Annual Report and Accounts
2011
DCC is a sales, marketing, distribution and business support services Group,
operating across five divisions:
Sales, marketing and distribution businesses (87% of profits)
Business support services (13% of profits)
DCC Energy
• Oil
• LPG
• Fuel cards
DCC SerCom
SerCom Distribution
IT & entertainment products to
• Retailers
• Resellers
• Enterprise markets
SerCom Solutions
• Outsourced procurement and supply chain
management services
DCC Healthcare
• Hospital supplies and services focussed
on the medical and pharmaceutical sectors
• Outsourced solutions to the health and beauty sector
DCC Environmental
• Waste management and recycling services
DCC Food & Beverage
• Healthfoods
• Indulgence foods and beverages
• Chilled and frozen logistics
DCC currently employs approximately 8,000 people and is listed under Support Services on the
Irish and London stock exchanges.
DCC’s strategy is to grow a sustainable, diversified business through concentrating on those
activities where it has established, or has the opportunity to establish, leadership positions
(i.e. typically number 1 or 2) in its chosen markets.
Contents
Strategy
1 Highlights
2 Group at a Glance
3
4 Board of Directors
6 Chairman’s Statement
10 Chief Executive’s Review
14 Senior Management
18 Business Reviews
38 Financial Review
46 Sustainability Report
52 Report of the Directors
54 Principal Risks and Uncertainties
56 Corporate Governance
62 Report on Directors’ Remuneration and Interests
69 Statement of Directors’ Responsibilities
70 Report of the Independent Auditors
72 Financial Statements
132 Group Directory
136 Shareholder Information
138 Corporate Information
139 Index
140 Five Year Review
Highlights
Revenue
€8,680.6m
2010: €6,725.0m
Reported: +29.1%
Constant currency†:+25.4%
Operating profit*
€229.6m
2010: €192.8m
Reported: +19.1%
Constant currency†:+15.5%
Operating
cash flow
€269.6m
2010: €297.8m
By Geography
UK
ROI
Rest of World
72%
15%
13%
By Division
Energy
SerCom
Healthcare
Environmental
Food & Beverage
60%
20%
10%
5%
5%
Dividend
per share
74.18 cent
2010: 67.44 cent
Reported: +10.0%
By Geography
UK
ROI
Rest of World
72%
15%
13%
By Division
Energy
SerCom
Healthcare
Environmental
Food & Beverage
60%
20%
10%
5%
5%
* Excluding net exceptionals and amortisation of intangible assets.
† Constant currency figures quoted are based on retranslating 2010/11
figures at prior year translation rates.
Adjusted earnings
per share*
203.15 cent
2010: 177.98 cent
Reported: +14.1%
Constant currency†: +10.5%
Return on total
capital employed
19.9%
2010: 18.4%
DCC ANNUAL REPORT AND ACCOUNTS 2011
1
Group at a Glance
DCC Energy
DCC Energy is the leading oil and liquefied petroleum gas (LPG) sales,
marketing and distribution business in Britain and Ireland and one of the
leading oil distribution businesses in Austria and Denmark.
DCC SerCom
SerCom Distribution markets and sells IT and entertainment products to
the Retail, Reseller and Enterprise markets in Britain, Ireland, France, Spain,
Portugal, the Netherlands, Belgium and Luxembourg.
SerCom Solutions provides outsourced procurement and supply chain
management services in Ireland, Poland, China, Mexico and the USA.
DCC Healthcare
DCC Healthcare provides sales, marketing, distribution and other services
to healthcare providers and medical and pharmaceutical brand owners/
manufacturers in Britain and Ireland and outsourced product development,
manufacturing and packing services to the health and beauty sector in
Britain and continental Europe.
DCC Environmental
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 Food & Beverage
DCC Food & Beverage markets and sells a wide range of owned and
agency branded food and beverage products in Ireland, has a wine
business in Britain and provides temperature controlled logistics services to
the food industry in Ireland.
2
DCC ANNUAL REPORT AND ACCOUNTS 2011
Strategy
DCC’s strategy is to grow a sustainable, diversified
business through concentrating on those activities
where it has established, or has the opportunity to
establish, leadership positions (i.e. typically number
1 or 2) in its chosen markets. In pursuit of this
strategy, DCC will seek to grow:-
• through a combination of organic growth and acquisitions which
will strengthen existing market positions and carefully extend its
geographic footprint;
• through the deployment of a devolved management structure
aimed at attracting and empowering entrepreneurial leadership
teams capable of delivering outstanding performance in each of its
businesses;
• while maintaining the financial discipline necessary to invest only
where it can drive returns well above its cost of capital; and
• while retaining a strong balance sheet and a prudent capital
structure which will enable DCC to take advantage of attractive
commercial opportunities as they arise.
Successful delivery of the strategy will result in:-
• the achievement of sustainable, superior returns for DCC’s
shareholders;
• increased employment opportunities and greater capacity for DCC to
provide development opportunities for all its employees;
• enhanced levels of customer service to DCC’s commercial, industrial,
retail, domestic and public sector customers;
• strengthening of the “partnership” nature of our relationships with
our local, regional, national and global suppliers; and
• increased opportunity for DCC to have a positive impact on the wider
communities in which it operates.
Total Shareholder Return
- 10 Years and 5 Years to 31 March 2011
10 years ended 31 March 2011
179.5%
37.2%
5 years ended 31 March 2011
Average no. of employees
- 10 Years to 31 March 2011
11
10
09
08
07
06
05
04
03
02
7,925
7,396
7,182
6,638
5,653
5,109
4,746
3,768
3,685
3,361
DCC ANNUAL REPORT AND ACCOUNTS 2011
3
Board of Directors
1
4
7
2
5
8
10
11
3
6
9
4
DCC ANNUAL REPORT AND ACCOUNTS 2011
1. Michael Buckley
Non-executive Chairman
Michael Buckley, MA, LPh, MCSI, (66) was
appointed non-executive Chairman in May
2008. He is a non-executive director of M and
T Bank Corporation, listed on the New York
Stock Exchange, of Enterprise Ireland and
of UK Asset Resolution Limited. Mr. Buckley
is senior adviser to a number of privately
owned Irish and international companies,
is an adjunct professor at the Department
of Economics in the National University of
Ireland, University College Cork, and chairs the
Board of the Irish Chamber Orchestra. He 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 September 2005.
2. Tommy Breen
Chief Executive
Tommy Breen, B Sc (Econ), FCA, (52) was
appointed Chief Executive in May 2008
having been Group Managing Director from
July 2007. He was previously Chief Operating
Officer and has held a number of other senior
management positions in the Group, including
those of Managing Director of DCC’s Energy,
SerCom and Environmental divisions. Mr.
Breen joined DCC in 1985, having previously
worked with KPMG. Mr. Breen joined the
Board in February 2000.
Board
Michael Buckley (Chairman)
Tommy Breen
Róisín Brennan
David Byrne
Kevin Melia
John Moloney
Donal Murphy
Fergal O’Dwyer
Bernard Somers
Leslie Van de Walle
Length of service
on Board
5 years
11 years
5 years
2 years
2 years
2 years
2 years
11 years
7 years
0.5 years
Maurice Keane retired from the Board on
5 April 2011
Audit Committee
Bernard Somers (Chairman)
Kevin Melia
John Moloney
Length of service
on Committee
5 years
2 years
2 years
Nomination and Governance Committee
Michael Buckley (Chairman)
Róisín Brennan
David Byrne
Leslie Van De Walle
5 years
0.1 years
2 years
0.1 years
Remuneration Committee
Leslie Van De Walle (Chairman)
Róisín Brennan
Michael Buckley
David Byrne
0.5 years
5 years
5 years
2 years
6. John Moloney
Non-executive Director
John Moloney, B.Agr.Sc., MBA, (56) 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.
10. Leslie Van De Walle
Non-executive Director
Leslie Van de Walle, (55) is non-executive
Chairman of SIG plc and is a non-executive
director of Aviva plc and of La Seda de
Barcelona S.A. Mr. Van de Walle is a former
Chief Executive Officer of Rexam plc and
previously held a number of senior executive
roles in Royal Dutch Shell plc, including
Executive Vice President of Retail for Oil
Products and Head of Oil Products, Shell
Europe. He has also held a number of
senior management positions with Cadbury
Schweppes plc and United Biscuits plc. Mr.
Van de Walle joined the Board in November
2010.
11. Maurice Keane
Non-executive Director
(retired on 5 April 2011)
Maurice Keane, B Comm, M Econ Sc, (69)
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 on the New York
Stock Exchange, 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 March 2002 and retired
from the Board on 5 April 2011.
7. Donal Murphy
Executive Director
Donal Murphy, B Comm, BFS, MBA, (45)
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.
8. Fergal O’Dwyer
Executive Director
Fergal O’Dwyer, FCA, (51) 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 February
2000.
9. Bernard Somers
Non-executive Director
Bernard Somers, B Comm, FCA, (62)
is the founder of Somers & Associates,
which specialises in debt and corporate
restructuring. He is a non-executive director of
Irish Continental Group plc and has also been
an investor in and a director of several start-up
companies. Mr. Somers joined the Board in
September 2003.
DCC ANNUAL REPORT AND ACCOUNTS 2011
5
3. Róisín Brennan
Non-executive Director
Róisín Brennan, BCL, FCA, (46) is a former
Chief Executive of IBI Corporate Finance,
where she had extensive experience advising
public companies in Ireland. Ms. Brennan also
served as a non-executive director of The Irish
Takeover Panel during 2000/2001. Ms Brennan
qualified as a chartered accountant with Arthur
Andersen. Ms. Brennan joined the Board in
September 2005.
4. David Byrne
Non-executive Deputy Chairman and
Senior Independent Director
David Byrne, SC, (64) joined the Board
and was appointed non-executive Deputy
Chairman and Senior Independent Director in
January 2009. He is a non-executive director
of Kingspan Group plc and serves on a
number of commercial international advisory
boards. Mr. Byrne also chairs the National
Treasury Management Agency Advisory
Committee. 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.
5. Kevin Melia
Non-executive Director
Kevin Melia, FCMA, JDipMA, (63) is non-
executive Chairman of Vette Corp, he is a
Joint Managing Director of Boulder Brook
Partners, a private investment company and
is non-executive director of Merrion Capital,
Newtide Acquisitions, Analogic Corporation,
Greatbatch Inc, RadiSys Corp and a member
of the advisory Board of C&S Wholesale
Grocers and Distributors. Mr. Melia is a former
non-executive Chairman of Iona Technologies
and Authorize.Net and was the Co-founder,
Chairman and Chief Executive Officer
of Manufacturers Services Ltd. Previous
positions held include Chief Financial Officer
and Executive Vice President of Operations
of Sun Microsystems and President of
its computer hardware division. Mr. Melia
also held a number of senior management
positions at Digital Equipment Corporation. Mr.
Melia joined the Board in December 2008.
6
DCC ANNUAL REPORT AND ACCOUNTS 2011
Chairman’s Statement
Consistent Profit Growth, Exceptional Return on Capital, Financial Strength
I am very pleased to be able to report to shareholders of DCC plc that in the year ended 31
March 2011, profits again grew significantly - for the 17th year in a row. It was a year in which the
economies that are currently most important to our business showed little growth, or remained in
recession. Nonetheless, adjusted earnings per share increased by 14.1 % on a reported basis, the
return achieved on capital employed was an exceptional 19.9 %, €123.6 million of free cash flow
was generated and DCC ended the year with net debt of €45.2 million compared with equity of
€931.9 million. This puts the Company in a very strong position to continue to progress its strategic
agenda and, in particular, to take advantage of acquisition opportunities that will meet our
financial return criteria and which will contribute to our drive to achieve or to consolidate leadership
positions in our chosen fields of activity.
Dividend (cent)
- years ended 31 March
11
10
09
08
07
06
05
04
03
02
74.18
67.44
62.34
56.67
49.28
42.85
37.26
32.40
28.18
24.50
CAGR 10yrs 13.4%, CAGR 5yrs 11.6%
The financial results are summarised more
completely in the Chief Executive’s Review
and are set out in detail in the Business
Review and in the Financial Review
below. The Board warmly congratulates
DCC’s Chief Executive, Tommy Breen,
his management team and the more than
8,000 employees who work in 13 countries
for achieving such strong results, for the
consistency and balance that have become
hallmarks of DCC’s financial performance
and for the exceptional efforts made to
continue to serve customers during an
extended period of severe weather during
two crucial trading months in the financial
year under review, particularly for our oil and
gas distribution businesses.
DCC’s total shareholder return in the 10
years to 31 March 2011 was 179.5%.
Dividend Increase of 10%
The Board is pleased to be in a position
to recommend a final dividend of 48.07
cent per share. When added to the interim
dividend of 26.11 cent per share, this means
that the total dividend for the year will be
74.18 cent per share, an increase of 10%
per share over the prior year. The dividend
is covered 2.7 times by adjusted earnings
per share. This means that the compound
annual growth rate in DCC’s dividend over
the last 5 years has been 11.6%. Subject to
shareholder approval at the Annual General
Meeting on 15 July 2011, the final dividend
will be paid on 21 July 2011 to shareholders
on the register at the close of business on 20
May 2011.
DCC’s Business Model
DCC’s business model is distinctive, and can
be summarised under four main headings.
First, over more than thirty years DCC has
built up a set of skills in building agency
relationships with product producers, in
order to provide them with outsourced
sales, marketing, distribution and business
support services, as well as the supply chain
management expertise that develops from
combining those skills. We have proven
that this skill-set can be applied to build
sustainable businesses in a variety of sectors
as long as they have good consolidation
potential. Our environmental business stands
somewhat apart from this model, but uses
many of the same skill-sets.
Second, DCC has built a management
model which seeks to combine
entrepreneurial leadership teams at
subsidiary level with a lean management
team at the centre. It focuses on
identifying and capitalising on development
opportunities, on the successful integration
of acquisitions and on ensuring that the
businesses being built operate according
to good business principles and embed
best practice in relation to sustainability, risk
management and compliance.
Third, DCC applies the same set of financial
disciplines to each business line focussing,
in particular, on efficiency in working capital,
cash generation and return on capital
employed.
Finally, we maintain a very strong balance
sheet which gives DCC the capacity to avail
of acquisition opportunities that meet our
financial and strategic criteria, as they arise.
DCC ANNUAL REPORT AND ACCOUNTS 2011
7
Chairman’s Statement (continued)
Strategy
During the year under review, there was
steady progress in implementing DCC’s
strategy of seeking over time to concentrate
focus on those businesses in which it has
already established, or has the opportunity
to establish, leadership positions and which
are most likely to generate attractive and
substantial returns on capital, through
a combination of organic growth and
acquisitions. Some peripheral businesses
in our healthcare division were disposed
of for a good price. Our position in the
UK oil distribution business was further
strengthened by a number of additional
acquisitions (the largest of which is subject
to OFT clearance at the time of writing).
Acquisitions in DCC’s SerCom division
respectively broadened our product range
and customer base into the French retail
market and strengthened our position in
the distribution of electronic office supplies
into the UK reseller market. In all, over €130
million was committed to acquisitions,
while considerable effort was expended on,
and much benefit was achieved from, the
integration of acquisitions made in the prior
year in the UK, Denmark and Austria.
Sustainability
I am glad to be able to say that good
progress was made both in relation
to defining and implementing the key
components of a best practice sustainability
agenda and in communicating our
performance and plans, both internally
and externally, to all stakeholders. An
overall structure of policies, processes and
performance indicators, focussed on the four
material aspects of direct economic value
added, climate change, health and safety
and business ethics, has been approved at
DCC Board level and is now being worked
through at subsidiary level through local
workshops.
During the year under review:
- Direct economic value added was €557
million.
- CO2 emissions increased by 16%, primarily
driven by acquisitions in the Energy
Division. Our environmental compliance
and the calibre of our responses to
incidents has been high. Our subsidiary,
the William Tracey Group, has launched a
food and organic waste collection service
for its customers, in support of the Scottish
Government’s Zero Waste plan. A key
part of the service will be an anaerobic
digestion treatment plant which has been
constructed by Scottish and Southern
Energy at Tracey’s former landfill site at
Barkip, where landfill gas is already being
used to generate renewable energy.
- On the health and safety front, the
frequency of accidents that resulted in
lost time fell from 2.8 per 200,000 hours
worked to 2.5. However, due to some
accidents that resulted in over 100 days
lost, the number of calendar days lost per
200,000 days worked increased from 42
in the prior year to 48 in the year under
review. The International Safety Rating
System (ISRS) audit tool is being phased
in across our energy and environmental
subsidiaries.
- In line with the commitment given last year,
a set of DCC Business Conduct Guidelines
has been circulated to all subsidiary
employees. It sets out and gives guidance
on the application of our common
commitment to ethical behaviour, trust
and accountability across what is a highly
diversified business.
A detailed Sustainability Report, which meets
the requirements of the Global Reporting
Initiative C+ standard, is set out in the body
of this Annual Report.
Board Membership and Board
Evaluation
One new non-executive Director, Leslie
Van De Walle, who is UK based, was
appointed during the year, following a
search conducted by an international firm
specialising in board level appointments.
Leslie broadens the sectoral experience
base of the Board significantly, in areas such
as energy and manufacturing, and brings
a wealth of knowledge of doing business
in the UK and in key European markets
relevant to DCC’s strategy. He has taken
the Chairmanship of the Remuneration
Committee and is also a member of the
Nomination and Governance Committee.
Maurice Keane retired as a non-executive
Director on 5 April 2011, after 9 years’
service, during which he served on the
Audit and Nomination and Governance
Committees and chaired the Remuneration
Committee at various stages. His strong,
independent and constructive approach to a
wide range of issues will be missed.
The Nomination and Governance Committee
has begun a search process with a view to
appointing during the course of the current
financial year a new non-executive Director,
preferably UK based, who will become
a member of the Audit Committee, on
appointment.
In accordance with the Combined Code, at
year end DCC’s annual, extensive evaluation
of Board performance during the year
was conducted. Under the supervision
of David Byrne, Deputy Chairman and
Senior Independent Director, a detailed
questionnaire designed to elicit individual
Directors’ views on Board performance
was circulated to each Director. Completed
questionnaires were sent by the Directors
to Towers Watson, who coordinated and
summarised the responses in conjunction
8
DCC ANNUAL REPORT AND ACCOUNTS 2011
I am glad to be able to say that good progress
was made both in relation to defining and
implementing the key components of a
best practice sustainability agenda and in
communicating our performance and plans,
both internally and externally, to all stakeholders.
Board responsibility for risk oversight is
given much heavier emphasis in the new
Code. Board agendas from now on will
allocate significant time to the risk oversight
role of the Board in satisfying itself that risk
management policies and procedures,
and the risk management organisation
structure operated by senior management
and risk managers are consistent with
the Group’s corporate strategy and risk
appetite, that these policies are functioning
as directed, and that the necessary steps
are being taken to foster a culture of risk-
aware and risk-adjusted decision-making
throughout DCC. The terms of reference of
the Audit Committee have been amended
to reflect the updated FRC Guidance on
Audit Committees and, in particular, to put
more emphasis on its role in reviewing the
effectiveness of risk management systems
and the conclusions of any testing carried
out by internal and external auditors. The
terms of reference of the Remuneration
Committee have also been amended to
ensure that the Committee gives appropriate
weight to risk management performance
in determining variable elements in overall
remuneration schemes, and that the
overall approach to remuneration does
not encourage inappropriate risk-taking.
The title of the Nomination Committee
has been amended to ‘The Nomination
and Governance Committee’ and its
terms of reference have been expanded
to give it the role of reviewing and making
recommendations to the Board on
developments in corporate governance law
and best practice.
with David Byrne. He presented the
results to the Board for discussion. Useful
suggestions in relation to key Board agenda
items, time allocation at Board meetings and
areas for further director education emerged,
which I will act upon in the current year.
David also conducted interviews with each
Director, other than myself, to determine their
views on my performance as Chairman. I
separately conducted a review with each
Director of his/her individual performance
during the year under review. I am happy to
report that I found that each Director had
performed effectively in offering independent
and constructive challenge to management,
had made an appropriate contribution to
strategy development and had committed
sufficient time to DCC Board affairs. The
other Directors found that I had discharged
my responsibilities satisfactorily.
Next year, the entire Board evaluation
process will be conducted by an
independent consultant, in accordance with
the requirements of the new UK Corporate
Governance Code.
As has been the case for several years now,
all Directors will offer themselves for re-
election at the Annual General Meeting.
The Combined Code and Other
Corporate Governance Matters
The UK Corporate Governance Code
(issued in May 2010) and the Irish Corporate
Governance Annex (issued in December
2010 ) come into effect, as far as DCC is
concerned, from the current financial year
beginning on 1 April 2011. I can report
that DCC was in compliance with all of the
requirements of the prior Combined Code
in force in the financial year under review
and is taking the necessary measures to be
in compliance with all revised requirements
during the year now started.
In light of the rapid expansion of the Group in
recent years, the Chief Executive has initiated
a Group wide review of risk management
policies and structures, with a view to
ensuring that risk organisation, resourcing,
policies, process and practice meet the
highest standards, while being appropriate
to DCC’s specific diversified structures
and business model. The results of the
review and recommendations arising will be
presented to the Board for approval during
the third quarter of 2011.
External Audit
A formal process is being undertaken by the
Audit Committee to select the firm which will
carry out DCC’s external audit in the coming
years. Five firms were asked to tender. The
outcome of this process is not yet known.
Outlook
The economic environment in our most
important markets remains uncertain. In
assessing the outlook for the year to 31
March 2012, it is wise to assume a return to
a more normal weather pattern, compared
to the last two winters. We are assuming
also a 3% weakening of the average sterling/
euro exchange rate compared with last year.
Organically, therefore, we are anticipating
a modest decline in operating profit and
adjusted earnings per share, on a reported
basis. But, as I have outlined above, the
DCC business model is based on seeking
over time a good balance between organic
and acquisition led growth. I am confident
that our strong balance sheet and pipeline
of acquisition opportunities provide us with
a platform to continue to deliver value to our
shareholders in the year ahead.
Michael Buckley
Chairman
9 May 2011
DCC ANNUAL REPORT AND ACCOUNTS 2011
9
Chief Executive’s Review
“ Another year of profit growth and
improved returns on capital”
It is pleasing to report that in another year which has seen ongoing difficult
economic conditions in each of our principal geographic markets, DCC has
generated operating profits of €229.6 million which represents growth, on a
constant currency basis, of 15.5%. Approximately 77% of the Group’s operating
profit was denominated in sterling in the year and the impact of a 4%
favourable movement in the average sterling : euro exchange rate resulted in
reported growth in operating profit of 19.1%.
Results Highlights
Revenue
Operating profit*
Profit before exceptional items, amortisation of intangible assets and tax
Adjusted earnings per share*
Dividend per share
Operating cash flow
Free cash flow**
Net debt at 31 March 2011
Total equity
Return on total capital employed
Change on Prior Year
Constant
Currency†
+25.4%
+15.5%
+14.3%
+10.5%
€
Reported
8,680.6m
229.6m
214.8m
203.15 cent
74.18 cent
+29.1%
+19.1%
+18.0%
+14.1%
+10.0%
269.6m (2010: €297.8m)
123.6m (2010: €229.1m)
45.2m (2010: €53.5m)
931.9m (2010: €836.9m)
19.9% (2010: 18.4%)
All constant currency figures quoted in this report are based on retranslating 2010/11 figures at prior year translation rates
†
* Excluding net exceptionals and amortisation of intangible assets
** After interest and tax payments
Adjusted earnings per share of 203.15
cent was 10.5% ahead on a constant
currency basis and 14.1% ahead on a
reported basis.
Dividend per share is up 10% to 74.18
cent with dividend cover at 2.7 times (2.6
times in 2010).
In the two previous financial years the
Group achieved a material reduction in
working capital days – which fell from
16.4 days at 31 March 2008 to 4.6 days
at 31 March 2010. This reduction was
largely maintained at 31 March 2011
with working capital days at 4.9 days.
Operating cash flow in the year was
€269.6 million. Free cash flow was €123.6
million after higher than normal capital
expenditure and tax payments.
A focus on driving returns on total
invested capital well in excess of its cost
of capital has always been core to DCC’s
strategy. It is therefore good to report that
in the year to 31 March 2011, return on
total invested capital increased to 19.9%
from 18.4% in the prior year.
DCC employs just over 8,000 people and
I have spoken previously of the talent
and commitment that exists throughout
the Group. These results are a reflection
of that talent and commitment. In the
year just past our people demonstrated
that commitment to our customers
in many ways – in particular there are
many examples where significant effort
and sacrifice was made to ensure the
maintenance of customer deliveries and
service through some very extreme winter
weather conditions. I would again like to
thank all of our people for their dedication.
10
DCC ANNUAL REPORT AND ACCOUNTS 2011
Adjusted earnings per share (cent)
- years ended 31 March
11
10
09
08
07
06
05
04
03
02
203.15
177.98
169.13
165.06
143.51
123.95
115.06
105.96
101.51
94.85
CAGR 10yrs 9.5%, CAGR 5yrs 10.4%
Group operating profit (€m)
- years ended 31 March
11
10
09
08
07
06
05
04
03
02
229.6
192.8
180.4
167.2
140.1
121.0
109.3
101.6
97.2
91.1
CAGR 10yrs 10.7%, CAGR 5yrs 13.7%
Divisional Highlights
Each of the five divisions reported
operating profit growth for the year and
detailed business reviews for the divisions
are set out on pages 18 to 37. Key
features of the year include:-
DCC Energy had another year of
excellent profit growth, benefitting from
the successful integration of a number
of acquisitions completed in prior years
and another extremely cold winter
overall. Volumes increased by 15.5%,
due to the impact of acquisitions and this
resulted in DCC Energy selling 7.1 billion
litres of product in the year. A number
of small acquisitions were completed
during the year and in February 2011,
as previously announced, DCC Energy
reached conditional agreement to acquire
the entire issued share capital of Pace
Fuelcare, a British based oil distribution
business which sells over 500 million litres
of fuel to independent retail petrol stations
and a broad range of commercial,
industrial, agricultural and domestic
customers. This acquisition is subject,
inter alia, to clearance from the UK Office
of Fair Trading (OFT).
DCC SerCom had a very good year
of profit growth and development. The
division benefitted from an excellent
performance in SerCom Distribution
which achieved constant currency
operating profit growth of 16.6%. This
result reflected very strong organic
growth in the Reseller business, good
organic growth in the Retail business
and the benefit of acquisitions completed
during the year. In October 2010, DCC
SerCom completed the acquisition of
Comtrade SA, a leading distributor of AV
accessories and peripherals to the retail
sector in France. This acquisition is a
further step in DCC SerCom’s strategy
to extend its product, customer and
market coverage in Retail distribution. In
March 2011 DCC SerCom completed
the acquisition of Advent Data Limited,
a leading distributor of electronic office
supplies to a broad range of resellers,
retailers and e-tailers in the UK. The
acquisition of Advent Data is consistent
with SerCom Distribution’s strategy to
expand its Reseller distribution business
in complementary product markets.
DCC Healthcare achieved strong
constant currency operating profit
growth in continuing activities against a
challenging market background. Despite
increased price pressure in public
healthcare systems, the Hospital Supplies
and Services business performed well
while DCC Health and Beauty Solutions
had a very good year, generating excellent
revenue and operating profit growth,
strengthening key customer relationships
and expanding its customer base. In
June 2010, DCC Healthcare disposed
of its Mobility & Rehabilitation business
which was consistent with our strategy
to concentrate our focus on our larger
healthcare businesses which have strong
leadership positions and significant
opportunities for organic and acquisition
growth.
DCC Environmental traded satisfactorily
in a market which saw a further decline
in construction derived waste volumes
and significant disruption by the extreme
weather conditions in December 2010.
The joint venture development of
Scotland’s largest anaerobic digestion
plant (with Scottish and Southern Energy
plc) reached a significant milestone with
the completion of construction and has
commenced its commissioning phase.
DCC ANNUAL REPORT AND ACCOUNTS 2011
11
Chief Executive’s Review (continued)
DCC continues to make
progress in evolving
our understanding and
use of the concept of
sustainability to deliver
benefits to our business
and to our shareholders.
We firmly believe that
providing products and
services which create
social and environmental
value also creates long
term financial value
for the benefit of our
shareholders.
DCC Food & Beverage had a much
improved year with a recovery in
profitability and an improved return
on capital, despite a continuing very
challenging marketplace. This reflected
good cost control, operating efficiencies
and the introduction of new products.
During the second half the business
acquired the Goodalls and YR home
cooking brands.
Acquisition and Capital Expenditure
Committed acquisition expenditure in
the year amounted to €130.7 million.
Net capital expenditure in the year of
€77.2 million is significantly higher than
the prior year amount of €35.7 million
and also higher than the depreciation
charge of €52.9 million. The excess over
the depreciation charge is mainly driven
by increased investment in DCC Energy
to upgrade vehicles and support the
ongoing development of the business
and also a €17 million investment by DCC
SerCom in a new 250,000 square feet
warehouse near Wellingborough, north
of London. This latter investment allows
Gem Distribution to market its third party
logistics services to software and DVD
distributors.
Acquisition and Capital Expenditure
DCC Energy
DCC SerCom
DCC Healthcare
DCC Environmental
DCC Food & Beverage
Financial Strength
At 31 March 2011 DCC had net debt
of €45.2 million (2010 : €53.5 million)
and total equity of €931.9 million (2010:
€836.9 million). The Group’s net debt levels
averaged €167 million during the year,
compared to €155 million in the prior year.
Sustainability
DCC continues to make progress in
evolving our understanding and use of
the concept of sustainability to deliver
benefits to our business and to our
shareholders. We firmly believe that
providing products and services which
create social and environmental value also
creates long term financial value for the
benefit of our shareholders.
This year an external assessment of this
Sustainability Report has been completed.
Confirmation that our report meets the
GRI level C+ criteria is a milestone in the
ongoing development of our reporting
processes. We are committed to
increasing the quality of the Sustainability
Report and, where appropriate, integrating
it into the Annual Report. In this regard
we welcome the views of all our
stakeholders on how we can improve our
communication in this area.
Acquisitions
€’m
68.0
55.9
1.9
0.4
4.5
130.7
Capex
€’m
40.8
20.1
4.1
10.1
2.1
77.2
Total
€’m
108.8
76.0
6.0
10.5
6.6
207.9
12
DCC ANNUAL REPORT AND ACCOUNTS 2011
DCC’s strategy continues to be to grow a
sustainable diversified business through
concentrating on those businesses where it has
established or has the opportunity to establish
leadership positions
Consequently at this very early stage the
Group anticipates that operating profit
and adjusted earnings per share, both on
a constant currency basis, will be broadly
in line with the prior year. On a reported
basis, assuming an exchange rate of
Stg£0.8800 = €1 (which would represent
a 3% weakening of the average rate from
last year of Stg£0.8522 = €1), this would
result in a modest decline in operating
profit and adjusted earnings per share
compared to the prior year.
This outlook excludes the potential benefit
of acquisitions and the Group remains in
a very strong financial position to pursue
opportunities in the year ahead.
Tommy Breen
Chief Executive
9 May 2011
objective of driving long term returns
for shareholders well above our cost
of capital. The validity and success in
execution of strategy in each of the
businesses is monitored and reviewed
regularly.
Our strategy has been largely consistent
for many years and we feel we have made
progress in the last year in the pursuit of
our strategic objectives, some of which is
demonstrated in the profit growth, cash
generation and return on capital which
has been achieved.
Outlook
The outlook for the year to 31 March
2012 is framed against an uncertain
economic environment, particularly in
the UK, and the significant assumption
that there will be a return to a more
normal weather pattern compared to the
extremely cold winter last year. In April
DCC Energy has been impacted by what
has been the mildest April on record, with
temperatures significantly warmer than
last year and this along with the impact
of the number of public holidays in the
UK has resulted in Group trading being
well behind the prior year. However it is
important to note that April represents
only approximately 5% of the Group’s
budgeted profit for the year.
Our ongoing objective of formally
integrating sustainability into subsidiary
decision making requires further progress.
Dedicated sustainability workshops are
being delivered to progress this objective.
These will provide management teams
with the fundamentals of sustainability
and illustrate how changing social and
environmental drivers can effect business
performance in the longer term.
The publication of DCC’s Business
Conduct Guidelines has been a positive
development during the year. It provides
a consistent set of standards that all
subsidiary employees are expected to
maintain in their professional conduct.
Strategy
DCC’s strategy continues to be to grow a
sustainable diversified business through
concentrating on those businesses where
it has established or has the opportunity
to establish leadership positions (i.e.
typically number 1 or 2) in its chosen
markets.
The Group has clear, well defined, longer
term growth strategies for each of its
five divisions which are reviewed on a
regular basis. In building these strategies,
the initial focus is on organic growth
potential which is then supplemented
by identifying suitable acquisition
opportunities. Strategically, the objective
of these acquisitions is to strengthen
existing market positions and in some
cases carefully extend the geographic
footprint. It is our strong belief however
that these acquisition opportunities
should be pursued in a disciplined way
which will not compromise our overriding
DCC ANNUAL REPORT AND ACCOUNTS 2011
13
Senior Management
- Group and Divisional
Donal Murphy
Managing Director -DCC Energy
Frank Fenn
Managing Director - DCC Food & Beverage
Fergal O’Dwyer
Chief Financial Officer
Tommy Breen
Chief Executive
Niall Ennis
Managing Director -DCC SerCom
Conor Costigan
Managing Director - DCC Healthcare
14
DCC ANNUAL REPORT AND ACCOUNTS 2011
DCC ANNUAL REPORT AND ACCOUNTS 2011
15
Senior Management
- Group and Divisional (continued)
Divisional
DCC Energy
Finance Director
Development Director
DCC SerCom
Finance & Development Director
DCC Healthcare
Finance & Development Director
DCC Environmental
Finance & Development Director
DCC Food & Beverage
Finance & Development Director
Group
Conor Murphy
Clive Fitzharris
Kevin Lucey
Ian O’Donovan
Thomas Davy
Redmond McEvoy
Group Secretary & Head of Enterprise Risk Management
Ger Whyte
Managing Director, DCC Corporate Finance
Michael Scholefield
Head of Group EHS
Head of Group Tax
Head of Internal Audit
Head of Group HR
Head of Group Accounting
Head of Group IT
Head of Group Treasury
John Barcroft
Yvonne Divilly
Stephen Johnston
Ann Keenan
Gavin O’Hara
Peter Quinn
Daphne Tease
16
DCC ANNUAL REPORT AND ACCOUNTS 2011
Senior Management
- Subsidiary and Joint Venture
DCC Energy
Oil
LPG
Fuel Card
DCC SerCom
Retail
Reseller
Enterprise
SCM
GB Oils
Emo Oil
Great Gas
DCC Energy NI - Oil
DCC Energi Danmark
Energie Direct - Austria
Flogas UK
Flogas Ireland
Fuel Card Services
Gem Distribution
MSE
Banque Magnetique
Comtrade
Micro Peripherals
Sharptext
Advent Data
Altimate
SerCom Solutions
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Chief Operations Officer
Paul Vian
Gerry Wilson
Ray O’Sullivan
Pat O’Neill
Christian Heise
Hans-Peter Hintermayer
Henry Cubbon
Richard Martin
Ben Jordan
Managing Director
Managing Director
Directeur Général
President
Managing Director
Managing Director
Managing Director
Directeur Général
Chief Executive Officer
Chris Peacock
Jim Morgan
Claude Dupont
Stefan Riesser
Gerry O’Keeffe
John Dunne
Raj Advani
Patrice Arzillier
Kevin Henry
DCC Healthcare
Hospital Supplies & Services (and Fannin)
Health & Beauty Solutions
Squadron Medical
TPS Healthcare
Virtus
(and Thompson & Capper)
EuroCaps
Laleham Healthcare
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Andrew O’Connell
Peter Wyslych
Catherine McCallum
John Leonard
Stephen O’Connor
Adrian Williams
Tim O’Connor
DCC Environmental
DCC Environmental Britain and William Tracey
Wastecycle
Enva Ireland
Managing Director
Managing Director
Managing Director
Michael Tracey
Paul Needham
Declan Ryan
DCC Food & Beverage
Healthfood
Indulgence
Logistics
Other
*Joint venture
Kelkin
Robert Roberts
Bottle Green
Allied Foods
Kylemore Foods Group *
Managing Director
Managing Director
Managing Director
Executive Chairman
Managing Director
Frank Fenn
Tom Gray
Jon Eagle
Mitchel Barry
Brian Hogan
DCC ANNUAL REPORT AND ACCOUNTS 2011
17
DCC Energy
DCC Energy is the leading oil and liquefied petroleum
gas (LPG) sales, marketing and distribution business
in Britain and Ireland and one of the leading oil
distribution businesses in Austria and Denmark. In the
year ended 31 March 2011, DCC sold 7.1 billion litres
of product to c.800,000 customers from its extensive
network of 261 facilities.
DCC Energy currently employs 3,524 people.
Revenue
€6,129.8m
2010: €4,420.1m
Change on prior year
Reported: +38.7%
Constant currency: +34.3%
Operating profit
€137.3m
2010: €113.1m
Change on prior year
Reported: +21.4%
Constant currency: +17.2%
Return on total
capital employed
26.9%
2010: 26.5%
brands
Oil - Bayford*, Brogan*, Carlton Fuels*, CPL*, Emo Oil*, Gulf, Scottish Fuels*, Shell, Texaco.
LPG - Flogas*.
Fuel card - BP, Esso, Diesel Direct, Fastfuels, Shell, Total.
* DCC owned brand
18
DCC ANNUAL REPORT AND ACCOUNTS 2011
no.1
• oil distributor in Britain
• oil distributor in Northern Ireland and a leading oil distributor in the Republic of Ireland
• in the “agency” fuel card business in Britain
no.2
• oil distributor in Austria and Denmark
• LPG distributor in Britain and Ireland
DCC ANNUAL REPORT AND ACCOUNTS 2011
19
DCC Energy
(continued)
Volume Split
Oil 86%
LPG 7%
7%
Fuel Card
Oil Volume Split
by Product
Derv 40%
Gas Oil 30%
Kero 20%
Petrol 6%
Fuel Oils 4%
Performance Management – key performance indicators
Volumes
Organic volume growth
Operating profit per litre (constant currency)
Operating cash flow
Return on total capital employed
10 year operating profit CAGR
2011
7.1 bn litres
-1.0%
1.86 cent
€147.1m
26.9%
19.9%
2010
6.2 bn litres
-7.8%
1.84 cent
€178.8m
26.5%
19.3%
Business and Markets
Oil
DCC Energy’s oil distribution business supplies transport
fuels, heating oils and fuel oils to commercial, domestic,
agricultural and industrial customers in Britain, Ireland, Austria
and Denmark. DCC Energy sells oil under a portfolio of
strong brands including Bayford, Brogan, Carlton Fuels, CPL,
Emo Oil, Gulf, Scottish Fuels, Shell and Texaco.
Texaco, Total and Diesel Direct 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 while giving them detailed information on their
fuel utilisation to enable them to minimise their spend on
transport fuels.
DCC is the largest oil distributor in Britain, selling
approximately 4.4 billion litres of product per annum on a
proforma basis which gives DCC approximately 14% of
the market.* DCC has been a consolidator of the highly
fragmented oil distribution market in Britain having first
entered the market in September 2001 with the acquisition of
BP’s business in Scotland. DCC Energy is one of the largest
oil distributors in Austria and Denmark with respective market
shares of 12% and 13%. 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.
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 both bulk and cylinders to
domestic, commercial, agricultural and industrial customers
for heating, cooking, transport and industrial processes.
Trading under the Flogas brand, DCC has approximately
19% of the market in Britain and approximately 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
wide range of LPG fuel appliances such as mobile heaters and
barbecues.
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,
Supply
DCC Energy purchases its oil and LPG from the major oil
companies with which it has established excellent long
standing relations. DCC Energy’s supply strategy is to
maintain a portfolio approach to the sourcing of its oil and
LPG products. DCC’s significant financial strength provides
DCC Energy with a significant competitive advantage in
building long term partnerships with its suppliers.
Performance for the Year Ended 31 March 2011
DCC Energy’s operating profit was 17.2% ahead of the
prior year on a constant currency basis. This was another
year of excellent growth and the business benefited from
the successful integration of a number of acquisitions
completed in prior years and another extremely cold winter
overall, particularly in the last six weeks of the quarter ended
31 December 2010. However, trading in the fourth quarter
was adversely impacted by the milder weather conditions,
particularly relative to the same period in the prior year.
DCC Energy sold 7.1 billion litres of product, an increase
of 15.5% on the prior year. While the division achieved
good organic volume growth in the nine months ended 31
December 2010, this was negated in the fourth quarter
primarily as a result of the mild weather conditions. For the full
year, volumes were approximately 1% behind the prior year
on an organic basis.
On a constant currency basis, the operating profit per
litre for the year was 1.86 cent, broadly in line with
the prior year of 1.84 cent.
20
DCC ANNUAL REPORT AND ACCOUNTS 2011
DCC Energy’s vision is to
be the leading oil and
LPG sales, marketing
and distribution
business in Europe
The Oil distribution business had another
excellent performance in Britain, benefiting
from the integration, consequent synergies
and strong performance of recent
acquisitions. DCC further strengthened its
position within the British market through
the acquisition of Pearts (a 190 million litre
business in Northern England, completed
in May 2010) and the acquisition of two
oil importation and storage terminals
in Inverness and Aberdeen in Scotland
(completed in June 2010). In February 2011,
as previously announced, DCC Energy
reached conditional agreement to acquire
the entire issued share capital of Pace
Fuelcare, a British oil distribution business. In
its last financial year Pace Fuelcare sold 515
million litres of fuel to independent retail petrol
stations and a broad range of commercial,
industrial, agricultural and domestic
customers. The acquisition is subject, inter
alia, to clearance from the UK Office of Fair
Trading. DCC is the clear market leader in oil
distribution in Britain and on completion of
the acquisition of Pace Fuelcare, would have
a market share of approximately 15% and is
well positioned to further consolidate what
remains a very fragmented market.
DCC Energy’s oil distribution businesses in
continental Europe (Denmark and Austria)
performed strongly and made an important
contribution to the division’s overall result.
Having reached conditional agreement
in February, the scale of the Group’s
oil distribution business in Austria was
increased when DCC Energy completed the
acquisition in April of the trade and certain
assets of Top Oil GmbH, a 140 million litre
oil distributor based in Northern Austria for a
modest consideration. Despite the continued
weak economic environment in Ireland, there
was a modest recovery in the profitability
of the Irish oil business reflecting cost
reductions achieved in the prior year.
primarily due to the difficult Irish economy.
The overall result was adversely impacted by
a challenging product pricing environment,
reducing the operating profit of the business.
The Fuel Card business had another excellent
year, driven by the additional contribution
from the acquisition of the Brogan fuel card
business (completed December 2009) and
good organic volume growth.
Strategy and Development
DCC Energy’s vision is to be the leading oil
and LPG sales, marketing and distribution
business in Europe:-
• with strong local market shares;
• operating under multiple brands;
• generating high levels of ROCE;
• expanding into other geographic regions
with attractive market characteristics; and
• developing a presence over time in the
green/renewable energy sector.
In oil distribution, DCC’s strategy is
to achieve a 20% share of the British
market. With a particular focus on the
non heating dependent segments of the
market (including dealer operated retail
petrol stations, the marine market and the
aviation sector) and on national accounts,
DCC Energy aims to leverage its extensive
nationwide operational infrastructure to
drive high levels of organic profit growth.
During the year DCC acquired two marine
importation and storage terminals in
Inverness and Aberdeen. These will support
the strategic aim of growing in the marine
market and will also provide a platform
for further such development over time.
DCC Energy is also focused on selling
differentiated products and cross selling
add-on products and services such as
lubricants and boiler maintenance services to
its extensive customer base.
The LPG business performed satisfactorily
in the year achieving market share growth
in Britain, particularly in the commercial
sector, although volumes in Ireland declined
In the LPG market, DCC Energy will continue
to leverage its strong market positions to
drive organic profit growth on a sector by
sector basis in both Britain and Ireland.
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.
DCC Energy made the first important
strategic steps in developing the business into
continental Europe through the acquisition
of Shell’s oil distribution businesses in Austria
and Denmark in the year ended 31 March
2010. The scale of the Austrian business was
increased by the acquisition of the trade and
certain assets of Top Oil GmbH in April 2011,
while the Danish business acquired a small
lubricant distribution business during the last
financial year.
DCC is developing a presence in the
renewable energy sector with the focus
being to provide energy solutions to
customers across the division, allowing them
to understand and maximise the benefits of
investments in alternative energy products
and to support them in reducing their carbon
footprints.
Outlook
The outlook for DCC Energy for the year
to 31 March 2012 is set against the
significant assumption that there will be a
return to a more normal weather pattern
compared to the extremely cold winter last
year. Consequently it is anticipated, at this
very early stage, that operating profit, on a
constant currency basis, in DCC Energy for
the year to 31 March 2012 will be behind the
prior year.
* 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).
DCC ANNUAL REPORT AND ACCOUNTS 2011
21
DCC SerCom
SerCom Distribution markets and sells IT and
entertainment products to the Retail market, the
Reseller market and the Enterprise market in Britain,
Ireland, France, Spain, Portugal, the Netherlands,
Belgium and Luxembourg. SerCom Solutions
provides outsourced procurement and supply chain
management services in Ireland, Poland, China,
Mexico and the USA.
DCC SerCom currently employs 1,668 people.
Revenue
€1,868.9m
2010: €1,618.5m
Change on prior year
Reported: +15.5%
Constant currency: +12.9%
Operating profit
€46.0m
2010: €40.8m
Change on prior year
Reported: +12.7%
Constant currency: +9.9%
Operating margin
2.5%
2010: 2.5%
Return on total
capital employed
16.2%
2010: 16.1%
brands
Retail - Altec Lansing, D-Link, Electronic Arts, iHome, Logitech, Microsoft,
Netgear, Nintendo, Paramount, Seagate, Take Two, Tom Tom, Warner
Brothers, Western Digital.
Reseller - Acer, APC, Cisco, Dell, IBM, Lenovo, Microsoft, Netgear,
Plantronics, Samsung, Sony, Toshiba, Western Digital.
Enterprise - Adobe, EMC, Fortinet, HP, IBM, Network Appliance, Oracle,
Red Hat, SonicWall, Symantec, VMware.
SCM - SerCom Solutions*
* DCC owned brand
22
DCC ANNUAL REPORT AND ACCOUNTS 2011
no.1
• specialist distributor of consumer IT & entertainment products to a broad
range of retailers in Britain, Ireland and France
• specialist distributor of enterprise products to resellers and independent
software vendors in France, Iberia, Benelux, UK and Ireland
a market leader
• a leading distributor of IT products to a broad range of resellers in Britain
and Ireland
• a leading provider of outsourced procurement and supply chain
management services
DCC ANNUAL REPORT AND ACCOUNTS 2011
23
DCC SerCom
(continued)
Revenue by
Activity
Retail 41%
Reseller 39%
Enterprise 15%
SerCom Solutions 5%
Revenue by
Geography
Britain 60%
Europe 34%
Ireland 6%
Performance Management – key performance indicators
Revenue growth (constant currency)
Organic revenue growth (constant currency)
Operating cash flow
Return on total capital employed
10 Year operating profit CAGR
2011
+12.9%
+7.7%
€60.7m
16.2%
3.1%
2010
+8.6%
+6.8%
€51.8m
16.1%
5.4%
Business and Markets
Retail
DCC SerCom’s Retail distribution business sells a broad
range of consumer products, including games consoles
and software, consumer electronics, audio visual
accessories and peripherals and home entertainment
products, to the retail channel, including e-tailers, grocers
and catalogue retailers in Britain, Ireland and France.
DCC SerCom represents many of the leading brands
in the computer games, entertainment and consumer
electronics markets such as Altec Lansing, D-Link,
Electronic Arts, iHome, Logitech, Microsoft, Netgear,
Nintendo, Paramount, Seagate, Take Two, Tom Tom,
Warner Brothers and Western Digital. The business is the
leading specialist distributor of games hardware, software
and accessories, consumer electronics and packaged
software in Britain, the leading specialist distributor of
IT peripherals, audio visual and consumer electronics
products in France and the leading specialist distributor
of home entertainment products in Ireland. The Retail
distribution business provides a range of value added
services to its customers and suppliers including end-
user fulfilment, third party logistics, category management
and merchandising, security tagging and cross vendor
bundling. The Retail distribution business employs
582 people and in the year ended 31 March 2011 had
revenues of €761 million.
Reseller
DCC SerCom’s Reseller distribution business sells a
broad range of IT, communications and consumer
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, consumables and
network products. The business is a distribution partner
of many of the leading brands in the IT market, such as
Acer, APC, Cisco, Dell, IBM, Lenovo, Microsoft, Netgear,
Plantronics, Samsung, Sony, Toshiba and Western Digital,
and 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. The Reseller distribution
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. The business employs
640 people and in the year ended 31 March 2011 had
revenues of €723 million.
Enterprise
DCC SerCom’s Enterprise distribution business sells 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’ customers are value added resellers, large
account resellers and independent software vendors in
France, Iberia, Benelux and Britain. The business has
developed a supplier portfolio of the leading hardware
and software vendors in the industry including Adobe,
EMC, Fortinet, HP, IBM, Network Appliance, Oracle, Red
Hat, SonicWall, Symantec and VMware. This portfolio
allows its highly trained sales teams to offer integrated
IT solutions and related services to its customers.
The business is the leading independent specialist
value-added distributor of enterprise and mid-market
products in its core markets of France, Spain, Portugal,
Belgium and Luxembourg, with a growing presence in
the Netherlands and Britain. The Enterprise distribution
business employs 286 people and in the year ended 31
March 2011 had revenues of €292 million.
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, the United States and Mexico,
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. SerCom Solutions
24
DCC ANNUAL REPORT AND ACCOUNTS 2011
- To extend its pan-European presence in
the Enterprise distribution market with an
increased focus on strategic brands in the
server, software and security sectors
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
DCC SerCom anticipates very strong growth
in operating profit, on a constant currency
basis, for the year to 31 March 2012, through
a combination of the benefit of acquisitions
completed in the prior year and further
organic growth, notwithstanding what is
likely to be a less favourable environment for
consumer demand.
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
focussed business units
delivers global supply chain solutions
encompassing vendor hubbing, consignment
stock programmes, supplier identification
and qualification, quality assurance and
compliance and supplier and customer
fulfilment 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. The Supply Chain
Management business employs 160 people
and in the year ended 31 March 2011 had
revenues of €93 million.
Performance for the Year Ended 31
March 2011
DCC SerCom’s operating profit grew by
9.9% on a constant currency basis. This
was driven by an excellent performance
in SerCom Distribution, which achieved
constant currency operating profit growth of
16.6% of which 6.3% was organic, reflecting
very strong organic growth in the Reseller
business, good organic growth in the Retail
business and the benefit of acquisitions
completed during the year.
DCC SerCom’s Retail distribution business
achieved very strong operating profit growth.
The business in Britain performed well,
growing market share with key suppliers
while also investing in its logistics and
ancillary services capability through the
acquisition of a substantial new facility north
of London. In France, the Retail business
achieved good organic profit growth and
significantly strengthened its market and
service proposition through the acquisition of
Comtrade SA, a leading distributor of audio
visual accessories and peripherals, which
was announced in August 2010.
DCC SerCom’s Reseller distribution business
had an excellent year, generating significant
operating profit growth in both Britain
and Ireland. The business gained market
share in core product areas, particularly
PCs, supported by the introduction of new
suppliers. The continuing investment in
strengthening its technical and commercial
expertise in communications, audio visual
and the converging IT and mobile telephony
channels also generated a strong return.
In March 2011 DCC acquired Advent Data
Limited, a leading independent distributor of
electronic office supplies in the UK. Advent
is highly complementary to DCC’s Reseller
business and significantly strengthens its
customer and supplier breadth in this market.
DCC SerCom’s Enterprise distribution
business had a challenging year in France.
Profits declined modestly, despite good
progress in Belgium and the Netherlands
and extending its presence in the UK market
during the year.
DCC SerCom’s Supply Chain Management
business, which now accounts for less
than 10% of DCC SerCom’s operating
profit, continued to suffer from a decline
in procurement volumes with its major
customer, as a result of changes in its
manufacturing strategy.
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 focussed business
units.
SerCom Distribution’s principal medium term
objectives are:
- To establish its Retail distribution business
as the leading specialist service provider to
the European retail sector, with a particular
focus on online, catalogue and supermarket
channels, by extending its market and
service coverage;
- To become the leading Reseller distribution
business in the UK and Ireland through the
continued expansion of its product and
customer base, including expansion into
complementary sectors such as audio
visual, communications and mobile;
DCC ANNUAL REPORT AND ACCOUNTS 2011
25
DCC Healthcare
DCC Healthcare is a broadly based healthcare services business
principally focussed on:
• the provision of sales, marketing and distribution services in
Ireland and Britain to healthcare providers and medical and
pharmaceutical brand owners/manufacturers;
• the provision of outsourced product development, manufacturing
and packing services to the health and beauty industry in Britain
and continental Europe.
DCC Healthcare currently employs 1,113 people.
Revenue*
€311.1m
2010: €280.5m
Change on prior year
Reported: +10.9%
Constant currency: +7.9%
Operating margin*
7.2%
2010: 7.1%
Operating profit*
€22.5m
2010: €19.9m
Change on prior year
Reported: +13.1%
Constant currency: +10.5%
Return on total
capital employed*
16.3%
2010: 14.6%
*Continuing activities (excluding Mobility & Rehabilitation)
brands
Hospital Supplies & Services - Biorad, Boston Scientific, Diagnostica Stago, Fannin*, Fresenius,
Grifols, ICU Medical, Martindale Pharma, Molnlycke, Oxoid, Sandoz, Smiths Medical, Zeiss.
Health & Beauty Solutions’ Customers - Body Shop, Elder Pharmaceuticals, GSK, Healthspan,
Merck (Seven Seas, Natures Best, Lamberts), Reckitt Benckiser, Sara Lee, Unilever, Vitabiotics.
* DCC owned brands
26
DCC ANNUAL REPORT AND ACCOUNTS 2011
no.1
• provider of sales, marketing and distribution services in Ireland to healthcare
providers and medical and pharmaceutical brand owners/manufacturers
• provider of outsourced pharma compounding services in Ireland
• UK based provider of outsourced product development, manufacturing and packing
services to the health and beauty sector in Europe
DCC ANNUAL REPORT AND ACCOUNTS 2011
27
DCC Healthcare
(continued)
Revenue by
Activity
Hospital Supplies
& Services 75%
Health & Beauty 25%
Revenue by
Geography
Britain 54%
Ireland 40%
Continental Europe 6%
Performance Management - key performance indicators
Revenue growth (constant currency)
Operating cash flow
Return on total capital employed
10 year operating profit CAGR
2011
+7.9%
€30.5m
16.3%
8.5%
2010
+9.1%
€23.3m
14.6%
11.6%
Business and Markets
DCC Hospital Supplies & Services
In Ireland, DCC Healthcare is the market leader in the
provision of sales, marketing and distribution services
to healthcare providers and to international healthcare
brands/manufacturers in the areas of medical devices,
consumables and pharmaceuticals.
In the medical area, the business markets and sells a
broad range of products in areas such as woundcare,
urology, procedure packs, critical care (anaesthesia, endo-
vascular, cardiology, IV access) and diagnostics. Products
are typically single use/consumable in nature. DCC
represents leading medical, surgical and scientific brands
including BioRad, Boston Scientific, Diagnostica Stago,
ICU Medical, Molnlycke, Oxoid, Smiths Medical and Zeiss
through its extensive field sales force of highly trained
professionals. In Britain, DCC is also seeking to build a
growth platform in the provision of stock management
and distribution services to hospitals and healthcare brand
owners/manufacturers. This is a potentially interesting
sector as British acute care hospitals look for customised
just-in-time distribution solutions to deliver cost savings
and improve product availability.
In the pharma area, DCC Healthcare is involved in the
sales, marketing and distribution of pharmaceuticals,
primarily IV pharmaceuticals for the hospital sector
in areas such as oncology, haematology, neurology
and anaesthesia. DCC works with leading brands like
Fresenius Kabi, Grifols, Martindale Pharma and Sandoz,
as well as generic companies. The business is increasingly
focussed on developing its range of pharma services
including value added logistics in Britain and its growing
business in the provision of IV compounding services
to hospitals in Ireland. DCC has significantly expanded
the capacity of its licensed compounding facility,
which is involved in the aseptic filling of oncology, pain
management, antibiotic and paediatric nutrition products
into patient ready dosage forms, i.e. syringes or IV bags,
and is leveraging this capacity to expand its service
offering, including into the provision of pharma homecare
services in Ireland.
DCC Healthcare is continually expanding its product
portfolio in both the medical and pharma sectors
organically and through bolt on acquisition. In the pharma
sector, in addition to growing its compounding service
business, DCC Healthcare is seeking to expand in other
service areas and to further develop its pharma sales
and marketing activities into new product formats and
channels to market.
DCC 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 products. DCC’s key strength is
the highly responsive and flexible service it provides to
its customers. This service typically involves product
development, formulation, stability and other testing and
regulatory compliance, as well as manufacturing and
packing.
28
DCC ANNUAL REPORT AND ACCOUNTS 2011
DCC Healthcare’s primary focus is the
generation of strong organic profit growth and
superior returns in its existing businesses by
developing and expanding its service offerings
to meet the changing needs of the healthcare
and health & beauty sectors. In addition to
driving continuing growth through existing
channels to market, the business is also
focussed on growing in developing channels
such as homecare.
Outlook
While pressure on healthcare spending will
impact DCC Hospital Supplies & Services,
DCC Health & Beauty Solutions is budgeting
for strong profit growth. Overall DCC
Healthcare expects operating profit from
continuing activities, on a constant currency
basis, in the year to 31 March 2012 to be
modestly ahead of the prior year.
DCC Healthcare’s strategy is to build a
substantial, broadly based, healthcare
business principally focussed on the
provision of value added services to the
healthcare and health & beauty sectors
Strategy and Development
DCC Healthcare’s strategy is to build a
substantial, broadly based, healthcare
business principally focussed on the provision
of value added services to the healthcare and
health & beauty sectors.
In the markets in which DCC Hospital
Supplies & Services operates, healthcare
provision is primarily funded by governments.
As fiscal budgets tighten and the burden of
ageing populations increases, healthcare
providers are increasing their focus on cost
saving opportunities and value for money.
Individual hospitals, hospital trusts and
procurement groups and other healthcare
providers are seeking to source equivalent
quality, lower cost products and looking
to outsource activities deemed to be
non-core. DCC Healthcare is working to
meet this demand by growing its portfolio
of cost effective products, including
generic pharmaceuticals and own brand
medical products, and by providing value
added outsourced services, including IV
pharmaceutical compounding services and
stock management and distribution services.
Outsourcing trends are also visible in the
health and beauty sector, where brand
owners are increasingly outsourcing non-sales
and marketing activities (including product
development) and streamlining their supply
chains. DCC Health & Beauty Solutions,
given its high quality licensed facilities and the
depth of its technical, regulatory and financial
resources, is well positioned to capitalise on
these trends.
Performance for the Year Ended 31
March 2011
DCC Healthcare achieved growth in operating
profit from continuing activities of 10.5% on a
constant currency basis, which represented
a strong performance against a challenging
market background.
The successful disposal of its Mobility &
Rehabilitation businesses in June 2010 has
enabled DCC Healthcare to bring greater
focus to the development of its Hospital
Supplies & Services and Health & Beauty
Solutions businesses, as well as improving the
return on capital employed of the division.
DCC Hospital Supplies & Services recorded
good revenue and profit growth. In the
Republic of Ireland, government austerity
measures have reduced demand and
increased price pressure in the public
healthcare system, which impacted the gross
margin in DCC Hospital Supplies & Services.
This was offset by tight cost control, the full
year benefit of bolt-on acquisitions completed
in the prior year and other revenue growth
driven by, inter alia, the expansion of DCC’s
pharma compounding service capacity and
new product introductions. The British value
added distribution services business had a
challenging year but contributed modestly to
profits as it continued to invest in enhancing
its management and operational capacity.
DCC Health & Beauty Solutions generated
excellent revenue and operating profit growth.
Revenue growth was particularly strong
in skincare and fish oil products across
a range of customers, benefitting from
continued business development with existing
customers as well as new customer wins,
including in continental Europe. Despite raw
material cost inflation, the business managed
its input costs and overheads very well. These
measures, together with efficiency gains as
a result of investments in infrastructure and
skilled people in recent years, delivered strong
operational leverage.
DCC ANNUAL REPORT AND ACCOUNTS 2011
29
DCC Environmental
DCC Environmental is a leading British 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. In the last year
DCC Environmental handled approximately 1.3 million
tonnes of waste through its twenty facilities in Britain
and Ireland.
DCC Environmental currently employs 761 people.
Revenue
€106.4m
2010: €77.4m
Change on prior year
Reported: +37.6%
Constant currency: +33.1%
Operating profit
€11.6m
2010: €9.3m
Change on prior year
Reported: +24.7%
Constant currency: +19.7%
Operating margin
10.9%
2010: 12.0%
Return on total
capital employed
10.0%
2010: 9.7%
brands
Enva*, Wastecycle*, Tracey*.
* DCC owned brands
30
DCC ANNUAL REPORT AND ACCOUNTS 2011
no.1
• recycling and waste management business in Scotland
• hazardous waste treatment business in Ireland
a market leader
• a leading Nottingham based recycling
and waste management business
DCC ANNUAL REPORT AND ACCOUNTS 2011
31
DCC Environmental
(continued)
Revenue by
Geography
Britain 77%
Ireland 23%
Performance Management – key performance indicators
2011
2010
Tonnages*
Recycling %
Operating cash flow
Return on total capital employed
10 year operating profit CAGR
*2010 includes 50% of Tracey for 9 months
1,305k
69%
€19.8m
10.0%
26.1%
962k
71%
€15.8m
9.7%
30.6%
Business and Markets
Britain
DCC Environmental collects and processes a broad
range of non hazardous and hazardous waste through
its market leading Scottish business which owns the
most comprehensive waste infrastructure in Scotland. In
addition DCC Environmental owns the largest material
recycling facility in the East Midlands. The business
handles 1.2 million tonnes of material, the majority of which
is collected by its fleet of 223 vehicles. 70% of all waste
volumes are diverted from landfill.
With its comprehensive recycling infrastructure (the
business doesn’t operate any active waste landfill sites),
DCC Environmental is ideally positioned to benefit from
society’s drive to reduce waste and to conserve natural
resources. Strong legislative backing is being provided to
support the shift to resource recovery from waste products
– the most significant of which is the commitment by
government to increase landfill tax which is now £56 per
tonne to £80 a tonne over the next three years in equal
annual increments. Another tangible example of this
movement to the more efficient management of scarce
resources is Scotland’s world leading Zero Waste Plan
which, published in June 2010, includes a 50% recycling
target for all waste by 2013 and 70% by 2025. Further
evidence of Scotland leading the way is the more recent
announcement that from 2013 Scotland will measure
recycling in terms of carbon saving in order to prioritise
the recycling of ‘high impact’ carbon materials such as
textiles and plastics. Whilst Britain has made progress in
increasing the proportion of waste diverted from landfill
by way of recycling, it continues to significantly lag behind
Europe in terms of organic waste processing. To address
this deficit, the government has unveiled incentives
such as the renewable heat incentive to encourage the
development of new infrastructure such as anaerobic
digestion plants. DCC Environmental is well positioned
to capitalise on the increased treatment of organic
waste with the recent completion of the construction of
one of Britain’s largest anaerobic digestion facilities with
project partner Scottish and Southern Energy Plc. DCC
Environmental Britain’s business is well placed to benefit
from these developments.
Ireland
Enva is Ireland’s largest hazardous waste treatment
company, providing technically innovative solutions
to a wide range of commercial and industrial sectors.
Operating from six EPA/EA licensed sites throughout
Ireland Enva has an unrivalled national presence. The six
Enva facilities process a broad range of hazardous wastes
including waste oil, contaminated soils, bulk chemicals
and contaminated packaging. Enva also continues to
invest in new and innovative solutions for hazardous waste
as illustrated by the recent commissioning of infrastructure
to facilitate converting waste lubricant oils into processed
fuel oil, an approved substitute for gas oil. In addition
to treating a broad range of hazardous waste at Enva’s
facilities in Ireland, Enva also works with a network of
European based companies to provide a comprehensive
range of solutions for hazardous waste.
32
DCC ANNUAL REPORT AND ACCOUNTS 2011
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
There is growing recognition that there is
value in waste material both as a commodity
and energy source and DCC Environmental’s
recycling led infrastructure is ideally positioned
to capitalise on this. In addition to processing
recyclable waste such as paper and plastic,
DCC Environmental processes residual
waste into a fuel for use in cement kilns
as a direct substitute for fossil fuels. DCC
Environmental will also shortly commence
sending organic waste to Scotland’s largest
anaerobic digestion plant and discussions are
progressing to divert further residual waste,
which cannot be recycled, from landfill into
energy from waste facilities.
Outlook
With its strong focus on recycling and
resource recovery, DCC Environmental
expects to achieve good growth in operating
profit, on a constant currency basis, in
the year to 31 March 2012 in spite of the
challenging trading environment prevailing in
Britain and Ireland.
Enva also operates a water treatment division
providing specialty chemicals, equipment
and professional services to the drinking,
industrial and waste water sectors. The
water treatment division directly operates an
in-house manufacturing facility as well as an
INAB accredited laboratory to support these
services.
Regulation
DCC Environmental’s waste management
business operates in a highly regulated
environment. Each facility operates under
conditions as set down in respective waste
management licences. During the year 47
inspections were carried out by environmental
regulatory authorities, with only two minor
non-conformances recorded. Any non-
compliance with licence requirements,
however minor, is investigated immediately
and corrective actions implemented.
Performance for the Year Ended 31
March 2011
DCC Environmental’s operating profit was
19.7% ahead of the prior year on a constant
currency basis. The results benefitted from the
consolidation of 100% of the operating profit
of the William Tracey Group for the full year.
On a like for like basis, however, operating
profit declined modestly.
Market conditions in Britain were difficult, with
a further decline in construction derived waste
volumes, and operations were significantly
disrupted by the extreme weather conditions
in December, resulting in a like for like decline
in operating profit in Britain. Some of this
weakness was offset by the strong growth
in recyclate prices and the commissioning of
a new material recycling facility in Glasgow
to process domestic recyclable waste.
The development of Scotland’s largest
anaerobic digestion plant (in partnership with
Scottish and Southern Energy Plc) reached
a significant milestone with the completion
of construction and commencement of the
commissioning phase.
The Irish business made progress during the
year and recorded growth in operating profit
despite the challenging market conditions.
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 resource recovery
and recycling. The strategy includes delivering
superior value adding services to all its
customers by way of a deep understanding
of customer’s requirements and the
development of innovative solutions to their
problems. Furthermore DCC Environmental is
aligning its business to support the transition
to a low carbon economy through resource
rather than waste focus, developing internal
climate change expertise and ever improving
its recycling capability.
DCC ANNUAL REPORT AND ACCOUNTS 2011
33
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 930 people.
Revenue
€252.2m
2010: €275.0m
Change on prior year
Reported: -8.3%
Constant currency: -9.2%
Operating margin
4.6%
2010: 3.1%
Operating profit
€11.5m
2010: €8.5m
Change on prior year
Reported: +36.0%
Constant currency: +35.6%
Return on total
capital employed
14.9%
2010: 10.2%
brands
Healthfood - Alpro, Biofreeze, Dorset Cereals, Filippo Berio, Hipp, Jakemans, Kallo,
Kelkin*, Nairns, Ocean Spray, Olbas, Ortis, Pomegreat, St Dalfour, Vitabiotics, Whole Earth.
Indulgence - Andrew Peace, Antinori, Bollinger, Chapoutier, Cono Sur, Elizabeth Shaw,
French Connection*, Freixenet, Glenfiddich, Goodalls, Hula Hoops, KP, Lemons*,
Lindemans, Louis Jadot, McCoys, Masi, Mateus, Meanies, Moreau, Rancheros, Ritter,
Robert Roberts*, Sacla, Skips, Sutter Home, Topps, Torres, Tullamore Dew, Wakefield,
Wilton Candy*.
Logistics - Allied Foods*, Mr. Food.
Other - Kylemore.
* DCC owned brand
34
DCC ANNUAL REPORT AND ACCOUNTS 2011
no.1
• ambient healthfood business in Ireland
• brand of fresh ground coffee in retail in Ireland
• in frozen food logistics and distribution in Ireland with a significant chilled food business
no.2
• brand of fresh ground coffee in foodservice in Ireland
• supplier of herbs and spices in Ireland
a market leader
• a leading independent wine distributor in Ireland
• the No.3 supplier in savoury snacks in Ireland
DCC ANNUAL REPORT AND ACCOUNTS 2011
35
DCC Food & Beverage
(continued)
Revenue by
Activity
Indulgence 56%
Logistics & Other 33%
Healthfood 11%
Revenue by
Customer Group
40%
Multiples
Symbols
20%
Food Service 19%
Independents 12%
9%
Wholesale
Performance Management - key performance indicators
2011
2010
Operating cash flow
Revenue per employee (constant currency)
Return on total capital employed
10 year operating profit CAGR
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. The principal customers are
grocery multiples, symbol and independent retailers,
pharmacies, off licenses, 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. The Kelkin brand is also a strong and
growing brand in the VMS sector.
€12.6m
€261k
14.9%
4.3%
€21.9m
€279k
10.2%
0.3%
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, home
cooking (herbs, spices and colourings), confectionery,
and soft drinks. In the Irish market Robert Roberts
is the number 1 supplier of freshly ground coffee to
the retail sector and the number 2 supplier in the
foodservice sector; the number 2 supplier of herbs
and spices (following the successful acquisition and
integration of the Goodall’s range during the year), the
number 3 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 to both the
on and off trade, providing an extensive portfolio of
international wine brands. 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.
36
DCC ANNUAL REPORT AND ACCOUNTS 2011
The Group’s strategy is
to develop DCC Food &
Beverage into a leading added
value sales, marketing and
distribution business
beverages, Robert Roberts coffee and
speciality teas and Lemon’s confectionery as
well as developing the newly acquired brands
of Goodall’s and YR. The business will also
continue to actively develop its extensive
range of third party agency brands across
its healthfoods and indulgence categories.
Our wine and spirits business in Ireland will
continue to develop its range and grow its
market share, particularly in the on-trade.
The UK wine business remains focussed on
developing its own range of brands which
include French Connection and Andrew
Peace, along with selected agency brands.
Outlook
DCC Food & Beverage anticipates good
operating profit growth, on a constant
currency basis, in the year to 31 March 2012.
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.
company owned brands with the acquisition
of the Goodall’s and YR brands (completed in
December 2010), which contributed modestly
in the fourth quarter. The Healthfoods
business achieved strong sales growth in
its Kelkin brand in both the grocery and
pharmacy channels, however, this was offset
somewhat by a decline in sales in certain of
the third party grocery brands.
Kylemore Foods Group (50% owned by DCC)
is a leading operator of retail restaurants and
contract catering services in Ireland, serving
8 million customer meals annually throughout
Ireland.
Performance for the Year Ended 31
March 2011
DCC Food & Beverage reported a very strong
increase in operating profit in the year of
36.0%, despite the impact on the consumer
of the Irish economy. This result was driven by
good cost control following the actions taken
in the prior year, operating efficiencies and the
introduction of new products.
The Indulgence and Healthfoods businesses
both delivered good operating profit growth.
The Indulgence business experienced
a decline in sales in Ireland, however, a
deliberate policy of reduced promotional
activity in certain categories allied with strong
control of costs delivered operating profit
growth. The business added to its portfolio of
The Frozen and Chilled Logistics business
performed well in a difficult market through
its focus on operational efficiencies, however
following a change in its supply chain strategy
for Ireland an important customer has
terminated its contract, which will impact the
performance of the business in the year to 31
March 2012.
Strategy and Development
The Group’s strategy is to develop DCC Food
& Beverage into a leading added value sales,
marketing and distribution business, building
number 1 or number 2 branded positions in
focussed segments and delivering an above
average return on capital. This will be achieved
by building on current positions in the health,
indulgence and logistics segments, both
organically and through acquisition.
The business will continue to increase its
focus on brands, building on the progress that
has been made to date with the company
owned brands of Kelkin healthy foods and
DCC ANNUAL REPORT AND ACCOUNTS 2011
37
Financial Review
“ Another good year of
growth and development”
DCC again achieved another year of growth and development,
in a year when economic conditions in our main markets
remained difficult. During the year the Group’s operating profits
increased by 15.5%, on a constant currency basis, to €229.6
million and we deployed an incremental €207.9 million on
acquisitions and net capital expenditure.
The return on invested capital improved
again to 19.9% (2010: 18.4%).
As the key financial performance indicators
set out in Table 1 show, the Group
performed strongly in 2011 delivering an
improvement in revenues and operating
profits and returns on capital employed
whilst still retaining a strong, well funded
and highly liquid balance sheet.
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 on
pages 80 to 88.
Table 1: Key financial performance indicators
Revenue growth – constant currency
Operating profit growth* – constant currency
Interest cover (times)
Net debt as a percentage of total equity
Net debt/EBITDA (times)
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 total capital employed
* excluding exceptionals and amortisation of intangible assets.
38
DCC ANNUAL REPORT AND ACCOUNTS 2011
2011
2010
25.4%
15.5%
15.8
4.9%
0.2
1.6%
4.9
36.8
269.6
123.6
19.9%
5.1%
6.9%
17.7
6.4%
0.2
1.8%
4.6
35.3
297.8
229.1
18.4%
Group revenue increased by 25.4%, on
a constant currency basis, primarily as a
result of acquisitions and the impact of
higher oil prices
Overview of Results
Summary Income Statement
2011
€’m
2010
€’m
Reported
Constant
currency
Change on prior year
Revenue
8,680.6
6,725.0
+29.1%
+25.4%
Operating profit
DCC Energy
DCC SerCom
DCC Healthcare
DCC Environmental
DCC Food & Beverage
Group operating profit
Share of associates’ (loss)/profit after tax
Finance costs (net)
Profit before exceptional items, amortisation of intangible assets and tax
Amortisation of intangible assets
Exceptional charge(net)
Profit before tax
Taxation
Non-controlling interests
Net earnings
137.3
46.0
23.2
11.6
11.5
229.6
(0.2)
(14.6)
214.8
(10.9)
(14.3)
189.6
(43.8)
(0.7)
145.1
113.1
40.8
21.1
9.3
8.5
192.8
0.2
(10.9)
182.1
(6.2)
(11.0)
164.9
(33.2)
(0.9)
130.8
+21.4%
+12.7%
+9.7%
+24.7%
+36.0%
+19.1%
+17.2%
+9.9%
+7.2%
+19.7%
+35.6%
+15.5%
+18.0%
+14.3%
15.0%
+10.9%
+10.9%
+6.9%
Adjusted earnings per share (cent)
203.15
177.98
+14.1%
+10.5%
Revenue
Group revenue increased by 25.4%, on
a constant currency basis, primarily as a
result of acquisitions and the impact of
higher oil prices. DCC Energy had a 15.5%
increase in sales volumes, however, on an
organic basis, volumes declined by 1%.
Excluding DCC Energy, Group revenue
was 8.2% ahead of the prior year, on a
constant currency basis, of which 5.4%
was organic.
Operating Profit
DCC had a very strong year with all
five divisions reporting operating profit
growth. Group operating profit increased
by 15.5%, on a constant currency basis,
to €229.6 million. Approximately two
thirds of the growth was organic and
the balance came from acquisitions
completed in the current and prior year.
The Group had a strong first half which
was followed by an excellent third quarter,
driven by the exceptionally cold weather
conditions throughout northern Europe,
particularly in the last six weeks of the
quarter, which benefited DCC Energy,
DCC’s largest division. However, trading
in the fourth quarter in DCC Energy was
adversely impacted by the milder weather
conditions, particularly relative to the same
period in the prior year.
Approximately 77% of the Group’s
operating profit in the period was
denominated in sterling. The average
exchange rate at which sterling profits
were translated during the year was
Stg£0.8522 = €1, compared to an average
translation rate of Stg£0.8873 = €1 for
the prior year, an appreciation of 4%
which resulted in a positive translation
impact on Group operating profit of €6.9
million. Consequently on a reported basis
operating profit increased by 19.1%.
DCC ANNUAL REPORT AND ACCOUNTS 2011
39
Financial Review (continued)
Interest was covered
15.8 times by Group
operating profit (17.7
times in 2010)
DCC Energy, DCC’s largest division, had
the benefit of another extremely cold winter
overall and generated constant currency
operating profit growth of 17.2%, driven by
the 15.5% increase in volumes.
the Group’s businesses and an increase
in DCC Energy’s operating costs in
November and December 2010 as it made
significant efforts to service its customers
during this extremely cold period.
DCC SerCom, DCC’s second largest
division, delivered a strong performance
with constant currency operating profit
9.9% ahead of the prior year, reflecting
another excellent result in SerCom
Distribution (where operating profit, on
a constant currency basis, was 16.6%
ahead of the prior year). DCC Healthcare,
DCC Environmental and DCC Food &
Beverage each reported increases in
operating profit.
The benefits of cost efficiencies achieved
in the prior year were maintained, with
operating costs 1% higher than the prior
year (on a constant currency basis and
adjusted for the impact of acquisitions and
disposals) notwithstanding the organic
increase in revenues in many of
Although DCC’s operating margin
(excluding exceptionals) was 2.6% (2.9%
in 2010), 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. Excluding DCC
Energy, the operating margin (excluding
exceptionals) for the Group’s other
divisions was 3.6% (3.5% in 2010).
Table 2: Revenue - Constant Currency
H1
€’m
2011
H2
€’m
FY
€’m
H1
€’m
2010
H2
€’m
FY
€’m
H1
%
Change
H2
%
FY
%
DCC Energy
2,722.4
3,214.0
5,936.4
1,788.2
2,631.9
4,420.1
+52.2%
+22.1%
+34.3%
DCC SerCom
782.1
1,044.5
1,826.6
665.1
953.4
1,618.5
+17.6%
+9.6%
+12.9%
DCC Healthcare
161.9
152.5
314.4
163.8
170.2
334.0
-1.1%
-10.4%
-5.9%
DCC Environmental
51.7
51.3
103.0
36.0
41.4
77.4
+43.6%
+24.0%
+33.1%
DCC Food & Beverage
137.2
112.4
249.6
155.7
119.3
275.0
-11.9%
-5.8%
-9.2%
Total
Weighting %
3,855.3
45.7%
4,574.7
54.3%
8,430.0
100.0%
2,808.8
41.8%
3,916.2
58.2%
6,725.0
100.0%
+37.3%
+16.8%
+25.4%
40
DCC ANNUAL REPORT AND ACCOUNTS 2011
Profit before tax of €189.6 million increased
by 10.9% on a constant currency basis
(15.0% on a reported basis)
Excellent Second Half Performance
Overall, DCC’s results in the significantly
more important second half of its financial
year were excellent. An analysis of Group
revenue and operating profit, on a constant
currency basis, for the first half and the
second half and the full year to 31 March
2011 is set out in Tables 2 and 3.
Profit Before Net Exceptional Items,
Amortisation of Intangible Assets
and Tax
Profit before net exceptional items,
amortisation of intangible assets and tax
of €214.8 million increased by 14.3% on
a constant currency basis (an increase of
18.0% on a reported basis).
A detailed review of the operating
performance of each of DCC’s divisions is
set out on pages 18 to 37.
Finance Costs (net)
Net finance costs increased to €14.6
million (2010: €10.9 million) primarily due
to the additional interest costs associated
with the €284 million of private placement
debt which the Group raised in March
2010 to fund future acquisitions and
development. The Group’s net debt
averaged €167 million, compared to €155
million during the prior year. Interest was
covered 15.8 times by Group operating
profit before amortisation of intangible
assets (17.7 times in 2010).
Table 3: Operating Profit - Constant Currency
Net Exceptional Charge and
Amortisation of Intangible Assets
The Group incurred a net exceptional charge
before tax of €14.3 million as follows:
€’m
0.8
Gain on disposal of subsidiaries
Cumulative foreign exchange
translation losses relating to
subsidiaries disposed of
(3.1)
Restructuring of pension arrangements 5.0
Write down of property, plant
and equipment
Acquisition costs
Reorganisation costs and other
(6.1)
(3.6)
(7.3)
Total
(14.3)
During the first half DCC Healthcare
disposed of its Mobility & Rehabilitation
businesses and DCC Food & Beverage
disposed of one of its smaller Irish
businesses. The net cash impact of these
transactions (€28.4 million) resulted in a
pre-tax gain on their book carrying values,
including goodwill, of €0.8 million. These
businesses accounted for less than 1% of
DCC’s operating profit for the year ended
31 March 2010.
IAS 21 requires that any foreign exchange
translation differences which have been
written off directly to reserves in prior years
be recycled through the Income Statement
on the disposal of the related asset. The
amount of such differences relating to the
above disposals, which did not have any
impact on the Group’s total equity, was
€3.1 million.
Restructuring of certain of the Group’s
pension arrangements during the year
gave rise to a net reduction in pension
liabilities and an exceptional gain of €5.0
million.
H1
€’m
2011
H2
€’m
FY
€’m
H1
€’m
2010
H2
€’m
FY
€’m
H1
%
Change
H2
%
FY
%
DCC Energy
29.0
103.5
132.5
25.2
87.9
113.1
+14.8%
+17.9%
+17.2%
DCC SerCom
13.9
31.0
44.9
13.7
27.1
40.8
+1.3%
+14.2%
+9.9%
DCC Healthcare
10.9
11.8
22.7
DCC Environmental
DCC Food & Beverage
6.7
5.4
4.4
6.1
11.1
11.5
8.7
4.7
4.3
12.4
21.1
+25.8%
-5.6 %
+7.2%
4.6
4.2
9.3
+43.9%
-4.9%
+19.7%
8.5
+26.0%
+45.2%
+35.6%
Total
Weighting %
65.9
29.6%
156.8
70.4%
222.7
100.0%
56.6
29.4%
136.2
70.6%
192.8
100.0%
+16.5%
+15.1%
+15.5%
DCC ANNUAL REPORT AND ACCOUNTS 2011
41
Financial Review (continued)
Return on Capital Employed
The creation of shareholder value through
the delivery of consistent, long-term
returns well in excess of the cost of capital
is one of DCC’s core strengths. DCC
again achieved excellent returns on total
capital employed (as detailed in Table
4), generating a return of 19.9% on total
capital employed (18.4% in 2010).
DCC’s return on total capital employed
has remained consistently high through
a combination of good organic growth,
well executed acquisitions and excellent
integration synergies.
Table 4: Return on total capital employed
2011
ROCE
2010
ROCE
26.9% 26.5%
16.2% 16.1%
16.3% 14.6%
9.7%
10.0%
14.9% 10.2%
19.9% 18.4%
DCC Energy
DCC SerCom
DCC Healthcare*
DCC Environmental
DCC Food & Beverage
Group
* Continuing activities
CAGR %
13.1%
9.5%
10.4%
The Group made a provision of €6.1 million
against the carrying value of one of its
buildings.
IFRS 3 (revised) requires that the
professional (legal and financial due
diligence) and tax (such as stamp duty)
costs relating to the evaluation and
completion of an acquisition are expensed
in the Income Statement whereas
previously they were capitalised as part of
the acquisition cost. During the year these
costs amounted to €3.6 million.
Adjusted Earnings Per Share
Adjusted earnings per share of 203.15
cent increased by 10.5% on a constant
currency basis (an increase of 14.1% on a
reported basis). The increase was 11.5%
in the first half and 10.2% in the seasonally
more important second half.
The compound annual growth rate in
DCC’s adjusted earnings per share over
the last 15, 10 and 5 years is as follows;
The balance of the net exceptional charge
relates primarily to restructuring costs
arising from the integration of recently
acquired businesses.
15 years
10 years
5 years
(i.e. since 1996)
(i.e. since 2001)
(i.e. since 2006)
Dividend
The total dividend for the year of 74.18
cent per share represents an increase of
10.0% over the previous year. The dividend
is covered 2.7 times (2.6 times in 2010) by
adjusted earnings per share. Over the last
17 years (i.e. since DCC’s flotation on the
Irish and London stock exchanges), DCC’s
dividend has grown at a compound annual
rate of 15.6%.
The charge for the amortisation of
intangible assets increased to €10.9 million
(2010: €6.2 million).
Profit Before Tax
Profit before tax of €189.6 million
increased by 10.9% on a constant
currency basis (15.0% on a reported
basis).
Taxation
The effective tax rate for the Group
increased to 21% compared to 19% in
the previous year, primarily due to the
increased proportion of profits arising in
Britain and continental Europe.
42
DCC ANNUAL REPORT AND ACCOUNTS 2011
DCC again achieved excellent
returns on capital employed,
generating a return of 19.9%
on total capital employed
(18.4% in 2010)
Table 5: Summary of cash flows
Year ended 31 March
Operating profit
(Increase)/decrease in working capital:
2011
€’m
2011
€’m
229.6
2010
€’m
2010
€’m
192.8
DCC Energy
DCC SerCom
DCC Healthcare
DCC Environmental
DCC Food & Beverage
Depreciation and other
Operating cash flow
Capital expenditure (net)
Interest and tax paid
Free cash flow
Acquisitions
Disposals
Dividends
Exceptional items
Share issues
Net inflow
Opening net debt
Translation
Closing net debt
(19.8)
8.9
2.1
0.6
(2.6)
45.9
8.7
6.1
1.0
10.1
71.8
33.2
297.8
(35.7)
(33.0)
229.1
(133.6)
0.8
(52.5)
(12.8)
7.7
38.7
(90.7)
(1.5)
(53.5)
(10.8)
50.8
269.6
(77.2)
(68.8)
123.6
(78.3)
28.4
(58.3)
(8.9)
3.8
10.3
(53.5)
2.0
(45.2)
DCC ANNUAL REPORT AND ACCOUNTS 2011
43
Cash Flow
In recent years the Group has achieved a
significant reduction in net working capital
days which reduced from 16.4 days at
31 March 2008 to 4.6 days at 31 March
2010. These gains were largely retained
at 31 March 2011 when net working
capital days were 4.9 days. The cash flow
generated by the Group for the year ended
31 March 2011 is summarised in Table 5.
Operating cash flow in 2011 was €269.6
million compared to €297.8 million in 2010
which benefited from a net reduction in
working capital in that year. After higher
than normal capital expenditure and tax
payments, free cash flow was €123.6 million
compared to €229.1 million in the prior year.
The cash impact of acquisitions in the year
was €78.3 million. Net capital expenditure
in the year of €77.2 million is significantly
higher than the prior year amount of €35.7
million and compares to a depreciation
charge of €52.9 million. DCC Energy’s
net capital expenditure of €40.8 million is
higher than its depreciation charge (€31.2
million) due to increased investment to
support the ongoing development of new
business (predominantly the upgrading of
the distribution fleet). In November 2010,
DCC SerCom’s UK Retail distribution
business purchased a 250,000 square feet
warehouse near Wellingborough, north of
London. The total cost of the warehouse
including fit-out was €17 million. This
investment allows Gem Distribution to
market its third party logistics services
to software and DVD publishers from a
modern, customised facility within easy
reach of the south east of England.
The exceptional cash outflow of €8.9
million primarily relates to restructuring
costs.
Financial Review (continued)
DCC’s financial
position remains very
strong, well funded
and highly liquid.
Balance Sheet and Group Financing
DCC’s financial position remains very
strong, well funded and highly liquid. At
31 March 2011 the Group had net debt
of €45.2 million (2010: €53.5 million)
and total equity of €931.9 million (2010:
€836.9 million). This equates to gearing
of 4.9% (2010: 6.4%) and a net debt
to EBITDA ratio of 0.2 times (2010: 0.2
times). DCC has significant cash resources
and relatively long term debt maturities.
Substantially all of the Group’s debt has
been raised in the US private placement
market with an average credit margin of
1.23% over floating Euribor/Libor and
an average maturity of 6.0 years from 31
March 2011.
The Group’s strong funding and liquidity
position at 31 March 2011 is summarised
in Table 6.
Substantially all of the Group’s debt has
been raised in the US private placement
market.
The composition of net debt at 31 March
2011 and 2010 is analysed in Table 7.
Further analysis of DCC’s cash, debt and
financial instrument balances at 31 March
2011 is set out in Notes 27 to 30 in the
financial statements.
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 46 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.
Table 6: Funding and liquidity position
Table 7: Analysis of net debt
Cash and short term bank deposits
Overdrafts
Cash and cash equivalents
Bank debt repayable within 1 year
US Private Placement debt repayable*:
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
Y/e 31/3/2022
Other
Debt
Net debt
* Inclusive of related swap derivatives
2011
€’m
700.3
(34.2)
666.1
(0.5)
(5.3)
(62.9)
(216.2)
(14.4)
(112.5)
(52.9)
(205.2)
(43.1)
1.7
(711.3)
(45.2)
44
DCC ANNUAL REPORT AND ACCOUNTS 2011
Non-current assets:
Derivative financial instruments
Current assets:
Derivative financial instruments
Cash and short term deposits
Non-current liabilities:
Borrowings
Derivative financial instruments
Unsecured Notes due 2013 to 2022
Current liabilities:
Borrowings
Derivative financial instruments
Unsecured Notes due 2011
Net debt
2011
€’m
2010
€’m
84.4
101.9
3.5
700.3
703.8
1.4
714.9
716.3
(0.7)
(30.1)
(761.5)
(792.3)
(35.3)
(0.5)
(5.3)
(41.1)
(45.2)
(2.5)
(19.3)
(791.2)
(813.0)
(58.2)
(0.5)
-
(58.7)
(53.5)
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.
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 three
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.
A significant proportion of the Group’s
profits and net assets are denominated in
sterling. The sterling:euro exchange rate
strengthened marginally from 0.8894 at
31 March 2010 to 0.8837 at 31 March
2011. The average rate at which the
Group translates its UK operating profits
strengthened by 4.0% from 0.8873 in
2010 to 0.8522 in 2011.
Approximately 77% of the Group’s
operating profit for the year ended 31
March 2011 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 profits of foreign currency
subsidiaries on the basis and to the
extent that they are not intended to be
repatriated. The 4.0% strengthening in the
average translation rate of sterling, referred
to above, positively impacted the Group’s
reported operating profit by €6.9 million in
the year ended 31 March 2011.
DCC has investments in sterling operations
which are highly cash generative and
cash generated from these operations
is 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 marginal
strengthening in the value of sterling
against the euro during the year ended 31
March 2011, referred to above, gave rise
to a translation gain of €4.6 million on the
translation of DCC’s sterling denominated
net asset position at 31 March 2011 as set
out in the Group Statement of Changes in
Equity in the financial statements.
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 which 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.
DCC ANNUAL REPORT AND ACCOUNTS 2011
45
Sustainability Report
Following the introduction by the Chief Executive on
page 12, details of our sustainability approach and
activities are set out in this report. DCC is committed
to evolving our sustainability reporting in line with
best practice and communicating our performance
in this area.
Report Profile, Boundary and Scope
This is DCC’s third Sustainability Report
and follows the same reporting cycle and
fiscal year as the Annual Report. The
scope of this report includes subsidiaries
which contribute in excess of 99% Group
profitability1.
The Corporate Sustainability Working
Group (CSWG), which comprises
senior Group, divisional and subsidiary
management, was formed in 2009
and reports to the Chief Executive. In
determining report content the CSWG
consulted with senior management to
determine aspects that were material at
a divisional level. These formed the basis
for a Group level materiality matrix which
identified four material aspects - direct
economic value added, climate change,
health & safety and business ethics - which
are reported on below.
Governance, Structures and Processes
The role of the CSWG is to develop
appropriate corporate sustainability
policies, processes and performance
indicators across the DCC Group and to
support the integration of sustainability
into our business strategies to deliver
competitive advantage.
Presentations to the DCC plc Board and
to divisional management have been
completed and sustainability workshops
involving all subsidiary management teams
will be held in the first half of the current
financial year. External experts have been
invited to participate to provide industry
examples of best practice.
Stakeholder Engagement
In general, feedback from investors has
been limited, though positive. During
2011 we will, at a Group level, increase
our engagement with investors and
other stakeholders to identify any further
informational requirements. At subsidiary
level, management will formally identify and
engage with key stakeholders including
customers, suppliers, employees and the
local community.
Our People
DCC employs 8,037 people across the
Group, approximately 90% of whom are in
permanent employment.
Employee numbers
by division
Employee numbers
by geography
3,524
DCC Energy
1,668
DCC SerCom
1,113
DCC Healthcare
DCC Environmental
761
DCC Food & Beverage 930
41
DCC Corporate
UK
5,461
1,725
Ireland
Continental Europe 715
136
Other
Graduate Recruitment Programme
As a diverse and expanding business, it
is critical to DCC’s long term sustainability
to develop senior executives with multi-
sector, multi-functional and multi-country
skill sets who can grow and develop into
international business leaders in the future.
46
DCC ANNUAL REPORT AND ACCOUNTS 2011
One action in support of this during the
year was the implementation of a new
graduate recruitment programme, the
DCC Future Leaders Programme. This was
launched in October 2010 in Britain and
Ireland to recruit a select cadre of young,
high quality and mobile graduates. There
was a strong response to the recruitment
programme with over 1,300 applicants.
Offers were made to the top performers
from the programme and DCC will have
10 graduates taking up an initial two year
rotation programme in September 2011.
Material Aspects
As noted earlier, the CSWG in conjunction
with senior divisional management,
determined four sustainability aspects
to be material to the DCC Group. These
CO2e emissions (tonnes) by division
aspects are common to all subsidiaries
although additional aspects, for example
sourcing of raw materials, may be
identified as material to a particular
business and addressed accordingly.
2010
2011
2010 %
55,244 55
16,546 17
13,409 13
9,772 10
5
5,133
Total
6,313
1. Direct Economic Value Added
To be a sustainable company, we must
2011*4 %
create value for our shareholders and
62,426 54
DCC Energy
DCC Environmental
22,502 19
other stakeholders. In the year ended
DCC Food & Beverage 13,724 12
March 2011, €557 million of added value
11,340 10
DCC Healthcare
5
DCC SerCom
was created, taking account of the cost
of inputs from suppliers of €8,124 million
and revenue of €8,681 million. This
value added is distributed in the form of
remuneration to employees of €327 million,
corporate taxes of €42 million, interest
to lenders of €15 million and dividends2
to shareholders, including many Group
employees, of €62 million. €111 million
is retained in the business to fund further
growth.
116,306
100,104
CO2e emissions (tonnes) by source
KPI - LTIFR
Number of lost time injuries6 per 200,000 hours worked
2011
2010
KPI - LTISR
Number of calendar days lost per 200,000 hours worked
2011*
2010
2011*
2010
2.5
2.8
48
42
Scope 1
Company transport
On site fuel use
Scope 2
Electricity
2011* %
82,968 71
9,070
8
2010 %
71,296 71
8,813
9
24,268 21
19,995 20
Total
116,306
100,104
Revenue
€8,681m
(2010: €6,725m)
DCC plc
Goods and
Services
€8,124m
(2010: €6,241m)
Value Added
€557m
(2010: €484m)
Corporate
Taxes
€42m
(2010: €33m)
Employees
€327m
(2010: €291m)
Lenders
€15m
(2010: €11m)
Retained
€111m
(2010: €93m)
Dividends to
Shareholders
€62m
(2010: €56m)
Following a review of our approach to
corporate giving, DCC has entered into
a three year partnership with Social
Entrepreneurs Ireland (SEI), whereby we
will contribute a total of €360,000 over
the period
Corporate Giving
Following a review of our approach to
corporate giving, DCC has entered into
a three year partnership with Social
Entrepreneurs Ireland (SEI), whereby we
will contribute a total of €360,000 over
the period. Established in 2004, SEI is a
privately funded, not-for-profit organisation
that supports social entrepreneurs in
growing their ideas from concept to reality.
“ In order for social entrepreneurs to turn
their vision into reality and tackle some of
our entrenched social and environmental
problems they need high quality support
and mentoring. In partnering with
Social Entrepreneurs Ireland, DCC have
shown real leadership in stepping up to
the plate, providing both financial and
mentor support to our network of social
entrepreneurs and in doing so making a
tangible and hugely positive difference to
communities throughout Ireland.”
Sean Coughlan, Chief Executive, Social
Entrepreneurs Ireland.
2. Climate Change
The reality and threat of climate change
is clear. The response from policy makers
and consumers is growing year by year
and society is re-evaluating consumption
patterns and use of natural resources. This
in turn requires the business community to
respond positively to new commercial risks
and opportunities.
The DCC Carbon Management Plan,
established in 2008, sets out objectives for
measuring, reducing and reporting carbon
emissions. The plan is currently being
revised to include medium and long term
carbon reduction targets.
In the UK the CRC Energy Efficiency
Scheme has been significantly amended
following the Comprehensive Spending
Review initiated by the new government in
October 2010. Originally designed to allow
revenue to be recycled to the participants,
the Scheme is now effectively a carbon
levy on fuel and electricity consumption,
payable annually from July 2012 onwards.
Some uncertainty still surrounds the final
details of the Scheme but DCC’s UK
subsidiaries have robust reporting systems
in place to provide the required energy
consumption data to the Environment
Agency in July 2011.
DCC responds annually to the investor
led Carbon Disclosure Project, providing
detailed emissions data and explanations
of our strategic approach and the
management of risks and opportunities
from climate change.
Details of our energy use and carbon
emissions are presented below. The DCC
Energy and Carbon Reporting Guidelines,
based on the Greenhouse Gas Protocol,
set out in detail the sources included in
the DCC Group carbon footprint3. Briefly
these are:
• subsidiaries of DCC plc1
• the energy sources where DCC is the
counter party to the contract to supply
• direct usage of electricity and fuels to
heat, light and operate buildings
• fuels used to operate company owned
vehicles, plant and machinery
• electricity and gas purchased and
recharged to subtenants
• any new sites from the point at which
they are operational
• any new acquisitions from the point at
which they are acquired
DCC ANNUAL REPORT AND ACCOUNTS 2011
47
Sustainability Report (continued)
Employee numbers
Employee numbers
CO2e emissions (tonnes) by division
by division
by geography
2011
2010
DCC Energy
DCC SerCom
DCC Healthcare
DCC Environmental
3,524
1,668
1,113
761
DCC Food & Beverage 930
DCC Corporate
41
UK
Ireland
5,466
1,725
Continental Europe 715
136
Other
2011*4 %
62,426 54
DCC Energy
DCC Environmental
22,502 19
DCC Food & Beverage 13,724 12
11,340 10
DCC Healthcare
5
DCC SerCom
6,313
2010 %
55,244 55
16,546 17
13,409 13
9,772 10
5
5,133
Total
116,306
100,104
Employee numbers
Employee numbers
CO2e emissions (tonnes) by division
CO2e emissions (tonnes) by source
by division
by geography
2011
2010
2011
2010
DCC Energy
DCC SerCom
DCC Healthcare
DCC Environmental
3,524
1,668
1,113
761
DCC Food & Beverage 930
DCC Corporate
41
UK
Ireland
Other
Continental Europe 715
5,461
1,725
136
DCC Energy
DCC Environmental
DCC Healthcare
DCC SerCom
2011*4 %
62,426 54
22,502 19
11,340 10
6,313
5
2010 %
55,244 55
16,546 17
13,409 13
9,772 10
5
5,133
DCC Food & Beverage 13,724 12
Total
116,306
100,104
Scope 1
Company transport
On site fuel use
Scope 2
Electricity
2011* %
82,968 71
8
9,070
2010 %
71,296 71
9
8,813
24,268 21
19,995 20
Total
116,306
100,104
All remedial actions identified in the notices
have been completed to the satisfaction of
the regulator.
KPI - LTIFR
Number of lost time injuries6 per 200,000 hours worked
KPI - LTISR
Number of calendar days lost per 200,000 hours worked
2.5
2.8
48
42
2011
Transport and heating fuels make up
CO2e emissions (tonnes) by source
the direct sources of primary energy
purchased within the Group. In total they
represented 1,454,813 Gigajoules (GJ)
of energy. Indirect energy consumption
amounted to 164,570 GJ from electricity
purchased. While a number of subsidiaries
purchase some of their electricity from
renewable sources this has not been
recorded during the year. Systems to
record renewable energy purchases have
8,813
been introduced and will be reported in
24,268 21
next year’s Sustainability Report.
Scope 1
Company transport
On site fuel use
Scope 2
Electricity
2011* %
82,968 71
8
2010
9,070
2010 %
71,296 71
9
19,995 20
Total
116,306
100,104
Total carbon emissions increased by
16% over the prior year, primarily driven
by acquisitions in the Energy division
and increased processing capacity in the
environmental and healthcare businesses.
2011*
2010
Outside of emissions generated by our
own operations, as reported above, the
use of fuel products sold within the Energy
division represent the most significant
2011*
source of indirect emissions beyond our
2010
immediate control. The use of oil, LPG
and natural gas sold by DCC Energy
subsidiaries account for approximately
19 million tonnes of CO2e emissions.
Opportunities to reduce these emissions
over time include the development of lower
carbon fuels and the provision of energy
efficiency advice to customers.
KPI - LTIFR
Number of lost time injuries6 per 200,000 hours worked
KPI - LTISR
Number of calendar days lost per 200,000 hours worked
2011*
2010
2011*
2010
During the year GB Oils was fined
Stg£5,000 for polluting a tributary of
the River Clyst in Devon in July 2009,
contrary to Section 83(1) of the UK
Water Resources Act 1991. The Court
recognised the work undertaken by the
company to remediate the environmental
impact of the spill. Approximately
20,000 litres of diesel was lost when an
underground pipeline failed at a recently
acquired depot. Underground pipework at
our oil depots is pressure tested annually
and, where possible, replaced with over
ground pipework. There were no other
significant releases of oil or chemicals
during the period.
2.8
2.5
42
48
In June 2010 the Scottish Government
released its Zero Waste plan which
establishes a goal of recycling 70% of
Scotland’s waste by 2025. Supporting
this agenda, the William Tracey Group
has launched a food and organic waste
collection service for customers. A key part
of the service will be an anaerobic digestion
treatment plant constructed by Scottish
and Southern Energy (SEE) at Traceys
former landfill site in Barkip, North Ayrshire
where landfill gas is currently being used to
generate renewable energy. The new SSE
facility will be capable of processing around
75,000 tonnes of organic waste annually
and producing 2.5 MW of electricity
which will contribute towards Scotland’s
renewable energy targets.
Environmental compliance and spills
During the year 47 routine site inspections
of our licenced facilities were completed by
environmental regulators. Overall our level
of compliance with permitting requirements
was high. During one inspection, two non
compliances, principally due to extreme
weather conditions causing operational
difficulties, were recorded and resulted in
the issue of two enforcement notices.
48
DCC ANNUAL REPORT AND ACCOUNTS 2011
Health and safety is a key priority
for all divisional and subsidiary
managing directors
Employee numbers
Employee numbers
CO2e emissions (tonnes) by division
CO2e emissions (tonnes) by source
by division
by geography
2011
2010
2011
2010
DCC Energy
DCC SerCom
DCC Healthcare
DCC Environmental
3,524
1,668
1,113
761
DCC Food & Beverage 930
DCC Corporate
41
UK
Ireland
Other
Continental Europe 715
5,461
1,725
136
DCC Energy
DCC Environmental
DCC Healthcare
DCC SerCom
2011*4 %
62,426 54
22,502 19
11,340 10
6,313
5
2010 %
55,244 55
16,546 17
13,409 13
9,772 10
5,133
5
DCC Food & Beverage 13,724 12
Total
116,306
100,104
Scope 1
Company transport
On site fuel use
2011* %
82,968 71
9,070
8
2010 %
71,296 71
8,813
9
Scope 2
Electricity
24,268 21
19,995 20
Total
116,306
100,104
KPI - LTIFR
Number of lost time injuries6 per 200,000 hours worked
2011*
2010
2.5
2.8
KPI - LTISR
Number of calendar days lost per 200,000 hours worked
2011*
2010
48
42
3. Health & Safety
Health and safety is a key priority for
all divisional and subsidiary managing
directors, in particular in the Energy and
Environmental divisions where the potential
impacts are significant given the nature of
the businesses and the products handled.
Health and safety resources in GB Oils
have been strengthened following the
acquisition of two oil terminals in Scotland
during the year. A particular focus on
process safety is ongoing to minimise the
likelihood of a major incident and to meet
increasing regulatory demands.
The International Safety Rating System
(ISRS) audit tool, developed by DNV, a
leading risk management company, is
being phased in across our energy and
environmental subsidiaries. The audit
is demanding, requiring a high level of
verification and covering fifteen health and
safety management processes including
leadership, learning from events and
management review in addition to risk and
asset management. The ISRS tool allows
us to benchmark our performance, identify
areas for improvement and measure
progress objectively.
Wastecycle’s health and safety
management system was certified to the
international OHSAS180017 standard
in February 2011 – an independent
recognition of the efforts by all employees
to adopt a consistent and proactive
approach to safety management.
In addition to OHSAS18001 certifications
in the Environmental subsidiaries, SerCom
Solutions health and safety management
systems in Ireland and Poland are also
certified to the OHSAS18001 standard.
Individual subsidiaries use a range of
indicators to measure health and safety
performance. Lost time injury rates (lagging
indicators) are recorded at Group level
for the operations within the scope of
this report and this year the frequency of
accidents that resulted in lost time fell from
2.8 per 200,000 hours worked to 2.55.
At the same time the lost time severity
rate increased from 42 to 48 days lost
per 200,000 hours worked reflecting, on
average, more days lost per accident.
This increase was driven by a number of
accidents that resulted in over 100 days
lost. No fatalities were recorded in the
year ended 31 March 2011 (tragically
one fatality was recorded in the prior
year as reported previously). Absentee
and occupational diseases rates are not
compiled at Group level.
DCC ANNUAL REPORT AND ACCOUNTS 2011
49
Sustainability Report (continued)
Report Application Level
C
C+
B
B+
A
A+
G3 Profile
Disclosures
G3 Management
Approach
Disclosures
G3 Performance
Indicators &
Sector Supplement
Performance
Indicators
t
u
p
t
u
O
t
u
p
t
u
O
t
u
p
t
u
O
Report on:
1.1
2.1 - 2.10
3.1 - 3.8, 3.10 - 3.12
4.1 - 4.4, 4.14 - 4.15
Not required
Report on all criteria listed
for Level C plus:
1.2
3.9, 3.13
4.5 - 4.13, 4.16 - 4.17
Management Approach
Disclosures for each
Indicator Category
Same a requirement for
Level B
Management Approach
Disclosures for each
Indicator Category
d
e
r
u
s
s
A
y
l
l
a
n
r
e
t
x
E
t
r
o
p
e
R
d
e
r
u
s
s
A
y
l
l
a
n
r
e
t
x
E
t
r
o
p
e
R
d
e
r
u
s
s
A
y
l
l
a
n
r
e
t
x
E
t
r
o
p
e
R
Report on a minimum of
10 Performance
Indicators, including at
least one from each of:
Economic, Social and
Environmental.
Report on a minimum of
20 Performance
Indicators, least one from
each of: Economic,
Environmental, Human
Rights, Labour Society,
Product Responsibility.
Report on each core G3
and Sector Supplement*
Indicator with due regard to
the Materiality Principle by
either: a) reporting on the
indicator or b) explaining
the reason for its omission
l
i
s
e
r
u
s
o
c
s
D
d
r
a
d
n
a
t
S
* Sector supplement in final version
Reporting
This report meets the requirements of the
Global Reporting Initiative level C+ standard,
as identified in the content table below.
Feedback on this Sustainability Report is
welcome and should be addressed to John
Barcroft, Head of Group Environment, Health
& Safety or David Byrne, Senior Independent
Director.
4. Business Ethics
In last year’s Sustainability Report we
noted our decision to provide more
practical support to our employees in
the area of business ethics by formally
articulating a set of guidelines which
would enshrine principles for the everyday
conduct of business. As a diversified
Group, the freedom to manage and make
decisions locally in our business, which
has been critical to DCC’s success, has
been underpinned by a common set
of values of ethical behaviour, trust and
accountability. These values have now
been enshrined in a set of guidelines,
the DCC Business Conduct Guidelines,
which set out our common commitment
to the highest standards of behaviour
in the everyday carrying out of our
responsibilities.
Given the breadth of DCC’s operations
and the different legal and regulatory
environments in which all DCC’s
businesses operate, the guidelines do not
set out to address every situation. They
are complementary to the employment
practices and policies already set out for
employees by each of DCC’s operating
subsidiaries. As well as outlining basic legal
and ethical principles, they offer guidance
on behaviour, framed with useful examples
in respect of the complex issues that can
arise in the business environment in which
we operate.
The guidelines have been distributed to
employees in all the Group’s subsidiaries.
They have been translated into the local
languages as required for DCC’s European
businesses and also into Chinese for the
employees based there.
Content table for GRI Level C
GRI Section No.
1.1
2.1 – 2.10
3.1 – 3.8
3.10 – 3.12
4.1 – 4.4
4.14 – 4.15
EC1
EN3
EN4
EN16
EN17
EN23
EN28
LA1
LA7
SO6
Standard Disclosure
Statement from Chief Executive
Organisational Profile
Profile, Boundary and Scope
Restatement
Governance
Stakeholder Engagement
Direct Economic Value
Direct Energy Consumption
Indirect Energy Consumption
Greenhouse gases
Other indirect sources
Spillage
Non-Compliance
Workforce
Rates of injury
Political Contributions
50
DCC ANNUAL REPORT AND ACCOUNTS 2011
Report Page
12
Inside Front Cover
46
46
56
46
46
48
48
48
48
48
48
46
49
53
1 Virtus, a US healthcare subsidiary with 131 employees,
in which DCC is a 51% shareholder, is not included
within the scope of this report. It will be included in next
year’s report.
2 Paid and proposed for the year ended 31 March 2011.
3 Carbon dioxide makes up over 98% of the Groups’
greenhouse gas emissions. Other greenhouse gas
emissions include fugitive refrigerant gases from our
chilled foods logistics business and methane emissions
from a small capped landfill. Carbon dioxide emissions
arising from our composting operations are considered
to be part of the natural cycle and are not included in
the reported figures.
4 Data marked with the symbol * is included in the scope
of assurance provided by KPMG LLP.
5 Company employees only, contractors are not included
in lost time injury rates.
6 A Lost Time Injury is defined as any injury that results
in at least one day off work following the day of the
accident.
7 Occupational Health and Safety Assessment Series
standard.
8 International Standard on Assurance Engagements
3000: Assurance engagements other than Audits
or reviews of Historical information, issued by the
International Auditing and Assurance Standards Board.
Independent Assurance Report to DCC plc
KPMG LLP was engaged by DCC plc (‘DCC’) to provide limited assurance
over selected aspects of the DCC’s Sustainability Report for the year
ended 31 March 2011 (‘the Report’).
This report is solely made to DCC in accordance with the terms of our
engagement. Our work has been undertaken so that we might state
to DCC those matters we have been engaged to state within this report
and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than DCC for our
work, this report, or for the conclusions we have reached.
What was included in the scope of our assurance engagement?
Assurance scope
Reliability of performance data
for year ending 31 March 2011
marked with the symbol *
on pages 48 and 49 of the Report.
Level of assurance Reporting and assurance criteria
Limited
assurance
Relevant internal reporting guidelines
for the selected environmental and
safety performance data as set out
on pages 47 and 50 of this report
DCC self-declared Global
Reporting Initiative (GRI)
application level on page 50
of the Report.
Limited
assurance
G3 Sustainability Reporting
Guidelines and application level
requirements
The extent of evidence-gathering procedures
for a limited assurance engagement is
less than for a reasonable assurance
engagement, and therefore a lower level of
assurance is provided.
integrity, objectivity, professional competence
and due care, confidentiality and professional
behaviour. KPMG LLP has systems and
processes in place to monitor compliance
with the Code and to prevent conflicts
regarding independence.
Which assurance standard
did we use?
We conducted our work in accordance
with ISAE 30008, with a team of specialists
in auditing environmental information and
with experience in similar engagements.
This standard requires that we comply with
applicable ethical requirements, including
independence requirements, and plan and
perform the engagement to obtain limited
assurance about whether the data is free
from material misstatement.
Our conclusions are based on the
appropriate application of the criteria outlined
in the table above.
We conducted our engagement in
compliance with the requirements of
the IFAC Code of Ethics for Professional
Accountants, which requires, among other
requirements, that the members of the
assurance team (practitioners) as well as
the assurance firm (assurance provider)
be independent of the assurance client,
including not being involved in writing the
Report. The Code also includes detailed
requirements for practitioners regarding
What did we do to reach our
conclusions?
We planned and performed our work to
obtain all the evidence, information and
explanations that we considered necessary
in relation to the above scope. Our work was
limited to the following procedures using a
range of evidence-gathering activities which
are further explained below:
• Conducting interviews with management
and other personnel at DCC, to
understand the systems and methods in
place during the year ended 31 March
2011;
• An evaluation of the design, existence and
operation of the systems and methods
used to collect, process and aggregate
the selected performance data as well
as testing the reliability of underlying data
across a risk-based selection of nine sites,
including at least one site from each of the
business divisions, in the UK and Republic
of Ireland, covering 75% of the data for
each data set;
• Checking the content of the Report
to ensure consistency with the GRI
application level requirements of C+;
• A review of drafts of the Report to
ensure there are no disclosures that are
misrepresented or inconsistent with our
findings.
What are our conclusions?
The following conclusions should be read
in conjunction with the work performed
and scope of our assurance engagement
described above.
Nothing has come to our attention to
suggest that the performance data marked
with the symbol *, on pages 48 and 49,
are not fairly stated, in all material respects
in accordance with the relevant internal
reporting guidelines for the selected
environmental and safety performance data.
Nothing has come to our attention to
suggest that DCC’s self-declaration of GRI
application level C+ on page 50 is not fairly
stated, in all material respects in accordance
with the G3 Sustainability Reporting
Guidelines.
Responsibilities
The Directors of DCC plc are responsible
for preparing the Report and the information
and statements within it. They are
responsible for identification of stakeholders
and material issues, for defining objectives
with respect to sustainability performance,
and for establishing and maintaining
appropriate performance management and
internal control systems from which reported
information is derived.
Our responsibility is to express our
conclusions in relation to the above scope.
Lynton Richmond for and on behalf of
KPMG LLP
Chartered Accountants
London
9 May 2011
DCC ANNUAL REPORT AND ACCOUNTS 2011
51
Report of the Directors
The Directors of DCC plc present their
report and the audited financial statements
for the year ended 31 March 2011.
Results for the Year
Revenue for the year amounted to
€8,680.6 million (2010: €6,725.0 million).
The profit for the year attributable to
owners of the Parent amounted to €145.1
million (2010: €130.8 million). Adjusted
earnings per share amounted to 203.15
cent (2010: 177.98 cent). Further details
of the results for the year are set out in the
Group Income Statement on page 72.
Dividends
An interim dividend of 26.11 cent per
share, amounting to €21.74 million,
was paid on 3 December 2010. The
Directors recommend the payment of a
final dividend of 48.07 cent per share,
amounting to €40.05 million. Subject
to shareholders’ approval at the Annual
General Meeting on 15 July 2011, this
dividend will be paid on 21 July 2011 to
shareholders on the register on 20 May
2011. The total dividend for the year
ended 31 March 2011 amounts to 74.18
cent per share, a total of €61.79 million.
This represents an increase of 10% on the
prior year’s total dividend per share.
The profit attributable to owners of the
Parent, which has been transferred to
reserves, and the dividends paid during the
year ended 31 March 2011 are shown in
note 39 on page 120.
Share Capital and Treasury Shares
DCC’s authorised share capital is
152,368,568 ordinary shares of €0.25
each, of which 88,229,404 shares
(excluding treasury shares) and 4,911,407
treasury shares were in issue at 31 March
2011. All of these shares are of the same
class. With the exception of treasury
shares which have no voting rights and
no entitlement to dividends, they all carry
equal voting rights and rank for dividends.
The number of shares held as treasury
shares at the beginning of the year (and the
maximum number held during the year) was
5,224,345 (5.92% of the issued share capital)
with a nominal value of €1.306 million.
A total of 1,896,000 shares (2.15% of the
issued share capital) with a nominal value
of €0.474 million were re-issued during
the year at prices ranging from €10.25
to €18.05 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 as treasury shares at 31
March 2011 of 4,911,407 shares (5.57%
of the issued share capital) with a nominal
value of €1.228 million.
At the Annual General Meeting held on
16 July 2010, the Company was granted
authority to purchase up to 8,822,940
of its own shares (10% of the issued
share capital) with a nominal value of
€2.206 million. This authority has not
been exercised and will expire on 15 July
2011, 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 9,
the Chief Executive’s Review on pages 10
to 13, the Business Reviews on pages 18
to 37 and the Financial Review on pages 38
to 45 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 2011, 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 included in these
sections and in note 48 on page 131.
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 54 to 55.
52
DCC ANNUAL REPORT AND ACCOUNTS 2011
Directors
The names of the Directors and a short
biographical note on each Director appear
on pages 4 to 5.
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 notice
period of twelve months, none of the
other 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 62 to 68.
Corporate Governance
DCC has complied, throughout the year
ended 31 March 2011, with the provisions
set out in Section 1 of the Combined Code
on Corporate Governance (June 2008),
which applied to the Company for the year
ended 31 March 2011.
The UK Corporate Governance Code
(issued in May 2010) and the Irish
Corporate Governance Annex (issued in
December 2010) come into effect, as far
as DCC is concerned, for the financial year
commencing on 1 April 2011.
DCC is taking the necessary measures
to be in compliance with these revised
requirements for the year to 31 March
2012.
The Corporate Governance statement on
pages 56 to 61 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.
For the purposes of the European
Communities (Takeover Bids (Directive
2004/25/EC)) Regulations 2006, details
concerning the appointment and the re-
election of Directors and the amendment
of the Company’s Articles of Association
are set out in the Corporate Governance
statement.
FMR LLC on behalf of certain of its direct and indirect subsidiaries*
10,118,365
12.14%
No. of €0.25
Ordinary Shares
% of Issued
Share Capital
(excluding
treasury shares)
7,181,656
5,833,119
2,579,282
2,520,100
8.62%
7.00%
3.10%
3.02%
Auditors
A formal tender process is being
undertaken with regard to the audit of the
Group’s financial statements for the year
to 31 March 2012. The outcome of this
tender process is not yet known.
Michael Buckley, Tommy Breen
Directors
9 May 2011
Prudential plc group of companies*
Invesco Limited *
T. Rowe Price Associates Inc.*
Jim Flavin
*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 132 to 135.
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.
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 long term incentive plans
contain change of control provisions
which can allow for the acceleration of the
exercisability of share options or awards in
the event that a change of control occurs
with respect to the Company.
DCC ANNUAL REPORT AND ACCOUNTS 2011
53
Principal Risks and 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 56 to 61.
In light of the rapid expansion of the Group in recent years, a Group wide review of
risk management policies and structures has been initiated by the Chief Executive
to ensure they meet the highest standards while remaining appropriate to DCC's
business model.
Further detail on the principal risks facing the Group is set out below.
Strategic Risks and Uncertainties
Impact
Mitigation
Economic downturn
Climate change
Acquisitions
Demand for goods and services in the
Group’s businesses could be impacted
by a continuing economic downturn,
particularly in the UK, the Group’s key
market.
EU and national climate change policies
and legislation could reduce demand for
carbon based energy sources over the
longer term.
Growth through acquisition is an integral
part of DCC's strategy. A failure to identify
acquisition targets, execute acquisitions
or to properly integrate acquisitions could
lead to operational and financial difficulties.
The Group’s operations are diversified
across five different business sectors.
Whilst a continuing economic downturn
will affect all businesses the impact will
vary according to the sectors in which they
operate. The Group has an ongoing focus
on operating efficiencies and business
development.
In the Energy division, initiatives to address
this risk include the introduction and
marketing of lower carbon fuels, providing
advice to customers on energy efficiency
and the identification of commercial
opportunities in renewable energy.
Only acquisitions which add value and are
a strategic fit are considered. The Group
conducts a stringent internal evaluation
process and external due diligence prior
to completing an acquisition. Group and
subsidiary management have significant
expertise in and experience of integrating
acquisitions.
54
DCC ANNUAL REPORT AND ACCOUNTS 2011
Operational Risks and Uncertainties
Impact
Mitigation
Management resources
The Group's devolved management
structure has been fundamental to the
Group’s success. A failure to attract, retain
or develop high quality entrepreneurial
management throughout the Group will
impede its strategic objectives.
Key supplier
Environmental, health & safety incident
The loss of a key supplier could have a
serious operational and financial impact on
the Group’s business.
A serious environmental, health & safety
incident, particularly in the Energy or
Environmental divisions, could endanger
lives and seriously disrupt operations.
Loss of major site
Product quality
The loss or serious destruction of any one
of the Group’s key sites would present
significant financial and operational
difficulties for the Group.
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.
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 the Board, the Chief Executive
and divisional management. A graduate
recruitment programme is in place.
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.
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, both internal and external
monitoring, measurement and review of
the control measures ensures a continuous
improvement cycle is maintained.
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.
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 13 countries.
Failure to comply with statutory obligations
could result in regulatory action, legal
liability and damage to the Group’s
reputation.
Compliance with all statutory requirements
is managed by local management and
is subject to formal confirmation by the
Compliance Officer of DCC plc. A review
of compliance policies and processes is in
progress, as part of the Group wide review
of risk management as noted above.
The principal financial risks facing the Group are addressed in detail under ‘Financial Risk Management’ in the Financial Review on
pages 38 to 45.
DCC ANNUAL REPORT AND ACCOUNTS 2011
55
Corporate Governance
This statement describes how DCC has
applied the principles set out in Section
1 of the Combined Code on Corporate
Governance (‘the 2008 Combined Code’)
published in June 2008 by the Financial
Reporting Council (‘FRC’) in the UK.
This statement also deals with the
provisions introduced by the UK Corporate
Governance Code (‘the 2010 Code’),
issued by the FRC in May 2010 which, for
DCC, replaced the 2008 Combined Code
with effect from 1 April 2011. The 2008
Combined Code and the 2010 Code are
collectively referred to as the Combined
Code in this statement, where a provision
is the same in both Codes. This statement
also deals with the disclosure requirements
set out in the Irish Corporate Governance
Annex (‘the Irish Annex’), issued by the
Irish Stock Exchange in December 2010,
which supplements the 2010 Code with
additional corporate governance provisions
and is also effective, for DCC, from 1 April
2011.
Copies of the 2008 Combined Code and
the 2010 Combined Code can be obtained
from the Financial Reporting Council’s
website, www.frc.org.uk. The Irish Annex
is available on the Irish Stock Exchange’s
website, www.ise.ie.
The Board of Directors
Role
The Board of DCC is collectively
responsible for the long term success of
the Group. Its role is essentially threefold
- to provide leadership, to oversee
management and to ensure that the
Company provides its stakeholders with a
balanced and understandable assessment
of the Group’s current position and
prospects.
Its leadership responsibilities involve
working with management to set corporate
values and to develop strategy, including
deciding which risks it is prepared to
take in pursuing its strategic objectives.
Its oversight responsibilities involve it
in providing constructive challenge to
the management team in relation to
operational aspects of the business,
including approval of budgets, and probing
whether risk management and internal
controls are sound. Its responsibility
to ensure that accurate, timely and
understandable information is provided
about the Group is not only focussed on
the contents of the Annual Report, the
Interim Report at the half year and other
statements, for instance in the context of
the Annual General Meeting, but also in
deciding whether it is appropriate at any
given time to make a statement to the
market, as well as in communications with
regulators or in respect of other statutory
obligations.
The Board has delegated responsibility
for management of the Group to the Chief
Executive and his executive management
team. There is a written statement of
authorities delegated by the Board to
management. It is reviewed periodically.
The main areas where decisions remain
with the Board include approval of the
annual strategy statement, the financial
statements, budgets (including capital
expenditure), acquisitions and dividends.
In parallel, a clear division of responsibility
exists between the Chairman, who is non-
executive, and the Chief Executive. It is set
out in writing and has been approved by
the Board.
The Chairman’s Statement on page 7
includes a specific comment in relation to
the enhancement of the risk oversight role
of the Board, in the light of the increased
emphasis given to this in the 2010 Code
and in the Irish Annex.
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. The latter
responsibility has also been given
increased emphasis in the 2010 Code.
At the beginning of the financial year,
having consulted with the other Directors
and the Company Secretary, the Chairman
sets a schedule of Board and Committee
meetings to be held in the following twelve
56
DCC ANNUAL REPORT AND ACCOUNTS 2011
months, which includes the key agenda
items for each meeting. Further details on
these agenda items are outlined under
“Meetings” on page 57.
Deputy Chairman and Senior
Independent Director
The duties of the Deputy Chairman (who is
also the Senior Independent Director) are
set out in writing and formally approved by
the Board. The Deputy Chairman chairs
meetings of the Board if the Chairman is
unavailable or is conflicted in relation to
any agenda item. He also leads the annual
Board review of the performance of the
Chairman.
The Senior Independent Director is
available to shareholders who have
concerns that cannot be addressed
through the Chairman or Chief Executive.
Membership and Composition
The Board currently consists of three
executive and seven non-executive
Directors, following the retirement of
Maurice Keane as a non-executive Director
on 5 April 2011. The composition of the
Board and the principal Board Committees
and brief biographies of the Directors are
set out on pages 4 to 5.
The Board, with the assistance of the
Nomination and Governance Committee,
keeps Board composition under review to
ensure that it includes the necessary mix
of relevant skills and experience required to
perform its role.
The Board is satisfied that its size is right.
There is a clear majority of non-executive
Directors and of independent non-
executive Directors. Significant new and
relevant experience has been added in the
period since the end of 2008. Changes in
the composition of Committees and the
reshaping of the Board itself should not
pose an issue over the coming few years.
Appointment
The process for making new appointments
to the Board, which is detailed below, has
been in place since 2009.
succession planning and Directors’
education). Risk issues are now a regular
substantive agenda item.
Each year, a number of the Board
meetings are held at subsidiary locations,
particularly in the UK, which allows
Directors to meet with the subsidiary
management teams.
The non-executive Directors meet a
number of times each year without
executives being present.
During the year ended 31 March 2011,
the Board held seven meetings. Individual
attendance at these meetings is set out in
the table on page 59.
Remuneration
Details of remuneration paid to the
Directors are set out in the Report on
Directors’ Remuneration and Interests
on pages 62 to 68. It has been the
Company’s practice since 2009 to put
the Report to an advisory, non-binding
shareholder vote at the Annual General
Meeting.
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 62 to 68. 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.
The Nomination and Governance
Committee formally agrees a specification
of requirements covering sectoral business
experience, professional qualifications, if
relevant, and other relevant factors. An
international professional search firm is
employed to carry out a wide ranging,
international search. At least two members
of the Nomination and Governance
Committee formally interview prospective
candidates to arrive at a short list, which
is reviewed by the Committee. Before any
preferred candidate is proposed to the
Board, he/she will have been met by each
Director individually. If any Director has
reservations about a candidate, the matter
is reviewed again by the Committee with
a view to deciding if an alternative should
be found. When an agreed candidate is
identified, a formal proposal is put to the
Board.
Following appointment by the Board,
non-executive Directors 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.
Each new appointee undertakes a
rigorous induction process which includes
a series of meetings with Group and
divisional management, detailed divisional
presentations and visits to key subsidiary
locations.
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
Combined 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 several 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. The Chairman invites external
experts to attend certain Board meetings
to address the Board on corporate
governance developments and relevant
sectoral issues to ensure that Directors
are kept up to date on the latest corporate
governance guidance and best practice.
In addition, the Chairman and Company
Secretary review Directors’ training needs,
in conjunction with individual Directors,
and match those needs with appropriate
external seminars.
Meetings
The Board holds eight scheduled meetings
each year and additional meetings are held
on specific issues as necessary. There
is regular contact as required between
meetings in order to progress the Group’s
business. At the beginning of the financial
year, having consulted with the other
Directors and the Company Secretary,
the Chairman sets a schedule of Board
and Committee meetings to be held in the
following calendar year, which includes the
key agenda items for each meeting.
The key recurrent Board agenda themes
are divided into normal business (which
includes financial statements, budgets
and interim management statements) and
developmental business (which includes
strategy, sectoral and divisional reviews,
DCC ANNUAL REPORT AND ACCOUNTS 2011
57
Corporate Governance (continued)
Board Committees
The terms of reference of all Committees
have recently been refreshed, in particular
to take account of new requirements and
areas of emphasis in the 2010 Code and
the Irish Annex.
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. The
Committee met five times during the
year ended 31 March 2011. Individual
attendance at these meetings is set out in
the table on page 59.
The Chief Executive, Chief Financial Officer,
Head of Enterprise Risk Management,
Head of Internal Audit, 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 a number of times
each year with the external auditors and
with the Head of Internal Audit 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;
• reviewing the Group’s internal control
and risk management systems and
making recommendations to the Board
thereon;
• reporting to the Board on its annual
assessment of the operation of the
Group’s system of internal control
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 as detailed below.
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 in particular on any
changes in accounting policy and practices,
major judgmental areas and compliance
with stock exchange, legal and regulatory
requirements. The Committee reviews the
external audit plan in advance of the audit
and meets with the external auditors to
review the findings from the 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, seeking confirmation from the
external auditors that in their professional
judgment they are independent from
the Group and providing that the Chief
Executive will consult with the Chairman
of the Audit Committee prior to the
appointment to a senior financial reporting
position, to a senior management role or
to a Company officer role of any employee
or former employee of the external auditor,
where such a person was a member of
the external audit team in the previous two
years.
58
DCC ANNUAL REPORT AND ACCOUNTS 2011
The Committee has approved a policy on
the engagement of the external auditors to
provide non-audit services, which 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. The
policy also provides that the aggregate of
non-audit fees paid to the external auditor
must not exceed 50% of annual audit fees.
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 95.
The Committee makes recommendations
to the Board in relation to the appointment
of the external auditor. The Committee
is currently engaged in a formal tender
process for the external audit of the
Group’s financial statements with effect
from the year ending 31 March 2012.
The Committee receives regular reports
from the Group Internal Audit and
Group Environmental, Health and Safety
functions, which include summaries of the
key findings of each audit in the period
and the planned work programme. On an
ongoing basis the Committee ensures that
these functions are adequately resourced
and have appropriate standing within
the Group. The Committee ensures co-
ordination between Group Internal Audit
and the external auditors.
The Committee also receives regular
reports from the Risk Committee and the
Enterprise Risk Management function.
The Committee conducts, on behalf of
the Board, 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.
Nomination and Governance
Committee
At 31 March 2011, the Nomination and
Governance Committee comprised
Michael Buckley (Chairman) and two
independent non-executive Directors,
David Byrne and Maurice Keane. The
Committee met four times during the
year ended 31 March 2011. Individual
attendance at these meetings is set
out in the table below. On 5 April 2011,
Róisín Brennan and Leslie Van De Walle
joined the Committee on Maurice Keane’s
retirement.
The role and responsibilities of the
Nomination and Governance Committee
are set out in its updated written terms
of reference, which are available on the
Company’s website www.dcc.ie. The
principal responsibilities of the Committee
in relation to the composition of the Board
are to keep Board renewal, structure,
size and composition under constant
review, including the skills, knowledge and
experience required, taking account of the
Group’s businesses and strategic direction.
The Committee also actively manages
the open and transparent process for
appointment of new Directors as outlined
under Appointment above. The principal
duties in relation to Corporate Governance
are to monitor the Company’s compliance
with corporate governance best practice
and with applicable legal, regulatory and
listing requirements.
The Committee has particular regard to
the leadership needs of the organisation
and gives full consideration to succession
planning for Directors and senior
management, in particular the Chairman
and Chief Executive, taking into account
the challenges and opportunities facing the
Group and the skills and expertise required.
Remuneration Committee
At 31 March 2011, the Remuneration
Committee comprised four independent
non-executive Directors, Maurice Keane
(Chairman), Róisín Brennan, David
Byrne and Leslie Van de Walle, and the
Chairman of the Board, Michael Buckley.
The Committee met four times during the
year ended 31 March 2011. Individual
attendance at these meetings is set out
in the table below. On 5 April 2011, Leslie
Van De Walle was appointed Chairman
of the Committee on Maurice Keane’s
retirement.
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, the oversight
of remuneration structures for other
Group and subsidiary senior management
and the granting of awards under the
Company’s long term incentive schemes.
The Committee is responsible for ensuring
that risk is properly considered in setting
remuneration policy and in determining
remuneration packages.
The Remuneration Committee consults
with the Chief Executive on remuneration
for the other executive Directors and for
senior Group management.
The Remuneration Committee maintains
regular access to independent professional
advice to keep up to date with market best
practice and remuneration trends.
Details of the activities of the Remuneration
Committee during the year are set out in
the Report on Directors’ Remuneration
and Interests on pages 62 to 68.
Attendance at Board and Committee meetings during the year ended 31 March 2011:
Director
Board
Audit
Committee
Nomination and
Governance
Committee
Remuneration
Committee
Michael Buckley
Tommy Breen
Róisín Brennan
David Byrne
Maurice Keane
Kevin Melia
John Moloney
Donal Murphy
Fergal O’Dwyer
Bernard Somers
Leslie Van De Walle1
A
7
7
7
7
7
7
7
7
7
7
3
B
7
7
7
7
7
7
6
6
7
7
3
A
-
-
-
-
-
5
5
-
-
5
-
B
-
-
-
-
-
5
5
-
-
5
-
A
4
-
-
4
4
-
-
-
-
-
-
B
4
-
-
4
4
-
-
-
-
-
-
A
4
-
4
4
4
-
-
-
-
-
2
B
4
-
4
4
4
-
-
-
-
-
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.
Note 1 Appointed November 2010
DCC ANNUAL REPORT AND ACCOUNTS 2011
59
Corporate Governance (continued)
Performance Evaluation
The Board undertakes a formal annual
evaluation of its own performance, that
of each of its principal committees, the
Audit, Nomination and Governance and
Remuneration committees, and that of
individual Directors.
As part of the 2010/2011 Board
evaluation of its own performance,
a questionnaire was circulated to all
Directors by external advisors, Towers
Watson. The questionnaire was designed
to obtain Directors’ comments regarding
the performance of the Board including
any recommendations for improvement.
Completed questionnaires were
returned directly to Towers Watson who
summarised the results of the exercise
for the Senior Independent Director. He
presented it to the Board at the April 2011
Board meeting.
The Chairman, on behalf of the Board,
conducts evaluations of performance
individually with each of the non-executive
and the executive Directors on an annual
basis. This process was conducted
during March/April 2011 in respect of the
year under review and the results were
presented by the Chairman to the Board at
its April 2011 meeting.
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 were conducted at the
April 2011 Board meeting in respect of the
year under review.
These evaluations are designed to
determine whether each Director
continues to contribute effectively and to
demonstrate commitment to the role.
The Audit, Nomination and Governance
and Remuneration committees each
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 Chairman and the Senior Independent
Director meet to review in detail all issues
raised and, finally, the Chairman reports to
the Board on any suggestions for changes
in Board practice. This process was
concluded in respect of the year under
review at the May 2011 Board meeting.
The entire performance evaluation process
will be externally facilitated in 2012, in
accordance with the requirements of the
2010 Code.
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. The Chairman
and the Senior Independent Director are
available to communicate directly with
shareholders on any specific issue on
which discussion is required. If major
shareholders request meetings with
new non-executive Directors, this is also
facilitated. If any of the non-executive
Directors wishes to attend meetings with
major shareholders, arrangements are
made accordingly. The Chairman had a
series of meetings with major investors
during January/February 2011.
General Meetings
The Company’s Annual General Meeting
(‘AGM’) affords shareholders the opportunity
to question the Chairman and the Board.
The chairmen of the Audit, Nomination and
Governance and Remuneration Committees
are also available to answer questions at
the AGM. The Chief Executive presents
at the AGM 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.
60
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notice of the AGM, the Form of Proxy and
the Annual Report are sent to shareholders
at least 20 working days before the
Meeting. At the Meeting, resolutions are
voted on by a show of hands of those
shareholders attending, in person or by
proxy. 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.
If validly requested, resolutions can be
voted by way of a poll. In a poll, the votes
of shareholders present and voting at the
Meeting are added to the proxy votes
received in advance of the Meeting and
the total number of votes for, against and
withheld for each resolution are announced.
All other general meetings are called
Extraordinary General Meetings (‘EGM’).
An EGM called for the passing of a special
resolution must be called by at least
twenty one clear days’ notice. Provided
shareholders have passed a special
resolution to that effect at the immediately
preceding AGM and the Company
continues to allow shareholders to vote
by electronic means, an EGM to consider
an ordinary resolution may be called at
fourteen clear days’ notice.
A quorum for an AGM or an EGM of
the Company is constituted by three
shareholders, present in person, by proxy
or by a duly authorised representative
in the case of a corporate member.
The passing of resolutions at a general
meeting, other than special resolutions,
requires a simple majority. To be passed, a
special resolution requires a majority of at
least 75% of the votes cast.
Shareholders have the right to attend,
speak, ask questions and vote at general
meetings. In accordance with Irish
company law, the Company specifies
record dates for general meetings,
by which date shareholders must be
registered in the Register of Members
of the Company to be entitled to attend.
Record dates are specified in the notes to
the Notice convening the meeting.
Shareholders may exercise their right
to vote by appointing a proxy/proxies,
by electronic means or in writing, to
vote some or all of their shares. The
requirements for the receipt of valid proxy
forms are set out in the notes to the Notice
convening the meeting.
A shareholder or a group of shareholders,
holding at least 5% of the issued share
capital, has the right to requisition a
general meeting. A shareholder or a group
of shareholders, holding at least 3% of the
issued share capital of the Company, has
the right to put an item on the agenda of
an AGM or to table a draft resolution for an
item on the agenda of a general meeting.
The 2011 AGM will be held at 11 a.m. on
15 July 2011 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 has
delegated responsibility for the ongoing
monitoring of its effectiveness to the Audit
Committee. Details of the work undertaken
by the Audit Committee in this regard
are set out at page 58. 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
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;
• independent Enterprise Risk
Management, Group Internal Audit and
Group Environmental, Health and Safety
functions; and
• a formally constituted Audit Committee.
The consolidated financial statements
are prepared subject to the oversight
and control of the Group Chief Financial
Officer, ensuring correct data is
captured from Group locations and all
required information for disclosure in
the consolidated financial statements
is provided. A control framework has
been put in place around the recording
of appropriate eliminations and other
adjustments. The consolidated financial
statements are reviewed by the Audit
Committee and approved by the Board of
Directors.
The Board has reviewed the effectiveness
of the Group’s system of internal control,
up to and including the date of the
financial statements, and confirms that
necessary actions have been or are
being taken to remedy any significant
failings or weaknesses identified from that
review. 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.
As noted in the Chairman's Statement,
the Chief Executive has initiated a Group
wide review of risk management policies
and structures to ensure they meet the
highest standards while being appropriate
to DCC's business model. The results of
this review will be reported to the Board.
Memorandum and Articles of
Association
The Company’s Memorandum and Articles
of Association sets out the objects and
powers of the Company. The Articles of
Association detail the rights attaching
to shares, the method by which the
Company’s shares can be purchased
or re-issued, the provisions which apply
to the holding of and voting at general
meetings and the rules relating to the
Directors, including their appointment,
retirement, re-election, duties and powers.
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.
A copy of the Memorandum and Articles
of Association can be obtained from the
Company’s website www.dcc.ie.
Report of the Directors
For the purposes of the European
Communities (Directive 2006/46/EC)
Regulations 2009, details of substantial
shareholdings in the Company and
details in relation to the purchase of the
Company’s own shares are set out in the
Report of the Directors on pages 52 to 53.
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 69 and the reporting
responsibilities of the auditors are set out in
their report on page 70.
Compliance Statement
DCC has complied, throughout the year
ended 31 March 2011, with the provisions
set out in Section 1 of the 2008 Combined
Code.
Michael Buckley, Tommy Breen
Directors
9 May 2011
DCC ANNUAL REPORT AND ACCOUNTS 2011
61
Report on Directors’ Remuneration and Interests
Composition and Role of the
Remuneration Committee
The Remuneration Committee currently
comprises three independent non-executive
Directors, Leslie Van de Walle (Chairman),
Róisín Brennan and David Byrne, and the
Chairman of the Board, Michael Buckley.
Mr. Van de Walle joined the Committee on 8
November 2010 and became Chairman on
5 April 2011, following Mr. Maurice Keane's
retirement from the Committee.
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;
• the oversight of remuneration structures
for other Group and subsidiary senior
management; and
• the granting of awards under the
Company’s long term incentive schemes.
Group Remuneration Policy
DCC’s remuneration policy is designed
and managed to support a high
performance and entrepreneurial
culture, taking into account relevant
benchmarking. The Board seeks to align
the interests of executive Directors and
other senior Group executives with those
of shareholders, within the framework
set out in the Combined Code on
Corporate Governance. Central to this
policy is the Group’s belief in long-term
performance based incentivisation and the
encouragement of share ownership.
The Remuneration Committee seeks to
ensure:
• that the Group will attract, motivate and
retain individuals of the highest calibre;
• that executives are rewarded in a fair and
balanced way for their individual and team
contribution to the Group’s performance;
• that they receive a level of remuneration
that is appropriate to their scale of
responsibility and individual performance;
• that the overall approach to remuneration
has regard to the sectors and
geographies within which the Group
operates and the markets from which it
draws its executives; and
• that risk is properly considered in setting
remuneration policy and in determining
remuneration packages.
DCC’s strategy of fostering
entrepreneurship requires well designed
incentive plans that reward the creation
of shareholder value through organic
and acquisitive growth while maintaining
high returns on capital employed, strong
cash generation and a focus on good risk
management. The typical elements of
the remuneration package for executive
Directors and other senior Group
executives are base pay, pension and
other benefits, annual performance related
bonuses and participation in long term
performance plans which promote the
creation of sustainable shareholder value.
The Remuneration Committee supports
the objectives of the EU Commission’s
recommendations on “fostering an
appropriate regime for the remuneration
of directors of listed companies”
which were issued in December 2004
and supplemented by additional
recommendations in April 2009. This is
reflected in the disclosures in this Report in
relation to the Group’s remuneration policy,
the remuneration of individual Directors
and share-based remuneration.
While the Remuneration Committee’s
specific oversight of individual executive
remuneration packages extends only to
the Chief Executive, the other executive
Directors and a number of senior Group
executives, it aims to create a broad policy
framework to be applied by management
to senior executives throughout the Group.
62
DCC ANNUAL REPORT AND ACCOUNTS 2011
Since 2009, the Report on Directors’
Remuneration and Interests is put to a
shareholder vote at the Annual General
Meeting. There is no legal obligation to
put such a resolution to shareholders,
so it is an ‘advisory’ resolution and is
not binding. However, DCC believes that
such a resolution is good practice and
is an appropriate acknowledgement of a
shareholder’s right to have a ‘say on pay’.
Review of Remuneration Policy and
Structures
Following a comprehensive review in the
prior year of Group executive remuneration
policy and remuneration structures, the
Remuneration Committee established
a framework for remuneration policy in
respect of the senior executive cadre in the
DCC Group.
This framework was set out in last year’s
Annual Report, as follows:
(i)
That the key reference group for overall
remuneration purposes would be the
market capitalisation comparison group.
The other comparator groups would be
used as secondary reference points;
That the basic policy objective would be
to have top quartile overall remuneration
for top quartile performance;
(ii)
(iii) That the aim would be to have basic
pay rates and the short term element of
incentive payments at the median of the
market capitalisation comparator group;
(iv) That the aim would be to have long term
incentive rewards at the top quartile of
the market capitalisation comparator
group for top quartile performance;
(v) That the overall policy aim would
be, over time, to have the longer
term elements of total remuneration
constituting at least half of the total for
maximum performance and somewhat
less than half for on target performance;
(vi) That insofar as adjustments to existing
policies are needed to achieve these
aims, the adjustments would be carried
out over the medium term;
(vii) That any increase in the maximum
annual bonus potential would be
accompanied by:
• appropriately stretched targets for
qualifying for the increased element of
the maximum potential bonus;
• the introduction of a deferral
mechanism for part of the bonus
payments awarded, with the deferral
element being represented by
shares held in trust (thus to increase
the longer term element of total
remuneration and to align with Group
share ownership policy);
• a wider range of financial targets for
qualification for various levels of bonus
(threshold, target and maximum); and
• a general provision for subsequent
The Remuneration Committee may modify
the composition of these key reference
points from time to time with a view to
ensuring their relevance.
clawback of bonus, in certain
circumstances.
(viii) That a formal shareholding policy would
be introduced for the senior executive
cadre. Because share ownership has
been encouraged for many years in
the Group, current executive Directors’
shareholdings are substantial and
exceed the benchmarks used in
comparable companies, but such a
policy would be built with a view to a
future cadre of senior managers.
Those elements of the policy framework
relating to base salary have been
implemented. No changes to maximum
annual bonus potential or the longer term
elements of total remuneration have been
implemented at this time but they will be
kept under review by the Remuneration
Committee. A formal bonus clawback
policy and share ownership guidelines
have been introduced and are set out later
in this Report.
Benchmarking
The Remuneration Committee uses annual
benchmarking to ensure that remuneration
structures continue to support the key
remuneration policy objectives and to
inform them regarding current trends and
on actions as required from time to time.
The primary comparator group for
benchmarking is a group of 60 FTSE
companies, 30 of whom have market
capitalisations just below DCC’s and 30
of whom have market capitalisations just
above DCC’s (‘the market capitalisation
comparator group’).
The Remuneration Committee also
considers it useful to use a set of other
comparators as secondary references
to ensure rigorous and comprehensive
benchmarking, being:
• the FTSE 250;
• the peer group for the DCC plc Long
Term Incentive Plan 2009; and
• a group of Irish listed industrial
companies which can be taken to be
broadly comparable to DCC, though in
this group there are limitations on the
amount of relevant information available,
for instance on the definition of “target”
and “maximum” bonus levels.
Executive Directors’ Remuneration
The current remuneration package for
executive Directors consists of fixed
remuneration (base salary), pension and
other benefits and performance related
remuneration (annual bonus and long term
incentives).
Fixed Remuneration
Base salaries
With effect from 1 April 2012, the salaries
of executive Directors will be reviewed
annually on 1 April, rather than on 1
January as was the practice, in order to
align them with the Group’s financial year.
The reviews take account of personal
performance, Company performance and
competitive market practice.
No fees are payable to executive Directors.
Pension Benefits
A small number of senior Group
executives, including the executive
Directors, are participants in a defined
benefit pension scheme which aims 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.
Other senior Group executives participate
in a defined contribution pension scheme.
Performance Related Remuneration
Annual bonuses
Annual bonuses are payable to the
executive Directors and to other senior
Group executives in respect of the financial
year to 31 March, subject, inter alia, to the
achievement of performance targets.
The maximum bonus potential, as a
percentage of basic salary, for each
executive Director and senior Group
executive is reviewed and set annually and
ranged between 40% and 100% of basic
salary for the year ended 31 March 2011.
The performance targets for each
executive Director and senior Group
executive, 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 overall contribution
and personal performance. The weighting
of the performance targets varies
according to the role of each individual,
within the range of 60% to 80% of bonus
potential for profit performance and 20%
to 40% of bonus potential for personal
contribution.
The Remuneration Committee has
implemented general provisions for
subsequent clawback of bonus in certain
circumstances, effective from 1 April 2011,
which will apply to all annual performance
bonuses paid to executive Directors and
senior Group executives.
Long term incentives
Executive Directors and other senior Group
executives are eligible to participate in the
Company’s long term incentive schemes.
DCC plc Long Term Incentive Plan 2009
The DCC plc Long Term Incentive Plan
2009 (‘the Plan’) was approved by
shareholders at the 2009 Annual General
Meeting, following the termination of the
DCC plc 1998 Employee Share Option
Scheme in 2008. The Plan reflects the
Group’s culture of long term performance
based incentivisation and seeks to align
the interests of executives with those of
the Group’s shareholders.
The Plan provides for the Remuneration
Committee to grant nominal cost options
to acquire ordinary shares in the Company
or to make contingent share awards
only to those employees, including
executive Directors, of the Company
and its subsidiaries whose contribution
can have a direct and significant impact
on Group value or whom the Company
wishes to retain in anticipation of direct
and significant contribution to Group value
in the future and to a small number of key
support staff.
DCC ANNUAL REPORT AND ACCOUNTS 2011
63
Report on Directors’ Remuneration and Interests (continued)
The percentage of share capital which can
be issued under the Plan, the phasing of
the grant of awards and the limit on the
value of awards which can be granted
to any individual comply with guidelines
published by the institutional investment
associations. The Plan provides for the
making of awards, up to a maximum
of 10% of the Company’s issued share
capital over a 10 year period, taking
account of any other share award or share
option plan operated by the Company.
The market value of the shares which
are the subject of any contingent award
granted in any period of 12 months may
not, at the date of the grant of award, in
the case of the Chief Executive exceed
120% of annual basic salary and in the
case of other participants exceed a
lower percentage, as determined by the
Committee.
Awards will normally vest no earlier than
the third anniversary of the award date and
in the case of options cannot be exercised
later than the seventh anniversary of the
award date.
An award will not vest (and in the case
of an award in the form of an option, the
option will not be exercisable) unless the
Committee is satisfied that the Company’s
underlying financial performance has
shown a sustained improvement in
the period since the award date. If this
condition is met, the extent of vesting for
awards granted to participants will be
determined by the performance conditions
set out below.
(a) TSR performance condition:
Up to 60% of the shares subject to
the award will vest depending on the
Company’s total shareholder return
(‘TSR’) over a three-year performance
period, starting on 1 April in the year in
which the award is granted, compared
with the TSR of a designated peer group.
The peer group in respect of each award
comprises the FTSE 250 on the first day
of the performance period excluding
financial services type companies and a
small number of other companies that
are not comparable to the Company,
as determined by the Remuneration
Committee.
The extent of vesting will be determined
according to the following table:
Company’s
TSR ranking
Below median
Median
Between median
and 75th percentile
75th percentile or above
Proportion of the
total award vesting
0%
25%
25%-60% pro rata
60%
TSR shall mean the return that a company
has provided for its ordinary shareholders,
reflecting share price movements and
assuming reinvestment of dividends.
The Remuneration Committee may from
time to time and at their discretion modify
the composition of the peer group with
the agreement of the Irish Association
of Investment Managers if by reason of
any change in the business of any such
company, or if any such company ceases
to be publicly listed, they consider that it
would no longer properly form part of such
comparison group for the business of the
Company or that any one or more other or
additional companies would properly form
part of such comparison group.
(b) EPS performance condition:
Up to 40% of the shares subject to the
award will vest depending on the growth
in the Company’s consolidated adjusted
earnings per share (‘EPS’) over a three-
year performance period starting on 1 April
in the year in which the award is granted
compared with the change in the Irish
Consumer Price Index (‘CPI’), determined
according to the table below. EPS growth
year on year will be calculated on a
constant currency basis, as set out in the
Company’s annual report.
Company’s annualised
EPS growth in excess of
annualised CPI change
Below 3 percentage points
3 percentage points
Between 3 and 7
percentage points
7 percentage points or more
Proportion of the
total award vesting
0%
15%
15%-40% pro rata
40%
Vesting under the EPS performance
condition is also contingent on:
(i) the Company’s average share price
over the 30 day period following
the annual or half yearly results
announcement date prior to vesting
being higher than the average share
price over the 30 day period following
the annual or half yearly results
announcement date prior to the award
date (subject to any adjustment in
accordance with Rule 11 of the Plan
to reflect a variation in the Company’s
share capital); and
(ii) the Company’s cumulative annualised
EPS growth over the three year
performance period being positive.
No re-testing of the performance
conditions is permitted.
The total number of awards granted under
the Plan, in the form of nominal cost
options, currently amounts to 0.52% of
issued share capital.
64
DCC ANNUAL REPORT AND ACCOUNTS 2011
The Deputy Chairman and Senior
Independent Director, David Byrne,
received a total fee of €103,000, again
inclusive of the basic fee and committee
fees.
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.
Directors’ Service Agreements
With the exception of Tommy Breen, Chief
Executive, who has a service agreement
with a notice period of twelve months,
none of the other Directors has a service
contract with the Company or with any
member of the Group.
DCC plc 1998 Employee Share Option
Scheme
Executive Directors and other senior
executives participated in the DCC plc
1998 Employee Share Option Scheme.
The ten year period during which share
options could be granted under this
Scheme expired in June 2008.
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
2.15% 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.
Share Ownership Guidelines
DCC’s remuneration policy has at its core
a recognition that the spirit of ownership
and entrepreneurship is essential to the
creation of long term high performance
and that share ownership is important in
aligning the interests of executive Directors
and other senior Group executives with
those of shareholders.
In support of this the Remuneration
Committee has introduced a set of share
ownership guidelines, effective from 1 April
2011, under which the Chief Executive,
other executive Directors and other senior
Group executives are encouraged to build,
over a five year period, a shareholding in
the Company with a valuation relative to
base salary as follows:
Chief Executive
3 times annual base salary
Other executive Directors
2 times annual base salary
Senior Group executives
1 times annual base salary
Non-Executive Directors’
Remuneration
The remuneration of the Chairman
is determined by the Remuneration
Committee. The Chairman absents himself
from the Committee meeting while this
matter is being considered.
The remuneration of the other non-
executive Directors is determined by the
Chairman and the Chief Executive.
The fees paid to non-executive Directors
reflect their experience and ability and the
time demands of their Board and Board
committee duties. The fees are reviewed
annually, taking account of any changes in
responsibilities and external advice on the
level of fees in comparable companies.
The basic non-executive Director fee
amounts to €60,000 per annum and
additional fees are paid to members and
the Chairmen of Board committees. There
have been no increases in these fees for
the years commencing on 1 April 2009,
1 April 2010 and 1 April 2011.
The Chairman, Michael Buckley, received a
total fee of €190,000 for the year ended 31
March 2011, inclusive of the basic fee and
committee fees.
DCC ANNUAL REPORT AND ACCOUNTS 2011
65
Report on Directors’ Remuneration and Interests (continued)
The information set out at page 66 to 68 forms an integral part of the audited financial statements and is covered by the Report of the
Independent Auditors.
Executive and Non-Executive 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
2010
2011
€’000
€’000
Bonus
2011
€’000
2010
€’000
Benefits2
2011
€’000
2010
€’000
Pension
Contribution3
Total
2011
€’000
2010
€’000
2011
€’000
2010
€’000
Executive Directors
Tommy Breen
Donal Murphy
Fergal O’Dwyer
700
374
374
700
316
365
434
126
227
700
274
274
Total for executive Directors
1,448
1,381
787
1,248
Non-executive Directors
Michael Buckley
Róisín Brennan
David Byrne
Maurice Keane4
Kevin Melia
John Moloney
Bernard Somers
Leslie Van de Walle5
190
65
103
73
68
68
80
26
225
65
103
73
68
68
80
-
Total for non-executive Directors
673
682
Ex gratia pension to dependant of retired Director
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
22
22
74
-
-
-
-
-
-
-
-
-
26
22
22
70
-
-
-
-
-
-
-
-
-
246
129
130
248
108
131
1,410
651
753
1,674
720
792
505
487
2,814
3,186
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
190
65
103
73
68
68
80
26
225
65
103
73
68
68
80
-
673
682
10
10
3,497
3,878
Notes
1. Fees are payable only to non-executive Directors and include Board Committee fees.
2. In the case of the executive Directors, benefits relate principally to the use of a company car.
3. Executive Director pension contributions in the year ended 31 March 2011 were made to a defined benefit scheme.
4. Maurice Keane resigned as a Director on 5 April 2011.
5. Leslie Van de Walle was appointed as a Director on 8 November 2010.
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 2011 and the transfer value of the increase in accrued benefit, under the Company’s defined benefit pension scheme:
Executive Directors
Tommy Breen
Donal Murphy
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
4
5
7
16
54
43
233
330
352
97
164
613
Notes
1. Increases are after adjustment for inflation over the year, if applicable, and reflect additional pensionable service and salary.
2.
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 2011.
66
DCC ANNUAL REPORT AND ACCOUNTS 2011
Executive Directors’ and Company Secretary’s Long Term Incentives
DCC plc Long Term Incentive Plan 2009
Details of the executive Directors’ and the Company Secretary’s awards, in the form of nominal cost options, under the DCC plc Long
Term Incentive Plan 2009 are set out in the table below:
Executive Directors
Tommy Breen
Donal Murphy
Fergal O’Dwyer
Company Secretary
Gerard Whyte
At 31
March 2010
Number of options
Granted
in year
At 31
March 2011
Performance period
Earliest exercise date Market price
on award
€
53,743
53,743
21,113
21,113
23,353
23,353
11,756
11,756
39,529
39,529
18,894
18,894
18,894
18,894
8,647
8,647
53,743
39,529
93,272
21,113
18,894
40,007
23,353
18,894
42,247
11,756
8,647
20,403
20 August 2012
1 April 2009 – 31 March 2012
1 April 2010 – 31 March 2013 15 November 2013
15.63
21.25
20 August 2012
1 April 2009 – 31 March 2012
1 April 2010 – 31 March 2013 15 November 2013
15.63
21.25
1 April 2009 – 31 March 2012
20 August 2012
1 April 2010 – 31 March 2013 15 November 2013
15.63
21.25
20 August 2012
1 April 2009 – 31 March 2012
1 April 2010 – 31 March 2013 15 November 2013
15.63
21.25
DCC plc 1998 Employee Share Option Scheme
Details as at 31 March 2011 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
At 31
March 2010
Granted
in year
Exercised
At 31
in year March 2011
Weighted
average
option price
at 31
March 2011
€
Normal Exercise Period
Options exercised
in year
Market
price at
date of
exercise
€
Exercise
price
€
Executive Directors
Tommy Breen
Basic Tier
Second Tier
Donal Murphy
Basic Tier
Second Tier
Fergal O’Dwyer
Basic Tier
Second Tier
Company Secretary
Gerard Whyte
Basic Tier
Second Tier
170,000
95,000
65,000
35,000
117,500
70,000
71,000
41,000
-
-
-
-
-
-
-
-
-
-
170,000
95,000
15.53
10.31
Nov 2004 – May 2018
Nov 2004 – Nov 2012
(5,000)
(5,000)
60,000
30,000
16.24
10.33
Nov 2004 – May 2018
Nov 2004 – Nov 2012
11.25
11.25
20.31
20.31
-
-
117,500
70,000
15.37
10.32
Nov 2004 – May 2018
Nov 2004 – Nov 2012
(11,000)
(11,000)
60,000
30,000
16.03
10.34
Nov 2004 – May 2018
Nov 2004 – Nov 2012
11.25
11.25
20.31
20.31
The market price of DCC shares on 31 March 2011 was €22.47 and the range during the year was €17.30 to €24.20.
Additional information in relation to the DCC plc Long Term Incentive Plan 2009 and the DCC plc 1998 Employee Share Option Scheme
appears in note 10 on page 97.
DCC ANNUAL REPORT AND ACCOUNTS 2011
67
Report on Directors’ Remuneration and Interests (continued)
Executive and Non-Executive 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 2011 (together with their interests at 31 March 2010) are set out below:
Directors
Michael Buckley
Tommy Breen
Róisín Brennan
David Byrne
Maurice Keane
Kevin Melia
John Moloney
Donal Murphy
Fergal O’Dwyer
Bernard Somers
Leslie Van de Walle
Company Secretary
Gerard Whyte
No. of Ordinary Shares
At 31 March 2011
No. of Ordinary Shares
At 31 March 2010
10,000
279,395
-
-
5,000
1,250
2,000
82,313
254,889
1,000
-
10,000
279,395
-
-
5,000
1,250
2,000
80,113
254,889
1,000
-
142,200
137,200
All of the above interests were beneficially owned. 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 2011.
The Company’s Register of Directors Interests (which is open to inspection) contains full details of Directors’ shareholdings and share
options.
Leslie Van de Walle
Chairman, Remuneration Committee
9 May 2011
68
DCC ANNUAL REPORT AND ACCOUNTS 2011
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 2009 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 and 5,
confirms that, to the best of each person’s
knowledge and belief:
• the financial statements, prepared in
accordance with IFRS 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 that they
face.
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, which are required 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 judgements and estimates that are
reasonable and prudent;
• state that the financial statements
comply with IFRS 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 Company will continue in
business.
The Directors confirm that they have
complied with the above requirements in
preparing the financial statements.
The Directors have prepared the Group
and Company financial statements in
accordance with International Financial
Reporting Standards (IFRS) as adopted by
the European Union.
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
Chairman
Tommy Breen
Chief Executive
DCC ANNUAL REPORT AND ACCOUNTS 2011
69
Report of the Independent Auditors
For the year ended 31 March 2011
To the Members of DCC plc
We have audited the Group and Company
financial statements (the ‘financial
statements’) of DCC plc for the year ended
31 March 2011 which comprise the Group
Income Statement, the Group and Company
Balance Sheets, the Group and Company
Cash Flow Statements, the Group and
Company Statements of Comprehensive
Income, the Group and Company
Statements of Changes in Equity and the
related notes. These financial statements
have been prepared under the accounting
policies set out therein.
• whether the Company has kept proper
books of account;
• whether the Report of the Directors 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.
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 (IFRS) as adopted by the
European Union, are set out in the Statement
of Directors’ Responsibilities.
Our responsibility is to audit the financial
statements in accordance with relevant legal
and regulatory requirements and International
Standards on Auditing (UK and Ireland).
This report, including the opinion, has been
prepared for and only for the Company’s
members as a body in accordance with
Section 193 of the Companies Act, 1990
and for no other purpose. We do not,
in giving this opinion, accept or assume
responsibility for any other purpose or to any
other person to whom this report is shown or
into whose hands it may come save where
expressly agreed by our prior consent in
writing.
We report to you our opinion as to whether
the Group financial statements give a true
and fair view, in accordance with IFRS
as adopted by the European Union. We
report to you our opinion as to whether
the Company financial statements give a
true and fair view, in accordance with IFRS
as adopted by the European Union, as
applied in accordance with the provisions
of the Companies Acts, 1963 to 2009. We
also report to you whether the financial
statements have been properly prepared in
accordance with Irish statute comprising the
Companies Acts, 1963 to 2009 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
Company Balance Sheet is in agreement
with the books of account. We also report to
you our opinion as to:
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 are required by law to report to you
our opinion as to whether the description
in the Corporate Governance Statement
of the main features of the internal control
and risk management systems in relation
to the process for preparing the Group
financial statements is consistent with the
Group financial statements. In addition, we
review whether the Corporate Governance
Statement reflects the Company’s
compliance with the nine provisions of the
2008 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 Highlights, Group at a Glance,
Strategy, Chairman’s Statement, Chief
Executive’s Review, Business Review,
Financial Review, Sustainability Report,
Report of the Directors, Principal Risks and
Uncertainties, Corporate Governance, Report
on Directors’ Remuneration and Interests,
Statement of Directors’ Responsibilities and
5 Year Review. 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.
70
DCC ANNUAL REPORT AND ACCOUNTS 2011
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 Report of the Directors is consistent
with the financial statements and the
description in the Corporate Governance
Statement of the main features of the
internal control and risk management
systems in relation to the process for
preparing the Group financial statements
is consistent with the Group 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 2011
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.
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 judgements 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
IFRS as adopted by the European Union,
of the state of the Group’s affairs as at
31 March 2011 and of its profit and cash
flows for the year then ended;
• the Company financial statements give
a true and fair view, in accordance
with IFRS as adopted by the European
Union as applied in accordance with the
provisions of the Companies Acts, 1963
to 2009, of the state of the Company’s
affairs as at 31 March 2011 and cash
flows for the year then ended; and
• the financial statements have been
properly prepared in accordance with
the Companies Acts, 1963 to 2009 and
Article 4 of the IAS Regulation.
PricewaterhouseCoopers
Chartered Accountants and Registered Auditors
Dublin, Ireland
9 May 2011
DCC ANNUAL REPORT AND ACCOUNTS 2011
71
Group Income Statement
For the year ended 31 March 2011
2011
2010
exceptionals
€’000
Note
Pre Exceptionals
(note 11)
€’000
Total
€’000
Pre
exceptionals
€’000
Exceptionals
(note 11)
€’000
Total
€’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’ (loss)/profit after tax
Profit before tax
Income tax expense
4 8,680,573
(7,925,798)
754,775
(257,899)
(289,748)
25,423
(2,931)
5
5
- 8,680,573 6,724,971
(7,925,798) (6,054,577)
-
670,394
-
(234,181)
-
(251,118)
-
9,703
7,177
(1,965)
(19,827)
754,775
(257,899)
(289,748)
32,600
(22,758)
4
4
12
12
14
15
229,620
(10,962)
218,658
(50,517)
35,939
(239)
203,841
(42,417)
(12,650)
-
(12,650)
(1,623)
-
-
(14,273)
(1,354)
216,970
(10,962)
206,008
(52,140)
35,939
(239)
189,568
(43,771)
192,833
(6,150)
186,683
(34,300)
23,415
152
175,950
(33,207)
- 6,724,971
(6,054,577)
-
670,394
-
(234,181)
-
(251,118)
-
10,530
827
(12,556)
(10,591)
(9,764)
-
(9,764)
(1,285)
-
-
(11,049)
-
183,069
(6,150)
176,919
(35,585)
23,415
152
164,901
(33,207)
Profit after tax for the financial year
161,424
(15,627)
145,797
142,743
(11,049)
131,694
Profit attributable to:
Owners of the Parent
Non-controlling interests
Earnings per ordinary share
Basic
Diluted
18
18
Michael Buckley, Tommy Breen, Directors
145,109
688
145,797
174.48c
173.90c
130,803
891
131,694
158.76c
157.92c
72
DCC ANNUAL REPORT AND ACCOUNTS 2011
Group Statement of Comprehensive Income
For the year ended 31 March 2011
Group profit for the financial year
Other comprehensive income:
Currency translation effects
Group defined benefit pension obligations:
- actuarial loss
- movement in deferred tax asset
Gains relating to cash flow hedges
Movement in deferred tax liability on cash flow hedges
Other comprehensive income for the financial year, net of tax
Total comprehensive income for the financial year
Attributable to:
Owners of the Parent
Non-controlling interests
Michael Buckley, Tommy Breen, Directors
2011
€’000
2010
€’000
145,797
131,694
4,636
23,353
(2,590)
336
1,623
(341)
3,664
(1,595)
861
986
(107)
23,498
149,461
155,192
148,773
688
149,461
154,212
980
155,192
DCC ANNUAL REPORT AND ACCOUNTS 2011
73
Group Balance Sheet
As at 31 March 2011
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 owners of the Parent
Share capital
Share premium
Other reserves - share options
Cash flow hedge reserve
Foreign currency translation reserve
Other reserves
Retained earnings
Non-controlling interests
Total equity
LIABILITIES
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred income tax liabilities
Retirement benefit obligations
Provisions for liabilities and charges
Deferred and contingent acquisition consideration
Government grants
Current liabilities
Trade and other payables
Current income tax liabilities
Borrowings
Derivative financial instruments
Provisions for liabilities and charges
Deferred and contingent acquisition consideration
Total liabilities
Total equity and liabilities
Michael Buckley, Tommy Breen, Directors
74
DCC ANNUAL REPORT AND ACCOUNTS 2011
Note
2011
€’000
2010
€’000
19
20
21
31
28
395,485
636,114
2,281
9,328
84,376
358,096
595,090
2,393
12,166
101,921
1,127,584 1,069,666
23
248,129
24 1,034,275
3,562
28
700,340
27
234,898
922,019
1,343
714,917
1,986,306 1,873,177
3,113,890 2,942,843
36
37
38
38
38
38
39
40
29
28
31
32
34
33
35
22,057
124,687
10,537
987
(125,136)
1,400
895,108
929,640
2,234
931,874
22,057
124,687
9,148
(295)
(129,772)
1,400
806,452
833,677
3,249
836,926
762,244
30,142
25,434
19,335
14,256
65,188
2,864
919,463
793,663
19,331
23,479
23,690
11,429
49,351
3,678
924,621
29
28
34
33
59,427
40,542
533
3,109
9,156
25 1,149,786 1,039,641
71,699
58,169
557
6,372
4,858
1,262,553 1,181,296
2,182,016 2,105,917
3,113,890 2,942,843
Group Statement of Changes in Equity
For the year ended 31 March 2011
Attributable to owners of the Parent
Share
capital
€’000
Share
premium
€’000
Retained
earnings
€’000
Other
reserves
(note 38)
€’000
Non-
controlling
interests
€’000
Total
€’000
Total
equity
€’000
At 1 April 2010
22,057
124,687
806,452
(119,519)
833,677
3,249
836,926
Profit for the financial year
Other comprehensive income/(expense):
Currency translation
Group defined benefit pension obligations:
- actuarial loss
- movement in deferred tax asset
Gains relating to cash flow hedges
Movement in deferred tax
liability on cash flow hedges
Total comprehensive income
-
-
-
-
-
-
-
-
145,109
-
145,109
688
145,797
-
-
-
-
-
-
-
4,636
4,636
(2,590)
336
-
-
-
1,623
(2,590)
336
1,623
-
-
-
-
4,636
(2,590)
336
1,623
-
142,855
(341)
5,918
(341)
148,773
-
688
(341)
149,461
Re-issue of treasury shares
Share based payment
Dividends
Other movements in non-controlling interests
At 31 March 2011
-
-
-
-
22,057
-
-
-
-
124,687
3,835
-
(58,034)
-
895,108
-
1,389
-
-
(112,212)
3,835
1,389
(58,034)
-
929,640
-
-
-
(1,703)
2,234
3,835
1,389
(58,034)
(1,703)
931,874
For the year ended 31 March 2010
Attributable to owners of the Parent
Share
capital
€’000
Share
premium
€’000
Retained
earnings
€’000
Other
reserves
(note 38)
€’000
Non-
controlling
interests
€’000
Total
€’000
Total
equity
€’000
At 1 April 2009
22,057
124,687
720,909
(145,003)
722,650
3,581
726,231
Profit for the financial year
Other comprehensive income/(expense):
Currency translation
Group defined benefit pension obligations:
- actuarial loss
- movement in deferred tax asset
Gains relating to cash flow hedges
Movement in deferred tax
liability on cash flow hedges
Total comprehensive income
-
-
-
-
-
-
-
-
130,803
-
130,803
891
131,694
-
-
-
-
-
-
-
23,264
23,264
89
23,353
(1,595)
861
-
-
-
986
(1,595)
861
986
-
-
-
(1,595)
861
986
-
130,069
(107)
24,143
(107)
154,212
-
980
(107)
155,192
Re-issue of treasury shares
Share based payment
Dividends
Other movements in non-controlling interests
At 31 March 2010
-
-
-
-
22,057
-
-
-
-
124,687
7,657
-
(52,183)
-
806,452
-
1,341
-
-
(119,519)
7,657
1,341
(52,183)
-
833,677
-
-
-
(1,312)
3,249
7,657
1,341
(52,183)
(1,312)
836,926
Michael Buckley, Tommy Breen, Directors
DCC ANNUAL REPORT AND ACCOUNTS 2011
75
Note
41
35
45
17
40
30
27
30
30
2011
€’000
2010
€’000
269,572
(8,935)
(43,276)
(56,343)
161,018
297,757
(12,842)
(32,297)
(20,548)
232,070
5,586
626
28,431
-
30,809
65,452
9,831
1,799
-
827
19,824
32,281
(83,381)
(74,614)
(3,709)
(161,704)
(96,252)
(47,268)
(129,515)
(4,127)
(180,910)
(148,629)
3,835
-
658
4,493
(21,157)
(1,234)
(58,034)
(219)
(80,644)
(76,151)
7,657
1,035
293,568
302,260
(43,424)
(618)
(52,183)
(275)
(96,500)
205,760
(11,385)
2,552
674,961
666,128
289,201
10,243
375,517
674,961
700,340
(34,212)
666,128
714,917
(39,956)
674,961
Group Cash Flow Statement
For the year ended 31 March 2011
Cash generated from operations
Exceptionals
Interest paid
Income tax paid
Net cash flows from operating activities
Investing activities
Inflows
Proceeds from disposal of property, plant and equipment
Government grants received
Proceeds on disposal of subsidiaries
Proceeds on disposal of associate
Interest received
Outflows
Purchase of property, plant and equipment
Acquisition of subsidiaries
Deferred and contingent 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 owners of the Parent
Dividends paid to non-controlling 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
Michael Buckley, Tommy Breen, Directors
76
DCC ANNUAL REPORT AND ACCOUNTS 2011
Company Statement of Comprehensive Income
For the year ended 31 March 2011
Profit for the financial year
Total comprehensive income for the financial year
Attributable to:
Owners of the Parent
Company Balance Sheet
As at 31 March 2011
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 owners of the Parent
Share capital
Share premium
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
16
2011
€’000
10,284
10,284
2010
€’000
3,852
3,852
10,284
3,852
Note
2011
€’000
2010
€’000
21
22
24
27
36
37
38
39
25
1,244
168,065
169,309
414,314
30
414,344
583,653
1,244
168,065
169,309
421,462
6,232
427,694
597,003
22,057
124,687
344
109,728
256,816
22,057
124,687
344
153,643
300,731
10,387
10,387
10,387
10,387
316,450
316,450
326,837
583,653
285,885
285,885
296,272
597,003
DCC ANNUAL REPORT AND ACCOUNTS 2011
77
Company Statement of Changes in Equity
For the year ended 31 March 2011
Share
capital
€’000
Share
premium
€’000
Retained
earnings
€’000
Other
reserves
(note 38)
€’000
Total
equity
€’000
At 1 April 2010
22,057
124,687
153,643
344
300,731
Profit for the financial year
Total comprehensive income
Re-issue of treasury shares
Dividends
At 31 March 2011
For the year ended 31 March 2010
-
-
-
-
10,284
10,284
-
-
10,284
10,284
-
-
22,057
-
-
124,687
3,835
(58,034)
109,728
-
-
344
3,835
(58,034)
256,816
Share
capital
€’000
Share
premium
€’000
Retained
earnings
€’000
Other
reserves
(note 38)
€’000
Total
equity
€’000
At 1 April 2009
22,057
124,687
194,317
344
341,405
Profit for the financial year
Total comprehensive income
Re-issue of treasury shares
Dividends
At 31 March 2010
Michael Buckley, Tommy Breen, Directors
-
-
-
-
3,852
3,852
-
-
22,057
-
-
124,687
7,657
(52,183)
153,643
-
-
-
-
344
3,852
3,852
7,657
(52,183)
300,731
78
DCC ANNUAL REPORT AND ACCOUNTS 2011
Company Cash Flow Statement
For the year ended 31 March 2011
Cash generated from operations
Interest paid
Income tax received
Net cash flows from operating activities
Investing activities
Inflows
Interest received
Outflows
Acquisition of subsidiaries
Net cash flows from investing activities
Financing activities
Inflows
Re-issue of treasury shares
Outflows
Dividends paid to owners of the Parent
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
Michael Buckley, Tommy Breen, Directors
Note
41
2011
€’000
2010
€’000
34,756
(1,052)
-
33,704
51,388
(965)
2
50,425
14,293
14,293
-
-
14,293
6,518
6,518
(7,000)
(7,000)
(482)
3,835
3,835
7,657
7,657
17
(58,034)
(58,034)
(54,199)
(52,183)
(52,183)
(44,526)
(6,202)
6,232
30
5,417
815
6,232
DCC ANNUAL REPORT AND ACCOUNTS 2011
79
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 2009 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.
DCC plc, the parent company, is a publicly traded limited company incorporated and domiciled in the Republic of Ireland.
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 2011 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 judgement in the process of applying the Company’s accounting policies. The areas involving a high
degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements
are documented in note 3.
Adoption of IFRS and International Financial Reporting Interpretations Committee (‘IFRIC’) Interpretations
The Group has adopted the following standards, interpretations and amendments to existing standards during the financial year:
• Improvements to IFRS (effective date: DCC financial year beginning 1 April 2010). The improvements include changes in presentation,
recognition and measurement plus terminology and editorial changes. These improvements did not have a significant impact on the
Group’s financial statements.
• 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 IFRS. This standard did not have a
significant impact on the Group’s financial statements.
• 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 a business
combination and the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. Contingent
consideration is measured at fair value with subsequent changes recognised in the Income Statement and transaction costs, other
than share and debt issue costs, are expensed as incurred.
• 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 has not had a material impact on Group reporting in the current year.
• 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 did not have a significant impact 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 had 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 had no effect on the Group’s financial statements.
• Amendment to IFRS 2 Share-based Payment: Group Cash-Settled Share-based Payment Transactions (effective date: DCC financial
year beginning 1 April 2010). This amendment incorporates the changes previously applied under IFRIC 8 and IFRIC 11. This standard
did not have a significant impact on the Group’s financial statements.
80
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
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:
• IFRIC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments (effective date: DCC financial year beginning 1 April
2011). This interpretation addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the
entity issuing equity instruments to extinguish all or part of the liability. This IFRIC will have no effect on the Group’s financial statements.
• IAS 24 Revised Related Party Disclosures (effective date: DCC financial year beginning 1 April 2011). This revised standard simplifies
the definition of related parties and provides a partial exemption from the disclosure requirements for government-related entities. This
standard will not have a significant impact on the Group’s financial statements.
• IFRS 9 Financial Instruments (effective date: DCC financial year beginning 1 April 2013). This standard will eventually replace IAS 39
Financial Instruments: Recognition and Measurement. It currently establishes principles for the financial reporting of financial assets
in order for users of the financial statements to assess the amounts, timing and uncertainty of the entity’s future cash flows. This
standard will not have a significant impact 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.
Comparative Amounts
The Group uses derivative financial instruments to hedge its exposure to interest expense risks arising from financing activities. In previous
years in the Income Statement, the Group disclosed the net expense arising on Group borrowings and related swaps in Finance Costs.
In the current year in the Income Statement, the Group has disclosed the interest expense on Group borrowings in Finance Costs and
the net income receivable on swaps relating to those Group borrowings in Finance Income. Similarly in the Group Cash Flow Statement,
disclosures reflect interest paid on Group borrowings and amounts received from swap counterparties. The comparative amounts have
been presented on a consistent basis. This adjustment has no impact on the operating profit, net finance cost, profit before taxation,
earnings per share or net cash flows previously reported for the year ended 31 March 2010.
DCC ANNUAL REPORT AND ACCOUNTS 2011
81
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
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker who
is responsible for allocating resources and assessing performance of the operating segments. The Group has determined that it has five
reportable operating segments: DCC Energy, DCC SerCom, DCC Healthcare, DCC Environmental and DCC Food & Beverage.
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 or 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 together with gains or losses arising from currency swaps offset by gains or losses on related fixed rate debt, acquisition
costs, profit or loss on defined benefit pension scheme restructuring and impairment of assets. Judgement is used by the Group in
assessing the particular items, which by virtue of their scale and nature, should be 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%
3%
3%
3%
3%
5 - 331/
62/
10 - 331/
10 - 331/
82
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Land is not depreciated. The residual values and useful lives of property, plant and equipment are reviewed, and adjusted if appropriate,
at each balance sheet date.
In accordance with IAS 36 Impairment of Assets, the carrying amounts of items of property, plant and equipment are reviewed at each
balance sheet date to determine whether there is any indication of impairment. An impairment loss is recognised whenever the carrying
amount of an asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in the Income Statement. Following the recognition of an impairment loss, the depreciation charge
applicable to the asset or cash-generating unit is adjusted prospectively in order to systematically allocate the revised carrying amount,
net of any residual value, over the remaining useful life.
Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the replaced item can be measured reliably. All
other repair and maintenance costs are charged to the Income Statement during the financial period in which they are incurred.
Borrowing costs directly attributable to the construction of property, plant and equipment are capitalised as part of the cost of those assets.
Business Combinations
Business combinations from 1 April 2010
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For
each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate
share of the acquiree’s identifiable net assets. Acquisition costs are expensed as incurred.
When the Group acquires a business it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the
acquiree is re-measured to fair value at the acquisition date through the Income Statement.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance
with IAS39 in the Income Statement.
Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised
for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair
value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised in the Statement of
Comprehensive Income.
Business combinations prior to 1 April 2010
Business combinations were accounted for using the purchase method. Transaction costs directly attributable to the acquisition formed
part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share
of the acquiree’s identifiable net assets.
Business combinations achieved in stages were accounted for as separate steps. Any additional acquired share of interest did not affect
previously recognised goodwill.
Contingent consideration was recognised if the Group had a present obligation, the economic outflow was more likely than not and a
reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill.
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 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.
DCC ANNUAL REPORT AND ACCOUNTS 2011
83
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
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.
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.
84
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Trade and Other 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 and Other 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.
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 at 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.
Changes in the fair value of currency swaps that are hedging borrowings and for which the Group have not elected to apply hedge
accounting are reflected in the Income Statement in ‘Finance Costs’ and presented in note 12.
Changes in the fair value of other derivative financial instruments for which the Group have not elected to apply hedge accounting are
reflected in the Income Statement, in ‘Other Operating Income’ or ‘Other Operating Expenses’ and presented in note 5.
Hedging
For the purposes of hedge accounting, hedges are designated either as fair value hedges (which hedge 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 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 derivative is classified as a non-current asset or non-current liability if the remaining
maturity of the derivative is more than twelve months, and as a current asset or current liability if the remaining maturity of the derivative
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, together with any changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk. As a result, the gain or loss on interest rate swaps and cross currency interest rate swaps
that are in hedge relationships with borrowings are included within ‘Finance Income’ or ‘Finance Costs’. In the case of the related hedged
borrowings 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’. The gain or loss on commodity derivatives
that are fair value hedges of firm commitments are recognised in revenue. Any change in the fair value of the firm commitment attributable
to the hedged risk is recognised as an asset or liability on the balance sheet with a corresponding gain or loss in Revenue.
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.
DCC ANNUAL REPORT AND ACCOUNTS 2011
85
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
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 in ‘Other Operating Income’ or
‘Other Operating Expenses’. 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 in
Revenue or Costs of Sales (depending on whether the hedge related to a forecasted sale or purchase).
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.
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.
86
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
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 have been enacted or substantially enacted by the
balance sheet date 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 profits would be available to allow all or part of the deferred tax asset to be utilised.
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 Group Statement of Comprehensive Income.
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 Monte Carlo simulation technique for the DCC plc Long Term
Incentive Plan 2009, a binomial model for the DCC plc 1998 Employee Share Option Scheme and the Black Scholes option valuation
model for the DCC Sharesave Scheme.
DCC ANNUAL REPORT AND ACCOUNTS 2011
87
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
The DCC plc Long Term Incentive Plan 2009 contains market based vesting conditions and accordingly, the fair value assigned to the
related equity instrument on initial application of IFRS 2 Share-based Payment is adjusted to reflect the anticipated likelihood at the
grant date of achieving the market based vesting conditions.
The DCC plc 1998 Employee Share Option Scheme and the DCC Sharesave Scheme 2001 contain non-market based vesting
conditions which 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.
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 46.
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.
88
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
2. Financial Risk Management (continued)
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.
The fair value of interest rate and cross currency 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 fair
value of forward commodity contracts is determined using quoted forward commodity prices at the balance sheet date. The fair values
of borrowings (none of which are listed) are measured by discounting cash flows at prevailing interest and exchange rates.
The nominal value less impairment provision of trade receivables and payables approximate to their fair values, largely due to their short-
term maturities.
Fair values of the Group’s financial assets and financial liabilities are summarised in note 46.
3. Critical Accounting Estimates and Judgements
The Group’s main accounting policies affecting its results of operations and financial condition are set out on pages 80 to 88. In
determining and applying accounting policies, judgement 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 judgements:
Goodwill
The Group has capitalised goodwill of €597.6 million at 31 March 2011. 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 value in use, management judgement
is required in forecasting cash flows of cash generating 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 €103.0 million at 31 March 2011. At 31 March 2011
the Group also has plan assets totalling €83.7 million, giving a net pension liability of €19.3 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.
Taxation
The Group is subject to income taxes in a number of jurisdictions. Provisions for tax liabilities require management to make judgements
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
Business combinations are accounted for using the acquisition method which requires that the assets and liabilities assumed are
recorded at their respective fair values at the date of acquisition. The application of this 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.
DCC ANNUAL REPORT AND ACCOUNTS 2011
89
Notes to the Financial Statements (continued)
3. Critical Accounting Estimates and Judgements (continued)
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 operating segment and by geography
DCC is a sales, marketing, distribution and business support services group headquartered in Dublin, Ireland. Operating segments are
reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision
maker has been identified as Mr. Tommy Breen, Chief Executive. The Group is organised into five main operating segments: DCC
Energy, DCC SerCom, DCC Healthcare, DCC Environmental and DCC Food & Beverage.
DCC Energy markets and sells oil products for commercial/industrial, transport and domestic use in Britain, Ireland and Continental
Europe. DCC Energy markets and sells liquefied petroleum gas for similar uses 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 and intravenous pharmaceutical products and provides related value
added services to the acute care, community care and scientific sectors in Ireland and Britain. DCC Healthcare is also a provider of
outsourced services to the health and beauty industry in Europe.
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 Food & Beverage markets and sells food and beverages in Ireland to a broad range of customers and wine in Britain. DCC Food
& Beverage also has a frozen and chilled food distribution business in Ireland.
The chief operating decision maker monitors the operating results of segments separately in order to allocate resources between
segments and to assess performance. Segment performance is predominantly evaluated based on operating profit before amortisation
of intangible assets and net operating exceptional items. As performance is also evaluated based on return on capital employed,
supplemental information on net tangible capital employed is also provided below. Net finance costs and income tax are managed on a
centralised basis and therefore these items are not allocated between operating segments for the purpose of presenting information to
the chief operating decision maker and accordingly are not included in the detailed segmental analysis below.
Intersegment revenue is not material and thus not subject to separate disclosure.
90
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
4. Segment Information (continued)
The segment results for the year ended 31 March 2011 are as follows:
Income Statement items
Year ended 31 March 2011
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
DCC
Healthcare Environmental
€’000
€’000
DCC Food
& Beverage
€’000
Total
€’000
Segment revenue
6,129,786 1,868,877
323,291
106,442
252,177 8,680,573
Operating profit*
Amortisation of intangible assets
Net operating exceptionals (note 11)
Operating profit
Finance costs
Finance income
Share of associates’ loss after tax
Profit before income tax
Income tax expense
Profit for the year
137,307
(7,145)
(6,475)
46,029
(944)
(2,120)
23,203
(800)
(2,129)
11,589
(2,073)
(6)
11,492
-
(1,920)
229,620
(10,962)
(12,650)
123,687
42,965
20,274
9,510
9,572
206,008
(52,140)
35,939
(239)
189,568
(43,771)
145,797
* Operating profit before amortisation of intangible assets and net operating exceptionals
Year ended 31 March 2010
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
DCC
Healthcare Environmental
€’000
€’000
DCC Food
& Beverage
€’000
Total
€’000
Segment revenue
4,420,122 1,618,455
334,044
77,366
274,984 6,724,971
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
113,105
(4,510)
(4,195)
40,835
(318)
(1,051)
21,143
(394)
(897)
9,297
(799)
-
8,453
(129)
(3,621)
192,833
(6,150)
(9,764)
104,400
39,466
19,852
8,498
4,703
176,919
(35,585)
23,415
152
164,901
(33,207)
131,694
* Operating profit before amortisation of intangible assets and net operating exceptionals
DCC ANNUAL REPORT AND ACCOUNTS 2011
91
Notes to the Financial Statements (continued)
4. Segment Information (continued)
Balance Sheet items
As at 31 March 2011
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
DCC
Healthcare Environmental
€’000
€’000
DCC Food
& Beverage
€’000
Total
€’000
Segment assets
1,170,278
674,449
191,136
151,474
126,666 2,314,003
Reconciliation to total assets as reported in the Group Balance Sheet
Investments 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
2,281
87,938
9,328
700,340
3,113,890
Segment liabilities
666,423
366,487
61,102
29,091
63,256 1,186,359
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 and contingent acquisition consideration (current and non-current)
Government grants (current and non-current)
Total liabilities as reported in the Group Balance Sheet
DCC
Energy
€’000
DCC
SerCom
€’000
802,786
30,675
84,861
74,344
2,991
2,182,016
DCC Food
& Beverage
€’000
Total
€’000
As at 31 March 2010
DCC
DCC
Healthcare Environmental
€’000
€’000
Segment assets
1,062,927
539,656
231,622
147,677
128,221 2,110,103
Reconciliation to total assets as reported in the Group Balance Sheet
Investments 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
2,393
103,264
12,166
714,917
2,942,843
Segment liabilities
622,331
294,337
69,842
26,622
68,000 1,081,132
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 and contingent acquisition consideration (current and non-current)
Government grants (current and non-current)
Total liabilities as reported in the Group Balance Sheet
851,832
19,888
95,178
54,209
3,678
2,105,917
92
DCC ANNUAL REPORT AND ACCOUNTS 2011
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 2011 and
31 March 2010.
As at 31 March 2011
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
DCC
Healthcare Environmental
€’000
€’000
DCC Food
& Beverage
€’000
Total
€’000
Segment assets
Intangible assets
Deferred income tax assets
Assets employed
1,170,278
(336,191)
2,122
836,209
674,449
(113,672)
3,319
564,096
191,136
(87,526)
2,211
105,821
151,474
(64,252)
234
87,456
126,666 2,314,003
(636,114)
(34,473)
9,328
1,442
93,635 1,687,217
Segment liabilities
Income tax liabilities (current and deferred)
Government grants
Liabilities employed
666,423
29,852
191
696,466
366,487
28,636
143
395,266
61,102
11,068
1,876
74,046
29,091
9,968
781
39,840
63,256 1,186,359
84,861
2,991
68,593 1,274,211
5,337
-
Net tangible capital employed
139,743
168,830
31,775
47,616
25,042
413,006
As at 31 March 2010
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
DCC
Healthcare Environmental
€’000
€’000
DCC Food
& Beverage
€’000
Total
€’000
Segment assets
Intangible assets
Deferred income tax assets
Assets employed
1,062,927
(322,850)
4,062
744,139
539,656
(79,359)
2,004
462,301
231,622
(98,380)
3,985
137,227
147,677
(65,128)
155
82,704
128,221 2,110,103
(595,090)
(29,373)
12,166
1,960
100,808 1,527,179
Segment liabilities
Income tax liabilities (current and deferred)
Government grants
Liabilities employed
622,331
28,382
300
651,013
294,337
33,220
137
327,694
69,842
14,336
2,526
86,704
26,622
12,618
715
39,955
68,000 1,081,132
95,178
3,678
74,622 1,179,988
6,622
-
Net tangible capital employed
93,126
134,607
50,523
42,749
26,186
347,191
DCC ANNUAL REPORT AND ACCOUNTS 2011
93
Notes to the Financial Statements (continued)
4. Segment Information (continued)
Other segment information
Year ended 31 March 2011
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
DCC
Healthcare Environmental
€’000
€’000
DCC Food
& Beverage
€’000
Total
€’000
Capital expenditure
Depreciation
44,645
20,389
4,910
11,556
2,523
84,023
30,858
5,141
4,526
8,427
3,954
52,906
Intangible assets acquired
19,025
35,230
1,743
797
5,063
61,858
Impairment of goodwill
-
-
-
-
-
-
Year ended 31 March 2010
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
DCC
Healthcare Environmental
€’000
€’000
DCC Food
& Beverage
€’000
Total
€’000
Capital expenditure
Depreciation
23,097
4,220
11,643
6,708
1,261
46,929
26,804
4,101
4,959
6,599
4,493
46,956
Intangible assets acquired
107,438
6,279
8,407
26,358
(57)
148,425
Impairment of goodwill
-
-
-
-
1,908
1,908
Geographical analysis
The following is a geographical analysis of the segment information presented above.
Republic of Ireland
2010
2011
€’000
€’000
UK
2011
€’000
2010
€’000
Rest of the World
2011
€’000
2010
€’000
Total
2011
€’000
2010
€’000
Year ended 31 March
Income Statement items
Revenue
919,966 1,107,364 6,388,742 4,748,268 1,371,865
869,339 8,680,573 6,724,971
Operating profit*
Amortisation of intangible assets
Net operating exceptionals
Segment result
34,236
(470)
(3,076)
30,690
34,191
(962)
(3,175)
30,054
164,541
(8,773)
(8,582)
147,186
133,361
(4,317)
(5,429)
123,615
30,843
(1,719)
(992)
28,132
25,281
(871)
(1,160)
23,250
229,620
(10,962)
(12,650)
206,008
192,833
(6,150)
(9,764)
176,919
Balance Sheet items
Segment assets
393,223
404,043 1,600,302 1,397,514
320,478
308,546 2,314,003 2,110,103
Segment liabilities
177,859
182,011
778,365
696,349
230,135
202,772 1,186,359 1,081,132
Other segment information
Capital expenditure
9,641
9,245
70,672
34,213
3,710
3,471
84,023
46,929
Depreciation
14,091
15,385
36,391
30,145
2,424
1,426
52,906
46,956
Intangible assets acquired
5,848
10,363
45,739
106,281
10,271
31,781
61,858
148,425
Impairment of goodwill
-
-
-
1,908
-
-
-
1,908
* Operating profit before amortisation of intangible assets and net operating exceptionals
94
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
5. Other Operating Income/Expense
Other operating income and expense comprise the following credits/(charges):
Other income
Fair value gains on non-hedge accounted derivative financial instruments - commodities
Fair value gains on non-hedge accounted derivative financial instruments - forward exchange contracts
Throughput
Haulage
Rental income
Other operating income
Other expenses
Expensing of employee share options (note 10)
Fair value losses on non-hedge accounted derivative financial instruments - forward exchange contracts
Other operating expenses
2011
€’000
2010
€’000
-
206
6,612
7,139
3,675
7,791
25,423
(1,389)
(742)
(800)
(2,931)
300
-
2,751
2,444
1,968
2,240
9,703
(1,341)
(26)
(598)
(1,965)
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 46)
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
2011
€’000
5,317
2,121
(730)
13,247
873
11,390
25,510
1,378
58
1,118
2,554
2010
€’000
8,946
2,063
(800)
12,665
717
11,017
24,399
1,487
326
1,507
3,320
Auditor statutory disclosure
The audit fee for the Parent Company is €20,000 (2010: €20,000). This amount is paid to PricewaterhouseCoopers, Ireland, the
statutory auditor.
7. Directors’ Emoluments and Interests
Directors’ emoluments (which are included in operating costs) and interests are presented in the Report on Directors’ Remuneration and
Interests on pages 62 to 68.
DCC ANNUAL REPORT AND ACCOUNTS 2011
95
Notes to the Financial Statements (continued)
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 costs (net)
Profit before income tax
Income tax expense
Profit for the financial year
Impact on Group Balance Sheet
As at 31 March
Group share of:
Non-current assets
Current assets
Total assets
Total equity
Non-current liabilities
Current liabilities
Total liabilities
Total equity and liabilities
Impact on Group Cash Flow Statement
Year ended 31 March
Group share of:
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Net increase in cash and cash equivalents
Joint venture becoming a subsidiary
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
2011
€’000
2010
€’000
15,119
(9,311)
5,808
(4,693)
159
-
1,274
(1)
1,273
(179)
1,094
33,635
(22,466)
11,169
(7,523)
(821)
(300)
2,525
(24)
2,501
(884)
1,617
2011
€’000
6,828
3,171
9,999
6,508
8
3,483
3,491
9,999
2011
€’000
1,000
(536)
-
464
-
-
-
1,139
1,603
1,603
-
1,603
2010
€’000
6,957
2,731
9,688
6,452
6
3,230
3,236
9,688
2010
€’000
4,356
(3,039)
(64)
1,253
(2,324)
65
107
2,038
1,139
1,139
-
1,139
The Group’s share of its joint ventures’ capital commitments for property, plant and equipment at 31 March 2011 is €0.371 million
(2010: €0.415 million).
Details of the Group’s principal joint ventures are shown in the Group directory on pages 132 to 135.
96
DCC ANNUAL REPORT AND ACCOUNTS 2011
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 Environmental
DCC Food & Beverage
The employee benefit expense (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)
2011
Number
3,513
1,554
1,131
759
968
7,925
2011
€’000
2010
Number
3,098
1,421
1,324
550
1,003
7,396
2010
€’000
284,042
32,132
1,389
6,884
2,383
326,830
250,928
29,058
1,341
6,899
2,662
290,888
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 €1.389 million (2010: €1.341 million) has been arrived at by applying a Monte Carlo simulation
technique for share awards issued under the DCC plc Long Term Incentive Plan 2009, a 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
DCC plc Long Term Incentive Plan 2009
20 August 2009
15 November 2010
DCC Sharesave Scheme 2001
10 December 2004
Grant
price
€
15.63
21.25
Number of
share awards/
options
granted
Duration of
vesting period
Weighted
average
fair value
€
Expense in
Income Statement
2011
€’000
2010
€’000
3 years
3 years
255,406
212,525
8.97
12.00
742
283
1,025
12.63
3 and 5 years
716,010
4.67
(161)
DCC plc 1998 Employee Share Option Scheme
12 November 2002
18 May 2004
9 November 2004
15 December 2005
23 June 2006
23 July 2007
20 December 2007
20 May 2008
10.38
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 years
3 years
3 years
3 years
609,500
162,500
219,500
215,000
223,500
323,000
25,000
315,500
2.81
3.42
4.15
4.52
4.54
6.35
5.22
4.32
Total expense
(6)
(7)
-
-
(9)
126
33
388
525
1,389
439
-
439
90
(43)
(5)
18
(44)
13
435
44
394
812
1,341
DCC ANNUAL REPORT AND ACCOUNTS 2011
97
Notes to the Financial Statements (continued)
10. Employee Share Options (continued)
Share options
DCC plc Long Term Incentive Plan 2009
At 31 March 2011, under the DCC plc Long Term Incentive Plan 2009, Group employees hold options to subscribe for 462,058 ordinary
shares.
The general terms of the DCC plc Long Term Incentive Plan 2009 are set out in the Report on Directors’ Remuneration and Interests on
pages 62 to 68.
A summary of activity under the DCC plc Long Term Incentive Plan 2009 over the year is as follows:
At 1 April
Granted
Lapsed
At 31 March
2011
Number of
share awards
2010
Number of
share awards
251,887
212,525
(2,354)
462,058
-
255,406
(3,519)
251,887
The share awards outstanding at the year end have a weighted average remaining contractual life of 6.0 years (2010: 6.4 years).
The weighted average fair values assigned to share awards granted under the DCC plc Long Term Incentive Plan 2009, which were
computed in accordance with the Monte Carlo valuation methodology, were as follows:
Granted during the year ended 31 March 2011
Granted during the year ended 31 March 2010
€
12.00
8.97
The fair values of share awards granted under the DCC plc Long Term Incentive Plan 2009 were determined taking account of peer
group total share return volatilities and correlations together with the following assumptions:
Risk-free interest rate (%)
Dividend yield (%)
Expected volatility (%)
Expected life in years
2011
1.91
2.50
30.0
5.0
2010
2.57
2.50
30.0
5.0
The expected volatility is based on historic volatility over the past 5 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.
Analysis of closing balance - outstanding at end of year
Date of grant
Date of expiry
20 August 2009
15 November 2010
Total outstanding at 31 March
20 August 2016
15 November 2017
2011
Number of
share awards
2010
Number of
share awards
249,533
212,525
462,058
251,887
-
251,887
Analysis of closing balance - exercisable at end of year
As at 31 March 2011, none of the outstanding share awards under the DCC plc Long Term Incentive Plan 2009 were exercisable.
DCC plc 1998 Employee Share Option Scheme
At 31 March 2011, under the DCC plc 1998 Employee Share Option Scheme, Group employees hold basic tier options to subscribe for
1,235,000 ordinary shares and second tier options to subscribe for 661,000 ordinary shares.
The general terms of the DCC plc 1998 Employee Share Option Scheme are set out in the Report on Directors’ Remuneration and
Interests on pages 62 to 68.
98
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
10. Employee Share Options (continued)
A summary of activity under the DCC plc 1998 Employee Share Option Scheme over the year is as follows:
At 1 April
Exercised
Lapsed
At 31 March
2011
2010
Average
exercise
price in €
per share
Average
exercise
price in €
per share
Options
Options
14.14 2,213,000
(279,000)
12.21
(38,000)
14.01
14.42 1,896,000
12.75 3,033,000
(718,500)
8.06
(101,500)
15.76
14.14 2,213,000
Total exercisable at 31 March
16.44
953,500
12.58
801,500
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 €20.15 (2010: €18.53). The share options outstanding at the year end have a weighted average
remaining contractual life of 3.8 years (2010: 4.4 years).
Analysis of closing balance - outstanding at end of year
Date of grant
Date of expiry
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
7 June 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
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
Total exercisable at 31 March
7 June 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
2011
2010
Exercise
price in €
per share
Exercise
price in €
per share
Options
Options
-
-
10.25
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
-
-
395,500
339,500
84,000
119,500
140,500
122,500
162,000
226,000
25,000
281,500
1,896,000
10.65
11.25
10.25
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
25,000
128,500
431,500
350,000
114,000
133,000
160,500
143,500
177,500
232,000
25,000
292,500
2,213,000
2011
2010
Exercise
price in €
per share
-
-
10.25
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
Options
-
-
173,000
78,000
16,500
60,000
90,500
122,500
162,000
226,000
25,000
953,500
Exercise
price in €
per share
10.65
11.25
10.25
10.38
10.70
12.75
15.65
16.70
-
-
-
Options
25,000
128,500
191,000
86,500
46,500
70,000
110,500
143,500
-
-
-
801,500
DCC ANNUAL REPORT AND ACCOUNTS 2011
99
Notes to the Financial Statements (continued)
10. Employee Share Options (continued)
DCC Sharesave Scheme 2001
There are no remaining options to subscribe for ordinary shares under the DCC Sharesave Scheme 2001 (2010: Group employees held
options to subscribe for 45,791 ordinary shares). 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
2011
2010
Average
exercise
price in €
per share
12.63
12.63
12.63
-
Average
exercise
price in €
per share
12.63
12.63
12.63
12.63
Options
223,398
(147,554)
(30,053)
45,791
Options
45,791
(33,432)
(12,359)
-
The weighted average share price at the dates of exercise for share options exercised during the year under the DCC Sharesave
Scheme 2001 was €19.21 (2010: €19.18). There were no share options outstanding at the year end (2010: share options outstanding
at the year end had a weighted average remaining contractual life of 0.9 years).
Analysis of closing balance - outstanding at end of year
Date of grant
10 December 2004
Total outstanding at 31 March
Date of expiry
1 March 2011
2011
2010
Exercise
price in €
per share
-
Exercise
price in €
per share
12.63
Options
-
-
Options
45,791
45,791
Analysis of closing balance - exercisable at end of year
As at 31 March 2011 there were no outstanding options under the DCC Sharesave Scheme 2001 (2010: 45,791 outstanding options
were exercisable).
11. Exceptionals
Net profit on disposal of subsidiaries
Cumulative foreign exchange translation losses relating to subsidiaries disposed of
Restructuring of Group defined benefit pension schemes
Impairment of property, plant and equipment
Acquisition related fees
Restructuring costs and other
Impairment of goodwill
Profit on disposal of associate
Operating exceptional items
Mark to market losses (included in interest)
Net exceptional items before taxation
Exceptional taxation charge
Net exceptional items after taxation
2011
€’000
894
(3,145)
4,976
(6,074)
(3,566)
(5,735)
-
-
(12,650)
2010
€’000
-
-
-
-
-
(8,683)
(1,908)
827
(9,764)
(1,623)
(14,273)
(1,285)
(11,049)
(1,354)
(15,627)
-
(11,049)
During the first half of the financial year, DCC Healthcare disposed of its Mobility & Rehabilitation businesses and DCC Food & Beverage
disposed of one of its smaller Irish businesses. The net cash impact of these transactions (€28.431 million) resulted in a pre-tax gain on
their book carrying values, including goodwill, of €0.894 million. These businesses accounted for less than 1% of DCC’s operating profit
for the year ended 31 March 2010.
IAS 21 requires that any foreign exchange translation differences which have been written off directly to reserves in prior years be
recycled through the Income Statement on the disposal of the related asset. The amount of such differences relating to the above
disposals, which did not have any impact on the Group’s total equity, was €3.145 million.
100
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
11. Exceptionals (continued)
Restructuring of certain of the Group’s pension arrangements during the year gave rise to a net reduction in pension liabilities and an
exceptional gain of €4.976 million.
The Group made a provision of €6.074 million against the carrying value of one of its buildings.
IFRS 3 Revised requires that the professional (legal and financial due diligence) and tax costs (such as stamp duty) relating to the
evaluation and completion of an acquisition are expensed in the Income Statement whereas previously they were capitalised as part of
the acquisition cost. During the year these costs amounted to €3.566 million.
Most of the Group’s debt has been raised in the US Private Placement market and swapped, using long term interest, currency and
cross currency derivatives, to floating rate sterling and euro. The level of ineffectiveness calculated under IAS 39 by marking to market
swaps designated as fair value hedges and the related fixed rate debt, together with gains or losses arising from marking to market
swaps not designated as fair value hedges offset by gains or losses on that related fixed rate debt, is charged or credited as an
exceptional item. In the year to 31 March 2011 this amounted to a total exceptional charge of €1.623 million.
The balance of the net exceptional charge relates primarily to restructuring costs arising from the integration of recently acquired
businesses.
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 and contingent acquisition consideration (note 33)
Mark-to-market of swaps and related debt* (note 11)
Finance income
Interest on cash and term deposits
Net income on interest rate and currency swaps
Other income receivable
Expected return on defined benefit pension scheme assets (note 32 )
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
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)
2011
€’000
2010
€’000
(16,950)
(87)
(26,174)
(30)
(122)
(861)
(44,224)
(5,347)
(946)
(1,623)
(52,140)
4,306
26,813
129
4,691
35,939
(13,381)
(146)
(13,255)
(23)
(147)
(1,901)
(28,853)
(4,997)
(450)
(1,285)
(35,585)
3,537
16,317
105
3,456
23,415
(16,201)
(12,170)
(986)
(19,821)
26,733
(7,549)
(1,623)
(3,962)
(22,465)
27,066
(1,924)
(1,285)
2011
€1=Stg£
2010
€1=Stg£
0.884
0.852
0.889
0.887
DCC ANNUAL REPORT AND ACCOUNTS 2011
101
Notes to the Financial Statements (continued)
14. Share of Associates’ (Loss)/Profit after Tax
The Group’s share of associates’ (loss)/profit after tax is equity-accounted and is presented as a single line item in the Group Income
Statement. The (loss)/profit after tax generated by the Group’s associates is analysed as follows:
Group share of:
Revenue
(Loss)/profit before finance costs
Finance costs (net)
(Loss)/profit before income tax
Income tax credit/(charge)
(Loss)/profit after tax
15. Income Tax Expense
(i) Income tax expense recognised in the Income Statement
Current taxation
Irish corporation tax at 12.5%
Manufacturing relief
Exceptional taxation charge (note 11)
United Kingdom corporation tax at 28%
Other overseas tax
(Over)/under provision in respect of prior years
Total current taxation
Deferred tax
Irish at 12.5%
United Kingdom at 26%
Other overseas deferred tax
Under/(over) provision in respect of prior years
Total deferred tax credit
Total income tax expense
(ii) Deferred tax recognised directly in Equity
Defined benefit pension obligations
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’
(loss)/profit after tax, amortisation of intangible assets and net exceptionals
Impact of net exceptionals
Taxation as a percentage of profit before share of associates’
(loss)/profit after tax and amortisation of intangible assets
102
DCC ANNUAL REPORT AND ACCOUNTS 2011
2011
€’000
2010
€’000
10,977
10,778
(225)
(45)
(270)
31
(239)
203
(46)
157
(5)
152
2011
€’000
2010
€’000
4,395
(113)
1,354
29,153
9,444
(401)
43,832
(3,329)
1,797
(1,140)
2,611
(61)
9,097
(165)
-
15,332
7,778
3,870
35,912
(1,196)
3,321
85
(4,915)
(2,705)
43,771
33,207
(336)
341
5
(861)
107
(754)
189,568
239
10,962
200,769
164,901
(152)
6,150
170,899
43,771
2,742
46,513
21.0%
2.2%
33,207
1,363
34,570
19.0%
1.2%
23.2%
20.2%
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
2011
%
12.5
(0.1)
10.8
23.2
2010
%
12.5
(0.1)
7.8
20.2
(iv) Factors that may affect future tax rates and other disclosures
No significant change is expected to the standard rate of corporation tax in the Republic of Ireland which is currently 12.5%. The
standard rate of corporation tax in the UK reduced from 28% to 26% on 1 April 2011 and will reduce by a further 1% per annum up to
April 2014 when the tax rate will be 23%.
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 €10.284 million (2010: €3.852 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 per Ordinary Share are as follows:
Final - paid 43.70 cent per share on 22 July 2010
(2010: paid 39.73 cent per share on 23 July 2009)
Interim - paid 26.11 cent per share on 3 December 2010
(2010: paid 23.74 cent per share on 4 December 2009)
2011
€’000
2010
€’000
36,296
32,657
21,738
19,526
58,034
52,183
The Directors are proposing a final dividend in respect of the year ended 31 March 2011 of 48.07 cent per ordinary share (€40.051
million). This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.
DCC ANNUAL REPORT AND ACCOUNTS 2011
103
Notes to the Financial Statements (continued)
18. Earnings per Ordinary Share
Profit attributable to owners of the Parent
Amortisation of intangible assets after tax
Exceptionals after tax (note 11)
Adjusted profit after taxation and non-controlling 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)
2011
€’000
2010
€’000
145,109
8,220
15,627
168,956
130,803
4,787
11,049
146,639
2011
cent
2010
cent
174.48c
9.88c
18.79c
203.15c
158.76c
5.81c
13.41c
177.98c
83,167
82,391
Basic earnings per share is calculated by dividing the profit attributable to owners of the Parent 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.
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)
2011
cent
2010
cent
173.90c
9.85c
18.73c
202.48c
157.92c
5.78c
13.34c
177.04c
83,445
82,830
The earnings used for the purposes of the diluted earnings per share calculations were €145.109 million (2010: €130.803 million) and
€168.956 million (2010: €146.639 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 2011
was 83.445 million (2010: 82.830 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
Weighted average number of ordinary shares for diluted earnings per share
2011
‘000
83,167
278
83,445
2010
‘000
82,391
439
82,830
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.
104
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
19. Property, Plant and Equipment
Group
Year ended 31 March 2011
Opening net book amount
Exchange differences
Acquisition of subsidiaries (note 45)
Disposal of subsidiaries
Additions
Disposals
Depreciation charge
Impairment charge (note 11)
Reclassifications
Closing net book amount
At 31 March 2011
Cost
Accumulated depreciation
Net book amount
Year ended 31 March 2010
Opening net book amount
Exchange differences
Acquisition of subsidiaries (note 45)
Additions
Disposals
Depreciation charge
Reclassifications
Closing net book amount
At 31 March 2010
Cost
Accumulated depreciation
Net book amount
Land &
buildings
€’000
Plant &
machinery
& cylinders
€’000
Fixtures &
fittings &
office
equipment
€’000
Motor
vehicles
€’000
Total
€’000
138,740
(134)
1,281
(3,445)
15,929
(783)
(3,097)
(5,401)
2,272
145,362
138,665
(54)
13,778
(719)
28,984
(1,583)
(25,036)
(673)
(2,382)
150,980
27,751
(125)
6,378
(383)
12,332
(325)
(9,849)
-
184
35,963
52,940
(60)
1,271
(674)
26,778
(2,077)
(14,924)
-
(74)
63,180
358,096
(373)
22,708
(5,221)
84,023
(4,768)
(52,906)
(6,074)
-
395,485
173,732
(28,370)
145,362
392,678
(241,698)
150,980
106,014
(70,051)
35,963
135,954
(72,774)
63,180
808,378
(412,893)
395,485
118,352
2,657
18,539
3,661
(1,926)
(2,564)
21
138,740
119,924
3,894
8,929
30,580
(2,631)
(21,353)
(678)
138,665
29,364
901
800
7,033
(884)
(9,642)
179
27,751
51,661
2,031
10,264
5,655
(3,752)
(13,397)
478
52,940
319,301
9,483
38,532
46,929
(9,193)
(46,956)
-
358,096
159,466
(20,726)
138,740
362,245
(223,580)
138,665
91,022
(63,271)
27,751
124,548
(71,608)
52,940
737,281
(379,185)
358,096
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
2011
€’000
2010
€’000
54,712
(53,215)
1,497
55,712
(52,784)
2,928
607
1,119
DCC ANNUAL REPORT AND ACCOUNTS 2011
105
Notes to the Financial Statements (continued)
20. Intangible Assets
Group
Year ended 31 March 2011
Opening net book amount
Exchange differences
Arising on acquisition (note 45)
Disposal of subsidiaries
Other movements (note 33)
Amortisation charge
Closing net book amount
At 31 March 2011
Cost
Accumulated amortisation
Net book amount
Year ended 31 March 2010
Opening net book amount
Exchange differences
Arising on acquisition (note 45)
Revisions to prior year acquisitions
Impairment charge
Amortisation charge
Closing net book amount
At 31 March 2010
Cost
Accumulated amortisation
Net book amount
Goodwill
€’000
Customer
relationships
€’000
Total
€’000
561,077
2,170
46,783
(9,394)
(3,039)
-
597,597
34,013
391
15,075
-
-
(10,962)
38,517
595,090
2,561
61,858
(9,394)
(3,039)
(10,962)
636,114
624,397
(26,800)
597,597
81,143
(42,626)
38,517
705,540
(69,426)
636,114
429,299
11,012
123,094
(420)
(1,908)
-
561,077
13,889
943
25,331
-
-
(6,150)
34,013
443,188
11,955
148,425
(420)
(1,908)
(6,150)
595,090
588,695
(27,618)
561,077
66,687
(32,674)
34,013
655,382
(60,292)
595,090
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 Environmental
DCC Food & Beverage
2011
€’000
2010
€’000
312,460
105,003
86,296
63,865
29,973
597,597
294,850
77,719
96,378
62,757
29,373
561,077
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
2011
€’000
2010
€’000
214,120
68,924
197,556
71,845
Impairment testing of goodwill
Goodwill acquired through business combinations has been allocated to CGUs for the purpose of impairment testing. Goodwill is tested
for impairment by review of profit and cash flow forecasts and budgets.
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 operating segments determined in accordance with IFRS 8 Operating Segments.
106
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
20. Intangible Assets (continued)
The recoverable amount of each CGU is based on a value in use computation. The cash flow forecasts employed for this computation
are extracted from a three year plan and specifically exclude future acquisition activity. Cash flows for a further two years are based on
the assumptions underlying the three year plan. A terminal value reflecting inflation (2011: 2.5%; 2010: 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 (2011: 8.0%; 2010: 8.0%). Applying these techniques, no impairment charge arose in 2011 (2010:
€1.908 million).
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.
Sensitivity analysis was performed using a discount rate of 10.0% and a terminal growth rate of 1.5% and resulted in an excess in
the recoverable amount of all CGUs over their carrying amount. Management believes that any reasonable change in any of the key
assumptions would not cause the carrying value of goodwill to exceed the recoverable amount.
21. Investments in Associates
At 1 April
Acquisition of subsidiaries (note 45)
Share of (loss)/profit less dividends
Exchange adjustments and other
At 31 March
2011
€’000
2,393
127
(239)
-
2,281
Investments in associates at 31 March 2011 includes goodwill of €0.534 million (2010: €0.534 million).
The Group’s geographical share of the assets (including goodwill) and liabilities of its associates is as follows:
As at 31 March 2011
Ireland
France
As at 31 March 2010
Ireland
France
Non-current
assets
€’000
Current Non-current
liabilities
€’000
assets
€’000
Current
liabilities
€’000
787
7
794
873
-
873
3,338
769
4,107
3,351
-
3,351
(1,808)
(534)
(2,342)
(1,609)
-
(1,609)
(148)
(130)
(278)
(222)
-
(222)
2010
€’000
2,208
-
152
33
2,393
Net
assets
€’000
2,169
112
2,281
2,393
-
2,393
Details of the Group’s associates are as follows:
Name and Registered Office
Nature of Business
% Shareholding
Relevant Share Capital
John Hinde International Limited,
IDA Business Park, Southern Cross Road,
Bray, Co Wicklow.
Sale of tourism, gift and
novelty products.
32.6%
10,726 ordinary shares of €1.25 each.
Lee Oil (Cork) Limited,
Clonminam Industrial Estate, Portlaoise,
Co Laois.
SAS Blue Stork Industry
300, rue du Président Salvador Allende,
92700 Colombes, France.
Company
At 31 March
Sale and distribution of oil products.
50.0%
100 ordinary shares of €1.26 each.
Sales and distribution of computer
hardware, software and peripherals.
20.0%
740 ordinary shares of €10 each.
2011
€’000
2010
€’000
1,244
1,244
DCC ANNUAL REPORT AND ACCOUNTS 2011
107
Notes to the Financial Statements (continued)
22. Investments in Subsidiary Undertakings
Company
At 1 April
Additions
At 31 March
2011
€’000
2010
€’000
168,065
-
168,065
161,065
7,000
168,065
Details of the Group’s principal operating subsidiaries are shown on pages 132 to 135. Non-wholly owned subsidiaries comprises DCC
Environmental Britain Limited (70%) (which owns 100% of Wastecycle Limited and William Tracey Limited) where put and call options exist
to acquire the remaining 30%, Comtrade SA (74%) where a deferred purchase agreement is in place to acquire the remaining 26% and
Virtus Limited (51%).
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 Hill House, 1 Little New Street, London EC4A 3TR, England. 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 46)
Prepayments and accrued income
Value added tax recoverable
Other debtors
Company
Amounts owed by subsidiary undertakings
Prepayments and accrued income
Value added tax recoverable
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
108
DCC ANNUAL REPORT AND ACCOUNTS 2011
2011
€’000
2010
€’000
9,601
1,842
236,686
248,129
9,073
2,047
223,778
234,898
2011
€’000
2010
€’000
979,553
(31,202)
43,708
19,410
22,806
1,034,275
877,575
(30,590)
47,156
10,464
17,414
922,019
2011
€’000
2010
€’000
414,312
2
-
414,314
421,444
1
17
421,462
2011
€’000
2010
€’000
934,004
156,628
15,240
38,142
127
4,950
695
852,794
139,706
11,744
31,167
175
4,002
53
1,149,786 1,039,641
2011
€’000
2010
€’000
315,322
1,128
316,450
284,734
1,151
285,885
Notes to the Financial Statements (continued)
26. Movement in Working Capital
Group
Year ended 31 March 2011
At 1 April 2010
Translation adjustment
Arising on acquisition (note 45)
Disposal of subsidiaries
Exceptional items, interest accruals and other
Increase/(decrease) in working capital (note 41)
At 31 March 2011
Year ended 31 March 2010
At 1 April 2009
Translation adjustment
Arising on acquisition (note 45)
Exceptional items, interest accruals and other
Increase/(decrease) in working capital (note 41)
At 31 March 2010
Company
Year ended 31 March 2011
At 1 April 2010
Decrease in working capital (note 41)
At 31 March 2011
Year ended 31 March 2010
At 1 April 2009
Decrease in working capital (note 41)
At 31 March 2010
27. Cash and Cash Equivalents
Group
Cash at bank and in hand
Short-term bank deposits
Trade
and other
receivables
€’000
Trade
and other
payables
€’000
Inventories
€’000
Total
€’000
234,898
926
19,214
(11,578)
-
4,669
922,019
1,130
47,272
(12,147)
439
75,562
248,129 1,034,275
(1,039,641)
(2,202)
(44,224)
7,436
(1,792)
(69,363)
(1,149,786)
117,276
(146)
22,262
(16,289)
(1,353)
10,868
132,618
208,759
6,131
9,917
(959)
11,050
234,898
672,782
21,462
86,765
477
140,533
922,019
(696,294)
(20,908)
(102,869)
3,827
(223,397)
(1,039,641)
185,247
6,685
(6,187)
3,345
(71,814)
117,276
Trade
and other
receivables
€’000
Trade
and other
payables
€’000
Total
€’000
421,462
(7,148)
414,314
(296,272)
(30,565)
(326,837)
125,190
(37,713)
87,477
452,817
(31,355)
421,462
(274,536)
(21,736)
(296,272)
178,281
(53,091)
125,190
2011
€’000
2010
€’000
185,106
515,234
700,340
178,746
536,171
714,917
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
2011
€’000
2010
€’000
700,340
(34,212)
666,128
714,917
(39,956)
674,961
2011
€’000
2010
€’000
30
6,232
DCC ANNUAL REPORT AND ACCOUNTS 2011
109
Notes to the Financial Statements (continued)
28. Derivative Financial Instruments
Group
Non-current assets
Interest rate swaps - fair value hedges
Cross currency interest rate swaps - fair value hedges
Current assets
Forward contracts - cash flow hedges
Commodity contracts - cash flow hedges
Commodity contracts - fair value hedges
Forward contracts - not designated as hedges
Commodity contracts - not designated as hedges
Total assets
Non-current liabilities
Currency swaps - not designated as hedges
Cross currency interest rate swaps - fair value hedges
Interest rate swaps - fair value hedges
Current liabilities
Forward contracts - cash flow hedges
Commodity contracts - cash flow hedges
Forward contracts - not designated as hedges
Total liabilities
Net asset arising on derivative financial instruments
2011
€’000
2010
€’000
19,778
64,598
84,376
161
3,076
319
6
-
3,562
87,938
(26,845)
(2,875)
(422)
(30,142)
(375)
(38)
(120)
(533)
(30,675)
57,263
20,343
81,578
101,921
38
137
-
409
759
1,343
103,264
(19,296)
(34)
(1)
(19,331)
(231)
(293)
(33)
(557)
(19,888)
83,376
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 2011 total US$200.0 million, Stg£55.0 million and €20.0 million. At 31 March 2011, the fixed interest rates vary from 4.58% to
6.18% and the floating rates are based on US$ LIBOR, sterling LIBOR and EURIBOR.
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$683.0 million into floating rate
sterling debt of Stg£306.967 million and floating rate euro debt of €110.051 million. At 31 March 2011 the fixed interest rates vary from
4.37% 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 2011 total €33.841 million (2010:
€25.283 million). Gains and losses recognised in the cash flow hedge reserve in equity (note 38) at 31 March 2011 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 2011 total €12.879 million (2010: €3.535
million). Gains and losses recognised in the cash flow hedge reserve in equity (note 38) at 31 March 2011 on forward commodity
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.
110
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
29. Borrowings
Group
Non-current
Bank borrowings
Finance leases*
Unsecured Notes due 2013 to 2022
Current
Bank borrowings
Finance leases*
Loan notes
Unsecured Notes due 2011
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
2011
€’000
2010
€’000
350
413
761,481
762,244
34,668
475
120
5,279
40,542
802,786
1,776
732
791,155
793,663
47,318
1,341
9,510
-
58,169
851,832
2011
€’000
2010
€’000
317
297,940
463,987
762,244
6,503
293,301
493,859
793,663
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 six
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 2011.
Unsecured Notes due 2011 to 2022
The Group’s Unsecured Notes due 2011 to 2022 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’), fixed rate debt of US$120.0 million issued in 2008 and maturing in 2013 and 2015 (the ‘2013/15 Notes’) and fixed rate debt of
US$363.0 million and €20.0 million issued in 2010 and maturing in 2015, 2017, 2020 and 2022 (the ‘2015/17/20/22 Notes’).
The 2013/15 Notes which are all denominated in US$ 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 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.
Of the 2015/17/20/22 Notes denominated in US$, $213.0 million has been swapped (using cross currency interest rate swaps
designated as fair value hedges under IAS 39) from fixed US$ to floating sterling rates, repricing quarterly based on sterling LIBOR and
$150.0 million has been swapped (using cross currency interest rate swaps designated as fair value hedges under IAS 39) from fixed
US$ to floating euro rates, repricing quarterly based on EURIBOR. The 2015/17/20/22 Notes denominated in euro have been swapped
from fixed to floating euro rates (using an interest rate swap designated as a fair value hedge under IAS 39), repricing quarterly based on
EURIBOR.
DCC ANNUAL REPORT AND ACCOUNTS 2011
111
Notes to the Financial Statements (continued)
29. Borrowings (continued)
The maturity and interest profile of the Unsecured Notes is as follows:
Average maturity
Average fixed interest rates*
- US$ denominated
- sterling denominated
- euro denominated
Average floating rate including swaps
- sterling denominated
- euro denominated
* Issued and repayable at par
2011
2010
6.0 years
7.0 years
5.56%
5.95%
4.58%
5.56%
5.95%
4.58%
2.08%
2.24%
1.94%
2.02%
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 2011 is as follows:
Cash and short term bank deposits
Overdrafts
Cash and cash equivalents
Bank loans and loan notes
Finance leases
Unsecured Notes due 2011 to 2022
Derivative financial instruments (net)
Group net debt (including share of net cash in joint ventures)
Group net debt (excluding share of net cash in joint ventures)
At 1
April 2010
€’000
Cash flow
€’000
Fair value
adjustment
€’000
At 31
Translation
adjustment March 2011
€’000
€’000
714,917
(39,956)
674,961
(18,648)
(2,073)
(791,155)
83,376
(53,539)
(54,678)
(17,536)
6,151
(11,385)
18,168
1,234
-
2,331
10,348
9,884
-
-
-
-
-
26,733
(28,356)
(1,623)
(1,623)
2,959
(407)
2,552
(446)
(49)
(2,338)
(88)
(369)
(369)
700,340
(34,212)
666,128
(926)
(888)
(766,760)
57,263
(45,183)
(46,786)
The reconciliation of opening to closing net debt for the year ended 31 March 2010 is as follows:
Cash and short term bank deposits
Overdrafts
Cash and cash equivalents
Bank loans and loan notes
Finance leases
Unsecured Notes due 2011 to 2022
Derivative financial instruments (net)
Group net debt (including share of net cash in joint ventures)
Group net debt (excluding share of net cash in joint ventures)
Currency profile
The currency profile of net debt at 31 March 2011 is as follows:
Cash and cash equivalents
Borrowings
Derivatives
At 1
April 2009
€’000
426,789
(51,272)
375,517
(50,614)
(1,599)
(523,577)
109,603
(90,670)
(92,647)
Cash flow
€’000
276,773
12,428
289,201
31,886
(417)
(284,031)
2,001
38,640
39,582
Fair value
adjustment
€’000
Translation
adjustment
€’000
At 31
March 2010
€’000
-
-
-
-
-
27,066
(28,351)
(1,285)
(1,285)
11,355
(1,112)
10,243
80
(57)
(10,613)
123
(224)
(328)
714,917
(39,956)
674,961
(18,648)
(2,073)
(791,155)
83,376
(53,539)
(54,678)
Euro
€’000
Sterling
€’000
US Dollar
€’000
199,599
(287,803)
(16,073)
(104,277)
482,660
(509,523)
71,732
44,869
17,708
(5,460)
1,604
13,852
Other
€’000
373
-
-
373
Total
€’000
700,340
(802,786)
57,263
(45,183)
112
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
30. Analysis of Net Debt (continued)
The currency profile of net debt at 31 March 2010 is as follows:
Cash and cash equivalents
Borrowings
Derivatives
Euro
€’000
Sterling
€’000
US Dollar
€’000
Other
€’000
Total
€’000
198,437
(305,228)
(6,028)
(112,819)
500,337
(538,923)
88,398
49,812
14,885
(5,732)
1,006
10,159
1,258
(1,949)
-
(691)
714,917
(851,832)
83,376
(53,539)
Interest rate profile
Cash and cash equivalents at 31 March 2011 and 31 March 2010 have maturity periods up to three months (note 27).
Bank borrowings are at floating interest rates for periods less than six months while the Group’s Unsecured Notes due 2013 to 2022
have been swapped to floating rates which reset on a quarterly or semi-annual basis (note 29). The Group’s Unsecured Notes due 2011
are at a fixed US Dollar rate and the majority of finance leases are at fixed rates.
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
Arising on acquisition
Disposal of subsidiaries
Income Statement credit (note 15)
Tax recognised directly in equity (note 15)
At 31 March
2011
€’000
2010
€’000
3,180
515
5,633
9,328
25,224
210
25,434
3,961
515
7,690
12,166
23,266
213
23,479
2011
€’000
2010
€’000
11,313
(248)
4,536
561
(61)
5
16,106
6,392
(348)
8,728
-
(2,705)
(754)
11,313
32. Retirement Benefit Obligations
Group
The Group operates defined benefit and defined contribution schemes. The pension scheme assets are held in separate trustee
administered funds.
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 1 April 2007 and 1 May 2010. 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 2011 for IAS 19 by a qualified actuary.
DCC ANNUAL REPORT AND ACCOUNTS 2011
113
Notes to the Financial Statements (continued)
32. Retirement Benefit Obligations (continued)
The principal actuarial assumptions used were as follows:
2011
2010
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
2.25% - 4.00%
0.00% - 3.00%
5.50%
2.25%
3.60% - 4.60%
3.60%
5.45%
3.60%
2011
7.25%
3.75%
5.75%
2.00%
7.85%
4.35%
6.85%
0.50%
4.00%
2.00% - 3.00%
5.40%
2.00%
4.65%
3.65%
5.55%
3.65%
2010
7.50%
4.00%
6.00%
2.00%
8.05%
4.55%
7.05%
0.50%
The expected rate of return for equities and property has been calculated assuming that equities and property will outperform bonds
by 3.5% and 2.0% 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 2011
Present value of scheme liabilities
Net pension liability at 31 March 2011
114
DCC ANNUAL REPORT AND ACCOUNTS 2011
2011
2010
23.2
25.0
26.3
27.7
22.0
25.1
23.3
26.4
ROI
€’000
27,273
37,719
1,691
3,523
70,206
(83,885)
(13,679)
2011
UK
€’000
5,168
7,051
1,064
234
13,517
(19,173)
(5,656)
Total
€’000
32,441
44,770
2,755
3,757
83,723
(103,058)
(19,335)
Notes to the Financial Statements (continued)
32. Retirement Benefit Obligations (continued)
Equities
Bonds
Property
Cash
Total market value at 31 March 2010
Present value of scheme liabilities
Net pension liability at 31 March 2010
ROI
€’000
36,754
17,028
1,659
10,491
65,932
(83,188)
(17,256)
2010
UK
€’000
6,103
6,220
980
718
14,021
(20,455)
(6,434)
Total
€’000
42,857
23,248
2,639
11,209
79,953
(103,643)
(23,690)
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)
Curtailment and settlement gains
Total, included in exceptional items (note 11)
Interest cost, included in finance costs (note 12)
Expected return on plan assets, included in finance income (note 12)
Total
2011
€’000
2010
€’000
(2,383)
(2,383)
(2,662)
(2,662)
4,976
4,976
(5,347)
4,691
(656)
-
-
(4,997)
3,456
(1,541)
Based on the assumptions employed for the valuation of assets and liabilities at 31 March 2011, the net charge in the Group Income
Statement in the year ending 31 March 2012 is expected to be marginally lower than the current year figures.
The actuarial gain recognised in the Group Statement of Comprehensive Income 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 Comprehensive Income
The movement in the fair value of plan assets is as follows:
At 1 April
Expected return on assets
Actuarial (loss)/gain
Contributions by employers
Contributions by members
Benefits paid
Acquisition of subsidiary
Exchange
At 31 March
The actual return on plan assets was a gain of €2.661 million (2010: gain of €16.634 million).
2011
€’000
2010
€’000
(2,030)
1,344
(1,904)
(2,590)
13,178
2,231
(17,004)
(1,595)
2011
€’000
2010
€’000
79,953
4,691
(2,030)
5,080
468
(4,551)
-
112
83,723
52,265
3,456
13,178
11,665
368
(2,445)
1,011
455
79,953
DCC ANNUAL REPORT AND ACCOUNTS 2011
115
Notes to the Financial Statements (continued)
32. Retirement Benefit Obligations (continued)
The movement in the present value of defined benefit obligations is as follows:
At 1 April
Current service cost
Interest cost
Actuarial loss
Contributions by members
Benefits paid
Acquisition of subsidiary
Curtailment and settlement gains
Exchange
At 31 March
2011
€’000
2010
€’000
103,643
2,383
5,347
560
468
(4,551)
-
(4,976)
184
103,058
81,763
2,662
4,997
14,773
368
(2,445)
954
-
571
103,643
The level of contributions for the forthcoming financial year are expected to be broadly in line with the current year amounts.
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
2011
€’000
2010
€’000
2009
€’000
2008
€’000
2007
€’000
83,723
(103,058)
(19,335)
79,953
(103,643)
(23,690)
52,265
(81,763)
(29,498)
67,907
(89,758)
(21,851)
74,980
(91,352)
(16,372)
Difference between the expected and actual return on scheme assets
As a percentage of scheme assets
(2,030)
(2.4%)
13,178
16.5%
(21,904)
(41.9%)
(13,935)
(20.5%)
Experience gains and losses on scheme liabilities
As a percentage of the present value of the scheme liabilities
1,344
(1.3%)
2,231
(2.2%)
(589)
0.7%
(3,737)
4.2%
Total recognised in the Group Statement of Comprehensive Income
As a percentage of the present value of the scheme liabilities
(2,590)
2.5%
(1,595)
1.5%
(9,517)
11.6%
(9,086)
10.1%
904
1.2%
884
(1.0%)
1,576
(1.7%)
Cumulatively since transition to IFRS on 1 April 2004, €27.175 million has been recognised as a charge in the Group Statement of
Comprehensive Income as follows:
Recognised in the financial year ended 31 March 2005
Recognised in the financial year ended 31 March 2006
Recognised in the financial year ended 31 March 2007
Recognised in the financial year ended 31 March 2008
Recognised in the financial year ended 31 March 2009
Recognised in the financial year ended 31 March 2010
Recognised in the financial year ended 31 March 2011
€’000
(7,742)
1,779
1,576
(9,086)
(9,517)
(1,595)
(2,590)
(27,175)
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
Increase/decrease by 0.25%
Increase/decrease by 0.25%
Increase/decrease by one year
Impact on Irish plan liabilities
Decrease/increase by 5.4%
Increase/decrease by 3.4%
Increase/decrease by 2.1%
Impact on UK plan liabilities
Decrease/increase by 5.9%
Increase/decrease by 5.5%
Increase/decrease by 2.5%
116
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
33. Deferred and Contingent Acquisition Consideration
Group
The Group’s deferred and contingent acquisition consideration of €74.344 million (2010: €54.209 million) as stated on the Balance
Sheet consists of €14.797 million of € floating rate provisions (2010: €12.885 million) and €59.547 million of Stg£ floating rate provisions
(2010: €41.324 million) payable as follows:
Within one year
Between one and two years
Between two and five years
Analysed as:
Non-current liabilities
Current liabilities
The movement in the Group’s deferred and contingent acquisition consideration is as follows:
At 1 April
Arising on acquisition
Unwinding of discount applicable to deferred and contingent acquisition consideration
Disposal of subsidiaries
Amounts no longer required (note 20)
Paid during the year
Exchange
At 31 March
2011
€’000
9,156
9,843
55,345
74,344
65,188
9,156
74,344
2010
€’000
4,858
5,059
44,292
54,209
49,351
4,858
54,209
2011
€’000
2010
€’000
54,209
27,050
946
(1,106)
(3,039)
(3,709)
(7)
74,344
21,147
36,198
450
-
-
(4,127)
541
54,209
34. Provisions for Liabilities and Charges
The reconciliation of the movement in provisions for liabilities and charges for the year ended 31 March 2011 is as follows:
Group
At 1 April 2010
Provided during the year
Utilised during the year
Arising on acquisition (note 45)
Disposal of subsidiaries
Exchange and other
At 31 March 2011
Analysed as:
Non-current liabilities
Current liabilities
Environmental
and
remediation
€’000
Rationalisation,
restructuring
and
redundancy
€’000
Insurance
and other
€’000
8,545
300
(655)
-
-
68
8,258
7,955
303
8,258
4,220
698
(259)
36
(52)
62
4,705
4,158
547
4,705
Total
€’000
17,801
3,117
(3,315)
70
(400)
92
17,365
5,036
2,119
(2,401)
34
(348)
(38)
4,402
2,143
2,259
4,402
14,256
3,109
17,365
DCC ANNUAL REPORT AND ACCOUNTS 2011
117
Notes to the Financial Statements (continued)
34. Provisions for Liabilities and Charges (continued)
The reconciliation of the movement in provisions for liabilities and charges for the year ended 31 March 2010 is as follows:
Group
At 1 April 2009
Provided during the year
Utilised during the year
Arising on acquisition (note 45)
Exchange and other
At 31 March 2010
Analysed as:
Non-current liabilities
Current liabilities
Environmental
and
remediation
€’000
Rationalisation,
restructuring
and
redundancy
€’000
Insurance
and other
€’000
4,168
30
(1,087)
1,082
27
4,220
10,664
6,843
(12,609)
-
138
5,036
Total
€’000
19,063
6,684
(13,696)
5,399
351
17,801
1,294
2,926
4,220
2,015
3,021
5,036
11,429
6,372
17,801
4,231
(189)
-
4,317
186
8,545
8,120
425
8,545
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 (2010: 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 45)
Disposal of subsidiaries
Exchange and other adjustments
At 31 March
Disclosed as due within one year (note 25)
36. Share Capital
Group and Company
Authorised
152,368,568 ordinary shares of €0.25 each
Issued
88,229,404 ordinary shares (including 4,911,407 ordinary shares held as Treasury Shares)
of €0.25 each, fully paid (2010: 88,229,404 ordinary shares (including 5,224,345 ordinary shares
held as Treasury Shares) of €0.25 each, fully paid)
118
DCC ANNUAL REPORT AND ACCOUNTS 2011
2011
€’000
3,853
(730)
626
-
(788)
30
2,991
(127)
2,864
2010
€’000
2,136
(800)
1,799
650
-
68
3,853
(175)
3,678
2011
€’000
2010
€’000
38,092
38,092
22,057
22,057
Notes to the Financial Statements (continued)
36. Share Capital (continued)
As at 31 March 2011, the total authorised number of ordinary shares is 152,368,568 shares (2010: 152,368,568 shares) with a par
value of €0.25 per share (2010: €0.25 per share).
During the year the Company re-issued 312,938 Treasury Shares for a consideration (net of expenses) of €3.835 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 62 to 68.
37. Share Premium
Group and Company
At 31 March
38. Other Reserves
Group
At 31 March 2009
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
Share based payment
At 31 March 2010
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
Share based payment
At 31 March 2011
Company
At 31 March 2011 and 31 March 2010
2011
€’000
2010
€’000
124,687
124,687
Share
options1
€’000
Cash flow
hedge
reserve2
€’000
Foreign
currency
translation
reserve3
€’000
Other
reserves4
€’000
Total
€’000
7,807
-
-
-
-
-
-
1,341
9,148
-
-
-
-
-
-
1,389
10,537
(1,174)
-
(153,036)
23,264
1,400
-
(145,003)
23,264
4,062
(926)
(180)
(2,896)
819
-
(295)
-
9,038
(1,935)
(116)
(7,299)
1,594
-
987
-
-
-
-
-
-
(129,772)
4,636
-
-
-
-
-
-
(125,136)
-
-
-
-
-
-
1,400
-
-
-
-
-
-
-
1,400
4,062
(926)
(180)
(2,896)
819
1,341
(119,519)
4,636
9,038
(1,935)
(116)
(7,299)
1,594
1,389
(112,212)
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.
3 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.
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.
DCC ANNUAL REPORT AND ACCOUNTS 2011
119
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
Re-issue of treasury shares (net of expenses)
Dividends
At 31 March
Company
At 1 April
Total comprehensive income for the financial year
Re-issue of treasury shares (net of expenses)
Dividends
At 31 March
2011
€’000
2010
€’000
806,452
145,109
720,909
130,803
(2,590)
336
3,835
(58,034)
895,108
(1,595)
861
7,657
(52,183)
806,452
2011
€’000
2010
€’000
153,643
10,284
3,835
(58,034)
109,728
194,317
3,852
7,657
(52,183)
153,643
The cost to the Group and the Company of €64.489 million to acquire the 4,911,407 shares held in Treasury has been deducted from
the Group and Company Retained Earnings. These shares were acquired at prices ranging from €10.50 to €17.90 each (average:
€13.13) between 12 November 2003 and 19 June 2006.
40. Non-Controlling Interests
Group
At 1 April
Acquisition of non-controlling interests in subsidiary undertaking (note 45)
Share of profit for the financial year
Dividends to non-controlling interests
Disposal of subsidiaries
Exchange and other adjustments
At 31 March
2011
€’000
3,249
-
688
(219)
(1,457)
(27)
2,234
2010
€’000
3,581
(1,037)
891
(275)
-
89
3,249
120
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
41. Cash Generated from Operations
Group
Profit for the financial year
Add back non-operating (income)/expense
- tax (note 15)
- share of loss/(profit) from associates (note 14)
- net operating exceptionals (note 11)
- net finance costs (note 12)
Operating profit before exceptionals
- 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)
- 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
- tax
- 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
2011
€’000
2010
€’000
145,797
131,694
43,771
239
12,650
16,201
218,658
1,389
52,906
10,962
(818)
(730)
(1,927)
33,207
(152)
9,764
12,170
186,683
1,341
46,956
6,150
(1,515)
(800)
(12,872)
(4,669)
(75,562)
69,363
269,572
(11,050)
(140,533)
223,397
297,757
2011
€’000
2010
€’000
10,284
3,852
-
(13,241)
(2,957)
7,148
30,565
34,756
(2)
(5,553)
(1,703)
31,355
21,736
51,388
42. Contingencies
Guarantees
The Company and certain subsidiaries have given guarantees of €1,173.393 million (2010: €1,042.033 million) in respect of borrowings
and other obligations arising in the ordinary course of business of the Company and other Group undertakings.
Other
Pursuant to the provisions of Section 17, Companies (Amendment) Act, 1986, the Company has guaranteed the liabilities of the
following subsidiaries; Altimate Ireland Limited, Alvabay Limited, Arc Telecom Limited, DCC Business Expansion Fund Limited, DCC
Corporate 2007 Limited, DCC Corporate Partners Limited, DCC Energy Limited, DCC Finance 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, Great Gas Petroleum (Ireland) Limited, Lotus Green 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.
DCC ANNUAL REPORT AND ACCOUNTS 2011
121
Notes to the Financial Statements (continued)
43. Capital Expenditure Commitments
Group
Capital expenditure on property, plant and equipment that has been
contracted for but has not been provided for in the financial statements
Capital expenditure on property, plant and equipment that has been
authorised by the Directors but has not yet been contracted for
44. Commitments under Operating and Finance Leases
Group
Operating leases
Future minimum rentals payable under non-cancellable operating leases at 31 March are as follows:
Within one year
After one year but not more than five years
More than five years
2011
€’000
2010
€’000
4,109
2,665
75,024
79,133
60,487
63,152
2011
€’000
2010
€’000
12,962
41,050
77,094
131,106
18,154
42,223
79,130
139,507
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 2011, €25.510 million (2010: €24.399 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
2011
2010
Minimum
payments
€’000
Present
value of
payments
€’000
478
423
901
(13)
888
475
413
888
-
888
Minimum
payments
€’000
1,347
752
2,099
(26)
2,073
Present
value of
payments
€’000
1,341
732
2,073
-
2,073
45. Business Combinations
The principal acquisitions completed by the Group during the year, together with percentages acquired were as follows:
- F. Peart (100%): a medium sized oil distribution business which operates from four locations in the north of England, announced on 4
May 2010;
- the acquisition of two oil importation and storage terminals in Scotland, announced on 16 July 2010;
- Comtrade SA (74%): a distributor of consumer electronic and audio visual products to the retail sector in France, announced on 23
August 2010; and
- Advent Data Limited (100%): a UK based distributor of electronic office supplies, announced on 9 March 2011.
122
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
45. Business Combinations (continued)
The carrying amounts of the assets and liabilities acquired (excluding net debt/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 - other intangible assets (note 20)
Investments in associates (note 21)
Deferred income tax assets
Total non-current assets
Current assets
Inventories (note 26)
Trade and other receivables (note 26)
Total current assets
Equity
Non-controlling interests (note 40)
Total equity
Liabilities
Non-current liabilities
Deferred income tax liabilities
Retirement benefit obligations
Provisions for liabilities and charges (note 34)
Deferred and contingent acquisition consideration
Government grants (note 35)
Total non-current liabilities
Current liabilities
Trade and other payables (note 26)
Current income tax liabilities
Total current liabilities
Identifiable net assets acquired
Intangible assets - goodwill (note 20)
Total consideration (enterprise value)
Satisfied by:
Cash
Net debt/(cash) acquired
Net cash outflow
Deferred and contingent acquisition consideration
Total consideration
2011
€’000
2010
€’000
22,708
15,075
127
47
37,957
38,532
25,331
-
479
64,342
19,214
47,272
66,486
9,917
86,765
96,682
-
-
1,037
1,037
(4,583)
-
(70)
-
-
(4,653)
(9,207)
57
(5,399)
(450)
(650)
(15,649)
(44,224)
(685)
(44,909)
(102,869)
(1,374)
(104,243)
54,881
46,783
101,664
42,169
123,094
165,263
73,503
1,111
74,614
27,050
101,664
142,439
(12,924)
129,515
35,748
165,263
None of the 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:
Total
Non-current assets (excluding goodwill)
Current assets
Non-current liabilities and non-controlling interests
Current liabilities
Identifiable net assets acquired
Goodwill arising on acquisition
Total consideration (enterprise value)
Book
value
€’000
Fair value
adjustments
€’000
Fair
value
€’000
22,882
68,945
(717)
(44,909)
46,201
55,463
101,664
15,075
(2,459)
(3,936)
-
8,680
(8,680)
-
37,957
66,486
(4,653)
(44,909)
54,881
46,783
101,664
DCC ANNUAL REPORT AND ACCOUNTS 2011
123
Notes to the Financial Statements (continued)
45. Business Combinations (continued)
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 transactions. Any amendments to these fair values within the
twelve month timeframe from the date of acquisition will be disclosable in the 2012 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.
None of the goodwill recognised in respect of acquisitions completed during the financial year is expected to be deductible for tax
purposes.
The acquisition related costs for these acquisitions included in the Group Income Statement amounted to €3.566 million.
No contingent liabilities were recognised on the acquisitions completed during the financial year or the prior financial years.
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to €49.731 million. The
fair value of these receivables is €47.272 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance
for impairment of €1.523 million.
The fair value of contingent consideration recognised at the date of acquisition is calculated by discounting the expected future payment
to present value at the acquisition date. In general, for contingent consideration to become payable, pre-defined profit thresholds must
be exceeded. On an undiscounted basis, the future payments for which the Group may be liable for acquisitions in the current year
range from nil to €45.851 million.
There were no adjustments processed during the year to the fair value of business combinations completed during the year ended 31
March 2010 where those fair values were not readily determinable as at 31 March 2010.
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
Profit for the financial year
2011
€’000
2010
€’000
255,142
(234,710)
20,432
(9,560)
10,872
-
10,872
(54)
10,818
(2,943)
7,875
454,841
(415,701)
39,140
(22,606)
16,534
(117)
16,417
(512)
15,905
(3,891)
12,014
The revenue and profit of the Group for the financial year 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
2011
€’000
2010
€’000
8,867,654 7,559,862
139,020
150,412
124
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
46. 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 three
months.
The capital structure of the Group, which comprises capital and reserves attributable to the owners of the Parent, net debt and deferred
and contingent acquisition consideration, may be summarised as follows:
Group
Capital and reserves attributable to the owners of the Parent
Net debt (note 30)
Deferred and contingent acquisition consideration (note 33)
At 31 March
2011
€’000
2010
€’000
929,640
45,183
74,344
1,049,167
833,677
53,539
54,209
941,425
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 November 2010. 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 and 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 2011 of €700.340 million, 94.7% (€662.976 million) was
with financial institutions with a minimum rating in the P-1 (short-term) category of Moodys. As at 31 March 2011 derivative transactions
were with counterparties with ratings ranging from A- to BB (long-term) with Standard and Poors or Baa3 to Aa3 (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.
DCC ANNUAL REPORT AND ACCOUNTS 2011
125
Notes to the Financial Statements (continued)
46. Financial Risk and Capital Management (continued)
Included in the Group’s trade and other receivables as at 31 March 2011 are balances of €96.191 million (2010: €94.127 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 movement 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
Disposal of subsidiaries
Exchange differences
At 31 March
2011
€’000
63,213
27,940
3,173
1,865
96,191
2010
€’000
69,087
16,055
5,130
3,855
94,127
2011
€’000
2010
€’000
30,590
5,317
237
(6,159)
1,523
(392)
86
31,202
30,753
8,946
343
(12,861)
1,522
-
1,887
30,590
Company
There were no past due or impaired trade receivables in the Company at 31 March 2011 (31 March 2010: 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 three
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 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 2011 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 tables below show the projected contractual undiscounted total cash outflows (principal and interest) arising from the Group’s trade
and other payables, gross debt and derivative financial instruments. The tables also include the gross cash inflows projected to arise
from derivative financial instruments. These projections are based on the interest and foreign exchange rates applying at the end of the
relevant financial year.
126
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
46. Financial Risk and Capital Management (continued)
Group
As at 31 March 2011
Financial liabilities - cash outflows
Trade and other payables
Interest bearing loans and borrowings
Interest payments on interest bearing loans and borrowings
Cross currency swaps - gross cash outflows
Other derivative financial instruments
Derivative financial instruments - cash inflows
Interest rate swaps - net cash inflows
Cross currency swaps - gross cash inflows
Group
As at 31 March 2010
Financial liabilities - cash outflows
Trade and other payables
Interest bearing loans and borrowings
Interest payments on interest bearing loans and borrowings
Cross currency swaps - gross cash outflows
Other derivative financial instruments
Derivative financial instruments - cash inflows
Interest rate swaps - net cash inflows
Cross currency swaps - gross cash inflows
Less than
Between
Between
1 year 1 and 2 years 2 and 5 years
€’000
€’000
€’000
Over
5 years
€’000
Total
€’000
(1,149,786)
(40,542)
(40,117)
(14,896)
(533)
(1,245,874)
-
(317)
(39,061)
(14,896)
-
(54,274)
-
(278,640)
(89,959)
(292,480)
-
(661,079)
-
(425,569)
(68,357)
(391,456)
-
(1,149,786)
(745,068)
(237,494)
(713,728)
(533)
(885,382) (2,846,609)
3,070
34,428
37,498
3,070
34,428
37,498
6,582
324,135
330,717
357
444,249
444,606
13,079
837,240
850,319
Less than
1 year
€’000
Between
1 and 2 years
€’000
Between
2 and 5 years
€’000
Over
5 years
€’000
Total
€’000
(1,039,641)
(58,169)
(42,895)
(12,610)
(557)
(1,153,872)
-
(6,503)
(41,161)
(12,610)
-
(60,274)
-
(276,099)
(94,771)
(277,614)
-
(648,484)
-
(462,549)
(99,535)
(409,687)
-
(1,039,641)
(803,320)
(278,362)
(712,521)
(557)
(971,771) (2,834,401)
3,301
36,296
39,597
3,301
36,296
39,597
6,909
325,511
332,420
4,148
508,201
512,349
17,659
906,304
923,963
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 2011
Financial liabilities - cash outflows
Trade and other payables
Company
As at 31 March 2010
Financial liabilities - cash outflows
Trade and other payables
Less than
Between
Between
1 year 1 and 2 years 2 and 5 years
€’000
€’000
€’000
Over
5 years
€’000
Total
€’000
316,450
-
10,387
-
326,837
Less than
1 year
€’000
Between
1 and 2 years
€’000
Between
2 and 5 years
€’000
Over
5 years
€’000
Total
€’000
285,885
-
10,387
-
296,272
The Company has sufficient cash resources and liquid assets to enable it to meet its trade and other payables.
DCC ANNUAL REPORT AND ACCOUNTS 2011
127
Notes to the Financial Statements (continued)
46. 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. Although the Group holds significant borrowings
denominated or swapped into sterling, these sterling borrowings have been offset by the strong ongoing cash flow generated by the
Group’s sterling operations leaving the Group with a net position in sterling assets. The marginal increase of 0.6% in the value of sterling
against the euro during the year ended 31 March 2011 gave rise to a gain of €4.6 million on the translation of the Group’s sterling
denominated net asset position at 31 March 2011 as set out in the Statement of Comprehensive Income. Included in this figure is €2.6
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 fifteen
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 €14.7 million (2010: €12.4 million) impact on the
Group’s profit before tax, would change the Group’s equity by €65.2 million and change the Group’s net debt by €6.0 million (2010:
€58.4 million and €5.9 million respectively). These amounts include an insignificant amount of transactional currency exposure.
Company
The Company does not have any material assets or liabilities denominated in any currency other than euro at 31 March 2011 or at 31
March 2010 and consequently has no exposure to currency movements at 31 March 2011 (31 March 2010: nil).
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 2011 a one percentage point (100 basis points) change in average floating interest
rates would have a €1.5 million (2010: €1.5 million) impact on the Group’s profit before tax.
Further information on Group borrowings and the management of related interest rate risk is set out in notes 29 and 28 respectively.
128
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
46. Financial Risk and Capital Management (continued)
Company
The effective interest rates earned during the year on cash at bank ranged from 0.4% to 1.5%. Generally the Company holds very low
levels of cash or debt throughout the year and consequently has a negligible exposure to movements in interest rates.
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 which are designated as hedges under
IAS 39. 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.
Sensitivity to commodity price movements
Group
Due to pricing dynamics in the oil distribution market, 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 (2010: nil) and a nil impact on the Group’s equity (2010: 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.
Fair values of financial assets and financial liabilities
The fair values of borrowings (none of which are listed) and derivative financial instruments are measured by discounting cash flows at
prevailing interest and exchange rates. The carrying value of non-interest bearing financial assets and financial liabilities and cash and
cash equivalents approximates their fair values, largely due to their short-term maturities. The following is a comparison by category of
book values and fair values of the Group’s and Company’s financial assets and financial liabilities:
Group
Financial assets
Derivative financial instruments
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Borrowings
Derivative financial instruments
Trade and other payables
Company
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
2011
2010
Book value
€’000
Fair value
€’000
Book value
€’000
Fair value
€’000
87,938
87,938
1,034,275 1,034,275
700,340
103,264
922,019
714,917
1,822,553 1,822,553 1,740,200 1,740,200
103,264
922,019
714,917
700,340
802,786
30,675
778,222
30,675
1,149,786 1,149,786
1,983,247 1,958,683
(851,832)
(19,888)
(821,022)
(19,888)
(1,039,641) (1,039,641)
(1,911,361) (1,880,551)
414,314
30
414,344
414,314
30
414,344
421,462
6,232
427,694
421,462
6,232
427,694
(326,837)
(326,837)
(326,837)
(326,837)
(296,272)
(296,272)
(296,272)
(296,272)
DCC ANNUAL REPORT AND ACCOUNTS 2011
129
Notes to the Financial Statements (continued)
46. Financial Risk and Capital Management (continued)
Group
The Group has adopted the following fair value measurement hierarchy in relation to its financial assets and financial liabilities that are
carried in the Balance Sheet at fair value as at the year end:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2: inputs, other than quoted prices included within level 1, that are observable for the asset or liability either directly (as prices) or
indirectly (derived from prices); and
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Group
Fair value measurement as at 31 March 2011
Level 1
€’000
Level 2
€’000
Level 3
€’000
Total
€’000
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
Group
Fair value measurement as at 31 March 2010
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
-
-
-
-
87,938
87,938
30,675
30,675
-
-
-
-
Level 1
€’000
Level 2
€’000
Level 3
€’000
87,938
87,938
30,675
30,675
Total
€’000
-
-
-
-
103,264
103,264
19,888
19,888
-
-
-
-
103,264
103,264
19,888
19,888
Company
As at 31 March 2011 and 31 March 2010 the Company had no financial assets or financial liabilities which were carried at fair value.
130
DCC ANNUAL REPORT AND ACCOUNTS 2011
Notes to the Financial Statements (continued)
47. 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 80 to 88. A listing of the principal subsidiaries, joint ventures and
associates is provided in the Group Directory on pages 132 to 135 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 62 to 68 of this Annual Report.
Company
Subsidiaries, joint ventures and associates
During the year the Company did not receive dividends from its subsidiaries or associates (2010: nil). Details of loan balances to/from
subsidiaries are provided in the Company Balance Sheet on page 77, in note 24 ‘Trade and Other Receivables’ and in note 25 ‘Trade
and Other Payables’.
During the year the Company was charged a management fee of €3.486 million (2010: €2.892 million) by its subsidiary, DCC
Management Services Limited.
48. Events after the Balance Sheet Date
There have been no material events subsequent to 31 March 2011 which would require disclosure in this report.
49. Approval of Financial Statements
The financial statements were approved by the Board of Directors on 9 May 2011.
DCC ANNUAL REPORT AND ACCOUNTS 2011
131
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
Principal activity
Contact details
Holding and divisional management company
Procurement, sales, marketing and distribution
of petroleum products
Procurement, sales, marketing and distribution
of petroleum products
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: energy@dcc.ie
www.dcc.ie
Tel: +44 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
Great Gas Petroleum (Ireland) Limited Procurement, sales, marketing and distribution
Market House
Churchtown, Mallow,
Co Cork, Ireland
of petroleum products
Tel: +353 22 23 989
Fax: +353 22 23 980
Email: info@greatgas.com
www.greatgas.com
DCC Energy Limited
40 - 48 Airport Road West,
Sydenham,
Belfast BT3 9ED, Northern Ireland
DCC Energi Danmark A/S
Naerum Hovedgade 8,
2850 Naerum, Danmark
Procurement, sales, marketing and distribution
of petroleum products
Procurement, sales, marketing and distribution
of petroleum products
Tel: +44 28 9073 2611
Fax: +44 28 9045 0243
Email: enquiries@emooil.com
www.emooil.com
Tel: +45 7010 2010-04-21
Fax: +45 4558 0190
Email: info@kundeservice.dccenergi.dk
www.dccenergi.dk
Energie Direct MineralölhandelsgesmbH Procurement, sales, marketing and distribution
Alte Poststraße 400,
A-8055 Graz,
Austria
of petroleum products
Tel: +43 316 210
Fax: +43 316 210 20
Email: info@energiedirect.at
www.energiedirect.at
LPG
Flogas UK Limited
81 Raynsway,
Syston,
Leicester LE7 1PF, England
Flogas Ireland Limited
Knockbrack House,
Matthews Lane,
Donore Road,
Drogheda,
Co. Louth, Ireland
Fuel Card
Fuel Card Services Limited
Alexandra House,
Lawnswood Business Park,
Redvers Close,
Leeds LS16 6QY, England
Procurement, sales, marketing and distribution
of liquefied petroleum gas
Procurement, sales, marketing and distribution
of liquefied petroleum gas
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: +44 844 870 9827
Email: info@fuelcardservices.com
www.fuelcardservices.com
132
DCC ANNUAL REPORT AND ACCOUNTS 2011
DCC SerCom
Company name & address
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
Multichannel Solutions
for Entertainment (MSE) Limited
Unit 2, Loughlinstown Industrial Estate,
Ballybrack, Co. Dublin, Ireland
Banque Magnetique SAS
Paris Nord 2, Parc des Reflets,
99 Avenue de la Pyramide,
95700, Roissy en France
Principal activity
Contact details
Holding and divisional management company
Procurement, sales, marketing and distribution
of computer software and peripherals
Procurement, sales, marketing and distribution
of DVDs and computer games and accessories
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
www.msegroup.ie
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
Comtrade SAS
300 rue du Président Salvador Allende, of audio visual and consumer electronics products www.comtrade.fr
92700 Colombes, France
Procurement, sales, marketing and distribution
Tel: +33 1 56 47 04 70
Reseller
Micro Peripherals Limited
Shorten Brook Way,
Altham Business Park, Altham,
Accrington, Lancashire BB5 5YJ, England
Procurement, sales, marketing and distribution
of computer products
Advent Data Limited
Unit H4 Premier Way,
Lowfields Business Park,
Elland HX5 9HF, England
Sharptext Limited
M50 Business Park,
Ballymount Road Upper,
Dublin 12, Ireland
Enterprise
Altimate Group SAS
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
Procurement, sales, marketing and distribution
of electronic office supplies
Procurement, sales, marketing and distribution
of computer products
Distribution of enterprise infrastructure products
in France, Iberia & Benelux
Tel: +44 1282 776 776
Fax: +44 1282 770 001
Email: enquiries@micro-p.com
www.micro-p.com
Tel: +44 871 222 3844
Fax: +44 871 222 3855
Email: sales@adventdata.co.uk
www.adventdata.co.uk
Tel: +353 1 4087 171
Fax: +353 1 4193 111
Email: sharptext@sharptext.com
www.sharptext.com
Tel: +33 1 34 58 47 00
Fax: + 33 1 34 58 47 27
Email: info@altimate-group.com
www.altimate-group.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
DCC ANNUAL REPORT AND ACCOUNTS 2011
133
Group Directory (continued)
DCC Healthcare
Company name & address
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
Fannin (UK) Limited
42-46 Booth Drive, Park Farm South,
Wellingborough,
Northamptonshire, NN8 6GT
Squadron Medical Limited
Unit A, Griffen Close
Ireland Industrial Estate, Staveley,
Chesterfield S43 3LJ, England
Principal activity
Contact details
Holding and divisional management company
Sales, marketing, distribution and other services
to healthcare providers and medical and
pharma brand owners/manufacturers
Sales, marketing, distribution and other services
to healthcare providers and medical and
pharma brand owners/manufacturers
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: healthcare@dcc.ie
www.dcc.ie
Tel: +353 1 2907 000
Fax: +353 1 2954 777
Email: information@fannin.ie
www.fannin.ie
Tel: +44 1189 305333
Fax: +44 1189 305111
Email: enquiries@fanninuk.com
www.fanninuk.com
Provision of value-added distribution services
to healthcare providers and brand
owners/manufacturers
Tel: +44 1246 470 999
Fax: +44 1246 284 030
The TPS Healthcare Group Limited
27-35 Napier Place,
Wardpark, North Cumbernauld,
Glasgow G68 0LL, Scotland
Provision of value-added distribution services
to healthcare providers and brand
owners/manufacturers
Tel: +44 1236 739 668
Fax: +44 1236 738 376
Email: corporate@tpshealthcare.com
www.tpshealthcare.com
Virtus Inc.
1896 Lammers Pike, Batesville,
IN 47006-8637, United States
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
DCC Environmental
Company name & address
DCC Environmental Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
Manufactures fabric health care products,
primarily mattresses
Tel: +1 812 933 1121
Outsourced solutions for the health
and beauty industry
Development, contract manufacture and packing
of liquids and creams for the beauty and
consumer healthcare sectors
Development, contract manufacture and packing
of tablet and hard gel capsule nutraceuticals
Development and contract manufacture of
soft gel capsule nutraceuticals
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
Principal activity
Contact details
Holding and divisional management company
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: environmental@dcc.ie
www.dcc.ie
134
DCC ANNUAL REPORT AND ACCOUNTS 2011
DCC Environmental (continued)
Company name & address
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 Industrial Estate, Linwood,
Renfrewshire, PA3 3BD, Scotland
DCC Food & Beverage
Company name & address
DCC Food & Beverage Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, 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
* 50% owned joint venture
Principal activity
Contact details
Specialist waste treatment/management services
Recycling and waste management company
Recycling and waste management company
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
Principal activity
Contact details
Holding and divisional management company
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: foods@dcc.ie
www.dcc.ie
Procurement, sales, marketing and distribution of
Tel: +353 1 4600 400
branded healthy foods, beverages and vms products Fax: +353 1 4600 411
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
Email: info@kelkin.ie
www.kelkin.ie
Tel: +353 1 4047 300
Fax: +353 1 4047 311
Email: info@robert-roberts.ie
www.robert-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 4047 311
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
DCC ANNUAL REPORT AND ACCOUNTS 2011
135
Shareholder Information
Share Price Data
Share price at 9 May
Market capitalisation at 9 May
Share price at 31 March
Market capitalisation at 31 March
Share price movement during the year
- High
- Low
2011
€
22.25
1,854m
22.47
1,872m
24.20
17.30
2010
€
19.20
1,594m
21.10
11.65
Shareholdings as at 31 March 2011
Range of shares held
Number of accounts
% of accounts
Number of shares¹
% of shares
Over 250,000
100,001 – 250,000
10,000 – 100,000
Less than 10,000
Total
Geographic division²
Ireland
UK
North America
Europe/Other
Retail³
Total
44
45
188
2,730
3,007
1.5
1.5
6.2
90.8
100.0
66,362,786
7,335,523
6,536,181
3,083,507
83,317,997
Number of Shares¹
7,767,171
27,094,593
24,649,166
6,703,261
17,103,806
83,317,997
79.7
8.8
7.8
3.7
100.0
% of shares
9.3
32.5
29.6
8.1
20.5
100.0
1 Excludes 4,911,407 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 plc is an Irish registered company
whose shares are traded on the Irish
Stock Exchange and the London Stock
Exchange.
CREST
DCC is a member of the CREST share
settlement system. Shareholders have the
choice of holding their shares in electronic
form or in the form of paper share
certificates. Shareholders should consult
their stockbroker if they wish to hold
shares in electronic form.
Dividends
DCC normally pays dividends twice yearly,
in July and in December. Dividends are
paid in euro to all shareholders (other
than shareholders with addresses in the
United Kingdom who may elect to receive
dividends in 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 of these
options.
The Company is obliged to deduct
Dividend Withholding Tax (“DWT”) 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 (for example 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. 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.
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.
136
DCC ANNUAL REPORT AND ACCOUNTS 2011
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 information concerning
the Company (such as the Annual
Report, Interim Report and Notice of
Annual General Meeting) 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 receive
information electronically 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.
Financial calendar
• Preliminary results announced –
10 May 2011
Annual General Meeting, electronic
proxy voting and CREST voting
The 2011 Annual General Meeting will
be held at The Four Seasons Hotel,
Simmonscourt Road, Ballsbridge, Dublin
4, Ireland on Friday 15 July 2011 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.
Shareholders may lodge a Form of Proxy
for the 2011 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.eproxyappointment.com
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.
• Ex-dividend date for the final dividend –
18 May 2011
• Record date for the final dividend –
20 May 2011
• Interim Management Statement –
15 July 2011
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.
• Annual General Meeting - 15 July 2011
• Proposed payment date for final dividend
– 21 July 2011
Tel: + 353 1 247 5698
Fax: + 353 1 216 3151
www.investorcentre.com/ie/contactus
• Interim results to be announced –
8 November 2011
• Proposed payment date for the interim
dividend – December 2011
• Interim Management Statement –
February 2012
Investor relations
For investor enquiries please contact
Redmond McEvoy, 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
DCC ANNUAL REPORT AND ACCOUNTS 2011
137
Corporate Information
Registered and Head Office
DCC House
Brewery Road
Stillorgan
Blackrock
Co. Dublin
Ireland
Auditors
PricewaterhouseCoopers
Chartered Accountants
& Registered Auditors
One Spencer Dock
North Wall Quay
Dublin 1
Ireland
Registrar
Computershare Investor Services (Ireland)
Limited
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
Ireland
Bankers
Allied Irish Banks
Bank of Ireland
Barclays
BNP Paribas
Danske Bank A/S
Deutsche Bank
ING Bank N.V.
KBC Bank
Lloyds Banking Group
National Westminster Bank plc
Rabobank
Royal Bank of Scotland
Ulster Bank
Solicitors
William Fry
Fitzwilton House
Wilton Place
Dublin 2
Ireland
Stockbrokers
Davy
49 Dawson Street
Dublin 2
Ireland
Goodbody Stockbrokers
Ballsbridge Park
Ballsbridge
Dublin 4
Ireland
JPMorgan Cazenove Limited
10 Aldermanbury
London
EC2V 7RF
England
138
DCC ANNUAL REPORT AND ACCOUNTS 2011
Index
Accounting Policies
Accounting Records
Acquisitions and Capital Expenditure
Adjusted Earnings per Share
Analysis of Net Debt
Appointment of Directors
Approval of Financial Statements
Attendance at Meetings
Audit Committee
Auditors
Balance Sheet and Group Financing
Basis of Consolidation
Basis of Preparation
Board of Directors
Board Committees
Board Meetings
Board Membership
Board Procedures
Borrowings
Business Combinations
Business Ethics
Business Reviews
DCC Energy
DCC Environmental
DCC Food & Beverage
DCC Healthcare
DCC SerCom
38, 80
53
12
42
112
56
131
59
58
53
44
81
80
4, 56
5, 58
57
56
57
111
83, 89, 122
50
18
30
34
26
22
122
Capital Expenditure Commitments
85, 109
Cash and Cash Equivalents
43
Cash Flow
121
Cash Generated from Operations
56
Chairman
6
Chairman’s Statement
10
Chief Executive’s Review
47
Climate Change
Combined Code
9
Commitments Under Operating and Finance Leases 122
45
Commodity Price Risk Management
77
Company Balance Sheet
79
Company Cash Flow Statement
78
Company Statement of Changes in Equity
77
Company Statement of Comprehensive Income
55
Compliance Risks
Compliance Statement
61
Inside Front Cover
Contents
121
Contingencies
47
Corporate Giving
Corporate Governance
56
138
Corporate Information
45
Credit Risk Management
89
Critical Accounting Estimates and Judgments
Deferred and Contingent Acquisition Consideration 117
113
Deferred Income Tax
Deputy Chairman and Senior Independent Director 56
85, 110
Derivative Financial Instruments
46
Direct Economic Value Added
4
Directors
68
Directors’ and Company Secretary’s Interests
95
Directors’ Emoluments and Interests
63
Directors’ Remuneration
Directors’ Service Agreements
65
Directors’ Statement pursuant
to the Transparency Regulations
Dividend
Dividend Increase
Dividends
Divisional Highlights
69
42
7
52, 103
11
Earnings per Ordinary Share
Employee Share Options
Employment
Environmental Provisions
Events After the Balance Sheet Date
Exceptional Items
Exceptionals
External Audit
Fair Value Estimation
Finance Costs
Finance Costs (Net)
Finance Costs and Finance Income
Finance Income
Financial Calendar
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
Free Cash Flow
General Meetings
Going Concern
Goodwill
Government Grants
Graduate Recruitment Programme
Group at a Glance
Group Balance Sheet
Group Cash Flow Statement
Group Directory
Group Income Statement
Group Operating Profit
Group Statement of Changes in Equity
Group Statement of Comprehensive Income
Health & Safety
Hedging
Highlights
104
97
97
86
131
82
100
9
88
86
41
101
86
137
38
44, 125
88
88
38, 55
12
140
101
82
44
43
60
61
83, 89
88, 118
46
2
74
76
132
72
95
75
73
49
85
1
86
Income Tax
102
Income Tax Expense
57
Independence of Non-Executive Directors
106
Intangible Assets
Intangible Assets (other than Goodwill)
84
Interest Rate Risk and Debt/Liquidity Management 45
86
Interest-Bearing Loans and Borrowings
61
Internal Control
137
Investor Relations
84, 108
Inventories
107
Investments In Associates
108
Investments In Subsidiary Undertakings
Key Financial Performance Indicators
Key Performance Indicators
DCC Energy
DCC Environmental
DCC Food & Beverage
DCC Healthcare
DCC SerCom
Leases
Memorandum and Articles of Association
Movement in Working Capital
Net Exceptional Charge
38
20
32
36
28
24
84
61
109
41
59
120
65
80
55
95
119
9, 13
39
87
60
53
89
54
132
103
Nomination and Governance Committee
Non-Controlling Interests
Non-Executive Directors’ Remuneration
Notes to the Financial Statements
Operational Risks and Uncertainties
Other Operating Income/Expense
Other Reserves
Outlook
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 Exceptional Items,
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
41
82, 105
96
90
86
117
Registrar
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 Employed
Revenue Recognition
Review of Activities and Events Since Year End
Review of Remuneration Policy and Structures
137
131
60
59, 62
62
52
70
62
53
10
120
113
42
82
52
62
Segment Information
Segment Reporting
Senior Management
Share Capital
Share Capital and Treasury Shares
Share of Associates’ (Loss)/Profit after Tax
Share Premium
Share-Based Payment Transactions
Shareholder Information
Shareholders’ Equity
Statement of Compliance
Statement of Directors’ Responsibilities
Strategic Risks and Uncertainties
Strategy
Substantial Shareholdings
Summary of Significant Accounting Policies
Sustainability Report
90
82
14
118
52
102
119
87
136
88
80
69
54
3
53
80
46
Takeover Regulations
Taxation
Trade and Other Payables
Trade and Other Receivables
53
42, 89
85, 108
85, 108
Useful Lives for Property, Plant and Equipment
and Intangible Assets
Website
90
136
DCC ANNUAL REPORT AND ACCOUNTS 2011
139
5 Year Review
Group Income Statement
Year ended 31 March
Revenue
Operating profit before exceptional items
and amortisation of intangible assets
Exceptional items
Amortisation of intangible assets
Operating profit
Finance costs (net)
Share of associates’ profit/(loss) after tax
Profit before tax
Income tax expense
Minority interests
Profit attributable to owners of the Parent
Earnings per share
- basic (cent)
- basic adjusted (cent)
Dividend per share (cent)
Dividend cover (times)
Interest cover (times)*
* excludes exceptional items
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
Return on total capital employed (%)
Working capital (days)
Average number of employees
140
DCC ANNUAL REPORT AND ACCOUNTS 2011
2007
€’m
2008
€’m
2009
€’m
2010
€’m
2011
€’m
4,046.1
5,532.0
6,400.1
6,725.0
8,680.6
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
192.8
(9.8)
(6.1)
176.9
(12.2)
0.2
164.9
(33.2)
(0.9)
130.8
229.6
(12.6)
(11.0)
206.0
(16.2)
(0.2)
189.6
(43.8)
(0.7)
145.1
174.59
160.02
204.28
165.06
142.36
169.13
158.76
177.98
174.48
203.15
49.28
56.67
62.34
67.44
74.18
3.2
12.9
2.9
9.4
2.7
8.5
2.6
2.7
17.7
15.8
2007
€’m
2008
€’m
2009
€’m
2010
€’m
2011
€’m
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
358.1
595.1
2.4
818.2
1,169.0
2,942.8
395.5
636.1
2.3
788.3
1,291.7
3,113.9
687.7
742.4
726.2
836.9
931.9
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
871.7
23.7
1,210.5
2,105.9
2,942.8
833.5
19.3
1,329.2
2,182.0
3,113.9
(100.5)
(123.7)
(90.7)
(53.5)
(45.2)
2007
€’m
127.4
60.7
105.7
2008
€’m
129.0
87.5
176.6
2009
€’m
304.9
57.0
101.7
2010
€’m
297.8
47.3
133.6
2011
€’m
269.6
83.4
78.3
2007
2008
2009
2010
2011
17.9%
14.0
5,653
17.5%
16.4
6,638
17.8%
11.9
7,182
18.4%
4.6
7,396
19.9%
4.9
7,925
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DCC plc
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland.
Tel: + 353 1 279 9400
Fax: + 353 1 283 1017
Email: info@dcc.ie
www.dcc.ie
Annual Report and Accounts
2011