect of assets, liabilities and actuarial gains and losses for the Group are as follows:
Fair value of assets
Present value of liabilities
Net pension liability
Difference between the expected and
actual return on scheme assets
As a percentage of scheme assets
2009
€’000
2008
€’000
2007
€’000
2006
€’000
52,265
(81,763)
(29,498)
67,907
(89,758)
(21,851)
74,980
(91,352)
(16,372)
67,294
(87,973)
(20,679)
(21,904)
(41.9%)
(13,935)
(20.5%)
904
1.2%
884
(1.0%)
8,697
12.9%
(383)
0.4%
2005
€’000
54,659
(80,039)
(25,380)
1,277
2.3%
(1,598)
2.0%
Experience gains and losses on scheme liabilities
As a percentage of the present value of the scheme liabilities
(589)
0.7%
(3,737)
4.2%
Total recognised in the Group Statement of
Recognised Income and Expense
As a percentage of the present value of the scheme liabilities
(9,517)
11.6%
(9,086)
10.1%
1,576
(1.7%)
1,779
(2.0%)
(7,742)
9.7%
Cumulatively since 1 April 2004, €22.990 million has been recognised as a charge in the Group Statement of Recognised Income and
Expense.
Sensitivity analysis for principal assumptions used to measure scheme liabilities
There are inherent uncertainties surrounding the financial assumptions adopted in calculating the actuarial valuation of the Group’s defined
benefit pension schemes. The following table analyses, for the Group’s Irish and UK pension schemes, the estimated impact on plan
liabilities resulting from changes to key actuarial assumptions, whilst holding all other assumptions constant.
Assumption
Discount rate
Price inflation
Mortality
Change in assumption
Impact on Irish plan liabilities
Impact on UK plan liabilities
Increase/decrease 0.25%
Increase/decrease 0.25%
Increase/decrease by one year
Increase/decrease by 5.6%
Increase/decrease by 3.6%
Increase/decrease by 2.3%
Increase/decrease by 6.0%
Increase/decrease by 5.5%
Increase/decrease by 2.0%
33. Deferred Acquisition Consideration
Group
The Group’s deferred acquisition consideration of €21.147 million (2008: €30.191 million) as stated on the Balance Sheet consists of
€8.223 million of € floating rate financial liabilities (2008: €3.237 million) and €12.924 million of Stg£ floating rate financial liabilities (2008:
€26.954 million) payable as follows:
Within one year
Between one and two years
Between two and five years
Analysed as:
Non-current liabilities
Current liabilities
2009
€’000
6,090
3,165
11,892
21,147
15,057
6,090
21,147
2008
€’000
14,036
8,691
7,464
30,191
16,155
14,036
30,191
100
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
34. Provisions for Liabilities and Charges
The reconciliation of the movement in provisions for liabilities and charges for the year ended 31 March 2009 is as follows:
Group
At 1 April 2008
Provided during the year
Utilised during the year
Exchange and other
At 31 March 2009
Analysed as:
Non-current liabilities
Current liabilities
Environmental
and remediation
€’000
Rationalisation,
restructuring
and
redundancy
€’000
Insurance
and other
€’000
5,399
(194)
-
(974)
4,231
4,028
203
4,231
3,463
354
(426)
777
4,168
707
3,461
4,168
Total
€’000
13,363
19,321
(13,499)
(122)
19,063
4,501
19,161
(13,073)
75
10,664
574
10,090
10,664
5,309
13,754
19,063
The reconciliation of the movement in provisions for liabilities and charges for the year ended 31 March 2008 is as follows:
Group
At 1 April 2007
Provided during the year
Utilised during the year
Arising on acquisition (note 46)
Exchange
At 31 March 2008
Analysed as:
Non-current liabilities
Current liabilities
Environmental
and remediation
€’000
Insurance
and other
€’000
6,122
285
(93)
-
(915)
5,399
5,399
-
5,399
4,807
4,684
(2,015)
553
(65)
7,964
-
7,964
7,964
Total
€’000
10,929
4,969
(2,108)
553
(980)
13,363
5,399
7,964
13,363
Environmental and remediation
This provision relates to obligations governing site remediation and improvement costs to be incurred in compliance with environmental
regulations. The net present value of the estimated costs is capitalised as property, plant and equipment. The unwinding of the discount
element on the provision is reflected in the Income Statement. Provision is made for the net present value of post closure costs based on
the quantity of waste input into the landfill during the year. Ongoing costs incurred during the operating life of the sites are written off directly
to the Income Statement and are not charged to the provision. The majority of the obligations will unwind over a 30-year timeframe.
Insurance and other
The insurance provision relates to employers liability and public and products liability and reflects an estimation of the excess not
recoverable from insurers arising from claims against Group companies. A significant element of the provision is subject to external
assessments. The claims triangles applied in valuation indicate that these provisions have an average life of four years (2008: four years).
Rationalisation and redundancy
This provision relates to various rationalisation and restructuring programs across the Group. The majority of this provision falls due within
one year.
35. Government Grants
Group
At 1 April
Amortisation in year
Received in year
Arising on acquisition (note 46)
Exchange and other adjustments
At 31 March
Disclosed as due within one year (note 25)
2009
€’000
2,070
(830)
1,130
6
(240)
2,136
(141)
1,995
2008
€’000
2,632
(288)
92
-
(366)
2,070
(129)
1,941
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
101
36. Equity Share Capital
Group and Company
Authorised
152,368,568 ordinary shares of €0.25 each
Issued
88,229,404 ordinary shares (including 6,090,399 ordinary shares held as Treasury Shares)
of €0.25 each, fully paid (2008: 88,229,404 ordinary shares (including 7,414,239 ordinary
shares held as Treasury Shares) of €0.25 each, fully paid)
Ordinary shares of €0.25 each
At 31 March 2009 and 31 March 2008
2009
€’000
2008
€’000
38,092
38,092
22,057
22,057
No. of shares
‘000
88,229
€‘000
22,057
As at 31 March 2009, the total authorised number of ordinary shares is 152,368,568 shares (2008: 152,368,568 shares) with a par value of
€0.25 per share (2008: €0.25 per share).
During the year the Company reissued 1,323,840 Treasury Shares for a consideration (net of expenses) of €10.267 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 on Directors’ Remuneration and Interests on pages 52 to 55.
37. Share Premium Account
Group and Company
At 31 March 2009 and 31 March 2008
38. Other Reserves
Group
At 1 April 2007
Currency translation
Cash flow hedges
- fair value gains in year
- tax on fair value gains
- transfers to sales
- transfers to cost of sales
- tax on transfers to income tax expense
Share based payment
At 31 March 2008
Currency translation
Cash flow hedges
- fair value losses in year
- tax on fair value losses
- transfers to sales
- transfers to cost of sales
- tax on transfers to income tax expense
Share based payment
At 31 March 2009
Company
At 31 March 2009 and 31 March 2008
2009
€’000
2008
€’000
124,687
124,687
Share
options1
€’000
Cash flow
hedge
reserve2
€’000
4,807
-
-
-
-
-
-
1,844
6,651
-
-
-
-
-
-
1,156
7,807
(117)
-
1,665
(374)
(306)
(943)
297
-
222
-
(7,023)
1,217
707
4,716
(1,013)
-
(1,174)
Foreign
currency
translation
reserve3
€’000
(2,914)
(64,310)
-
-
-
-
-
-
(67,224)
(85,812)
-
-
-
-
-
-
(153,036)
Other
reserves4
€’000
1,400
-
-
-
-
-
-
-
1,400
-
-
-
-
-
-
-
1,400
Total
€’000
3,176
(64,310)
1,665
(374)
(306)
(943)
297
1,844
(58,951)
(85,812)
(7,023)
1,217
707
4,716
(1,013)
1,156
(145,003)
Other
reserves5
€’000
344
1 The share option reserve comprises the amounts expensed in the Income Statement in connection with share based payments.
2
The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to
hedged transactions that have not yet occurred.
The foreign currency translation reserve represents all foreign exchange differences from 1 April 2004 arising from the translation of the net assets of the
Group’s non-euro denominated operations, including the translation of the profits and losses of such operations from the average rate for the year to the
closing rate at the balance sheet date.
3
4 The Group’s other reserves comprise a capital conversion reserve fund and an unrealised gain on the disposal of an associate.
5 The Company’s other reserves is a capital conversion reserve fund.
102
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
39. Retained Earnings
Group
At 1 April
Net income recognised in Income Statement
Net income recognised directly in equity
- actuarial loss on Group defined benefit pension schemes
- deferred tax on actuarial loss
Deferred tax on employee share options
Re-issue of treasury shares (net of expenses)
Dividends
At 31 March
Company
At 1 April
Total recognised income and expense for the financial year
Re-issue of treasury shares (net of expenses)
Dividends
At 31 March
2009
€’000
2008
€’000
650,871
116,314
531,994
164,491
(9,517)
911
-
10,267
(47,937)
720,909
(9,086)
1,200
25
4,060
(41,813)
650,871
2009
€’000
2008
€’000
230,285
1,702
10,267
(47,937)
194,317
46,758
221,280
4,060
(41,813)
230,285
The cost to the Group and the Company of €82.358 million to acquire the 6,090,399 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 €17.90 each (average: €11.23)
between 28 July 2000 and 19 June 2006.
40. Minority Interest
Group
At 1 April
Arising on acquisition of subsidiary (note 46)
Share of profit for the financial year (less attributable to associates)
Dividends to minorities
Exchange and other adjustments
At 31 March
41. Movement in Total Equity
Group
At 1 April
Re-issue of treasury shares
Share based payment (note 10)
Dividends (note 17)
Movement in minority interest
Total recognised income and expense for the financial year
At 31 March
Company
At 1 April
Re-issue of treasury shares
Dividends (note 17)
Total recognised income and expense for the financial year
At 31 March
2009
€’000
3,771
12
565
(766)
(1)
3,581
2008
€’000
5,816
-
683
(2,725)
(3)
3,771
2009
€’000
2008
€’000
742,435
10,267
1,156
(47,937)
(190)
20,500
726,231
687,730
4,060
1,844
(41,813)
(2,045)
92,659
742,435
2009
€’000
2008
€’000
377,373
10,267
(47,937)
1,702
341,405
193,846
4,060
(41,813)
221,280
377,373
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
103
42. 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)
- Net operating exceptionals (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 government 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
Company
Profit for the financial year
Add back non-operating (income)/expense
- Tax
- Net operating exceptionals
- Net finance costs
Operating profit
Changes in working capital:
- Trade and other receivables (note 26)
- Trade and other payables (note 26)
Cash generated from operations
2009
€’000
2008
€’000
116,879
165,174
20,936
(168)
19,839
17,191
174,677
1,156
45,409
5,719
(719)
(830)
-
(539)
16,530
(639)
(39,605)
17,792
159,252
1,844
45,445
7,928
(751)
(288)
220
(227)
4,403
164,383
(88,785)
304,874
(11,412)
(143,853)
70,885
129,043
2009
€’000
2008
€’000
1,702
221,280
(1)
-
(4,613)
(2,912)
41,813
(7,694)
31,207
1,750
7,056
(3,123)
226,963
(198,327)
17,520
46,156
43. Contingencies
Guarantees
The Company and certain subsidiaries have given guarantees of €724.802 million (2008: €707.548 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
Pursuant to the provisions of Section 17, Companies (Amendment) Act, 1986, the Company has guaranteed the liabilities of the following
subsidiaries; Alvabay Limited, Classic Fuel & Oil Limited, DCC Business Expansion Fund Limited, DCC Corporate 2007 Limited, DCC
Corporate Partners Limited, DCC Energy Limited, DCC Finance Limited, DCC Financial Services Holdings Limited, DCC Funding 2007
Limited, DCC Healthcare Limited, DCC Management Services Limited, DCC Nominees Limited, DCC SerCom Limited, Emo Oil Limited,
Fannin Limited, Fannin Compounding Limited, Flogas Ireland Limited, SerCom (Holdings) Limited, SerCom Property Limited, Shannon
Environmental Holdings Limited and Sharptext Limited. As a result, these companies will be exempted from the filing provisions of Section
7, Companies (Amendment) Act, 1986.
104
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
44. 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
45. 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
2009
€’000
3,048
37,833
40,881
2008
€’000
5,113
58,269
63,382
2009
€’000
12,219
36,727
84,354
133,300
2008
€’000
5,759
14,319
29,499
49,577
The Group leases a number of properties under operating leases. The leases typically run for a period of 10 to 25 years. Rents are generally
reviewed every five years.
During the year ended 31 March 2009, €20.198 million (2008: €14.069 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:
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
2009
2008
Minimum
Payments
€’000
Present
value of
payments
€’000
807
832
1,639
(40)
1,599
800
799
1,599
-
1,599
Minimum
Payments
€’000
1,469
1,755
3,224
(290)
2,934
Present
value of
payments
€’000
1,426
1,508
2,934
-
2,934
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
105
46. Business Combinations
The principal acquisitions completed by the Group during the year, together with percentages acquired were as follows:
- the acquisition of the trade, assets and goodwill of Chevron’s UK oil distributor business (‘Chevron’) announced on 15 August 2008;
- Findlater Grants (100%): an Irish based wine and spirits distributor, announced on 15 September 2008;
- Cooke Fuel Cards business (100%): a UK based fuel card sales and marketing business, announced on 5 January 2009; and
- Mambo Technology (100%): a Spanish based enterprise distribution business, announced on 3 February 2009.
The carrying amounts of the assets and liabilities acquired (excluding net cash acquired), determined in accordance with IFRS before
completion of the business combinations, together with the fair value adjustments made to those carrying values were as follows:
Assets
Non-current assets
Property, plant and equipment (note 19)
Intangible assets - goodwill (note 20)
Intangible assets - other intangible assets (note 20)
Deferred income tax assets (note 31)
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)
Provisions for liabilities and charges (note 34)
Government grants (note 35)
Total non-current liabilities
Current liabilities
Trade and other payables (note 26)
Current income tax liabilities
Total current liabilities
2009
€’000
Chevron
2009
€’000
Others
2009
€’000
Total
2008
€’000
Total
5,776
23,383
2,120
-
31,279
6,105
84,994
91,099
3,565
46,513
5,791
3,415
59,284
10,020
28,146
38,166
9,341
69,896
7,911
3,415
90,563
16,130
112,545
8,482
479
137,636
16,125
113,140
129,265
48,244
139,071
187,315
-
-
(12)
(12)
(12)
(12)
-
-
(593)
-
-
(593)
(1,692)
-
(6)
(1,698)
(2,285)
-
(6)
(2,291)
(2,044)
(553)
-
(2,597)
(85,183)
-
(85,183)
(33,179)
(734)
(33,913)
(118,362)
(734)
(119,096)
(140,828)
(1,971)
(142,799)
Total consideration (enterprise value)
36,602
61,827
98,429
179,555
Satisfied by:
Cash
Net (cash)/debt acquired
Net cash outflow
Deferred acquisition consideration
Total consideration
36,602
-
36,602
-
36,602
63,432
(10,309)
53,123
8,704
61,827
100,034
(10,309)
89,725
8,704
98,429
156,859
9,725
166,584
12,971
179,555
106
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
46. Business Combinations (continued)
The acquisition of Chevron has been deemed to be a substantial transaction and separate disclosure of the fair values of the identifiable
assets and liabilities has therefore been made. None of the remaining business combinations completed during the year were considered
sufficiently material to warrant separate disclosure of the fair values attributable to those combinations. The carrying amounts of the assets
and liabilities acquired, determined in accordance with IFRS, before completion of the combination together with the adjustments made to
those carrying values disclosed above were as follows:
Chevron
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)
Other acquisitions
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)
Total
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
5,776
93,250
-
(85,183)
13,843
22,759
36,602
2,120
(2,151)
(593)
-
(624)
624
-
Book
value
€’000
Fair value
adjustments
€’000
6,980
38,586
(88)
(33,913)
11,565
50,262
61,827
5,791
(420)
(1,622)
-
3,749
(3,749)
-
Book
value
€’000
Fair value
adjustments
€’000
Fair
value
€’000
7,896
91,099
(593)
(85,183)
13,219
23,383
36,602
Fair
value
€’000
12,771
38,166
(1,710)
(33,913)
15,314
46,513
61,827
Fair
value
€’000
12,756
131,836
(88)
(119,096)
25,408
73,021
98,429
7,911
(2,571)
(2,215)
-
3,125
(3,125)
-
20,667
129,265
(2,303)
(119,096)
28,533
69,896
98,429
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect of a number of
the business combinations above given the timing of closure of these deals. Any amendments to these fair values within the twelve month
timeframe from the date of acquisition will be disclosable in the 2010 Annual Report as stipulated by IFRS 3.
The principal factors contributing to the recognition of goodwill on business combinations entered into by the Group are the expected
profitability of the acquired business and the realisation of cost savings and synergies with existing Group entities.
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
107
46. Business Combinations (continued)
The total adjustments processed during the year to the fair value of business combinations completed during the year ended 31 March
2008 where those fair values were not readily determinable as at 31 March 2008 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)
Initial fair value
assigned
€’000
Adjustments
to provisional
fair values
€’000
25,091
187,315
(2,597)
(142,799)
67,010
112,545
179,555
-
377
-
377
754
(754)
-
Revised
fair value
€’000
25,091
187,692
(2,597)
(142,422)
67,764
111,791
179,555
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
Operating exceptional items
Operating profit
Finance costs (net)
Profit before tax
Income tax expense
Group profit for the financial year
2009
€’000
2008
€’000
624,717
(588,184)
36,533
(26,574)
9,959
(766)
9,193
(86)
9,107
(2,199)
6,908
618,957
(576,804)
42,153
(28,826)
13,327
(1,705)
11,622
81
11,703
(3,245)
8,458
The revenue and profit of the Group for the financial period determined in accordance with IFRS as though the acquisition date for all
business combinations effected during the year had been the beginning of that year would be as follows:
Revenue
Group profit for the financial year
2009
€’000
2008
€’000
7,016,264
6,237,843
117,019
170,668
47. Financial Risk and Capital Management
Capital risk management
The Group’s objectives when managing its capital structure are to safeguard the Group’s ability to continue as a going concern in order
to provide returns to shareholders and benefits for other stakeholders, while maintaining a strong balance sheet to support the continued
organic and acquisitive growth of its businesses and to maintain investor, creditor and market confidence.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares or
buy back existing shares, increase or reduce debt or sell assets.
The policy for net debt is to ensure a structure of longer term debt funding and cash balances with deposit maturities up to six months.
108
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
47. Financial Risk and Capital Management (continued)
The capital structure of the Group, which comprises capital and reserves attributable to the Company’s equity holders, net debt and
deferred acquisition consideration, may be summarised as follows:
Group
Capital and reserves attributable to the Company’s equity holders
Net debt (note 30)
Deferred acquisition consideration (note 33)
At 31 March
2009
€’000
722,650
90,670
21,147
834,467
2008
€’000
738,664
123,719
30,191
892,574
Financial risk management
Group financial risk management is governed by policies and guidelines which are reviewed and approved annually by the Board of
Directors, most recently in February 2009. These policies and guidelines primarily cover credit risk, liquidity risk, foreign exchange risk,
interest rate risk and commodity price 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 subsidiary management, in
conjunction with Group Treasury, manage foreign exchange and commodity price exposures within approved policies and guidelines.
There are no significant concentrations of risk and there has been no significant change during the financial year, or since the end of the
year, to the types of financial risks faced by the Group or the Group’s approach to the management of those risks.
(i) Credit risk management
Credit risk arises from credit exposure to trade debtors, cash and cash equivalents including deposits with banks and financial institutions,
derivative and financial instruments.
Trade receivables arise from a wide and varied customer base spread throughout the Group’s operations and as such there is no significant
concentration of credit risk. The Group’s credit risk management policy in relation to trade receivables involves periodically assessing the
financial reliability of customers, taking into account their financial position, past experience and other factors. The utilisation of credit limits
is regularly monitored and a significant element of credit risk is covered by credit insurance.
Risk of counterparty default arising on cash and cash equivalents and derivative financial instruments is controlled within a framework of dealing
with high quality institutions and, by policy, limiting the amount of credit exposure to any one bank or institution. 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 the counterparty risk limits of the Board approved treasury policy. Of the total
cash and cash equivalents at 31 March 2009 of €426.789 million, a minimum of 97.3% (€415.256 million) was with financial institutions in the
A-1 (short-term) category of Standard and Poors and in the P-1 (short-term) category of Moodys. As at 31 March 2009 derivative transactions
were with counterparties with ratings ranging from A- to A+ (long-term) with Standard and Poors or Baa2 to Aa1 (long-term) with Moodys. In
the normal course of business, the Group operates notional cash pooling systems, where a legal right of set-off applies.
Management does not expect any significant counterparty to fail to meet its obligations. The maximum exposure to credit risk is
represented by the carrying amount of each asset.
Included in the Group’s trade and other receivables as at 31 March 2009 are balances of €98.421 million (2008: €131.477 million) which
are past due at the reporting date but not impaired in the majority of cases. The aged analysis of these balances is as follows:
Group
Less than 1 month overdue
1 - 3 months overdue
3 - 6 months overdue
Over 6 months overdue
The movements in the provision for impairment of trade receivables during the year is as follows:
Group
At 1 April
Provision for impairment recognised in the year
Amounts recovered during the year
Amounts written off during the year
Arising on acquisition
Exchange differences
At 31 March
2009
€’000
62,428
25,639
8,207
2,147
98,421
2009
€’000
15,624
18,996
930
(6,238)
3,357
(1,916)
30,753
2008
€’000
76,336
26,532
20,494
8,115
131,477
2008
€’000
13,343
5,638
(805)
(4,762)
3,723
(1,513)
15,624
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
109
47. Financial Risk and Capital Management (continued)
Company
There were no past due or impaired trade receivables in the Company at 31 March 2009 (31 March 2008: none).
(ii) Liquidity risk management
The Group maintains a strong balance sheet with long term debt funding and cash balances with deposit maturities up to six months.
Wherever possible, surplus funds in the Group are transferred to the centralised treasury department through the repayment of borrowings,
deposits and dividends. These are then lent to Group companies or contributed as equity to fund Group operations, used to retire external
debt or invested externally. The Group does not use off-balance sheet special purpose entities as a source of liquidity or for other financing
purposes. In addition, the Group maintains significant committed and uncommitted credit lines with its relationship banks. Compliance with the
Group’s biannual debt covenants is monitored continuously based on the management accounts. Sensitivity analyses using various scenarios
are applied to forecasts to assess their impact on covenants and net debt. During the year to 31 March 2009 all covenants have been
complied with and based on current forecasts it is expected that all covenants will continue to be complied with for the foreseeable future.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period to contractual
maturity at the balance sheet date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Group
As at 31 March 2009
Trade and other payables
Borrowings (principal repayments)
Derivative financial instruments
Deferred acquisition consideration
Future finance charges
Less: future finance charges
Group
As at 31 March 2008
Trade and other payables
Borrowings (principal repayments)
Derivative financial instruments
Deferred acquisition consideration
Future finance charges
Less: future finance charges
Less than
Between
Between
1 year 1 and 2 years 2 and 5 years
€’000
€’000
€’000
696,294
101,657
1,660
6,151
13,023
818,785
(13,023)
805,762
-
1,361
-
3,261
10,673
15,295
(10,673)
4,622
-
66,108
-
12,746
29,744
108,598
(29,744)
78,854
Less than
1 year
€’000
Between
1 and 2 years
€’000
Between
2 and 5 years
€’000
796,902
233,161
1,534
14,407
33,999
1,080,003
(33,999)
1,046,004
-
1,459
-
9,392
22,506
33,357
(22,506)
10,851
-
9,376
-
8,941
66,423
84,740
(66,423)
18,317
Over
5 years
€’000
-
349,425
-
-
14,649
364,074
(14,649)
349,425
Over
5 years
€’000
-
364,086
-
-
73,022
437,108
(73,022)
364,086
Total
€’000
696,294
518,551
1,660
22,158
68,089
1,306,752
(68,089)
1,238,663
Total
€’000
796,902
608,082
1,534
32,740
195,950
1,635,208
(195,950)
1,439,258
The Group has sufficient cash resources and liquid assets to enable it to meet its current borrowing obligations and trade and other
payables.
Company
As at 31 March 2009
Less than
Between
Between
1 year 1 and 2 years 2 and 5 years
€’000
€’000
€’000
Over
5 years
€’000
Total
€’000
Trade and other payables
264,149
-
10,387
-
274,536
Company
As at 31 March 2008
Less than
1 year
€’000
Between
1 and 2 years
€’000
Between
2 and 5 years
€’000
Over
5 years
€’000
Total
€’000
Trade and other payables
271,843
-
10,387
-
282,230
The Company has sufficient cash resources and liquid assets to enable it to meet its trade and other payables.
110
DCC ANNUAL REPORT AND ACCOUNTS 2009
Notes to the Financial Statements
(continued)
47. Financial Risk and Capital Management (continued)
(iii) Market risk management
Foreign exchange risk management
DCC’s reporting currency and that in which its share capital is denominated is the euro. Foreign exchange risk arises from future commercial
transactions, recognised assets and liabilities and net investments in foreign operations giving rise to exposure to other currencies, primarily
sterling and the US dollar.
Divisional and subsidiary management, in conjunction with Group Treasury, manage foreign currency exposures within approved policies
and guidelines using forward currency contracts.
The portion of the Group’s operating profits which are sterling denominated are offset to a limited degree by certain natural economic
hedges that exist within the Group in that a proportion of the purchases by certain of its Irish businesses are sterling denominated. The
Group does not hedge the remaining translation exposure on the translation of the profits of foreign currency subsidiaries on the basis that
they are not intended to be repatriated.
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 hedge is offset by the strong ongoing cash flow generated by the Group’s sterling operations leaving the Group
with a net investment in sterling assets. The 14.5% reduction in the value of sterling against the euro during the year ended 31 March 2009
gave rise to a translation loss of €85.8 million on the translation of the Group’s sterling denominated net asset position at 31 March 2009
as set out in the Statement of Recognised Income and Expense. Included in this figure is €34.6 million relating to the Group’s sterling
denominated intangible assets.
The Group has a moderate level of transactional currency exposure arising from sales or purchases by operating units in currencies other
than their functional currencies. Where sales or purchases are invoiced in other then the local currency and there is not a natural hedge
with other activities within the Group, DCC generally hedges between 50% and 90% of those transactions for the subsequent two months.
The Group also hedges a proportion of anticipated transactions in certain subsidiaries for periods ranging up to twelve months with such
transactions qualifying as ‘highly probable’ forecast transactions for IAS 39 hedge accounting purposes.
Sensitivity to currency movements:
Group
A change in the value of other currencies by 10% against the euro would have a €11.2 million (2008: €8.3 million) impact on the Group’s
profit before tax, would change the Group’s equity by €45.5 million and change the Group’s net debt by €0.6 million (2008: €42.6 million
and €4.8 million respectively). These amounts include an insignificant amount of transactional currency exposure.
Company
The Company does not have significant levels of non-functional currency assets and liabilities at 31 March 2009 or at 31 March 2008.
Interest rate risk management
On a net debt basis, the Group is exposed to changes in interest rates, primarily changes in EURIBOR and sterling LIBOR. Having borrowed
at both fixed and floating rates of interest, DCC has swapped its fixed rate borrowings to floating interest rates, using interest rate and cross
currency interest rate swaps. Overall interest rate risk on gross borrowings is mitigated 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.
Sensitivity of interest charges to interest rate movements:
Group
Based on the composition of net debt at 31 March 2009, a one percentage point (100 basis points) change in average floating interest rates
would have a €1.5 million (2008: €1.2 million) impact on the Group’s profit before tax.
Company
The effective interest rates earned during the year on cash at bank ranged from 0.1% to 3.7%.
Commodity price risk management
The Group is exposed to commodity cost price risk in its oil distribution and LPG businesses. Market dynamics are such that these
commodity cost price movements are immediately reflected in oil commodity sales prices and, within a short period, in LPG commodity
sales prices. Fixed price oil supply contracts are occasionally provided to certain customers for periods of less than one year. To manage
this exposure, the Group enters into matching forward commodity contracts, not designated as hedges under IAS 39. While LPG price
changes are being implemented, the Group hedges a proportion of its anticipated LPG commodity exposure, with such transactions
qualifying as ‘highly probable’ forecast transactions for IAS 39 hedge accounting purposes. In addition, to cover certain customer segments
for whom it is commercially beneficial to avoid price increases, a proportion of LPG commodity price and related foreign exchange exposure
is hedged. All commodity hedging counterparties are approved by the Board.
Notes to the Financial Statements (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
111
47. Financial Risk and Capital Management (continued)
Sensitivity to commodity price movements:
Group
An increase or decrease of 10% in the commodity cost price of oil would have a nil impact on the Group’s profit before tax and on the
Group’s equity (2008: nil).
The impact on the Group’s profit before tax and on the Group’s equity of an increase or decrease of 10% in the commodity cost price of
LPG would be dependant on seasonal variations, competitive pressures and the underlying absolute cost of the commodity at the time and,
as such, is difficult to quantify but would not be material.
Company
The Company has no exposure to commodity price risk.
48. Related Party Transactions
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 64 to 72. A listing of the principal subsidiaries, joint ventures and associates is provided in
the Group Directory on pages 112 to 114 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.
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 on Directors’ Remuneration and Interests on pages 52 to 55 of this Annual Report.
Company
Subsidiaries, joint ventures and associates
During the year the Company did not receive dividends from its subsidiaries or associates (2008: received €230.000 million). Details of loan
balances to/from subsidiaries are provided in the Company Balance Sheet on page 62, 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 €2.352 million (2008: €2.209 million) by its subsidiary, DCC Management
Services Limited.
49. Approval of Financial Statements
The financial statements were approved by the Board of Directors on 18 May 2009.
112
DCC ANNUAL REPORT AND ACCOUNTS 2009
Group Directory
Principal Subsidiaries and Joint Ventures
DCC Energy
Company name & address
DCC Energy Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
Oil
GB Oils Limited
302 Bridgewater Place,
Birchwood Park,
Warrington WA3 6XG, England
Emo Oil Limited
Clonminam Industrial Estate,
Portlaoise,
Co. Laois, Ireland
DCC Energy Limited
Airport Road West,
Sydenham,
Belfast BT3 9ED, Northern Ireland
LPG
Flogas UK Limited
81 Raynsway,
Syston,
Leicester LE7 1PF, England
Flogas Ireland Limited
Dublin Road,
Drogheda,
Co. Louth, Ireland
Fuel Cards
Fuel Card Services Limited
Alexandra House,
Lawnswood Business Park,
Redvers Close,
Leeds LS16 6QY, England
DCC SerCom
Principal activity
Holding and divisional management company
Procurement, sales, marketing and distribution
of petroleum products
Procurement, sales, marketing and distribution
of petroleum products
Procurement, sales, marketing and distribution
of petroleum products
Procurement, sales, marketing and distribution
of liquefied petroleum gas
Procurement, sales, marketing and distribution
of liquefied petroleum gas
Contact details
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: energy@dcc.ie
www.dcc.ie
Tel: +44 1925 858 500
Fax: +44 1925 858 501
Email: info@gb-oils.co.uk
www.gb-oils.co.uk
Tel: +353 578 674 700
Fax: +353 578 674 775
Email: info@emo.ie
www.emo.ie
Tel: +44 28 9073 2611
Email: info@flogasni.com
Email: enquiries@emooil.com
www.emooil.com
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
Sale of motor fuels through fuel cards
Tel: +44 113 384 6264
Fax: +44 871 598 0010
Email: info@fuelcardservices.com
www.fuelcardservices.com
Company name & address
Principal activity
Contact details
SerCom Distribution Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
Retail
Gem Distribution Limited
St. George House, Parkway,
Harlow Business Park, Harlow,
Essex CM19 5QF, England
Holding and divisional management company
Procurement, sales, marketing and distribution of
computer software and peripherals
Pilton Company Limited
Unit 2, Loughlinstown Industrial Estate, DVDs and computer games and accessories
Ballybrack, Co. Dublin, Ireland
Procurement, sales, marketing and distribution of
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: sercom@dcc.ie
www.sercomdistribution.com
Tel: +44 1279 822 800
Fax: +44 1279 416 228
Email: info@gem.co.uk
www.gem.co.uk
Tel: +353 1 2826 444
Fax: +353 1 2826 532
Banque Magnetique SAS
Paris Nord 2, Parc des Reflets,
99 Avenue de la Pyramide,
95700 Roissy en France
Reseller
Micro Peripherals Limited
Shorten Brook Way, Altham Business
Park, Altham, Accrington,
Lancashire BB5 5YJ, England
Sharptext Limited
M50 Business Park,
Ballymount Road Upper,
Dublin 12, Ireland
Procurement, sales, marketing and distribution of
computer peripherals and accessories
Tel: +33 1 49 90 93 93
Fax: + 33 1 49 90 93 07
Email: c.dupont@banquemagnetique.fr
www.banquemagnetique.fr
Procurement, sales, marketing and distribution of
computer products
Procurement, sales, marketing and distribution of
computer products
Tel: +44 1282 776 776
Fax: +44 1282 770 001
Email: enquiries@micro-p.com
www.micro-p.com
Tel: +353 1 4087 171
Fax: +353 1 4193 111
Email: sharptext@sharptext.com
www.sharptext.com
Group Directory (continued)
DCC ANNUAL REPORT AND ACCOUNTS 2009
113
DCC SerCom (continued)
Company name & address
Enterprise
Distrilogie SA
Energy Park IV,
34 Avenue de l’Europe,
78140 Velizy, France
Supply Chain Management
SerCom Solutions Limited
M50 Business Park,
Ballymount Road Upper,
Dublin 12, Ireland
DCC Healthcare
Principal activity
Contact details
Distribution of enterprise infrastructure products in Tel: +33 1 34 58 47 00
France, Iberia & Benelux
Fax: + 33 1 34 58 47 27
Email: info@distrilogie.com
www.distrilogie.com
Provision of supply chain management and
procurement services
Tel: +353 1 4056 500
Fax: +353 1 4056 555
Email: kevin.vaughan@sercomsolutions.com
www.sercomsolutions.com
Company name & address
Principal activity
Contact details
DCC Healthcare Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
Hospital Supplies & Services
Fannin Limited
Fannin House, South County
Business Park, Leopardstown,
Dublin 18, Ireland
Squadron Medical Limited
Unit A, Griffen Close,
Ireland Industrial Estate, Staveley,
Chesterfield S43 3LJ, England
The TPS Healthcare Group Limited
27-35 Napier Place,
Wardpark, North Cumbernauld,
Glasgow G68 0LL, Scotland
Health & Beauty Solutions
DCC Health & Beauty Solutions
9-12 Hardwick Road,
Astmoor Industrial Estate, Runcorn,
Cheshire WA7 1PH, England
Laleham Healthcare Limited
Sycamore Park,
Mill Lane, Alton,
Hampshire GU34 2PR, England
Thompson & Capper Limited
9-12 Hardwick Road,
Astmoor Industrial Estate, Runcorn,
Cheshire WA7 1PH, England
EuroCaps Limited
Crown Business Park,
Dukes Town, Tredegar,
Gwent NP22 4EF, Wales
Mobility & Rehab
Days Healthcare UK Limited
North Road,
Bridgend Industrial Estate,
Bridgend CF31 3TP, Wales
Physio-Med Services Limited
7-23 Glossop Brook Business Park,
Surrey Street, Glossop,
Derbyshire SK13 7AJ, England
Ausmedic Australia Pty Limited
Unit 4, 37 Leighton Place,
Hornsby,
NSW 2077, Australia
Holding and divisional management company
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: healthcare@dcc.ie
www.dcc.ie
Procurement, sales and marketing of
pharmaceutical, medical and laboratory products
and provision of related value-added services
Tel: +353 1 2907 000
Fax: +353 1 2954 777
Email: information@fannin.ie
www.fannin.ie
Provision of value-added distribution services to
hospitals and healthcare providers
Tel: +44 1246 470 999
Fax: +44 1246 284 030
Provision of value-added distribution services to
hospitals and healthcare providers
Outsourced solutions for the health and
beauty industry
Contract manufacture and packing of
nutraceuticals and cosmetics (liquids and creams)
Development, contract manufacture and packing
of tablet and hard gel capsule nutraceuticals
Development and contract manufacture of soft
gel capsule nutraceuticals
Development, procurement, sales and marketing
of mobility and rehabilitation products
Procurement, sales and marketing of
rehabilition products
Procurement, sales and marketing of mobility
and rehabilitation products
Tel: +44 1236 739 668
Fax: +44 1236 738 376
Email:corporate@tpshealthcare.com
www.tpshealthcare.com
Tel: +44 1928 573 734
Fax: +44 1420 566 566
Email: enquiries@dcchealthandbeauty.com
www.dcchealthandbeauty.com
Tel: +44 1420 566 500
Fax: +44 1420 566 566
Email: reception@laleham-healthcare.com
www.laleham-healthcare.com
Tel: +44 1928 573 734
Fax: +44 1928 580 694
Email: enquiries@tablets2buy.com
www.tablets2buy.com
Tel: +44 1495 308 900
Fax: +44 1495 308 990
Email: info@softgels.co.uk
www.softgels.co.uk
Tel: +44 1656 664 700
Fax: +44 1656 664 750
Email: info@dayshealthcare.com
www.dayshealthcare.com
Tel: +44 1457 860 444
Fax: +44 1457 860 555
Email: sales@physio-med.com
www.physio-med.com
Tel: +61 2 94773422
Fax: +61 2 94773522
Email: sales@ausmedic.com
www.ausmedic.com
114
DCC ANNUAL REPORT AND ACCOUNTS 2009
Group Directory
(continued)
DCC Food & Beverage
Company name & address
Principal activity
DCC Food & Beverage Limited
79 Broomhill Road,
Tallaght,
Dublin 24, Ireland
Healthfoods
Kelkin Limited
Unit 1, Crosslands Industrial Park,
Ballymount Cross,
Dublin 12, Ireland
Indulgence
Robert Roberts Limited
79 Broomhill Road,
Tallaght,
Dublin 24, Ireland
Bottle Green Limited
19 New Street,
Horsforth,
Leeds LS18 4BH, England
KP (Ireland) Limited*
79 Broomhill Road,
Tallaght,
Dublin 24, Ireland
Logistics
Allied Foods Limited
Second Avenue,
Cookstown Industrial Estate,
Dublin 24, Ireland
Other
Kylemore Foods Group*
McKee Avenue,
Finglas,
Dublin 11, Ireland
DCC Environmental
Company name & address
DCC Environmental Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
Enva Ireland Limited
Clonminam Industrial Estate,
Portlaoise,
Co. Laois, Ireland
Wastecycle Limited
Enviro Building, Private Road No. 4,
Colwick Industrial Estate,
Nottingham NG4 2JT, England
William Tracey Limited*
49 Burnbrae Road, Linwood,
Paisley, Renfrewshire
PA3 3BD, Scotland
* 50% owned joint venture
Holding and divisional management company
Procurement, sales, marketing and
distribution of branded healthy foods,
beverages and vms products
Procurement, sales, marketing and
distribution of food and beverages
Procurement, sales, marketing and
distribution of wine
Manufacture of snack foods
Chilled and frozen food distribution
Operation of restaurants and contract catering
Contact details
Tel: +353 1 4047 300
Fax: +353 1 4599 369
Email: foods@dcc.ie
www.dcc.ie
Tel: +353 1 4600 400
Fax: +353 1 4600 411
Email: info@kelkin.ie
www.kelkin.ie
Tel: +353 1 4047 300
Fax: +353 1 4599 369
Email: info@robt-roberts.ie
www.robt-roberts.ie
Tel: +44 113 2054 500
Fax: +44 113 2054 501
Email: info@bottlegreen.com
www.bottlegreen.com
Tel: +353 1 4047 300
Fax: +353 1 4599 369
Tel: +353 1 466 2600
Fax: +353 1 466 2688
Email: info@alliedfoods.ie
Tel: +353 1 814 0600
Fax: + 353 1 814 0601
Email: info@kylemore.ie
www.kylemore.ie
Principal activity
Contact details
Holding and divisional management company
Specialist waste treatment/management services
Recycling and waste management company
Recycling and waste management company
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: environmental@dcc.ie
www.dcc.ie
Tel: +353 578 678 600
Fax: +353 578 678 699
Email: info@enva.ie
www.enva.ie
Tel: +44 115 9403 111
Fax: +44 115 940 4141
Email: enquiries@wastecycle.co.uk
www.wastecycle.co.uk
Tel: +44 1505 321 000
Fax: + 44 1505 335 555
Email: info@wmtracey.co.uk
www.wmtracey.co.uk
Shareholder Information
DCC ANNUAL REPORT AND ACCOUNTS 2009
115
Share Price Data
Share price movement during the year
- High
- Low
Share price at 31 March
Market capitalisation at 31 March
Share price at 18 May
Market capitalisation at 18 May
Shareholder Analysis as at 31 March 2009
2008
€
26.48
14.78
14.95
1,208m
2009
€
17.00
10.05
11.40
936m
14.50
1,191m
Range of shares held
Number of accounts
% of accounts
Number of shares1
% of shares
Over 250,000
100,001 – 250,000
10,001 – 100,000
Less than 10,000
Total
Geographic division2
Ireland
UK
North America
Europe/Other
Retail3
Total
48
45
180
3,052
3,325
1.4
1.4
5.4
91.8
65,652,538
6,948,735
6,157,901
3,379,831
100.0
82,139,005
79.9
8.5
7.5
4.1
100.0
Number of shares1
% of shares
11,085,527
22,495,121
23,886,652
7,597,579
17,074,126
82,139,005
13.5
27.4
29.1
9.2
20.8
100.0
1 Excludes 6,090,399 shares held as Treasury Shares
2 This represents the best estimate of the number of shares controlled by fund managers resident in the relevant geographic regions
3 Retail includes private shareholders, management and broker holdings
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.
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.
ISIN: IE0002424939
ISE Xetra: DCC plc
Bloomberg: DCC ID, DCC LN
Website
Through DCC’s website, www.dcc.ie,
stakeholders and other interested parties
can access information on DCC in an
easy-to-follow and user-friendly format.
As well as information on the Group’s
activities, users can keep up to date on
DCC’s financial results and share price
performance through downloadable reports
and interactive share price tools. The site
also provides access to archived financial
data, annual reports, stock exchange
announcements and investor presentations.
Tel: + 353 1 247 5698
Fax: + 353 1 216 3151
www.investorcentre.com/ie/contactus
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 www.
revenue.ie. Declaration forms for claiming
an exemption are available from the
Company’s Registrar.
116
DCC ANNUAL REPORT AND ACCOUNTS 2009
Shareholder Information (continued)
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.
Annual General Meeting
The 2009 Annual General Meeting will
be held at The Four Seasons Hotel,
Simmonscourt Road, Ballsbridge, Dublin
4, Ireland on Friday 17 July 2009 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.
Financial Calendar
• Preliminary results announced
19 May 2009
• Ex-dividend date for the final dividend
27 May 2009
• Record date for the final dividend
29 May 2009
• Interim Management Statement
17 July 2009
• Annual General Meeting
17 July 2009
• Proposed payment date for final dividend
23 July 2009
• Interim results to be announced
November 2009
• Proposed payment date for the interim
dividend
December 2009
Electronic communications
Following the introduction of the
Transparency Regulations 2007, and in
order to adopt a more environmentally-
friendly and cost-effective approach, the
Company provides the Annual Report
to shareholders electronically via DCC’s
website, www.dcc.ie, and only sends a
printed copy to those shareholders who
specifically request a copy. Shareholders
who choose to receive the Annual Report
electronically will also receive other
information electronically (such as interim
reports, notices of annual general meeting
and shareholder circulars) but will continue
to receive certain communications by
post (such as share certificates, dividend
cheques, dividend payment vouchers and
tax vouchers). Shareholders who wish to
alter the method by which they receive
communications should contact the
Company’s Registrar.
Electronic proxy voting and
CREST voting
Shareholders may lodge a Form of Proxy
for the 2009 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
the notes in the Notice of Annual General
Meeting or on the Form of Proxy.
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 2831 017
email: investorrelations@dcc.ie
Corporate Information
DCC ANNUAL REPORT AND ACCOUNTS 2009
117
Auditors
PricewaterhouseCoopers
Chartered Accountants
& Registered Auditors
One Spencer Dock
North Wall Quay
Dublin 1
Ireland
Bankers
Allied Irish Banks
Bank of Ireland
Barclays
BNP Paribas
Danske Bank A/S trading as National Irish Bank
Deutsche Bank
ING Bank N.V.
KBC Bank
Royal Bank of Scotland
Ulster Bank
Registered and Head Office
DCC House
Brewery Road
Stillorgan
Blackrock
Co. Dublin
Ireland
Registrar
Computershare Investor Services
(Ireland) Limited
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
Ireland
Solicitors
William Fry
Fitzwilton House
Wilton Place
Dublin 2
Ireland
Stockbrokers
Davy
49 Dawson Street
Dublin 2
Ireland
JPMorgan Cazenove Limited
20 Moorgate
London EC2R 6DA
England
118
DCC ANNUAL REPORT AND ACCOUNTS 2009
Senior Management
Group and Divisional
DCC Energy
DCC SerCom
DCC Healthcare
DCC Food & Beverage
Chief Executive
Chief Financial Officer
Managing Director
Deputy Managing Director
Managing Director
Finance & Development Director
Managing Director
Finance & Development Director
Managing Director
Finance & Development Director
DCC Environmental
Finance & Development Director
Group Secretary & Head of Enterprise Risk Management
Managing Director, DCC Corporate Finance
Head of Group EHS
Head of Group Tax
Head of Group HR
Head of Group Accounting
Group Internal Auditor
Head of Group IT
Head of Group Treasury
Subsidiary and Joint Venture
Oil
LPG
Retail
Reseller
Enterprise
SCM
Hospital Supplies & Services
Health & Beauty Solutions
Mobility & Rehab
Healthfoods
Indulgence
Logistics
Other
* Joint ventures
DCC Energy
GB Oils
Emo Oil
DCC Energy NI - Oil
Flogas Ireland
Flogas UK
Fuel Card Group
DCC SerCom
Gem Distribution
Pilton
Banque Magnetique
Micro Peripherals
Sharptext
Distrilogie
SerCom Solutions
DCC Healthcare
(and Fannin)
Squadron Medical
TPS Healthcare
(and Thompson & Capper)
Eurocaps
Laleham
DCC Mobility & Rehab
Ausmedic Australia
PhysioMed Services
Days Healthcare UK
DCC Food & Beverage
Kelkin
Robert Roberts
Bottle Green
Allied Foods
Broderick Bros
Kylemore Foods Group *
DCC Environmental
William Tracey *
Wastecycle
Enva Ireland
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Chief Operations Officer
Managing Director
Managing Director
Directeur Général
Managing Director
Managing Director
Directeur Général
Chief Executive Officer
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
General Manager
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Executive Chairman
Managing Director
Managing Director
Tommy Breen
Fergal O’Dwyer
Donal Murphy
Colman O’Keeffe
Niall Ennis
Conor Murphy
Conor Costigan
Ian O’Donovan
Frank Fenn
Redmond McEvoy
Thomas Davy
Ger Whyte
Michael Scholefield
John Barcroft
Yvonne Divilly
Ann Keenan
Gavin O’Hara
Val O’Sullivan
Peter Quinn
Daphne Tease
Sam Chambers
Gerry Wilson
Pat O’Neill
Richard Martin
Henry Cubbon
Ben Jordan
Chris Peacock
Jim Morgan
Claude Dupont
Gerry O’Keeffe
John Dunne
Patrice Arzillier
Kevin Henry
Andrew O’Connell
Peter Wyslych
Catherine McCallum
Stephen O’Connor
Adrian Williams
Tim O’Connor
Graham White
Ashley Williams
Jamie Burles
Steve Holton
Frank Fenn
Tom Gray
Jon Eagle
John Casey
Richard Kieran
Brian Hogan
Michael Tracey
Mike Shearstone
Paul Needham
Declan Ryan
Index
Accounting Policies
Accounting Records
Acquisitions and Capital Expenditure
Adjusted Earnings per Share
Amortisation of Intangible Assets
Analysis of Net Debt
Appointment of Directors
Appointment of Inspector/Fyffes Case
Approval of Financial Statements
Articles of Association
Attendance at Meetings
Audit Committee
Auditors
35
45
10
36
36
95
48
7
111
45
50
5, 49
45
Balance Sheet and Group Financing
Basis of Consolidation
Basis of Preparation
Board
Board Committees
Board Meetings
Board Membership
Board of Directors
Board Procedures
Borrowings
Business Combinations
Business Ethics
Business Reviews
38
65
64
6
49
48
48
4,48
48
94
67, 73, 105
43
14
104
69, 93
37
103
48
6
8
41
Capital Expenditure Commitments
Cash and Cash Equivalents
Cash Flow
Cash Generated from Operations
Chairman
Chairman’s Statement
Chief Executive’s Review
Climate Change
Commitments Under Operating and
Finance Leases
Commodity Price Risk Management
Company Balance Sheet
Company Cash Flow Statement
Company Statement of Recognised Income
63
and Expense
47
Compliance Risks
51
Compliance Statement
1
Contents
103
Contingencies
44, 48
Corporate Governance
117
Corporate Information
7
Corporate Sustainability
Credit Risk Management
39
Critical Accounting Estimates and Judgments 72
104
39
62
63
14
30
26
22
18
99
96
DCC Energy
DCC Environmental
DCC Food & Beverage
DCC Healthcare
DCC SerCom
Deferred Acquisition Consideration
Deferred Income Tax
Deputy Chairman and Senior
Independent Director
Derivative Financial Instruments
Direct Economic Value Added
Directors
Directors’ and Company Secretary’s Interests
Directors’ Emoluments and Interests
Directors’ Remuneration
Directors’ Service Agreements
Directors’ Statement pursuant
to the Transparency Regulations
Dividend
Dividend Increase
Dividends
Divisional Highlights
48
69, 93
41
44
54
78
52, 53
55
56
36
6
44, 86
9
DCC ANNUAL REPORT AND ACCOUNTS 2009
119
Occupational Health & Safety
Operational Risks
Other Operating Income/Expenses
Other Reserves
Outcome of the Strategy Review
Outlook
Oversight Committee
Overview of Results
Pension and Other Post Employment
Obligations
Performance Evaluation
Political Contributions
Post-Retirement Benefits
Principal Risks and Uncertainties
Principal Subsidiaries and Joint Ventures
Profit Attributable To DCC plc
Profit before Net Exceptionals,
Amortisation of Intangible Assets and Tax
Property, Plant and Equipment
Proportionate Consolidation of
Joint Ventures
Provision for Impairment of
Trade Receivables
Provisions
Provisions for Liabilities and Charges
42
47
78
101
13
7, 11
50
35
71
51
45
72
44, 46
45,112
86
35
66, 88
79
73
70
100
111
51
5, 50, 52
52
44
57
Related Party Transactions
Relations with Shareholders
Remuneration Committee
Remuneration Policy
Report of The Directors
Report of The Independent Auditors
Report on Directors’ Remuneration
and Interests
Research and Development
Results Highlights
Retained Earnings
Retirement Benefit Obligations
Return on Capital Empoyed
Revenue Recognition
Review of Activities and Events
Since Year End
Review of Long Term Incentive Arrangements
Roles of Board of Directors
52
45
6, 8
102
96
37
66
44
54
48
Segment Information
Segment Reporting
Senior Management
Share Capital and Treasury Shares
Share of Associates’ Profit after Tax
Share Options
Share Premium Account
Share-Based Payment Transactions
Shareholder Information
Shareholders’ Equity
Statement of Compliance
Statement of Directors’ Responsibilities
Strategic Risks
Strategy Review
Substantial Shareholdings
Summary of Significant Accounting Policies
Sustainablity Report
73
66
118
44
70, 85
54
101
71
115
72
64
56
46
7, 11, 12
45
64
40
Takeover Regulations
Taxation
Trade and Other Payables
Trade and Other Receivables
Trade Payables
Trade Receivables
Useful Lives for Property, Plant and
Equipment and Intangible Assets
45
36, 73
92
91
68
68
73
Earnings per Ordinary Share
Employee Share Options
Employment
Environmental Provisions
Equity Share Capital
Exceptional Charge
Exceptional Charge (Net)
Exceptional Items
Exceptionals
Fair Value Estimation
Finance Costs
Finance Costs (Net)
Finance Costs and Finance Income
Finance Income
Financial Review
Financial Risk and Capital Management
Financial Risk Factors
Financial Risk Management
Financial Risks
Financial Strength
Five Year Review
Foreign Currency
Foreign Currency Translation
Foreign Exchange Risk Management
Going Concern
Goodwill
Government Grants
Group at a Glance
Group Balance Sheet
Group Cash Flow Statement
Group Directory
Group Income Statement
Group Operating Profit
Group Statement of Recognised Income
and Expense
Hedging
Highlights
Income Tax
Income Tax Expense
Independence of Non-Executive Directors
Intangible Assets
Intangible Assets (other than Goodwill)
Interest-Bearing Loans and Borrowings
Interest Rate Risk and Debt/
Liqudity Management
Internal Control
Inventories
Investments In Associates
Investments In Subsidiary Undertakings
Key Performance Indicators
DCC Energy
DCC Environmental
DCC Food & Beverage
DCC Healthcare
DCC Sercom
Leases
Management and Staff
Minority Interest
Minority Interests
Movement in Total Equity
Movement in Working Capital
Nomination Committee
Nomination Committee
Non-Executive Directors’ Remuneration
Notes to the Financial Statements
86
80
80
70
101
10
35
66
83
72
70
35
84
70
34
107
72
38
47
10
120
84
66
38
51
67,72
71, 100
2
60
61
112
58
78
59
69
1
70
85
48
89
68
69
39
51
68
90
91
17
33
29
25
21
68
7
102
67
102
92
5
49
52
64
120
DCC ANNUAL REPORT AND ACCOUNTS 2009
5 Year Review
Group Income Statement
Year ended 31 March
2005
€’m
2006
€’m
2007
€’m
2008
€’m
2009
€’m
Revenue
2,644.7
3,436.3
4,046.1
5,532.0
6,400.1
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)
109.3
(16.0)
(1.2)
92.1
(5.7)
19.3
(4.8)
100.9
(12.1)
(1.0)
87.8
121.0
2.8
(4.9)
118.9
(7.0)
28.1
(1.2)
138.8
(13.5)
(1.5)
123.8
140.1
24.5
(6.7)
157.9
(10.8)
14.7
-
161.8
(20.7)
(0.9)
140.2
167.2
39.6
(7.9)
198.9
(17.8)
0.6
-
181.7
(16.5)
(0.7)
164.5
180.4
(19.9)
(5.7)
154.8
(17.2)
0.2
-
137.8
(20.9)
(0.6)
116.3
109.68
137.22
153.92
157.23
174.59
160.02
204.28
165.06
142.36
169.13
Dividend per share (cent)
37.26
42.85
49.28
56.67
62.34
Dividend cover (times)
Interest cover (times)
* excludes exceptional credit of €3.9 million
3.7
3.7
3.2
19.2
17.2
12.9
2.9
9.4
2.7
8.5*
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
Net debt included above
Group Cash Flow
Year ended 31 March
Operating cash flow
Capital expenditure
Acquisitions
Other Information
2005
€’m
2006
€’m
2007
€’m
2008
€’m
2009
€’m
254.8
208.1
51.4
353.3
541.1
1,408.7
267.5
248.5
76.8
354.4
665.4
1,612.6
319.6
321.4
90.3
340.2
783.1
1,854.6
337.1
416.9
4.7
512.7
1,037.3
2,308.7
319.3
443.2
2.2
555.4
891.0
2,211.1
492.2
585.4
687.7
742.4
726.2
362.2
25.4
528.9
916.5
1,408.7
387.1
20.7
619.4
1,027.2
1,612.6
440.7
16.4
709.8
1,166.9
1,854.6
636.4
21.9
908.0
1,566.3
2,308.7
646.1
29.5
809.3
1,484.9
2,211.1
(8.9)
(32.7)
(100.5)
(123.7)
(90.7)
2005
€’m
116.4
43.6
81.2
2006
€’m
142.9
57.7
54.7
2007
€’m
127.4
60.7
105.7
2008
€’m
129.0
87.5
176.6
2009
€’m
304.9
57.0
101.7
2005
2006
2007
2008
2009
Return on total capital employed (%)
Return on tangible capital employed (%)
20.4%
44.9%
19.1%
43.0%
17.9%
38.9%
17.5%
38.0%
17.8%
41.6%
Working capital (days)
10.2
9.5
14.0
16.4
11.9
Average number of employees
4,746
5,109
5,653
6,638
7,182