1
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Annual Report and Accounts
2012
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
DCC iS A SALES, mARkETiNg, DiSTRibUTiON
AND bUSiNESS SUPPORT SERviCES gROUP,
ORgANiSED AND mANAgED ACROSS fivE
DiviSiONS wiTh REvENUES Of OvER €10
biLLiON AND EmPLOyiNg OvER 8,800 PEOPLE
iN 15 COUNTRiES.
DCC’S ObjECTivE iS TO bUiLD A gROwiNg,
SUSTAiNAbLE AND CASh gENERATivE
bUSiNESS whiCh CONSiSTENTLy PROviDES
RETURNS ON TOTAL CAPiTAL EmPLOyED
SigNifiCANTLy AhEAD Of iTS COST Of CAPiTAL.
DCC iS hEADqUARTERED iN DUbLiN, iRELAND
AND iS LiSTED UNDER SUPPORT SERviCES ON
ThE iRiSh AND LONDON STOCk ExChANgES.
CONTENTS
OVERVIEW
01 Financial Highlights
02 Group At A Glance
04 Business Model And Strategy
06 Chairman’s Statement
08 Chief Executive’s Review
BUSINESS PERFORMANCE
12 Group KPIs
14 Energy Review
20 SerCom Review
26 Healthcare Review
32 Environmental Review
36 Food & Beverage Review
40 Financial Review
47 Sustainability Report
GOVERNANCE
56 Board Of Directors
58 Senior Management
60 Report Of The Directors
62 Principal Risks And Uncertainties
64 Corporate Governance
74 Report On Directors’
Remuneration And Interests
84 Statement Of Directors’
Responsibilities
FINANCIAL STATEMENTS
85 Report Of The Independent
Auditors
87 Financial Statements
INFORMATION
158 Group Directory
163 Shareholder Information
165 Corporate Information
166 Index
168 Five Year Review
01
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
FINANCIAL HIGHLIGHTS
Revenue
Revenue
2012
2011
Operating profit*
€10,690.3m
€8,680.6m
2012
2011
€185.0m
€229.6m
Reported: +23.2%
Constant currency†: +24.9%
Reported: -19.4%
Constant currency†: -18.3%
Adjusted earnings per share*
Dividend per share
2012
2011
163.51 cent
203.15 cent
2012
2011
77.89 cent
74.18 cent
Reported: -19.5%
Constant currency†: -18.4%
Reported: +5.0%
Operating cash flow
Return on total capital employed
2012
2011
€277.3m
€269.6m
2012
2011
14.2%
19.9%
* excluding net exceptionals and amortisation of intangible assets
† constant currency figures quoted are based on retranslating 2011/12 figures at prior year translation rates
02
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
GROUP AT A GLANCE
DCC Energy
Sales, marketing and distribution of oil
and liquefied petroleum gas (LPg).
Revenue
(% of Group)
Operating profit
(% of Group)
Customers
Commercial, retail, domestic,
industrial, agricultural,
aviation and marine.
for more information
see pages 14 to 19
73.2%
45.1%
DCC SerCom
SerCom Distribution: Sales, marketing
and distribution of iT, communications
and home entertainment products.
SerCom Solutions: Supply chain
management services.
Revenue
(% of Group)
Operating profit
(% of Group)
for more information
see pages 20 to 25
20.4%
28.8%
Customers
SerCom Distribution:
iT and mobile resellers, dealers, retailers,
etailers, grocers and catalogue retailers.
SerCom Solutions:
iT equipment manufacturers,
outsourced equipment manufacturers,
consumer electronics companies
and telecommunications equipment
manufacturers.
DCC Healthcare
hospitals Supplies & Services: medical
device and pharma products sales,
marketing and distribution and value
added logistics services to hospitals.
health & beauty Solutions: Outsourced
services to brand owners in the health and
beauty sector.
for more information
see pages 26 to 31
DCC Environmental
Provider of a broad range of
recycling, waste management and
resource recovery services.
Revenue
(% of Group)
Operating profit
(% of Group)
Customers
hospitals, retail pharmacy, pharma
wholesalers, homecare channel, brand
owners, mail order companies, specialist
health and beauty retailers and private
label suppliers.
3.1%
12.7%
Revenue
(% of Group)
Operating profit
(% of Group)
Customers
industrial, commercial,
construction and public sector,
in the hazardous and non-
hazardous markets.
for more information
see pages 32 to 35
1.2%
7.7%
DCC Food & Beverage
Sales, marketing and distribution of food
and beverage products.
Revenue
(% of Group)
Operating profit
(% of Group)
Customers
grocery multiples, symbol and
independent retailers including
pharmacies, off-licenses, hotels,
restaurants and cafes.
for more information
see pages 36 to 39
2.1%
5.7%
Principal
operating
locations
britain, ireland,
Sweden, Denmark
and Austria.
Principal
operating
locations
britain, ireland,
france, Spain,
Portugal, belgium,
the Netherlands,
Luxembourg,
Poland, China,
mexico and the USA.
Principal
operating
locations
britain and ireland.
Principal
operating
locations
britain and ireland.
Principal
operating
locations
britain and ireland.
03
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Employees
Market leadership positions
4,174
DCC Energy is the largest oil distributor in britain and in
Sweden and a leading oil distributor in ireland, in Denmark
and in Austria. it is also one of the leading sales and
marketing businesses for branded fuel cards in britain.
DCC Energy is the second largest LPg sales, marketing and
distribution business in britain and in ireland.
Employees
Market leadership positions
1,743
in the Uk, SerCom Distribution is the largest distributor in home
entertainment products (including games consoles and software,
consumer electronics and Av accessories and peripherals) and a
leading distributor of iT and communications products (including
PCs, printers, smartphones, peripherals, consumables and
networking products).
in ireland, it is the largest distributor of home entertainment
products and a leading distributor of iT products. in france, it
is also a leading distributor of iT products.
Employees
Market leadership positions
SerCom Distribution is now the fifth largest distributor of iT
and home entertainment products in Europe.
SerCom Solutions is a strategic supply chain partner for some
of the world’s leading technology and telecommunications
companies.
1,169
DCC healthcare is the largest distributor of medical devices
and pharma products in ireland with a developing presence
in britain and is also the largest provider of outsourced
compounding services in ireland.
it is a leading provider of value added logistics services in
britain.
DCC healthcare is the leading british based outsourced
provider to the health and beauty sector.
Employees
Market leadership positions
896
DCC Environmental is the leading recycling, waste
management and resource recovery services provider
in Scotland. it owns the largest material recycling facility
in the East midlands at Nottingham. it also owns the
leading national waste oil and hazardous waste collection,
processing and recycling business in britain.
Employees
Market leadership positions
886
in ireland, DCC food & beverage is the leading supplier
of healthy foods and beverages, fine foods and vitamins,
minerals and supplements. it is also a leading value added
distributor of indulgence products in the grocery, impulse
and food service sectors. it is also a leading distributor of
wine in ireland to both the on and off-trade.
DCC Environmental is the largest hazardous waste
treatment business in ireland.
in britain, DCC food & beverage is a leading supplier of
branded and exclusive retail solutions to the multiple off-
trade sector of the Uk wine market.
04
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
BUSINESS MODEL AND STRATEGY
OUR BUSINESS MODEL
DCC iS A SALES, mARkETiNg,
DiSTRibUTiON AND bUSiNESS
SUPPORT SERviCES gROUP.
ThE gROUP iS ORgANiSED
AND mANAgED iN fivE
SEPARATE DiviSiONS, EACh
fOCUSED ON SPECifiC
mARkET SECTORS.
DIVISION
MARKET SECTOR
DCC ENERGY
• Oil and LPG sales, marketing and
DCC SERCOM
distribution
• IT, communications and home
entertainment products sales,
marketing and distribution
• Supply chain management
services
DCC HEALTHCARE
• Medical device and pharma
products sales, marketing and
distribution and value added
logistics services to hospitals
• Outsourced services to brand
owners in the health & beauty
sector
DCC ENVIRONMENTAL • Waste management and
recycling services to commercial,
industrial and public sector
customers
DCC FOOD & BEVERAGE • Food & beverage product sales,
marketing and distribution
OUR OBjECTIVE
TO bUiLD A gROwiNg,
SUSTAiNAbLE AND CASh
gENERATivE bUSiNESS whiCh
CONSiSTENTLy PROviDES
RETURNS ON TOTAL CAPiTAL
EmPLOyED SigNifiCANTLy AhEAD
Of iTS COST Of CAPiTAL.
05
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
OUR STRATEGY
CREATING AND SUSTAINING
LEADING POSITIONS IN EACH
OF THE MARKETS IN WHICH WE
OPERATE
MAINTAINING FINANCIAL
STRENGTH THROUGH A
DISCIPLINED APPROACH TO
BALANCE SHEET MANAGEMENT
DCC aims to be the number 1 or 2 operator in
each of its markets. This is achieved through a
consistent focus on increasing market shares
organically and via value enhancing acquisitions.
DCC has a long and successful track record of
bolt-on acquisitions which have strengthened our
market positions and generated attractive returns
on capital invested.
It is core to our strategy that in pursuing our
objectives, we will only do so in the context of
maintaining relatively low levels of financial
risk in the Group. We believe that this not only
provides the greatest likelihood of generating
value for shareholders in the long term but also
leaves the Group best placed to react quickly to
commercial opportunities as they arise.
ATTRACTING AND EMPOWERING
ENTREPRENEURIAL
LEADERSHIP TEAMS, CAPABLE
OF DELIVERING OUTSTANDING
PERFORMANCE, THROUGH THE
DEPLOYMENT OF A DEVOLVED
MANAGEMENT STRUCTURE
DCC strives to attract, motivate and empower
entrepreneurial leadership teams across
the Group. Given the diverse market sectors
which we operate in, we believe that providing
appropriate short and long term incentives to
these leaders, based on the performance of the
businesses which they manage, is the best way
to drive returns for shareholders. Very often
post-acquisition, we retain entrepreneurial
managers who have sold their businesses to
DCC and through our devolved management
structure we ensure they are empowered to
continue to develop those businesses. We then
overlay this with both the close involvement of
our small divisional teams with the businesses
and strong Group financial and capital
allocation controls.
CONTINUOUSLY
BENCHMARKING AND
IMPROVING THE EFFICIENCY
OF OUR OPERATING MODEL IN
EACH OF OUR BUSINESSES
DCC strives to be the most efficient business
in each of the sectors in which it operates.
We continuously benchmark our businesses
against those specific KPIs which we judge are
important indicators in our drive for superior
returns on capital in the short, medium and
longer term.
CAREFULLY ExTENDING OUR
GEOGRAPHIC FOOTPRINT,
THEREBY PROVIDING NEW
HORIzONS FOR GROWTH
In the year ended 31 March 2012, 68% of DCC’s
operating profits were derived from the UK and
14% from Ireland. In recent years we have been
expanding certain of the Group’s businesses
into other European markets which we believe
will provide good opportunity for growth going
forward. In the year ended 31 March 2012, 17%
of operating profits were from Continental
Europe, up from 12% last year and 3% five
years ago. We will look to further extend our
business in these markets and to enter new
geographic markets in the coming years.
06
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
CHAIRMAN’S STATEMENT
DEAR SHAREHOLDER,
AfTER 17 CONSECUTivE yEARS Of gROwTh, iT iS DiSAPPOiNTiNg TO
REPORT TO yOU A fALL Of 18.4% iN ADjUSTED EARNiNgS PER ShARE
ON A CONSTANT CURRENCy bASiS iN ThE fiNANCiAL yEAR ENDED 31
mARCh 2012. hAviNg hAD A vERy STRONg PERfORmANCE fROm DCC
ENERgy OvER A TEN yEAR PERiOD, wiTh AN ExCEPTiONAL UPLifT
iN OUR OiL AND LPg bUSiNESSES fROm COLDER ThAN NORmAL
wEAThER iN ThE PRECEDiNg TwO yEARS, TEmPERATURES wERE
ExCEPTiONALLy wARm ThROUghOUT ThE fiNANCiAL yEAR
jUST ENDED. high OiL PRiCES ExACERbATED ThE wEAk TRADiNg
CONDiTiONS ThROUghOUT ThE yEAR. AS A RESULT, DCC ENERgy’S
OPERATiNg PROfiT fELL by 38.3%. AS AgAiNST ThAT, wE hAD A
RObUST OvERALL PERfORmANCE fROm ThE OThER DiviSiONS,
NOTAbLy DCC SERCOm, whERE OPERATiNg PROfiT wAS UP by 17.0%.
Our overall return on capital employed,
at 14.2%, while lower than recent years,
remained exceptional and well above
the cost of capital. Our free cash flow,
at €146.0 million, was higher than in
the previous year and our balance sheet
remained very robust, with net year
end borrowings of only €128.2 million,
compared with shareholder equity of
over €1 billion.
Dividend
The board is recommending a final
dividend of 50.47 cent per share, making
a total annual dividend of 77.89 cent
per share, a 5% increase over the prior
year. The total dividend for the year is
covered 2.1 times by adjusted earnings
per share. The board’s policy is to
grow dividends over time in line with
what we believe to be the long term
sustainable trend in underlying earnings
per share. it also seeks to balance the
income needs of shareholders with the
needs of the group to invest both in the
business we have and in future growth
opportunities through acquisition, where
we believe that we can continue to make
high returns on capital employed, as we
have consistently done.
07
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Dividend (cent)
- years ended 31 March
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
CAGR 10yrs 12.3%, CAGR 5yrs 9.6%
Development
2011/12 was a good year for development
activity. in all, we deployed €169.1 million
on acquisitions during the year, the most
substantial of which was for part of the
Total business in the Uk. we sold our
enterprise iT distribution business, which
we had concluded was not core to our
future strategy, for a good price.
we saw strong organic growth and
consolidated leadership positions in
the Uk and in ireland in a number of
our businesses across the divisions.
Approaching one-fifth of our operating
profit now comes from Continental
Europe.
A number of acquisition opportunities
are under review at present across our
divisions, to which we will apply our
normal disciplined approach.
we made a number of key new senior
management appointments during the
year so that we will be well equipped to
deal with future growth and to continue to
build sustainable, scale businesses.
On behalf of the board, i want to thank
DCC’s Chief Executive, Tommy breen, his
management team and all 8,800 or so
DCC employees for their very hard work,
discipline, persistence and effectiveness
in meeting all of the challenges and
pursuing all of the opportunities that
presented themselves during the year.
77.89
74.18
67.44
62.34
56.67
49.28
42.85
37.26
32.40
28.18
in addition to board focus on strategy
and operational performance, a
detailed review of risk management
and compliance policies, practices and
structures was completed, with external
assistance, in the light of the substantial
growth we have experienced in recent
years and the diversified nature of the
group. The board is happy that what
we have in place is appropriate from
a commercial point of view and in the
context of best practice.
i am happy with our progress on our
sustainability agenda. we have more to
do. but i believe that at all levels there
is an appropriate focus on ensuring
the resilience of DCC’s business over
time, by maintaining an appropriate
balance between economic, social and
environmental dimensions in the way
we look at cost management, revenue
enhancement, customers, our people
management and our reputation.
Board and Governance
The board believes that DCC meets all
of the current requirements of the latest
corporate governance standards as set
out in the Uk Corporate governance Code
and in the irish Corporate governance
Annex.
There were no changes in the composition
of the board during the year under review.
The average service of the non-executive
Director cadre at 31 march 2012 was
4 years and 8 months. The significant
diversification of experience and expertise
brought to the table as a result of new
appointments over the past three years
has paid substantial dividends in terms
of the quality of board discussion and
contribution to decision-making. The
effectiveness of the board was underlined
by the positive results of an external
evaluation of board performance which
was undertaken by Towers watson in the
final quarter of the financial year. The
board has incorporated learnings from
the evaluation into an action plan which
will be implemented in the current year.
i continue to spend a significant amount
of time on ensuring that we will continue
to have available top class candidates for
future non-executive appointments, as
vacancies arise.
further detail on governance is set out in
the Corporate governance statement on
pages 64 to 73.
Outlook
Economic conditions in the Uk, ireland
and Europe generally, on which our
business is focused, are unlikely to
improve materially in the year ahead.
but a return to something like more
average winter temperatures should
lead to a material resumption in DCC
Energy’s profit growth path. On that key
assumption and with the benefit of our
continuing development activities across
all divisions, i would anticipate strong
overall growth in group operating profit
and another year of excellent returns on
capital employed in the year ahead.
Michael Buckley
Chairman
14 may 2012
08
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
CHIEF ExECUTIVE’S REVIEW
KEY FEATURES OF RESULTS
ThE OPERATiNg PROfiT Of ThE gROUP DECLiNED by 18.3% ON A
CONSTANT CURRENCy bASiS iN ThE yEAR ENDED 31 mARCh 2012.
AS SigNALLED DURiNg ThE yEAR, ThE gROUP’S RESULTS wERE
ADvERSELy imPACTED by TRADiNg iN DCC ENERgy DUE TO miLD
wEAThER, highER OiL PRiCES AND ThE CONTiNUiNg DiffiCULT
ECONOmiC bACkgROUND, PARTiCULARLy iN ThE Uk. hOwEvER, ThE
yEAR wAS ALSO ONE Of SigNifiCANT DEvELOPmENT ACTiviTy, wiThiN
DCC ENERgy AND ACROSS ThE wiDER gROUP, wiTh TOTAL CAPiTAL
DEPLOyED ON ACqUiSiTiONS AND NET CAPiTAL ExPENDiTURE Of €235
miLLiON. wiTh ThE bENEfiT Of ThiS ACTiviTy AND ThE PROSPECT Of A
mORE NORmAL wiNTER, DCC LOOkS fORwARD TO A RESUmPTiON Of
STRONg gROwTh iN ThE yEAR AhEAD.
while operating profit in DCC Energy in
the year ended 31 march 2012 declined
by 38.3% on a constant currency basis,
reflecting the factors already referred
to, operating profit in the group’s other
four divisions combined increased by
11.3% on a constant currency basis.
This was driven primarily by DCC
SerCom, DCC’s second largest division,
which increased its operating profit by
17.0% on a constant currency basis.
DCC healthcare increased its operating
profit on continuing activities by 5.3%
on a constant currency basis, while
DCC Environmental’s operating profit
advanced 24.9%, also on a constant
currency basis, driven primarily by
acquisition activity during the year.
Operating profit declined by 7.0% in
DCC’s smallest division, DCC food &
beverage.
Despite the challenging trading result
in the year, the group continued to drive
strong cash generation with operating
cash flow of €277.3 million (€269.6
million in the prior year) and free cash
flow of €146.0 million (€123.6 million
in the prior year). A major factor in this
was a working capital reduction of €46.6
million in the year despite a €2.0 billion
09
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Results Highlights
Revenue
Operating profit*
Profit before net exceptional items,
amortisation of intangible assets and tax
Adjusted earnings per share*
Dividend per share
Operating cash flow
free cash flow**
Net debt
Total equity
Return on total capital employed
% Change on Prior Year
Constant
Currency†
Reported
+23.2%
-19.4%
-22.2%
-19.5%
+5.0%
+24.9%
-18.3%
-21.1%
-18.4%
€
10,690.3m
185.0m
167.1m
163.51 cent
77.89 cent
277.3m
146.0m
128.2m
1,014.0m
14.2%
(2011: €269.6m)
(2011: €123.6m)
(2011: €45.2m)
(2011: €931.9m)
(2011: 19.9%)
† all constant currency figures quoted in this report are based on retranslating 2011/12 figures at prior year translation rates
* excluding net exceptionals and amortisation of intangible assets
** after net capital expenditure, interest and tax payments
increase in revenue with overall working
capital days reducing to 2.5 days at
31 march 2012 from 4.9 days at 31
march 2011.
Reflecting the strong cash generation
and confidence in the future
development of the group, it is proposed
to increase the final dividend for the
year by 5% to 50.47 cent per share,
resulting in a 5% increase for the full
year to 77.89 cent per share.
while return on total capital employed
declined to 14.2% (19.9% in the prior
year), reflecting the result in DCC
Energy, this is well above the group’s
cost of capital.
Delivering against Strategy
Despite a challenging year, we
continued to make excellent progress
against each of our key strategic
objectives.
we have grown our market positions in
many of our businesses. During the year
we further strengthened our position as
the leading distributor of oil products
in the Uk through the completion of the
acquisition of Pace fuelcare, certain
oil distribution assets of Total in britain
and a number of other smaller oil
distributors. DCC Energy’s strategy is to
develop its business in the retail petrol
station, marine, aviation and other value
added product sectors which along with
other initiatives will, over time, reduce
the impact of weather on its business.
Our iT distribution businesses have
consolidated their number 1 or 2
positions in the irish and Uk markets
through strong organic growth and the
integration of Advent Data which was
acquired just before the end of the prior
financial year.
in DCC healthcare we have reinforced
our position as the market leader in the
medical device and pharma products
sector in ireland and in the provision of
outsourced services to brand owners in
the health and beauty sector. Through
the acquisition of Neolab and the forth
medical group, we have grown our
developing market presence in britain
in the generic pharma and medical
device markets. Similarly, in DCC
Environmental we added to our british
waste management business through the
acquisitions of Oakwood and maxi waste.
we maintained our focus throughout
the year on the continuous drive to
improve the operating efficiency of our
businesses. we aim to be the most
efficient business within each of the
sectors in which we operate, consistent
always with providing optimal value
and service to both our customers and
suppliers. A most notable achievement
during the year was the reduction in
working capital days from 4.9 days last
year to 2.5 days at 31 march 2012, our
lowest ever level.
in the year ended 31 march 2012, 17%
of operating profit was derived from
businesses in Continental Europe,
up from 12% in the prior year and 3%
just five years ago. During the year,
we acquired our first businesses in
Sweden – Swea Energi, the leading
oil distributor in Sweden, and Ztorm
Ab, a small company providing digital
media distribution services to global
customers. Our development strategy,
which resulted in committed acquisition
expenditure during the year of €169.1
million, remains focused on not just
each of the geographic markets
we operate in today, but also new
markets where we believe attractive
opportunities exist for the group.
10
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
CHIEF ExECUTIVE’S REVIEW (continued)
Adjusted earnings per share (cent)
- years ended 31 March
Adjusted earnings per share (cent)
- years ended 31 March
CAGR 10yrs 5.6%, CAGR 5yrs 2.6%
CAGR 10yrs 5.6%, CAGR 5yrs 2.6%
Group operating profit (€m)
- years ended 31 March
Group operating profit (€m)
- years ended 31 March
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
CAGR 10yrs 7.3%, CAGR 5yrs 5.7%
we are very pleased to have
CAGR 10yrs 7.3%, CAGR 5yrs 5.7%
strengthened our senior management
teams in a number of areas at group,
divisional and subsidiary levels. A
number of these appointments have
been made with a view to expanding our
management resource to better position
the group for future development
opportunities.
Our financial position remains very
strong – the group is well funded and
highly liquid. At 31 march 2012, the
group had net debt of €128.2 million
and total equity of just over €1.0 billion.
The group net debt to EbiTDA ratio
was 0.5. The significant majority of our
debt has been raised in the US private
placement market with relatively long
term maturities, at 31 march 2012 an
average maturity of 5.5 years.
Sustainability
good progress has been made in raising
our awareness and understanding
of sustainability and how, by having
a wider and deeper perspective of
the environmental and social trends
that impact our business over the
longer term, we can more effectively
identify both risks and opportunities
for our businesses. Notwithstanding
the challenges to national economies,
global social pressures continue to
place greater demands on energy
availability, natural resources and food
production. The business community
has a role to play in addressing these
challenges by creating more sustainable
business models that deliver shared
value to our shareholders, society and
the environment.
GOOD PROGRESS HAS
BEEN MADE IN RAISING
OUR AWARENESS AND
UNDERSTANDING OF
SUSTAINABILITY AND HOW,
BY HAVING A WIDER AND
DEEPER PERSPECTIVE
OF THE ENVIRONMENTAL
AND SOCIAL TRENDS
THAT IMPACT OUR
BUSINESS OVER THE
LONGER TERM, WE CAN
MORE EFFECTIVELY
IDENTIFY BOTH RISKS AND
OPPORTUNITIES FOR OUR
BUSINESSES.
163.5
203.2
178.0
169.1
165.1
143.5
124.0
115.1
106.0
101.5
163.5
203.2
178.0
169.1
165.1
143.5
124.0
115.1
106.0
101.5
185.0
229.6
192.8
180.4
185.0
167.2
229.6
140.1
192.8
121.0
180.4
109.3
167.2
101.6
140.1
97.2
121.0
109.3
101.6
97.2
11
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
DCC RETAINS A
STRONG EqUITY BASE,
RELATIVELY LONG TERM
DEBT MATURITIES AND
SIGNIFICANT CASH
RESOURCES WHICH
LEAVE IT WELL PLACED
TO TAKE ADVANTAGE OF
FURTHER ACqUISITION
AND DEVELOPMENT
OPPORTUNITIES.
SENIOR MANAGEMENT
The completion of all divisional
sustainability workshops during the
year has engaged senior executive
management teams in the sustainability
agenda and forms a starting point
for cascading sustainability into each
subsidiary. while engagement with
stakeholders (for example investors,
employees, customers and suppliers)
is ongoing, sustainability has not
always been explicitly or systematically
addressed. This is a challenge for DCC
and we are committed to improving our
sustainability engagement processes in
the coming year.
The DCC Climate Change Strategy was
issued in 2011 and included carbon
intensity reduction targets to be met
by each subsidiary in 2015 and 2020,
using metrics that are appropriate to
their operations. The Climate Change
Strategy is discussed more fully in the
Sustainability Report at page 50.
DCC’s overall commitment to reporting
carbon emissions data and policies
was independently recognised by our
inclusion in the Carbon Disclosure
Project’s (CDP) irish Climate Leaders
index, based on DCC’s response to the
CDP’s investor questionnaire.
Safety performance improved in terms
of the number of lost time injuries
sustained by employees but the
number of days lost as a result of those
injuries increased, i.e. on average more
days lost per accident. Our objective
is to have no lost time injuries and
management systems are in place to
identify, control and monitor health
and safety risks to employees and
others. in those subsidiaries with higher
injury rates, additional resource will be
focused on preventing incidents in the
first instance and, in the event of an
accident, fully supporting the recovery of
injured parties and their return to work.
This is the second year that we have
reported in line with the global
Reporting initiative (gRi) level C
standard. As sustainability reporting
standards develop and become
increasingly more complex and
demanding in terms of disclosure
requirements, a review of how we
measure and report sustainability
will be completed in the coming year
to ensure that we focus resources on
material issues that add value and
contribute to the long term success
of our business. we will include
international standards such as the
greenhouse gas Protocol, the gRi
and the CDP and the work of the
international integrated Reporting
Council as part of this review.
DCC has made a positive start on the
sustainability journey but we recognise
that we have more to do. Our priority
is to develop and embed sustainability
concepts into business processes to
ensure that our customers, people and
investors continue to benefit from their
association with DCC.
Outlook
The outlook for the year to 31 march
2013 is set against a continued
uncertain economic environment
and the important assumption that
there will be a return to more normal
winter temperatures compared to
the extremely mild winter last year,
which should give rise to a strong
recovery in DCC Energy’s operating
profit. Consequently, at this very early
stage, the group anticipates that its
operating profit and adjusted earnings
per share on continuing activities, both
on a constant currency basis, will be
approximately 15% ahead of the prior
year. This would result in approximately
a 20% increase in operating profit and in
adjusted earnings per share compared
to the prior year on a reported basis,
assuming an exchange rate of
Stg£0.81 = €1.
DCC retains a strong equity base,
relatively long term debt maturities
and significant cash resources which
leave it well placed to take advantage
of further acquisition and development
opportunities.
Tommy Breen
Chief Executive
14 may 2012
12
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
MEASURING OUR PROGRESS
- GROUP KEY PERFORMANCE INDICATORS
The Group employs financial and non-financial key performance indicators (‘KPIs’) which signify progress towards the
achievement of our strategy. Each division has its own KPIs which are in direct alignment with those of the Group and are
included in the divisional operating reviews on pages 14 to 39.
FINANCIAL KPIs
Strategic objective
KPI
KPI definition
Deliver superior
shareholder returns
Return on capital
employed (‘ROCE’)
ROCE is defined as the operating profit before amortisation and
exceptional items as a percentage of the total average capital
employed.
Drive for enhanced
operational
performance
Operating profit
growth on a
constant currency
basis
Measures the change in operating profit before amortisation
and exceptional items achieved in the current year (based on
retranslating current year sterling figures at prior year exchange
rates) compared to operating profit before amortisation and
exceptional items reported in the prior year.
Deliver superior
shareholder returns
Generate cash flows
to fund organic and
acquisition growth
and dividends
Adjusted earnings
per share (‘eps’)
growth on a
constant currency
basis
Operating cash
flow
Extend our business
and geographic
footprint
Committed
acquisition
expenditure
Measures the change in adjusted eps achieved in the current year
(based on retranslating current year sterling figures at prior year
exchange rates) compared to adjusted eps reported in the prior
year.
Measures cash generated from operations.
Measures cash spent and future deferred and contingent
consideration amounts for acquisitions completed during the year.
NON-FINANCIAL KPIs
Strategic objective
KPI
KPI definition
Grow a sustainable
business
Carbon emissions
Total scope 1 and 2 carbon emissions expressed in tonnes of CO2e.
Health and safety
Lost time injury
rates
Lost Time Injury Frequency Rate (‘LTIFR’) measures the number
of lost time injuries per 200,000 hours worked. Lost Time Injury
Severity Rate (‘LTISR’) measures the number of calendar days lost
per 200,000 hours worked.
13
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
FY12 performance
FY12 comment
FY13 outlook
Link to other disclosures
2012
2011
2010
Notwithstanding the excellent
working capital management
in the year, the decline in ROCE
primarily reflects the decline in
operating profit in DCC Energy.
14.2%
19.9%
18.4%
The group anticipates an
improvement in ROCE, driven
by a recovery in operating
profits in DCC Energy.
2012
2011
2012 v 2011: -18.3%
€187.5m
€229.6m
2012
2011
2012 v 2011: -18.4%
165.79c
203.15c
Operating profit was adversely
impacted by trading in DCC Energy
due to very mild weather, higher
oil prices and a continuing difficult
economic background. Operating
profit in the group’s other four
divisions combined increased by
11.3% on a constant currency basis.
The decline in adjusted eps was
primarily driven by the factors
mentioned under the operating
profit kpi.
The group anticipates that
operating profit on continuing
activities, on a constant currency
basis, will be approximately 15%
ahead of the prior year.
The group anticipates that
adjusted eps on continuing
activities, on a constant currency
basis, will be approximately 15%
ahead of the prior year.
2012
2011
2010
2012
2011
2010
€277.3m
€269.6m
€297.8m
Despite the challenging trading
environment, the group
generated excellent operating
cash flow of €277.3m during the
year, driven by a reduction in
working capital of
€46.6 million.
Cash generation and working
capital management will remain a
key focus of the group.
Significant acquisition activity
across the group during the
year, particularly in DCC Energy
(€110.9m), DCC Environmental
(€30.8m) and DCC healthcare
(€20.5m).
€169.1m
€130.7m
€165.3m
The group will continue to pursue
attractive opportunities in our
traditional markets as well as
looking to extend our business
into new geographic markets.
Chief Executive’s Review
see pages 8 to 11
financial Review
see pages 40 to 46
Chief Executive’s Review
see pages 8 to 11
financial Review
see pages 40 to 46
Chief Executive’s Review
see pages 8 to 11
financial Review
see pages 40 to 46
financial Review
see pages 40 to 46
Chief Executive’s Review
see pages 8 to 11
FY12 performance
FY12 comment
FY13 outlook
Link to other disclosures
2012
2011
2010
LTIFR
2012
2011
2010
LTISR
2012
2011
2010
116.9tns
116.3tns
100.1tns
No significant change from prior year.
increased emissions from acquisitions
in DCC Energy and DCC Environmental
were offset principally by less
transport activity in DCC Energy due to
the mild winter and reduced electricity
demand in Allied foods following the
business restructuring.
with the introduction of emission
reduction targets and an increasing
focus on energy efficiency initiatives
around the group, relative carbon
emissions are expected to fall.
Absolute emissions may increase
with a return to more normal winter
weather patterns.
Continued improvement in the
frequency of lost time injuries was
driven by good performances in DCC
Energy and DCC Environmental.
2.3
2.5
2.8
53 days
48 days
42 days
The increase in the LTiSR was driven
by a relatively small number of
accidents which resulted in very long
periods of absence.
The group is targeting an
improved performance in both
kPis, through a continued focus
on prevention and active case
management to facilitate the full
recovery of injured parties.
Sustainability Report
see pages 47 to 55
Sustainability Report
see pages 47 to 55
14
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
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 fEbRUARy 2012, ThROUgh
ThE ACqUiSiTiON Of SwEA, DCC ENERgy bECAmE ThE mARkET
LEADER iN OiL DiSTRibUTiON iN SwEDEN. iN ThE yEAR ENDED 31
mARCh 2012, DCC SOLD 7.9 biLLiON LiTRES Of PRODUCT fROm iTS
ExTENSivE NETwORk Of 320 fACiLiTiES TO iTS CUSTOmER bASE Of
APPROximATELy ONE miLLiON CUSTOmERS.
Markets and Market Position
Oil
DCC Energy’s oil distribution business
supplies transport fuels, heating oils,
and fuel oils to commercial, retail,
domestic, agricultural, industrial,
aviation and marine customers in
britain, ireland, Sweden, Denmark and
Austria. in britain, DCC Energy sells oil
under a portfolio of brands including
bayford, butler fuels, brogan, Carlton
fuels, CPL Petroleum, gulf, Pace
fuelcare, Scottish fuels, Shell and
Texaco. Outside of britain, DCC Energy
sells oil under the leading brands of
Emo Oil (ireland), Swea (Sweden),
DCC Energi (Denmark), Energie Direct
(Austria) and Top Oil (Austria).
DCC Energy is one of the leading sales
and marketing businesses for branded
fuel cards in britain. The business
sells in excess of 500 million litres of
transport fuels annually through its
portfolio of fuel cards under the bP,
Esso, Shell, Texaco and Diesel Direct
brands. fuel cards are now an essential
tool for commercial organisations to
manage their transport fuel costs. DCC
Energy provides its customers with
access to the breadth of the british
retail petrol station and bunker network
through its portfolio of branded fuel
cards, while giving them detailed
information on fuel utilisation to assist
in minimising their spend on transport
fuels.
britain
DCC Energy has acquired a number of
companies in 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 and is now
the largest oil distributor in britain.
DCC’s addressable market in britain
has been for transport fuels and
heating oils to commercial, industrial,
domestic, agricultural and the smaller
independent petrol stations. This
market is a total of circa 32 billion
litres and DCC will sell circa 5.3 billion
litres of product to this market, giving
a market share of approximately 16%.
in addition, with the acquisition of the
Total assets, which included supply to
larger independent dealers, DCC has
now entered the market to supply the
broader retail petrol station market
which comprises approximately 9,000
retail sites selling circa 35 billion litres
of fuel. On a combined basis DCC is now
supplying circa 1,350 sites throughout
the country with a total volume of
circa 1.3 billion litres, giving DCC
approximately 4% of the overall retail
petrol station market.
ireland
Emo Oil is one of the leading oil
distributors in ireland with a market
share of 9%. DCC’s addressable oil
market in ireland is estimated at 9
billion litres.
Continental Europe
The newly acquired Swedish oil
distribution business (Swea) is the
market leader in Sweden with a share
of circa 17% of the addressable market
which is estimated at 3 billion litres. The
addressable oil distribution market in
Denmark is estimated at 2 billion litres
of which DCC Energi Danmark has a
market share of 13% and is the number
two oil distributor. The addressable
oil distribution market in Austria is
estimated at 5 billion litres and DCC’s
business Energie Direct is the number
two in this market with a share of 12%.
with the oil majors continuing to divest
oil distribution assets, DCC Energy is
well placed to continue its growth by
acquisition.
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. in
britain, the business operates from a
nationwide infrastructure comprising
45 facilities, while in ireland the
infrastructure comprises 5 depots
throughout the country. The LPg
business also distributes a wide range
of LPg fuel appliances, such as mobile
heaters and barbeques.
britain represents DCC Energy’s largest
LPg market at approximately 1.0 million
tonnes. Trading under the flogas
brand, DCC Energy is the number two
LPg distributor in britain and ireland
with market shares of approximately
19% and 37% respectively. Unlike the
oil distribution market, which remains
highly fragmented, the LPg market in
both britain and ireland is relatively
consolidated.
New Energy
DCC Energy made its first step in
developing a presence in the renewable
energy sector through the acquisition
of Ufw in November 2011. Ufw is a
distributor of innovative renewable
energy solutions (including solar
panels, biomass, geothermal heating
and underfloor heating) in britain with a
broad supplier and customer base.
15
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Revenue
Operating profit
€7,823.0m
2011: €6,129.8m
Change on prior year
Reported: +27.6%
Constant currency: +29.5%
€83.5m
2011: €137.3m
Change on prior year
Reported: -39.2%
Constant currency: -38.3%
Return on total capital employed
Brands
14.0%
2011: 26.9%
Oil - bayford, brogan*, butler fuels*,Carlton
fuels*, CPL Petroleum, Emo Oil*, gulf, Pace
fuelcare, Scottish fuels*, Shell, Texaco.
LPG - flogas*.
Fuel card - bP, Diesel Direct, Esso, fastfuels,
Shell.
* DCC owned brands
IN OIL DISTRIBUTION, DCC
ENERGY’S STRATEGY IN
BRITAIN IS TO ACHIEVE
A 20% MARKET SHARE
(CURRENTLY 16%) OF ITS
ADDRESSABLE MARKET.
16
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC ENERGY (continued)
CASE STUDY
GB OILS RETAIL GROWTH
It has been DCC Energy’s strategy to expand the business in non heating dependent
areas with a specific focus on supply into the retail service station sector in Britain.
Through its depot infrastructure across the country, robust supplier portfolio and fleet
in excess of 1,000 trucks, GB Oils is exceptionally well positioned to supply the retail
sector throughout the country. Over the past year, GB Oils has significantly grown the
number of retail sites to which it delivers, both organically and through acquisition,
from 804 to 1,350, making GB Oils the largest distributor to dealer owned dealer
operated sites in the country. The portfolio of customers now includes almost 300 Gulf
branded sites, a similar number of Total branded sites, and, through the acquisition of
Pace Fuelcare, 120 Pace branded stations. GB Oils now supplies circa 1.3 billion litres of
product to retail stations across Britain.
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 new geographic
regions with attractive market
characteristics; and
• continuing the development of its
presence in the green/renewable
energy sector.
Oil
in oil distribution, DCC Energy’s
strategy in britain is to achieve a 20%
market share (currently 16%) of its
addressable market. key to achieving
this target is growth in non heating
dependent segments of the market
with a particular focus on retail petrol
stations and the marine and aviation
sectors. DCC Energy is now the largest
supplier to independent dealer owned
retail petrol stations in britain, selling
to approximately 1,350 sites across
the country. The business has been
actively rolling out the gulf brand
across this network and currently
has approximately 300 sites under
the gulf brand. following on from the
completion of the acquisition in October
2011 of certain Total distribution assets,
the business distributes to a similar
number of Total branded sites and also
has sites under a range of other brands
including Pace, Power, Scottish fuels,
Texaco and Regent.
The business also made good progress
in developing its marine and aviation
offering during the year, strengthening
the management team and increasing
its customer base. DCC Energy is
also focused on selling differentiated
products and cross selling add-
on products and services such as
17
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
lubricants and boiler maintenance
services to its extensive customer base.
DCC Energy continued to expand its
business in continental Europe during
the year through the acquisition of
Top Oil and a bio-fuels distribution
business in Austria. DCC Energy
took a further important step in the
development of its business into
new geographic areas through the
acquisition of Swea (announced in
December 2011). The acquisition of
Swea significantly strengthens DCC’s
business in Scandinavia. The scale of
Swea has since been increased through
the acquisition of two small distribution
businesses in Sweden (Lantmannen and
malardalen).
in fuel cards, DCC Energy is continuing
to target high levels of organic growth
through its extensive telesales team
and cross selling fuel cards to its broad
oil distribution customer base. The
fuel cards business has expanded its
customer offering through providing
innovative products to customers
such as CO2Count (which is set out
in further detail in the Sustainability
Report at pages 47 to 55) and mileage
Capture, providing customers with
key information on fuel consumption
and emissions to allow them to better
manage their businesses.
Approximately 50% of DCC Energy’s
margin is generated from the sale
and distribution of heating dependent
product. A key element of DCC Energy’s
strategy is to grow its business in
areas outside of the heating dependent
sectors to ensure diversification from,
and to reduce the reliance on, the
margin generated by heating products.
Demand for heating volumes, as DCC
Energy has experienced with the swing
in demand between the years ended 31
march 2011 and 2012, is much more
volatile than the demand for other
oil products. DCC Energy will aim to
increase the flexibility in its cost base
by aligning overheads more closely with
demand.
LPG
DCC Energy will continue to leverage
its strong LPg market positions to drive
organic profit growth on a sector by
sector basis in both britain and ireland.
Similar to the oil business, the LPg
business is targeting growth in the
non heating dependent segments of
the market, primarily through organic
volume growth with commercial and
industrial customers. in April 2012, DCC
Energy expanded its cylinder business
into the medical gas sector in britain
through the acquisition of medical
gas Solutions Limited, a distributor of
specialist medical gasses to ambulance
trusts.
Customers
DCC Energy has a very broad customer
base with approximately 1 million
customers across the geographies
in which the businesses operate.
Customers are primarily spread over the
commercial, retail, industrial, domestic,
agricultural and marine markets.
The volume split by customer type for
the year ended 31 march 2012 is as
follows.
Customer Split
53%
Commercial
16%
Retail
12%
Industrial
11%
Domestic
Customer Split
5%
Agricultural
2%
Marine
53%
Commercial
1%
Other
16%
Retail
12%
Industrial
11%
Domestic
The volume split by type of product for
Product Split
5%
Agricultural
the year ended 31 march 2012 is as
2%
Marine
OIL
follows.
1%
Other
49%
Transport
24%
Heating
21%
Fuel
Product Split
LPG
OIL
Transport
Heating
Fuel
LPG
6%
49%
24%
21%
6%
Suppliers
As with its customer base, DCC
Energy’s supplier portfolio is broadly
based. The top five suppliers represent
63% of total volumes supplied with no
one individual supplier accounting for
more than 20% of volumes supplied in
the year to 31 march 2012.
Our People
DCC Energy has strong management
teams with an in depth knowledge and
years of experience in the markets in
which the businesses operate. As our
businesses have grown we have looked
to augment the existing management
teams with strong personnel in senior
roles. most recently we appointed a
managing Director for DCC Energy’s oil
businesses, a Chief Operating Officer
in gb Oils, a managing Director for
DCC Energy’s oil business in ireland
and a Compliance manager for DCC
Energy. we will continue to develop the
management teams as the businesses
grow.
DCC Energy currently employs 4,174
people.
Key Risks
DCC Energy, like all the businesses
within the group, faces a number of
strategic, operational, compliance and
financial risks. while the division has a
broad customer base across a number
of geographies, further economic
downturn and its impact on demand and
consumer confidence is a key risk faced
by the division.
A significant proportion of DCC Energy’s
volumes are generated through the
sale of heating dependent product
and, accordingly, the division can be
impacted by extreme movements in
weather conditions. As discussed
earlier in this report, there have been
significant developments in the non-
heating segments of the business and
a continuation of this development and
growth underpins the strategy to reduce
the dependence on heating products.
THE BUSINESS STRATEGY
FOR DCC ENERGY
RECOGNISES THAT IT IS
IMPORTANT TO OUR LONG
TERM SUCCESS THAT WE
DIVERSIFY BY GROWING
THE NON-HEATING
DEPENDENT SECTORS OF
THE BUSINESS, INCLUDING
THE DEVELOPMENT OF
RENEWABLES BUSINESS
THROUGH DCC NEW
ENERGY.
18
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC ENERGY (continued)
DCC Energy distributed 7.9 billion litres
of oil products during the year ended 31
march 2012 and the businesses operate
with inherent risks to the environment
and people. Ensuring that our
businesses maintain rigorous health,
safety and environmental standards is
one of our core business principles.
DCC Energy has been highly acquisitive
over the last number of years and
ensuring the smooth integration
of these acquisitions is critical to
the success of the division. This is
achieved through close monitoring of
the acquired businesses and ongoing
management development.
Sustainability
Climate change presents challenges
in physical (extreme weather events),
regulatory (carbon levies and taxes)
and commercial (changing demand
from customers) terms. The business
strategy for DCC Energy recognises
that it is important to our long term
success that we diversify by growing the
non-heating dependent sectors of the
business, including the development of
renewables business through DCC New
Energy.
from an operational perspective it is
pleasing to record that gb Oils achieved
the Carbon Trust Standard during the
year and flogas Uk was re-certified
to the same standard for another two
years. This independently verified
standard confirms the reduction in
relative emissions by the businesses
and the efforts which they are making
to reduce carbon emissions through
greater efficiencies and optimisation.
we are confident that this standard will
provide our customers with assurance
of our commitment to address the
challenge of climate change.
health, safety and environmental
(‘hSE’) performance is a key priority
and responsibility for all line managers
and directors who are supported by
experienced hSE functions in each
business. Occupational safety and
process safety (relating to the larger
terminals which have the potential for
a major accident) is managed through
hSE systems and processes which
identify, control and monitor hSE
risks. monthly kPis are reviewed by the
DCC Energy board which sets annual
objectives to drive improvements in
near miss reporting, safety awareness,
competence and overall safety culture.
The potential for oil spills to impact
on the environment is a risk that
is managed on a daily basis. from
domestic deliveries to large storage
facilities in coastal locations, a range of
controls are in place to minimise this
potential becoming a reality. Controls
include the design and maintenance of
vehicles and depots, the implementation
of effective hSE procedures and,
critically, the engagement of competent,
trained employees who are moving
product every day.
while no significant spills occurred
in the period, detailed investigations
following all spill events have identified
areas where we can and will improve
our performance. in the event of any
spill occurring, immediate action is
taken to contain and recover the product
to minimise impact to the surrounding
environment.
Performance for the Year Ended 31
March 2012
DCC Energy had a very difficult year with
operating profit declining by 38.3% on a
constant currency basis, as a result of
the very mild weather, higher oil prices
and the continuing difficult economic
background particularly in the Uk, its
largest market.
DCC ENERGY: KEY FINANCIAL PERFORMANCE INDICATORS
Strategic objective
KPI
Performance
Drive for enhanced
operational performance
Revenue growth
(constant currency)
Drive for enhanced
operational performance
Operating profit
growth (constant
currency)
Deliver superior
shareholder returns
Return on capital
employed (‘ROCE’)
Drive increase in sales
volumes
Volumes
Grow operating profit
per litre
Generate cash flows to fund
organic and acquisition
growth and dividends
Operating profit
per litre (constant
currency)
Operating cash flow
Deliver superior
shareholder returns
10 year operating
profit CAGR
2012
2011
2012 v 2011: +29.5%
2012
2011
2012 v 2011: -38.3%
2012
2011
2010
2012
2011
2010
2012
2011
2012
2011
2010
2012
2011
2010
19
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
€7,940.4m
€6,129.8m
€84.8m
€137.3m
14.0%
26.9%
26.5%
7.9bn litres
7.1bn litres
6.2bn litres
1.08 cent
1.86 cent
€216.5m
€147.1m
€178.8m
9.8%
19.9%
19.3%
Outlook
The outlook for DCC Energy for the
year to 31 march 2013 is set against
the important assumption that there
will be a return to more normal
winter temperatures compared to the
extremely mild winter last year which
should give rise to a strong recovery in
DCC Energy’s operating profit.
The average temperature in the Uk in
the quarter to 31 December 2011 was
the mildest on record. in contrast the
same quarter in the prior year was
the coldest on record. The average
temperature in the other important
heating quarter to 31 march 2012 was
also significantly milder than the prior
year. The substantially weaker demand
for heating oil products created excess
capacity across a very competitive
market which resulted in reduced gross
margins on all product grades. This
reduction in gross margins, combined
with the effect of a predominantly fixed
operating cost base, had a significant
impact on DCC Energy’s operating profit
for the year.
Overall DCC Energy sold 7.9 billion litres
of product during the year, an increase
of 10.8% over the prior year. Like for
like volumes declined by 5.9% on the
prior year with heating related volumes
declining by approximately 15% and non
heating related volumes declining by
approximately 2%.
The performance of the oil distribution
business in britain and ireland was
significantly impacted by the factors
outlined above and while the business
in Continental Europe was also affected
by the weather, it benefited from its
substantially outsourced infrastructure
and from the first time contribution of
Swea.
The LPg business in britain and ireland
was also impacted by the weak demand
for heating products and the difficult
economic environment with overall
volumes down 10.5%.
20
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC SERCOM
DCC SERCOm COmPRiSES SERCOm DiSTRibUTiON, whiCh iS A LEADiNg
DiSTRibUTOR Of iT, COmmUNiCATiONS AND hOmE ENTERTAiNmENT
PRODUCTS iN bRiTAiN, iRELAND AND fRANCE, AND SERCOm
SOLUTiONS, whiCh PROviDES OUTSOURCED PROCUREmENT AND
SUPPLy ChAiN mANAgEmENT SERviCES iN iRELAND, POLAND, ChiNA,
mExiCO AND ThE USA. ON 3 APRiL 2012, DCC ANNOUNCED ThAT
iT hAD REAChED AgREEmENT TO DiSPOSE Of iTS ENTERPRiSE iT
DiSTRibUTiON bUSiNESS.
Markets and Market Position
SerCom Distribution
SerCom Distribution sells a broad range
of iT and communications products
into both the SmE and retail markets,
to a very wide customer base of iT and
mobile resellers, dealers, retailers
and e-tailers in britain and ireland.
The products distributed include PCs,
printers, smartphones, peripherals,
consumables and networking products.
The business is a distribution partner of
many of the leading brands in the iT and
communications market, such as Acer,
Asus, Cisco, Dell, huawei, ibm, Lenovo,
microsoft, Netgear, Nokia, Plantronics,
Samsung, Sony, Toshiba and western
Digital.
SerCom Distribution also sells a range
of home entertainment and consumer
products including games consoles and
software, DvDs, consumer electronics,
Av accessories and peripherals
which are sold into the retail channel,
including large e-tailers, grocers,
catalogue retailers, specialist retailers
and small independent retailers.
SerCom Distribution represents many
of the leading brands in the computer
games, home entertainment and
consumer electronics markets such
as Altec Lansing, belkin, Devolo,
D-Link, Electronic Arts, ihome,
Logitech, microsoft, Netgear, Nintendo,
Paramount, Seagate, Take-Two,
TomTom and warner brothers.
SerCom Distribution provides its
partners with an exceptionally broad
customer reach and proactively markets
its vendors’ products through product
and customer focused sales teams.
SerCom Distribution provides a range
of value-added services to the retail and
reseller channels, to both its customers
and suppliers, including end-user
fulfillment, digital distribution, third
party logistics, web site development
and management, category
management and merchandising,
kitting, product customization, security
tagging and cross vendor bundling.
During the year, the business extended
its range of customer services in the
home entertainment and gaming
markets through the acquisition of
Ztorm Ab, a provider of digital media
distribution services to retail customers
throughout Europe, which is based
in Sweden. in addition, the business
in britain has significantly expanded
its market position in the mobile
communications market in the past year
and has developed its product offering
to take advantage of the growing
convergence of the iT and mobile
communications markets and channels.
in the Uk, SerCom Distribution is
number 1 in home entertainment
products, number 2 in iT products and
number 4 in communications products.
in ireland, it is number 1 in home
entertainment products and number 2
in iT products. in france, it is number
7 in iT products. SerCom Distribution
is now the fifth largest distributor of iT
and home entertainment products in
Europe.
SerCom Distribution’s revenue* for the
year ended 31 march 2012 by product
type is as follows:
IT Products
30%
PCs & servers
Consumables
10%
Consumer electronics 10%
Printers &
IT peripherals
Networking
Storage
Business software
9%
8%
4%
3%
Communications
6%
Home entertainment
Games consoles &
peripherals
Games software
DVD
10%
6%
4%
*based on continuing activities, excluding Altimate
SerCom Distribution’s principal markets
are the distribution of iT products and
home entertainment products in the
Uk, france and ireland. The value of
the iT distribution market in those
three territories is estimated to be €20
billion, and we estimate that this market
grew by 3% in the twelve months
to 31 December 2011. The home
entertainment market in the Uk and
ireland is valued at €7 billion of which
we estimate €1.5 billion is supplied
through the distribution channel and
we further estimate that this market
declined by 6% in the year to 31
December 2011, including a decline of
11% in the video games market.
On 3 April 2012, DCC announced that
it had reached agreement to dispose
of its enterprise distribution business,
subject to European Commission
competition approval. The enterprise
distribution segment of the market
in Europe has undergone significant
consolidation in recent years, with
the result that it would have been
difficult to achieve a leading position
in this market over the medium term.
The decision to sell the business is
consistent with DCC’s strategy and will
allow SerCom Distribution to focus
on its iT, communications and home
entertainment products businesses.
21
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Revenue
Operating profit
€2,181.2m
2011: €1,868.9m
Change on prior year
Reported: +16.7%
Constant currency: +18.0%
€53.2m
2011: €46.0m
Change on prior year
Reported: +15.7%
Constant currency: +17.0%
Return on total capital employed
Brands
15.7%
2011: 16.2%
SerCom Distribution - Acer, Asus, Cisco, Dell, huawei, ibm, Lenovo, microsoft,
Netgear, Nokia, Plantronics, Samsung, Sony, Toshiba, western Digital, Altec
Lansing, belkin, Devolo, D-Link, Electronic Arts, ihome, Logitech, microsoft,
Netgear, Nintendo, Paramount, Seagate, Take-Two, TomTom, warner brothers.
SCM - SerCom Solutions*
* DCC owned brands
22
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC SERCOM (continued)
SerCom Solutions
SerCom Solutions, DCC SerCom’s
supply chain management business,
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 delivers global
supply chain solutions encompassing
vendor hubbing, consignment stock
programmes, supplier identification
and qualification, quality assurance and
compliance and supplier and customer
fulfillment to effectively reduce its
partners’ cost of production and reduce
obsolescence and wastage. SerCom
Solutions has developed partnerships
with leading logistics firms to enable
the business to deliver its services in a
flexible, cost effective manner in its core
markets in Europe, North America and
the far East.
SerCom Solutions operates in the
market for global outsourced supply
chain management services, excluding
the provision of logistics services.
Strategy and Development
DCC SerCom’s strategy is to deliver
consistent long-term profit growth
and industry leading returns on capital
employed by building strong commercial
and market positions in each of its
focused business units.
SerCom Distribution’s principal medium
term objectives are:
• to establish its consumer facing
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; and
• to become the leading SmE facing
iT and communications distribution
business in the Uk and ireland, and a
growing player in Europe, through the
continued expansion of its product and
customer base, including expansion
into complementary sectors such as
audio visual, communications and
mobile.
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.
Customers
SerCom Distribution has a very broad
customer base, dealing with in excess of
15,000 customers each year. The largest
customer accounted for approximately
10% of revenues in the year ended
31 march 2012 and the ten largest
customers accounted for 30% of total
revenues in that year.
SerCom Distribution seeks to provide
the highest possible standard of
customer service combining an
unrivalled range of services with a
commitment to identify the most cost
effective and flexible solutions to our
customers’ requirements. we also seek
to provide our suppliers with access to
the broadest possible customer base for
their products.
SerCom Solutions deals with
approximately ten customers,
including iT equipment manufacturers,
outsourced equipment manufacturers,
consumer electronics companies
and telecommunications equipment
manufacturers. Customer relationships
tend to be long term in nature and
several of our customers have been
dealing with the company for over ten
years.
SerCom Distribution
Analysis of revenue by customer type*
Britain
SME reseller 36%
Consumer
retail /etail
64%
France
SME reseller
Consumer
retail /etail
5%
95%
Ireland
SME reseller 54%
Consumer
retail /etail
46%
* based on continuing activities, excluding Altimate
23
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Suppliers
SerCom Distribution has a diverse
supplier base and deals with hundreds
of vendors including the leading global
suppliers of iT, communications and
home entertainment products such as
Acer, Altec Lansing, Asus, belkin, Cisco,
Dell, Devolo, D-Link, Electronic Arts,
huawei, ibm, ihome, Lenovo, Logitech,
microsoft, Netgear, Nintendo, Nokia,
Paramount, Plantronics, Samsung,
Seagate, Sony, Take-Two, TomTom,
Toshiba, warner brothers and western
Digital. The largest supplier accounted
for 11% of total purchases in the year to
31 march 2012 and the top ten suppliers
represented 46% of total purchases.
SerCom Distribution adopts a proactive
approach to the identification and
recruitment of new suppliers and
technologies and seeks to position
itself as the obvious choice for growing
vendors to access the retail and reseller
channels in the markets it services. in
addition, it seeks to ensure that it has a
position of strategic relevance with its
principal suppliers.
SerCom Solutions deals with a
broad range of suppliers including
manufacturers of electronic
components, print suppliers, original
design equipment manufacturers and
iT distributors. A core element of the
services provided by SerCom Solutions
is the identification of appropriate
supply chain partners for its customers
and carrying out the quality assurance
on those suppliers to ensure that they
conform to necessary quality, regulatory
and ethical standards.
Our People
DCC SerCom employs 1,743 people
in 10 countries and recognises that
they are fundamental to the ongoing
success of the business. At all levels
employees are encouraged to adopt a
flexible service orientated approach to
meeting the demands of suppliers and
customers.
CASE STUDY
SERCOM DISTRIBUTION CONTINUES TO ExPAND ITS SERVICE OFFERING
SerCom Distribution recognises that to maintain the leadership position it holds in
its principal markets demands constant evolution in the suite of services it offers to
both its customers and suppliers. A number of new services were launched recently
which will ensure that we continue to be viewed as a best in class participant in the
industry. Following the acquisition of ztorm AB, SerCom Distribution can now offer to
customers a suite of tailor-made digital media distribution services which can include
the full outsourcing of a web based offering or a solution which is fully integrated
into the customer’s existing retail web offering. This ensures that the business can
offer all retailers (including etailers and catalogues) a full service offering for both
physical and digital products. During the year SerCom Distribution also significantly
expanded its capability within the mobile communications distribution area and the
launch of a number of mobile vendors during last year was facilitated by the addition
of a range of new services, including the ability to kit and flash individual mobile
devices for customers, the recruitment of a number of specialist mobile technical
and sales professionals and bringing the flexibility and ambition shown in our IT and
home entertainment distribution activities to the mobile distribution marketplace.
At senior management level, our
operating businesses are run by some
of the strongest management teams
in the industry. DCC SerCom seeks to
foster and maintain an entrepreneurial
culture, coupled with a commitment
to ensuring that the highest ethical
standards in business conduct are
maintained.
DCC SerCom fully supports the
DCC graduate Programme and
operates a variety of employee
training programmes within individual
businesses to promote the ongoing
development of staff.
DCC SERCOM EMPLOYS
1,743 PEOPLE IN 10
COUNTRIES AND
RECOGNISES THAT THEY
ARE FUNDAMENTAL TO
THE ONGOING SUCCESS OF
THE BUSINESS.
24
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC SERCOM (continued)
DCC SERCOM IS COMMITTED
TO CONDUCTING
ITS BUSINESS IN A
SUSTAINABLE MANNER
AND THIS COMMITMENT
IS REFLECTED IN HOW
IT INTERACTS WITH
CUSTOMERS, SUPPLIERS,
EMPLOYEES AND THE
COMMUNITIES IN WHICH IT
OPERATES.
Key Risks
DCC SerCom faces a number of
strategic, operational, compliance
and financial risks. The business
supplies end users in the business and
consumer markets in western Europe
and further economic downturn and
disruption in these markets is a key risk
for the business.
in addition, the business would be
significantly impacted by the loss of
a small number of key suppliers and
customers.
Sustainability
DCC SerCom is committed to
conducting its business in a sustainable
manner and this commitment is
reflected in how it interacts with
customers, suppliers, employees and
the communities in which it operates. in
common with the rest of the DCC group,
the business has processes to assess
and control health and safety risks,
reduce carbon emissions and uphold
the highest standards of business
ethics.
DCC SerCom is also focused on
enabling our ultimate customers to
behave in a more sustainable manner by
reducing energy usage and inefficiency,
through, for example, the use of
video conferencing or home working
opportunities.
Performance for the Year Ended 31
March 2012
DCC SerCom increased operating
profit by 17.0% on a constant currency
basis, reflecting another excellent
performance in SerCom Distribution,
which accounted for 94% of operating
profit in the division and achieved
constant currency operating profit
growth of 20.0%. good organic growth
in SerCom Distribution of 10.9% was
complemented by the contribution from
acquisitions completed in the prior year.
On 3 April 2012, DCC announced
that it had reached agreement to
dispose of Altimate group SA, SerCom
Distribution’s Enterprise business,
subject to competition clearance from
the European Commission. The decision
to dispose of Altimate (which accounted
for approximately 10% of DCC SerCom’s
profits during the year) reflects the
strategy to focus SerCom Distribution
on the supply of iT, communications
and home entertainment products to
retail and reseller customers who in
turn service consumers and small and
medium sized businesses. This is a
business where DCC has strong market
positions in britain, france and ireland
and the potential for expansion, both
within these markets and further afield.
SerCom Distribution (excluding
Altimate) achieved excellent constant
currency profit growth in the year of
17.5%. This was driven by good organic
growth of 8.4% and by the full year
contributions from the acquisitions in
the prior year of Comtrade in france
and Advent Data in britain.
The business in britain, which
accounted for 79%* of revenues,
achieved very strong growth driven by
significant new vendor additions in PC
and mobile communications products
complemented by excellent growth in
consumables. in addition, the business
achieved good growth in its networking,
components and tablet product
categories as it continued to grow its
market share in these areas.
The market for home entertainment
products in britain was weak and
the games market was particularly
affected by the games console market
being at a mature stage in its current
product cycle, disruption in high street
retail and the rise of mobile gaming.
Recognising the changing nature of the
games market, SerCom Distribution
acquired Ztorm Ab, a leading provider
of digital media distribution services,
in December 2011 to complement its
existing service offering.
* based on continuing activities, excluding Altimate.
DCC SERCOM: KEY FINANCIAL PERFORMANCE INDICATORS
Strategic objective
KPI
Performance
Drive for enhanced
operational performance
Revenue growth
(constant currency)
Drive for enhanced
operational performance
Operating profit
growth (constant
currency)
Grow operating margin
Operating margin
Deliver superior
shareholder returns
Return on capital
employed (‘ROCE’)
Generate cash flows to fund
organic and acquisition
growth and dividends
Operating
cash flow
Deliver superior
shareholder returns
10 year operating
profit CAGR
2012
2011
2012 v 2011: +18.0%
2012
2011
2012 v 2011: +17.0%
2010
2012
2011
2010
2012
2011
2010
2012
2011
2010
2012
2011
2010
25
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
€2,205.0m
€1,868.9m
€53.9m
€46.0m
2.4%
2.5%
2.5%
15.7%
16.2%
16.1%
€15.0m
€60.7m
€51.8m
5.7%
3.1%
5.4%
in france, which accounted for 15%*
of revenues, excellent operating profit
growth was achieved, reflecting very
good organic growth and a full year
contribution from Comtrade. The french
business was successful in broadening
its vendor portfolio in accessories
and peripherals and also benefited
from increased sales of higher margin
products and good cost control.
in ireland, which accounted for 6%*
of revenues, SerCom Distribution
achieved strong growth in both iT and
home entertainment products and has
continued to broaden its customer base.
Operating profit in SerCom Solutions,
the supply chain management business,
declined during the year reflecting a
very weak first half, although the second
half benefited from a new contract with
an OEm customer.
Outlook
The breadth of DCC SerCom’s supplier
and customer relationships across a
wide range of products and markets
leaves it well placed to continue to
develop its business in the year to
31 march 2013, notwithstanding an
anticipated further decline in demand
for certain home entertainment
products.
DCC SERCOM IS ALSO
FOCUSED ON ENABLING
OUR ULTIMATE CUSTOMERS
TO BEHAVE IN A MORE
SUSTAINABLE MANNER
BY REDUCING ENERGY
USAGE AND INEFFICIENCY,
THROUGH, FOR ExAMPLE,
THE USE OF VIDEO
CONFERENCING OR HOME
WORKING OPPORTUNITIES.
* based on continuing activities, excluding Altimate.
26
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC HEALTHCARE
DCC hEALThCARE COmPRiSES hOSPiTAL SUPPLiES & SERviCES, whiCh
PROviDES SALES, mARkETiNg, DiSTRibUTiON AND OThER SERviCES
TO mEDiCAL DEviCE AND PhARmA COmPANiES iN ThE iRiSh AND
bRiTiSh hOSPiTAL AND hOmECARE mARkETS, AND hEALTh & bEAUTy
SOLUTiONS, whiCh PROviDES OUTSOURCED PRODUCT DEvELOPmENT,
mANUfACTURiNg, PACkiNg AND OThER SERviCES TO hEALTh AND
bEAUTy bRAND OwNERS, PRiNCiPALLy iN ThE AREAS Of NUTRiTiON
AND bEAUTy PRODUCTS.
Markets and Market Position
Hospital Supplies & Services
DCC healthcare has a market leading
position in the sales, marketing and
distribution of medical devices into
irish hospitals with an extensive,
highly trained field sales force and
strong relationships with senior
management, clinicians and
procurement professionals. The
business has a developing position in
the medical devices sector in britain
which was significantly enhanced
during the year by the acquisition
of the forth medical group.
DCC healthcare sells and markets
a broad range of medical devices
and consumables in areas such as
woundcare, urology, procedure packs,
critical care (anaesthesia, endovascular,
cardiology, iv access), diagnostics,
orthopaedics and neurology. Products
are typically single use/consumable in
nature. Capital equipment represents
a small element of total sales
and typically relates to generating
sales of consumable products, for
example the sale (or placing) of
diagnostic testing equipment in order
to drive sales of the consumable
test kits used in the equipment.
DCC healthcare sells, markets and
distributes innovative and generic
pharma products in ireland and britain
through the hospital, pharmacy and
homecare channels. DCC healthcare’s
portfolio of pharmaceuticals
encompasses a range of therapy
areas including oncology, antibiotics,
anaesthesia, pain management,
haematology, respiratory, addiction and
emergency medicine. The business is
now developing its product portfolio
and sales network in the retail
pharmacy channel and this process
was accelerated during year through
the acquisition of the trade and assets
of Neolab Limited, a supplier of
generic pharmaceuticals to the british
retail pharmacy channel, with its own
local market authorisations (product
licences). DCC’s current modest market
share in this channel in both britain
and ireland provides the business with
significant scope for continued growth.
DCC healthcare also provides
outsourced pharma compounding
services to hospitals in ireland,
through its licensed compounding
facility in Dublin, 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.
The compounding facility services
the national contract for paediatric
nutrition in ireland in partnership with
fresenius kabi. DCC healthcare has
leveraged its compounding capability
to expand its service offering into
the provision of pharma homecare
services, an underdeveloped area in
ireland. During the year DCC launched
a home antibiotics service for cystic
fibrosis patients on behalf of one of
Dublin’s major teaching hospitals.
DCC healthcare is also a leading
provider of value added logistics
services in britain, providing innovative
stock management and distribution
services to hospitals and healthcare
brand owners/manufacturers focused
principally on theatre products.
DCC healthcare operates in the medical
device and pharma markets which
are primarily government funded.
fiscal budgets in ireland and britain
have tightened and, in common with
the majority of developed economies,
the burden of care, particularly
to support ageing populations, is
growing. As a result healthcare
providers are increasing their focus
on cost saving opportunities and
value for money. Public and private
healthcare payers and providers are
leveraging procurement scale through
increased use of tendering, framework
agreements, reference pricing and
pharma formularies. They are switching
to equivalent quality, lower cost
medical and pharma products as well
as outsourcing activities deemed to
be non-core. DCC healthcare is well
placed to benefit from these trends.
Health & Beauty Solutions
DCC healthcare is the leading british
based outsourced service provider
to the health and beauty sector,
including operating the only soft gel
encapsulation facility in britain. its
range of outsourced services is focused
principally in the areas of nutrition
(vitamin and health supplements) and
beauty products (skin care and bath
and body care). The service offering
encompasses contract manufacturing
in 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 manufacturing
facilities in britain. The business is
building its reputation and market
share in continental Europe especially
in benelux and Scandinavia.
27
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Revenue
Operating profit
€330.0m
2011: €311.1m*
Change on prior year
Reported: +6.1%
Constant currency: +7.5%
€23.4m
2011: €22.5m*
Change on prior year
Reported: +4.1%
Constant currency: +5.3%
Return on total capital employed
Brands
15.4%
2011: 16.3%*
* based on continuing activities excluding
mobility and Rehabilitation
Hospital Supplies & Services - biorad,
boston Scientific, Cipla, Diagnostica Stago,
fannin**, fresenius kabi, grifols, hikma,
iCU medical, martindale Pharma, molnlycke,
Neolab**, Oxoid, Sandoz, Smiths medical.
Health & Beauty Solutions’ Customers -
The body Shop, Elder Pharmaceuticals,
forest Labs, gSk, healthspan, merck (Seven
Seas, Natures best, Lamberts), Omega
Pharma, Reckitt benckiser, Space Nk,
Unilever, vitabiotics.
** DCC owned brands
28
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC HEALTHCARE (continued)
Revenue for the year
ended 31 March 2012
by product/service area
27%
Devices
Pharma
15%
Distribution Services 30%
28%
Health & Beauty
Consumer demand for nutrition and
beauty products has been robust
through the current economic downturn
with continued demand for product
innovation. The trend for health and
beauty brand owners to outsource
non-sales and marketing activities
(including product development) and to
streamline their supply chains is a more
important factor in driving demand
in the contract manufacturing sector.
There is also a trend towards increased
regulation and higher manufacturing
standards in the health and beauty
sector. These trends will favour well
funded contract manufacturers
like DCC healthcare which has the
resources to invest in regulatory
expertise and high quality facilities.
Strategy and Development
DCC healthcare’s strategy is to
build a substantial healthcare
business principally focused on the
provision of value added services
to the medical device, pharma
and health and beauty sectors.
in medical devices, DCC healthcare is
continually seeking to strengthen its
market positions and expand its product
portfolio organically and through bolt
on acquisitions. The medical market is
increasingly polarising between high
tech products in specialist therapy
areas and commodity products.
DCC healthcare seeks to attract
quality specialist agencies while also
selectively launching commodity
products under its own brand.
DCC healthcare’s increased sales
and marketing capability in britain
following the forth medical acquisition
will provide an enhanced platform
for development of our medical
device portfolio in this territory.
in pharma, DCC is also seeking to
strengthen its market positions and
expand its product portfolio and service
offering organically and through bolt
on acquisitions. DCC healthcare
has a strong regulatory capability in
the pharma area including product
in-licensing, quality control and
assurance and pharmacovigilance.
This capability, together with strength
in sourcing and the uniformity of
European Union product licensing
regulations, will open up opportunities
for the business to extend its pharma
activities into new geographic
markets over the coming years.
in britain, DCC healthcare is also
building a growth platform in the
provision of stock management and
distribution services. During the
year DCC healthcare strengthened
its management team in this area
and invested in a new state of the
art distribution centre in Derbyshire
which has created significant scope
for growth and operating efficiencies.
This is a potentially interesting
growth sector as british acute care
hospitals seek cost savings and
operating efficiencies from customised
just-in-time distribution solutions
which reduce stock obsolescence
and improve product availability.
in health & beauty, the high quality
of DCC’s facilities, together with the
strength and depth of DCC’s related
business development, product
development and technical resources,
has enabled DCC to build a reputation
for providing a highly responsive and
flexible service to its customers and
for assisting customers in rapidly
bringing new products from marketing
concept through to finished, shelf-
ready products. This service typically
involves product development,
formulation, stability and other
testing and regulatory compliance, as
well as manufacturing and packing.
DCC will continue to leverage this
capability across a broader customer
base by expanding its European
customer base both organically and
by acquisition. DCC will also seek to
expand its service offering into related
areas such as sports nutrition and
OTC pharma. During the year DCC
enhanced its manufacturing capability
in the creams and liquids area through
29
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
an investment in a small pharma
suite and has already secured new
business on the strength of this.
Customers
DCC healthcare has deep market
coverage in the sales and marketing
of medical devices into the hospital
sector in ireland and britain.
in pharma, DCC healthcare’s market
coverage extends beyond the hospital
sector and into retail pharmacy,
pharma wholesalers and the homecare
channel. following the Neolab
acquisition in may 2012, DCC now
has key account relationships with
major retail and wholesale pharmacy
groups including Alliance boots,
Lloyds, Phoenix and The Co-op.
DCC’s british value added distribution
services business services a broad
customer base of brand owners
and hospitals including guys & St
Thomas’s hospital in London and
the Sheffield hospital Trust.
DCC health & beauty Solutions
principally focuses on brand owners
in the areas of nutrition (vitamin and
health supplements) and beauty
products (skin care and bath and body
care). in addition to leading premium
brand owners, DCC’s customers
include mail order companies,
specialist health and beauty retailers
and private label suppliers in britain,
continental Europe and other markets
- in fact the ultimate consumers of
approximately half of the output from
DCC’s facilities are in international
markets. As the lines between pharma
and consumer healthcare become
increasingly blurred in the market
place, DCC health & beauty Solutions
is strengthening its relationships
within blue chip companies such as
merck, gSk, Unilever and L’Oreal.
DCC healthcare has a broad
customer base with its ten
largest customers accounting for
approximately 16% of revenue in
the year ended 31 march 2012.
CASE STUDY
MAKING AN IMPACT ON LIFE
DCC’s subsidiary Fannin Pharma is making a very real and positive impact on
people lives, for example in their role with Cystic Fibrosis (CF) patients. CF is a
critical disease affecting patients’ respiratory tract and digestive system from a
very young age. Patients need specialist treatment and infection is always a serious
risk. Often patients are required to attend hospital just to receive IV antibiotics
when they would be safer at home avoiding hospital acquired infections.
Fannin Pharma’s compounding and home delivery service means that patients
do not need to travel to hospital to receive therapy. Individual prescriptions
of IV antibiotics are compounded by Fannin in its state-of-the-art aseptic
filling unit in Dublin and sent to patients’ homes where they are administered
by a local district nurse. This avoids patients’ exposure to other potential
infections as well as allowing more time with family and friends.
Fannin produces thousands of such prescriptions for patients all over the
country for CF and other illnesses so that patients can get their treatment
safely in their own homes and without filling hospital beds, which is
good for both the patient and for the overall healthcare system.
Suppliers
DCC healthcare represents leading
medical, surgical and scientific
device brands including bioRad,
boston Scientific, Diagnostica
Stago, iCU medical, molnlycke,
Oxoidand Smiths medical.
DCC healthcare works with leading
innovative and generic pharma
companies like Cipla, fresenius kabi,
grifols, hikma, martindale Pharma,
medac, Rosemont and Sandoz.
DCC healthcare’s british value
added distribution services business
services has a very broad supplier
base including baxter, Covidien,
gambro, j&j and molnlycke.
in health & beauty, DCC healthcare
sources from high quality raw materials
and ingredient suppliers across the
globe in order to provide its customers
with high quality and cost effective
solutions and is increasingly focused
on sourcing sustainability-certified
raw materials, such as fish oils.
The supplier portfolio is broadly based
with the top ten suppliers representing
approximately 14% of revenue in
the year ended 31 march 2012.
DCC HEALTHCARE EMPLOYS
1,169 PEOPLE PRINCIPALLY
BASED IN BRITAIN AND
IRELAND, LED BY STRONG,
ENTREPRENEURIAL
MANAGEMENT TEAMS.
30
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC HEALTHCARE (continued)
Our People
DCC healthcare employs 1,169 people
principally based in britain and
ireland, led by strong, entrepreneurial
management teams. in pharma, DCC
healthcare strengthened its senior
management team during the year
reflecting the increased scale of its
activities in this sector and the range
of growth opportunities available to it.
Training and education is critical in the
healthcare sector and DCC healthcare
continually invests in ensuring that its
people are experts in their respective
product or service areas and are
fully conversant with the relevant
regulatory frameworks within which the
business operates. DCC healthcare’s
businesses are actively participating
in the DCC graduate Programme.
Key Risks
DCC healthcare operates in geographic
markets where healthcare spending
is predominantly funded (directly
or indirectly) by governments.
The economic downturn is clearly
influencing governments’ healthcare
budgets. DCC healthcare’s competitive
product portfolio and outsourced
service offering mitigates this risk and
indeed is providing DCC healthcare
with new growth opportunities
in the current environment.
DCC healthcare trades with a very
broad supplier and customer base
and a constant focus on providing a
value added service ensures excellent
commercial relationships. in the case of
a very small number of key suppliers/
principals and customers, their loss
could have a serious operational and
financial impact on the business.
Product quality and regulatory
compliance are critical matters
for DCC healthcare - poor product
quality could have consequences
for customer or public safety. DCC
healthcare continually invests in its
technical and regulatory resources,
quality systems, staff training and
facilities to ensure quality standards
are consistently maintained and the
requirements of the relevant regulatory
authorities are met or surpassed.
Sustainability
DCC healthcare strives to improve
sustainability for the benefit of
all stakeholders. by minimising
waste, reducing water consumption,
optimising energy efficiency and
procuring sustainable ingredients such
as fish oils certified by the marine
Stewardship Council, DCC healthcare
is reducing the environmental
impacts from its operations.
DCC healthcare’s customers are
increasingly interested in understanding
its approach to sustainability and
many request information on DCC
healthcare’s sustainability policies
and procedures. we are focused on
exceeding customers expectations in
this regard, including the provision of
carbon metrics to our NhS customers,
as highlighted in the Squadron medical
case study in the Sustainability Report
on pages 47 to 55. DCC healthcare
is also engaging with the Carbon
Disclosure Project Supply Chain
programme to report carbon emissions
data and carbon management
initiatives to participating customers.
Performance for the Year
Ended 31 March 2012
DCC healthcare achieved growth
in operating profit from continuing
activities of 5.3% on a constant currency
basis despite a challenging market
background, particularly in ireland.
DCC hospital Supplies & Services
which operates in medical
devices, pharma and value added
logistics, had a good year.
in medical devices, modest revenue
growth was achieved and the scale of
activities in britain was significantly
increased through the acquisition
in february 2012 of the forth
medical group. forth is a specialist
distributor of neurology, orthopaedic
and niche surgical devices and has
strong relationships with clinicians
in the british hospital sector.
31
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
€334.5m
€311.1m
€23.7m
€22.5m
7.1%
7.2%
7.1%
15.4%
16.3%
14.6%
€19.1m
€30.5m
€23.3m
7.5%
8.5%
11.6%
DCC HEALTHCARE : KEY FINANCIAL PERFORMANCE INDICATORS
Strategic objective
KPI
Drive for enhanced
operational performance
Revenue growth
(constant currency)
Drive for enhanced
operational performance
Operating profit
growth (constant
currency)
Grow operating margin
Operating margin
Deliver superior
shareholder returns
Return on capital
employed (‘ROCE’)
Generate cash flows to fund
organic and acquisition
growth and dividends
Operating
cash flow
Deliver superior
shareholder returns
10 year operating
profit CAGR
* based on continuing activities excluding mobility & Rehabilitation
Performance*
2012
2011
2012 v 2011: +7.5%
2012
2011
2012 v 2011: +5.3%
2012
2011
2010
2012
2011
2010
2012
2011
2010
2012
2011
2010
strong development with existing
customers and the expansion of its
European customer base. Overall profit
in DCC health & beauty Solutions
was held back by the impact on its
beauty operations of a reduction in
contribution from one of its important
customers due to destocking and an
unfavourable change in sales mix.
Outlook
DCC healthcare is well placed for
the year to 31 march 2013, which
will have the full year benefit of
recent development activity in
pharma and medical devices and an
expected recovery in the performance
of its beauty operations.
BY MINIMISING WASTE,
REDUCING WATER
CONSUMPTION, OPTIMISING
ENERGY EFFICIENCY AND
PROCURING SUSTAINABLE
INGREDIENTS SUCH AS
FISH OILS CERTIFIED BY
THE MARINE STEWARDSHIP
COUNCIL, DCC
HEALTHCARE IS REDUCING
ENVIRONMENTAL IMPACTS
FROM ITS OPERATIONS.
in pharma, strong revenue growth
was achieved and good progress
was made in the development of the
product portfolio, regulatory capability
and market coverage in britain and
ireland. important in this regard
was the acquisition in may 2011 of
the business and certain assets of
Neolab Limited, a british generic
pharma business. The Neolab product
range, where DCC healthcare is the
product licence holder, has opened up
valuable new customer and supplier
relationships. DCC healthcare also
achieved strong pharma sales growth
in the british hospital sector driven
by a number of NhS contract wins.
good progress was made in value
added logistics services in britain
and the business has recently moved
into a newly built state of the art
distribution centre in Derbyshire.
DCC health & beauty Solutions which
provides outsourced solutions to
nutrition and beauty brand owners,
generated strong revenue and profit
growth in nutrition driven by continued
32
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC ENVIRONMENTAL
DCC ENviRONmENTAL iS A LEADiNg bRiTiSh AND iRiSh
PROviDER Of RECyCLiNg, wASTE mANAgEmENT AND
RESOURCE RECOvERy 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
1.5 miLLiON TONNES Of wASTE ThROUgh iTS
TwENTy ONE fACiLiTiES iN bRiTAiN AND iRELAND.
Markets and Market Position
Britain
DCC Environmental collects and
processes a broad range of non-
hazardous and hazardous waste.
its market leading Scottish business
owns one of the most comprehensive
waste infrastructures in Scotland, which
includes material recycling facilities
across the central belt of Scotland. These
facilities seek to divert as much waste as
possible away from landfill through the
extraction of valuable commodities from
waste streams which are sold to paper
mills, steel mills and plastic and glass
reprocessors as raw materials. wood chip
is also produced from waste wood which
can be used by either the panel board or
biomass industries or for animal bedding,
arena surfacing and ground cover. finally,
construction aggregate is produced from
waste demolition material which can
be used as a substitute for virgin quarry
aggregate.
DCC Environmental owns the largest
material recycling facility in the East
midlands at Nottingham. in addition to
providing a similar range of services to
that offered by the Scottish facilities, this
facility produces refuse derived fuel, a
substitute to fossil fuels utilised by the
cement industry. During the year, DCC
Environmental expanded its geographic
footprint in the East midlands region
with the acquisition of maxi waste, which
operates two material recycling facilities
in Leicester.
At its three hazardous facilities in
Scotland and the North East of England,
DCC Environmental provides innovative
solutions to customers for a broad range
of both solid and liquid hazardous waste.
During the year, DCC Environmental
significantly expanded its hazardous
waste management activities with the
acquisition of Oakwood fuels Limited
(‘Oakwood’), a national waste oil and
hazardous waste collection, processing
and recycling business. Oakwood collects
waste lubricant oil and hazardous waste
from businesses in a variety of sectors
(the largest of which is the automotive
services sector) and converts the waste
oil to processed fuel oil, which is sold
to customers for use in a variety of
applications including road surfacing
operations, aggregate drying, industrial
and agricultural drying, power stations,
large boilers and furnaces.
Overall, the british business handles 1.5
million tonnes of material, the majority of
which is collected by its own fleet of 261
vehicles, and 74% of all waste volumes
are diverted from landfill.
The Uk government has valued the
british waste management market at
Stg£7.5 billion. The six largest british
waste management companies account
for approximately 50% of this market but
below this level the market is relatively
fragmented.
The british business, with its
comprehensive non-hazardous recycling
infrastructure (the business does not
operate any active waste landfill sites),
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 the Uk
government to increase landfill tax from
Stg£64 per tonne to Stg£80 per tonne
over the next two years. Other examples
of the movement towards a more efficient
management of scarce resources was
the publication by the Uk government
in june 2011 of its waste Review which
includes plans to consult on material-
specific landfill bans and the Scottish
government’s own plans for a ‘Zero
waste’ Scotland, which aims to reach a
70% recycling rate (currently circa 40%)
for all waste by 2025.
Ireland
Enva is ireland’s largest hazardous waste
treatment company, providing technically
innovative solutions to a wide range
of customers in the 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.
in addition to treating a broad range of
hazardous waste at its own facilities in
ireland, Enva also works with a network
of European based companies to provide
a comprehensive range of solutions for
hazardous waste.
Enva’s water treatment division provides
specialty chemicals, equipment and
professional services to the drinking,
industrial and waste water sectors. The
water treatment division operates an
in-house manufacturing facility as well as
an iNAb accredited laboratory to support
these services.
33
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Revenue
Operating profit
€132.7m
2011: €106.4m
Change on prior year
Reported: +24.7%
Constant currency: +26.7%
€14.2m
2011: €11.6m
Change on prior year
Reported: +22.6%
Constant currency: +24.9%
Return on total capital employed
Brands
10.2%
2011: 10.0%
Enva*, wastecycle*, Tracey*, Oakwood*.
* DCC owned brand
34
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC ENVIRONMENTAL (continued)
The customer base is quite fragmented,
with the ten largest customers
accounting for approximately 16% of
total revenue in the year ended 31
march 2012. many of the customers
have been with DCC Environmental
for a long time and the business has
developed a deep understanding of their
requirements.
Our People
DCC Environmental is proud of the
fact that its management teams have
deep industry knowledge, combined
with strong operational capability. in
particular, the former owners of william
Tracey, wastecycle and Oakwood all
occupy senior executive positions
within DCC Environmental. DCC
Environmental seeks to develop its own
employees by promoting from within the
organisation and each business seeks
to develop a challenging but enjoyable
working environment. Each company
has a dedicated human resources
department.
DCC Environmental currently employs
896 people.
Key Risks
DCC Environmental, like all businesses
within the group, faces a number of
strategic, operational, compliance and
financial risks.
The construction sector is an important
market for DCC Environmental and
this sector is particularly sensitive to
changes in the economic backdrop.
DCC Environmental has an exposure
to movements in both recyclate and oil
commodity prices.
The interaction of heavy plant and
people, in particular employees, at
the facilities gives rise to the risk of
accidents.
Sustainability
The environmental sector is at the
centre of society’s move to a more
sustainable future by ensuring that
the life of material is extended by
either reusing it or recycling into a
CASE STUDY
OAKWOOD FUELS ACqUISITION
The acquisition of Oakwood Fuels Limited (‘Oakwood’) was immediately synergistic
both with DCC Environmental companies and with the wider DCC Group. Oakwood
was planning the creation of a satellite depot in Scotland but rather than invest
in a new greenfield site, Oakwood were able to locate vehicles at existing Tracey
facilities. Similarly, prior to the investment, Wastecycle planned to develop a new
facility to manage hazardous waste but the acquisition allowed them to utilise
Oakwood’s existing infrastructure. Finally, DCC Energy sells significant volumes
of lubricant oil in Britain and is now in a position to offer Oakwood’s oil collection
services to its customers.
The irish waste market is valued
at approximately €1 billion. The
recession, and the collapse in activity
in the construction sector, has seen
significant contraction particularly in
the non-hazardous market but DCC
Environmental’s irish business has
been protected through its focus on the
niche hazardous sector and through
developing innovative solutions for
hazardous waste.
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
its customers’ 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 a focus on
resource rather than waste, developing
internal climate change expertise and
continually improving its recycling
capability.
Customers
DCC Environmental provides recycling,
waste management and resource
recovery services to the industrial and
commercial, construction and public
sectors.
Revenue split
by customer
Industrial and
commercial
Construction
and demolition
Public sector
69%
21%
10%
DCC ENVIRONMENTAL: KEY FINANCIAL PERFORMANCE INDICATORS
Strategic objective
KPI
Drive for enhanced
operational performance
Revenue growth
(constant currency)
Drive for enhanced
operational performance
Grow operating
margin
Operating profit
growth (constant
currency)
Operating margin
Deliver superior
shareholder returns
Return on capital
employed (‘ROCE’)
Drive for enhanced
margins
Recycling %
Generate cash flows to fund
organic and acquisition
growth and dividends
Operating cash flow
Deliver superior
shareholder returns
10 year operating
profit CAGR
Performance
2012
2011
2012 v 2011: +26.7%
2010
2012
2011
2012 v 2011: +24.9%
2010
2012
2011
2010
2012
2011
2010
2012
2011
2010
2012
2011
2010
2012
2011
2010
35
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
€134.9m
€106.4m
€14.5m
€11.6m
10.7%
10.9%
12.0%
10.2%
10.0%
9.7%
74%
69%
71%
€21.7m
€19.8m
€15.8m
22.3%
26.1%
30.6%
new product. Significant developments
during the year included the production
of processed fuel oil, which is used
as a substitute for virgin fuel oil,
in both britain and ireland and the
commencement of the full upgrade of
the recyclable processing line at the
Nottingham facility.
in November 2011, wastecycle was
awarded the Carbon Trust Standard
(‘CTS’), a rigorous independent
verification of the business’s efforts
to reduce carbon emissions from
both its own operations and on behalf
of customers. The CTS confirms
wastecycle’s commitment to meeting
increasing demand for businesses to
address the challenges arising from
climate change.
All DCC Environmental sites are
regulated by either the EA in England,
SEPA in Scotland, the EPA in the
Republic of ireland or the Northern
ireland Environment Agency in Northern
ireland. During the year there were 44
inspections. No major non compliances
were identified and all minor non
conformances or observations were
addressed in full.
Performance For The Year Ended 31
March 2012
DCC Environmental generated an
increase in operating profit of 24.9% on
a constant currency basis, benefitting
from the first time contribution of
Oakwood, which has performed strongly
since its acquisition in june 2011.
Oakwood is a british waste oil and
hazardous waste collection, processing
and recycling business based in
Nottinghamshire.
while operating profit grew strongly
in britain driven by the acquisition of
Oakwood, trading conditions in the non
hazardous waste management and
recycling business were impacted by a
decline in waste volumes in the market
and a reduction in recyclate commodity
prices in the second half of the financial
year. The business consolidated its
strong position in the East midlands
through the acquisition of maxi waste
which operates two material recycling
facilities in Leicester. The hazardous
waste management and recycling
business performed satisfactorily and
the scale and range of its activities was
significantly increased by the acquisition
of Oakwood.
The business in ireland performed
well driven by the development of new
innovative solutions for hazardous waste
and the continued tight control of costs.
Outlook
DCC Environmental is well placed for
the year to 31 march 2013 to benefit
from the full year contribution of
acquisitions completed in the prior year.
36
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC FOOD & BEVERAGE
DCC fOOD & bEvERAgE iS PRiNCiPALLy fOCUSED ON
ThE DiSTRibUTiON Of fOOD AND bEvERAgE PRODUCTS
iN iRELAND AND ON RETAiL AND OUTSOURCED
CATERiNg ThROUgh A jOiNT vENTURE COmPANy.
Markets and Market Position
DCC food & beverage’s irish
distribution business markets, sells
and distributes a range of its own
and third party agency brands and
provides category management and
merchandising services to a broad
range of customers including grocery
multiples, symbol and independent
retailers including pharmacies, off-
licenses, hotels, restaurants and cafes.
in britain, the business markets
and sells wines to multiple
retailers, wholesale and cash
and carry customers.
The majority of DCC food & beverage’s
operations are focused on the irish
grocery market which has shown
some contraction over the last number
of years due to price deflation and
the general economic downturn.
As economic conditions remain
challenging, consumers continue to
search for value and to reduce their
discretionary spending both in grocery
and out of home. Recent market data
has shown that while the average spend
per household has remained broadly
flat, consumers are engaging in more
frequent shopping trips while spending
slightly less on each trip they make.
while private label now accounts for
approximately 35% of all sales by
value, brands continue to be important
to the irish consumer. DCC food &
beverage continues to develop its
own branded offering and company
owned brands now account for
approximately 36% of total revenue.
DCC food & beverage’s businesses
enjoy a number of leading market
positions in the categories
in which they operate.
in ireland, the business is the leading
and most comprehensive supplier
of healthy foods and beverages, fine
foods and vitamins, minerals and
supplements (’vmS’), selling owned
and agency brands directly to both the
grocery and pharmacy sectors. DCC
food & beverage’s healthfood brand,
kelkin, 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
developing brand in the vmS sector.
Also in ireland, the business is a leading
value added distributor of indulgence
products in the grocery, impulse and
food service sectors with a strong,
complementary range of company
owned and agency brands, specialising
in wine, snacks, hot beverages, home
cooking (herbs, spices and colourings),
confectionery and soft drinks.
DCC food & beverage is a leading
distributor of wine in ireland to both
the on and off-trade, providing an
extensive portfolio of international
wine brands, and is focused on further
developing its spirits portfolio and
offers its principals the largest on-
trade reach in the irish marketplace.
in britain, the business is a leading
supplier of branded (both company
owned and agency) and exclusive
retail solutions to the multiple off-
trade sector of the Uk wine market.
DCC food & beverage is also a
leading temperature controlled
distributor in ireland. 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.
kylemore Services group (50%
owned by DCC) is a leading operator
of retail restaurants and contract
catering services in ireland, serving
approximately 8 million customer
meals annually throughout ireland.
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
focused segments and delivering
an above average return on capital.
This will be achieved by building on
current positions in the healthfood,
indulgence and logistics markets, 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 beverages,
Robert Roberts coffee and speciality
teas and Lemon’s confectionery, as
well as developing the goodall’s and yR
brands. 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 sector. The Uk wine
business remains focused on developing
its own range of brands, in particular
french Connection and Andrew Peace,
along with selected agency brands.
37
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Revenue
Operating profit
€223.4m
2011: €252.2m
Change on prior year
Reported: -11.4%
Constant currency: -11.0%
€10.7m
2011: €11.5m
Change on prior year
Reported: -7.2%
Constant currency: -7.0%
Return on total capital employed
Brands
13.7%
2011: 14.9%
Healthfood - Alpro, biofreeze, Celtic Chocolates, filippo berio, fry Light, hipp,
jakemans, kallo, kalms, kelkin*, Nairns, Nanny Care, Ocean Spray, Olbas, Ortis,
Pomegreat, Popz, 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,
Oatfield, Rancheros, Ritter, Robert Roberts*, Sacla, Sea Dog*, Skips, Stolichnaya,
Sutter home, Topps, Torres, Tullamore Dew, wakefield, wilton Candy*, yR*.
Logistics - Allied foods*, mr. food*.
Other - kylemore.
* DCC owned brand
38
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
OPERATING REVIEW –
DCC FOOD & BEVERAGE (continued)
Suppliers
DCC food & beverage deals with a
broad base of approximately 1,800
suppliers. The supply base is quite
fragmented and the top ten suppliers
account for only approximately 28%
of total revenues. A key to success in
our businesses is remaining close to
new trends and developments in the
categories in which we operate, and
as a result, DCC food & beverage
remains in constant contact with its
supply base to ensure that it brings the
best of what is new to its customers.
Our People
DCC food & beverage employs
management teams with deep category
and industry knowledge, combined
with strong operational capability.
This depth of knowledge is continually
enhanced by a focus on product training
particularly in wine, hot beverages
(coffee and tea) and healthfoods/vmS.
DCC food & beverage currently
employs 886 people.
Key Risks
DCC food & beverage, like all the
businesses within the group faces
a number of strategic, operational,
compliance and financial risks. The
division is made up of a number of
consumer focused businesses and
further economic downturn and its
impact on consumer spending remains
a key risk faced by the division. Product
quality is central to our success and
remains under constant review with
focused quality assurance undertaken
within each of our businesses.
Sustainability
Sustainability within DCC food &
beverage is aimed at creating long
term shareholder value by generating
economic, environmental and social
value. During the year the division
broadened its sustainability agenda
from health and safety and climate
change to include product stewardship
(local sourcing, packaging, responsible
advertising and trends such as fair
trade), business ethics and improved
communication with employees across
the businesses. The welfare of our
CASE STUDY
INNOVATION
Innovation in products, packaging and branding provide growth opportunity for
the Kelkin brand. Following the very successful development and launch of the
Kelkin Granola range of wholesome cereals, Kelkin has extended this offering into
a convenient ‘on the go’ breakfast and snacking format of Granola bars that is now
widely available throughout the Irish grocery trade. Granola is high in fibre, which
is important for both heart and digestive health. A range of various formulations
were tested before the final products were agreed and throughout the development
process the Kelkin values of ‘good for you’ and ‘nutrition’ were maintained. A key
focus was also placed on the choice of packaging where quality of presentation and
ease of consumer use were the priority elements as part of our mission ’to make
the healthy choice the easy choice for consumers’. All these products are produced
in Ireland using only the finest quality ingredients, giving Kelkin consumers in
Ireland another reason to feel good about themselves.
Revenue split by
customer type 2012
Multiples
Symbols
Food Service
Wholesale
Independents
37%
22%
21%
11%
9%
Revenue split by
category 2012
40%
13%
11%
11%
Wine
Health Foods
Snack Foods
Frozen Traded
Hot & Cold Beverages
10%
/Equipment
Logistics Services
9%
Confectionery & Other 6%
Customers
DCC food & beverages’ business
is primarily based in ireland, with
a modest wine business in britain
which is focused on selling wines to
the multiple off-trade and growing a
presence in the on trade sector. The
ten largest customers accounted for
approximately 56% of total revenue
in the year ended 31 march 2012.
DCC food & beverage’s different
operating companies each have
their own focused sales teams
that regularly interact with our
customers on developing joint
business plans that focus on sales,
marketing, category management,
advertising, promotions, new product
development and product quality.
DCC FOOD & BEVERAGE: KEY FINANCIAL PERFORMANCE INDICATORS
Strategic objective
KPI
Performance
Drive for enhanced
operational performance
Revenue growth
(constant currency)
Drive for enhanced
operational performance
Operating profit
growth (constant
currency)
Grow operating margin
Operating margin
Deliver superior
shareholder returns
Return on capital
employed (‘ROCE’)
Generate cash flows to fund
organic and acquisition
growth and dividends
Operating
cash flow
Deliver superior
shareholder returns
10 year operating
profit CAGR
2012
2011
2012 v 2011: -11.0%
2012
2011
2012 v 2011: -7.0%
2012
2011
2010
2012
2011
2010
2012
2011
2010
2012
2011
2010
39
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
€224.5m
€252.2m
€10.7m
€11.5m
4.8%
4.6%
3.1%
13.7%
14.9%
10.2%
€5.0m
€12.6m
€21.9m
0.4%
4.3%
0.3%
SUSTAINABILITY WITHIN
DCC FOOD & BEVERAGE IS
AIMED AT CREATING LONG
TERM SHAREHOLDER VALUE
BY GENERATING ECONOMIC,
ENVIRONMENTAL AND
SOCIAL VALUE.
employees remains very important to
DCC food & beverage. Unfortunately,
there has been an increase in the
number of lost time accidents across
the division. management focus has
identified areas of weakness in our
systems and steps have been taken
which we are confident will improve
our performance in this area.
Performance for the Year
Ended 31 March 2012
DCC food & beverage experienced
a decline in revenue and operating
profit primarily due to the loss
of a major contract in the frozen
and chilled logistics business in
the second half of the year.
The branded distribution activities
delivered good growth in operating
profit driven by strong growth in
company owned brands. The business
benefited from the development of its
goodall’s and yR brands as well as
growth in its Robert Roberts coffee and
tea brands. DCC food & beverage’s
healthfood brand, kelkin, continued
to grow, particularly in the areas of
cereals and gluten free products,
although this was offset by a decline
in sales of third party agency brands.
The frozen and chilled logistics business
was negatively impacted by the loss of a
major contract resulting in a significant
decline in operating profit. A major
restructuring has been undertaken
and this will lead to improvements in
competitiveness as the business seeks
to win new customers over time.
The group’s joint venture, kylemore
Services group, delivered a very good
result due to a very strong performance
in its contract services business.
A number of large new customer
contracts were won during the year.
Outlook
it is anticipated that operating profit
in the year to 31 march 2013 will
decline due to the full year impact
of the contract loss in the frozen
and chilled logistics business.
40
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
FINANCIAL REVIEW
whiLST OvERALL iT wAS A DiffiCULT yEAR fOR ThE gROUP wiTh
OPERATiNg PROfiTS DECREASiNg by 18.3% ON A CONSTANT CURRENCy
bASiS, OPERATiNg CASh fLOw iNCREASED TO €277.3 miLLiON, fREE
CASh fLOw iNCREASED TO €146.0 miLLiON AND wE DEPLOyED AN
iNCREmENTAL €234.7 miLLiON ON ACqUiSiTiONS AND NET CAPiTAL
ExPENDiTURE.
As the key financial performance
indicators set out in Table 1 show,
whilst the performance of DCC
Energy impacted the overall group
profit and return on capital employed
performance in 2012, working capital
management, cash flow and the
deployment of capital was good and
the group still retains 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 95 to 105
Revenue
group revenue increased by 24.9% on a
constant currency basis to €10.7 billion
primarily as a result of acquisitions, the
impact of higher oil prices and strong
organic growth in DCC SerCom. DCC
Energy increased its sales volumes by
10.8%, however, like for like volumes
declined by 5.9%. Average selling
prices in DCC Energy increased by
16.9% due to the higher oil prices.
Excluding DCC Energy, group revenue
was 13.6% ahead of the prior year on a
constant currency basis; approximately
half of this growth was organic.
Table 1: Key Financial Performance Indicators
Revenue growth - constant currency
Operating profit* (decrease)/increase - constant currency
EbiT: net interest (times)
EbiTDA: net interest (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
Acquisition capital deployed (€’m)
* excluding exceptionals and amortisation of intangible assets.
2012
24.9%
(18.3%)
10.4
13.5
12.6%
0.5
0.9%
2.5
34.6
277.3
146.0
14.2%
169.1
2011
25.4%
15.5%
15.8
19.3
4.9%
0.2
1.6%
4.9
36.8
269.6
123.6
19.9%
130.7
41
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Overview of Results
2012
€’m
2011
€’m
Change on prior year
Reported
Constant
currency
Revenue
10,690.3
8,680.6
+23.2%
+24.9%
Operating profit
DCC Energy
DCC SerCom
DCC healthcare
DCC Environmental
DCC food & beverage
Group operating profit
Share of associates’ loss 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
Adjusted earnings per share (cent)
* continuing activities excluding mobility & Rehabilitation
83.5
53.2
23.4
14.2
10.7
185.0
-
(17.9)
167.1
(11.3)
(22.8)
133.0
(30.0)
(0.6)
102.4
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
-39.2%
+15.7%
+4.1%*
+22.6%
-7.2%
-19.4%
-38.3%
+17.0%
+5.3%*
+24.9%
-7.0%
-18.3%
-22.2%
-21.1%
-29.8%
-28.6%
-29.4%
-28.1%
163.51
203.15
-19.5%
-18.4%
Operating Profit
As signalled during the year, the
results for the group were adversely
impacted by trading in DCC Energy,
which suffered from the effects of the
very mild weather, higher oil prices
and the continuing difficult economic
background, particularly in the Uk, DCC
Energy’s largest market. Operating
profit in DCC Energy declined by 38.3%
on a constant currency basis as the
impact of the sustained period of
extremely mild temperatures on both
volumes and margins was exacerbated
by its comparison to the extremely
cold weather conditions of the prior
year. The average temperature in the
Uk in the very important quarter to
31 December 2011 was the mildest
on record, in contrast to the same
quarter in the prior year which was
the coldest on record. The other key
quarter to 31 march 2012 was also
significantly milder than the prior year.
DCC Energy’s total heating related
volumes declined by approximately
15% on a like for like basis compared
to the prior year. The substantially
weaker demand for heating oil
products gave rise to considerable
excess capacity, even during the
normally busy winter months, which
in a very competitive market resulted
in reduced gross margins across all
product grades. This reduction in gross
margins, combined with the effect of
a predominantly fixed operating cost
base, had a significant impact on DCC
Energy’s operating profit for the year.
Operating profit in the group’s other
four divisions combined increased
by 11.3% on a constant currency
basis. DCC SerCom, DCC’s second
largest division, increased operating
profit by 17.0%, also on a constant
currency basis. This reflected
another excellent performance in
SerCom Distribution, where revenue
and operating profit, on a constant
currency basis, were 16.5% and 20.0%
ahead of the prior year respectively.
DCC healthcare increased its operating
profit on continuing activities by
5.3% on a constant currency basis,
while DCC Environmental’s operating
profit advanced by 24.9%, also on
a constant currency basis, driven
primarily by acquisition activity
during the year. Operating profit
declined by 7.0% on a constant
currency basis in DCC’s smallest
division, DCC food & beverage.
42
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
FINANCIAL REVIEW (continued)
Overall operating profit in the group
declined by 18.3% on a constant
currency basis. Approximately 70%
of the group’s operating profit in the
year was denominated in sterling. The
average exchange rate at which sterling
profits were translated during the
year was Stg£0.8684 = €1, compared
to an average translation rate of
Stg£0.8522 = €1 for the prior year, a
weakening of 2% which resulted in a
modest negative translation impact on
group operating profit of €2.5 million.
Consequently on a reported basis
operating profit decreased by 19.4%.
Although DCC’s operating margin
(excluding exceptionals) was 1.7%
(2.6% in 2011), 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 3.5% (3.6% in 2011).
Increasingly Difficult Trading
Conditions in DCC Energy
Overall, trading conditions, driven by
the factors in DCC Energy referred to
above, became increasingly difficult
during the year. An analysis of the
performance on a constant currency
basis for the first half, the second
half and the full year ended 31 march
2012 is set out in Tables 2 and 3.
A detailed review of the operating
performance of each of DCC’s divisions
is set out on pages 14 to 39.
Finance Costs (net)
Net finance costs increased to
€17.9 million (2011: €14.6 million)
primarily due to higher average net
debt of €248 million during the year,
compared to €167 million during
the prior year. interest was covered
10.4 times by group operating profit
before amortisation of intangible
assets (15.8 times in 2011).
Profit Before Net Exceptional
Items, Amortisation of
Intangible Assets and Tax
Profit before net exceptional items,
amortisation of intangible assets and
tax of €167.1 million decreased by
21.1% on a constant currency basis
(by 22.2% on a reported basis).
Net Exceptional Charge and
Amortisation of Intangible Assets
The group incurred a net
exceptional charge before tax
of €22.8 million as follows:
2012
€’m
14.0
Taiwanese legal claim
Restructuring of
pension arrangements
3.6
Reorganisation and other costs (19.4)
(14.4)
Asset impairments
(6.6)
Acquisition costs
Total
(22.8)
The cash effect of the net exceptional
charge was €2.8 million.
Table 2: Revenue - Constant Currency
H1
€’m
2012
H2
€’m
FY
€’m
h1
€’m
2011
h2
€’m
fy
€’m
H1
%
Change
H2
%
FY
%
DCC Energy
3,242.2
4,698.2
7,940.4
2,808.6
3,321.2
6,129.8
+15.4%
+41.5%
+29.5%
DCC SerCom
933.9
1,271.1
2,205.0
799.2
1,069.7
1,868.9
+16.9%
+18.8%
+18.0%
DCC healthcare
158.6
175.9
334.5
166.3
157.0
323.3
-4.6%
+12.1%
+3.5%
DCC Environmental
67.8
67.1
134.9
53.4
53.0
106.4
+27.1%
+26.3%
+26.7%
DCC food & beverage
133.4
91.1
224.5
138.3
113.9
252.2
-3.5%
-20.0%
-11.0%
Total
weighting %
4,535.9
41.8%
6,303.4 10,839.3
100.0%
58.2%
3,965.8
45.7%
4,714.8
54.3%
8,680.6
100.0%
+14.4%
+33.7%
+24.9%
43
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
in january 2004 the London high Court
awarded Stg£10.2 million in damages
and interim costs of Stg£2.0 million
(in both cases together with interest)
to DCC’s british based mobility and
rehabilitation subsidiary for breach of
an exclusive supply agreement by a
Taiwanese supplier. further amounts
in respect of costs of Stg£2.9 million
were subsequently determined by the
London high Court to be payable. in
order to enforce the London high Court
judgements, it has been necessary to
pursue the collection of all outstanding
amounts through the Taiwanese courts.
in march 2012, DCC received the initial
Stg£12.2 million referred to above.
The recovery of accumulated interest
on this amount and the additional
costs referred to above continue to
be pursued through the Taiwanese
courts. DCC has not accrued the
amount of the outstanding claim.
Restructuring of certain of the
group’s pension arrangements
during the year gave rise to an
exceptional gain of €3.6 million.
The group incurred an exceptional
charge of €19.4 million primarily
in relation to restructuring
costs and the cost of integrating
recently acquired businesses.
There was a non-cash charge of €14.4
million relating to the impairment
of subsidiary goodwill and an
associate company investment and
the write-down of certain property
assets. included in this charge is an
impairment charge in relation to the
carrying value of a company within the
DCC food & beverage division, Allied
foods, following the loss of a major
distribution contract during the year.
in addition, on 3 April 2012 the group
announced that it had agreed to dispose
of Altimate group SA, DCC SerCom’s
Enterprise distribution business, which
is expected to give rise to a loss of
approximately €8.0 million, primarily
resulting from the non-recovery of a
portion of the goodwill arising since
the acquisition of Altimate in 2000.
ifRS 3 requires that professional
fees and tax costs (such as stamp
duty) relating to the evaluation and
completion of acquisitions are expensed
in the income Statement and these
costs amounted to €6.6 million.
The charge for the amortisation
of intangible assets was €11.3
million (2011: €10.9 million)
Profit Before Tax
Profit before tax of €133.0
million decreased by 28.6% on
a constant currency basis (by
29.8% on a reported basis).
Taxation
The effective tax rate for the group
decreased to 18% compared to 21% in
the previous year, the reduction being
primarily due to a lower proportion
of Uk taxable profits and a reduction
in the Uk corporation tax rate.
Adjusted Earnings Per Share
Adjusted earnings per share of 163.51
cent decreased by 18.4% on a constant
currency basis (a decrease of 19.5% on
a reported basis). The decrease was
14.7% in the first half and 19.9% in the
seasonally more important second half.
Table 3: Operating Profit - Constant Currency
H1
€’m
2012
H2
€’m
FY
€’m
h1
€’m
2011
h2
€’m
fy
€’m
H1
%
Change
H2
%
FY
%
DCC Energy
19.5
65.3
84.8
30.1
107.2
137.3
-35.1%
-39.1%
-38.3%
DCC SerCom
15.8
38.1
53.9
14.3
31.7
46.0
+10.3%
+20.0%
+17.0%
DCC healthcare
10.7
13.0
23.7
11.1
12.1
23.2
-3.9%
+7.7 %
+2.1%
DCC Environmental
DCC food & beverage
8.2
6.0
6.2
4.7
14.4
10.7
7.0
5.4
4.6
6.1
11.6
+17.0%
+36.8%
+24.9%
11.5
+11.5%
-23.3%
-7.0%
Total
weighting %
60.2
32.1%
127.3
67.9%
187.5
100.0%
67.9
29.6%
161.7
70.4%
229.6
100.0%
-11.4%
-21.3%
-18.3%
44
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
FINANCIAL REVIEW (continued)
The compound annual growth rate in
DCC’s adjusted earnings per share
over the last 20, 15, 10 and 5 years is as
follows:
20 years (i.e. since 1992)
15 years (i.e. since 1997)
10 years (i.e. since 2002)
5 years (i.e. since 2007)
CAGR %
12.1%
10.3%
5.6%
2.6%
Dividend
The total dividend for the year of 77.89
cent per share represents an increase
of 5.0% over the previous year. The
dividend is covered 2.1 times (2.7 times
in 2011) by adjusted earnings per share.
Over the last 18 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 14.9%.
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.
Notwithstanding the excellent working
capital management, the group’s return
on total capital employed reduced from
19.9% to 14.2% primarily reflecting
the decline in operating profit in DCC
Energy (as detailed in Table 4).
Table 4: Return on Total Capital Employed
2012
ROCE
2011
ROCE
14.0%
DCC Energy
15.7%
DCC SerCom
15.4%
DCC healthcare*
DCC Environmental
10.2%
DCC food & beverage 13.7%
14.2%
group
* continuing activities
26.9%
16.2%
16.3%
10.0%
14.9%
19.9%
Table 5: Summary of Cash Flows
Operating profit
Decrease/(increase) in working capital
Depreciation and other
Operating cash flow
Capital expenditure (net)
interest and tax paid
Free cash flow
Acquisitions
Disposals
Dividends
Exceptional items
Share issues
Net (outflow)/ inflow
Opening net debt
Translation
2012
€’m
2011
€’m
185.0
229.6
46.6
45.7
(10.8)
50.8
277.3
269.6
(65.6)
(65.7)
(77.2)
(68.8)
146.0
123.6
(168.1)
(1.3)
(63.2)
(2.8)
2.4
(87.0)
(45.2)
4.0
(78.3)
28.4
(58.3)
(8.9)
3.8
10.3
(53.5)
(2.0)
Closing net debt
(128.2)
(45.2)
Cash Flow
Despite the challenging trading
environment, the group generated
excellent operating and free
cash flow during the year, as
summarised in Table 5.
Operating cash flow in 2012 was €277.3
million compared to €269.6 million in
2011. working capital days reduced
from 4.9 days at 31 march 2011 to 2.5
days at 31 march 2012 and this gave
rise to a net reduction in working
capital of €46.6 million, despite a
€2.0 billion increase in revenue, with
debtor days reducing to 34.6 days
from 36.8 days in the prior year.
This excellent operating cash flow
performance generated increased
free cash flow for the group which,
after interest and tax payments and
net capital expenditure, amounted
to €146.0 million compared to
€123.6 million in the prior year.
Net capital expenditure in the year
of €65.6 million (2011: €77.2 million)
compares to a depreciation charge of
€55.4 million (2011: €52.9 million).
with a cash impact of acquisitions
in the year of €168.1 million and
dividend payments to shareholders
of €63.2 million, overall there was
a net outflow of €83.0 million in the
year leaving net debt at 31 march
2012 at a modest €128.2 million.
Balance Sheet and Group Financing
DCC’s financial position remains very
strong, well funded and highly liquid.
At 31 march 2012 the group had net
debt of €128.2 million (2011: €45.2
million) and total equity of just over
€1.0 billion (2011: €931.9 million). 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 5.5 years from 31 march 2012.
45
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
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
2012
€’m
670.8
(70.7)
600.1
2011
€’m
700.3
(34.2)
666.1
(0.5)
(0.5)
-
(66.9)
(219.2)
(15.4)
(113.2)
(56.2)
(215.4)
(44.9)
3.4
(728.3)
(128.2)
(5.3)
(62.9)
(216.2)
(14.4)
(112.5)
(52.9)
(205.2)
(43.1)
1.7
(711.3)
(45.2)
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
Cash and short term deposits attributable
to asset held for sale
Net debt including asset held for sale
2012
€’m
2011
€’m
134.5
84.4
4.3
630.0
634.3
3.5
700.3
703.8
(0.3)
(17.5)
(848.0)
(865.8)
(0.7)
(30.1)
(761.5)
(792.3)
(71.0)
(1.0)
-
(72.0)
(169.0)
(35.3)
(0.5)
(5.3)
(41.1)
(45.2)
40.8
(128.2)
-
(45.2)
The group’s strong funding and
liquidity position at 31 march 2012 is
summarised in Table 6.
key financial ratios (at 31 march 2012),
including those covenants included in
the group’s various lending agreement
are as follows:
2012
Actual
2011
Actual Covenant
0.5
n/a*
Net debt: EbiTDA
EbiTDA: net interest 13.5
3.0
10.4
EbiTA: net interest
3.0
Total equity (€’m) 1,014.0 931.9 300.0
0.2
19.3
15.8
*the group does not have any net debt: EbiTDA
lending covenants
The group retains significant financial
capacity to support its future growth
plans.
The composition of net debt at 31 march
2012 and 2011 is analysed in Table 7.
further analysis of DCC’s cash, debt
and financial instrument balances at
31 march 2012 is set out in notes 28
to 31 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 47 to the financial statements.
Foreign Exchange Risk Management
DCC’s reporting currency and
that in which its share capital is
denominated is the euro. Exposures
to other currencies, principally
sterling and the US dollar, arise in
the course of ordinary trading.
A significant proportion of the group’s
profits and net assets are denominated
in sterling. The sterling:euro exchange
rate strengthened by 5.6% from
0.8837 at 31 march 2011 to 0.8339 at
31 march 2012. The average rate at
which the group translates its Uk
operating profits weakened by 1.9%
from 0.8522 in 2011 to 0.8684 in 2012.
46
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
FINANCIAL REVIEW (continued)
Approximately 70% of the group’s
operating profit for the year ended 31
march 2012 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 1.9% weakening in the average
translation rate of sterling, referred to
above, negatively impacted the group’s
reported operating profit by €2.5 million
in the year ended 31 march 2012.
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 5.6% strengthening
in the value of sterling against the
euro during the year ended 31 march
2012, referred to above, gave rise to
a translation gain of €46.7 million
on the translation of DCC’s sterling
denominated net asset position
at 31 march 2012 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.
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.
Investor Relations
DCC’s senior management team are
committed to interacting with the
international financial community
to ensure a full understanding of
DCC’s strategic plans and current
trading performance. During the
year, the executive management
team hosted a Capital markets Day
in London, presented at 9 capital
market conferences and met over
150 institutional investors at one-
on-one and group meetings.
Share Price and Market Capitalisation
The Company’s shares traded in the
range €16.70 to €23.07 during the
year. The share price at 30 march
2012 was €18.56 (31 march 2011:
€22.47) giving a market capitalisation
of €1.55 billion (2011: €1.87 billion).
based on the Company’s share price
at 31 march 2012, Total Shareholder
Return since the group’s flotation
in may 1994 was 855.4%.
47
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Stakeholder Engagement
investor input is important to our
sustainability strategy and we welcome
all opportunities to engage with
investors. we have responded positively
to feedback received and implemented
actions to improve our communication
and reporting.
One of our key stakeholder groups are
the senior executives who lead and
develop our businesses. As part of our
engagement with this group, over 100
senior executives from all divisions
participated in a series of one day
sustainability workshops, each tailored
to their specific business sectors. The
purpose of these workshops was to
establish a clear understanding of
sustainability and determine actions
that could realise value from social
and environmental trends. The
workshops greatly benefited from the
experience and insights of speakers
from companies who are sustainability
leaders in their respective sectors,
including marks & Spencers, Carillion,
bT and bodyshop international.
Employee issues are reported up
through DCC’s devolved structure
by continuous interaction between
subsidiary, divisional and group
management. Employee forums and
communications channels within
our subsidiaries already include
sustainability issues, including health &
safety, energy efficiency and community
involvement. One of the outcomes from
the workshops is a recognition that
employee engagement on sustainability
could be more systematic.
SUSTAINABILITY REPORT
fOLLOwiNg ThE iNTRODUCTiON by ThE ChiEf ExECUTivE ON PAgE 10,
DETAiLS Of OUR SUSTAiNAbiLiTy APPROACh AND ACTiviTiES ARE SET
OUT iN ThiS REPORT.
Profile, Boundary and Scope of
Sustainability Reporting
This Sustainability Report follows
the same reporting cycle and fiscal
year as the Annual Report, i.e. to 31
march 2012, and includes all group
subsidiaries. joint ventures are not
included in the carbon emissions or LTi
data, except where they are under the
operational control of a DCC subsidiary.
There are no significant changes
from previous reporting periods in the
scope, boundary, or measurement
methods applied in the report. There is
no restatement of data from the 2011
Sustainability Report.
The content of the report is the same as
the prior year, with the material aspects
having been initially identified by the
Corporate Sustainability working group
and developed to include additional
areas relevant to investors and other
stakeholders. Engagement with senior
executives at sustainability workshops
held during the year confirmed the
importance of the material aspects
included in this Report.
There is an increasing trend towards
integrating sustainability information
and analysis into mainstream annual
reports to provide stakeholders with
a clear and concise representation of
how a company creates and sustains
value over the long term. The issues
highlighted in the sections below are
reflected in the operating reviews as
appropriate to those businesses and we
expect to continue this process until,
ultimately, a fully integrated report
becomes our practice.
This report meets the requirements
of the global Reporting initiative
level C+ standard, as identified in the
content table on page 54. feedback
on this report is welcome and should
be addressed to john barcroft, head
of group Sustainability or David
byrne, Deputy Chairman and Senior
independent Director.
Governance, Structures and Processes
good progress has been made in
introducing sustainability into existing
business processes. Sustainability is
now a formal agenda item at subsidiary
and divisional board meetings and a
number of subsidiaries are formally
reporting on the sustainability issues
that are material to their businesses.
internal sustainability reporting is
evolving and will become a standard
process in the short term.
in November 2011, the Corporate
Sustainability working group (CSwg),
established in 2009, was replaced by a
new high level Sustainability Committee
which meets quarterly. it is chaired
by the Chief Executive and includes
divisional and subsidiary managing
directors and senior group executives.
The Committee’s purpose is to provide
strategic oversight and direction to
sustainability initiatives. it is focused
on ensuring that sustainability delivers
tangible value to the businesses
and continues to be integrated into
existing management processes,
rather than being a stand alone
function. The Committee has begun the
process of developing a medium term
sustainability strategy for DCC, setting
out clear objectives at both group and
subsidiary level.
48
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
SUSTAINABILITY REPORT (continued)
Material Aspects
four aspects of sustainability – our
people, direct economic value,
environment and health & safety - are
considered to be material at group
level. These were determined in 2010 by
the CSwg, following consultations with
senior executives around the group.
A materiality matrix, with levels of
importance to stakeholders and to DCC
forming the two axes, was used to rate a
wide spectrum of sustainability issues,
allowing those issues that ranked
highly on both axes to be prioritised for
reporting. Over time these aspects will
develop, for example climate change is
now included in a wider commentary
on the environment, and we will review
them to take account of feedback from
investors, customers, employees and
other stakeholders.
individual subsidiaries and divisions
have additional aspects that are of
particular relevance to them, for
example customer engagement,
supply chains, employee training and
development, waste reduction, water
conservation and resource scarcity,
which were identified and explored
in more detail at the sustainability
workshops.
Our People
At 31 march 2012, DCC employed
8,868 people across the group,
approximately 90% of whom are in
permanent employment. This figure
has increased by approximately 10%
from the prior year due to a number of
recent acquisitions, in particular the
acquisitions by DCC Energy of maxol
Direct, Pace and butler fuels in the Uk
and Swea Energi in Sweden and the
acquisition by DCC Environmental of
Oakwood fuels in the Uk.
An analysis of DCC employment by
division and by geography is as follows:
Employee numbers by division
DCC Energy
DCC SerCom
DCC Healthcare
DCC Environmental
4,174
1,743
1,169
896
DCC Food & Beverage 886
Employee numbers by geography
UK
Ireland
Continental Europe
Other
6,134
1,739
834
161
Graduate Recruitment Programme
The DCC graduate Programme was put
in place to support the development
of a pipeline of senior executives who
can grow and develop into international
business leaders in the future. This
two year programme commenced in
September 2011 with the first intake
of graduates. The 2011 graduates
are currently progressing through
the rotations within the programme
which are designed to expose them to
diverse sectors and businesses. To date
feedback on the 2011 programme has
been very positive, from the perspective
of both the participating companies
and the graduates. Projects which the
graduates have been involved in include:
• research and review of a warehouse
picking technology product to
evaluate its potential business value
and benefits, including the ease and
viability of implementation;
• marketing and sales support
activities, including depot and
stakeholder engagement and
creation of marketing materials and
campaigns;
• management of 15 networking
vendors by creating and executing
marketing plans based on specific
budgets.
given the success of the 2011
programme we have hired
another tranche of graduates for
commencement in September
2012, also on a two year rotational
programme.
Business Ethics
DCC published business Conduct
guidelines in 2011. These record the
values of openness, honesty, trust,
respect and accountability that are vital
to the success of any organisation and
provide more detailed guidelines for
our employees on specific aspects of
business ethics. The guidelines have
been circulated to employees across the
group and are available on our website.
we will be taking further steps during
the current year, including as part of our
group compliance programme, to ensure
that awareness and use of the guidelines
remains strong across the group.
The DCC whistleblowing Policy provides
a clear mechanism for employee
reporting of malpractice or misconduct
within the organisation.
following the enactment of the
bribery Act 2010 in the Uk, training
workshops were held in August and
September 2011 for all Uk subsidiaries.
Subsequently all group subsidiaries
completed a standard risk assessment
to provide information on existing
bribery policies and procedures, which
were used to finalise anti bribery and
corruption policies for each subsidiary.
gifts and hospitality registers were
also put in place at both subsidiary
and corporate level. The DCC group
Anti bribery and Corruption Policy was
approved by the board in November
2011 and is on our website.
Total Income
€10,739m
(2011: €8,742m)
Goods and
Services
€10,177m
(2011: €8,150m)
Value
Added
€562m
(2011: €592m)
Corporate Taxes
€28m
(2011: €42m)
Interest
€50m
(2011: €51m)
Employees
€345m
(2011: €327m)
Retained
€74m
(2011: €111m)
Dividends to
Shareholders
€65m
(2011: €62m)
49
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Direct Economic Value Added
A key measure of our sustainability is
the economic value generated from
our activities over the long term.
Other sections of the Annual Report
present detailed financial information,
which is summarised in the graphic to
represent the principal value added to
stakeholders.
in the year ended 31 march 2012, €562
million of added value was created,
taking account of the cost of inputs
from suppliers of €10,177 million
and total income of €10,739 million
(€10,690 million revenue as per the
group income Statement, €32 million
finance income and €17 million other
operating income). This value added is
distributed in the form of remuneration
to employees of €345 million, corporate
taxes of €28 million, interest to lenders
of €50 million and dividends1 to
shareholders of €65 million. €74 million
is retained in the business to fund
further growth.
Community Support
Across the DCC group, subsidiaries are
involved in activities to support local
communities and local and national
charities. Employees are actively
involved in fund raising and giving their
time and effort to these campaigns,
supported by direct financial
contributions from subsidiaries. These
financial contributions are managed at
local level and are not collated at group
level.
Naomi House
iN EARLy 2011, miCRO P, A SUbSiDiARy Of
DCC SERCOm, TOOk ThE DECiSiON TO fOCUS
iTS SUPPORT fOR wORThwhiLE CAUSES ON
SPECifiC ChARiTiES bASED wiThiN ThE LOCAL
COmmUNiTy. EmPLOyEES wERE ASkED TO
NOmiNATE A ChARiTy AND ThEy ChOSE NAOmi
hOUSE, A hAmPShiRE bASED hOSPiCE fOR
ChiLDREN. OvER ThE NExT yEAR miCRO P
EmPLOyEES ACTivELy UNDERTOOk A hOST
Of iNiTiATivES RANgiNg fROm PhySiCAL
UNDERTAkiNgS, SUCh AS SCALiNg ThREE Uk
PEAkS, hOLDiNg AUCTiONS AND giviNg UP
ThEiR TimE TO UNDERTAkE gARDENiNg AND
mAiNTENANCE PROjECTS, bOTh iN wORk AND
PERSONAL TimE.
The relationship with this specific charity has developed
in a genuine and mutually beneficial way where micro P
has been able to share its most valuable asset, time,
and in return feel that it is adding value to the
communities in which it operates. An additional benefit
has been micro P’s ability to involve key suppliers and
customers in the various activities to create a sense of
purpose and community.
50
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
SUSTAINABILITY REPORT (continued)
fighTiNg wORDS iS A CREATivE wRiTiNg CENTRE ThAT iS ThE
bRAiNChiLD Of SEáN LOvE, fORmER DiRECTOR Of AmNESTy iRELAND,
AND wRiTER RODDy DOyLE. STAffED mAiNLy by vOLUNTEERS, fighTiNg
wORDS RUNS fREE CREATivE wRiTiNg AND STORyTELLiNg wORkShOPS
fOR STUDENTS Of ALL AgES TO ENhANCE ThEiR CREATivE wRiTiNg
SkiLLS AND bUiLD ThEiR CONfiDENCE iN wRiTiNg AbiLiTy AND SELf-
ExPRESSiON.
in just three years the centre has hosted over 32,000 students of all ages in
workshops in fiction writing, film-making, song writing and graphic novels. The
centre is booked out a year in advance and Social Entrepreneurs ireland is working
with Seán Love to examine models to scale fighting words to enable much greater
numbers of people to benefit from these workshops.
Social Entrepreneurs Ireland
following a review in 2010, DCC is
focusing its corporate giving resources
more strategically and consistently.
2011 was the first year of a three year
partnership with Social Entrepreneurs
ireland, an organisation that enables
high potential social entrepreneurs to
maximise their potential impact. in 2011,
DCC contributed management time and
direct funding of €120,000 to support
the awardee selection process which
culminated in an awards ceremony last
October, addressed by An Taoiseach,
Enda kenny.
Seán Love, profiled above, is an example
of an awardee who is creating real
social change using an entrepreneurial
business model.
Environment
Climate Change Strategy
Climate change continues to remain
high on our agenda. in 2011 we
substantially reviewed and updated the
DCC Carbon management Plan to a new
DCC Climate Change Strategy designed
to identify and prepare for the risks
and opportunities arising from climate
change. The strategy also introduces
a requirement for all subsidiaries to
develop a business specific carbon
intensity metric (for example kg of CO2e
emissions per 1,000 units delivered or
manufactured) and establish a target
to reduce intensity by 15% in 2015 and
20% in 2020 against performance in
the base year to 31 march 2011. we
will report on progress towards these
targets in subsequent reports. initiatives
to reduce carbon emissions focus on
transport emissions and include the
continuing roll out of engine monitoring
systems, routing software and fuel
efficient driver training. Projects such
as the installation of heating controls
and energy efficient lighting reduce
emissions arising from the use of
heating fuels and electricity.
Carbon Reduction Commitment Energy
Efficiency Scheme
DCC’s Uk subsidiaries fall within
the scope of the Carbon Reduction
Commitment Energy Efficiency Scheme
(CRC) and a subset of our Uk carbon
emissions (emissions from transport
fuels are not included) for the year
ended 31 march 2011 was reported to
the Environment Agency in july 2011.
in the second year (to 31 march 2012),
a levy of Stg£12 per tonne of relevant
carbon emissions generated will be
charged resulting in a cost to DCC of
approximately Stg£250,000. following
announcements by the Uk Chancellor in
April 2012, the CRC will be substantially
reformed to reduce administrative costs
for businesses or will be replaced by an
alternative environmental tax by 2014.
in either case the incentive remains
for our businesses to minimise carbon
emissions through energy efficiency
measures across all operational areas.
51
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Carbon Trust Standard
The Carbon Trust Standard (CTS) is
a leading certifier of organisational
carbon footprint reductions,
providing stakeholders with credible
and independent validation of an
organisation’s performance. Three
subsidiaries were newly certified to
the CTS in the past year - wastecycle,
gb Oils and Squadron medical - and
flogas Uk successfully passed the CTS
recertification process for a further two
year period.
Greenhouse Gas Emissions
Details of our energy use and
greenhouse gas emissions are set
out in the tables on page 52. The
DCC Energy and Carbon Reporting
guidelines, based on the greenhouse
gas Protocol, set out in detail the
scope and sources included in the DCC
group carbon footprint3. Total carbon
emissions were flat compared to the
prior year. within the total, however,
there were a number of significant
movements in carbon emissions as
follows:
• Reduced transport emissions in the
Energy division as a result of lower
activity due to the mild winter.
• The acquisitions of butler fuels (DCC
Energy) and Oakwood fuels (DCC
Environmental) increased emissions
by 2,713 and 2,558 tonnes CO2e
respectively and bolt on acquisitions
by gb Oils (Pace, Severn fuels) and
wastecycle (maxi waste) further
increased emissions.
• Reduced warehouse and office heating
demand as a result of the mild winter.
• Reduced emissions (4,218 tonnes CO2e)
in the food & beverage subsidiary
Allied foods, driven by the loss of a
significant contract in the logistics
business which reduced demand for
transport fuels and for electricity to
maintain cold storage units.
SqUADRON mEDiCAL wORkS wiTh
NUmEROUS hEALThCARE SUPPLiERS TO
PROviDE NhS hOSPiTALS AROUND ThE Uk
wiTh A CONSOLiDATED LOgiSTiCAL SERviCE,
DiRECT fROm A CENTRAL LOCATiON iN
ChESTERfiELD.
As part of their commitment to reducing carbon
emissions and providing customers with credible
supply chain carbon metrics, Squadron achieved
Carbon Trust Standard certification in 2011. As Terry
barnett, Transport manager explains, “Efficiency
measures save energy, cut costs and reduce
carbon emissions, delivering real benefits to our
business, our customers and the environment.
Current initiatives include vehicle telemetry, fuel
efficient driver training, introduction of routing
software, backhauling and the completion of our new
warehouse facility built to a BREEAM2 rating of Very
Good.”
fUEL CARD SERviCES (fCS), A DCC ENERgy
SUbSiDiARy, iS ONE Of ThE LARgEST
iNDEPENDENT AgENTS Of fUEL CARDS iN
ThE Uk, wORkiNg ON bEhALf Of mOST Of
ThE mAjOR OiL COmPANiES.
Anticipating an increasing demand for carbon
emissions data associated with fuel use, fCS
developed an innovative new service for their
customers. CO2Count provides a comprehensive
greenhouse gas emissions report with each invoice,
detailing emissions data per vehicle and fuel type.
At a glance, the user can see their entire fleet’s
production of greenhouse gases, use the online
reporting tool and, month by month, evaluate their
emission reduction initiatives.
Uk fleet managers have welcomed CO2Count’s
accurate emissions reporting. “Absolutely sold on
the idea, think it’s great, will be a real benefit to
our company as we need to know this information
for when we tender, and when we deal with other
companies.” heather Stone, keith walton brickwork
Ltd.
Steve Clarke, fuel Card Services head of marketing,
says: “Whether running vans, cars or trucks,
customers all face growing pressure to reduce
carbon footprints. That has to start with measuring
emissions.”
52
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
SUSTAINABILITY REPORT (continued)
CO2e emissions (tonnes) by source
2012
2011
Scope 1
2012* %
9,020 8%
On site fuel use
Company transport 85,187 73%
%
2011
9,070 8%
82,968 71%
Scope 2
Electricity
Total
22,657 19%
24,268 21%
116,864
116,306
CO2e emissions (tonnes) by division
2012
2011
2012* %
62,334 53%
DCC Energy
DCC SerCom4
6,227 5%
DCC Healthcare
11,220 10%
DCC Environmental 27,700 24%
DCC Food & Beverage 9,383 8%
2011
6,313
%
62,427 54%
5%
11,340 10%
22,502 19%
13,724 12%
Total
116,864
116,306
There were no internal structural
changes, for example outsourcing of
emitting activities, site openings or
closures or new business developments,
which had significant impact on the
group’s carbon emissions.
Transport and heating fuels from non
renewable sources make up the direct
sources of primary energy purchased
within the group. in total they
represented 1,127,780 gigajoules (gj)
of energy. indirect energy consumption
amounted to 159,855 gj from electricity
purchased. green tariff electricity
accounts for less than 1% of indirect
energy purchased.
Scope 3 emissions are indirect
emissions outside of our immediate
control, for example business travel,
extraction of raw materials, supplier
emissions, consumption of products
and waste disposal. while we have
not systematically quantified Scope 3
emissions, the use of products sold
within the Energy division is a significant
source of carbon emissions. The use
of oil, LPg and natural gas sold by
DCC Energy subsidiaries accounted
for approximately 21 mtonnes of CO2e
emissions, an increase from 19 mtonnes
in the prior year. Acquisitions by gb Oils
lead to an increase in sales of forecourt
diesel and petrol, offset by a decrease in
the sale of kerosene heating oil.
Carbon Disclosure Project
in 2011, DCC’s response to the
investor led Carbon Disclosure Project
achieved a score of 83%, placing DCC
in the ireland Carbon Leaders index
and in 4th place out of 33 responding
companies. The CDP is a global
initiative, funded by the investment
community, to encourage companies to
measure carbon emissions and disclose
information on carbon management.
we will work to maintain our excellent
position on disclosure rankings and,
furthermore, demonstrate progress
against our carbon reduction targets.
in addition to responding to the CDP
investor questionnaire, there are early
signs that a number of our subsidiaries
will be impacted by the CDP Supply
Chain Programme as customers
increasingly look for carbon data from
their suppliers.
by the regulatory authorities. Physical
control measures, such as bunding
and tank gauges/alarms, operational
controls, such as tank integrity testing,
training and detailed procedures are
in place to prevent loss of containment
of products. No significant spills were
recorded in the reporting period6.
Ozone Depleting Substances
Allied foods, a DCC food & beverage
subsidiary, operates chilled and frozen
storage warehouses and as such is
the most significant user of refrigerant
gases, including R22/hCfC22, an ozone
depleting substance (ODS)7, within the
DCC group. Smaller quantities of R22
are also used for cooling in Sharptext
and Thompson & Capper.
in 2011 a release of 0.208 tonnes of R22
occurred in Allied foods’ Cork facility.
This is equivalent to 0.0114 tonnes of
CfC-11. following the release, the
remaining R22 was recovered and the
unit was refilled with R404A, in advance
of the ultimate ban on R22 in 2015. No
releases of R22 occurred in Sharptext or
Thompson & Capper.
The Allied foods’ Dublin facility uses
ammonia as the plant refrigerant gas
and small quantities of R404A are used
in vehicle chilling units. These gases
have an ozone depletion potential of
zero.
Compliance and Spills
No fines or non-monetary sanctions
for non-compliance with environmental
laws and regulations (for example in
relation to waste packaging, waste
electronic and electrical equipment,
pollution, or environmental licencing)
have been incurred in the reporting
period and no environmental cases have
been brought through dispute resolution
mechanisms.
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. Line managers
are responsible for health and safety
performance, supported by experienced
health and safety professionals.
Potential for significant environmental
impact from loss of containment of
products arises principally in our oil
businesses, specifically from sea fed
oil terminals. These terminals are
regulated under COmAh5 legislation in
the Uk and subject to regular inspection
Near Miss Reporting
A near miss is any situation, behaviour
or condition that has the potential
to cause an actual incident. As part
of our effort to reduce accidents or
other losses, employees are actively
encouraged to recognise and report
53
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
near misses. in the past year over 8,000
near misses were reported, including
unsafe work practices, substandard
housekeeping, defective equipment and
unsafe deliveries. Near miss reports are
appropriately reviewed and actioned as
every report is an opportunity to improve
standards and prevent an incident
occurring. Over time we believe that this
focus, in addition to other health and
safety risk management processes, will
reduce injury rates, minimise losses
and contribute positively to the overall
performance of our businesses.
Health and Safety Performance
health and safety performance is
reported monthly to divisional boards
and quarterly to the DCC plc board.
individual subsidiaries use a range of
indicators to measure health and safety
performance, including both lagging
indicators, which measure failures of
management systems, for example
lost time injury rates, and leading
indicators, which monitor the successful
implementation of safety management
processes, for example performance of
safety critical equipment when tested.
Lost time injury rates are recorded at
group level for the operations within
the scope of this report. in the reporting
period, the lost time injury frequency
rate (LTifR) decreased from 2.5 per
200,000 hours worked to 2.39. At the
same time the lost time injury severity
rate (LTiSR) increased from 48 to 53
days lost per 200,000 hours worked
reflecting, on average, more days lost
per accident. The improvement in the
LTifR was primarily driven by good
performance from the Energy and
Environmental divisions. The increase
in the LTiSR is driven by a relatively
small number of accidents resulting
in very long periods of time off. in the
current year, active case management
to facilitate the full recovery of injured
parties and their timely return to
work will be a focus at a number of
subsidiaries, in addition to a renewed
focus on the prevention of accidents in
the first instance.
Process Safety
Process safety focuses on preventing
unintentional releases of products
resulting in fire and/or explosion
causing a major accident. The
provision of an effective process
safety management system is a key
requirement to minimise the likelihood
of a major incident and to meet the
safety and environmental standards
for fuel storage sites as determined
by the Process Safety Leadership
group, which was established to
complete the implementation of the
buncefield major incident investigation
board’s recommendations. gb Oils
is implementing a competence
improvement plan for its staff involved
with major hazards. in addition, a
programme of upgrades has been
agreed with the regulator to further
reduce the risk and /or consequence
of the major hazards at oil terminals,
in particular by improving bunding and
overspill protection.
Safety Auditing
The international Safety Rating System
(iSRS) tool, developed by DNv, a leading
risk management company, is used
in the EhS audits carried out at our
Energy and Environmental subsidiaries,
which present a higher EhS risk
profile than other subsidiaries. iSRS
addresses a range of management
processes, driving continuous review
of current policies and procedures
to develop efficient and effective
management systems. The iSRS audit
identifies opportunities to further
improve processes and quantitatively
KPI - LTIFR
Number of lost time injuries8 per
200,000 hours worked
2012*
2011
2010
KPI - LTISR
Number of calendar days lost per
200,000 hours worked
2012*
2011
2010
2.3
2.5
2.8
53
48
42
measures progress over time. with
an increased emphasis on leadership,
communication and employee
involvement, our expectation is that our
safety culture will improve and deliver
tangible business benefits.
The Safety Climate Tool, developed by
the health and Safety Laboratory10, has
been used at a number of subsidiaries
to objectively assess employees views
on safety culture. These surveys
provide a measure of the degree to
which company management has been
successful in raising safety awareness
and communicating their commitment
to high safety standards. Opportunities
for improvement have been identified
from the feedback received.
1
2
Paid and proposed for the year ended 31 march
2012
bREEAm is one of the most comprehensive
and widely recognised measure of a building’s
environmental performance and sets a standard
for best practice in sustainable building design,
construction and operation.
3 Carbon dioxide emissions make up over 98% of
the groups greenhouse gas emissions. Other
greenhouses gases emissions include fugitive
refrigerant gases (e.g. R404A and R407C) from
our chilled foods logistics business (860 tonnes
CO2e) and fugitive landfill gas emissions from
a closed landfill in Scotland where 80% of the
methane is captured to generate renewable
energy (872 tonnes CO2e).
4 including DCC head office emissions (<100
tonnes CO2e)
5 Control of major Accident hazards
6 Significant is defined as a major environmental
event which exceed EC reporting thresholds
under COmAh regulations.
7 R22/hCfC22 is a Class ii ozone-depleting
substances regulated under the montreal
Protocol on Substances that Deplete the Ozone
Layer and has an ozone depleting potential
of 0.055 compared to CfC11, the standard
reference.
8 A Lost Time injury is defined as any injury that
results in at least one day off work following the
day of the accident.
9 Company employees only, contractors are not
included in lost time injury rates.
10 The health and Safety Laboratory is an in-house
agency of the Uk health and Safety Executive
with a mission to directly help organisations
become healthier, safer and therefore, more
productive places in which to work.
54
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
SUSTAINABILITY REPORT (continued)
s
e
r
u
s
o
l
c
s
i
D
d
r
a
d
n
a
t
S
Report Application Level
C
C+
B
B+
A
A+
G3 Profile
Disclosures
G3 Management
Approach
Disclosures
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 lsted
for level C plus:
1.2
3.9, 3.13
4.5 -4.13, 4.16 - 4.17
Same as requirement for
Level B
Management Approach
Disclosures for each
Indicator Category
Management Approach
Disclosures for each
Indicator Category
G3 Performance
Indicators & Sector
Supplement
Performance
Indicators
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, at
least one from each of
Economic, Environmental,
Human Rights, Labor, 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 its omission
*Sector supplement in final version
CONTENT TABLE FOR GRI LEVEL C
GRI Section No.
Standard Disclosure
Reported Page(s)
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
EN19
EN23
EN28
LA1
LA7
SO2
SO6
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
Ozone Depleting Substances
Spillage
Non-Compliance
workforce
Rates of injury
Corruption
Political Contributions
fully
fully
fully
fully
fully
fully
fully
fully
fully
fully
fully
fully
fully
fully
Partially
Partially
fully
fully
10-11
2-5
47
47
64-73
47
49
52
52
52
52
52
52
52
53
53
48
61
INDEPENDENT ASSURANCE
REPORT TO THE
DIRECTORS OF DCC PLC
wE hAvE bEEN ENgAgED by ThE
DiRECTORS Of DCC PLC (DCC)
TO PERfORm AN iNDEPENDENT
ASSURANCE ENgAgEmENT iN
RESPECT Of SELECTED ASPECTS
Of DCC’S SUSTAiNAbiLiTy
PERfORmANCE, DiSCLOSED iN iTS
SUSTAiNAbiLiTy REPORT fOR ThE
yEAR ENDED 31 mARCh 2012
(‘ThE REPORT’).
What we did and our conclusions
we planned and performed our work,
summarised below, to obtain the evidence
we considered necessary to reach our
assurance conclusions on the Selected
Sustainability Data.
What we are assuring (Selected
Sustainability Information)
• The selected sustainability data for the
year ended 31 march 2012 marked with
the symbol * presented in the Report
(the Selected Sustainability Data).
• DCC’s declared global Reporting
initiative (gRi) application level of C+ of
the gRi “g3” guidelines as stated on
page 47 of the Report.
The scope of our work was restricted to
the Selected Sustainability information for
the year ended 31 march 2012 and does
not extend to information in respect of
earlier periods or to any other information
in the Report.
How the information is assessed
(Reporting Criteria )
DCC’s Reporting Criteria at http://www.
dcc.ie/~/media/files/D/DCC-group-Plc/
pdfs/carbon-LTi-reporting-criteria.pdf
and the gRi g3 guidelines at https://www.
globalreporting.org/reporting/guidelines-
online/g3Online/Pages/default.aspx set
out how the Selected Sustainability Data
is measured, recorded and reported.
55
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Assurance standard applied1
iSAE 3000.
Level of assurance2
Limited Assurance.
Understanding DCC’s reporting and
measurement methodology
There is not yet an established practice for
evaluating and measuring sustainability
performance information. The range of
different, but acceptable, techniques used
can result in materially different reporting
outcomes which may affect comparability
with other organisations. it is therefore
important to read and understand the
Reporting Criteria at http://www.dcc.
ie/~/media/files/D/DCC-group-Plc/pdfs/
carbon-LTi-reporting-criteria.pdf and
the gRi g3 guidelines at https://www.
globalreporting.org/reporting/guidelines-
online/g3Online/Pages/default.aspx that
DCC has used to evaluate and measure
the Selected Sustainability Data.
Limited assurance work performed on
the Selected Sustainability Information
we performed the following activities:
• Evaluated the design and
implementation of key processes and
controls over the Selected Sustainability
Data;
• Assessed the source data used to
prepare the Selected Sustainability Data
for the period 1 April 2011 to 31 march
2012, including re-performing a sample
of calculations;
• Carried out analytical procedures over
the Selected Sustainability Data;
• Examined on a sample basis the
preparation and collation of the Selected
Sustainability Data, as well as making
inquiries of management and others;
• Performed site visits to ten sites to
review systems and processes in
place for managing and reporting on
sustainability activities, and examined
source documentation on a sample
basis;
• with respect to the carbon figures
disclosed and marked with the symbol *
on page 52 of the Report, we evaluated
the methodology and basis of converting
the original reported unit into carbon
emission equivalent tonnes. we agreed
a sample of emission factors back to
the stated source (as detailed in the
Reporting Criteria);
• Reviewed the Selected Sustainability
Data disclosures; and
• Assessed the gRi index on page 54 of
the Report for compliance with the gRi
application level requirements for C+.
This consisted of examining supporting
documentation, on a sample basis,
where relevant.
Our conclusions
As a result of our procedures nothing has
come to our attention that indicates:
• The Selected Sustainability Data for
the year ended 31 march 2012 is not
prepared in all material respects with
the Reporting Criteria; and
• DCC’s declared gRi application level of
C+ on page 47 of the Report is not fairly
stated in all material respects.
DCC’s responsibilities
The directors of DCC are responsible for:
• designing, implementing and
maintaining internal controls over
information relevant to the Selected
Sustainability information;
• establishing objective assessment and
Reporting Criteria for preparing the
Selected Sustainability Data;
• measuring DCC’s performance based
on the Reporting Criteria; and
• the content of the Annual Report.
Our responsibilities
we are responsible for:
• forming independent conclusions,
based on our limited assurance
procedures;
• reporting our conclusions to the
directors of DCC; and
• reading the other information
included in the Report as well as the
Chief Executive’s Review, group at a
glance, business model and Strategy,
Corporate governance Statement and
Report of the Directors of the DCC plc
Annual Report, and considering the
consistency of that other information
with the understanding gained from our
work, and considering the implications
for our report if we become aware
of any material inconsistencies. Our
responsibilities do not extend to any
information other than the Selected
Sustainability information in the Report.
This report, including our conclusions,
has been prepared solely for the
directors of DCC as a body in accordance
with the agreement between us, to
assist the directors in reporting DCC’s
sustainability performance and activities.
we permit this report to be disclosed
in the Annual Report for the year
ended 31 march 2012, to enable the
directors to show they have addressed
their governance responsibilities by
obtaining an independent assurance
report in connection with the Selected
Sustainability information. To the fullest
extent permitted by law, we do not accept
or assume responsibility to anyone other
than the directors as a body and DCC plc
for our work or this report except where
terms are expressly agreed between us in
writing.
PricewaterhouseCoopers
Chartered Accountants
Dublin, ireland
14 may 2012
Notes
1. international Standard on Assurance Engagements
3000 (Revised) – ‘Assurance Engagements other
than Audits and Reviews of historical financial
information’ issued by the iAASb.
2. Assurance, defined by the international Auditing and
Assurance Standards board (iAASb), gives the user
confidence about the subject matter (“Sustainability
information”) assessed against the Reporting
Criteria. Reasonable assurance gives more
confidence than limited assurance. The evidence
gathered to support a reasonable assurance
conclusion is greater than that gathered to support a
limited assurance conclusion.
3. we comply with the applicable independence
and competency requirements of the Chartered
Accountancy Regulatory board (CARb) Code of
Ethics.
56
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
BOARD OF DIRECTORS
Michael Buckley MA, LPh, MCSI
(age 67) Non-executive Chairman; Chairman,
Nomination and Governance Committee;
Member, Remuneration Committee
joined Board: mr. buckley joined the board in
September 2005 and was appointed non-executive
Chairman in may 2008.
Key strengths: mr. buckley has senior
management and board level experience over 25
years in stockbroking, mergers and acquisitions,
banking, enterprise software, internationally
traded services and healthcare businesses, in
ireland and internationally.
Previous board and management experience: 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. he was previously a non-executive director
of m and T bank Corporation, listed on the New
york Stock Exchange, and of Enterprise ireland.
Current external commitments/relevant
qualifications: he is a non-executive director of
Uk Asset Resolution Limited and Senior Advisor to
a number of privately owned companies. he is an
adjunct professor and chairs the Advisory board
at the Department of Economics in the National
University of ireland, University College Cork, and
chairs the board of the irish Chamber Orchestra.
Tommy Breen B Sc (Econ), FCA
(age 53) Chief Executive
joined Board: mr. breen joined the board in
february 2000.
Key strengths: he joined DCC in 1985, having
previously worked with kPmg, and has held a
number of senior management positions within
the group, including managing Director of the
Energy, SerCom and Environmental divisions.
he was appointed Chief Operating Officer of DCC
in march 2006 and subsequently became group
managing Director in july 2007. he was appointed
Chief Executive in may 2008.
Previous management experience: As detailed
above, mr. breen has gained broad experience and
knowledge of the DCC group, during his 26 years
with DCC.
Relevant qualifications: he is an economics
graduate of queens University belfast and a
chartered accountant.
Róisín Brennan BCL, FCA
(age 47) Non-executive Director; Member,
Nomination and Governance Committee;
Member, Remuneration Committee
joined Board: ms. brennan joined the board in
September 2005.
Key strengths: ms. brennan has over 20 years
experience advising companies on mergers and
acquisitions, takeovers, disposals, fundraisings
and initial public offerings.
Previous board and management experience:
She is a former Chief Executive of ibi Corporate
finance where she worked from 1990 until 2011.
She is a former non-executive director of The irish
Takeover Panel.
Current external commitments/relevant
qualifications: She sits on the finance,
Remuneration and Asset management Committee
of University College Dublin. She qualified as a
chartered accountant with Arthur Andersen.
David Byrne SC
(age 65) Non-executive Deputy Chairman
and Senior Independent Director; Member,
Nomination and Governance Committee;
Member, Remuneration Committee
joined Board: mr. byrne joined the board and
was appointed Deputy Chairman and Senior
independent Director in january 2009.
Key strengths: mr. byrne has practised at the
top of the legal profession. 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. his international
commercial experience at board and advisory
level ranges across the food, healthcare and
construction materials sectors.
Previous board and management experience:
he has previously been a member of the boards
of public and private companies, including The
National Concert hall (chairman), irish Life &
Permanent plc and Alltech (ireland) Limited.
Current external commitments/relevant
qualifications: he is a non-executive director
and chairman of the remuneration committee
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.
Kevin Melia FCMA, jDipMA
(age 64) Non-executive Director; Member, Audit
Committee
joined Board: mr. melia joined the board in
December 2008.
Key strengths: mr. melia has long experience
across the iT sector, including hardware
manufacturing and distribution and software
development, as a corporate executive, an
entrepreneur and as a non-executive director in
listed companies. Additionally, he has experience
as a principal in the private equity sector, and as
a non-executive director in the financial services
sector.
Previous board and management experience: he
is a former non-executive Chairman of vette Corp,
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.
Current external commitments/relevant
qualifications: 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.
john Moloney B.Agr.Sc., MBA
(age 57) Non-executive Director; Member, Audit
Committee
joined Board: mr. moloney joined the board in
february 2009.
Key strengths: mr. moloney has extensive
top management and board level experience
internationally and domestically in the dairy, meat
and nutritionals sectors, covering processing,
manufacturing and distribution.
Previous board and management experience:
he worked with the Department of Agriculture,
food and forestry as well as in the meat industry
in ireland.
Current external commitments/relevant
qualifications: he is group managing Director of
glanbia plc where he has been a board member
since 1997. he is a director of the irish Dairy board
Co-operative Limited and a council member of the
irish business and Employers Confederation.
57
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
Board
Name
Length
of service
on Board
michael buckley (Non-executive Chairman)
6 years
Tommy breen (Chief Executive)
Róisín brennan (Non-executive Director)
David byrne (Non-executive Deputy Chairman
and Senior independent Director)
kevin melia (Non-executive Director)
john moloney (Non-executive Director)
Donal murphy (Executive Director)
fergal O’Dwyer (Executive Director)
bernard Somers (Non-executive Director)
12 years
6 years
3 years
3 years
3 years
3 years
12 years
8 years
Leslie van de walle (Non-executive Director)
1.5 years
Audit Committee
Name
bernard Somers (Chairman)
kevin melia
john moloney
Length
of service
on Committee
6 years
3 years
3 years
Nomination and Governance Committee
Name
michael buckley (Chairman)
Róisín brennan
David byrne
Leslie van De walle
Remuneration Committee
Name
Leslie van De walle (Chairman)
Róisín brennan
michael buckley
David byrne
Length
of service
on Committee
6 years
1 year
3 years
1 year
Length
of service
on Committee
1.5 years
6 years
6 years
3 years
Donal Murphy B Comm, BFS, MBA
(age 46) Executive Director
joined Board: mr. murphy joined the board in
December 2008.
Key strengths: mr. murphy has been managing
Director of DCC Energy since 2006. he was
previously managing Director of DCC SerCom
having been appointed in 2004. he joined DCC plc
as head of group iT in 1998.
mr. murphy has extensive experience in managing
businesses in diverse industry sectors and
in leading the acquisition and integration of
numerous businesses, particularly in the Energy
sector.
Previous management experience: he previously
worked with Allied irish banks plc.
Relevant qualifications: he is a commerce
graduate and a bfS graduate of University College
Dublin and has also completed an mbA with the
Smurfit business School, Dublin.
Fergal O’Dwyer FCA
(age 52) Executive Director
joined Board: mr. O’Dwyer joined the board in
february 2000.
Key strengths: mr. O’Dwyer joined DCC in 1989
and was appointed Chief financial Officer in 1994,
having worked in that role in the lead up to DCC’s
flotation in that year.
he has worked in DCC in senior management
positions for over 22 years and during that time
he has worked closely with all of the group’s
material operating companies on a range of
financial management, treasury and strategic and
development matters.
Previous management experience: Prior to
joining DCC in 1989, he previously worked
with kPmg and Price waterhouse in audit and
corporate finance.
Relevant qualifications: he qualified as a
chartered accountant in 1982.
Bernard Somers B Comm, FCA
(age 63) Non-executive Director; Chairman, Audit
Committee
joined Board: mr. Somers joined the board in
September 2003.
Key strengths: mr. Somers has long experience
both as a principal and as an advisor in corporate
advisory and restructuring projects. he has
been for many years an investor in and advisor
to start-up companies. he also brings extensive
experience as a non-executive director in listed
companies in the transport and financial sectors.
Previous board and management experience:
he is a former director of public and private
companies in ireland and the USA and is former
executive chairman of eTel group Limited.
Current external commitments/relevant
qualifications: he is founder of Somers &
Associates, which specialises in debt and
corporate restructuring. he is a non-executive
director of eircom Limited, irish Continental group
plc and is non-executive chairman of Escher
group holdings plc.
Leslie Van De Walle
(age 56) Non-executive Director; Chairman,
Remuneration Committee; Member, Nomination
and Governance Committee
joined Board: mr. van de walle joined the board
in November 2010.
Key strengths: mr. van de walle has a very wide
range of international senior management
business experience, as well as experience as a
non-executive director, in the oil and gas sector, in
the food and drinks industry, in manufacturing, in
building materials and in the insurance sector.
Previous board and management experience:
he is a former non-executive director of Aviva plc
and former Chief Executive Officer of Rexam plc.
he 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
where he was CEO. he was also a non-executive
director of Aegis group plc from 2003 to 2009.
Current external commitments/relevant
qualifications: he is non-executive Chairman of
Sig plc and is a non-executive director of La Seda
de barcelona S.A.
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SENIOR MANAGEMENT
GROUP AND DIVISIONAL
Chief Executive
Chief financial Officer
Tommy breen
fergal O’Dwyer
DCC Energy
managing Director
managing Director - Oil
finance Director
Development Director
Donal murphy
Eddie O’brien
Conor murphy
Clive fitzharris
DCC SerCom
managing Director
finance & Development Director
Niall Ennis
kevin Lucey
DCC Healthcare
managing Director
finance & Development Director
Conor Costigan
ian O’Donovan
DCC Environmental
finance & Development Director
Thomas Davy
DCC Food & Beverage
managing Director
finance & Development Director
frank fenn
Redmond mcEvoy
group Secretary & head of
Enterprise Risk management
ger whyte
managing Director, DCC Corporate finance michael Scholefield
head of group Accounting
gavin O’hara
head of group Compliance
Darragh byrne
head of group hR
Ann keenan
head of internal Audit
Stephen johnston
head of group iT
Cormac watters
head of group Sustainability
john barcroft
head of group Tax
yvonne Divilly
head of group Treasury
Daphne Tease
5959
OVERVIEW
BUSINESS PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
INFORMATION
managing Director
managing Director
managing Director
managing Director
group CEO
Chief Operations Officer ben jordan
managing Director
managing Director
Paul vian
Tom walsh
Christian heise
hans-Peter hintermayer
Lennart hannson
henry Cubbon
Richard martin
Raj Advani
managing Director
Patrice Arzillier
Directeur général
Claude Dupont
Directeur général
Stefan Riesser
President
Chris Peacock
managing Director
gerry O’keeffe
managing Director
jim morgan
managing Director
managing Director
john Dunne
Chief Executive Officer kevin henry
PRINCIPAL BUSINESSES AND jOINT VENTURE
DCC ENERGY
Oil
LPG
DCC SERCOM
SerCom Distribution
SCM
DCC HEALTHCARE
gb Oils
Oil ireland
DCC Energi Danmark
Energie Direct - Austria
Swea
fuel Card Services
flogas Uk
flogas ireland
Advent Data
Altimate
banque magnetique
Comtrade
gem Distribution
micro P
mSE
Sharptext
SerCom Solutions
hospital Supplies & Services and fannin
managing Director
health & beauty Solutions and Thompson & Capper managing Director
managing Director
EuroCaps
managing Director
Laleham healthcare
Andrew O’Connell
Stephen O’Connor
Adrian williams
Tim O’Connor
DCC ENVIRONMENTAL
DCC FOOD & BEVERAGE
DCC Environmental britain and william Tracey
Enva ireland
Oakwood
wastecycle
managing Director
managing Director
managing Director
managing Director
michael Tracey
Declan Ryan
Steve Tooley
Paul Needham
kelkin
Robert Roberts
bottle green
Allied foods
kylemore foods group*
* joint venture
frank fenn
managing Director
Tom gray
managing Director
jon Eagle
managing Director
managing Director
john Raleigh
Chief Executive Officer brian hogan
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RepoRt of the DiRectoRs
The Directors of DCC plc present their
report and the audited financial statements
for the year ended 31 March 2012.
Results and Review of Activities
Revenue for the year amounted to
€10,690.3 million (2011: €8,680.6 million).
The profit for the year attributable to
owners of the Parent amounted to €102.4
million (2011: €145.1 million). Adjusted
earnings per share amounted to 163.51
cent (2011: 203.15 cent). Further details of
the results for the year are set out in the
Group Income Statement on page 87.
The Chairman’s Statement on pages
6 to 7, the Chief Executive’s Review on
pages 8 to 11, the Operating Reviews on
pages 14 to 39 and the Financial Review
on pages 40 to 46 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 2012, 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 49 on page 157.
Dividends
An interim dividend of 27.42 cent per
share, amounting to €22.90 million,
was paid on 2 December 2011. The
Directors recommend the payment of
a final dividend of 50.47 cent per share,
amounting to €42.16 million. Subject to
shareholders’ approval at the Annual
General Meeting on 20 July 2012, this
dividend will be paid on 26 July 2012 to
shareholders on the register on 25 May
2012. The total dividend for the year ended
31 March 2012 amounts to 77.89 cent
per share, a total of €65.06 million. This
represents an increase of 5% 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 2012 are shown
in note 40 on page 145.
share capital and treasury shares
DCC’s authorised share capital is
152,368,568 ordinary shares of €0.25 each,
of which 83,528,497 shares (excluding
treasury shares) and 4,700,907 treasury
shares were in issue at 31 March 2012.
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 4,911,407 (5.57% of the issued share
capital) with a nominal value of €1.228
million.
A total of 210,500 shares (0.24% of the
issued share capital) with a nominal value
of €0.053 million were re-issued during
the year at prices ranging from €10.25 to
€19.50 consequent to the exercise of share
options under the DCC plc 1998 Employee
Share Option Scheme, leaving a balance
held as treasury shares at 31 March 2012
of 4,700,907 shares (5.33% of the issued
share capital) with a nominal value of
€1.175 million.
At the Annual General Meeting held on
15 July 2011, 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 20 July 2012,
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.
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 and
Uncertainties report on pages 62 to 63.
Directors
The names of the Directors and a short
biographical note on each Director appear
on pages 56 to 57.
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 74 to 83.
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substantial shareholdings
The Company has been notified of the following shareholdings of 3% or more in the
issued share capital (excluding treasury shares) of the Company as at 14 May 2012:
FMR LLC and FIL Limited on behalf of certain of
its direct and indirect subsidiaries*
Prudential plc group of companies*
Invesco*
UBS Investment Bank*
Bestinver Gestión SGIIC *
Setanta Asset Management*
Franklin Templeton Investment*
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 158 to 162.
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.
No. of €0.25
% of issued
ordinary shares share capital
(excluding
treasury shares)
10,454,119
12.52%
7,147,938
6,083,677
4,919,707
3,760,890
3,002,226
2,796,831
2,742,356
2,532,850
8.56%
7.28%
5.89%
4.50%
3.59%
3.35%
3.28%
3.03%
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.
Auditors
Following the conclusion of a formal
audit tender process during the year, the
Board approved the re-appointment of
PricewaterhouseCoopers as auditors to
the Company.
PricewaterhouseCoopers will continue in
office in accordance with the provisions
of Section 160(2) of the Companies
Act, 1963. A resolution authorising the
Directors to determine their remuneration
will be proposed at the Annual General
Meeting.
Michael Buckley, tommy Breen
Directors
14 May 2012
corporate Governance
DCC has complied, throughout the
year ended 31 March 2012, with the
provisions set out in the UK Corporate
Governance Code (issued in May 2010)
and in the Irish Corporate Governance
Annex (issued in December 2010),
which applied to the Company for the
year ended 31 March 2012.
The Corporate Governance statement
on pages 64 to 73 sets out the
Company’s appliance of the principles
and compliance with the provisions of
the UK Corporate Governance Code and
the Irish Corporate Governance Annex,
the Group’s system of risk management
and internal control and the adoption
of the going concern basis in preparing
the financial statements. The Corporate
Governance statement shall be treated
as forming part of the Report of the
Directors.
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.
transparency Rules
As required by the Transparency Rules
published by the Central Bank of Ireland
under Section 22 of the Investment
Funds, Companies and Miscellaneous
Provisions Act 2006, the following
sections of the Annual Report shall be
treated as forming part of this report:
the Chairman’s Statement on pages 6
to 7, the Chief Executive’s Review on
pages 8 to 11, the Operating Reviews
on pages 14 to 39, the Financial Review
on pages 40 to 46, the Principal Risks
and Uncertainties on pages 62 to 63,
the earnings per ordinary share in note
18 on page 123, the key performance
indicators on page 12 and the derivative
financial instruments in note 29 on page
132.
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pRiNcipAL RisKs AND UNceRtAiNties
The Board of DCC is responsible for the Group’s risk management systems and the approval of the Risk Management Policy,
Risk Appetite and the Group Risk Register which are designed to identify, manage and mitigate potential material risks to
the achievement of the Group’s strategic and business objectives. The Group’s risk management process was subject to a
comprehensive review during the current financial year, including a benchmark review by Ernst & Young. Details of the Group’s
Risk and impact
change in likelihood
Risk mitigation
strategic risks and uncertainties
economic downturn
Economic recovery remains fragile and the effect on customer demand can be difficult
to predict. Prolonged economic downturn, particularly in Britain, could impact on:
• Demand for the Group’s goods and services;
• Counterparty failure; and
• The Group’s ability to access capital markets.
Acquisitions
Growth through acquisition is an integral part of DCC’s strategy. A failure to
identify, execute and properly integrate acquisitions could lead to operational
and financial issues.
operational risks and uncertainties
extreme weather impacts
on trading
Significant variations in temperatures have been experienced in the UK over
the last two winters significantly impacting demand for energy products.
Managing talent
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
The loss of a key supplier could have a serious operational and financial impact
on the Group’s business.
Major health & safety
or environmental incident
A major fire, explosion, multiple vehicle accident or environmental incident could
result in multiple fatalities, breach of regulatory compliance and significant
disruption to operations. Failure to react appropriately to an incident or the publicity
generated by such incidents may negatively impact on the Group’s reputation.
compliance risks and uncertainties
Regulation and
compliance
product quality
fraud
DCC has operations in 15 countries. Failure to comply with statutory obligations or react
appropriately where non-compliance is identified could result in regulatory action, legal
liability and damage to the Group’s reputation.
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.
Technological advances and austerity measures have increased the risk of
cybercrime fraud in particular.
financial risks and uncertainties
commodity price
fluctuations
The Group is exposed to commodity cost price risk in its oil distribution and
LPG business.
Details of the internal controls in place for the financial risks facing the Group are addressed in detail under ‘Financial Risk Management’
in the Financial Review on pages 40 to 46.
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Risk and impact
change in likelihood
Risk mitigation
risk management systems and internal controls are set out under ‘Risk Management and Internal Control’ in the Corporate
Governance statement on pages 64 to 73.
The top 10 risks facing the Group in the short to medium term are set out below. Longer term risks, such as climate change,
are discussed in the Sustainability Report on pages 47 to 55.
Sensitivity analysis is applied to our planning and budgeting models to prepare for further economic changes. There is a continued focus on
working capital management, cash generation and ROCE.
The Group transacts with a variety of high credit rated functional institutions for the purpose of placing deposits and entering into derivative
contracts. The credit exposure to counterparties is actively monitored to ensure compliance with limits approved by the Board.
The Group’s financial position remains strong with significant cash resources and relatively long term debt maturities.
Acquisitions are subject to an assessment of their ability to generate ROCE in excess of the cost of capital and their strategic fit within the
Group. 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.
The Group continues to expand into new geographical regions with attractive market characteristics and continues to focus on the retail
petrol station, marine, aviation and other value added product sectors.
The Group maintains a constant focus on succession planning, remuneration programmes, including long and short term incentive
initiatives, and management development. This is implemented 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.
Internal and external monitoring, measurement and review of the control measures ensure a continuous improvement cycle is maintained.
Insurance cover is in place for all significant insurable risks and major catastrophes.
Business Continuity Plans are in place to reduce the potential impact of any significant incidents.
The Group compliance function has recently been enhanced following a Group wide review of compliance structures and resources.
Compliance with all legal and statutory requirements is primarily managed by subsidiary management and is subject to formal review by the
Head of Group Compliance.
All manufacturing and processing facilities operate quality management systems, which are subject to regulatory review and licence
requirements. Quality assurance processes are in place to ensure finished products are produced in accordance with specifications.
IT and banking system security measures are subject to both external and internal review and are continuously updated and improved.
Commodity cost price movements are immediately reflected in oil commodity sales prices and within a short period in LPG commodity
sales prices. Approved matching forward contracts and hedges are used where price movement exposures exist.
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coRpoRAte GoVeRNANce
The Board and management of DCC is committed to maintaining the highest standards of corporate governance. This
statement describes DCC’s governance principles and practices and details the Group’s risk management, internal control
and compliance systems.
This statement also describes how DCC has applied the principles set out in the 2010 UK Corporate Governance Code (‘the 2010
Code’), which was issued by the UK’s Financial Reporting Council (‘FRC’) in June 2010 and a new Irish code of practice, the Irish
Corporate Governance Annex (‘the Irish Annex’), which was issued by the Irish Stock Exchange in December 2010. A copy of the 2010
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.
The Board’s 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 focused 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. 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. The Board is also responsible for setting the
Group’s risk management policy and risk appetite.
The Board has delegated some of its responsibilities to Committees of the Board, whose activities are described under ‘Board
Committees’ on page 67. The Board receives reports at its meetings from the chairmen of each of the Committees on their
current activities.
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.
There is an established procedure for Directors to take independent professional advice in the furtherance of their duties, if they
consider this necessary.
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 was given increased emphasis in the 2010 Code.
Before 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 months, which includes the key agenda items for each
meeting. Further details on these agenda items are outlined under “Board Meetings” on page 66.
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.
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The Senior Independent Director is available to shareholders who may have concerns that cannot be addressed through the
Chairman or Chief Executive.
company secretary
The Company Secretary’s responsibilities include ensuring that Board procedures are followed, assisting the Chairman in relation to
corporate governance matters and ensuring compliance by the Company with its legal and regulatory requirements.
Membership and composition
The Board currently consists of three executive and seven non-executive Directors. The composition of the Board and the principal
Board Committees and brief biographies of the Directors, which highlight the range of experience they bring to the Board table, are
set out on pages 56 to 57.
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 it has the appropriate mix of skills, knowledge and experience, from a wide range of industries, regions
and backgrounds, necessary to address the major challenges for the Company. In that regard, significant new and relevant
experience has been added in the period since the end of 2008.
The Board is satisfied that its size is right. There is a clear majority of non-executive Directors and of independent non-executive
Directors. The Chairman devotes a significant amount of time to ensuring that, when the retirement date for an existing non-
executive Director is approaching, suitable replacement candidates are available.
Diversity
A key criterion in appointing new Board members is to increase diversity in the DCC boardroom and in particular to increase
the number of female Directors. As there is not a case for increasing the overall size of the Board, the aim is to achieve this
by prioritising the appointment of suitable female candidates whenever a Board vacancy arises. This is the approach being
adopted at present as the current Chairman of the Audit Committee is due to retire during the year to 31 March 2013. At the
same time, the Board’s renewal agenda also includes the continuing objective of increasing the number of Directors with
substantial direct senior experience in U.K. and/or Continental European businesses, in line with the fact that over 85% of
DCC’s profits come from these geographies. The combination of these criteria poses a significant challenge as many FTSE 100
and FTSE 250 companies are also seeking to appoint similar candidates.
Appointment
The process for making new appointments to the Board, which is detailed below, has been in place since 2009.
The Nomination and Governance Committee formally agrees criteria for new non-executive director appointments, including
experience of the industry sectors and geographies in which the Group operates, professional background, nationality and gender.
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.
In relation to the appointment of executive directors, following discussion and agreement between the Chairman and Chief Executive,
a proposal from the Chief Executive is put to the Nomination and Governance Committee, which may decide formally to interview the
proposed candidate, before making a recommendation to the Board.
Following appointment by the Board, all Directors are, in accordance with the Articles of Association, subject to re-election at the next
Annual General Meeting. Since 2008, 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, generally not extending beyond nine years in total. After three years’ service, and again after six years’ service, each
non-executive Director’s performance is reviewed by the Nomination and Governance Committee, with a view to recommending to
the Board whether a further period of service is recommended, subject to the usual annual approval by shareholders at the Annual
General Meeting.
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(continued)
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.
training and Development
New Directors undertake a rigorous induction process which includes a series of meetings with Group and divisional management,
detailed divisional presentations and visits to key subsidiary locations.
The Chairman invites external experts to attend certain Board meetings to address the Board on developments in corporate
governance, risk management and executive remuneration and on relevant industry and sectoral matters.
The Chairman and Company Secretary review Directors’ training needs, in conjunction with individual Directors, and match those
needs with appropriate external seminars. The Chairman also discusses individual training and development requirements for each
Director as part of the annual evaluation process.
Non-executive Directors are expected to meet individually during the year, outside of Board meetings, with members of senior
management throughout the Group and to visit a number of subsidiaries to familiarise themselves with the business in more detail
than is possible during Board meetings.
All Directors are encouraged to avail of opportunities to hear the views of and meet with the Group’s shareholders and analysts.
The section on “Relations with Shareholders” on page 72 gives further information on opportunities for Directors to meet with
the Group’s shareholders.
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 2010 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 2010 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 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 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. Before 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 budgets, financial statements,
acquisitions, investor relations, human resources and governance, risk and compliance) and developmental issues, (which include
strategy, sectoral and divisional reviews, succession planning and Directors’ education). Strategy and three-year planning are the
subject of a two-day Board meeting each December.
The Board schedule includes a significant succession planning item once a year. Against a template agreed by the Chief Executive
and the Nomination and Governance Committee, the Chief Executive brings a detailed plan for review by that Committee. At an
immediately subsequent Board meeting the plan is presented to the Board, discussed and approved.
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 2012, the Board held ten meetings. Individual attendance at these meetings is set out in the table on
page 70.
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Remuneration
Details of remuneration paid to the Directors are set out in the Report on Directors’ Remuneration and Interests on pages 74 to
83. 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 74 to 83.
During the year, the Board adopted a revised DCC Share Dealing Policy which applies to dealings in DCC shares by the Directors and
Company Secretary of DCC, directors of all Group companies and all DCC Head Office employees. The revised Policy incorporated the
Company’s existing rules on share dealing and is based on the Model Code, as set out in the Listing Rules of the Irish Stock Exchange
and the UK Listing Authority. Under the Policy, directors and relevant executives 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 revised Policy introduces the concept of ‘preferred periods’ for share dealing by Directors and relevant executives, being the four
21 day periods following the updating of the market on the Group’s trading position through the preliminary results announcement
in May, the Interim Management Statement in July (at the Annual General Meeting), the interim results announcement in November
and the Interim Management Statement in January/February.
Board committees
The principal Committees of the Board are the Audit Committee, the Nomination and Governance Committee and the
Remuneration Committee.
Audit committee
The Audit Committee comprises three independent non-executive Directors, Bernard Somers (Chairman), Kevin Melia and John
Moloney. All of the Committee’s members have recent and relevant financial and business experience arising from the senior
positions they hold or held in other organisations as can be seen from the Directors’ biographical details on pages 56 to 57.
The Committee met seven times during the year ended 31 March 2012. Individual attendance at these meetings is set out in the table
on page 70. 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 other executive
management being present.
The role and responsibilities of the Audit Committee are set out in its written terms of reference, which are reviewed annually and are
available on the Company’s website www.dcc.ie. They 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, re-appointment 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 risk management and internal control 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 risk management and internal control
and reviewing the Company’s statements on risk management and internal control 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.
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(continued)
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.
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 113.
The Committee makes recommendations to the Board in relation to the appointment of the external auditor. During the year, the
Committee engaged in a formal tender process for the external audit of the Group’s financial statements with effect from the year
ended 31 March 2012. Following the conclusion of this process, the Board approved the re-appointment of PricewaterhouseCoopers
as auditors to the Company.
The Committee receives regular reports from the Group Internal Audit, Group Environmental, Health and Safety and Group
Compliance 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 conducts, on behalf of the Board, an annual assessment of the operation of the Group’s system of risk management
and 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. Further details in relation to the Committee’s work in this area are set out under ‘Risk
Management and Internal Control’ below.
Risk Management and Internal Control
The Board is responsible for the Group’s system of risk management and internal control and has delegated responsibility for the
ongoing monitoring of its effectiveness to the Audit Committee. 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 Group Internal Audit, Group Environmental, Health and Safety and Group Compliance functions; and
• a formally constituted Audit Committee.
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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 results of an annual assessment, conducted by the Audit Committee, of the operation of the Group’s
system of risk management and internal control up to and including the date of approval of the financial statements. This
assessment was based on a detailed review carried out by Group Internal Audit. Where areas for improvement have been identified
the necessary actions in respect of the relevant control procedures have been or are being taken. 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 the procedures in place to monitor them.
Review of Risk Management Structures
During the year, a review of the structures, processes and resources in place to manage risk in the DCC Group was carried out
with the objective of ensuring that these meet the highest standards while being appropriate to DCC’s structure and business
model. This review included an external assessment by Ernst & Young against their internal risk management model and best
practice in FTSE 250 companies. Following the review, a number of changes to the risk management framework were agreed
with the Board including:
• Enhancing the top down governance structures including an increased focus on risk management at the Board and Audit
Committee meetings;
• Developing a Group Risk Management Policy and a Risk Appetite Statement which have been approved by the Board;
• Re-modelling the Group risk register, which is focussed on the key risks across the Group, and developing an Integrated
Assurance Report;
• Enhancing reporting from assurance providers to the Audit Committee and from the Audit Committee to the Board; and
• Enhancing the operation of the Risk Committee.
Review of Compliance Structures
During the year, the Board completed a review of the structures in place to ensure compliance by the Group’s subsidiaries with
applicable laws and regulations in the countries in which they operate. Following this review, additional resources have been put in
place at Group and divisional level, including the appointment of a Head of Group Compliance, who reports to the Group Secretary
and to the Audit Committee.
Nomination and Governance committee
The Nomination and Governance Committee comprises Michael Buckley (Chairman) and three independent non-executive Directors,
Róisín Brennan, David Byrne and Leslie Van De Walle. The Committee met four times during the year ended 31 March 2012.
Individual attendance at these meetings is set out in the table on page 70.
The role and responsibilities of the Nomination and Governance Committee are set out in its written terms of reference, which are
reviewed annually, and 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, strategic direction and diversity objectives.
The Committee also actively manages the open and transparent process for appointment of new Directors as outlined under
‘Appointment’ on page 65.
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.
The Committee’s duties in relation to corporate governance include advising the Board of significant developments in the law and
practice of corporate governance, monitoring the Company’s compliance with corporate governance best practice and with applicable
legal, regulatory and listing requirements and the review and approval of the Corporate Governance statement and any other material
information being made public in respect of the Company’s corporate governance.
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(continued)
Remuneration committee
The Remuneration Committee comprises three independent non-executive Directors, Leslie Van De Walle (Chairman), Róisín
Brennan and David Byrne, and the Chairman of the Board, Michael Buckley. The members of the Committee have relevant financial
and business experience, including in the area of executive remuneration.
The Committee met six times during the year ended 31 March 2012. Individual attendance at these meetings is set out in the
table below.
The role and responsibilities of the Remuneration Committee are set out in its written terms of reference, which are reviewed
annually, and are available on the Company’s website www.dcc.ie. The Committee is responsible for determining the policy for the
remuneration of the Chief Executive, the other executive Directors and certain senior Group executives. In this regard the Committee
gives full consideration to legal and regulatory requirements, to the principles and provisions of the UK Corporate Governance
Code and to related guidance. The Committee also ensures that risk is properly considered in the setting of remuneration policy, by
ensuring that targets are appropriately stretched but do not lead to the taking of excessive risk.
The Committee determines the remuneration packages of the Chairman, the Chief Executive, the other executive Directors and
certain senior Group executives, including salary, bonuses, pension rights and compensation payments.
The Remuneration Committee consults with the Chief Executive on remuneration for the other executive Directors and for senior
Group executives.
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 74 to 83.
Attendance at Board and committee meetings during the year ended 31 March 2012:
Director
Board
Audit
committee
Michael Buckley
Tommy Breen
Róisín Brennan²
David Byrne
Maurice Keane¹
Kevin Melia
John Moloney
Donal Murphy
Fergal O’Dwyer
Bernard Somers
Leslie Van De Walle²
A
10
10
10
10
1
10
10
10
10
10
10
B
10
10
10
9
1
10
9
10
10
10
10
A
-
-
-
-
-
7
7
-
-
7
-
B
-
-
-
-
-
7
6
-
-
7
-
Nomination and
Governance
committee
B
A
4
-
3
4
1
-
-
-
-
-
3
4
-
3
3
1
-
-
-
-
-
3
Remuneration
committee
A
6
-
6
6
1
-
-
-
-
-
6
B
6
-
6
4
1
-
-
-
-
-
6
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 Retired on 5 April 2011
Note 2 Appointed to Nomination and Governance Committee on 5 April 2011
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performance evaluation
The Board conducts an 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.
This year, the entire performance evaluation process was externally defined and conducted by Towers Watson in accordance with
Provision B.6.2 of the UK Corporate Governance Code. Towers Watson also act as remuneration consultants to the Company.
The process covered a variety of aspects associated with board effectiveness, including the composition of the Board, the content
and running of Board and Committee meetings, corporate governance, risk and crisis management, succession planning and the
Directors’ continuing education process.
The process commenced with a questionnaire being circulated to all Directors by 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 held brief follow up discussions with each of the Directors individually to
clarify any points raised in the questionnaire.
Towers Watson then prepared two separate summary reports of matters raised during the questionnaire and follow up telephone
call phases, one for the Chairman comprising a summary of individual Directors’ self-assessment and training needs to support his
discussion with each Director in respect of their own performance and a second report for the Senior Independent Director to assist
in the evaluation of the Chairman.
With the assistance of the Towers Watson report, the Chairman, on behalf of the Board, conducted evaluations of performance
individually with each of the non-executive and the executive Directors and also enquired if they had any views they wished to express
on the performance of any other Director.
With the assistance of the Towers Watson report, the Senior Independent Director conducted an evaluation of performance of the
Chairman by firstly speaking with each of the Directors individually and then meeting with the non-executive Directors, without the
Chairman present, to formally evaluate the Chairman’s performance, having taken into account the views of the executive Directors.
The non-executive Directors also evaluated the performance of each executive Director.
Finally, Towers Watson prepared summary reports on the performance of the Board, of the three Committees and of the Chairman.
Each Board Committee, with the participation of the Towers Watson representative, considered the summary report as part of its
annual review of its own performance and terms of reference and recommended any changes it considered necessary to the Board
for approval.
During the Board meeting in April, and with the participation of the Towers Watson representative, the non-executive Directors, led by
the Senior Independent Director, concluded on the performance evaluation of the Chairman.
The Board then considered the Towers Watson report on its own performance and formally concluded on its own performance, on the
performance of its Committees and on the performance of individual Directors.
The main conclusion from the evaluation process was that the Board, its Committees and individual Directors are performing
well. Many of the areas identified as excellent in the assessment were further supported by comments and examples from Board
members, both during the assessment and in the follow up discussions. Comparative analysis was conducted where the same
questions were asked of Board members to identify trends and it was noted that progress had been made during the year since the
2011 process. The process in respect of the year under review was concluded at the May 2012 Board meeting, with a number of next
steps being agreed, with particular reference to succession planning, crisis management, Directors’ continuing education and Board
meeting format and agenda items.
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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, typically in January/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.
During the year, an Investor Day took place in London which was attended by the Chairman, the Senior Independent Director and
Róisín Brennan. Most of DCC’s top shareholders as well as various brokers, analysts and fund managers were present at this
Investor Day.
Business conduct Guidelines
DCC’s Business Conduct Guidelines were first issued in 2011. The Guidelines set out the Group’s commitment to the highest
standards of integrity and honesty. They have been circulated to employees across the Group and are also available on the Company’s
website www.dcc.ie.
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.
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.
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A shareholder or a group of shareholders, holding at least 5% of the issued share capital of the Company, has the right to requisition
a general meeting. A shareholder or a group of shareholders, holding at least 3% of the issued share capital, 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 2012 AGM will be held at 11 a.m. on 20 July 2012 at The Four Seasons Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.
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 60 to 61.
Going concern
The Company’s business activities, together with the factors likely to affect its future development, performance and position are set
out in the Chief Executive’s Review on pages 8 to 11.
The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in the Financial Review
on pages 40 to 46. In addition, note 47 to the financial statements include the Company’s objectives, policies and processes for
managing its capital, its financial risk management objectives, details of its financial instruments and hedging activities and its
exposures to credit risk and liquidity risk.
The Company has considerable financial resources and a broad spread of businesses with a large number of customers and
suppliers across different geographic areas and industries. As a consequence, the Directors believe that the Company is well placed
to manage its business risks successfully.
The Directors have 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.
compliance statement
DCC has complied, throughout the year ended 31 March 2012, with the provisions set out in 2010 Code and the Irish Annex.
Michael Buckley, tommy Breen
Directors
14 May 2012
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composition and Role of the Remuneration committee
The Remuneration Committee 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 became Chairman on
5 April 2011, following Mr. Maurice Keane’s retirement from the Committee. Further details regarding the members of the
Remuneration Committee, including their biographies and length of service are set out on pages 56 to 57. The Company
Secretary acts as secretary to the Committee.
The Chief Executive and the Head of Group Human Resources may be invited to attend meetings of the Committee, except
when their own remuneration is being discussed. No Director is involved in consideration of their own remuneration.
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 Committee is responsible for determining the policy for the remuneration of the Chief Executive, the other executive
Directors and certain senior Group executives. In this regard the Committee gives full consideration to legal and regulatory
requirements, to the principles and provisions of the UK Corporate Governance Code and to related guidance. The Committee
also ensures that risk is properly considered in the setting of remuneration policy, by ensuring that targets are appropriately
stretched but do not lead to the taking of excessive risk.
The Committee determines the remuneration packages of the Chairman, the Chief Executive, the other executive Directors and
certain senior Group executives, including salary, bonuses, pension rights and compensation payments.
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, through its oversight of remuneration structures for other
Group and subsidiary senior management and of any major changes in employee benefits structures throughout the Group.
The Committee is responsible for the granting of awards under the Company’s long term incentive schemes, determining
whether the criteria for the vesting of options or awards have been met and making any necessary amendments to the rules of
these schemes.
The Remuneration Committee seeks independent advice when necessary from external remuneration consultants. During the
year, the Committee received independent external advice from Towers Watson on remuneration matters and from Mercer on
pension matters.
The Committee met six times during the year ended 31 March 2012. The main agenda items included remuneration policy,
remuneration trends and benchmarking, the remuneration packages of the Chairman, the Chief Executive, the other executive
Directors and certain senior Group executives, pension matters, grants of share options under the Company’s long term
incentive plan and approval of this Report. Individual attendance at these meetings is set out in the Corporate Governance
statement on page 70.
Group Remuneration policy
principles
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 UK Corporate Governance Code. 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 executives 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.
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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 Company recognises that share ownership is important in aligning the interests of management with those of shareholders
and has fostered a culture under which executive Directors and other senior Group executives hold long term, significant
holdings in the Company’s shares. Details of the executive Directors’ interests in shares and share options are set out on pages
81 to 83.
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.
Review of policy and structures
Following a detailed review, which was facilitated by external remuneration consultants, Towers Watson, the Remuneration
Committee established a framework for remuneration policy in respect of the senior executive cadre in the DCC Group, which
was set out in full in last year’s Annual Report.
Certain elements of this policy framework have been implemented as follows:
(i) The key reference group for overall remuneration purposes is the market capitalisation comparison group and three other
comparator groups are used as secondary reference points. These groups are defined fully under ‘Benchmarking and
Market Trends’ below;
(ii) In the setting of basic pay rates and the short term element of incentive payments, the objective is to place these at the
median of the market capitalisation comparator group;
(iii) A formal bonus clawback policy is in place for the executive Directors and other senior Group, divisional and subsidiary
management; and
(iv) A formal shareholding policy is in place for the Chief Executive, other executive Directors and other senior Group executives.
Further details of this policy are set out under ‘Share Ownership Guidelines’ on page 79.
The Committee remains committed to implementation of the other elements of the framework in the medium term.
Benchmarking and Market trends
The Remuneration Committee uses annual benchmarking to ensure that remuneration structures continue to support the key
remuneration policy objectives.
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.
The Remuneration Committee may modify the composition of these key reference points from time to time with a view to
ensuring their relevance.
The Committee is advised by Towers Watson in relation to benchmarking of remuneration structures, market trends and
competitive positioning.
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shareholder Vote
Since 2009, the Report on Directors’ Remuneration and Interests is put to a shareholder ‘advisory’ vote at the Annual General
Meeting. While there is no legal obligation to put such a resolution to shareholders, DCC believes that it is an appropriate
acknowledgement of a shareholder’s right to have a ‘say on pay’.
executive Directors’ and senior Group executives’ Remuneration
The current remuneration package for executive Directors and senior Group executives consists of fixed remuneration (base
salary), performance related remuneration (annual bonus and long term incentives), pension and other benefits.
fixed Remuneration
Base salaries
With effect from 1 April 2012, the salaries of executive Directors and senior Group executives are 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.
There were no increases in the salaries of executive Directors for the year commencing on 1 April 2012, the salaries of two
of the executive Directors having been increased by 9.6% on 1 January 2011, in the light of the substantial growth in and
increasing complexity of their job roles.
No fees are payable to executive Directors.
With a small number of exceptions as a result of benchmarking and role changes, there were no increases in the salaries of
senior Group executives for the year commencing on 1 April 2012.
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. It ranged between 40% and 100% of base salary for the year ended 31 March 2012, unchanged from
the prior year.
The performance targets for each executive Director and senior Group executive, which are set annually, are based on growth
in Group earnings and (apart from the Chief Executive, the Chief Financial Officer, the Company Secretary and the Managing
Director, Corporate Finance) on growth in divisional operating profit, measured on a constant currency basis, against a pre-
determined range, and on overall contribution and personal performance. The weighting of the performance targets varies
according to the role of each individual and for the year ended 31 March 2012 were within the range of 60% to 75% of bonus
potential for profit performance and 25% to 40% of bonus potential for overall contribution and personal performance. The
Remuneration Committee can apply appropriate discretion in respect of determining the bonuses to be awarded based on
actual performance achieved.
In the case of the executive Directors, the Group earnings and divisional operating profit targets for the year ended 31 March
2012 were not met and therefore no bonus payments will be made in respect of this element. The personal performance and
contribution targets were met and the bonuses payable reflect performance in respect of this element only. The total bonus
payments in respect of the years ended 31 March 2012 and 31 March 2011 are as follows:
Executive Director
Tommy Breen
Donal Murphy
Fergal O’Dwyer
2012
2011
Bonus
€
% of
base salary
Bonus
€
% of
base salary
245,000
75,000
90,000
35.0%
18.7%
22.5%
434,000
126,000
227,000
62.0%
33.7%
60.7%
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For the year to 31 March 2013, the general approach and parameters in respect of annual bonuses, as detailed above in respect
of the year ended 31 March 2012, will remain in place.
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.
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 base 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.
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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
proportion of the total award vesting
Below 3 percentage points
3 percentage points
Between 3 and 7 percentage points
7 percentage points or more
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, net of options lapsed, currently
amounts to 0.81% of issued share capital.
Details of awards, in the form of nominal cost options, held by the executive Directors under the DCC plc Long Term Incentive
Plan 2009, are set out in the table on page 81.
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 1.6% 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.
Details of options held by the executive Directors under the DCC plc 1998 Employee Share Option Scheme are set out in the
table on page 82.
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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.
A set of share ownership guidelines is in place, 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
The existing shareholdings held by the executive Directors, as shown in the table on page 83, are substantially in excess of
these guidelines.
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.
The Irish Finance Act 2006 established a cap on pension assets by introducing a penalty tax charge on pension assets in excess
of the higher of €5 million or the value of individual accrued pension entitlements as at 7 December 2005. The Irish Finance
Act 2011 reduced these thresholds to the higher of €2.3 million or the value of individual accrued pension entitlements as at
7 December 2010. As a result of this change the Remuneration Committee decided that the executive Directors and the other
senior Group executives, who are members of the defined benefit scheme, would have the option of continuing to accrue
pension benefits as previously or to cap their benefits in line with the Irish Finance Act 2011 limits. The executive Directors and
the other senior Group executives elected to cap their benefits and receive a taxable non-pensionable cash allowance in lieu of
pension benefits foregone. All cash allowances have been calculated based on independent actuarial advice from Mercer, the
scheme actuaries, as the equivalent of the cost to the Group of the pension benefits foregone. The cash allowances payable to
the executive Directors for the year ended 31 March 2012 are set out in the table on page 80.
Other senior Group executives participate in a defined contribution pension scheme.
Non-executive Directors’ Remuneration
The remuneration of the Chairman is determined by the Remuneration Committee for approval by the Board. 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 for approval by
the Board.
The fees paid to non-executive Directors reflect their experience and ability and the time demands of their Board and Board
committee duties. The fees are reviewed annually, taking account of any changes in responsibilities and benchmarking advice
from external remuneration consultants on the level of fees in a range of comparable Irish and UK 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 since 1 April 2009 with the exception of the fee for
the Chairman of the Remuneration Committee which increased from €5,000 to €7,500 with effect from 1 January 2012.
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The Chairman, Michael Buckley, received a total fee of €190,000 for the year ended 31 March 2012, inclusive of the basic fee
and committee fees. This fee is unchanged since 1 April 2010, when it was reduced from the previous level of €225,000.
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. This fee is unchanged since 1 April 2009.
Non-executives Directors do not participate in the Company’s long term incentive schemes and do not receive any pension
benefits from the Company. An office is provided for the use of the Chairman.
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.
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
2012
2011
€’000
€’000
Bonus
Benefits2
expense3
total
2012
€’000
2011
€’000
2012
€’000
2011
€’000
2012
€’000
2011
€’000
2012
€’000
2011
€’000
Retirement Benefits
Executive Directors
Tommy Breen
Donal Murphy
Fergal O’Dwyer
700
400
400
700
374
374
245
75
90
434
126
227
58
39
39
55
36
37
334
130
190
221
115
115
1,337
644
719
1,410
651
753
Total for executive Directors
1,500
1,448
410
787
136
128
654
451
2,700
2,814
Non-executive Directors
Michael Buckley
Róisín Brennan
David Byrne
Maurice Keane4
Kevin Melia
John Moloney
Bernard Somers
Leslie Van de Walle5
190
68
103
-
68
68
80
74
190
65
103
73
68
68
80
26
Total for non-executive Directors
651
673
Ex gratia pension to dependant of retired Director
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
190
68
103
-
68
68
80
74
651
10
190
65
103
73
68
68
80
26
673
10
3,361
3,497
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 and life/disability cover.
3. The Irish Finance Act 2006 established a cap on pension assets by introducing a penalty tax charge on pension assets in excess of
the higher of €5 million or the value of individual accrued pension entitlements as at 7 December 2005. The Irish Finance Act 2011
reduced these thresholds to the higher of €2.3 million or the value of individual accrued pension entitlements as at 7 December
2010. As a result of this change the Remuneration Committee decided that the executive Directors and the other senior Group
executives, who are members of the defined benefit scheme, would have the option of continuing to accrue pension benefits as
previously or to cap their benefits in line with the Irish Finance Act 2011 limits. The executive Directors and the other senior Group
executives elected to cap their benefits and receive a taxable non-pensionable cash allowance in lieu of pension benefits foregone.
All cash allowances have been calculated based on independent actuarial advice approved by the Remuneration Committee as
the equivalent of the cost to the Group of the pension benefits foregone. Retirement Benefits Expense comprises an amount of
€334,000 for Tommy Breen, being a cash allowance of €468,000 less the value of a reversal of previously funded benefits; an amount
of €130,300 for Donal Murphy, being a cash allowance of €85,000 and an accrual of benefits of €45,300; and a cash allowance of
€190,000 for Fergal O’Dwyer.
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.
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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 2012 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
(10)
18
-
8
(134)
120
-
(14)
338
115
162
615
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 Statement of Practice ASP PEN-2. 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 2012.
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:
At 31
March 2011
Number of options
Granted
in year
At 31
March 2012
executive Directors
Tommy Breen
Donal Murphy
Fergal O’Dwyer
company secretary
Gerard Whyte
53,743
39,529
-
93,272
21,113
18,894
-
40,007
23,353
18,894
-
42,247
11,756
8,647
-
20,403
-
-
48,000
48,000
-
-
22,857
22,857
-
-
22,857
22,857
-
-
10,500
10,500
53,743
39,529
48,000
141,272
21,113
18,894
22,857
62,864
23,353
18,894
22,857
65,104
11,756
8,647
10,500
30,903
performance period
earliest exercise date Market price
on award
€
20 August 2012
1 April 2009 – 31 March 2012
1 April 2010 – 31 March 2013 15 November 2013
1 April 2011 – 31 March 2014 15 November 2014
1 April 2009 – 31 March 2012
20 August 2012
1 April 2010 – 31 March 2013 15 November 2013
1 April 2011 – 31 March 2014 15 November 2014
1 April 2009 – 31 March 2012
20 August 2012
1 April 2010 – 31 March 2013 15 November 2013
1 April 2011 – 31 March 2014 15 November 2014
15.63
21.25
17.50
15.63
21.25
17.50
15.63
21.25
17.50
1 April 2009 – 31 March 2012
20 August 2012
1 April 2010 – 31 March 2013 15 November 2013
1 April 2011 – 31 March 2014 15 November 2014
15.63
21.25
17.50
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Dcc plc 1998 employee share option scheme
Details as at 31 March 2012 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
2011
exercised
in year
Lapsed
in year
At
31 March
2012
Weighted
average
option price
at 31 March
2012
€
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
(50,000)
-
-
(50,000)
120,000
45,000
17.73
10.38
Nov 2005 – May 2018
Nov 2007 – Nov 2012
10.25
-
17.63
-
60,000
30,000
(10,000)
-
-
(10,000)
50,000
20,000
17.44
10.38
Nov 2005 – May 2018
Nov 2007 – Nov 2012
10.25
-
17.63
-
117,500
70,000
(30,000)
-
-
(30,000)
87,500
40,000
17.13
10.38
Nov 2005 – May 2018
Nov 2007 – Nov 2012
10.25
-
17.63
-
60,000
30,000
(10,000)
-
(10,000)
50,000
20,000
17.19
10.38
Nov 2005 – May 2018
Nov 2007 – Nov 2012
10.25
-
17.63
-
The market price of DCC shares on 30 March 2012 was €18.56 and the range during the year was €16.70 to €23.07.
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 115.
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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 2012 (together with their interests at 31 March 2011) are set out below:
Directors
Michael Buckley
Tommy Breen
Róisín Brennan
David Byrne
Kevin Melia
John Moloney
Donal Murphy
Fergal O’Dwyer
Bernard Somers
Leslie Van de Walle
company secretary
Gerard Whyte
No. of ordinary shares No. of ordinary shares
At 31 March 2011
At 31 March 2012
10,000
290,000
-
1,200
1,250
2,000
84,313
260,889
1,000
670
10,000
279,395
-
-
1,250
2,000
82,313
254,889
1,000
-
144,400
142,200
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 2012.
The Company’s Register of Directors Interests (which is open to inspection) contains full details of Directors’ shareholdings and
share options.
The information commencing with the Executive and Non-Executive Directors’ Remuneration Details table on page 80
and continuing to page 83 forms an integral part of the audited financial statements and is covered by the Report of the
Independent Auditors.
Leslie Van de Walle
Chairman, Remuneration Committee
14 May 2012
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stAteMeNt of DiRectoRs’ RespoNsiBiLities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws
and regulations.
Irish company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors
have prepared the Group and Company financial statements in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union. The financial statements are required by law to give a true and fair view of the state
of affairs of the Company and the Group and of the profit or loss of the Group.
In preparing these financial statements the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make 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 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.
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 56 and 57, 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.
On behalf of the Board
Michael Buckley
Non-executive Chairman
tommy Breen
Chief Executive
85
oVeRVieW
BUsiNess peRfoRMANce
GoVeRNANce
fiNANciAL stAteMeNts
iNfoRMAtioN
RepoRt of the iNDepeNDeNt AUDitoRs
for the year ended 31 March 2012
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 2012 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.
Respective Responsibilities of Directors and Auditors
The Directors’ responsibilities for preparing the Annual Report and the financial statements, in accordance with applicable Irish
law and International Financial Reporting Standards (IFRSs) as adopted by the European Union, are set out in the Statement of
Directors’ Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland). This report, including the opinion, has been prepared for and only for the
Company’s members as a body in accordance with Section 193 of the Companies Act, 1990 and for no other purpose. We do
not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the Group financial statements give a true and fair view, in accordance with IFRSs
as adopted by the European Union. We report to you our opinion as to whether the Company financial statements give a true
and fair view, in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of
the Companies Acts 1963 to 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, as regards the Group financial statements,
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:
• 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.
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 UK Corporate Governance Code and the two provisions of the
Irish Corporate Governance Annex 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 Financial Highlights, Group at a Glance, Business Model and Strategy,
Chairman’s Statement, Chief Executive’s Review, Group KPIs, Energy Review, SerCom Review, Healthcare Review, Environmental
Review, Food & Beverage 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 all other information listed on the contents page. 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.
86
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
RepoRt of the iNDepeNDeNt AUDitoRs
for the year ended 31 March 2012 (continued)
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 IFRSs as adopted by the European Union, of the
state of the Group’s affairs as at 31 March 2012 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 IFRSs 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 2012 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, as regards
the Group financial statements, Article 4 of the IAS Regulation.
We have obtained all the information and explanations which we consider necessary for the purposes of our audit. In our opinion
proper books of account have been kept by the Company. The Company balance sheet is in agreement with the books of account.
In our opinion the information given in the 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 2012 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.
paul hennessy
for and on behalf of PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
Dublin, Ireland
14 May 2012
GRoUp iNcoMe stAteMeNt
for the year ended 31 March 2012
87
oVeRVieW
BUsiNess peRfoRMANce
GoVeRNANce
fiNANciAL stAteMeNts
iNfoRMAtioN
2012
2011
exceptionals
€’000
pre exceptionals
(note 11)
€’000
Note
total
€’000
exceptionals
€’000
Pre 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 after tax
profit before tax
Income tax expense
4 10,690,341
(9,934,168)
756,173
(266,950)
(317,281)
16,583
(3,499)
5
5
- 10,690,341 8,680,573
- (9,934,168) (7,925,798)
-
-
-
17,676
(40,033)
756,173
(266,950)
(317,281)
34,259
(43,532)
754,775
(257,899)
(289,748)
25,423
(2,931)
4
4
12
12
14
15
185,026
(11,379)
173,647
(50,447)
32,578
(40)
155,738
(27,703)
(22,357)
-
(22,357)
-
670
(1,068)
(22,755)
(2,234)
162,669
(11,379)
151,290
(50,447)
33,248
(1,108)
132,983
(29,937)
229,620
(10,962)
218,658
(50,517)
35,939
(239)
203,841
(42,417)
- 8,680,573
(7,925,798)
-
-
-
-
7,177
(19,827)
(12,650)
-
(12,650)
(1,623)
-
-
(14,273)
(1,354)
754,775
(257,899)
(289,748)
32,600
(22,758)
216,970
(10,962)
206,008
(52,140)
35,939
(239)
189,568
(43,771)
Profit after tax for the financial year
128,035
(24,989)
103,046
161,424
(15,627)
145,797
profit attributable to:
Owners of the Parent
Non-controlling interests
earnings per ordinary share
Basic
Diluted
18
18
Michael Buckley, tommy Breen, Directors
102,428
618
103,046
122.78c
122.46c
145,109
688
145,797
174.48c
173.90c
88
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
GRoUp stAteMeNt of coMpReheNsiVe iNcoMe
for the year ended 31 March 2012
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
2012
€’000
2011
€’000
103,046
145,797
46,711
4,636
(8,791)
1,178
189
11
39,298
(2,590)
336
1,623
(341)
3,664
142,344
149,461
141,726
618
142,344
148,773
688
149,461
GRoUp BALANce sheet
As at 31 March 2012
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
Assets classified as held for sale
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
Post employment 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
Liabilities associated with assets classified as held for sale
total liabilities
total equity and liabilities
Michael Buckley, tommy Breen, Directors
89
oVeRVieW
BUsiNess peRfoRMANce
GoVeRNANce
fiNANciAL stAteMeNts
iNfoRMAtioN
Note
2012
€’000
2011
€’000
20
21
22
32
29
451,097
785,205
1,173
6,397
134,531
395,485
636,114
2,281
9,328
84,376
1,378,403 1,127,584
338,170
4,294
630,023
24
248,129
25 1,291,698 1,034,275
3,562
29
700,340
28
2,264,185 1,986,306
-
2,406,799 1,986,306
3,785,202 3,113,890
142,614
19
37
38
39
39
39
39
40
22,057
124,687
11,086
1,187
(78,425)
1,400
929,331
1,011,323
2,656
1,013,979
41
22,057
124,687
10,537
987
(125,136)
1,400
895,108
929,640
2,234
931,874
30
29
32
33
35
34
36
848,365
17,493
32,011
14,745
15,438
85,271
2,458
1,015,781
762,244
30,142
25,434
19,335
14,256
65,188
2,864
919,463
30
29
35
34
38,813
70,999
1,020
9,966
13,428
26 1,533,882 1,149,786
59,427
40,542
533
3,109
9,156
1,668,108 1,262,553
-
1,755,442 1,262,553
2,771,223 2,182,016
3,785,202 3,113,890
87,334
19
90
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
GRoUp stAteMeNt of chANGes iN eQUitY
for the year ended 31 March 2012
Attributable to owners of the parent
share
capital
€’000
share
premium
€’000
Retained
earnings
€’000
other
reserves
(note 39)
€’000
Non-
controlling
interests
€’000
total
€’000
total
equity
€’000
At 1 April 2011
22,057
124,687
895,108
(112,212)
929,640
2,234
931,874
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
Re-issue of treasury shares
Share based payment
Dividends
Other movements in non-controlling interests
At 31 March 2012
22,057
-
-
-
-
-
-
-
-
-
-
-
-
102,428
-
102,428
618
103,046
-
-
-
-
-
-
-
-
-
-
-
46,711
46,711
(8,791)
1,178
-
-
-
-
189
11
(8,791)
1,178
189
11
-
-
-
-
-
46,711
(8,791)
1,178
189
11
94,815
46,911
141,726
618
142,344
2,372
-
(62,964)
-
-
549
-
-
2,372
549
(62,964)
-
-
-
-
(196)
2,372
549
(62,964)
(196)
124,687
929,331
(64,752) 1,011,323
2,656 1,013,979
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 39)
€’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
Re-issue of treasury shares
Share based payment
Dividends
Other movements in non-controlling interests
-
-
-
-
-
-
-
-
-
-
-
-
145,109
-
145,109
688
145,797
-
-
-
-
-
-
-
-
-
-
-
4,636
4,636
(2,590)
336
-
-
-
1,623
(2,590)
336
1,623
-
(341)
(341)
-
-
-
-
-
4,636
(2,590)
336
1,623
(341)
142,855
5,918
148,773
688
149,461
3,835
-
(58,034)
-
-
1,389
-
-
3,835
1,389
(58,034)
-
-
-
-
(1,703)
3,835
1,389
(58,034)
(1,703)
At 31 March 2011
22,057
124,687
895,108
(112,212)
929,640
2,234
931,874
Michael Buckley, tommy Breen, Directors
GRoUp cAsh fLoW stAteMeNt
for the year ended 31 March 2012
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
Disposal of subsidiaries
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 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
Cash and short term bank deposits attributable to asset held for sale
Michael Buckley, tommy Breen, Directors
91
oVeRVieW
BUsiNess peRfoRMANce
GoVeRNANce
fiNANciAL stAteMeNts
iNfoRMAtioN
Note
42
2012
€’000
2011
€’000
277,322
(2,774)
(43,056)
(49,829)
181,663
269,572
(8,935)
(43,276)
(56,343)
161,018
4,614
13
(1,285)
27,155
30,497
5,586
626
28,431
30,809
65,452
(70,229)
(160,076)
(8,063)
(238,368)
(207,871)
(83,381)
(74,614)
(3,709)
(161,704)
(96,252)
2,372
-
2,372
(6,091)
(397)
(62,964)
(196)
(69,648)
(67,276)
3,835
658
4,493
(21,157)
(1,234)
(58,034)
(219)
(80,644)
(76,151)
(93,484)
27,435
666,128
600,079
(11,385)
2,552
674,961
666,128
630,023
(70,758)
40,814
600,079
700,340
(34,212)
-
666,128
36
46
17
41
31
28
31
19
31
92
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
coMpANY stAteMeNt of coMpReheNsiVe iNcoMe
for the year ended 31 March 2012
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 2012
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
2012
€’000
40,444
40,444
2011
€’000
10,284
10,284
40,444
10,284
Note
2012
€’000
2011
€’000
22
23
25
28
37
38
39
40
26
250
168,065
168,315
409,656
867
410,523
578,838
1,244
168,065
169,309
414,314
30
414,344
583,653
22,057
124,687
344
89,580
236,668
22,057
124,687
344
109,728
256,816
43,694
43,694
10,387
10,387
298,476
298,476
342,170
578,838
316,450
316,450
326,837
583,653
93
oVeRVieW
BUsiNess peRfoRMANce
GoVeRNANce
fiNANciAL stAteMeNts
iNfoRMAtioN
coMpANY stAteMeNt of chANGes iN eQUitY
for the year ended 31 March 2012
for the year ended 31 March 2012
share
capital
€’000
share
premium
€’000
Retained
earnings
€’000
other
reserves
(note 39)
€’000
total
equity
€’000
At 1 April 2011
22,057
124,687
109,728
344
256,816
Profit for the financial year
total comprehensive income
Re-issue of treasury shares
Dividends
At 31 March 2012
For the year ended 31 March 2011
At 1 April 2010
Profit for the financial year
Total comprehensive income
Re-issue of treasury shares
Dividends
At 31 March 2011
Michael Buckley, tommy Breen, Directors
-
-
-
-
-
-
-
-
40,444
40,444
2,372
(62,964)
-
-
-
-
40,444
40,444
2,372
(62,964)
22,057
124,687
89,580
344
236,668
Share
capital
€’000
Share
premium
€’000
Retained
earnings
€’000
Other
reserves
(note 39)
€’000
Total
equity
€’000
22,057
124,687
153,643
344
300,731
-
-
-
-
-
-
-
-
10,284
10,284
3,835
(58,034)
-
-
-
-
10,284
10,284
3,835
(58,034)
22,057
124,687
109,728
344
256,816
94
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
coMpANY cAsh fLoW stAteMeNt
for the year ended 31 March 2012
cash generated from operations
Interest paid
Net cash flows from operating activities
investing activities
Inflows
Interest received
Dividend received from subsidiary
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
42
2012
€’000
2011
€’000
19,977
(2,417)
17,560
34,756
(1,052)
33,704
13,869
30,000
43,869
14,293
-
14,293
2,372
2,372
3,835
3,835
17
(62,964)
(62,964)
(60,592)
(58,034)
(58,034)
(54,199)
837
30
867
(6,202)
6,232
30
95
oVeRVieW
BUsiNess peRfoRMANce
GoVeRNANce
fiNANciAL stAteMeNts
iNfoRMAtioN
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.
IFRS as adopted by the EU differ in certain respects from IFRS as issued by the IASB. Both the Parent Company and the Group
financial statements have been prepared in accordance with IFRS as adopted by the EU and references to IFRS hereafter
should be construed as references to 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.
The Going Concern Statement on page 73 forms part of the Group financial statements.
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-based payments, post employment benefit
obligations and certain financial assets and liabilities including 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 2012 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 IFRSs 2010. These 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.
• Amendment to IFRIC 14 Prepayments of a Minimum Funding Requirement. This amendment corrected an unintended
consequence of IFRIC 14. Without the amendment entities were not permitted to recognise as an asset some voluntary
prepayments for minimum funding contributions. This was not intended when IFRIC 14 was issued and the amendment
corrects this. This amendment did not have a significant impact on the Group’s financial statements.
• IFRIC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments. 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 did not have an effect on the Group’s financial statements.
• Amendment to IAS 24 Revised Related Party Disclosures. This amendment simplifies the definition of related parties and
provides a partial exemption from the disclosure requirements for government-related entities. This amendment did not have
a significant impact on the Group’s financial statements.
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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:
• Amendment to IFRS 7 Disclosures - Transfer of financial assets (effective date: DCC financial year beginning 1 April 2012). The
amendment addresses disclosures required to help users of financial statements evaluate the risk exposures relating to the
transfer of financial assets and the effect of those risks on an entity’s financial position. This amendment will not have a significant
impact on the Group’s financial statements.
• Amendment to IAS 12 Recovery of underlying assets (effective date: DCC financial year beginning 1 April 2012). The amendment
provides a practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured
using the fair value model in IAS 40 Investment Property. The amendment is subject to EU endorsement. This amendment will not
have a significant impact on the Group’s financial statements.
• Amendment to IAS 19 Employee benefits (effective date: DCC financial year beginning 1 April 2013). This amendment is still subject
to EU endorsement. The amendment makes significant changes to the recognition and measurement of defined benefit pension
expense and termination benefits, and significantly increases the volume of disclosures. This amendment will have an impact on
the Group’s financial statements due to changes in the measurement of the defined benefit expense, however management has not
yet determined the impact this will have on the Group’s financial statements.
• Amendment to IAS 1 Presentation of items of other comprehensive income (OCI) (effective date: DCC financial year beginning
1 April 2013). This amendment is still subject to EU endorsement. The amendment introduces a requirement for entities to group
items of OCI on the basis of whether they are potentially re-classifiable to profit or loss subsequently. This amendment will result in
some presentation changes but is not expected to have a significant impact on the Group’s financial statements.
• IFRS 10 Consolidated financial statements (effective date: DCC financial year beginning 1 April 2013). This standard is still subject
to EU endorsement. IFRS 10 replaces all of the guidance on control and consolidation in IAS 27 and SIC 12. IFRS 10 changes the
definition of control so that the same criteria are applied to all entities to determine control. The core principle that a consolidated
entity presents a parent and its subsidiaries as if they are a single entity remains unchanged, as do the mechanics of consolidation.
IAS 27 is renamed ‘Separate financial statements’ and is now a standard dealing solely with separate financial statements. This
standard is not expected to have a significant impact on the Group’s financial statements.
• IFRS 11 Joint arrangements (effective date: DCC financial year beginning 1 April 2013). This standard is still subject to EU
endorsement. IFRS 11 eliminates the existing accounting policy choice of proportionate consolidation for jointly controlled entities.
IFRS 11 makes equity accounting mandatory for participants in joint ventures. Changes in definitions also mean that the types
of joint arrangements have been reduced from three to two; joint operations and joint ventures. IFRS 11 also made a number of
consequential amendments to IAS 28 Investments in associates and joint ventures. This standard will impact the Group financial
statements as the Group currently has adopted an accounting policy of proportionate consolidation for jointly controlled entities. On
adoption of IFRS 11 the Group will be required to equity account for its interests in jointly controlled entities.
• IFRS 12 Disclosure of interests in other entities (effective date: DCC financial year beginning 1 April 2013). This standard is still
subject to EU endorsement. IFRS 12 sets out the required disclosures for entities reporting under IFRS 10 and IFRS 11. IFRS
12 requires entities to disclose information about the nature, risks and financial effects associated with the entity’s interests in
subsidiaries, associates, joint arrangements and unconsolidated structured entities. This standard will not have a significant impact
on the Group’s financial statements.
• IFRS 13 Fair value measurement (effective date: DCC financial year beginning 1 April 2013). This standard is still subject to EU
endorsement. IFRS 13 explains how to measure fair value and enhances fair value disclosures. This standard will not have a
significant impact on the Group’s financial statements.
• Amendment to IFRS 7 Disclosures - Offsetting financial assets and financial liabilities (effective date: DCC financial year beginning
1 April 2013). The amendment is still subject to EU endorsement. The amendment enhances current disclosures about offsetting
financial assets and financial liabilities. This amendment will not have a significant impact on the Group’s financial statements.
• IFRIC 20 Stripping costs in the production of a surface mine (effective date: DCC financial year beginning 1 April 2013). This IFRIC
is still subject to EU endorsement. IFRIC 20 sets out the accounting for overburden waste removal costs in the production phase
of a mine. The interpretation may require mining entities to write off existing stripping assets to opening retained earnings if the
assets cannot be attributed to an identifiable component of an ore body. This interpretation will have no impact on the Group’s
financial statements.
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• Amendment to IAS 32 Offsetting financial assets and financial liabilities (effective date: DCC financial year beginning 1 April
2014). The amendment is still subject to EU endorsement. The amendment clarifies some of the requirements for offsetting
financial assets and financial liabilities on the balance sheet. This amendment will not have a significant impact on the Group’s
financial statements.
• IFRS 9 Financial instruments (effective date: DCC financial year beginning 1 April 2015). This standard is still subject to EU
endorsement. IFRS 9 is the first step in the process to replace IAS 39 Financial instruments: recognition and measurement. IFRS
9 introduces new requirements for classifying and measuring financial assets and is likely to affect the group’s accounting for its
financial assets. IFRS 9 replaces the multiple classification models in IAS 39 with a single model that has only two classification
categories: amortised cost and fair value. Classification under IFRS 9 is driven by the entity’s business model for managing
financial assets and the contractual characteristics of the financial assets. IFRS 9 removes the requirement to separate embedded
derivatives from financial asset hosts. IFRS 9 removes the cost exemption for unquoted equities. The impact of the standard on the
Group’s financial statements has not yet been determined.
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.
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Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains arising from such transactions, are eliminated in preparing
the consolidated financial statements. Unrealised gains arising from transactions with joint ventures and associates are
eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same manner as
unrealised gains, but only to the extent that there is no evidence of impairment.
Revenue Recognition
Revenue comprises the 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.
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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%
5 - 331/3%
62/3%
10 - 331/3%
10 - 331/3%
Land is not depreciated. The residual values and useful lives of property, plant and equipment are reviewed, and adjusted if
appropriate, at each balance sheet date.
In accordance with IAS 36 Impairment of Assets, the carrying amounts of items of property, plant and equipment are reviewed
at each balance sheet date to determine whether there is any indication of impairment. An impairment loss is recognised
whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in the Income Statement. Following the recognition of an impairment loss, the depreciation
charge applicable to the asset or cash-generating unit is adjusted prospectively in order to systematically allocate the revised
carrying amount, net of any residual value, over the remaining useful life.
Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the replaced item can be
measured reliably. All other repair and maintenance costs are charged to the Income Statement during the financial period in
which they are incurred.
Borrowing costs directly attributable to the construction of property, plant and equipment are capitalised as part of the cost of
those assets.
Business combinations
Business combinations from 1 April 2010
Business combinations are accounted for using the acquisition method. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The
cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value.
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.
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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 Income Statement.
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.
Non-current Assets held for sale
Non-current assets and disposal groups are classified as assets held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale
is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be
committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of
classification. The assets held for sale are stated at the lower of their carrying amount and fair value less costs to sell.
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.
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.
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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.
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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, along with changes in the fair value of derivatives hedging borrowings, that are part of designated fair value
hedge relationships, 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 29 and the movements on the hedging reserve in
shareholders’ equity are shown in note 39. 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.
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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.
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.
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1. summary of significant Accounting policies (continued)
environmental provisions
The Group’s waste management and recycling activities are subject to various laws and regulations governing the protection
of the environment. Full provision is made for the net present value of the Group’s estimated costs in relation to restoration
liabilities at its landfill sites. The net present value of the estimated costs is capitalised as property, plant and equipment and
the unwinding of the discount element on the restoration provision is reflected in the Income Statement.
finance costs
Finance costs comprise interest payable on borrowings calculated using the effective interest rate method, gains and losses on
hedging instruments that are recognised in the Income Statement and the unwinding of discounts on provisions. The interest
expense component of finance lease payments is recognised in the Income Statement using the effective interest rate method.
The finance cost on defined benefit pension scheme liabilities is recognised in the Income Statement in accordance with IAS 19.
finance income
Interest income is recognised in the Income Statement as it accrues, using the effective interest method. The expected return
on defined benefit pension scheme assets is recognised in the Income Statement in accordance with IAS 19.
income tax
Current tax
Current tax represents the expected tax payable or recoverable on the taxable profit for the year using tax rates enacted or
substantively enacted at the balance sheet date and taking into account any adjustments stemming from prior years.
Deferred tax
Deferred tax is provided using the liability method on all temporary differences at the balance sheet date which is defined
as the difference between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax assets and liabilities are not subject to discounting and are measured at the tax rates that 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.
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1. summary of significant Accounting policies (continued)
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.
Settlements and curtailments trigger immediate recognition of the consequent change in obligations and related assets or
liabilities 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 and a binomial model for the DCC plc 1998 Employee Share Option Scheme.
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 contains 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.
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Notes to the fiNANciAL stAteMeNts
(continued)
2. financial Risk Management
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.
Non-controlling interests
Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly or indirectly to the
Parent Company and are presented separately in the Group Income Statement and within equity in the Group Balance Sheet,
distinguished from shareholders’ equity attributable to owners of the Parent. Acquisitions of non-controlling interests are
accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as
a result of such transactions. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the
acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.
financial Risk factors
The Group uses derivative financial instruments (principally interest rate, currency and cross currency interest rate swaps
and forward foreign exchange and commodity contracts) to hedge certain risk exposures, as detailed below, arising from
operational, financing and investment activities. The Group does not trade in financial instruments nor does it enter into any
leveraged derivative transactions.
Financial risk management within the Group is governed by policies and guidelines reviewed and approved annually by the
Board of Directors. These policies and guidelines primarily cover foreign exchange risk, commodity price risk, credit risk,
liquidity risk and interest rate risk. Monitoring of compliance with the policies and guidelines is managed by the Group Risk
Management function.
The Group’s financial risks are detailed in note 47.
fair Value estimation
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.
The quoted market price used for financial assets held by the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined by using valuation techniques. The Group uses a variety of techniques and makes assumptions that are based on
market conditions existing at each balance sheet date.
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 47.
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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 95 to 105.
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 €723.4 million at 31 March 2012. 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 21.
post employment 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 €116.3 million at 31 March 2012. At
31 March 2012 the Group also has plan assets totalling €101.6 million, giving a net pension liability of €14.7 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 33.
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.
environmental provisions
The Group has provisions for environmental remediation costs at 31 March 2012 of €9.9 million as disclosed in note 35. The
main component of this provision relates to restoration liabilities at the Group’s landfill sites. Future remediation costs are
affected by a number of uncertainties, the most significant of which is the estimation of the ongoing costs of treating the
by-products of bio-degrading waste. Management believes that the total provision is adequate based on currently available
information. However, given the inherent difficulties in estimating liabilities in this area, it cannot be guaranteed that additional
costs will not be incurred in excess of the amounts accrued. The effect of the resolution of environmental matters on the
results of the Group cannot be predicted due to the uncertainty concerning both the amount and the timing of future costs.
Such changes that arise could impact the provisions recognised in the Balance Sheet in future periods.
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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
operating segments: DCC Energy, DCC SerCom, DCC Healthcare, DCC Environmental and DCC Food & Beverage.
Dcc energy markets and sells oil products for transport, commercial/industrial, marine, aviation and home heating 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 is a distributor of IT, communications and home entertainment products in Britain, Ireland and France primarily
to retail and business customers. DCC SerCom also includes a supply chain management business.
Dcc healthcare provides sales, marketing, distribution and other services to medical device and pharma companies in
the Irish and British hospital and homecare markets. DCC Healthcare also provides outsourced product development,
manufacturing, packing and other services to health and beauty brand owners 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 is also a provider of frozen food distribution 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. 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.
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4. segment information (continued)
The segment results for the year ended 31 March 2012 are as follows:
income statement items
Year ended 31 March 2012
Dcc
energy
€’000
Dcc
sercom
€’000
Dcc
Dcc food
healthcare environmental & Beverage
€’000
€’000
€’000
Dcc
total
€’000
segment revenue
7,822,971 2,181,212
330,022
132,702
223,434 10,690,341
operating profit*
Amortisation of intangible assets
Net operating exceptionals (note 11)
83,493
(5,835)
(14,960)
53,235
(2,348)
(11,083)
23,428
(1,090)
12,311
14,211
(1,206)
(252)
10,659
(900)
(8,373)
185,026
(11,379)
(22,357)
operating profit
Finance costs
Finance income
Share of associates’ loss after tax
Profit before income tax
Income tax expense
Profit for the year
62,698
39,804
34,649
12,753
1,386
151,290
(50,447)
33,248
(1,108)
132,983
(29,937)
103,046
DCC Food
& Beverage
€’000
Total
€’000
Year ended 31 March 2011
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
DCC
Healthcare Environmental
€’000
€’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)
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)
Operating profit
Finance costs
Finance income
Share of associates’ loss after tax
Profit before income tax
Income tax expense
Profit for the year
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
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Notes to the fiNANciAL stAteMeNts
(continued)
4. segment information (continued)
Balance sheet items
As at 31 March 2012
Dcc
energy
€’000
Dcc
sercom
€’000
Dcc
Dcc food
healthcare environmental & Beverage
€’000
€’000
€’000
Dcc
total
€’000
segment assets
1,666,993
656,212
233,358
197,999
111,608 2,866,170
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
Assets classified as held for sale
total assets as reported in the Group Balance sheet
1,173
138,825
6,397
630,023
142,614
3,785,202
segment liabilities
1,088,048
326,338
74,249
34,652
50,677 1,573,964
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)
Liabilities associated with assets classified as held for sale
total liabilities as reported in the Group Balance sheet
DCC
Energy
€’000
DCC
SerCom
€’000
919,364
18,513
70,824
98,699
2,525
87,334
2,771,223
DCC Food
& Beverage
€’000
Total
€’000
As at 31 March 2011
DCC
DCC
Healthcare Environmental
€’000
€’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
802,786
30,675
84,861
74,344
2,991
2,182,016
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4. segment information (continued)
other segment information
Year ended 31 March 2012
Dcc
energy
€’000
Dcc
sercom
€’000
Dcc
Dcc food
healthcare environmental & Beverage
€’000
€’000
€’000
Dcc
total
€’000
Capital expenditure
48,163
3,086
8,840
11,741
3,295
75,125
Depreciation
32,585
5,815
4,213
9,289
3,533
55,435
Intangible assets acquired
125,670
6,800
16,771
28,512
41
177,794
Impairment of goodwill
-
5,500
-
-
5,869
11,369
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
44,645
20,389
4,910
11,556
2,523
84,023
Depreciation
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
-
-
-
-
-
-
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Notes to the fiNANciAL stAteMeNts
(continued)
4. segment information (continued)
Geographical analysis
The Group has a presence in 15 countries worldwide. The following represents a geographical analysis of the segment
information presented above in accordance with IFRS 8, which requires disclosure of information about the country of domicile
(Republic of Ireland) and countries with material revenue and non-current assets.
Republic of ireland
2012
2011
€’000
€’000
UK
2012
€’000
2011
€’000
Rest of the World
2012
€’000
2011
€’000
total
2012
€’000
2011
€’000
Year ended 31 March
income statement items
Revenue
957,831
919,966 7,883,888 6,388,742 1,848,622 1,371,865 10,690,341 8,680,573
Operating profit*
Amortisation of intangible assets
Net operating exceptionals
Segment result
26,526
(1,571)
(13,102)
11,853
34,236
(470)
(3,076)
30,690
125,349
(7,689)
(29)
117,631
164,541
(8,773)
(8,582)
147,186
33,151
(2,119)
(9,226)
21,806
30,843
(1,719)
(992)
185,026
(11,379)
(22,357)
229,620
(10,962)
(12,650)
28,132
151,290
206,008
Balance sheet items
Segment assets
409,698
393,223 2,093,840 1,600,302
362,632
320,478 2,866,170 2,314,003
Segment liabilities
184,489
177,859 1,140,857
778,365
248,618
230,135 1,573,964 1,186,359
other segment information
Non-current assets**
230,596
247,947
917,913
705,853
88,966
80,080 1,237,475 1,033,880
Capital expenditure
9,999
9,641
61,197
70,672
3,929
3,710
75,125
84,023
Depreciation
12,892
14,091
39,669
36,391
2,874
2,424
55,435
52,906
Intangible assets acquired
3,654
5,848
133,017
45,739
41,123
10,271
177,794
61,858
Impairment of goodwill
5,869
-
-
-
5,500
-
11,369
-
* Operating profit before amortisation of intangible assets and net operating exceptionals
** Non-current assets comprise intangible assets, property, plant and equipment and investments in associates
Revenue and operating profit are derived almost entirely from the sale of goods and are disclosed based on the location of
the entity producing the goods. There are no material dependencies or concentrations on individual customers which would
warrant disclosure under IFRS 8. The Balance Sheet and other segment information presented above are disclosed based on
the location of the assets.
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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 operating income included in net exceptional items
Total 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
Other operating expenses included in net exceptional items
Total other operating expenses
2012
€’000
2011
€’000
40
995
6,648
53
3,483
5,364
16,583
17,676
34,259
-
206
6,612
7,139
3,675
7,791
25,423
7,177
32,600
(549)
(857)
(2,093)
(3,499)
(40,033)
(43,532)
(1,389)
(742)
(800)
(2,931)
(19,827)
(22,758)
6. Group operating profit
Group operating profit has been arrived at after charging/(crediting) the following amounts (including the Group’s share of joint
ventures accounted for on the basis of proportionate consolidation):
Provision for impairment of trade receivables (note 47)
Directors’ fees and salaries
Foreign exchange loss
Amortisation of government grants (note 36)
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
Tax compliance and advisory services
Other non-audit services
2012
€’000
1,830
2,151
268
(604)
14,749
788
11,559
27,096
1,454
623
102
2,179
2011
€’000
5,317
2,121
106
(730)
13,247
873
11,390
25,510
1,378
1,118
58
2,554
Auditor statutory disclosure
The audit fee for the Parent Company is €16,000 (2011: €20,000). This amount is paid to PricewaterhouseCoopers, Ireland, the
statutory auditor.
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Notes to the fiNANciAL stAteMeNts
(continued)
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 74 to 83.
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
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 increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Reconciliation of cash and cash equivalents to net cash
Cash and cash equivalents as above
Net cash at 31 March
2012
€’000
2011
€’000
19,550
(12,339)
7,211
(5,789)
-
1,422
8
1,430
(195)
1,235
2012
€’000
7,096
3,890
10,986
6,592
15
4,379
4,394
10,986
2012
€’000
1,165
(1,031)
134
1,603
1,737
15,119
(9,311)
5,808
(4,693)
159
1,274
(1)
1,273
(179)
1,094
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
1,737
1,737
1,603
1,603
The Group’s share of its joint ventures’ capital commitments for property, plant and equipment at 31 March 2012 is €0.584
million (2011: €0.371 million).
Details of the Group’s principal joint ventures are shown in the Group directory on pages 158 to 162.
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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 33)
2012
Number
2011
Number
3,687
1,735
1,137
893
903
8,355
2012
€’000
3,513
1,554
1,131
759
968
7,925
2011
€’000
298,705
36,581
549
7,773
1,477
345,085
284,042
32,132
1,389
6,884
2,383
326,830
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 €0.549 million (2011: €1.389 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 and a binomial model,
which is a lattice option-pricing model, for options issued under the DCC plc 1998 Employee Share Option Scheme.
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.
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Notes to the fiNANciAL stAteMeNts
(continued)
10. employee share options (continued)
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
15 November 2011
Dcc sharesave scheme 2001
10 December 2004
Grant
price
€
Minimum
duration of
Number of
share awards/
vesting period options granted
Weighted
average
fair value
€
expense in
income statement
2011
€’000
2012
€’000
15.63
21.25
17.50
3 years
3 years
3 years
255,406
212,525
252,697
8.97
12.00
9.17
746
850
257
1,853
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
22 December 2003
18 May 2004
9 November 2004
23 June 2006
23 July 2007
20 December 2007
20 May 2008
10.38
10.70
12.75
15.65
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
132,500
162,500
219,500
223,500
323,000
25,000
315,500
Total expense
share options and awards
2.81
2.76
3.42
4.15
4.54
6.35
5.22
4.32
(748)
(192)
(212)
(220)
-
-
-
68
(1,304)
549
(6)
-
(7)
-
(9)
126
33
388
525
1,389
Dcc plc Long term incentive plan 2009
At 31 March 2012, under the DCC plc Long Term Incentive Plan 2009, Group employees hold options to subscribe for 714,755
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 74 to 83.
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
2012
Number of
2011
Number of
share awards share awards
462,058
252,697
-
714,755
251,887
212,525
(2,354)
462,058
The share awards outstanding at the year end have a weighted average remaining contractual life of 5.6 years (2011: 6.0 years).
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10. employee share options (continued)
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 2012
Granted during the year ended 31 March 2011
Granted during the year ended 31 March 2010
€
9.17
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
2012
1.88
2.50
30.0
5.0
2011
1.91
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
20 August 2009
15 November 2010
15 November 2011
Total outstanding at 31 March
Date of expiry
20 August 2016
15 November 2017
15 November 2018
2012
Number of
2011
Number of
share awards share awards
249,533
212,525
252,697
714,755
249,533
212,525
-
462,058
Analysis of closing balance - exercisable at end of year
As at 31 March 2012, 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 2012, under the DCC plc 1998 Employee Share Option Scheme, Group employees hold basic tier options to
subscribe for 1,024,500 ordinary shares and second tier options to subscribe for 418,500 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 74 to 83.
The DCC plc 1998 Employee Share Option Scheme contains 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. 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 vesting conditions for second tier share options granted
between 12 November 2002 and 9 November 2004 are highly unlikely to be achieved and, on that basis, amounts previously
charged to the Income Statement in relation to these share options have been reversed in the current year.
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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
2012
2011
Average
exercise
price in €
per share
Average
exercise
price in €
per share
options
Options
14.42 1,896,000
(210,500)
11.27
(242,500)
10.70
15.51 1,443,000
14.14 2,213,000
(279,000)
12.21
(38,000)
14.01
14.42 1,896,000
Total exercisable at 31 March
17.29 1,024,500
16.44
953,500
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 €18.61 (2011: €20.15). The share options outstanding at the year end have a weighted
average remaining contractual life of 3.4 years (2011: 3.8 years).
Analysis of closing balance - outstanding at end of year
2012
2011
Date of grant
Date of expiry
exercise
price in €
per share
Exercise
price in €
per share
options
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
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
Total outstanding at 31 March
Analysis of closing balance - exercisable at end of year
Date of grant
Date of expiry
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 exercisable at 31 March
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
10.25
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
-
332,000
84,000
119,500
120,500
120,000
162,000
226,000
12,500
266,500
1,443,000
Options
395,500
339,500
84,000
119,500
140,500
122,500
162,000
226,000
25,000
281,500
10.25
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
1,896,000
2012
2011
exercise
price in €
per share
Exercise
price in €
per share
options
10.25
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
-
70,500
16,500
60,000
90,500
120,000
162,000
226,000
12,500
266,500
1,024,500
10.25
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
Options
173,000
78,000
16,500
60,000
90,500
122,500
162,000
226,000
25,000
-
953,500
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2012
€’000
14,089
(1,770)
-
3,587
(2,000)
(6,568)
(18,326)
(11,369)
(22,357)
670
(1,068)
(22,755)
2011
€’000
-
894
(3,145)
4,976
(6,074)
(3,566)
(5,735)
-
(12,650)
(1,623)
-
(14,273)
(2,234)
(24,989)
(1,354)
(15,627)
11. exceptionals
Gain arising from Taiwanese legal claim
Net (loss)/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
Operating exceptional items
Mark to market gains/(losses) (included in interest)
Impairment of associate company investment
Net exceptional items before taxation
Exceptional taxation charge
Net exceptional items after taxation
In January 2004 the London High Court awarded Stg£10.2 million in damages and interim costs of Stg£2.0 million (in both
cases together with interest) to DCC’s British based mobility and rehabilitation subsidiary for breach of an exclusive supply
agreement by a Taiwanese supplier. Further amounts in respect of costs of Stg£2.9 million were subsequently determined by
the London High Court to be payable. In order to enforce the London High Court judgements, it has been necessary to pursue
the collection of all outstanding amounts through the Taiwanese courts. In March 2012, DCC received the initial Stg£12.2
million referred to above. The recovery of accumulated interest on this amount and the additional costs referred to above
continue to be pursued through the Taiwanese courts. DCC has not accrued the amount of the outstanding claim and will
account for it as an exceptional credit when it is virtually certain that the amount will be received.
Restructuring of certain of the Group’s pension arrangements during the year gave rise to an exceptional gain of €3.587 million.
The Group incurred an exceptional charge of €18.326 million in relation to restructuring costs and the cost of integrating
recently acquired businesses.
There was a non-cash charge of €14.437 million relating to the impairment of both subsidiary goodwill and an associate
company investment and the write-down of certain property assets. Included in this charge is an impairment charge in relation
to the carrying value of Allied Foods, a subsidiary of DCC Food & Beverage, following the loss of a major distribution contract
during the year. In addition, on 3 April 2012 the Group announced that it had agreed to dispose of Altimate Group SA, DCC
SerCom’s Enterprise distribution business, which is expected to give rise to a loss of approximately €8.0 million, primarily
resulting from the non-recovery of a portion of the goodwill arising since the acquisition of Altimate in 2000.
IFRS 3 (revised) requires that the professional fees and tax costs (such as stamp duty) relating to the evaluation and completion
of an acquisition are expensed in the Income Statement and these costs amounted to €6.568 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 2012 this amounted to a total exceptional gain of €0.670 million.
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Notes to the fiNANciAL stAteMeNts
(continued)
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
Facility fees
Other interest
Other finance costs:
Interest on defined benefit pension scheme liabilities (note 33)
Unwinding of discount applicable to deferred and contingent acquisition consideration (note 34)
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
Mark-to-market of swaps and related debt* (note 11)
Other income
Expected return on defined benefit pension scheme assets (note 33)
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
Mark-to-market of designated swaps and related debt
Currency movements on fixed rate debt not designated as hedged
Currency swaps not designated as hedges
Mark-to-market of undesignated swaps and related debt
Total mark-to-market of swaps and related debt
2012
€’000
2011
€’000
(22,252)
(1,106)
(19,576)
(41)
(86)
(739)
(949)
(44,749)
(5,632)
(66)
-
(50,447)
4,525
22,314
670
1,378
4,361
33,248
(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
(17,199)
(16,201)
4,714
48,738
(53,165)
287
(8,969)
9,352
383
(986)
(19,821)
19,097
(1,710)
7,636
(7,549)
87
670
(1,623)
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)
2012
€1=stg£
2011
€1=Stg£
0.834
0.868
0.884
0.852
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14. share of Associates’ Loss after tax
The Group’s share of associates’ loss after tax is equity-accounted and is presented as a single line item in the Group Income
Statement. The loss after tax generated by the Group’s associates is analysed as follows:
Group share of:
Revenue
Operating loss
Impairment of associate company investment (note 11)
Loss before finance costs
Finance costs (net)
Loss before income tax
Income tax credit
Loss 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 26% (2011: 28%)
Other overseas tax
Under/(over) provision in respect of prior years
Total current taxation
Deferred tax
Irish at 12.5%
United Kingdom at 24% (2011: 26%)
Other overseas deferred tax
Under provision in respect of prior years
Total deferred tax charge/(credit)
total income tax expense
(ii) Deferred tax recognised directly in equity
Defined benefit pension obligations
Cash flow hedges
2012
€’000
2011
€’000
5,732
10,977
(32)
(1,068)
(1,100)
(14)
(1,114)
6
(1,108)
(225)
-
(225)
(45)
(270)
31
(239)
2012
€’000
2011
€’000
4,514
-
2,234
11,402
10,187
175
28,512
(1,373)
2,696
88
14
1,425
4,395
(113)
1,354
29,153
9,444
(401)
43,832
(3,329)
1,797
(1,140)
2,611
(61)
29,937
43,771
(1,178)
(11)
(1,189)
(336)
341
5
122
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
Notes to the fiNANciAL stAteMeNts
(continued)
15. income tax expense (continued)
(iii) Reconciliation of effective tax rate
Profit on ordinary activities before taxation
Share of associates’ loss 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 after tax, amortisation of intangible assets and net exceptionals
Impact of net exceptionals
Taxation as a percentage of profit before share of associates’
loss after tax and amortisation of intangible assets
2012
€’000
2011
€’000
132,983
1,108
11,379
145,470
189,568
239
10,962
200,769
29,937
2,385
32,322
18.0%
4.2%
43,771
2,742
46,513
21.0%
2.2%
22.2%
23.2%
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
2012
%
12.5
(0.0)
9.7
22.2
2011
%
12.5
(0.1)
10.8
23.2
(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 26% to 24% on 1 April 2012 and will reduce by a further 1% per
annum up to April 2014 when the tax rate will be 22%.
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 €40.444 million (2011: €10.284 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.
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2012
€’000
2011
€’000
40,061
36,296
22,903
21,738
62,964
58,034
17. Dividends
Dividends paid per Ordinary Share are as follows:
Final - paid 48.07 cent per share on 21 July 2011
(2011: paid 43.70 cent per share on 22 July 2010)
Interim - paid 27.42 cent per share on 2 December 2011
(2011: paid 26.11 cent per share on 3 December 2010)
The Directors are proposing a final dividend in respect of the year ended 31 March 2012 of 50.47 cent per ordinary share
(€42.157 million). This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.
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)
2012
€’000
2011
€’000
102,428
8,994
24,989
136,411
145,109
8,220
15,627
168,956
2012
cent
2011
cent
122.78c
10.78c
29.95c
163.51c
174.48c
9.88c
18.79c
203.15c
83,427
83,167
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)
2012
cent
2011
cent
122.46c
10.75c
29.88c
163.09c
173.90c
9.85c
18.73c
202.48c
83,639
83,445
The earnings used for the purposes of the diluted earnings per share calculations were €102.428 million (2011: €145.109
million) and €136.411 million (2011: €168.956 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 2012 was 83.639 million (2011: 83.445 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:
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Notes to the fiNANciAL stAteMeNts
(continued)
18. earnings per ordinary share (continued)
Weighted average number of ordinary shares in issue
Dilutive effect of options
Weighted average number of ordinary shares for diluted earnings per share
2012
€’000
83,427
212
83,639
2011
€’000
83,167
278
83,445
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.
19. Assets classified as held for sale
On 3 April 2012 the Group announced that it had reached agreement to dispose of Altimate Group SA (‘Altimate’), DCC SerCom’s
Enterprise distribution business, subject to competition clearance from the European Commission. The decision to dispose of
Altimate is consistent with the Group’s strategy to focus SerCom Distribution on the supply of IT, communications and home
entertainment products to retail and reseller customers who in turn service consumers and small and medium sized businesses.
As at 31 March 2012, Altimate was classified as a disposal group held for sale. The fair value less costs to sell of the major
classes of assets and liabilities held for sale as at 31 March 2012 are as follows:
Assets
Property, plant and equipment (note 20)
Intangible assets (note 21)
Deferred income tax assets
Inventories (note 27)
Trade and other receivables (note 27)
Cash and cash equivalents (note 28)
Assets classified as held for sale
Liabilities
Deferred income tax liabilities
Deferred and contingent acquisition consideration (note 34)
Trade and other payables (note 27)
Current income tax liabilities
Provisions for liabilities and charges (note 35)
Liabilities associated with assets classified as held for sale
Net assets of the disposal group
2012
€’000
2,962
29,509
2,493
4,147
62,689
40,814
142,614
(1,036)
(7,153)
(77,436)
(802)
(907)
(87,334)
55,280
The disposal is expected to give rise to a non-cash goodwill impairment loss for the Group of approximately €5.5 million
resulting from the non-recovery of a portion of the goodwill arising since the acquisition of Altimate in 2000. Consequently,
an impairment charge of €5.5 million has been recognised in the year ended 31 March 2012 (note 11).
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iNfoRMAtioN
plant &
machinery
& cylinders
fixtures &
fittings &
office
equipment
€’000
€’000
Motor
vehicles
€’000
total
€’000
150,980
7,836
11,500
-
30,493
(1,131)
(24,737)
-
(3)
(1,547)
35,963
1,475
1,905
(127)
8,914
(424)
(10,154)
-
(2,957)
266
63,180
3,666
4,445
-
26,355
(2,115)
(17,137)
-
-
1,004
395,485
18,563
26,224
(127)
75,125
(3,776)
(55,435)
(2,000)
(2,962)
-
Land &
buildings
€’000
145,362
5,586
8,374
-
9,363
(106)
(3,407)
(2,000)
(2)
277
163,447
173,391
34,861
79,398
451,097
199,731
(36,284)
445,096
(271,705)
112,061
(77,200)
164,003
(84,605)
920,891
(469,794)
163,447
173,391
34,861
79,398
451,097
138,740
(134)
1,281
(3,445)
15,929
(783)
(3,097)
(5,401)
2,272
138,665
(54)
13,778
(719)
28,984
(1,583)
(25,036)
(673)
(2,382)
145,362
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)
358,096
(373)
22,708
(5,221)
84,023
(4,768)
(52,906)
(6,074)
-
63,180
395,485
173,732
(28,370)
392,678
(241,698)
106,014
(70,051)
135,954
(72,774)
808,378
(412,893)
145,362
150,980
35,963
63,180
395,485
20. property, plant and equipment
Group
Year ended 31 March 2012
Opening net book amount
Exchange differences
Acquisition of subsidiaries (note 46)
Disposal of subsidiaries
Additions
Disposals
Depreciation charge
Impairment charge (note 11)
Assets classified as held for sale (note 19)
Reclassifications
Closing net book amount
At 31 March 2012
Cost
Accumulated depreciation
Net book amount
Year ended 31 March 2011
Opening net book amount
Exchange differences
Acquisition of subsidiaries (note 46)
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
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
2012
€’000
2011
€’000
58,465
(57,626)
839
881
54,712
(53,215)
1,497
607
126
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Notes to the fiNANciAL stAteMeNts
(continued)
21. intangible Assets
Group
Year ended 31 March 2012
Opening net book amount
Exchange differences
Arising on acquisition (note 46)
Disposal of subsidiaries
Impairment charge (note 11)
Other movements (note 34)
Amortisation charge
Assets classified as held for sale (note 19)
Closing net book amount
At 31 March 2012
Cost
Accumulated amortisation
Net book amount
Year ended 31 March 2011
Opening net book amount
Exchange differences
Arising on acquisition (note 46)
Disposal of subsidiaries
Other movements (note 34)
Amortisation charge
Closing net book amount
At 31 March 2011
Cost
Accumulated amortisation
Net book amount
Goodwill
€’000
customer
related
€’000
total
€’000
597,597
24,392
143,658
(2,381)
(11,369)
(441)
-
(28,067)
38,517
1,984
34,136
-
-
-
(11,379)
(1,442)
636,114
26,376
177,794
(2,381)
(11,369)
(441)
(11,379)
(29,509)
723,389
61,816
785,205
747,562
(24,173)
114,993
(53,177)
862,555
(77,350)
723,389
61,816
785,205
561,077
2,170
46,783
(9,394)
(3,039)
-
34,013
391
15,075
-
-
(10,962)
595,090
2,561
61,858
(9,394)
(3,039)
(10,962)
597,597
38,517
636,114
624,397
(26,800)
81,143
(42,626)
705,540
(69,426)
597,597
38,517
636,114
Customer related intangible assets principally comprise contractual and non-contractual customer relationships arising from
business combinations and are amortised over their estimated useful lives. The average remaining amortisation period is 4.0 years
(2011: 3.8 years).
cash generating units
Goodwill acquired in business combinations is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to
benefit from that business combination. The CGUs represent the lowest level within the Group at which the associated goodwill
is monitored for internal management purposes and are not larger than the operating segments determined in accordance with
IFRS 8 Operating Segments. A total of 24 CGUs (2011: 24 CGUs) have been identified and these are analysed between the five
operating segments below together with a summary of the allocation of the carrying value of goodwill by segment.
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cash generating units
2011
number
2012
number
Goodwill (€’000)
2012
€’000
2011
€’000
6
5
4
4
5
24
6
6
4
3
5
24
426,481
79,260
101,372
91,779
24,497
723,389
312,460
105,003
86,296
63,865
29,973
597,597
21. intangible Assets (continued)
DCC Energy
DCC SerCom
DCC Healthcare
DCC Environmental
DCC Food & Beverage
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
2012
€’000
2011
€’000
298,283
83,557
214,120
68,924
The remaining goodwill balance of €341.549 million is allocated across 22 CGUs (2011: €314.553 million over 22 CGUs), none of
which are individually significant.
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 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 that has been formally approved by the Board of Directors and specifically
excludes 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 (2012: 2.5%; 2011: 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 (2012: 8.0%; 2011: 8.0%), adjusted to reflect risks associated with each CGU.
Key assumptions include management’s estimates of future profitability, capital expenditure requirements, working capital
investment and tax considerations. Cash flow forecasts and key assumptions are generally determined based on historical
performance together with management’s expectation of future trends affecting the industry and other developments and
initiatives in the business. The prior year assumptions were prepared on the same basis.
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.
Applying these techniques, an impairment charge of €5.869 million arose in 2012 (2011: nil). The impairment charge arose
in a CGU in the Food & Beverage segment following the loss of a major distribution contract during the year. In addition, the
Group announced that it has agreed to dispose of Altimate Group SA, part of DCC SerCom’s distribution business. The disposal
is conditional on competition clearance from the European Commission and is expected to give rise to a non-cash goodwill
impairment loss of €5.5 million which has been provided for in the current year (note 19).
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Notes to the fiNANciAL stAteMeNts
(continued)
22. investments in Associates
At 1 April
Acquisition of subsidiaries (note 46)
Share of loss after tax (note 14)
At 31 March
2012
€’000
2,281
-
(1,108)
1,173
2011
€’000
2,393
127
(239)
2,281
Investments in associates at 31 March 2012 include goodwill of €0.422 million (2011: €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 2012
Ireland
France
As at 31 March 2011
Ireland
France
Non-current
assets
€’000
current Non-current
liabilities
€’000
assets
€’000
current
liabilities
€’000
516
7
523
787
7
794
1,296
449
1,745
3,338
769
4,107
-
(126)
(126)
(1,808)
(534)
(2,342)
(751)
(218)
(969)
(148)
(130)
(278)
Net
assets
€’000
1,061
112
1,173
2,169
112
2,281
Details of the Group’s associates are as follows:
Name and Registered office
Nature of Business
financial Year end
% shareholding
Relevant share capital
John Hinde International Limited,
IDA Business Park, Southern Cross Road,
Bray, Co Wicklow.
Lee Oil (Cork) Limited,
Clonminam Industrial Estate,
Portlaoise, Co Laois.
Sale of tourism, gift
and novelty products.
31 December
32.6%
10,726 ordinary
shares of €1.25 each.
Sale and distribution
of oil products.
31 March
50.0%
100 ordinary
shares of €1.26 each.
SAS Blue Stork Industry
300, rue du Président Salvador Allende,
92700 Colombes, France.
Sales and distribution of
computer hardware,
software and peripherals.
31 March
20.0%
740 ordinary
shares of €10 each.
company
At 1 April
Impairment of investment in associate company
At 31 March
2012
€’000
1,244
(994)
250
2011
€’000
1,244
-
1,244
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2012
€’000
2011
€’000
168,065
168,065
23. investments in subsidiary Undertakings
company
At 31 March
Details of the Group’s principal operating subsidiaries are shown on pages 158 to 162. Non-wholly owned subsidiaries
comprises DCC Environmental Britain Limited (70%) (which owns 100% of Wastecycle Limited, Oakwood Fuels Limited and
William Tracey Limited) where put and call options exist to acquire the remaining 30%, Comtrade SA (83%) where a deferred
purchase agreement is in place to acquire the remaining 17% 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.
24. inventories
Group
Raw materials
Work in progress
Finished goods
25. trade and other Receivables
Group
Trade receivables
Provision for impairment of trade receivables (note 47)
Prepayments and accrued income
Loan to associate company
Value added tax recoverable
Other debtors
company
Amounts owed by subsidiary undertakings
Prepayments and accrued income
Loan to associate company
2012
€’000
2011
€’000
11,831
1,953
324,386
338,170
9,601
1,842
236,686
248,129
2012
€’000
2011
€’000
1,219,841
(26,217)
53,129
100
21,099
23,746
979,553
(31,202)
43,708
-
19,410
22,806
1,291,698 1,034,275
2012
€’000
2011
€’000
409,554
2
100
409,656
414,312
2
-
414,314
130
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
Notes to the fiNANciAL stAteMeNts
(continued)
26. trade and other payables
Group
Trade payables
Other creditors and accruals
PAYE and National Insurance
Value added tax
Government grants (note 36)
Interest payable
Amounts due in respect of property, plant and equipment
company
Amounts due to subsidiary undertakings
Other creditors and accruals
27. Movement in Working capital
Group
Year ended 31 March 2012
At 1 April 2011
Translation adjustment
Arising on acquisition (note 46)
Disposal of subsidiaries
Exceptional items, interest accruals and other
Increase/(decrease) in working capital (note 42)
Assets and liabilities classified as held for sale (note 19)
At 31 March 2012
Year ended 31 March 2011
At 1 April 2010
Translation adjustment
Arising on acquisition (note 46)
Disposal of subsidiaries
Exceptional items, interest accruals and other
Increase/(decrease) in working capital (note 42)
At 31 March 2011
2012
€’000
2011
€’000
1,278,255
168,588
12,590
62,148
67
6,643
5,591
934,004
156,628
15,240
38,142
127
4,950
695
1,533,882 1,149,786
2012
€’000
2011
€’000
297,798
678
298,476
315,322
1,128
316,450
trade
and other
receivables
€’000
trade
and other
payables
€’000
inventories
€’000
total
€’000
248,129 1,034,275 (1,149,786)
(56,883)
49,740
(131,960)
111,106
1,238
(219)
(12,142)
666
(261,785)
158,819
77,436
(62,689)
10,611
27,205
-
-
56,372
(4,147)
132,618
3,468
6,351
1,019
(11,476)
(46,594)
10,600
338,170 1,291,698 (1,533,882)
95,986
234,898
926
19,214
(11,578)
-
4,669
922,019
1,130
47,272
(12,147)
439
75,562
(1,039,641)
(2,202)
(44,224)
7,436
(1,792)
(69,363)
117,276
(146)
22,262
(16,289)
(1,353)
10,868
248,129 1,034,275
(1,149,786)
132,618
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iNfoRMAtioN
trade
and other
receivables
€’000
trade
and other
payables
€’000
total
€’000
414,314
(4,658)
(326,837)
(15,333)
87,477
(19,991)
409,656
(342,170)
67,486
421,462
(7,148)
(296,272)
(30,565)
125,190
(37,713)
414,314
(326,837)
87,477
2012
€’000
2011
€’000
241,336
388,687
630,023
185,106
515,234
700,340
27. Movement in Working capital (continued)
company
Year ended 31 March 2012
At 1 April 2011
Decrease in working capital (note 42)
At 31 March 2012
Year ended 31 March 2011
At 1 April 2010
Decrease in working capital (note 42)
At 31 March 2011
28. cash and cash equivalents
Group
Cash at bank and in hand
Short-term bank deposits
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
Cash and short-term bank deposits attributable to assets held for sale
Bank overdrafts are included within current borrowings (note 30) in the Group Balance Sheet.
company
Cash at bank and in hand
2012
€’000
2011
€’000
630,023
(70,758)
40,814
600,079
700,340
(34,212)
-
666,128
2012
€’000
867
2011
€’000
30
132
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
Notes to the fiNANciAL stAteMeNts
(continued)
29. 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
2012
€’000
2011
€’000
24,070
110,461
134,531
1,650
1,726
878
11
29
4,294
138,825
(17,493)
-
-
(17,493)
(389)
(614)
(17)
(1,020)
(18,513)
120,312
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
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 2012 total US$200.0 million, Stg£55.0 million and €20.0 million. At 31 March 2012, the fixed interest rates vary from
4.58% to 6.18% and the floating rates are based on US$ 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 2012 the fixed
interest rates vary from 4.37% to 6.19%. These swaps are designated as fair value hedges under IAS 39.
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29. Derivative financial instruments (continued)
forward foreign exchange contracts
The notional principal amounts of outstanding forward foreign exchange contracts at 31 March 2012 total €91.631 million
(2011: €33.841 million). Gains and losses recognised in the cash flow hedge reserve in equity (note 39) at 31 March 2012 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 2012 total €19.444 million (2011:
€12.879 million). Gains and losses recognised in the cash flow hedge reserve in equity (note 39) at 31 March 2012 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.
30. 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
2012
€’000
2011
€’000
-
287
848,078
848,365
70,758
241
-
-
70,999
919,364
350
413
761,481
762,244
34,668
475
120
5,279
40,542
802,786
2012
€’000
2011
€’000
76,792
360,429
411,144
848,365
317
297,940
463,987
762,244
Bank borrowings and finance leases
Interest on bank borrowings 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 majority of finance leases are at fixed rates.
In January 2012, the Group put in place a five year committed revolving credit facility with four relationship banks: Barclays,
HSBC, JP Morgan and RBS. The Group had various other uncommitted bank facilities available at 31 March 2012.
134
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Notes to the fiNANciAL stAteMeNts
(continued)
30. Borrowings (continued)
Unsecured Notes due 2013 to 2022
The Group’s Unsecured Notes due 2013 to 2022 is comprised of 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.
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
2012
2011
5.0 years
6.0 years
5.54%
5.95%
4.58%
5.56%
5.95%
4.58%
2.39%
2.73%
2.08%
2.24%
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31. 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 2012 is as follows:
Cash and short term bank deposits
Overdrafts
Cash and cash equivalents
Bank loans and loan notes
Finance leases
Unsecured Notes due 2013 to 2022
Derivative financial instruments (net)
At 1
April 2011
€’000
700,340
(34,212)
666,128
(926)
(888)
(766,760)
57,263
cash flow
€’000
(59,622)
(33,862)
(93,484)
929
397
5,386
(224)
fair value
adjustment
€’000
translation
At 31
adjustment March 2012
€’000
€’000
-
-
-
-
-
(62,134)
62,804
30,119
(2,684)
27,435
(3)
(37)
(24,570)
469
670,837
(70,758)
600,079
-
(528)
(848,078)
120,312
Group net debt (including share of net cash in joint ventures)
(45,183)
(86,996)
670
3,294
(128,215)
Group net debt (excluding cash attributable to
assets classified as held for sale)
Group net debt (excluding share of net cash in joint ventures
and cash attributable to assets classified as held for sale)
(71,649)
(101,344)
670
3,294
(169,029)
(73,252)
(101,478)
670
3,294
(170,766)
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)
currency profile
The currency profile of net debt at 31 March 2012 is as follows:
Cash and cash equivalents
Borrowings
Derivatives
The currency profile of net debt at 31 March 2011 is as follows:
Cash and cash equivalents
Borrowings
Derivatives
At 1
April 2010
€’000
714,917
(39,956)
674,961
(18,648)
(2,073)
(791,155)
83,376
(53,539)
(54,678)
Cash flow
€’000
Fair value
adjustment
€’000
At 31
Translation
adjustment March 2011
€’000
€’000
(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)
euro
€’000
sterling
€’000
Us Dollar
€’000
other
€’000
total
€’000
82,025
(325,953)
12,150
520,543
(592,509)
106,291
(231,778)
34,325
8,108
(902)
1,871
9,077
19,347
-
-
630,023
(919,364)
120,312
19,347
(169,029)
Euro
€’000
Sterling
€’000
US Dollar
€’000
199,599
(287,803)
(16,073)
482,660
(509,523)
71,732
(104,277)
44,869
17,708
(5,460)
1,604
13,852
Other
€’000
373
-
-
373
Total
€’000
700,340
(802,786)
57,263
(45,183)
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Notes to the fiNANciAL stAteMeNts
(continued)
31. Analysis of Net Debt (continued)
interest rate profile
Cash and cash equivalents at 31 March 2012 and 31 March 2011 have maturity periods up to three months (note 28).
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 30). The majority of finance
leases are at fixed rates.
32. 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
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 charge/(credit) (note 15)
Tax recognised directly in equity (note 15)
Deferred tax attributable to assets classified as held for sale (note 19)
At 31 March
2012
€’000
2011
€’000
2,569
515
3,313
6,397
14,110
17,665
236
32,011
3,180
515
5,633
9,328
12,070
13,154
210
25,434
2012
€’000
2011
€’000
16,106
107
7,710
(2)
1,425
(1,189)
1,457
25,614
11,313
(248)
4,536
561
(61)
5
-
16,106
33. post employment 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 four in the UK. The projected unit
credit method has been employed in determining the present value of the defined benefit obligation arising, the related current
service cost and, where applicable, past service cost.
Full actuarial valuations were carried out between 31 December 2009 and 1 April 2011. 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 2012 for IAS 19 by a qualified actuary.
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2012
2011
2.00% - 3.25%
0.00% - 2.50%
4.50%
2.25%
2.25% - 4.00%
0.00% - 3.00%
5.50%
2.25%
0.00% - 4.30%
3.40%
5.05%
3.40%
3.60% - 4.60%
3.60%
5.45%
3.60%
2012
2011
7.00%
3.10%
5.50%
2.00%
7.00%
3.50%
6.00%
0.50%
7.25%
3.75%
5.75%
2.00%
7.85%
4.35%
6.85%
0.50%
33. post employment Benefit obligations (continued)
The principal actuarial assumptions used were as follows:
Republic of ireland schemes
Rate of increase in salaries
Rate of increase in pensions in payment
Discount rate
Inflation assumption
UK schemes
Rate of increase in salaries
Rate of increase in pensions in payment
Discount rate
Inflation assumption
The expected long term rates of return on the assets of the schemes were as follows:
Republic of ireland schemes
Equities
Bonds
Property
Cash
UK schemes
Equities
Bonds
Property
Cash
The expected rate of return for equities and property has been calculated assuming that equities and property will outperform
bonds by 3.9% and 2.4% 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.
2012
23.4
25.0
26.5
27.6
2011
23.2
25.0
26.3
27.7
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Notes to the fiNANciAL stAteMeNts
(continued)
33. post employment Benefit obligations (continued)
The net pension liability recognised in the Balance Sheet is analysed as follows:
Equities
Bonds
Property
Cash
Total market value at 31 March 2012
Present value of scheme liabilities
Net pension liability at 31 March 2012
Equities
Bonds
Property
Cash
Total market value at 31 March 2011
Present value of scheme liabilities
Net pension liability at 31 March 2011
Roi
€’000
27,520
49,039
921
3,628
2012
UK
€’000
7,977
10,783
1,082
598
total
€’000
35,497
59,822
2,003
4,226
81,108
(90,400)
20,440
(25,893)
101,548
(116,293)
(9,292)
(5,453)
(14,745)
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
Total
€’000
32,441
44,770
2,755
3,757
13,517
(19,173)
83,723
(103,058)
(5,656)
(19,335)
The amounts recognised in the Group Income Statement in respect of defined benefit pension schemes is as follows:
Current service cost (note 9)
Total, included in employee benefit expenses
Exceptional 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
2012
€’000
(1,477)
(1,477)
3,587
3,587
(5,632)
4,361
(1,271)
2011
€’000
(2,383)
(2,383)
4,976
4,976
(5,347)
4,691
(656)
Based on the assumptions employed for the valuation of assets and liabilities at 31 March 2012, 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 Other 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 Other Comprehensive Income
2012
€’000
1,222
1,849
(11,862)
(8,791)
2011
€’000
(2,030)
1,344
(1,904)
(2,590)
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2012
€’000
2011
€’000
83,723
4,361
1,222
8,971
480
(1,964)
3,712
1,043
101,548
79,953
4,691
(2,030)
5,080
468
(4,551)
-
112
83,723
2012
€’000
2011
€’000
103,058
1,477
5,632
10,013
480
(1,964)
3,857
(3,587)
(2,673)
116,293
103,643
2,383
5,347
560
468
(4,551)
-
(4,976)
184
103,058
33. post employment Benefit obligations (continued)
The movement in the fair value of plan assets is as follows:
At 1 April
Expected return on assets
Actuarial gain/(loss)
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 €5.583 million (2011: gain of €2.661 million).
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 and other*
At 31 March
* Includes a reduction in the defined benefit pension obligation of €4.031 million in respect of the establishment of a cap on
pension assets by the Irish Finance Act 2006 as described in the Report on Directors’ Remuneration and Interests on page 80.
Employer contributions for the forthcoming financial year are estimated at €5.5 million. The difference between the actual
employer contributions paid in the current year of €8.971 million and the expectation of €5.0 million included in the 2011
Annual Report was primarily due to accelerated funding requirements in certain of the Group’s pension schemes which could
not have been anticipated at the time of preparation of the 2011 financial statements.
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Notes to the fiNANciAL stAteMeNts
(continued)
33. post employment Benefit obligations (continued)
history of scheme assets, liabilities and actuarial gains and losses
The five-year history in respect of assets, liabilities and actuarial gains and losses for the Group are as follows:
Fair value of assets
Present value of liabilities
Net pension liability
2012
€’000
2011
€’000
2010
€’000
2009
€’000
2008
€’000
101,548
(116,293)
83,723
(103,058)
79,953
(103,643)
52,265
(81,763)
67,907
(89,758)
(14,745)
(19,335)
(23,690)
(29,498)
(21,851)
Difference between the expected and actual return on scheme assets
As a percentage of scheme assets
1,222
1.2%
(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
Total recognised in Other Comprehensive Income
As a percentage of the present value of the scheme liabilities
1,849
(1.6%)
(8,791)
7.6%
1,344
(1.3%)
2,231
(2.2%)
(589)
0.7%
(2,590)
2.5%
(1,595)
1.5%
(9,517)
11.6%
(3,737)
4.2%
(9,086)
10.1%
Cumulatively since transition to IFRS on 1 April 2004, €35.966 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
Recognised in the financial year ended 31 March 2012
€’000
(7,742)
1,779
1,576
(9,086)
(9,517)
(1,595)
(2,590)
(8,791)
(35,966)
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
change in assumption
impact on irish plan liabilities
impact on UK plan liabilities
Discount rate
Price inflation
Mortality
Increase/decrease by 0.25%
Increase/decrease by 0.25%
Increase/decrease by one year
Decrease/increase by 5.4%
Increase/decrease by 3.1%
Increase/decrease by 2.3%
Decrease/increase by 5.3%
Increase/decrease by 4.7%
Increase/decrease by 2.4%
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34. Deferred and contingent Acquisition consideration
Group
The Group’s deferred and contingent acquisition consideration of €98.699 million (2011: €74.344 million) as stated on the Balance
Sheet consists of €10.998 million of Euro floating rate provisions (2011: €14.797 million), €9.999 million of Swedish Krona floating
rate provisions (2011: nil) and €77.702 million of Sterling floating rate provisions (2011: €59.547 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 21)
Paid during the year
Exchange and other
Deferred and contingent consideration attributable to assets classified as held for sale (note 19)
At 31 March
2012
€’000
13,428
8,186
77,085
98,699
85,271
13,428
98,699
2011
€’000
9,156
9,843
55,345
74,344
65,188
9,156
74,344
2012
€’000
2011
€’000
74,344
37,595
66
-
(441)
(8,063)
2,351
(7,153)
98,699
54,209
27,050
946
(1,106)
(3,039)
(3,709)
(7)
-
74,344
35. provisions for Liabilities and charges
The reconciliation of the movement in provisions for liabilities and charges for the year ended 31 March 2012 is as follows:
Group
At 1 April 2011
Provided during the year
Utilised during the year
Arising on acquisition (note 46)
Provisions for liabilities and charges attributable
to assets classified as held for sale (note 19)
Exchange and other
At 31 March 2012
Analysed as:
Non-current liabilities
Current liabilities
environmental
and
remediation
€’000
Rationalisation,
restructuring
and
redundancy
€’000
insurance
and other
€’000
8,258
245
(1,817)
2,769
-
429
4,705
604
(497)
438
(232)
76
total
€’000
17,365
8,731
(3,409)
3,207
4,402
7,882
(1,095)
-
(675)
(88)
(907)
417
9,884
5,094
10,426
25,404
9,884
-
9,884
1,683
3,411
5,094
3,871
6,555
10,426
15,438
9,966
25,404
142
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Notes to the fiNANciAL stAteMeNts
(continued)
35. provisions for Liabilities and charges (continued)
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 46)
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
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
(2011: 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.
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2012
€’000
2,991
(604)
13
-
125
2,525
(67)
2,458
2011
€’000
3,853
(730)
626
(788)
30
2,991
(127)
2,864
36. Government Grants
Group
At 1 April
Amortisation in year
Received in year
Disposal of subsidiaries
Exchange and other adjustments
At 31 March
Disclosed as due within one year (note 26)
Government grants relate to capital grants received and are amortised to the Income Statement over the estimated useful lives
of the related capital assets.
37. share capital
Group and company
Authorised
152,368,568 ordinary shares of €0.25 each
issued
88,229,404 ordinary shares (including 4,700,907 ordinary shares held as Treasury Shares)
of €0.25 each, fully paid (2011: 88,229,404 ordinary shares (including 4,911,407 ordinary
shares held as Treasury Shares) of €0.25 each, fully paid)
2012
€’000
2011
€’000
38,092
38,092
22,057
22,057
As at 31 March 2012, the total authorised number of ordinary shares is 152,368,568 shares (2011: 152,368,568 shares) with a
par value of €0.25 per share (2011: €0.25 per share).
During the year the Company re-issued 210,500 Treasury Shares for a consideration (net of expenses) of €2.372 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 74 to 83.
38. share premium
Group and company
At 31 March
2012
€’000
2011
€’000
124,687
124,687
144
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
Notes to the fiNANciAL stAteMeNts
(continued)
39. other Reserves
Group
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
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 2012
company
At 31 March 2012 and 31 March 2011
cash flow
hedge
reserve2
€’000
foreign
currency
translation
reserve3
€’000
other
reserves4
€’000
total
€’000
(295)
-
(129,772)
4,636
1,400
-
(119,519)
4,636
9,038
(1,935)
(116)
(7,299)
1,594
-
-
-
-
-
-
-
-
-
-
-
-
-
9,038
(1,935)
(116)
(7,299)
1,594
1,389
share
options1
€’000
9,148
-
-
-
-
-
-
1,389
10,537
-
987
-
(125,136)
46,711
1,400
-
(112,212)
46,711
-
-
-
-
-
549
820
(103)
494
(1,125)
114
-
-
-
-
-
-
-
-
-
-
-
-
-
820
(103)
494
(1,125)
114
549
11,086
1,187
(78,425)
1,400
(64,752)
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.
145
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iNfoRMAtioN
2012
€’000
2011
€’000
895,108
102,428
806,452
145,109
(8,791)
1,178
2,372
(62,964)
929,331
(2,590)
336
3,835
(58,034)
895,108
2012
€’000
2011
€’000
109,728
40,444
2,372
(62,964)
89,580
153,643
10,284
3,835
(58,034)
109,728
40. 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
The cost to the Group and the Company of €62.272 million to acquire the 4,700,907 shares held in Treasury has been deducted
from the Group and Company Retained Earnings. These shares were acquired at prices ranging from €10.80 to €17.90 each
(average: €13.25) between 27 November 2003 and 19 June 2006.
41. Non-controlling interests
Group
At 1 April
Share of profit for the financial year
Dividends to non-controlling interests
Disposal of subsidiaries
Exchange and other adjustments
At 31 March
2012
€’000
2,234
618
(196)
-
-
2,656
2011
€’000
3,249
688
(219)
(1,457)
(27)
2,234
146
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
Notes to the fiNANciAL stAteMeNts
(continued)
42. cash Generated from operations
Group
Profit for the financial year
Add back non-operating expenses
- tax (note 15)
- share of loss 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 20)
- amortisation (note 21)
- profit on sale of property, plant and equipment
- amortisation of government grants (note 36)
- other
Changes in working capital (excluding the effects of acquisition and exchange differences on consolidation):
- inventories (note 27)
- trade and other receivables (note 27)
- trade and other payables (note 27)
cash generated from operations
company
Profit for the financial year
Add back non-operating (income)/expense
- impairment of associate company investment
- net finance income
- dividend income
operating loss
Changes in working capital:
- trade and other receivables (note 27)
- trade and other payables (note 27)
cash generated from operations
43. contingencies
2012
€’000
2011
€’000
103,046
145,797
29,937
1,108
22,357
17,199
173,647
549
55,435
11,379
(838)
(604)
(8,840)
43,771
239
12,650
16,201
218,658
1,389
52,906
10,962
(818)
(730)
(1,927)
(56,372)
(158,819)
261,785
277,322
(4,669)
(75,562)
69,363
269,572
2012
€’000
2011
€’000
40,444
10,284
994
(11,452)
(30,000)
(14)
4,658
15,333
19,977
-
(13,241)
-
(2,957)
7,148
30,565
34,756
Guarantees
The Company and certain subsidiaries have given guarantees of €1,390.175 million (2011: €1,173.393 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; Alvabay Limited, DCC Business Expansion Fund 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, Energy Procurement 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.
147
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44. 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
45. commitments under operating and finance Leases
Group
operating leases
Future minimum rentals payable under non-cancellable operating leases at 31 March are as follows:
Within one year
After one year but not more than five years
More than five years
2012
€’000
2011
€’000
3,541
4,109
61,614
65,155
75,024
79,133
2012
€’000
2011
€’000
26,059
59,449
91,999
177,507
12,962
41,050
77,094
131,106
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 2012, €27.096 million (2011: €25.510 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
2012
2011
Minimum
payments
€’000
present
value of
payments
€’000
Minimum
payments
€’000
Present
value of
payments
€’000
243
295
538
(10)
528
241
287
528
-
528
478
423
901
(13)
888
475
413
888
-
888
148
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
Notes to the fiNANciAL stAteMeNts
(continued)
46. Business combinations
The principal acquisitions completed by the Group during the year, together with percentages acquired were as follows:
• the acquisition of the business, product licences and certain other assets of Neolab Limited, a British generic
pharmaceuticals business, completed in May 2011;
• the acquisition of Oakwood Fuels Limited (100%), a British waste oil and hazardous waste collection, processing and recycling
business, completed in June 2011;
• the acquisition of Pace Fuelcare Limited (100%), a British oil distribution business, completed in September 2011;
• the acquisition of certain oil distribution assets previously owned by Total in Britain, the Isle of Man and the Channel Islands
(‘Total UK,IOM,CI’), completed in October 2011; and
• the acquisition of Swea Energi Holding AB (100%), a Swedish based distributor of heating oils and transport fuels, completed
in February 2012.
There have been no acquisitions completed subsequent to the balance sheet date which would be individually material to the
Group, thereby requiring disclosure under either IFRS 3 or IAS 10. The carrying amounts of the assets and liabilities acquired
(excluding net cash/debt 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 20)
Intangible assets - other intangible assets (note 21)
Investments in associates (note 22)
Deferred income tax assets
Total non-current assets
current assets
Inventories (note 27)
Trade and other receivables (note 27)
Total current assets
Liabilities
Non-current liabilities
Deferred income tax liabilities
Post employment benefit obligations
Provisions for liabilities and charges (note 35)
Deferred and contingent acquisition consideration
Total non-current liabilities
current liabilities
Trade and other payables (note 27)
Current income tax liabilities
Total current liabilities
Identifiable net assets acquired
Intangible assets - goodwill (note 21)
total consideration (enterprise value)
satisfied by:
Cash
Net (cash)/debt acquired
Net cash outflow
Deferred and contingent acquisition consideration
total consideration
2012
€’000
total UK,ioM,ci
2012
€’000
others
2012
€’000
total
2011
€’000
Total
17,181
8,117
-
-
25,298
9,043
26,019
-
81
35,143
26,224
34,136
-
81
60,441
17,510
4,540
9,695
106,566
22,050
116,261
27,205
111,106
138,311
22,708
15,075
127
47
37,957
19,214
47,272
66,486
(2,110)
(145)
(2,769)
-
(5,024)
(5,681)
-
(438)
(940)
(7,059)
(7,791)
(145)
(3,207)
(940)
(12,083)
(4,583)
-
(70)
-
(4,653)
(11,649)
-
(120,311)
(1,636)
(11,649)
(121,947)
(131,960)
(1,636)
(133,596)
(44,224)
(685)
(44,909)
30,675
34,745
22,398
108,913
65,420
131,311
53,073
143,658
196,731
54,881
46,783
101,664
71,007
(5,587)
65,420
-
128,505
(33,849)
94,656
36,655
65,420
131,311
199,512
(39,436)
160,076
36,655
196,731
73,503
1,111
74,614
27,050
101,664
149
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46. Business combinations (continued)
The acquisition of the Total oil distribution business in Britain, the Isle of Man and the Channel Islands has been deemed to
be a substantial transaction and separate disclosure of the fair values of the identifiable assets and liabilities has therefore
been made. None of the remaining business combinations completed during the year were considered sufficiently material
to warrant separate disclosure of the fair values attributable to those combinations. The carrying amounts of the assets and
liabilities acquired, determined in accordance with IFRS, before completion of the combination together with the adjustments
made to those carrying values disclosed above were as follows:
total UK,ioM,ci
Non-current assets (excluding goodwill)
Current assets
Non-current liabilities
Current liabilities
Identifiable net assets acquired
Goodwill arising on acquisition
Total consideration (enterprise value)
other acquisitions
Non-current assets (excluding goodwill)
Current assets
Non-current liabilities
Current liabilities
Identifiable net assets acquired
Goodwill arising on acquisition
Total consideration (enterprise value)
total
Non-current assets (excluding goodwill)
Current assets
Non-current liabilities
Current liabilities
Identifiable net assets acquired
Goodwill arising on acquisition
Total consideration (enterprise value)
Book
value
€’000
fair value
adjustments
€’000
17,181
22,418
(145)
(11,649)
27,805
37,615
65,420
8,117
(368)
(4,879)
-
2,870
(2,870)
-
fair
value
€’000
25,298
22,050
(5,024)
(11,649)
30,675
34,745
65,420
Book
value
€’000
fair value
adjustments
€’000
fair
value
€’000
9,124
117,223
(2,267)
(121,947)
2,133
129,178
131,311
26,019
(962)
(4,792)
-
35,143
116,261
(7,059)
(121,947)
20,265
(20,265)
22,398
108,913
-
131,311
Book
value
€’000
fair value
adjustments
€’000
fair
value
€’000
26,305
139,641
(2,412)
(133,596)
29,938
166,793
196,731
34,136
(1,330)
(9,671)
-
60,441
138,311
(12,083)
(133,596)
23,135
(23,135)
53,073
143,658
-
196,731
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 2013 Annual Report as stipulated by IFRS 3.
150
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
Notes to the fiNANciAL stAteMeNts
(continued)
46. Business combinations (continued)
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.
€38.936 million of the goodwill recognised in respect of acquisitions completed during the financial year is expected to be
deductible for tax purposes.
Acquisition related costs included in the Group Income Statement amounted to €6.568 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 €112.436 million.
The fair value of these receivables is €111.106 million (all of which is expected to be recoverable) and is inclusive of an aggregate
allowance for impairment of €1.635 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 €92.102 million.
There were no adjustments processed during the year to the fair value of business combinations completed during the year ended 31
March 2011 where those fair values were not readily determinable as at 31 March 2011.
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 profit
Finance costs (net)
Profit before tax
Income tax expense
Profit for the financial year
2012
€’000
2011
€’000
1,238,936
(1,175,091)
63,845
(49,827)
14,018
341
14,359
(3,322)
11,037
255,142
(234,710)
20,432
(9,560)
10,872
(54)
10,818
(2,943)
7,875
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
2012
€’000
2011
€’000
12,112,182 8,867,654
105,158
150,412
151
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iNfoRMAtioN
47. financial Risk and capital Management
capital risk management
The Group’s objectives when managing its capital structure are to safeguard the Group’s ability to continue as a going concern in
order to provide returns to shareholders and benefits for other stakeholders, while maintaining a strong balance sheet to support
the continued organic and acquisitive growth of its businesses and to maintain investor, creditor and market confidence.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue
new shares or buy back existing shares, increase or reduce debt or sell assets.
The Group includes borrowings in its measure of capital. The Group’s borrowings are subject to covenants. Further details on
this are outlined in the Liquidity Risk Management section of this note.
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 (including assets classified as held for sale), 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 31)
Deferred and contingent acquisition consideration (note 34)
At 31 March
2012
€’000
2011
€’000
1,011,323
128,215
105,852
929,640
45,183
74,344
1,245,390 1,049,167
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 December 2011. 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 receivables, cash and cash equivalents including deposits with banks and
financial institutions and derivative 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 2012
of €630.023 million, 42.9% (€270.453 million) was with financial institutions with a minimum rating in the P-1 (short-term)
category of Moody’s and 91.7% (€577.478 million) was with financial institutions with a minimum rating in the P-2 (short-term)
category of Moody’s. In the normal course of business, the Group operates notional cash pooling systems, where a legal right
of set-off applies. As at 31 March 2012 derivative transactions were with counterparties with ratings ranging from A- to BB
(long-term) with Standard and Poors or Ba2 to Aa3 (long-term) with Moody’s.
152
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
Notes to the fiNANciAL stAteMeNts
(continued)
47. financial Risk and capital Management (continued)
Management does not expect any significant counterparty to fail to meet its obligations. The maximum exposure to credit risk
is represented by the carrying amount of each asset.
Included in the Group’s trade and other receivables as at 31 March 2012 are balances of €106.031 million (2011: €96.191
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
Provision for impairment attributable to assets classified as held for sale
Exchange
At 31 March
2012
€’000
80,620
19,069
4,823
1,519
106,031
2011
€’000
63,213
27,940
3,173
1,865
96,191
2012
€’000
2011
€’000
31,202
1,830
(1,118)
(7,105)
1,635
-
(1,205)
978
26,217
30,590
5,317
237
(6,159)
1,523
(392)
-
86
31,202
company
There were no past due or impaired trade receivables in the Company at 31 March 2012 (31 March 2011: 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 committed and
uncommitted credit lines with its relationship banks. Compliance with the Group’s debt covenants is monitored continually
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 2012 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.
153
oVeRVieW
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GoVeRNANce
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iNfoRMAtioN
Less than
Between
Between
1 year 1 and 2 years 2 and 5 years
€’000
€’000
€’000
over
5 years
€’000
total
€’000
(1,533,882)
(70,999)
(43,225)
(13,428)
(14,881)
(1,018)
-
(73,288)
(39,414)
(8,186)
(80,824)
-
-
(331,882)
(80,327)
(77,085)
(319,621)
-
- (1,533,882)
(818,368)
(213,488)
(98,699)
(721,933)
(1,018)
(342,199)
(50,522)
-
(306,607)
-
(1,677,433)
(201,712)
(808,915)
(699,328) (3,387,388)
3,182
36,621
3,182
107,570
5,555
347,834
398
362,223
12,317
854,248
39,803
110,752
353,389
362,621
866,565
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)
(9,156)
(14,896)
(533)
-
(317)
(39,061)
(9,843)
(14,896)
-
-
(278,640)
(89,959)
(55,345)
(292,480)
-
-
(425,569)
(68,357)
-
(391,456)
-
(1,149,786)
(745,068)
(237,494)
(74,344)
(713,728)
(533)
(1,255,030)
(64,117)
(716,424)
(885,382) (2,920,953)
3,070
34,428
37,498
3,070
34,428
37,498
6,582
324,135
357
444,249
13,079
837,240
330,717
444,606
850,319
47. financial Risk and capital Management (continued)
Group
As at 31 March 2012
Financial liabilities - cash outflows
Trade and other payables
Interest bearing loans and borrowings
Interest payments on interest bearing loans and borrowings
Deferred and contingent acquisition consideration
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 2011
Financial liabilities - cash outflows
Trade and other payables
Interest bearing loans and borrowings
Interest payments on interest bearing loans and borrowings
Deferred and contingent acquisition consideration
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
The Group has sufficient cash resources and liquid assets to enable it to meet its current borrowing obligations and trade and
other payables. The Group has a well balanced profile of debt maturities over the coming years which will be serviced through a
combination of cash and cash equivalents, cash flows, committed bank facilities and the raising of additional long term debt.
company
As at 31 March 2012
Financial liabilities - cash outflows
Trade and other payables
Company
As at 31 March 2011
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
298,476
-
43,694
-
342,170
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
The Company has sufficient cash resources and liquid assets to enable it to meet its trade and other payables.
154
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Notes to the fiNANciAL stAteMeNts
(continued)
47. financial Risk and capital Management (continued)
(iii) Market risk management
foreign exchange risk management
DCC’s reporting currency and that in which its share capital is denominated is the euro. Foreign exchange risk arises from
future commercial transactions, recognised assets and liabilities and net investments in foreign operations giving rise to
exposure to other currencies, primarily sterling and the US dollar.
Divisional and subsidiary management, in conjunction with Group Treasury, manage foreign currency exposures within
approved policies and guidelines using forward currency contracts.
The portion of the Group’s operating profits which are sterling denominated are offset to a limited degree by certain natural
economic hedges that exist within the Group in that a proportion of the purchases by certain of its Irish businesses are sterling
denominated. The Group does not hedge the remaining translation exposure on the translation of the profits of foreign currency
subsidiaries on the basis that they are not intended to be repatriated.
The Group has investments in sterling operations which are highly cash generative. 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 increase of 5.6% in the
value of sterling against the euro during the year ended 31 March 2012 gave rise to a gain of €46.7 million on the translation of
the Group’s sterling denominated net asset position at 31 March 2012 as set out in the Statement of Comprehensive Income.
Included in this figure is €26.4 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 €10.4 million (2011: €14.7 million) impact on the
Group’s profit before tax, would change the Group’s equity by €76.1 million and change the Group’s net debt by €6.3 million (2011:
€65.2 million and €6.0 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 2012 or
at 31 March 2011 and consequently has no exposure to currency movements at 31 March 2012 (31 March 2011: 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 2012 a one percentage point (100 basis points) change in average floating
interest rates would have a €3.0 million (2011: €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 30.
company
The Company holds negligible levels of cash and consequently the interest earned on cash at bank does not give rise to any
significant market risk. Finance income principally comprises guarantee fees charged at fixed rates on intergroup loans.
Finance costs comprise interest on intergroup loans payable at variable market rates.
155
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47. financial Risk and capital Management (continued)
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 and in the resale prices of recycled oil products. 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 and the recycled oil product 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 (2011: nil) and a nil impact on the
Group’s equity (2011: 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
2012
2011
Book value
€’000
fair value
€’000
Book value
€’000
Fair value
€’000
138,825
138,825
87,938
1,291,698 1,291,698 1,034,275 1,034,275
700,340
2,060,546 2,060,546 1,822,553 1,822,553
630,023
630,023
700,340
87,938
919,364
18,513
897,084
18,513
778,222
30,675
1,533,882 1,533,882 1,149,786 1,149,786
2,471,759 2,449,479 1,983,247 1,958,683
802,786
30,675
409,656
867
410,523
409,656
867
410,523
414,314
30
414,314
30
414,344
414,344
(342,170)
(342,170)
(342,170)
(342,170)
(326,837)
(326,837)
(326,837)
(326,837)
156
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
Notes to the fiNANciAL stAteMeNts
(continued)
47. 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 2012
financial assets
Derivative financial instruments
financial liabilities
Derivative financial instruments
Group
Fair value measurement as at 31 March 2011
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
Level 1
€’000
Level 2
€’000
Level 3
€’000
total
€’000
-
-
-
-
138,825
138,825
18,513
18,513
-
-
-
-
138,825
138,825
18,513
18,513
Level 1
€’000
Level 2
€’000
Level 3
€’000
Total
€’000
-
-
-
-
87,938
87,938
30,675
30,675
-
-
-
-
87,938
87,938
30,675
30,675
company
As at 31 March 2012 and 31 March 2011 the Company had no financial assets or financial liabilities which were carried at fair value.
48. Related party transactions
The principal related party relationships requiring disclosure in the consolidated financial statements of the Group under IAS
24 Related Party Disclosures relate to the existence of subsidiaries, joint ventures and associates and transactions with these
entities entered into by the Group and the identification and compensation of key management personnel as addressed in more
detail below:
Group
Subsidiaries, joint ventures and associates
The consolidated financial statements include the financial statements of the Company and its subsidiaries, joint ventures and
associates as documented in the accounting policies on pages 95 to 105. A listing of the principal subsidiaries, joint ventures
and associates is provided in the Group Directory on pages 158 to 162 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.
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48. Related party transactions (continued)
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 74 to 83 of this Annual
Report.
company
Subsidiaries, joint ventures and associates
During the year the Company received dividends of €30.0 million from its subsidiary company Fannin (Ireland) Limited (2011:
nil). Details of loan balances to/from subsidiaries are provided in the Company Balance Sheet on page 92, in note 25 ‘Trade and
Other Receivables’ and in note 26 ‘Trade and Other Payables’.
49. events after the Balance sheet Date
On 3 April 2012, DCC announced that it had reached agreement to dispose of Altimate Group SA (‘Altimate’), SerCom
Distribution’s Enterprise business, subject to competition clearance from the European Commission. The decision to dispose
of Altimate (which accounted for approximately 10% of DCC SerCom’s profits during the year) reflects the strategy to focus
SerCom Distribution on the supply of IT, communications and home entertainment products to retail and reseller customers
who in turn service consumers and small and medium sized businesses. This is a business where DCC has strong market
positions in Britain, France and Ireland and the potential for expansion, both within these markets and further afield. As
detailed in note 19, Altimate was classified as a disposal group held for sale at 31 March 2012.
50. Approval of financial statements
The financial statements were approved by the Board of Directors on 14 May 2012.
158
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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
Market House,
Churchtown, Mallow,
Co Cork, Ireland
distribution of petroleum products
Tel: +353 22 23 989
Fax: +353 22 23 980
Email: info@greatgas.com
www.greatgas.com
Dcc energy Limited
Airport Road West,
Sydenham,
Belfast BT3 9ED, Northern Ireland
Procurement, sales, marketing and
distribution of petroleum products
Procurement, sales, marketing and
distribution of petroleum products
Procurement, sales, marketing and
distribution of petroleum products
Procurement, sales, marketing and
distribution of petroleum products
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Tel: +44 28 9073 2611
Fax: +44 28 90736167
Email: enquiries@emooil.com
www.emooil.com
Tel: +45 7010 2010
Fax: +45 4558 0190
Email: info@kundeservice.dccenergi.dk
www.dccenergi.dk
Tel: +43 316 210
Fax: +43 316 210 20
Email: info@energiedirect.at
www.energiedirect.at
Tel: +46 300 687000
Fax: +46 300 687050
Email: info@sweaenergi.se
www.sweaenergi.se
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 and administration of petroleum
products through the use of fuel cards
Tel: +44 113 384 6264
Fax: +44 844 870 9827
Email: info@fuelcardservices.com
www.fuelcardservices.com
Dcc energi Danmark A/s
Naerum Hovedgade 8,
2850 Naerum, Danmark
energie Direct
Mineralölhandelsgesmbh
Alte Poststraße 400,
A-8055 Graz,
Austria
swea energi AB
Storgatan 35,
434 32 Kungsbacha,
Sweden
LpG
flogas UK Limited
81 Rayns Way, 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
159
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principal activity
contact details
Holding and divisional management
company
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: sercom@dcc.ie
www.sercomdistribution.com
Dcc sercom
company name & address
sercom Distribution Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
sercom Distribution
Gem Distribution Limited
St. George House, Parkway,
Harlow Business Park, Harlow,
Essex CM19 5QF, England
Procurement, sales, marketing and
distribution of computer software
and peripherals
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
Multichannel solutions
for entertainment (Mse) Limited
Unit 2, Loughlinstown Industrial Estate, products and accessories
Ballybrack, Co. Dublin, Ireland
Procurement, sales, marketing and
distribution of home entertainment
Banque Magnetique sAs
Paris Nord 2, Parc des Reflets,
99 Avenue de la Pyramide,
95700, Roissy en France
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, distribution of audio visual and
consumer electronics products
92700 Colombes, France
Procurement, sales, marketing and
Tel: +33 1 56 47 04 70
www.comtrade.fr
Micro p Limited
Shorten Brook Way,
Altham Business Park, Altham,
Accrington, Lancashire BB5 5YJ,
England
Procurement, sales, marketing and
distribution of computer and mobile
phone products
Tel: +44 1282 776 776
Fax: +44 1282 770 001
Email: enquiries@micro-p.com
www.micro-p.com
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
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 & UK
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.henry@sercomsolutions.com
www.sercomsolutions.com
160
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GRoUp DiRectoRY
principal subsidiaries and Joint Ventures (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
principal activity
contact details
Holding and divisional management
company
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: healthcare@dcc.ie
www.dcc.ie
Sales, marketing, distribution and other
services to healthcare providers and
medical and pharma brand owners/
manufacturers
Tel: +353 1 2907 000
Fax: +353 1 2954 777
Email: information@fannin.ie
www.fannin.ie
fannin (UK) Limited
42-46 Booth Drive, Park Farm South,
Wellingborough,
Northamptonshire NN8 6GT, England manufacturers
Sales, marketing, distribution and other
services to healthcare providers and
medical and pharma brand owners/
Tel: +44 1189 305333
Fax: +44 1189 305111
Email: enquiries@fanninuk.com
www.fanninuk.com
squadron Medical Limited
Greaves Close,
Markham Vale, Chesterfield,
Derbyshire S44 5FB, England
the tps healthcare Group Limited
27-35 Napier Place,
Wardpark, North Cumbernauld,
Glasgow G68 0LL, Scotland
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
thompson & capper Limited
9-12 Hardwick Road,
Astmoor Industrial Estate, Runcorn,
Cheshire WA7 1PH, England
eurocaps Limited
Crown Business Park,
Dukestown, Tredegar,
Gwent NP22 4EF, Wales
Provision of value-added distribution
services to healthcare providers and
brand owners/manufacturers
Provision of value-added distribution
services to healthcare providers and
brand owners/manufacturers
Tel: +44 1246 470 999
Fax: +44 1246 284 030
Email: orders@squadronmedical.co.uk
www.squadronmedical.co.uk
Tel: +44 1236 739 668
Fax: +44 1236 738 376
Email: corporate@tpshealthcare.com
www.tpshealthcare.com
Manufacture of fabric health care
products, primarily mattresses
Tel: +1 812 933 1121
Outsourced solutions for the health
and beauty industry
Tel: +44 1928 573 734
Fax: +44 1420 566 566
Email: enquiries@dcchealthandbeauty.com
www.dcchealthandbeauty.com
Development, contract manufacture and
packing of tablet and hard gel capsule
nutraceuticals
Tel: +44 1928 573 734
Fax: +44 1928 580 694
Email: enquiries@tablets2buy.com
www.tablets2buy.com
Development and contract manufacture
of soft gel capsule nutraceuticals
Tel: +44 1495 308 900
Fax: +44 1495 308 990
Email: info@softgels.co.uk
www.softgels.co.uk
Laleham healthcare Limited
Sycamore Park,
Mill Lane, Alton,
Hampshire GU34 2PR, England
Development, contract manufacture and
packing of liquids and creams for the
beauty and consumer healthcare sectors
Tel: +44 1420 566 500
Fax: +44 1420 566 566
Email: reception@laleham-healthcare.com
www.laleham-healthcare.com
161
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iNfoRMAtioN
Dcc environmental
company name & address
Dcc environmental Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
enva ireland Limited
Clonminam Industrial Estate,
Portlaoise,
Co. Laois, Ireland
Wastecycle Limited
Enviro Building, Private Road No. 4,
Colwick Industrial Estate,
Nottingham NG4 2JT, England
William tracey Limited
49 Burnbrae Road,
Linwood Industrial Estate, Linwood,
Renfrewshire, PA3 3BD, Scotland
oakwood fuels Limited
Brailwood Road,
Bilsthorpe, Newark
Nottinghamshire, NG22 8UA, England
principal activity
contact details
Holding and divisional management
company
Specialist waste treatment/
management services
Recycling and waste management
Recycling and waste management
Specialist waste treatment/
management services
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: environmental@dcc.ie
www.dcc.ie
Tel: +353 578 678 600
Fax: +353 578 678 699
Email: info@enva.ie
www.enva.ie
Tel: +44 115 9403 111
Fax: +44 115 940 4141
Email: enquiries@wastecycle.co.uk
www.wastecycle.co.uk
Tel: +44 1505 321 000
Fax: + 44 1505 335 555
Email: info@wmtracey.co.uk
www.wmtracey.co.uk
Tel: +44 1623 871 964
Fax: +44 1623 871 905
Email: mail@oakwoodgroup.uk.com
www.oakwoodfuels.co.uk
162
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GRoUp DiRectoRY
principal subsidiaries and Joint Ventures (continued)
Dcc food & Beverage
company name & address
Dcc food & Beverage Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
principal activity
contact details
Holding and divisional management
company
Kelkin Limited
Unit 1, Crosslands Industrial Park,
Ballymount Cross,
Dublin 12, Ireland
Procurement, sales, marketing and
distribution of branded healthy foods,
beverages and vms products
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
Allied foods Limited
Second Avenue,
Cookstown Industrial Estate,
Dublin 24, Ireland
Kylemore foods Group*
McKee Avenue,
Finglas,
Dublin 11, Ireland
*50% owned joint venture
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
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: foods@dcc.ie
www.dcc.ie
Tel: +353 1 4600 400
Fax: +353 1 4600 411
Email: info@kelkin.ie
www.kelkin.ie
Tel: +353 1 4047 300
Fax: +353 1 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
163
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GoVeRNANce
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iNfoRMAtioN
2011
€
2012
€
19.90
1,662m
18.56
1,550m
22.40
1,866m
23.07
16.70
24.20
17.30
Number of accounts % of accounts Number of shares¹ % of shares
53
34
199
2,686
2,972
1.8
1.1
6.7
90.4
100.0
67,555,280
5,500,243
7,433,083
3,039,891
83,528,497
80.9
6.6
8.9
3.6
100.0
Number of shares¹ % of shares
25,808,701
23,559,830
9,636,647
6,868,788
17,654,531
83,528,497
30.9
28.2
11.5
8.2
21.2
100.0
shARehoLDeR iNfoRMAtioN
share price Data
Share price at 14 May
Market capitalisation at 14 May
Share price at 30 March
Market capitalisation at 30 March
Share price movement during the year
- High
- Low
shareholdings as at 31 March 2012
Range of shares held
Over 250,000
100,001 – 250,000
10,000 – 100,000
Less than 10,000
Total
Geographic division²
North America
UK
Europe/Asia
Ireland
Retail³
Total
1 Excludes 4,700,907 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 although
shareholders, who hold a sterling bank account, have the option to elect to receive their 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.
164
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
shARehoLDeR iNfoRMAtioN (continued)
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.
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 – 15 May 2012
• Ex-dividend date for the final dividend – 23 May 2012
• Record date for the final dividend – 25 May 2012
• Interim Management Statement – 20 July 2012
• Annual General Meeting - 20 July 2012
• Proposed payment date for final dividend – 26 July 2012
• Interim results to be announced – 6 November 2012
• Proposed payment date for the interim dividend – December 2012
• Interim Management Statement – February 2013
Annual General Meeting, electronic proxy Voting and cRest Voting
The 2012 Annual General Meeting will be held at The Four Seasons Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland
on Friday 20 July 2012 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 2012 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.
Registrar
All administrative queries about the holding of DCC shares should be addressed to the Company’s Registrar, Computershare
Investor Services (Ireland) Limited, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland.
Tel: + 353 1 247 5698
Fax: + 353 1 216 3151
www.investorcentre.com/ie/contactus
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
165
oVeRVieW
BUsiNess peRfoRMANce
GoVeRNANce
fiNANciAL stAteMeNts
iNfoRMAtioN
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
Bankers
Allied Irish Banks
Bank of Ireland
Barclays
BNP Paribas
Danske Bank A/S
Deutsche Bank
HSBC
ING Bank N.V.
J.P. Morgan
KBC Bank
Lloyds Banking Group
National Westminster Bank plc
Rabobank
Royal Bank of Scotland
Ulster Bank
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
Registrar
Computershare Investor Services
(Ireland) Limited
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
Ireland
solicitors
William Fry
Fitzwilton House
Wilton Place
Dublin 2
Ireland
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
166
iNDeX
Accounting Policies
Accounting Records
Adjusted Earnings per Share
Analysis of Net Debt
Annual General Meeting
Appointment of Directors
Approval of Financial Statements
Assets Classified as Held for Sale
Attendance at Meetings
Audit Committee
Auditors
Balance Sheet and Group Financing
Basis of Consolidation
Basis of Preparation
Board Committees
Board Diversity
Board Meetings
Board Membership and Composition
Board of Directors
Board Training and Development
Borrowings
Business Combinations
Business Conduct Guidelines
Business Ethics
Business Model
Capital Expenditure Commitments
Cash and Cash Equivalents
Cash Flow
Cash Generated from Operations
Chairman
Chairman’s Statement
Chief Executive’s Review
Climate Change Strategy
Commitments Under Operating and Finance Leases
Commodity Price Risk Management
Community Support
Company Balance Sheet
Company Cash Flow Statement
Company Secretary
Company Statement of Changes in Equity
Company Statement of Comprehensive Income
Compliance Risks and Uncertainties
Compliance Statement
Contingencies
Corporate Governance
Corporate Information
Credit Risk Management
Critical Accounting Estimates and Judgments
40, 95
61
43
135
164
65
157
124
70
67
61
44
97
95
67
65
66
65
56, 64
66
133
148
72
48
4
147
131
44
146
64
6
8
50
147
46
49
92
94
65
93
92
62
73
146
64
165
46
107
Deferred and Contingent Acquisition Consideration
Deferred Income Tax
Deputy Chairman and Senior Independent Director
Derivative Financial Instruments
Direct Economic Value Added
Directors
Directors’ and Company Secretary’s Interests
Directors’ Emoluments and Interests
Directors’ Remuneration
Directors’ Service Agreements
Directors’ Statement pursuant
to the Transparency Regulations
Dividends
141
136
64
132
49
56
83
114
80
80
84
6, 60, 123
Earnings per Ordinary Share
Electronic Communications
Employee Share Options
Employment
Environmental Provisions
Events After the Balance Sheet Date
Exceptional Items
Fair Value Estimation
Finance Costs and Finance Income
Financial Calendar
Financial Highlights
Financial Review
Financial Risk and Capital Management
Financial Risk Factors
Financial Risk Management
Financial Risks and Uncertainties
Five Year Review
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
123
164
115
115
107
157
99
106
120
164
1
40
151
106
45
62
168
98
45
44
72
73
100
143
48
2
89
91
158
87
113
90
88
52
102
167
oVeRVieW
BUsiNess peRfoRMANce
GoVeRNANce
fiNANciAL stAteMeNts
iNfoRMAtioN
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
Results Highlights
Retained Earnings
Return on Capital Employed
Revenue Recognition
Review of Remuneration Policy and Structures
Risk Management and Internal Control
Segment Information
Segment Reporting
Senior Management
Share-Based Payment Transactions
Share Capital
Share Capital and Treasury Shares
Share of Associates’ Loss after Tax
Shareholder Information
Shareholders’ Equity
Share Ownership and Dealing
Share Premium
Share Price and Market Capitalisation
Statement of Compliance
Statement of Directors’ Responsibilities
Strategic Risks and Uncertainties
Strategy
Substantial Shareholdings
Summary of Significant Accounting Policies
Sustainability Report
Takeover Regulations
Trade and Other Payables
Trade and Other Receivables
Transparency Rules
Useful Lives for Property, Plant and Equipment
and Intangible Assets
Website
164
156
72
70
74
60
85
74
9
145
44
98
75
68
108
98
58
105
143
60
121
163
106
67
143
46
95
84
62
5
61
95
47
61
102
102
61
108
164
Income Tax
Independence of Non-Executive Directors
Intangible Assets
Intangible Assets (other than Goodwill)
Interest-Bearing Loans and Borrowings
Interest Rate Risk and Debt/Liquidity Management
Inventories
Investments In Associates
Investments In Subsidiary Undertakings
Investor Relations
Key Performance Indicators
Group
DCC Energy
DCC Environmental
DCC Food & Beverage
DCC Healthcare
DCC SerCom
Leases
Memorandum and Articles of Association
Movement in Working Capital
Nomination and Governance Committee
Non-Controlling Interests
Non-Current Assets Held for Sale
Non-Executive Directors’ Remuneration
Notes to the Financial Statements
Operating Reviews
DCC Energy
DCC Environmental
DCC Food & Beverage
DCC Healthcare
DCC SerCom
Operational Risks and Uncertainties
Other Operating Income/Expense
Other Reserves
Outlook
Overview of Results
Performance Evaluation
Post Employment Benefit Obligations
Principal Risks and Uncertainties
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 for Liabilities and Charges
104
66
126
101
103
46
101
128
129
46
12
19
35
39
31
25
101
73
130
69
145
100
79
95
14
32
36
26
20
62
113
144
7, 11
41
71
136
62
122
42
125
114
108
141
168
D C C A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 2
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
2008
€’m
2009
€’m
2010
€’m
2011
€’m
2012
€’m
5,532.0
6,400.1
6,725.0
8,680.6
10,690.3
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
185.0
(22.3)
(11.4)
151.3
(17.2)
(1.1)
133.0
(29.9)
(0.6)
102.5
204.28
165.06
142.36
169.13
158.76
177.98
174.48
203.15
122.78
163.51
56.67
2.9
9.4
62.34
2.7
8.5
67.44
2.6
17.7
74.18
2.7
15.8
77.89
2.1
10.4
2008
€’m
2009
€’m
2010
€’m
2011
€’m
2012
€’m
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
451.1
785.2
1.2
768.8
1,778.9
3,785.2
742.4
726.2
836.9
931.9
1,014.0
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
937.9
14.7
1,818.6
2,771.2
3,785.2
Net debt included above
(123.7)
(90.7)
(53.5)
(45.2)
(128.2)
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
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
2012
€’m
277.3
70.2
168.1
2008
2009
2010
2011
2012
17.5%
16.4
6,638
17.8%
11.9
7,182
18.4%
4.6
7,396
19.9%
4.9
7,925
14.2%
2.5
8,355
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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