Annual Report and Accounts
2013
Contents
Overview
01 Financial Highlights
02 Group At A Glance
04 Business Model And Strategy
06 Chairman’s Statement
10 Chief Executive’s Review
Business Performance
14 Group KPIs
16 Energy
22 SerCom
28 Healthcare
34 Environmental
38 Food & Beverage
42 Financial Review
49 Sustainability Report
58 Principal Risks and Uncertainties
Governance Report
60 Chairman’s Introduction
62 Board of Directors and Senior Management
66 Report of the Directors
68 Corporate Governance Statement
74 Audit Committee Report
78 Nomination and Governance Committee Report
81 Remuneration Report
95 Statement of Directors’ Responsibilities
Financial Statements
96 Report of the Independent Auditors
97 Financial Statements
Information
169 Group Directory
174 Shareholder Information
177 Corporate Information
178 Index
180 Five Year Review
181 Change in Presentation Currency
HOME OVERVIEW BUSINESS PERFORMANCE GOVERNANCE REPORT FINANCIAL STATEMENTS INFORMATION
Annual Report and Accounts 2013
DCC is a sales, marketing, distribution and business
support services Group, organised and managed across
five divisions with revenues of circa €13 billion and
employing over 9,800 people in 13 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 London Stock Exchange.
OVERVIEW
Financial Highlights
Group At A Glance
Business Model And Strategy
Chairman’s Statement
Chief Executive’s Review
BUSINESS PERFORMANCE
Group KPIs
Energy
SerCom
Healthcare
Environmental
Food & Beverage
Financial Review
Sustainability Report
Principal Risks and Uncertainties
GOVERNANCE REPORT
Chairman’s Introduction
Board of Directors and Senior
Management
Report of the Directors
Corporate Governance Statement
Audit Committee Report
Nomination and Governance Committee
Report
Remuneration Report
Statement of Directors’ Responsibilities
© DCC plc 2013 Site design: Source Design
FINANCIAL STATEMENTS
Report of the Independent Auditors
Financial Statements
Download Annual Report (pdf)
INFORMATION
Group Directory
Shareholder Information
Corporate Information
Five Year Review
Change in Presentation Currency
DCC is a sales, marketing, distribution
and business support services Group,
organised and managed across five
divisions with revenues of circa
€13 billion and employing over 9,800
people in 13 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 London Stock
Exchange.
View this report online
www.dcc.annualreport13.com
DCC ANNUAL REPORT AND ACCOUNTS 2013 01 Financial Highlights
02 Group At A Glance
04 Business Model And Strategy
06 Chairman’s Statement
10 Chief Executive’s Review
Financial Highlights
Revenue
€12,966.3m
2012: €10,350.9m†
Operating profit**
€229.2m
2012: €179.7m†
Adjusted earnings per share**
209.96 cent
2012: 158.31 cent†
Dividend per share
85.68 cent
2012: 77.89 cent
Operating cash flow
€324.5m
2012: €277.3m
Return on total capital employed
15.6%
2012: 14.2%
Reported: +25.3%
Constant currency*: +19.4%
Reported: +27.5%
Constant currency*: +21.3%
Reported: +32.6%
Constant currency*: +26.0%
Reported: +10%
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2012
† continuing activities i.e. excluding DCC SerCom’s Enterprise distribution business which was disposed of in June 2012
* constant currency figures quoted are based on retranslating 2012/13 figures at prior year translation rates
** all references to ‘operating profit’ and ‘adjusted earnings per share’ included in the Overview and Business Performance sections of this Report are stated
excluding net exceptionals and amortisation of intangible assets
Overview Business Performance Governance Report Financial Statements Information 02
Group at a Glance
DCC Energy
Sales, marketing and distribution
of oil and liquefied petroleum gas
(LPG).
For more information
see pages 16 to 21
DCC SerCom
Sales, marketing and distribution
of IT, communications and home
entertainment products and supply
chain management services.
For more information
see pages 22 to 27
DCC Healthcare
Sales, marketing and distribution
of pharmaceuticals and medical
devices. Outsourced services to
brand owners in the health and
beauty sector.
For more information
see pages 28 to 33
DCC Environmental
Provider of a broad range of
recycling, waste management and
resource recovery services.
For more information
see pages 34 to 37
DCC Food & Beverage
Sales, marketing and distribution of
food and beverage products.
Revenue
(% of Group)
Operating profit
(% of Group)
Customers
Principal
operating locations
76.7%
76.7%
76.7%
76.7%
76.7%
56.8%
56.8%
56.8%
56.8%
56.8%
Commercial, retail, domestic,
industrial, agricultural, aviation and
marine.
Britain, Ireland,
Sweden,
Denmark,
Austria,
Norway, the
Netherlands
and Germany.
IT and communications resellers,
dealers, retailers, etailers, grocers
and catalogue retailers, IT equipment
manufacturers, outsourced equipment
manufacturers, consumer electronics
companies and telecommunications
equipment manufacturers.
Britain, Ireland,
France, the
Netherlands,
Poland, China
and the USA.
17.5%
17.5%
17.5%
17.5%
17.5%
22.2%
22.2%
22.2%
22.2%
22.2%
Hospitals, pharma retailers and
wholesalers, homecare channel,
brand owners, mail order companies,
specialist health and beauty retailers
and private label suppliers.
Britain, Ireland
and Sweden.
Industrial, commercial, construction
and public sector, in the hazardous
and non-hazardous markets.
Britain and
Ireland.
3.0%
3.0%
3.0%
3.0%
3.0%
11.9%
11.9%
11.9%
11.9%
11.9%
1.1%
1.1%
1.1%
1.1%
1.1%
5.8%
5.8%
5.8%
5.8%
5.8%
Grocery multiples, symbol and
independent retailers including
pharmacies, off-licences, hotels,
restaurants and cafes.
Ireland and
Britain.
For more information
see pages 38 to 41
1.7%
1.7%
1.7%
1.7%
1.7%
3.3%
3.3%
3.3%
3.3%
3.3%
DCC ANNUAL REPORT AND ACCOUNTS 2013Overview 03
Employees
Market leadership positions
4,741
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 leading LPG sales, marketing and
distribution business in Sweden and Norway, joint leader
in the Netherlands and the second largest in Britain and
Ireland.
1,670
1,584
893
915
In Britain, DCC SerCom is the largest distributor
of home entertainment products (including games
consoles and software, consumer electronics and AV
accessories and peripherals) and the number two
distributor of IT and communications products (including
PCs, printers, smartphones, peripherals, consumables
and networking products).
In Ireland, DCC SerCom is the largest distributor of
home entertainment and IT products. In France, it is a
leading distributor of IT products.
DCC SerCom is the fifth largest distributor of IT
and home entertainment products in Europe, and
its supply chain business is a strategic supply chain
partner for some of the world’s leading technology and
telecommunications companies.
In Britain, DCC Healthcare is a leading distributor of
pharmaceuticals and medical devices. In Ireland, DCC
Healthcare is the largest distributor of medical devices
and pharma products into hospitals. It is also the
leading provider of outsourced compounding services to
hospitals and the homecare sector.
DCC Healthcare is a leading provider of value added
logistics services in Britain.
DCC Healthcare is a leading outsourced service
provider to the health and beauty sector in Europe with
operations in Britain and, following the acquisition
of Vitamex Manufacturing AB during the year, in
Scandanavia also.
DCC Environmental is a 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 a leading
national waste oil and hazardous waste collection,
processing and recycling business in Britain.
DCC Environmental is the largest hazardous waste
treatment business in Ireland.
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 now the
leading distributor of wine 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 British wine market.
Overview Business Performance Governance Report Financial Statements Information 04
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.
DCC
Energy
DCC
SerCom
DCC
Healthcare
Oil and LPG sales,
marketing and distribution
IT, communications and
home entertainment
products sales, marketing
and distribution and
supply chain management
services
Pharmaceuticals and
medical devices sales,
marketing and distribution
Outsourced services to
brand owners in the health
& beauty sector
Our
Strategic
Priorities
Creating and
sustaining leading
positions in each
of the markets in
which we operate
Continuously
benchmarking
and improving the
efficiency of our
operating model
in each of our
businesses
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.
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.
DCC ANNUAL REPORT AND ACCOUNTS 2013Overview
05
DCC
Environmental
DCC
Food & Beverage
Recycling, waste
management and resource
recovery services to
commercial, industrial and
public sector customers
Food & beverage product
sales, marketing and
distribution
Our Objective
To continue building a growing, sustainable and
cash generative business which consistently
provides returns on total capital employed
significantly ahead of its cost of capital.
Successful delivery of this objective will result in:
• increased employment opportunities and greater capacity for
DCC to provide development opportunities for all its employees;
• enhanced levels of customer service to DCC’s commercial,
industrial, retail, domestic and public sector customers;
• strengthening of the “partnership” nature of our relationships
with our local, regional, national and global suppliers; and
• increased opportunity for DCC to have a positive impact on the
wider communities in which it operates.
Carefully extending
our geographic
footprint, thereby
providing new
horizons for growth
Maintaining
financial
strength through
a disciplined
approach to
balance sheet
management
In the year ended 31 March 2013, 74%
of DCC’s operating profits were derived
from the UK, 15% from Continental
Europe and the rest of the world and
11% from Ireland. In recent years we
have been expanding certain of the
Group’s businesses into European
markets which we believe will provide
good opportunity for future growth. We
will look to further extend our business
in these markets and to enter new
geographic markets in the coming
years.
In pursuing our strategic objective,
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.
Overview Business Performance Governance Report Financial Statements Information 06
Chairman’s Statement
A WELL PROVEN
BUSINESS MODEL
AND A LONG TERM
TRACK RECORD
Dear Shareholder
DCC performed robustly in the year ended
31 March 2013. Despite a continuing weak
economic environment, we achieved our
highest ever earnings per share, which on
an adjusted basis showed sizeable year-on-
year earnings growth of 26% on a constant
currency basis. Return on capital employed
climbed back over 15% and cash generation
was strong. A number of acquisitions that
are important to delivering on our strategic
agenda, especially in DCC Energy and DCC
Healthcare, were successfully completed.
All in all, it was a good return to growth after
last year’s hiatus following a previous 17
years of continuous earnings growth.
DCC ANNUAL REPORT AND ACCOUNTS 2013Overview 07
Adjusted EPS and Dividend
300
250
200
150
100
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Dividend
Adjusted EPS
A base of 100 for 2004 is used for comparator purposes.
OUR BALANCE SHEET
REMAINS VERY STRONG
AND CONSERVATIVELY
MANAGED, WITH NET DEBT
AT YEAR END OF €219.9
MILLION, COMPARED WITH
SHAREHOLDERS’ EqUITY
OF €1.1 BILLION.
Strong Balance Sheet and Sound
Funding
Change of Listing Arrangements and
Reporting Currency
During the year, the Board carried out a
review of the listing and index eligibility
arrangements for DCC’s shares. The
increasing internationalisation of DCC’s
operations and shareholder base
were important factors that led the
Board to the conclusion, supported by
consultation with a wide range of large
shareholders, that inclusion in the FTSE
UK Index Series would, over time, be
likely to increase further the awareness
of DCC among the international
investor community, and therefore
be in the interest of shareholders. An
announcement of the intention to seek
admission to the FTSE UK Index series
was made on 26 February 2013. This
necessitated cancelling the listing
of DCC’s shares on the Irish Stock
Exchange, with effect from 3 May
2013, while maintaining its Premium
Listing on the Official List of the United
Kingdom Listing Authority.
Our balance sheet remains very strong
and conservatively managed, with net
debt at year end of €219.9 million,
compared with shareholders’ equity of
€1.1 billion.
Our strong funding position further
benefited from a successful private
placing of debt of $525 million (€404
million) with an average maturity of 10
years. A wide range of international
debt investors participated, including a
number of significant new investors.
Consistent Dividend Increases
The Board is recommending a final
dividend of 56.20 cent per share. This
brings the total dividend for the year
ended 31 March 2013 to 85.68 cent per
share, up 10% compared to the prior
year. The dividend is covered 2.5 times
by adjusted earnings per share (up
from 2.1 times in 2012). We now have
an uninterrupted 19 years of dividend
growth since DCC was first listed.
The chart above shows the comparison
between adjusted earnings per share
and dividend over the last ten years.
A base of 100 for 2004 is used for
comparator purposes.
Overview Business Performance Governance Report Financial Statements Information
IN THE 5 YEARS I HAVE
BEEN CHAIRMAN OF DCC,
I HAVE REFRESHED AND
STRENGTHENED THE
BOARD BY BRINGING IN
DIRECTORS WITH A RANGE
OF SKILL-SETS, DOMAIN
KNOWLEDGE AND DEEP
COMMERCIAL ExPERIENCE
RELEVANT TO THE DIVERSE
BUSINESS SECTORS AND
GEOGRAPHIES IN WHICH
DCC OPERATES.
08
Chairman’s Statement (continued)
Subject to the independent deliberations
of the FTSE Committees, DCC will be
included in the FTSE All-Share Index and
the FTSE 250 Index from 24 June 2013.
For some years now, the majority of the
Group’s revenue and profits have been
generated in the UK. With effect from the
start of the financial year to 31 March
2014, DCC will present its results in
sterling. This will reduce the impact of
currency movements on results and will
give a more straightforward picture of
financial performance from year to year.
The Group will remain incorporated,
headquartered and tax resident in
Ireland.
Focus of the Board and Governance
The main tasks of the Board of DCC
are to provide well-informed oversight
of strategy and delivery, to ensure
that risk appetite and parameters are
clearly defined and consistently applied,
to maintain the highest standards of
corporate governance and to nurture
the culture of a unitary Board.
There were 8 scheduled Board meetings
in the year ended 31 March 2013.
Two of the scheduled Board meetings
were held in the UK, to facilitate in-
depth reviews of particular businesses,
involving a broad range of management,
as well as to enable Board members to
visit DCC facilities in the area. During
the course of the year, individual
non-executive Directors also devoted
significant time to visiting DCC
subsidiaries and discussing operations,
challenges and opportunities with local
management.
In December 2012, the Board conducted
its annual strategy review over two days
with the executive team.
Over the course of the year, Board
agendas incorporated in depth reviews
of the Group’s divisions. Significant
Board time was also devoted to
operational performance, potential
acquisitions, the Group’s key risks and
risk appetite, succession planning,
diversity policies at Board and
management levels, the Group’s control
and governance environment, corporate
governance developments and progress
on the Group’s sustainability agenda. I
believe that, as a Board, we kept a good
balance through the year between the
amount of time devoted to business
issues and to governance issues.
Having had a fully independent,
externally conducted Board evaluation
in the previous year, with a positive
outcome, all action items, incorporating
learnings from it, were completed during
the course of the year. At the end of
the year under review, a formal Board
evaluation, using the framework from the
previous year, was conducted internally,
in part by David Byrne, our Deputy
Chairman and Senior Independent
Director, and in part by me. I have
again taken responsibility for ensuring
completion of a list of action items
arising, designed further to improve
Board performance in the year ahead.
In the 5 years I have been Chairman of
DCC, I have refreshed and strengthened
the Board by bringing in Directors with
a range of skill-sets, domain knowledge
and deep commercial experience
relevant to the diverse business
sectors and geographies in which DCC
operates. The current average service
of non-executive Board members is 4
years and 3 months.
DCC ANNUAL REPORT AND ACCOUNTS 2013Overview 09
WE HAVE THE RESOURCES
AND THE AMBITION TO
CONTINUE TO INVEST IN
THE DEVELOPMENT OF
THE BUSINESSES THAT
ARE STRATEGICALLY
IMPORTANT TO US AND TO
CONTINUE TO ExTEND OUR
GEOGRAPHICAL REACH AS
WE DO SO.
During the year under review, Bernard
Somers retired as an independent
non-executive Director and Chair of the
Audit Committee. Bernard had brought
exceptional financial expertise and
commercial acumen to his roles and to
his pithy contributions to Board debates.
We were fortunate to find someone with
highly relevant experience to replace
Bernard. On 4 October 2012, Jane Lodge
joined the Board as non-executive
Director and took over as Chair of the
Audit Committee on 5 November 2012.
Until July 2011, Jane had been a senior
audit partner with Deloitte, where she
spent over 25 years advising global
manufacturing companies.
Communications with Shareholders
DCC engages very actively with its
shareholders, both in terms of interim
and annual results and when significant
issues, such as the change of listing,
arise. The debt private placement
mentioned above also entailed detailed
interaction with a wide range of debt
investors. In June 2013, we will host
an Investor Day at the London Stock
Exchange. Non-executive Directors will
have an opportunity there to interact
with shareholders and hear their views.
Thanks to Colleagues
DCC has a very capable management
team, led by our Chief Executive,
Tommy Breen. It is focussed on building
sustainable businesses for long term
value. I congratulate them and our
entire workforce of almost 10,000
colleagues on achieving the robust
performance I have outlined in the year
under review, and for their continuing
dedication to serving our customers and
building strong relationships with our
suppliers.
The nature of DCC’s business requires
a culture of consistently applied
operational focus and financial
discipline, overlaid with a similarly
disciplined approach to making and
integrating acquisitions. Alongside
those disciplines is a culture of retaining
and developing within our subsidiaries
the entrepreneurial talent that comes
with many of our acquisitions. It
is an unusual combination. In the
year just past, we continued to add
judiciously to our senior management
capacity, notably in our Energy and
Healthcare divisions and to provide
leadership across the Group in adding
value through our IT systems. Those
investments in key people, together
with an associated evolution in the
organisational shape of key divisions,
will enable us to find added value from
the overall growth and geographical
diversification of the business achieved
in recent years, and to position
ourselves to find new opportunities for
future growth.
Outlook
Looking to the year ahead, the business
environment is likely to remain no less
anaemic and challenging than it has
been for the past several years.
But we have a well proven business
model and a long term track record of
well managed growth and adaptability
through the economic cycle. We have
the resources and the ambition to
continue to invest in the development
of the businesses that are strategically
important to us and to continue to
extend our geographical reach as we
do so.
Thank you for your continuing support.
Michael Buckley
Chairman
13 May 2013
Overview Business Performance Governance Report Financial Statements Information
10
Chief Executive’s Review
IT WAS PLEASING
TO REPORT OPERATING
PROFIT GROWTH TO
31 MARCH 2013 OF
21.3% ON A CONSTANT
CURRENCY BASIS
Key Features of Results
Group operating profit of €229.2 million increased
by 21.3% over the prior year on a constant
currency basis. Operating cash flow of €324.5
million was a new record for the Group as was the
spend on development activity (acquisitions and
capital expenditure) of €277.7 million. Return on
total capital employed increased to 15.6%. The
proposed 10% increase in the dividend for the
year would represent the 19th consecutive year
of dividend growth since the Group was listed in
May 1994. DCC ended the financial year with a net
debt:EBITDA ratio of 0.7 times.
DCC ANNUAL REPORT AND ACCOUNTS 2013Overview 11
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*
+19.4%
+21.3%
Reported
+25.3%
+27.5%
+31.0%
+32.6%
+10.0%
+24.4%
+26.0%
€
12,966.3m
229.2m
211.9m
209.96 cent
85.68 cent
324.5m
198.0m
219.9m
1,055.3m
15.6%
(2012: €277.3m)
(2012: €146.0m)
(2012: €128.2m)
(2012: €1,014.0m)
(2012: 14.2%)
† based on continuing activities i.e. excluding DCC SerCom’s Enterprise distribution business which was disposed of in June 2012.
*
all constant currency figures quoted in this report are based on retranslating 2012/13 figures at prior year translation rates
** excluding net exceptionals and amortisation of intangible assets
*** after net capital expenditure, interest and tax payments
OPERATING CASH FLOW
OF €324.5 MILLION WAS
A RECORD FOR DCC
AND WAS BOOSTED BY
A REDUCTION IN NET
WORKING CAPITAL TO
2.2 DAYS, REFLECTING
THE RELENTLESS FOCUS
ON WORKING CAPITAL
EFFICIENCY ACROSS THE
GROUP.
Operating cash flow of €324.5 million
was a record for DCC and was boosted
by a reduction in net working capital to
2.2 days, reflecting the relentless focus
on working capital efficiency across the
Group.
The Group’s return on total capital
employed increased from 14.2% to
15.6%, driven primarily by the increase
in the Group’s operating profit,
particularly in DCC Energy.
It is proposed to increase the final
dividend for the year by 11.4% to 56.20
cent, resulting in a 10% increase in the
full year dividend to 85.68 cent.
The Group’s financial position remains
strong with net debt:EBITDA at the year
end of 0.7 times. Having completed a
fundraising in the US Private Placement
market of US $525 million (€404
million) in April 2013, the Group’s
liquidity position is also very strong.
The year to 31 March 2013 was an
important and significant year for DCC.
Having had DCC’s unbroken profit
growth record, over 17 years from listing
in 1994, interrupted in the year ended
31 March 2012, due to the particularly
mild winter in that year, it was pleasing
to record operating profit growth to
31 March 2013 of 21.3% on a constant
currency basis. This growth primarily
reflected the strong performance in the
Group’s largest division, DCC Energy
(operating profit up 48% on a constant
currency basis), driven by a return to
colder winter weather conditions, and
in DCC Healthcare which achieved
operating profit growth of 10.3% on a
constant currency basis.
Operating profit in DCC SerCom, the
Group’s second largest division, was
modestly ahead of the prior year with
strong revenue growth in its mobile
communications and tablet product
businesses and a good performance
from its supply chain services activities
together more than offsetting the
effect of the decline in the market
for home entertainment products in
Britain and Ireland. Operating profit
declined in DCC’s two smaller divisions,
DCC Environmental and DCC Food &
Beverage.
Overview Business Performance Governance Report Financial Statements Information
12
Chief Executive’s Review (continued)
Adjusted earnings per share (cent) - years ended 31 March
Adjusted earnings per share (cent) - years ended 31 March
124.0
115.1
124.0
115.1
106.0
106.0
CAGR 10yrs 7.5%, CAGR 5yrs 4.9%
CAGR 10yrs 7.5%, CAGR 5yrs 4.9%
Group operating profit (€’m) - years ended 31 March
Group operating profit (€’m) - years ended 31 March
163.5
178.0
178.0
163.5
169.1
165.1
169.1
165.1
143.5
143.5
185.0
180.4
185.0
167.2
180.4
167.2
192.8
192.8
210.0
203.2
210.0
203.2
229.2
229.6
229.2
229.6
2013
2012
2011
2010
2013
2009
2012
2008
2011
2007
2010
2006
2009
2005
2008
2004
2007
2006
2005
2004
2013
2012
2011
2010
2013
2009
2012
2008
2011
2007
2010
2006
2009
2005
2008
2004
2007
2006
2005
140.1
140.1
121.0
121.0
109.3
101.6
109.3
CAGR 10yrs 9.0%, CAGR 5yrs 6.5%
Continued Delivery against Strategy
CAGR 10yrs 9.0%, CAGR 5yrs 6.5%
We believe that we have made further
good progress in the ongoing execution
of our strategy.
The key development in DCC Energy
was the significant expansion of our
LPG business through the commitment
of €100 million to the acquisitions
of BP’s businesses in Britain, the
Netherlands and Belgium and Statoil
Fuel & Retail’s LPG businesses in
Scandinavia. These acquisitions have
significantly increased the scale and
geographic scope of DCC Energy’s LPG
business in Europe which now operates
in six countries with market leading
positions in the Netherlands, Norway
and Sweden and strong number two
positions in Britain and Ireland. In Oil,
the unconditional clearance of the
acquisition of certain oil distribution
assets in the UK previously owned by
2004
in line with its strategy to expand its
product range and its geographic
coverage. The first of these was Go
Telecom, a small Dutch business
providing products and services in the
unified communications segment of the
market (including hardware, software
and services for audio, video and
telepresence conferencing). This was
followed by the acquisition of a small
distributor of Apple products in Ireland.
101.6
Total paves the way for DCC Energy
to continue to pursue its objective of
further increasing its share of the oil
distribution business in Britain. DCC
has recently established a greenfield
operation in Bavaria operating under
the brand Top Oil Bayern and since
the year end it has acquired a small
oil distribution business in Bavaria,
which trades as Bronberger & Kessler.
DCC Energy now has oil distribution
businesses in six countries in Europe.
DCC SerCom is the number two player
in the IT distribution market in Britain.
The business has been particularly
focused on gaining market leadership in
specific growth segments of the market
and is now the number one distributor
of mobile computing products and the
fastest growing distributor of smart
phones. DCC SerCom also made two
modest acquisitions during the year,
DCC ANNUAL REPORT AND ACCOUNTS 2013Overview 13
EMBEDDED IN
DCC’S STRATEGY IS
A COMMITMENT TO
MAINTAINING FINANCIAL
STRENGTH THROUGH A
DISCIPLINED APPROACH
TO BALANCE SHEET
MANAGEMENT.
Sustainability
Our approach to sustainability
continues to develop, led by our
Sustainability Committee. We are
confident that systematically identifying
and measuring the key economic,
environmental and social drivers of
our businesses and integrating them
into existing management processes
will support our objective to deliver
long term shareholder value. Details
of our approach are provided in the
Sustainability Report on pages 49 to 57.
Outlook
The outlook for the year to 31 March
2014 is set against a continuing weak
economic environment in the Group’s
principal markets and the important
assumption that there will be normal
winter weather conditions. At this very
early stage, the Group anticipates that
its operating profit will be approximately
10% - 12% ahead of the prior year
result which, in sterling, was £187
million. The incremental interest cost
of the additional debt raised in April
2013 will temporarily hold back the
growth in adjusted earnings per share
to approximately 8% - 10% ahead of the
prior year result, which, in sterling, was
171 pence per share.
DCC retains a strong equity base, long
term debt maturities and significant
cash and committed bank resources
which leave it well placed to continue
the development of its business in
existing and new geographies.
Tommy Breen
Chief Executive
13 May 2013
In DCC Healthcare, the acquisition
of Kent Pharmaceutical (Holdings)
Limited (“Kent Pharma”) represented
a significant expansion of its pharma
business in Britain which now has a
leading position in the British generics
market. Kent Pharma brings a highly
complementary product portfolio,
product licence ownership and strong
relationships in the British retail
pharmacy channel. In the near term, the
enlarged pharma product portfolio and
increased sales and marketing resource
should generate further growth
opportunities for DCC Healthcare
in Britain. Over time, the enhanced
pharma regulatory and business
development capability will also create
opportunities for sales development in
other geographic markets, in particular
within the EU and in the Middle East and
North Africa region.
As our business grows, we are
committed to developing and
augmenting our management resource
at Group, divisional and subsidiary
levels. DCC has benefited from the
strengthening of the team in recent
years and I am pleased that in the
last year there has again been further
development which has provided
opportunity for existing employees and
also allowed us to bring in new talent to
the Group.
Embedded in DCC’s strategy is a
commitment to maintaining financial
strength through a disciplined approach
to balance sheet management. We are
pleased that in the year ended 31 March
2013, which was a year of substantial
revenue growth and a year of record
development expenditure, we ended
the year with a net debt:EBITDA ratio
of 0.7 times and an EBITDA:net interest
ratio of 17.1 times. This strong financial
position, along with the Group’s liquidity
position, which was augmented by the
recent debt fundraising, leaves DCC
well poised for continuing development.
Overview Business Performance Governance Report Financial Statements Information 14
Business Performance
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 16 to 41.
FINANCIAL KPIs
Strategic objective
KPI
KPI Definition
FY13 performance
FY13 comment
FY14 outlook
Deliver superior
shareholder returns
Return
on capital
employed
(‘ROCE’)
ROCE is defined as the operating profit before amortisation and exceptional
items expressed as a percentage of the average total capital employed. Total
capital employed represents total equity adjusted for net cash/debt, goodwill
and intangibles previously written off, deferred and contingent consideration
and investments in associates.
Drive for enhanced
operational
performance
Operating
profit growth
on a constant
currency basis
Measures the change in operating profit on continuing activities 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 on continuing activities 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 on continuing activities achieved in
the current year (based on retranslating current year sterling figures at
prior year exchange rates) compared to adjusted eps on continuing activities
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
FY13 performance
€130.7m
FY13 comment
FY14 outlook
Grow a sustainable
business
Carbon
emissions
Total Scope 1 and 2 carbon emissions expressed in kilotonnes (kts) 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.
Steady improvement in the LTIFR was
The Group is targeting a continued
as a result of good performances in
improvement in both LTI metrics.
Sustainability Report
see pages 49 to 57
Lost Time Injury Severity Rate ('LTISR') measures the number of calendar
days lost per 200,000 hours worked.
Link to other
disclosures
Review
see pages 10 to 13
Financial Review
see pages 42 to 48
Review
see pages 10 to 13
Financial Review
see pages 42 to 48
Review
see pages 10 to 13
Financial Review
see pages 42 to 48
Chief Executive’s
Review
see pages 10 to 13
Financial Review
see pages 42 to 48
Chief Executive’s
Review
see pages 10 to 13
Financial Review
see pages 42 to 48
Link to other
disclosures
Sustainability Report
see pages 49 to 57
As anticipated, the increase in ROCE
The achievement of returns on total
over the prior year was driven by
capital employed in excess of the cost
Chief Executive’s
continued excellent working capital
of capital will continue to be a key
management and the recovery in
focus of the Group.
operating profits in DCC Energy.
Constant currency 2013 v 2012: +21.3%
Constant currency 2013 v 2012: +21.3%
Constant currency 2013 v 2012: +21.3%
Constant currency 2013 v 2012: +21.3%
Constant currency 2013 v 2012: +21.3%
14.2%
€179.7m
15.6%
€229.2m
19.9%
2012
2012
2011
2013
2013
14.2%
€179.7m
19.9%
209.96c
2011
2012
2012
2013
158.31c
19.9%
209.96c
2011
2012
2013
Constant currency 2013 v 2012: +26.0%
158.31c
209.96c
€229.2m
158.31c
€179.7m
209.96c
€229.2m
Constant currency 2013 v 2012: +26.0%
Constant currency 2013 v 2012: +26.0%
Constant currency 2013 v 2012: +21.3%
158.31c
€179.7m
209.96c
€229.2m
Constant currency 2013 v 2012: +26.0%
Constant currency 2013 v 2012: +21.3%
158.31c
€179.7m
€324.5m
Constant currency 2013 v 2012: +26.0%
Constant currency 2013 v 2012: +21.3%
prior year.
kpi.
DCC Energy recorded operating profit
With the Group’s move to a sole
growth on a constant currency basis
listing in London, DCC will, from now
Chief Executive’s
of 48.0% over the prior year whilst
on, present its results in sterling.
the Group's other four divisions
The Group anticipates that operating
combined was marginally behind the
profit will be approximately 10%-12%
ahead of the current year which, in
sterling, was £187m.
The increase in adjusted eps was
With the Group’s move to a sole
primarily driven by the factors
listing in London, DCC will, from now
Chief Executive’s
mentioned under the operating profit
on, present its results in sterling. The
Group anticipates that adjusted eps
will be approximately 8%-10% ahead
of the current year which, in sterling,
was 171 pence.
Constant currency 2013 v 2012: +26.0%
158.31c
Constant currency 2013 v 2012: +26.0%
Constant currency 2013 v 2012: +26.0%
€269.6m
€169.1m
profits of €229.2 million and a
reduction in working capital of €34.6
million.
The Group generated excellent
Cash generation and working capital
operating cash flow of €324.5 million
management will remain a key focus
during the year driven by operating
of the Group.
Significant acquisition activity during
The Group will continue to pursue
the year particularly in DCC Energy
attractive opportunities in our
(€128.1 million) and DCC Healthcare
traditional markets as well as looking
(€71.5 million).
to extend our business into new
geographic markets.
Increase of 6% versus the prior year
Increases in absolute emissions due
driven by acquisitions and an increase
to acquisitions and organic growth
in usage of road diesel in the Energy
will be partially offset by increased
division due to the colder winter,
efficiencies and energy saving
partially offset by improvements in
measures.
operating efficiencies and energy
saving initiatives.
48 days
2.5
2011
2011
the Energy, Healthcare and Food &
Beverage divisions. The improvement
in the LTISR was driven by active case
management of lost time injuries and
the overall decrease in LTIs.
15.6%
14.2%
15.6%
14.2%
15.6%
14.2%
15.6%
14.2%
15.6%
19.9%
19.9%
19.9%
14.2%
19.9%
€229.2m
€179.7m
19.9%
€229.2m
€179.7m
15.6%
€229.2m
€179.7m
14.2%
15.6%
€229.2m
€277.3m
€324.5m
€269.6m
€277.3m
€324.5m
209.96c
€269.6m
€277.3m
158.31c
€324.5m
209.96c
€269.6m
€277.3m
€324.5m
209.96c
€269.6m
€277.3m
158.31c
€207.2m
€207.2m
€130.7m
€169.1m
€207.2m
€324.5m
€130.7m
€169.1m
€277.3m
€207.2m
€324.5m
€130.7m
€169.1m
€269.6m
€277.3m
€207.2m
€324.5m
€130.7m
€169.1m
€269.6m
€277.3m
124.4kts
€130.7m
€269.6m
116.9kts
124.4kts
116.3kts
116.9kts
124.4kts
€207.2m
116.3kts
116.9kts
124.4kts
€207.2m
€169.1m
€130.7m
116.3kts
116.9kts
€169.1m
124.4kts
€207.2m
€130.7m
€169.1m
116.3kts
116.9kts
1.9
116.3kts
2.3
1.9
2.5
1.9
2.3
124.4kts
1.9
116.9kts
124.4kts
2.3
2.5
116.3kts
116.9kts
124.4kts
1.9
2.3
2.5
116.3kts
116.9kts
42 days
2.3
2.5
116.3kts
53 days
2.5
42 days
48 days
53 days
42 days
1.9
48 days
53 days
42 days
1.9
2.3
42 days
1.9
48 days
53 days
2.3
2.5
48 days
53 days
2.3
2.5
42 days
42 days
53 days
42 days
48 days
53 days
48 days
53 days
48 days
2013
2012
2013
2011
2012
2013
2011
2012
2013
2011
2012
2013
2011
2012
2013
2011
2012
2013
2012
2013
2013
2012
2013
2013
2012
2012
2013
2013
2012
2013
2013
2012
2012
2012
2013
2013
2012
2012
2013
2012
2013
2011
2012
2013
2013
2011
2012
2013
2013
2012
2011
2012
2012
2013
2013
2011
2012
2012
2013
2011
2012
2013
2011
2012
2013
2013
2011
2012
2013
2013
2012
2011
2012
2012
2011
2013
2013
2011
2011
2012
2012
2013
2011
2011
2012
2013
2011
2012
2013
2013
2011
2012
2013
2013
2012
2011
2012
2012
2011
2013
2013
2011
2011
2012
2012
2013
2011
2011
2012
2013
2011
2012
2013
2013
2011
2012
2013
2013
2012
2011
2012
2012
2011
2013
2013
2011
2011
2012
2012
2013
2011
2011
2012
2013
2011
2012
2013
2013
2011
2012
2013
2013
2012
2011
2012
2012
2011
2013
2013
2011
2011
2012
2012
2013
2013
2012
2012
2011
2013
2011
2012
2011
DCC ANNUAL REPORT AND ACCOUNTS 2013
Overview Business Performance Governance Report Financial Statements Information
14 Group KPIs
16 Energy
22 SerCom
28 Healthcare
34 Environmental
38 Food & Beverage
42 Financial Review
49 Sustainability Report
58 Principal Risks and Uncertainties
FINANCIAL KPIs
Strategic objective
KPI
KPI Definition
FY13 performance
FY13 comment
FY14 outlook
14.2%
€179.7m
19.9%
€229.2m
14.2%
€179.7m
19.9%
209.96c
€229.2m
€229.2m
19.9%
€229.2m
19.9%
€229.2m
Constant currency 2013 v 2012: +21.3%
158.31c
19.9%
209.96c
15.6%
14.2%
15.6%
14.2%
15.6%
14.2%
15.6%
14.2%
15.6%
19.9%
19.9%
19.9%
Constant currency 2013 v 2012: +21.3%
€179.7m
15.6%
Constant currency 2013 v 2012: +21.3%
€179.7m
15.6%
Constant currency 2013 v 2012: +21.3%
€179.7m
15.6%
Constant currency 2013 v 2012: +21.3%
14.2%
14.2%
Deliver superior
shareholder returns
Return
on capital
employed
(‘ROCE’)
ROCE is defined as the operating profit before amortisation and exceptional
items expressed as a percentage of the average total capital employed. Total
capital employed represents total equity adjusted for net cash/debt, goodwill
and intangibles previously written off, deferred and contingent consideration
and investments in associates.
Drive for enhanced
operational
performance
Operating
profit growth
on a constant
Measures the change in operating profit on continuing activities before
amortisation and exceptional items achieved in the current year (based on
retranslating current year sterling figures at prior year exchange rates)
currency basis
compared to operating profit on continuing activities before amortisation
and exceptional items reported in the prior year.
Measures the change in adjusted eps on continuing activities achieved in
the current year (based on retranslating current year sterling figures at
prior year exchange rates) compared to adjusted eps on continuing activities
reported in the prior year.
Operating cash
Measures cash generated from operations.
Deliver superior
shareholder returns
Adjusted
earnings per
share (‘eps’)
growth on
a constant
currency basis
Generate cash flows
to fund organic and
acquisition growth
and dividends
flow
Extend our business
and geographic
Committed
acquisition
expenditure
footprint
Measures cash spent and future deferred and contingent consideration
amounts for acquisitions completed during the year.
Constant currency 2013 v 2012: +26.0%
Constant currency 2013 v 2012: +21.3%
€277.3m
€324.5m
€269.6m
€277.3m
€324.5m
209.96c
€324.5m
209.96c
€269.6m
€277.3m
158.31c
158.31c
Constant currency 2013 v 2012: +26.0%
€269.6m
€277.3m
€324.5m
209.96c
Constant currency 2013 v 2012: +26.0%
€269.6m
€277.3m
158.31c
€207.2m
Constant currency 2013 v 2012: +26.0%
€169.1m
€269.6m
€207.2m
€130.7m
€169.1m
€207.2m
€324.5m
€130.7m
€169.1m
€277.3m
€207.2m
€324.5m
€130.7m
€169.1m
€277.3m
€269.6m
€207.2m
€324.5m
€130.7m
€169.1m
€269.6m
€277.3m
124.4kts
€130.7m
€269.6m
116.9kts
124.4kts
116.3kts
116.9kts
124.4kts
€207.2m
124.4kts
€207.2m
116.3kts
116.9kts
€169.1m
€130.7m
116.3kts
116.9kts
€169.1m
124.4kts
€207.2m
NON-FINANCIAL KPIs
Strategic objective
KPI
KPI Definition
Grow a sustainable
Carbon
emissions
business
Total Scope 1 and 2 carbon emissions expressed in kilotonnes (kts) of CO2e.
FY13 performance
Health and safety
Lost time injury
Lost Time Injury Frequency Rate ('LTIFR') measures the number of lost time
rates
injuries per 200,000 hours worked.
€130.7m
€130.7m
116.3kts
116.9kts
€169.1m
1.9
116.3kts
1.9
2.3
1.9
2.5
2.3
124.4kts
1.9
116.9kts
124.4kts
2.3
2.5
116.9kts
116.3kts
1.9
2.3
124.4kts
2.5
116.3kts
116.9kts
42 days
2.3
2.5
116.3kts
2.5
53 days
42 days
48 days
53 days
42 days
1.9
42 days
1.9
48 days
48 days
42 days
1.9
53 days
2.3
53 days
2.3
2.5
48 days
2.5
53 days
2.3
Constant currency 2013 v 2012: +26.0%
158.31c
Constant currency 2013 v 2012: +21.3%
Constant currency 2013 v 2012: +26.0%
Constant currency 2013 v 2012: +21.3%
158.31c
€179.7m
€179.7m
Constant currency 2013 v 2012: +26.0%
158.31c
209.96c
€229.2m
209.96c
€229.2m
209.96c
€229.2m
Constant currency 2013 v 2012: +26.0%
158.31c
€324.5m
€179.7m
2013
2012
2013
2011
2012
2013
2011
2012
2013
2011
2012
2013
2011
2012
2013
2011
2012
2013
2012
2013
2013
2012
2013
2013
2012
2012
2012
2011
2013
2013
2011
2012
2012
2013
2011
2012
2013
2012
2013
2013
2012
2013
2013
2012
2012
2012
2013
2013
2012
2012
2013
2012
2013
2011
2012
2013
2013
2011
2012
2013
2013
2012
2011
2012
2012
2013
2013
2011
2012
2012
2013
2011
2012
2013
2011
2012
2013
2013
2011
2012
2013
2013
2012
2011
2012
2012
2011
2013
2013
2011
2011
2012
2012
2013
2011
2011
2012
2013
2011
2012
2013
2013
2011
2012
2013
2013
2012
2011
2012
2012
2011
2013
2013
2011
2011
2012
2012
2013
2011
2011
2012
2013
2011
2012
2013
2013
2011
2012
2013
2013
2012
2011
2012
2012
2011
2013
2013
2011
2011
2012
2012
2013
2011
2011
2012
2013
2011
2012
2013
2013
2011
2012
2013
2013
2012
2011
2012
2012
2011
2013
2013
2011
2011
2012
2012
Lost Time Injury Severity Rate ('LTISR') measures the number of calendar
days lost per 200,000 hours worked.
42 days
42 days
53 days
42 days
48 days
53 days
48 days
53 days
48 days
2013
2013
2012
2012
2011
2013
2011
2012
2011
48 days
2.5
2011
2011
As anticipated, the increase in ROCE
over the prior year was driven by
continued excellent working capital
management and the recovery in
operating profits in DCC Energy.
The achievement of returns on total
capital employed in excess of the cost
of capital will continue to be a key
focus of the Group.
DCC Energy recorded operating profit
growth on a constant currency basis
of 48.0% over the prior year whilst
the Group's other four divisions
combined was marginally behind the
prior year.
With the Group’s move to a sole
listing in London, DCC will, from now
on, present its results in sterling.
The Group anticipates that operating
profit will be approximately 10%-12%
ahead of the current year which, in
sterling, was £187m.
The increase in adjusted eps was
primarily driven by the factors
mentioned under the operating profit
kpi.
The Group generated excellent
operating cash flow of €324.5 million
during the year driven by operating
profits of €229.2 million and a
reduction in working capital of €34.6
million.
With the Group’s move to a sole
listing in London, DCC will, from now
on, present its results in sterling. The
Group anticipates that adjusted eps
will be approximately 8%-10% ahead
of the current year which, in sterling,
was 171 pence.
Cash generation and working capital
management will remain a key focus
of the Group.
Significant acquisition activity during
the year particularly in DCC Energy
(€128.1 million) and DCC Healthcare
(€71.5 million).
The Group will continue to pursue
attractive opportunities in our
traditional markets as well as looking
to extend our business into new
geographic markets.
FY13 comment
FY14 outlook
Increase of 6% versus the prior year
driven by acquisitions and an increase
in usage of road diesel in the Energy
division due to the colder winter,
partially offset by improvements in
operating efficiencies and energy
saving initiatives.
Steady improvement in the LTIFR was
as a result of good performances in
the Energy, Healthcare and Food &
Beverage divisions. The improvement
in the LTISR was driven by active case
management of lost time injuries and
the overall decrease in LTIs.
Increases in absolute emissions due
to acquisitions and organic growth
will be partially offset by increased
efficiencies and energy saving
measures.
The Group is targeting a continued
improvement in both LTI metrics.
Sustainability Report
see pages 49 to 57
15
Link to other
disclosures
Chief Executive’s
Review
see pages 10 to 13
Financial Review
see pages 42 to 48
Chief Executive’s
Review
see pages 10 to 13
Financial Review
see pages 42 to 48
Chief Executive’s
Review
see pages 10 to 13
Financial Review
see pages 42 to 48
Chief Executive’s
Review
see pages 10 to 13
Financial Review
see pages 42 to 48
Chief Executive’s
Review
see pages 10 to 13
Financial Review
see pages 42 to 48
Link to other
disclosures
Sustainability Report
see pages 49 to 57
16
Business Performance
Operating Review
DCC Energy
DCC Energy is the leading oil and liquefied petroleum gas (LPG) sales,
marketing and distribution business in Europe. In oil distribution, DCC
Energy is the market leader in Britain and Sweden and one of the
leading oil distribution businesses in Austria, Denmark and Ireland. In
LPG distribution, DCC Energy is market leader in Norway and Sweden,
joint leader in the Netherlands and is a strong number two player in
both Britain and Ireland.
During the year ended 31 March 2013,
DCC significantly expanded its LPG
distribution business through the
acquisition of BP’s LPG businesses
in Britain and the Netherlands and
Statoil Fuel & Retail’s LPG distribution
businesses in Sweden and Norway. In
the year ended 31 March 2013, DCC
sold 9.6 billion litres of product from
its extensive network of 400 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, Denmark, Sweden,
Austria and Germany. 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 has recently
established a greenfield operation in
Bavaria operating under the brand Top
Oil Bayern and since the year end it
has acquired a small oil distribution
business in Bavaria, which trades as
Bronberger & Kessler.
DCC Energy is one of the leading sales
and marketing businesses for branded
fuel cards in Britain. The business sells
circa 700 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 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 networks 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 been the consolidator
of what was and continues to be a highly
fragmented oil distribution market
in Britain. DCC Energy first entered
the market in September 2001 with
the acquisition of BP’s business in
Scotland and since then has acquired
and integrated 28 businesses including
the oil distribution businesses of Shell
(2004), Chevron Texaco (2008), and
Total (2011). DCC Energy is now, by far,
the largest oil distributor in Britain.
DCC’s addressable market in Britain
comprises transport fuels and heating
oils to commercial, industrial, domestic,
agricultural and dealer owned petrol
stations. This is a market of circa 31
billion litres and DCC sold circa 5.8
billion litres of product to this market,
giving a market share of approximately
18% (excluding DCC Energy’s supply to
larger dealer petrol stations in Britain
DCC’s market share is circa 16%). The
total retail petrol station market in
Britain is circa 35 billion litres. This is
split 40% hyper markets, 30% company
owned and operated stations and 30%
independent dealer owned. DCC Energy
has circa 4% of the total market and circa
10% of the dealer market. DCC Energy
operates in the independent dealer owned
segment of the retail market and today
is the largest supplier to this segment,
based on the number of sites (selling to
approximately 1,600 sites).
Ireland
Emo Oil is one of the leading oil
distributors in Ireland with a market
share of 10%. DCC’s addressable oil
market in Ireland is estimated at 9
billion litres.
Continental Europe
DCC’s 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 2.3 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 13%. With the oil majors continuing to
divest oil distribution assets, DCC Energy
is well placed to continue its growth by
acquisition. During the year to March 2013
DCC Energy commenced a greenfield
operation in Bavaria, Top Oil Bayern.
In May 2013, DCC Energy acquired
Bronberger & Kessler, a 250 million litre
oil distributor based in Munich.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Overview Business Performance Governance Report Financial Statements Information
17
Revenue
€9,948.7m
2012: €7,823.0m
Change on prior year
Reported: +27.2%
Constant currency: +21.0%
Operating profit
€130.2m
2012: €83.5m
Change on prior year
Reported: +55.9%
Constant currency: +48.0%
Brands
Return on total capital employed
18.5%
2012: 14.0%
Oil - Bayford, Brogan*, Butler Fuels*,Carlton Fuels*, CPL Petroleum, Emo Oil*, Gulf, Pace Fuelcare, Scottish Fuels*, Shell, Texaco.
LPG - Flogas*, MacGas*, Benegas*.
Fuel card - BP, Diesel Direct, Esso, Fastfuels, Shell.
* DCC owned brands
18
Business Performance
Operating Review
DCC Energy (continued)
markets in Britain, Ireland, Sweden,
Norway and the Netherlands are
relatively consolidated.
New Energy
Through the newly acquired Clearpower
business and the existing UFW
business, DCC Energy is developing
a presence in the renewable energy
sector. Clearpower is a bioenergy and
environmental services business, based
in Ireland with a presence in Britain
while 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.
Strategy and Development
DCC Energy’s vision is to be a global
leader in the marketing, sale and
distribution of fuels and related
products and the provision of services to
energy consumers:
• with strong local market shares;
• operating under multiple brands;
• consolidating fragmented markets;
• selling a broad range of related
products and services;
• building a position in new
geographies;
• continuing the development of its
presence in the green/renewable
energy sector;
• generating high levels of ROCE; and
• while maintaining a strong balance
sheet.
Oil
In oil distribution, DCC Energy’s strategy
is to be the leading oil distribution
business in its chosen addressable
markets, by continuing to consolidate
existing markets, driving targeted
growth in the non-heating dependent
segments of the market, expanding into
new geographies through acquisition
and driving organic profit growth by
leveraging the scale of the business,
by selling differentiated products and
cross selling add-on products and
services such as lubricants and boiler
maintenance services to its extensive
customer base.
Case Study
FLOGAS – CONSOLIDATING OuR POSITION IN BRITAIN AND ExTENDING INTO
EuROPE.
DCC first entered the LPG market with a modest greenfield investment in Ireland
in the 1970s and, through a small acquisition in 1984, entered the market in
Britain. By 2012, the business had grown organically and through acquisition to
having national coverage and strong market shares of 39% in Ireland and 19%
in Britain. As the oil majors continue to exit from downstream operations, we
acquired BP’s LPG business in Britain in October 2012 which allowed Flogas
to increase its share to 27% and generate significant operational synergies. In
November 2012, we acquired BP’s operations in the Netherlands and Belgium
which trade under the Benegas brand. This business is based in Putten, one hour
from Amsterdam, and has a strong position in the cylinder, bulk, and aerosol gas
sectors, with potential for further development. Finally, in December 2012 we
acquired the Norwegian and Swedish LPG operations of Statoil Fuel and Retail
which gives us a market leading position In Sweden and Norway. Now operating
in six countries, as the Flogas Group, our objective is to develop our existing
businesses and explore opportunities to move further into new geographies.
LPG
DCC Energy is the second largest
LPG sales marketing and distribution
business in Britain and Ireland, the
largest LPG distributor in Sweden
and Norway and the joint leading
distributor in the Netherlands. 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
63 facilities, while in Ireland the
infrastructure comprises 6 depots
throughout the country. In Sweden and
Norway, the business operates from
10, mostly third party owned, locations
while in the Netherlands the business
operates from one central depot. 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 27% and
39% respectively. In Sweden and Norway
DCC Energy (trading under the Flogas
brand) is market leader with circa 47%
and 43% market shares respectively
and in the Netherlands the business
has a market share of approximately
24% trading under the Benegas brand.
Unlike the oil distribution market, which
remains highly fragmented, the LPG
DCC ANNUAL REPORT AND ACCOUNTS 2013 19
Key to DCC Energy’s expansion into the
non-heating segments of the market
is to build a larger presence in the
transport fuels segment of the market,
with particular emphasis on growing its
presence in the retail forecourt sector
of the market by expanding its supply
to independent dealers, growing its
unmanned and bunker site presence,
by leveraging its existing supply
infrastructure and scale and developing
industry leading propositions for its
dealers and retail consumers.
DCC Energy’s strategy in Britain
is to continue to grow its market
share (currently 18%) to in excess
of 20% of its addressable market.
The unconditional clearance by the
Competition Commission in September
2012 of the acquisition of certain oil
distribution assets in the UK previously
owned by Total was a significant step in
ensuring that DCC Energy can achieve
its strategic aims in the British oil
distribution 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 1,600 sites across
the country. The business has been
actively rolling out the Gulf brand
across this network and currently has
approximately 325 sites under the Gulf
brand. The business distributes to circa
250 Total branded sites and also has
sites under a range of other brands
including Pace, Power, Scottish Fuels,
Texaco and Regent.
Through the establishment of a
greenfield operation in Bavaria in
November 2012 and the acquisition of
Munich based Bronberger & Kessler
in May 2013, DCC Energy has taken
the first steps towards establishing a
business in Germany.
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’ and ‘Mileage Capture’,
which provide customers with key
information on fuel consumption and
emissions to allow them to better
manage their businesses.
LPG
DCC Energy will continue to leverage
its strong LPG market positions to drive
organic profit growth on a sector by
sector basis in all of its markets. 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.
The LPG business made significant
steps in developing its business in the
year to March 2013 through three major
acquisitions at a total cost of circa €100
million. In October 2012, DCC Energy
acquired BP’s LPG distribution business
in Britain for a total consideration of
£40.5 million. This acquisition reinforces
Flogas Britain’s position as the clear
number two operator in the market. The
acquisition was cleared by the Office of
Fair Trading in January 2013 and will
be integrated into the Flogas business
during the first quarter of the current
financial year. In November 2012, DCC
Energy agreed to acquire Benegas,
BP’s LPG distribution business in the
Netherlands and north Belgium for a
total consideration of €24.5 million.
This acquisition was DCC Energy’s first
step into continental Europe in the LPG
distribution business. In December
2012 DCC Energy completed the
acquisition of Statoil Fuel & Retail’s
LPG distribution business in Sweden
and Norway. These three acquisitions
have significantly increased the size,
profitability and geographic reach
of DCC Energy’s LPG distribution
businesses.
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. DCC Energy has no material
customer dependencies.
The volume split by customer type for
the year ended 31 March 2013 is as
follows.
Customer Split
46%
Commercial
16%
Retail
16%
Industrial
12%
Domestic
Customer Split
5%
Agricultural
2%
Marine
46%
Commercial
3%
Other
16%
Retail
16%
Industrial
12%
Domestic
The volume split by type of product for
Product Split
5%
Agricultural
the year ended 31 March 2013 is as
2%
Marine
OIL
follows:
3%
Other
45%
Transport
Fuel
22%
Heating
25%
Product Split
LPG
OIL
Transport
Heating
Fuel
LPG
8%
48%
24%
19%
9%
Suppliers
As with its customer base, DCC
Energy’s supplier portfolio is broadly
based. The top five suppliers represent
approximately 63% of total volumes
supplied with no one individual supplier
accounting for more than 20% of
volumes supplied in the year to 31
March 2013. The major suppliers to the
division are BP, Essar, Ineos, Mabanaft,
Philips66, Shell, and Valero Energy.
Our People
DCC Energy’s business is a people
business at its core. Therefore we are
very focused on developing processes
and practices that ensure we are
focused on the well being, development
and engagement of our people across
all areas of the business and to ensure
Overview Business Performance Governance Report Financial Statements Information
20
Business Performance
Operating Review
DCC Energy (continued)
that we have the necessary resources,
talent and skills to deliver the service
levels expected by our customers in a
safe way, every day.
Continuous improvement of our safety
performance is a key priority and
responsibility for all line managers
and directors who are supported by
experienced health and safety 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
systems and processes which identify,
control and monitor health and safety
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.
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 created new
roles as Managing Director and
Finance Director for DCC Energy’s
LPG businesses, and Director of
Human Resources in DCC Energy’s oil
business in Britain (two of these posts
filled by internal candidates and one
external), along with a number of other
appointments further strengthening
subsidiary management teams. We will
continue to develop the management
teams as the businesses grow.
DCC Energy currently employs 4,741
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, continued poor
economic demand and its impact on
consumer spending and 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.
DCC Energy distributed 9.6 billion litres
of product during the year ended 31
March 2013 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
DCC Energy’s approach to sustainability
recognises the reality of climate change
and the physical challenges arising
from changing weather patterns
and more frequent extreme weather
events. Government responses to
climate change include levies and
taxes on carbon emissions, incentives
for renewables and energy efficiency
technologies and setting long term
carbon reduction targets. At the same
time the economy relies on energy
(primarily from fossil fuels) to function
and grow. DCC Energy is committed
to assisting our customers reduce
their environmental impact. This is
being achieved through offering our
customers cleaner, more efficient
fuels and innovative solutions, enabling
customers to monitor their own energy
use and quantify the carbon emissions.
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
the potential of this 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 handling product
every day.
No significant spills occurred in the
period. However all spills have the
potential to cause local damage so
in the event of any spill occurring,
immediate action is taken to contain
and recover the product to minimise
impact to the surroundings. Detailed
investigations are completed to identify
the root causes of any incidents
to identify learning points and
opportunities for improvement.
DCC Energy’s businesses operate on a
very local footprint in all the markets in
which we have a presence. Therefore
it is crucial to our long term strategy
that we have a high degree of trust
within the communities in which we
operate. All our businesses operate to
the highest standards, invest heavily
in infrastructure and training, and
encourage our staff to participate
actively in the communities within
which they work.
Performance for the Year Ended 31
March 2013
DCC Energy had an excellent year with
operating profit 48.0% ahead of the prior
year on a constant currency basis. The
business benefited from organic profit
growth, primarily driven by a return to
colder winter weather conditions, and
also from good development activity.
DCC Energy sold 9.6 billion litres of
product during the year, an increase
of 21.8% over the prior year, driven
predominantly by acquisitions. Volumes
were 2.3% ahead of the prior year on
DCC ANNUAL REPORT AND ACCOUNTS 2013 DCC Energy: Key Financial Performance Indicators
Strategic objective
Drive for enhanced
operational performance
KPI
Revenue growth
(constant currency)
Drive for enhanced
operational performance
Operating profit growth
(constant currency)
Drive increase in sales
volumes
Volumes
Grow operating profit
per litre
Operating profit per litre
(constant currency)
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
Performance
€9,948.7m
€7,823.0m
Constant currency 2013 v 2012: +21.0%
€130.2m
€83.5m
Constant currency 2013 v 2012: +48.0%
2013 v 2012: +21.8%
9.6 bn litres
7.9 bn litres
1.29 cent
1.08 cent
18.5%
14.0%
€150.0m
€216.5m
12.2%
9.8%
21
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
a like for like basis. Heating volumes
increased by approximately 8% as
average temperatures during the key
winter months in Britain were 1.4
degrees cooler than the 10 year average
and materially colder than the prior year
although, with the exception of March,
the winter had few prolonged cold
periods. Overall volumes were impacted
somewhat by the weak economic
environment and the sustained high
price of product.
objective of increasing its share of the
oil distribution market in Britain. DCC
Energy’s oil businesses in continental
Europe also performed strongly, driven
by the benefit of acquisitions. In the
second half of the year, the business
established a start-up operation in
Bavaria in Germany and since the
year end it has also acquired a small
oil distribution business in Bavaria.
DCC Energy now has oil distribution
operations in six countries.
The oil business in Britain and Ireland
rebounded strongly from the very
difficult prior year, benefiting from
the colder temperatures and strong
growth in transport fuels, particularly
through fuelcards. The commercial and
industrial sectors of the market proved
challenging given the difficult economic
environment. The unconditional
clearance by the Competition
Commission of the acquisition of
certain oil distribution assets in the UK
previously owned by Total paves the way
for DCC Energy to continue to pursue its
The LPG business had an excellent year
achieving strong organic volume growth,
reflecting the colder weather conditions
and good market share growth in the
commercial and industrial sectors of
the market. The business also benefited
from a more favourable product pricing
environment.
From a development perspective, it was
an excellent year for the LPG business
with DCC Energy committing circa
€100 million to the expansion of its
LPG activities through the acquisitions
of BP’s businesses in Britain, the
Netherlands and Belgium and of Statoil
Fuel & Retail’s business in Scandinavia.
The clearance by the Office of Fair
Trading of the acquisition of the BP LPG
business in Britain will enable DCC
Energy to integrate this business with
its existing operations in Britain during
the first quarter of the current financial
year. These acquisitions significantly
increased the scale and geographic
scope of DCC Energy’s LPG business in
Europe. DCC Energy now operates LPG
businesses in six countries with market
leading positions in the Netherlands,
Norway and Sweden and strong number
two positions in Britain and Ireland.
Overview Business Performance Governance Report Financial Statements Information 22
Business Performance
Operating Review
DCC SerCom
DCC SerCom is a leading distributor of IT, Communications and
Home Entertainment products in Britain, Ireland and France and also
provides outsourced procurement and supply chain management
services in Ireland, Poland, China and the USA.
DCC SERCOM PROVIDES
ITS PARTNERS WITH AN
ExCEPTIONALLY BROAD
CUSTOMER REACH AND
PROACTIVELY MARKETS
ITS VENDORS’ PRODUCTS
THROUGH PRODUCT AND
CUSTOMER FOCUSED
SALES TEAMS.
Markets and Market Position
DCC SerCom 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,
Ireland, France and the Netherlands. The
products distributed include PCs, tablets,
printers, smartphones, peripherals,
consumables and networking products.
The business is a distribution partner
of many of the leading vendors in the IT
and communications market, such as
Acer, Asus, Cisco, Dell, Huawei, IBM,
Lenovo, LG, Microsoft, Netgear, Nokia,
Plantronics, Samsung, Sony, Toshiba and
Western Digital.
DCC SerCom 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. DCC
SerCom represents many of the leading
vendors in the computer games, home
entertainment and consumer electronics
markets such as Belkin, Devolo, D-Link,
Electronic Arts, iHome, Logitech,
Microsoft, Netgear, Nintendo, Paramount,
Seagate, Sony, Take-Two, TomTom and
Warner Brothers.
In addition, DCC SerCom provides a
range of supply chain management
services, including a range of specialist
procurement and sourcing services from
its operations in Ireland, Poland, China
and the United States, employing state
of the art IT systems and procurement
processes. The business is a strategic
supply chain partner for some of
the world’s leading technology and
telecommunications companies.
DCC SerCom provides its partners with
an exceptionally broad customer reach
and proactively markets its vendors’
products through product and customer
focused sales teams. The business
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. In addition
to the core distribution activities, DCC
SerCom also provides supply chain
management services globally, including
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. It also
delivers a range of post-manufacturing
supply chain services designed to bring
its customers products to market in the
most efficient manner possible, including
localisation, customisation and other
services.
DCC ANNUAL REPORT AND ACCOUNTS 2013 23
Revenue
€2,269.1m
2012: €1,841.8m*
Change on prior year
Reported: +23.2%
Constant currency: +17.9%
Operating profit
€50.9m
2012: €47.9m*
Change on prior year
Reported: +6.1%
Constant currency: +1.3%
Return on total capital employed
16.4%
2012: 15.9%*
* excluding DCC SerCom’s Enterprise distribution business which was disposed of in June 2012.
Brands
Acer, Apple, Asus, Belkin, Cisco, Dell, Devolo, D-Link, Electronic Arts, Epson, Fujistsu, Huawei, IBM, iHome, Lenovo, LG, Logitech,
Microsoft, Netgear, Nintendo, Nokia, Paramount, Plantronics, Samsung, Sandisk, Seagate, SerCom Solutions**, Sony, Symantec,
Take-Two, TomTom, Toshiba, Warner Brothers, Western Digital.
** DCC owned brands
Overview Business Performance Governance Report Financial Statements Information 24
Business Performance
Operating Review
DCC SerCom (continued)
During the year, the business extended
its capability in unified communications
through the acquisition of Go Connect,
a Netherlands-based distributor and
service provider in voice, video and
cloud-based conferencing solutions.
The business in Britain has continued to
significantly expand its market position in
the mobile communications market in the
past year and has developed its product
offering, particularly with smartphones
and tablet computers, to take advantage
of the growing convergence of the IT and
mobile communications markets and
channels.
In Britain, DCC SerCom is number 1
in home entertainment products and
number 2 in IT and communications
products. In Ireland it is number 1 in
home entertainment and IT products. In
France, it is number 7 in IT products. DCC
SerCom is the fifth largest distributor
of IT, communications and home
entertainment products in Europe.
DCC SerCom’s revenue for the year ended
31 March 2013 by product type is as
follows:
IT Products
27%
PCs & servers
Consumables
7%
Consumer electronics 10%
Printers &
IT peripherals
Networking
Storage
Business software
9%
7%
6%
2%
Communications
9%
Home entertainment
Games consoles
& peripherals
Games software
DVD
Supply chain
9%
3%
2%
9%
Case Study
DCC SERCOM EMERGES AS A MAjOR PLAYER IN uK MOBILE DISTRIBuTION
Three years ago DCC SerCom identified mobile communications as a target
area for organic expansion, given the likely future convergence of IT and mobile
devices. Without having an established mobile customer or product supply
base, DCC SerCom began to invest in a quality team of experienced technical
and sales personnel to leverage the strong, proactive service-led capabilities of
the business in its established IT distribution market. Although starting from a
position of considerable disadvantage to the large incumbent mobile distributors,
DCC SerCom achieved a considerable endorsement of its progress when it
was awarded distribution of Nokia devices in October 2011. From this point the
business has continued to grow strongly and now distributes a broad range of
mobile devices as well as ‘converged’ devices such as tablets where it is now
the market leader in the uK for Android and Windows 8 devices. In a relatively
short period of time the uK mobile business has built a large customer base
of over 1,000 dealers, network operators, virtual network operators, retailers
and etailers. We estimate that the business is now the number two player in the
mobile distribution market in the uK, from a modest base just two years ago. We
believe that this success has been built on the flexible, service-led approach which
has brought a differentiated offering to the market. In addition to the distribution
of hardware devices, the business is now also targeting the distribution of mobile
accessories and peripherals as an area of growth for the future. The continued
drive for excellence within the business has been recognised by the receipt of a
number of trade awards, including ‘Mobile Hardware Distributor of the Year’ in the
uK both 2012 and 2013.
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.
DCC ANNUAL REPORT AND ACCOUNTS 2013
25
Principal Distribution Markets
Analysis of revenue by customer type
Britain
SME reseller 33%
Consumer
retail /etail
67%
France
SME reseller
Consumer
retail /etail
4%
96%
Ireland
SME reseller 38%
Consumer
retail /etail
62%
Customers
DCC SerCom has a very broad customer
base, dealing with in excess of 14,000
customers each year. The largest
customer accounted for approximately
11% of revenues in the year ended
31 March 2013 and the ten largest
customers accounted for 39% of total
revenues in that year.
DCC SerCom 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 SME and consumer-
facing customer base for their products.
Our supply chain services customers
include IT equipment manufacturers,
outsourced equipment manufacturers,
consumer electronics companies
and telecommunications equipment
manufacturers. Customer relationships in
this area of business tend to be long term
in nature and several of our customers
have been dealing with the company for
over ten years.
Suppliers
DCC SerCom’s distribution activities have
a diverse supplier base and deals with
hundreds of vendors including the leading
global suppliers of IT, communications
and home entertainment products such
as Apple, Acer, Asus, Belkin, Cisco,
Dell, Devolo, D-Link, Electronic Arts,
Epson, Fujitsu, Huawei, IBM, Lenovo,
LG, Logitech, Microsoft, Netgear,
Nintendo, Nokia, Plantronics, Samsung,
Seagate, Sony, Symantec, Take-Two,
TomTom, Toshiba and Western Digital.
The largest supplier accounted for 14%
of total purchases in the year ended 31
March 2013 and the top ten suppliers
represented 52% of total purchases.
DCC SerCom’s principal market is the
distribution of IT products and home
entertainment products in Britain,
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
6% in the twelve months to 31 December
2012. The home entertainment market in
Britain and Ireland is valued at €6 billion
of which we estimate €1.25 billion is
supplied through the distribution channel
and we further estimate that this market
declined by over 15% in the year to 31
December 2012, including a decline of
over 25% in the video games market.
The supply chain management business
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.
DCC SerCom’s principal medium term
objectives are:
• to be a leading distributor of mobile,
IT and communications products and
related accessories and services in
Western Europe through continued
investment in organic development
complemented by acquisitions to extend
its geographic presence;
• 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.
Overview Business Performance Governance Report Financial Statements Information
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.
26
Business Performance
Operating Review
DCC SerCom (continued)
DCC SerCom 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.
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.
The supply chain management business
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 the business 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 1,670 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.
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 wide variety of employee training
programmes within individual businesses
to promote the ongoing development of
staff.
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 2013
DCC SerCom’s operating profits
increased by 1.3% on a constant
currency basis. DCC SerCom achieved
excellent organic growth in mobile
devices in Britain and in its supply chain
management activity, where it benefited
from a significant finished goods
fulfilment programme. This growth more
than offset the effect of the decline in the
market for home entertainment products
in Britain and Ireland.
DCC SerCom achieved organic revenue
growth of 16.8% on a constant currency
basis, reflecting very strong growth in IT
and communications products and the
supply chain fulfilment contract noted
above. The change in the product mix,
with a lower proportion of home
DCC ANNUAL REPORT AND ACCOUNTS 2013 27
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
€2,269.1m
€1,841.8m*
€50.9m
€47.9m*
2.2%
2.6%*
16.4%
15.9%
€122.2m
4.8%
5.7%
THE BUSINESS IN BRITAIN,
WHICH ACCOUNTED
FOR 72% OF REVENUE,
ACHIEVED VERY STRONG
ORGANIC GROWTH IN ITS
IT AND COMMUNICATIONS
PRODUCT SECTORS,
PARTICULARLY IN
MOBILE DEVICES SUCH
AS SMARTPHONES AND
TABLET COMPUTERS.
DCC SerCom: Key Financial Performance Indicators
Strategic objective
Drive for enhanced
operational performance
KPI
Revenue growth
(constant currency)
Drive for enhanced
operational performance
Operating profit growth
(constant currency)
Grow operating margin
Operating margin
Performance
Constant currency 2013 v 2012: +17.9%
Constant currency 2013 v 2012: +1.3%
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
€15.0m
*excluding DCC SerCom’s Enterprise distribution business which was disposed of in June 2012.
entertainment products in Britain and AV
products in France along with a higher
percentage of tablet and computing
products, gave rise to a reduction in the
overall operating margin of the business.
The business in Britain, which accounted
for 72% of revenue, achieved very
strong organic growth in its IT and
communications product sectors,
particularly in mobile devices such as
smartphones and tablet computers. This
reflects the rapid market acceptance of
new computing and leisure form factors
and the investment made in recent years
to position the business as a significant
participant in this market. DCC SerCom
remains well placed to benefit from the
ongoing demand from consumers and
businesses to access content and data on
a broad range of converged technology
devices.
The home entertainment market in
the UK declined by over 15% in the
calendar year 2012, with the market for
console gaming software and hardware
declining by over 25% in the period due
to a combination of factors, including a
cyclical decline in anticipation of the next
generation of consoles due to be launched
in the current financial year. This decline
had a negative impact on DCC SerCom’s
businesses in Britain and in Ireland.
However, DCC SerCom has continued to
develop its product and service portfolio in
this market and is well placed to benefit
from an upswing in the console gaming
cycle.
The business in France achieved organic
volume growth of 4.6% but profits
declined due to a change in the product
mix as the market for certain higher
margin AV accessories declined.
DCC SerCom’s supply chain management
activity had a very strong year reflecting
the contribution from a significant
finished goods fulfilment contract, which
is scheduled to wind down in the first half
of the financial year to 31 March 2014.
Overview Business Performance Governance Report Financial Statements Information 28
Business Performance
Operating Review
DCC Healthcare
DCC Healthcare comprises DCC Vital, which is focused on the sales,
marketing and distribution of pharmaceuticals and medical devices,
to the hospital and retail pharmacy channels, and DCC 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
DCC Vital
DCC Vital has a significant and growing
position in Britain in the sales, marketing
and distribution of pharmaceuticals and
medical devices and is the market leader
in these activities in Ireland.
Pharma - DCC Vital sells, markets
and distributes innovative and generic
pharma products in Britain and Ireland
through the hospital, retail pharmacy
and homecare channels. DCC Vital
has been active in the pharmaceutical
market since 2002, initially focused on
intravenous hospital products. DCC Vital
has been building its presence in the
retail pharmacy channel in recent years
including through the acquisition in May
2011 of the trade and assets of Neolab, a
small British generic pharma business.
This development was significantly
accelerated during the year with the
acquisition of Kent Pharmaceuticals
(announced in December 2012 and
completed in February 2013), a leading
provider of generic pharma products to
the British market.
Kent Pharma is involved in the
development, manufacture, sales,
marketing and distribution of generic
pharmaceuticals for the British, Irish
and international markets. It has a
broad portfolio of its own licensed
products with a particular focus on beta
lactam antibiotics including penicillin V,
flucloxacillin and amoxicillin, which are
long established antibiotics typically used
to treat bacterial infections such as throat,
ear and respiratory tract infections. Kent
Pharma is the market leader in these
products in Britain and also operates a
specialist beta lactam manufacturing
facility located in Roscommon, Ireland
(Athlone Pharmaceuticals). The balance
of the Kent product portfolio covers a
broad range of therapy areas. Kent has
strong relationships with the leading
retail/wholesale pharmacy groups and
independent pharmacies in Britain.
While Kent Pharma principally sells
to the retail pharmacy channel, it also
sells to hospitals, other generic pharma
companies and international distributors.
Following the acquisition of Kent Pharma,
DCC Vital now has a comprehensive
portfolio of own and third party innovative
and generic pharmaceuticals for the
hospital and retail channels across
a range of therapy areas including
antibiotics, oncology, pain management,
respiratory, haematology, emergency
medicine and addiction.
DCC Vital 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 Vital 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 Vital, in conjunction with
a subsidiary of United Drug plc, was
awarded a contract to provide a national
Outpatient Parenteral Antimicrobial
Therapy (OPAT) Service, the first national
pharma homecare contract to be awarded
by the Irish public healthcare system.
Devices - DCC Vital 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 last year by the
acquisition of the Forth Medical Group in
January 2012.
DCC Vital 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.
Sales of capital equipment represents
only a very 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 ANNUAL REPORT AND ACCOUNTS 2013
29
Revenue
€393.2m
2012: €330.0m
Change on prior year
Reported: +19.1%
Constant currency: +13.6%
Operating profit
€27.2m
2012: €23.4m
Change on prior year
Reported: +16.2%
Constant currency: +10.3%
Return on total capital employed
13.1%
2012: 15.4%
DCC Vital’s Brands - Biorad, Cipla, Diagnostica Stago, Fannin*, Fresenius Kabi, Grifols, Hikma, ICU Medical, Kent Pharmaceuticals*,
Martindale Pharma, Molnlycke, Neolab*, Oxoid, Smiths Medical.
* DCC owned brands
DCC Health & Beauty Solutions’ Customers -The Body Shop, Elder Pharmaceuticals, Forest Labs, GSK, Healthspan, Merck (Seven Seas,
Natures Best, Lamberts), Omega Pharma, PZ Cussons, Reckitt Benckiser, Space NK, Unilever, Vitabiotics.
Overview Business Performance Governance Report Financial Statements Information 30
Business Performance
Operating Review
DCC Healthcare (continued)
Logistics - DCC Vital 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 Vital operates in the pharma and
medical device markets in Britain and
Ireland which are primarily government
funded. Fiscal budgets in Ireland and, to
a lesser extent, Britain have tightened
in recent years 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 generic
pharmaceuticals and medical products
as well as outsourcing activities deemed
to be non-core. DCC Vital is well placed to
benefit from these trends.
DCC Health & Beauty Solutions
DCC Health & Beauty Solutions is a
leading outsourced service provider to the
health and beauty sector in Europe with
operations in Britain, and, following the
acquisition of Vitamex Manufacturing AB
during the year, in Scandinavia also. Its
range of outsourced services is focused
principally on the areas of nutrition
(vitamin and health supplements) and
beauty products (skin care and bath
and body care). The service offering
encompasses product development,
formulation, stability and other testing
and regulatory compliance as well as
manufacturing and packing. DCC operates
five licensed manufacturing facilities –
three in Britain and two in Sweden and
contract manufactures in a wide variety
of product formats (tablets, soft gel and
hard shell capsules, creams and liquids).
The business continues to enhance its
reputation and market share in continental
Case Study
CONTRACT MANuFACTuRE OF HEALTHCARE CREAMS AND LIquIDS – A
DEVELOPING GROWTH SECTOR FOR DCC HEALTH & BEAuTY SOLuTIONS
DCC Health & Beauty Solutions is rapidly developing its capability and revenues
in healthcare creams and liquids. While its creams and liquids facility in Alton,
Hampshire has been licensed by the MHRA for many years, historically it has
principally focused on products for the beauty sector.
Having identified a lack of high quality capacity in the contract manufacturing of
pharmaceutical creams and liquids in Britain, DCC invested to establish a dedicated
pharmaceutical manufacturing area within its Alton facility in mid 2010. DCC
installed a purpose built pharmaceutical grade dispensary and a new development
laboratory and enhanced its bottle filling capability, including the addition of in-
line automated carton erection and pharmacode reading capability. In addition to
its MHRA licence, the Alton facility is FDA audited and holds other international
accreditations in the pharmaceutical and medical devices areas.
Over the last two years, leveraging on its strong regulatory and technical expertise
and accreditations, the business has added new customers and generated
significant revenue growth in topical creams, liquids and suspensions across
OTC pharma, consumer healthcare and medical device categories. The range of
products now contract manufactured and packed by DCC Health & Beauty Solutions
includes Forest Laboratories’ Infacol®, a paediatric oral suspension, and a liquid
nutritional product for one of Britain’s leading vitamin brands.
While healthcare creams and liquids is a modest part of the overall DCC Health &
Beauty Solutions business today, based on current trends and growth rates, it is
expected to continue to increase in importance over the coming years.
DCC HEALTHCARE’S STRATEGY IS TO BUILD A
SUBSTANTIAL EUROPEAN HEALTHCARE BUSINESS
PRINCIPALLY FOCUSED ON THE SALES, MARKETING AND
DISTRIBUTION OF PHARMACEUTICALS AND MEDICAL
DEVICES AND THE PROVISION OF OUTSOURCED
SERVICES TO THE HEALTH AND BEAUTY SECTOR.
DCC ANNUAL REPORT AND ACCOUNTS 2013 31
Europe, especially in Scandinavia,
Benelux and Germany.
Consumer demand for nutrition and
beauty products has been robust through
the economic downturn with continued
demand for product innovation. More
importantly, there is an increasing
trend for health and beauty brand
owners to outsource non-sales and
marketing activities (including product
development) and to streamline their
supply chains. Further trends towards
increased regulation and higher
manufacturing standards add to the
generally positive market background
for contract manufacturing in the health
and beauty sector. These trends favour
well-funded contract manufacturers like
DCC Health & Beauty Solutions which
has the resources to invest in regulatory
expertise, customer specific product
innovation and high quality facilities.
Revenue for the year
ended 31 March 2013 by
product/service area
Pharma
Devices
Logistics
Health & Beauty
17%
26%
28%
29%
DCC Healthcare - Pro Forma
Sales Analysis
(post acquisition of
Kent Pharma)
Pharma
Devices
Logistics
Health & Beauty
27%
22%
25%
26%
Strategy and Development
DCC Healthcare’s strategy is to build a
substantial European healthcare business
principally focused on sales, marketing
and distribution of pharmaceuticals and
medical devices and the provision of
outsourced services to the health and
beauty sector.
In pharma, DCC Vital is currently focusing
on the integration of Kent Pharma. This
acquisition brings a highly complementary
product portfolio, product licence
ownership and strong
relationships in the British retail
pharmacy channel. Combining Kent
Pharma with DCC Vital’s pre-existing
pharma activities creates a substantial
pharma business with aggregate
revenues in excess of £100 million and a
leading position in the British generics
market. In the near term, the enlarged
pharma product portfolio and increased
sales and marketing capability is
generating growth opportunities for DCC
Vital in Britain. Over time the enhanced
pharma regulatory and business
development capability will also create
opportunities for sales development in
other geographic markets, in particular
within the EU and in the Middle East
and North Africa region. Furthermore,
the combined business will attract, and
provide a strong platform for product
in-licensing and bolt on acquisition
opportunities.
In devices, DCC Vital is continually seeking
to strengthen its market positions and
expand its product portfolio organically
and through bolt on acquisitions. The
devices market is increasingly polarising
between high tech products in specialist
therapy areas and commodity products.
DCC Vital seeks to attract quality
specialist agencies while also selectively
launching commodity products under
its own brand. DCC Vital has invested in
sales and marketing capability in Britain,
including the acquisition of Forth Medical
in 2012, which has provided an enhanced
platform for the development of our
medical device activities in this territory.
In Britain, DCC Vital is also building
a growth platform in the provision of
stock management and distribution
services. DCC Vital has strengthened
its management team, IT platform
and physical infrastructure in this area
and established a new state of the
art distribution centre in Derbyshire.
As a result the logistics business
has significant scope for growth and
operating efficiencies. This is a potentially
interesting growth opportunity as DCC
seeks to exploit British acute care
hospitals’ appetite for cost savings and
operating efficiencies from customised
just-in-time distribution solutions which
reduce stock obsolescence and improve
product availability.
In DCC Health & Beauty Solutions,
the high quality of DCC’s facilities,
together with the strength and depth
of DCC’s related product development
and technical resources, has enabled
the business 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. DCC
will continue to leverage this capability
across a broader customer base by
expanding its European customer base,
both organically and by acquisition. The
acquisition of Vitamex Manufacturing has
introduced some valuable new customer
relationships to DCC and the business
is working to deploy the full range of its
service offering to these customers. DCC
is also expanding its service offering
organically into related areas such as
sports nutrition and OTC pharma and will
seek to accelerate these developments by
acquisition.
Customers
DCC Vital’s market coverage in pharma
extends beyond the hospital sector into
retail pharmacy, pharma wholesalers
and the homecare channel, as well as
international distributors. The acquisition
of Kent Pharmaceuticals has broadened
and strengthened DCC Vital’s key account
relationships with the major retail and
wholesale pharmacy groups in Britain
including Alliance Boots, Lloyds, Phoenix
and The Co-op.
DCC Vital has deep market coverage
in the sales and marketing of medical
devices into the hospital sector in
Ireland and Britain and enjoys strong
relationships with the HSE in Ireland, the
NHS in Britain as well as individual acute
care hospitals, procurement groups and
private hospital groups.
DCC Vital’s British value added logistics
services business services a broad
customer base of brand owners, hospitals
and procurement groups including Guys
& St Thomas’s Hospital, the Sheffield
Hospital Trust and HCA.
Overview Business Performance Governance Report Financial Statements Information
32
Business Performance
Operating Review
DCC Healthcare (continued)
DCC Health & Beauty Solutions
principally focuses on providing services
to 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. The
acquisition of Vitamex Manufacturing AB
during the year has strengthened DCC
Healthcare’s presence in the European
market, particularly northern Europe.
Today approximately half of the output
from DCC’s facilities is consumed
in international markets outside of
Britain. 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 Apoteket, Merck,
Omega Pharma, Oriflame and Unilever.
DCC Healthcare has a broad customer
base with its ten largest customers
accounting for approximately 29% of
revenue in the year ended 31 March 2013.
Suppliers
DCC Vital works with leading innovative
and generic pharma companies like
Cipla, Fresenius Kabi, Grifols, Hikma,
Martindale Pharma, Medac and
Rosemont as well as having its own
specialist manufacturing plant for beta
lactam antibiotics in Ireland, which was
acquired as part of the acquisition of Kent
Pharmaceuticals.
DCC Vital represents leading medical,
surgical and scientific device brands
including BioRad, Diagnostica Stago, ICU
Medical, Molnlycke, Oxoid and Smiths
Medical.
DCC Vital’s British value added
distribution services business services
has a very broad supplier base including
Applied Medical, Baxter, Covidien,
Gambro, J&J and Molnlycke.
DCC Health & Beauty Solutions 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 28% of revenue in the year
ended 31 March 2013.
Our People
DCC Healthcare employs 1,584
people principally based in Britain and
Ireland, led by strong, entrepreneurial
management teams. In DCC Vital, the
senior management team has been
strengthened during the year, including
the appointment of new directors to
lead its pharma and devices activities
respectively, reflecting the increased
scale of the business 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 and resulting
fiscal pressures 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.
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.
DCC Healthcare trades with a very broad
supplier and customer base and its
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.
Sustainability
DCC Healthcare continues to improve
the sustainability of its businesses
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 we
have undertaken a number of new
initiatives during the year to meet and
in some cases exceed customers’
expectations in this regard. Within our
logistics business, the new state of the
art distribution centre in Derbyshire has
been designed to be energy efficient, in
addition we are using more fuel efficient
vehicles, as well as engaging with both
healthcare suppliers and providers on
mapping and understanding the Scope 3
carbon emissions of products supplied
into the NHS. As highlighted in the
Laleham Health & Beauty case study in
the Sustainability Report on pages 49 to
57, DCC Healthcare is also working with
one of its key customers as they engage
with the Carbon Disclosure Project Supply
Chain programme.
DCC ANNUAL REPORT AND ACCOUNTS 2013 DCC Healthcare: Key Financial Performance Indicators
Strategic objective
Drive for enhanced
operational performance
KPI
Revenue growth
(constant currency)
Drive for enhanced
operational performance
Operating profit growth
(constant currency)
Drive for enhanced
operational performance
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
Performance
Constant currency 2013 v 2012: +13.6%
Constant currency 2013 v 2012: +10.3%
€393.2m
€330.0m
€27.2m
€23.4m
6.9%
7.1%
13.1%
15.4%
€25.3m
€19.1m
7.7%
7.5%
33
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Performance for the Year Ended
31 March 2013
DCC Healthcare made good progress
during the year, growing its operating
profit by 10.3% on a constant currency
basis and significantly enhancing its
growth platform in the pharma sector
through the acquisition of Kent Pharma.
DCC Vital (formerly DCC Hospital
Supplies & Services), which is involved
in the sales, marketing and distribution
of pharmaceuticals and medical devices
and the provision of value added logistics
services, had a good year with the impact
of a challenging market in Ireland offset
by acquisitions in both the current and
prior year.
DCC Vital’s pharma business achieved
excellent profit growth. It generated
good organic growth in the British
retail pharmacy channel, especially
in respiratory and pain management
products, and benefited from a number of
NHS contract wins for antibiotic products
for the hospital sector. The result included
a modest first time contribution from
Kent Pharma, acquired in February 2013.
Kent Pharma has a strong portfolio of
own licence antibiotics and other generic
pharmaceuticals together with an
excellent sales network into the British
retail pharmacy channel. Its strengths
are highly complementary to DCC Vital’s
pre-existing pharma activities which
were more weighted to intravenous
pharmaceuticals for the hospital sector
with a geographical bias towards Ireland.
The integration of Kent Pharma is
progressing well.
DCC Vital’s devices business achieved
strong growth in Britain, boosted by a
first full year contribution from Forth
Medical Group, a specialist distributor
of neurological, orthopaedic and niche
surgical devices acquired in February
2012. This offset the impact on its Irish
activities of the budgetary constraints
within the public healthcare system which
have resulted in continued price pressure,
especially in more commoditised medical
and surgical products. DCC Vital’s
British value added logistics business
recorded good profit growth for the year
and benefited from continued market
interest in its range of customised
stock management and just-in-time
logistics solutions for hospitals and
manufacturers.
DCC Health & Beauty Solutions, a leading
provider of outsourced services to brand
owners in the health and beauty sectors,
achieved excellent organic profit growth
and benefited from a modest first time
contribution from Vitamex Manufacturing,
acquired in June 2012. Growth was
achieved across both the nutrition
(vitamins and health supplements)
and beauty categories. The business
benefited from successful new product
development for existing British and
European customers and from a number
of new business wins, including in
healthcare creams and liquids.
Overview Business Performance Governance Report Financial Statements Information
34
Business Performance
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 1.3 million tonnes of waste through its twenty one
facilities in Britain and Ireland.
Markets and Market Position
Britain
Operating under the William Tracey
brand in Scotland, Wastecycle in the East
Midlands and Oakwood Fuels nationally in
waste oil collection, DCC Environmental
collects and processes a broad range of
non-hazardous and hazardous waste.
DCC Environmental is a market leader
in non hazardous waste management
in Scotland operating a comprehensive
infrastructure across the central belt,
including one of the largest material
recycling facilities in Britain in Linwood,
close to Glasgow airport. The facilities
process waste collected by both company
owned and third party vehicles into
valuable commodities which can be used
as a substitute for virgin materials. Whilst
residual material continues to be sent to
landfill, DCC Environmental is constantly
looking to reduce the proportion of waste
that cannot be recycled or utilised for
its energy content. In that regard, DCC
Environmental has recently commenced
the export of processed material to Sweden
for energy recovery and, as highlighted in
the case study, is continuously investing in
its recycling infrastructure to ensure the
highest level of recycling.
DCC Environmental is also a market leader
in non-hazardous waste management in
the East Midlands where it operates three
material recycling facilities in Nottingham
and Leicester along with a civic amenity
site on behalf of Nottingham City Council.
Similarly to Scotland, the business
processes a broad range of waste streams
with the added capacity to process waste
not suitable for recycling into a fuel which
is used by the cement industry.
In hazardous waste management, DCC
Environmental is a market leader in
Scotland and the north of England with
three dedicated facilities providing a wide
range of treatment solutions for hazardous
waste. In addition, DCC Environmental is
a leading national collector of waste oils,
which are brought back to its facility in
Nottinghamshire where they are converted
into a fuel which can be used as a
substitute for heavy fuel oil.
Overall, the British business handles 1.2
million tonnes of material, the majority of
which is collected by its own fleet of 236
vehicles, and 72% of all waste volumes
are diverted from landfill. Recovery
percentages depend on the mix of material
with the highest percentage achieved from
construction material.
The British waste market has been
challenging over the past year, with the
recessionary environment resulting in a
decline in waste volumes and the wider
global malaise driving down recyclate
prices. However, the backdrop for DCC
Environmental remains positive, with
both the British Government and the EU
striving for continuous improvement in
waste management, which ideally suits
DCC Environmental with its comprehensive
recycling infrastructure and absence of any
landfill capacity. In 2011, the most recent
year for pan European statistics, the United
Kingdom landfilled 49% of municipal
waste, well ahead of many of its peers, and
the EU is striving to totally eliminate landfill
as an option for the disposal of waste. This
was illustrated in a European Parliament
debate in May 2012 when MEP’s voted
overwhelmingly in favour of proposals
contained in the ‘Report on a Resource-
Efficient Europe’, which articulated plans
put forward by the European Commission
to entirely phase out landfill.
There is an excellent regulatory backdrop
in Scotland with the devolved Government
leading the way in advanced waste policy
as articulated in the Zero Waste Scotland
plans. From January 2014, all business in
Scotland must present metals, plastics,
glass and card for separate collection. In
addition, businesses in non-rural areas
which produce over 50kg of foodwaste a
week must also present this for separate
collection. This will broaden to include all
businesses producing 5kg of food waste
from January 2016. DCC Environmental
sees exciting opportunities arising from
these new regulations and is active in
ensuring that it is appropriately resourced
to capitalise on the regulations.
Ireland
DCC Environmental’s Irish business
operates under the Enva brand which is
recognised as Ireland’s leading hazardous
waste treatment company. Enva operates
from six EPA/NIEA licensed sites in both
the Republic of Ireland and Northern
Ireland, offering technically innovative
solutions to a wide range of waste streams
for both multinational and indigenous
clients. It has an in-house infrastructure to
treat a broad range of materials including
waste oil, contaminated soils, bulk
chemicals and contaminated packaging. In
cases where it is unable to treat the waste
itself, it has relationships with a network
of European based companies to provide
a range of solutions for hazardous waste
which are not available in Ireland.
Enva’s water treatment division provides
specialty chemicals, equipment and
professional services to the drinking,
industrial and waste water sectors.
The division operates an in-house
manufacturing facility as well as an INAB
accredited laboratory to support these
services.
DCC ANNUAL REPORT AND ACCOUNTS 2013 35
Revenue
€142.4m
2012: €132.7m
Change on prior year
Reported: +7.3%
Constant currency: +1.6%
Brands
Enva*, Wastecycle*, Tracey*, Oakwood*.
* DCC owned brands
Operating profit
€13.4m
2012: €14.2m
Change on prior year
Reported: -6.0%
Constant currency: -11.7%
Return on total capital employed
8.3%
2012: 10.2%
Overview Business Performance Governance Report Financial Statements Information 36
Business Performance
Operating Review
DCC Environmental (continued)
The customer base is quite fragmented,
with the ten largest customers accounting
for approximately 19% of total revenue
in the year ended 31 March 2013. Many
of the customers have been with DCC
Environmental for a long time, in some
cases over 30 years, and the business has
developed a deep understanding of their
requirements.
Our People
DCC Environmental’s management have
deep industry knowledge with the former
owners of the businesses still with the
Group. Each company seeks to develop
their employees as illustrated by a policy
of promoting from within the organisation
wherever possible. Employee engagement
is critical and employee surveys are
undertaken. In addition the businesses
are constantly striving for excellence in
health and safety to ensure that a safe
place of work is provided to all employees.
Each company has a dedicated human
resources department.
DCC Environmental currently employs 893
people.
Key Risks
Similar to all businesses within the Group,
DCC Environmental 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, as has been the
case in recent years.
DCC Environmental has an exposure
to movements in both recyclate and oil
commodity prices.
Every effort is made to minimise the
interaction of heavy plant and people but
given the nature of its operations, it is
impossible to eliminate entirely and this
gives rise to the risk of accidents.
Sustainability
Noting its position at the heart of society’s
move to a more sustainable future, DCC
Environmental is constantly seeking
ways to reposition itself from a linear to
Case Study
WASTECYCLE’S uPGRADED MATERIAL RECYCLING LINE
Nottingham City Council collects recyclable waste from households and delivers to
Wastecycle who sort the material and identify outlets for the sale of the recyclable
materials. During the year, Wastecycle invested in new equipment which has allowed
for the processing of a broader range of materials. The equipment includes infrared
optical sorters to separate paper and plastic, ballistic separators to separate 2 and
3 dimensional material, eddy current separators to separate aluminium and steel
in addition to traditional magnets. Many trade waste customers (offices, retail)
segregate their waste into recyclable and non recyclable waste but many others for
a variety of reasons, such as lack of space, are unable to do so and historically little
value was extracted from these customers’ waste. Wastecycle is pioneering the split
of these customers into ‘clean’ and ‘dirty’ collection rounds and are now processing
the clean rounds through the same infrastructure as the local authority recyclable
material, thereby greatly reducing the proportion of waste sent to landfill.
The Irish waste market is valued at
approximately €1 billion. The economic
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 their 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
67%
19%
14%
DCC ANNUAL REPORT AND ACCOUNTS 2013
37
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
€142.4m
€132.7m
€13.4m
€14.2m
9.4%
10.7%
8.3%
10.2%
69%
74%
€21.5m
€21.7m
14.9%
22.3%
DCC Environmental: Key Financial Performance Indicators
Strategic objective
Drive for enhanced
operational performance
KPI
Revenue growth
(constant currency)
Drive for enhanced
operational performance
Operating profit growth
(constant currency)
Grow operating margin
Operating margin
Performance
Constant currency 2013 v 2012: +1.6%
Constant currency 2013 v 2012: -11.7%
Deliver superior
shareholder returns
Return on capital employed
(‘ROCE’)
Drive for enhanced margins
Recycling/recovery %
Generate cash flows to fund
organic and acquisition
growth and dividends
Operating cash flow
Deliver superior
shareholder returns
10 year operating profit
CAGR
will be no infringements of environmental
license conditions in the future.
Performance For The Year Ended
31 March 2013
DCC Environmental experienced a decline
in operating profit with difficult market
conditions in both Britain and Ireland.
In Britain, the non hazardous waste
business was impacted by increased
price competition driven by a reduction in
the volume of waste nationally and also
by a reduction in income from the sale
of recyclates as commodity prices fell.
Notwithstanding this difficult backdrop,
the business in Scotland performed well
with operating profit ahead of the prior
year. Price competition was also intense
in the hazardous sector, which suffered
from a reduction in demand due to the
challenging economic climate.
circular economy where resources are
continuously reused thereby reducing the
need for virgin materials and reducing
carbon emissions.
During the year there has been an
increase in focus on energy efficiency
across the companies, including the
sharing of best practice between the
businesses, possibly best illustrated by
a carbon reduction day in Scotland with
some excellent suggestions coming from
employees.
Disappointingly a prohibition notice
was issued by the HSE in the course
of a routine visit to one of Wastecycle’s
Leicester facilities. Corrective action was
immediately taken and the notice was
lifted within 24 hours. Lessons have been
learned and actions taken to prevent a
reoccurrence.
Within our Scottish business, a number
of infringements of environmental licence
conditions resulted in a downgrading of
our ‘excellent’ regulatory rating. Steps
have been put in place to ensure that there
Overview Business Performance Governance Report Financial Statements Information
38
Business Performance
Operating Review
DCC Food & Beverage
DCC Food & Beverage is principally focused on the sales, marketing
and distribution of food and beverage products in Ireland and on retail
restaurant and outsourced hospitality services through a joint venture
company.
Markets and Market Position
In Ireland, DCC Food & Beverage
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.
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 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 consumers
have reduced their purchase volumes
over the past twelve months however
underlying inflation is keeping the value
of sales relatively flat.
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 34% 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, hot beverages, home cooking
(herbs, spices and colourings), snacks,
confectionery and soft drinks.
DCC Food & Beverage is now the
leading distributor of wine in Ireland
to both the on and off-trade, providing
an extensive and recently expanded
portfolio of international wine brands. It
is also focused on further developing its
spirits portfolio and offers its principals
significant 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
wine solutions to the multiple off-trade
as well as the on-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 outsourced
hospitality services in Ireland, serving
approximately 10 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, Robert Roberts, Goodall’s,
YR (home cooking) and Lemon’s. The
business will also continue to actively
develop its extensive range of third party
agency brands across its healthfoods
and indulgence categories with
particular focus on selling, marketing
and category management.
DCC ANNUAL REPORT AND ACCOUNTS 2013 39
Revenue
€212.9m
2012: €223.4m
Change on prior year
Reported: -4.7%
Constant currency: -6.1%
Operating profit
€7.5m
2012: €10.7m
Change on prior year
Reported: -29.6%
Constant currency: -29.6%
Return on total capital employed
9.5%
2012: 13.7%
Brands
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, Beringer, Bollinger, Chapoutier, Cono Sur, Elizabeth Shaw, French Connection*, Freixenet, Glenfiddich,
Goodalls*, Hula Hoops, KP, Lemons*, Lindemans, Louis Jadot, McCoys, Masi, Mateus, Meanies, Moreau, Oatfield, Penfolds, Rancheros, Ritter,
Robert Roberts*, Sacla, Sea Dog*, Skips, Stolichnaya, Sutter Home, Topps, Torres, Tullamore Dew, Wakefield, Wilton Candy*, Wolfblass, YR*.
Logistics - Allied Foods*, Mr. Food*.
Other - Kylemore.
* DCC owned brands
Overview Business Performance Governance Report Financial Statements Information 40
Business Performance
Operating Review
DCC Food & Beverage (continued)
Case Study
GOODALL’S
The Goodall’s brand, comprising a range of herbs, spices, flavours and colours, was
acquired in December 2010. Since the acquisition the brand has been refreshed with
new packaging, new displays, new distribution, new advertising and new product
development.
Sales of the Goodall’s range continued to increase during the year, with the rollout of
the brand’s new look, which was updated in line with contemporary Irish food values.
The brand engaged successfully with opinion formers through the launch of
‘A Modern Irish Cookbook’, Ireland’s first ‘blogger’ cookbook. New customers have
been attracted to the brand through a strong website and social media presence,
whilst traditional media and recipe leaflets continued to play a part in retaining the
loyalty of established customers.
Goodall’s also took advantage of the rise in popularity of home baking by introducing a
theme of ‘Make it your own’ and bringing a number of innovative products to market.
A range of nine new products for the baking sector were launched during the year
including vanilla pods, vanilla extract with seeds and writing icing. Also new to the
Irish market was ‘Marshmallow Crème’, a versatile product which can be used as a
cake topping or dessert ingredient. The product was customer tested both at product
and packaging stage and has also been supported on social media post launch. It is
now available nationwide throughout Ireland and the Goodall’s range continues to
grow in the Irish market.
Our wine and spirits business in Ireland
will continue to develop its range and
grow its market share, particularly in
the on-trade sector.
Customers
DCC Food & Beverages’ business
is primarily based in Ireland, with a
modest wine business in Britain. The
ten largest customers accounted for
approximately 50% of total revenue in
the year ended 31 March 2013.
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.
Revenue split by
customer type 2013
Multiples
Symbols
Food Service
Wholesale
Independents
31%
22%
22%
13%
12%
Revenue split by
category 2013
40%
15%
10%
12%
Wine
Health Foods
Snack Foods
Frozen Traded
Hot & Cold Beverages
11%
/Equipment
Logistics Services
5%
Confectionery & Other 7%
Suppliers
DCC Food & Beverage deals with a
broad base of approximately 1,900
suppliers. The supply base is quite
fragmented and the top ten suppliers
account for only approximately 24%
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.
DCC ANNUAL REPORT AND ACCOUNTS 2013 DCC Food & Beverage: Key Financial Performance Indicators
Strategic objective
Drive for enhanced
operational performance
KPI
Revenue growth
(constant currency)
Drive for enhanced
operational performance
Operating profit growth
(constant currency)
Grow operating margin
Operating margin
Performance
€212.9m
€223.4m
Constant currency 2013 v 2012: -6.1%
€7.5m
€10.7m
Constant currency 2013 v 2012: -29.6%
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
-2.2%
3.5%
9.5%
4.8%
13.7%
€5.5m
€5.0m
0.4%
41
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
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 915 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 where
further economic downturn and its
impact on consumer spending remains
a key risk faced by the division as does
the related issue of changing market
demand for certain products and
product substitution.
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. The sustainability agenda of the
division includes health and safety,
climate change, product stewardship
(sustainable sourcing, healthy eating,
responsible advertising, packaging and
labelling compliance) and business
ethics. In addition, the division focuses on
engagement, development and well being
of employees across the businesses.
There has been a good improvement in
the number of lost time accidents across
the division during the year.
Performance for the Year Ended
31 March 2013
As anticipated, operating profit in DCC
Food & Beverage declined due to the
full year effect of the loss of a major
contract in the frozen and chilled
logistics business in the second half
of the prior year and a reduction in the
profitability of the wine business in
Britain.
The branded distribution activities in
Ireland delivered growth in revenue
and operating profit driven by a good
performance in company owned
brands. The Kelkin healthy foods brand
continued to grow sales, particularly in
the gluten free product category.
Overview Business Performance Governance Report Financial Statements Information
42
Business Performance
Financial Review
This was a year of recovery and renewed growth for the Group with
revenue increasing by 19.4%, operating profits increasing by 21.3%,
operating cash flow increasing to €324.5 million, free cash flow
increasing to €198.0 million and an incremental €277.7 million
deployed on acquisitions and net capital expenditure.
As the performance metrics set out in
Table 1 show, the key metrics of revenue
and profit growth, return on capital
employed, working capital management
and cash flow all improved during the
year to 31 March 2013. The deployment
of capital was the highest in the Group’s
history and the Group still retains a
strong, well funded and highly liquid
balance sheet.
Presentation Currency
With the recent cancellation of DCC’s
listing on the Irish Stock Exchange and
scheduled inclusion in the FTSE All-Share
Index and the FTSE 250 from 24 June
2013 DCC will, from 1 April 2013, present
its results in sterling. The Board believes
that this change will help to provide a
clearer understanding of DCC’s financial
performance by more closely reflecting
the profile of its operations. Given the
Table 1: Performance Metrics
current composition of the Group’s
activities, this change is expected to
reduce the impact of currency movements
on reported results.
in euro. DCC’s share capital will remain
denominated in euro and existing share
certificates will remain valid.
Accordingly, the results for the year ended
31 March 2013, set out in this Annual
Report, are the last set of results which
DCC is presenting in euro. Furthermore,
this Annual Report includes, on pages 181
to 184, summary financial information
presented in sterling for the year ended
31 March 2013, together with prior year
comparatives. DCC’s interim results for
the six months to 30 September 2013 and
subsequent results will be presented in
sterling only. The final dividend for the
year ended 31 March 2013 has being
declared in euro. Subsequent dividends
will be declared in sterling; however,
DCC will continue to offer shareholders
the option of receiving their dividends
The outlook statement set out in the
Chief Executive’s Review on page 13 is
presented in sterling.
Revenue
Group revenue increased by 19.4%, on
a constant currency basis, to €13 billion
primarily as a result of acquisitions in
DCC Energy and strong organic growth in
DCC SerCom. DCC Energy increased its
sales volumes by 21.8%, with like for like
volumes increasing by 2.3%. Excluding
DCC Energy, Group revenue was 14.4%
ahead of the prior year on a constant
currency basis; most of this growth was
organic and was driven by strong growth
in DCC SerCom, particularly in Britain.
Revenue growth - constant currency
Operating profit* increase/(decrease) - 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.
2013
2012
19.4%**
21.3%**
13.3
17.1
20.8%
0.7
0.6%
2.2
36.9
324.5
198.0
15.6%
207.2
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
** based on continuing activities i.e. excluding DCC SerCom’s Enterprise distribution business which was disposed of in June 2012.
DCC ANNUAL REPORT AND ACCOUNTS 2013 43
Overview of Results
2013
€’m
2012*
€’m
Change on prior year
Reported
Constant
currency
Revenue
12,966.3
10,350.9
+25.3%
+19.4%
Operating profit
DCC Energy
DCC SerCom
DCC Healthcare
DCC Environmental
DCC Food & Beverage
Group operating profit
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
130.2
50.9
27.2
13.4
7.5
229.2
(17.3)
211.9
(17.7)
(31.2)
163.0
(32.2)
(0.4)
130.4
83.5
47.9
23.4
14.2
10.7
179.7
(17.9)
161.8
(11.4)
(22.7)
127.7
(29.0)
(0.6)
98.1
+55.9%
+6.1%
+16.2%
-6.0%
-29.6%
+27.5%
+48.0%
+1.3%
+10.3%
-11.7%
-29.6%
+21.3%
+31.0%
+24.4%
Adjusted earnings per share (cent)
209.96
158.31
+32.6%
+26.0%
* based on continuing activities i.e. excluding DCC SerCom’s Enterprise distribution business which was disposed of in June 2012.
Operating Profit
Group operating profit increased strongly
by 21.3% on a constant currency basis;
approximately three quarters of this
growth was organic, primarily reflecting a
recovery in operating profit in DCC Energy.
Operating profit in DCC Energy, the
Group’s largest division, was significantly
ahead of the prior year (48.0% on a
constant currency basis) reflecting the
return to colder winter weather conditions
compared to the very mild winter in the
prior year as well as good development
activity. The colder weather gave rise
to increased heating related volumes
although commercial/industrial volumes
were impacted by the weak economic
environment.
Operating profit in DCC SerCom, the
Group’s second largest division, was
modestly ahead of the prior year, on
a constant currency basis, driven by
strong growth in Britain in the mobile
communications and tablet product
categories. Operating profit in DCC
Healthcare grew by 10.3% on a constant
currency basis, benefiting from
acquisitions in the current and prior year.
Operating profit declined in DCC’s two
smaller divisions, DCC Environmental and
DCC Food & Beverage.
Approximately 80% 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£0.8154 = €1, compared to an average
translation rate of Stg£0.8684 = €1 for the
prior year, a strengthening of 6%, which
resulted in a positive translation impact
on Group operating profit of €11.2 million.
Consequently, on a reported basis,
operating profit increased by 27.5%.
Although DCC’s operating margin on a
continuing basis (excluding exceptionals)
was 1.8%, compared to 1.7% in 2012, 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 on a continuing basis
(excluding exceptionals) for the Group’s
other divisions was 3.3% (3.8% in 2012),
with some of the sales growth in DCC
SerCom being at relatively lower margins.
An analysis of the performance on a
constant currency basis for the first half,
the second half and the full year ended
31 March 2013 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 16 to 41.
Finance Costs (net)
Net finance costs decreased marginally to
€17.3 million (2012: €17.9 million). Whilst
average net debt during the year was
€342 million, compared to €248 million
during the prior year, the average interest
rate on the Group’s debt was lower.
Overview Business Performance Governance Report Financial Statements Information
44
Business Performance
Financial Review (continued)
Interest was covered 13.3 times by Group
operating profit before amortisation of
intangible assets (10.4 times in 2012).
Profit Before Net Exceptional Items,
Amortisation of Intangible Assets and
Tax
Profit before net exceptional items,
amortisation of intangible assets and tax
of €211.9 million increased by 24.4% on
a constant currency basis (by 31.0% on a
reported basis).
Net Exceptional Charge and
Amortisation of Intangible Assets
The Group incurred a net exceptional
charge before tax of €31.2 million as
follows:
Reorganisation costs
Acquisition costs
Other (net)
Total
2013
€’m
20.7
14.9
(4.4)
31.2
The cash effect of the exceptional charges
was €30.9 million in the year ended 31
March 2013.
The Group incurred an exceptional
charge of €20.7 million in relation
to the restructuring of acquired and
existing businesses. Most of this related
to the planned integration into DCC
Energy’s existing operations of certain
oil distribution assets previously owned
by Total and the BP UK LPG business
following the clearance of these
acquisitions by the relevant competition
authorities.
Acquisition and related costs of €14.9
million include the professional and tax
costs (such as stamp duty) relating to the
evaluation and completion of acquisitions.
These costs also include the legal and
other professional costs relating to the
review and ultimate clearance by the
relevant competition authorities of the
Total and BP UK LPG acquisitions.
The net exceptional credit primarily
relates to deferred acquisition
consideration overprovided in previous
years of €6.8 million less an IAS 39
ineffectiveness charge of €1.7 million.
The charge for the amortisation of
acquisition related intangible assets
increased from €11.4 million to €17.7
million primarily due to the acquisitions
completed in the second half of the prior
year and in the current year.
Profit Before Tax
Profit before tax of €163.0 million
increased by 24.7% on a reported basis.
Taxation
The effective tax rate for the Group
decreased to 17% compared to 18% in
the previous year primarily reflecting a
reduction in the UK corporation tax rate.
Adjusted Earnings Per Share
Adjusted earnings per share of 209.96
cent increased strongly by 26.0% on a
continuing constant currency basis (32.6%
on a continuing reported basis).
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 1993)
15 years (i.e. since 1998)
10 years (i.e. since 2003)
5 years (i.e. since 2008)
CAGR %
12.5%
10.9%
7.5%
4.9%
Table 2: Revenue - Constant Currency
H1
€’m
2013
H2
€’m
FY
€’m
H1
€’m
2012*
H2
€’m
FY
€’m
Change
H2
%
H1
%
FY
%
4,407.2
5,061.6
9,468.8
3,133.3
4,689.7
7,823.0
+40.7%
+7.9%
+21.0%
DCC Energy
DCC SerCom
866.9
1,305.5
2,172.4
DCC Healthcare
DCC Environmental
174.3
66.5
DCC Food & Beverage
118.1
200.5
68.3
91.6
374.8
134.8
209.7
766.9
153.8
65.4
132.0
1,074.9
1,841.8
+13.0%
+21.4%
+17.9%
176.2
67.3
91.4
330.0
132.7
223.4
+13.3%
+13.8%
+13.6%
+1.8%
-10.6%
+1.4%
+0.3%
+1.6%
-6.1%
Total
5,633.0
6,727.5
12,360.5
4,251.4
6,099.5
10,350.9
+32.5%
+10.3%
+19.4%
Weighting %
45.6%
54.4%
100.0%
41.1%
58.9%
100.0%
* based on continuing activities i.e. excluding DCC SerCom’s Enterprise distribution business which was disposed of in June 2012.
DCC ANNUAL REPORT AND ACCOUNTS 2013
45
Dividend
Cash Flow
The total dividend for the year of 85.68
cent per share represents an increase
of 10.0% over the previous year. The
dividend is covered 2.5 times (2.1 times
in 2012) by adjusted earnings per share.
Over the last 19 years (i.e. since DCC’s
flotation), DCC’s dividend has grown at a
compound annual rate of 14.7%.
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. The Group’s return on
total capital employed increased from
14.2% to 15.6% driven primarily by the
increase in the Group’s operating profit,
particularly in DCC Energy and strong
working capital management.
2013
ROCE
2012
ROCE
DCC Energy
DCC SerCom*
DCC Healthcare
DCC Environmental
DCC Food & Beverage
Group
18.5% 14.0%
16.4% 15.9%
13.1% 15.4%
8.3% 10.2%
9.5% 13.7%
15.6% 14.2%
* continuing activities
The Group generated excellent operating
and free cash flow during the year, as
summarised in Table 4.
Operating cash flow in 2013 was €324.5
million compared to €277.3 million
in 2012. Working capital was reduced
by €34.6 million despite a €2.3 billion
increase in revenue, with overall
working capital days decreasing to 2.2
days at 31 March 2013 from 2.5 days at
31 March 2012.
After interest and tax payments and
net capital expenditure, free cash flow
amounted to €198.0 million compared
to €146.0 million in the prior year.
Net capital expenditure in the year
of €70.5 million (2012: €65.6 million)
compares to a depreciation charge of
€66.5 million (2012: €55.4 million).
With a cash impact of acquisitions in
the year of €206.2 million and dividend
payments of €67.0 million, overall there
was a net outflow of €89.6 million in the
year, leaving net debt at 31 March 2013
at €219.9 million.
Table 3: Operating Profit - Constant Currency
H1
€’m
21.5
14.8
11.2
7.1
3.3
2013
H2
€’m
FY
€’m
102.1
123.6
33.8
14.6
5.4
4.2
48.6
25.8
12.5
7.5
H1
€’m
18.7
14.2
10.5
7.8
6.0
2012*
H2
€’m
64.8
33.7
12.9
6.4
4.7
FY
€’m
83.5
47.9
23.4
14.2
10.7
Change
H2
%
H1
%
FY
%
+14.8%
+57.5%
+48.0%
+4.0%
+0.2%
+1.3%
+6.4%
+13.5 %
+10.3%
-9.4%
-14.6%
-11.7%
-44.2%
-11.1%
-29.6%
DCC Energy
DCC SerCom
DCC Healthcare
DCC Environmental
DCC Food & Beverage
Total
57.9
160.1
218.0
57.2
122.5
179.7
+1.1%
+30.7%
+21.3%
Weighting %
26.5%
73.5%
100.0%
31.8%
68.2%
100.0%
* based on continuing activities i.e. excluding DCC SerCom’s Enterprise distribution business which was disposed of in June 2012.
Overview Business Performance Governance Report Financial Statements Information
46
Business Performance
Financial Review (continued)
Table 4: Summary of Cash Flows
Operating profit
Decrease in working capital
Depreciation and other
Operating cash flow
Capital expenditure (net)
Free cash flow (before interest and tax payments)
Interest and tax paid
Free cash flow
Acquisitions
Disposals
Dividends
Exceptional items
Share issues
Net outflow
Opening net debt
Translation
Closing net debt
2013
€’m
2012
€’m
229.2
185.0
34.6
60.7
46.6
45.7
324.5
277.3
(70.5)
(65.6)
254.0
(56.0)
198.0
(206.2)
14.4
(67.0)
(30.9)
2.1
(89.6)
(128.2)
(2.1)
211.7
(65.7)
146.0
(168.1)
(1.3)
(63.2)
(2.8)
2.4
(87.0)
(45.2)
4.0
(219.9)
(128.2)
The conversion rate of operating profits
to free cash flow (i.e. operating cash
flow less capital expenditure but before
interest and tax payments) is an important
measure as to how the Group’s operating
profits translate into cash flow. The Group
has a relatively high conversion rate which
is summarised on a 1,5,10 and 15 year
basis as follows:
Balance Sheet and Group Financing
DCC’s financial position remains very
strong, well funded and highly liquid.
At 31 March 2013, the Group had net
debt of €219.9 million and total equity
of €1.06 billion. In April 2013, the Group
successfully completed a fund raising in
the US Private Placement market raising
$525 million (€404.1 million) at attractive
Operating profit
Operating cash flow
Free cash flow*
Free cash flow* %
1 Year
€‘m
229
325
254
111%
5 Year
€‘m
1,017
1,474
1,175
116%
10 Year
€‘m
1,654
2,135
1,632
99%
15 Year
€‘m
2,032
2,590
1,948
96%
*Operating cash flow less capital expenditure and before interest and tax payments.
rates of interest and with maturity
terms of seven, ten and twelve years
(average maturity of ten years). Pending
deployment of these funds on acquisitions
and future debt repayments, the funds
raised add to DCC’s cash resources,
increasing the average maturity on all of
the Group’s debt to just over six years.
The Group’s strong funding and liquidity
position at 31 March 2013, adjusted for the
above fundraising which was received on
25 April 2013, is summarised in Table 5.
Key financial ratios as of 31 March 2013,
including the principal financial covenants
included in the Group’s various lending
agreements, are as follows:
2013
2012
Lender
Actual
Actual
Covenants
Net
debt:EBITDA
EBITDA:net
interest
EBITA:net
interest
Total equity
(€’m)
0.7
0.5
17.1
13.5
13.3
10.4
3.5
3.0
3.0
1,055.3 1,014.0
500.0
The above funding together with available
cash resources and committed bank term
loan facilities ensures that the Group
retains significant financial capacity to
support its future plans. Pending the
deployment of this cash on scheduled
debt repayments and acquisition and
development opportunities, the Group
will incur an annual interest holding
cost on this incremental debt. However,
raising these funds at this time has taken
advantage of relatively good market
conditions well in advance of the Group’s
scheduled debt maturities of €285 million
over the next two years.
Further analysis of DCC’s cash, debt and
financial instrument balances at 31 March
2013 is set out in notes 28 to 31 in the
financial statements.
DCC ANNUAL REPORT AND ACCOUNTS 2013 47
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 6.1%
strengthening in the average translation
rate of sterling, referred to above,
positively impacted the Group’s reported
operating profit by €11.2 million in the
year ended 31 March 2013.
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 1.4% weakening in
the value of sterling against the euro
during the year ended 31 March 2013,
referred to above, was the main element
of the translation loss of €13.8 million
arising on the translation of DCC’s non-
euro denominated net asset position at
31 March 2013 as set out in the Group
Statement of Comprehensive Income 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 and in the resale prices
of recycled oil products. Fixed price
oil supply contracts are occasionally
provided to certain customers for periods
Table 5: Summary of Net Debt at 31 March 2013
Cash and short term bank deposits
Overdrafts
Cash and cash equivalents
Bank debt repayable within 1 year
US Private Placement debt repayable:
Y/e 31/3/2014
Y/e 31/3/2015
Y/e 31/3/2016
Y/e 31/3/2017
Y/e 31/3/2018
Y/e 31/3/2019
Y/e 31/3/2020
Y/e 31/3/2021
Y/e 31/3/2022
Y/e 31/3/2023
Y/e 31/3/2024
Y/e 31/3/2025
Y/e 31/3/2026
Other debt
Debt
At
Fund raising
31 March
25 April
2013
€’m
2013
€’m
Pro -forma
€’m
613.7
(103.9)
509.8
404.1
-
404.1
1,017.8
(103.9)
913.9
(0.9)
-
(0.9)
(66.0)
(218.3)
(15.2)
(112.9)
(55.4)
-
(213.0)
-
(44.4)
-
-
-
-
(3.6)
(729.7)
-
-
-
-
-
-
-
(60.4)
-
-
(258.2)
-
(85.5)
-
(404.1)
(66.0)
(218.3)
(15.2)
(112.9)
(55.4)
-
(213.0)
(60.4)
(44.4)
-
(258.2)
-
(85.5)
(3.6)
(1,133.8)
Net debt
(219.9)
-
(219.9)
Financial Risk Management
Group financial risk management is
governed by policies and guidelines
which are reviewed and approved
annually by the Board of Directors.
These policies and guidelines primarily
cover foreign exchange risk, commodity
price risk, credit risk, liquidity risk and
interest rate risk. The principal objective
of these policies and guidelines is
the minimisation of financial risk at
reasonable cost. The Group does not trade
in financial instruments nor does it enter
into any leveraged derivative transactions.
DCC’s Group Treasury function centrally
manages the Group’s funding and liquidity
requirements. Divisional and subsidiary
management, in conjunction with Group
Treasury, manage foreign exchange
and commodity price exposures within
approved policies and guidelines. Further
detail in relation to the Group’s financial
risk management and its derivative
financial instrument position is contained
in note 47 to the financial statements
Foreign Exchange Risk Management
DCC’s reporting currency and that in
which its share capital is denominated is
the euro. Exposures to other currencies,
principally sterling and the US dollar,
arise in the course of ordinary trading.
A significant proportion of the Group’s
profits and net assets are denominated
in sterling. The sterling:euro exchange
rate weakened by 1.4% from 0.8339 at 31
March 2012 to 0.8456 at 31 March 2013.
However the average rate at which the
Group translates its UK operating profits
strengthened by 6.1% from 0.8684 in 2012
to 0.8154 in 2013.
Approximately 80% of the Group’s
operating profit for the year ended 31
March 2013 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
Overview Business Performance Governance Report Financial Statements Information 48
Business Performance
Financial Review (continued)
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 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 Chief
Executive and Chief Financial Officer and
reviewed 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. All
drawn fixed rate borrowings at 31 March
2013 were swapped to floating interest
rates, using interest rate and cross
currency interest rate swaps which qualify
for fair value hedge accounting under IAS
39. Approximately 75% of the fixed rate
US Private Placement which was drawn
down on 25 April 2013 was similarly
swapped to floating interest rates. 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. With the recent
cancellation of DCC’s listing on the Irish
Stock Exchange and scheduled inclusion
in the FTSE All-Share Index and the
FTSE 250 from 24 June 2013, DCC
stepped up its investor relations efforts
in order to increase the awareness of
DCC among the international equity
investor community and in particular
commenced a process to attract
additional broker analyst coverage in
the UK. During the year, the executive
management presented at 8 capital
market conferences, at approximately
200 one-on-one and group meetings with
shareholders and to 14 UK broking firms.
For the Group’s debt investors,
in November 2012 the executive
management presented in London and
the US to 29 of its existing and potential
debt holders as part of a “Non-deal”
road show. This was followed in February
2013 with a “Deal” road show where
the executive management presented
in London, Continental Europe and the
US to 44 of its existing and potential
debt holders, which culminated in the
successful $525 million (€404.1 million)
fundraising referred to above.
Share Price and Market Capitalisation
The Company’s shares traded in the range
€17.55 to €27.50 during the year. The
share price at 28 March 2013 was €27.45
(30 March 2012: €18.56) giving a market
capitalisation of €2.30 billion (2012: €1.55
billion). Based on the Company’s share
price at 28 March 2013, Total Shareholder
Return since the Group’s flotation in May
1994 was 1,464%.
DCC ANNUAL REPORT AND ACCOUNTS 2013 49
Sustainability Report
Statement from the Chief Executive
For DCC, sustainability is a systematic approach to
identifying and managing the key economic, social and
environmental drivers that will ensure the resilience
of our business and deliver long term sustainable
shareholder value.
The Sustainability Committee has
continued to focus on the aspects of
sustainability that are material to the
Group and our activities and performance
in these areas is reported in more detail
below. We are determined to ensure that
sustainability is integrated into existing
business processes, such as strategic
planning and monthly reporting, and are
working to identify how best to achieve
this in the current year.
The talent, innovation and
entrepreneurial flair of our employees
have been essential to DCC’s strong
growth and achievements to date. Their
continued engagement, motivation and
development will be fundamental to the
future success of our businesses. We
are currently developing Group wide
metrics on this important aspect of our
sustainability approach.
Health and safety receives significant
management attention with regular
monitoring and review of performance
at all levels. We continue to improve
management systems, provide
appropriate training and raise safety
awareness through promotional
campaigns. We are pleased to report
that both measures of lost time injury
rates have decreased significantly since
last year, but we are not complacent
and zero lost time injuries remains our
ultimate goal.
The long term impact of climate change
is a global challenge. Government
policies, customer concerns and
extreme weather patterns impact
consumption demand, global supply
chains and commodity prices. Internally
we rigorously monitor our operational
carbon emissions and improve energy
efficiency where cost effective and
practical. We have retained our position
in the Carbon Disclosure Project (CDP)
Irish Climate Leaders index for the
second year, based on our response
to CDP’s investor questionnaire which
covered all of the Group’s operations.
As a successful business, DCC makes a
significant contribution to the economy,
creating value which is distributed to
stakeholders as outlined in the graphic
on page 55.
The new version of the Global Reporting
Initiative (GRI) Guidelines was published
in May this year and the final version
of an Integrated Reporting Framework
is expected from the International
Integrated Reporting Council (IIRC) later
this year. The release of these standards
will provide us with a timely opportunity
to review the format of reporting to
investors and other stakeholders.
Profile, Boundary and Scope of
Sustainability Reporting
This Sustainability Report follows the
same reporting cycle and fiscal year as
the Annual Report, to 31 March 2013,
and includes all Group subsidiaries.
Joint ventures are not included in the
carbon emissions or LTI data. There are
no significant changes from previous
reporting periods in the scope, boundary
or measurement methods applied in the
report and there is no restatement of data
from the 2012 Sustainability Report.
We continue to report consistently on
those aspects of sustainability that are
material at a Group level: people, health
and safety, environment and economic
contribution, as we have done for the
past three years. Within these headings
we report on key issues common to all
of our businesses. Given the diversity
of the Group’s business activities, at a
subsidiary level some aspects may take
on more importance than others, for
example community relationships in a
waste management business or product
safety in a healthcare business.
The impact of new reporting standards
from GRI and IIRC remains to be
seen but they will certainly inform
developments in corporate reporting
into the future. Reflecting this trend
towards integration, each divisional
operating review in this Annual
Report includes commentary on
areas of sustainability relevant to their
businesses and non-financial KPIs are
included in the Group Key Performance
Indicators section on page 14.
This Report meets the requirements of
the GRI level C+ standard, as identified in
the content table on page 56. Summary
criteria for the recording and reporting of
lost time injuries and carbon emissions
are available on the DCC website.
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.
Overview Business Performance Governance Report Financial Statements Information 50
Business Performance
Sustainability Report (continued)
Governance, Structures and Processes
The Sustainability Committee, chaired
by the Chief Executive, met five times
during the year. The Committee includes
divisional and subsidiary managing
directors and senior Group executives
and is tasked with identifying how the
concepts of corporate sustainability can
be used to augment and strengthen our
businesses.
During 2012, Forum for the Future1,
was engaged to facilitate a workshop
with the Sustainability Committee. The
purpose was to develop a standard
framework which provided a consistent,
systematic approach to sustainability
while at the same time being flexible
enough to be applied at all levels across
our diverse businesses.
The process of developing this
framework, at Group and divisional
levels, has confirmed the key values,
enablers and aspects of our businesses
and challenged us to set clear objectives
to enhance them and to measure and
report on their performance. Currently,
the framework is being finalised and the
outputs will be integrated into regular
planning, budgeting and reporting
processes in the current year.
Stakeholder Engagement
Stakeholder input is important to our
work on sustainability and we welcome
all opportunities to engage in that
regard.
During the year we engaged with a
number of shareholders and continue to
benefit from their input and observations
on sustainability reporting. In addition,
we have begun to review the criteria set
out by EIRIS who collect environmental,
social and governance data for fund
managers and other clients, including
the FTSE Group for the FTSE4Good
responsible investment index.
Sustainability is an agenda item
at divisional and subsidiary board
meetings and is the principal means
of engaging with these management
teams. As key stakeholders in our
approach to sustainability, subsidiary
management are essential to
embedding the approach into business
processes.
Material Aspects
Material aspects were initially
determined in 2010 by the Corporate
Sustainability Working Group (the
forerunner to the Sustainability
Committee), 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 that ranked
highly on both axes to be prioritised for
reporting. Over time these have evolved
and currently four key aspects - people,
health and safety, environment and
economic contribution - are considered
to be material at Group level.
Divisions and individual subsidiaries
have additional aspects that are of
particular relevance to them dependent
on their business sector – for example
customer engagement, supply chains,
employee training and development,
waste reduction, water conservation and
resource scarcity.
Our People
At 31 March 2013, DCC employed
9,803 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 LPG
distribution businesses in the UK,
Benelux and Scandanavia and by DCC
Healthcare of Kent Pharmaceuticals.
An analysis of DCC employment by
division and by geographic area is as
follows:
Division
DCC Energy
DCC SerCom
DCC Healthcare
DCC Food & Beverage
DCC Environmental
DCC Corporate
Geography
UK
Ireland
Continental Europe
Other
Employee
numbers
4,715
1,661
1,576
911
887
53
9,803
Employee
numbers
7,232
1,797
640
134
9,803
%
48
17
16
9
9
1
100
%
74
18
7
1
100
Graduate Recruitment Programme
The DCC graduate recruitment
programme is now in its third year
with the first tranche of graduates
preparing to complete the programme
in August. Due to the success of the
programme in its first year, we are
delighted to be in a position to offer all
seven of the 2011 graduates permanent
roles; they will begin the next stage
of their careers with a number of our
companies in September 2013. The 2012
graduates have now completed their
first placement and are commencing
their second placement in another
DCC company. The 2013 recruitment
campaign has been completed and seven
graduates will be commencing the next
graduate cycle in September 2013.
gradIreland is Ireland’s leading graduate
advice and employment company and
presents graduate recruitment awards
each year. DCC entered for the first time
this year and was shortlisted in the Best
Graduate Training and Development
Programme category.
DCC ANNUAL REPORT AND ACCOUNTS 2013 51
Health & Safety
The safety of our employees, customers
and the general public is of paramount
importance. Line managers are
responsible for health and safety
and are supported by experienced
health and safety professionals in
the implementation of policies and
procedures. Risk control measures –
including maintenance and inspections,
training, design standards and
emergency systems – are continuously
reviewed, audited and monitored to
confirm their effectiveness and to
identify improvement opportunities.
DCC’s employment practices provide
for equal opportunities to all existing
and prospective employees recognising
that our success is dependent upon the
quality, effectiveness and skill base of
our employees. We are committed to the
fair and equitable treatment of all our
employees.
In recognising the value of a diverse
workforce to our business, we felt it
important to bring additional focus
to diversity and to ensure that its
principles were consistently applied
across the Group. In order to do this we
created a Group policy statement on
diversity and equal opportunities and
distributed it to all Group companies,
with the objective of ensuring that
subsidiary policies accurately reflect
the Group’s overall commitment to
the principles of diversity and equal
opportunities. We plan to follow up with
all Group companies to ensure that,
where appropriate, relevant awareness
and training programmes are in place in
support of this commitment.
“GB Oils employs over 2,700 people.
Their safety is a constant focus within the
company and is fundamental to our values
and long term business success. In 2012
we launched the Safety First campaign
and are committed to maintaining the
positive momentum it is generating to
build a stronger safety culture.” Paul Vian,
Managing Director, GB Oils.
Safety First is about changing attitudes and behaviour
towards safety. It is the company’s commitment to continuous
improvement in health and safety and everyone within the
business is charged with making sure it is highly visible and
regularly discussed in every area and at every level. Safety
First is a commitment to always support staff when they
choose to work safely.
Five safety essentials were introduced - simple behaviours
that help to focus attention on the safety of activities carried
out on a daily basis. In addition, new Golden Rules establish
specific task based rules to prevent the most common causes
of accidents in the business.
Business Ethics
The Group Compliance function
provides support for leadership teams
across the Group to ensure that all our
activities are conducted in a compliant
and ethical manner.
During the year, detailed compliance
workshops were held with subsidiaries
across the Group, at which controls in a
range of important legal and regulatory
areas were reviewed. A programme
of training and other improvements
has been put in place on foot of those
workshops, focusing on key areas such
as competition law, data protection law
and consumer protection rules.
These recent improvements build on
previous initiatives in this area, including
the introduction of Group Business
Conduct Guidelines, Whistleblowing
Policy and Anti-Bribery and Corruption
Policy. We commenced online training
during the year, aimed at reminding
employees across the Group of the
importance of our Business Conduct
Guidelines and Whistleblowing Policy
and of ethical and fair behaviour in all
areas of our business. This training is
continuing and will be provided in all
Group subsidiaries during 2013.
Diversity and Equal Opportunities
DCC recognises and appreciates the
variety of characteristics which make
individuals unique and embraces the
benefits of bringing together people
from a wide range of backgrounds
and with diverse skills, qualities and
experiences. DCC also promotes the
fostering of a working culture which
is fair and inclusive, enabling all
employees to make their distinctive
contributions to the benefit of the
Group. A diverse workforce not only
benefits individuals by helping to create
a positive working environment in which
DCC employees can develop rewarding
careers but also enriches our pool of
talent, bringing new ways of thinking
and enabling us to understand better
the needs of all of our customers and
provide outstanding service.
Overview Business Performance Governance Report Financial Statements Information
52
Business Performance
Sustainability Report (continued)
Health and Safety Performance
The lost time injury frequency rate
(LTIFR) decreased for the third year
in succession. While this is positive,
we are still on a journey towards zero
LTIs – an objective that benefits both
employees and the businesses. The
improvement in the LTIFR was driven by
good results from, in particular, GB Oils,
Allied Foods, the William Tracey Group
and the businesses in the Healthcare
division. Key themes for maintaining
our objective of further reductions in
LTIs include leadership activities, for
example completing safety tours and
encouraging a positive safety culture,
and a focus on near miss reporting as a
proactive approach to addressing below
standard conditions before they become
accidents.
The historical upward trend in the
number of days lost as a result of lost
time injuries (LTISR) has been reversed
in the reported year by a reduction
in the seriousness of the lost time
injuries themselves and through active
management of the return to work
process.
KPI - LTIFR
Number of lost time injuries2 per
200,000 hours worked
1.9
2.3
2.5
2.8
2013*
2012
2011
2010
KPI - LTISR
Number of calendar days lost per
200,000 hours worked
42
42
53
48
2013*
2012
2011
2010
Process Safety
In common with other businesses
handling high hazard products, process
safety has been an increasing area of
senior management attention over the
past number of years. Process safety is
a blend of engineering and management
skills focused on preventing catastrophic
accidents caused by the loss of
containment of dangerous substances
such as oil or LPG.
Reflecting the potential for a major
incident at one of our top tier COMAH3
sites in Ireland or the UK, more
than twenty senior divisional and
subsidiary directors within DCC Energy
participated in process safety leadership
training in 2012. The training covered
core principles of process safety
management including increasing
board level understanding, development
of process safety improvement plans
and the monitoring of process safety
performance. A follow up session
will be completed in the current year
to formally assess progress on the
divisional, subsidiary and individual
actions arising from the training
courses.
Environment
Climate Change
The challenge of climate change
continues unabated as global emissions
continue to rise, increasing the
frequency and intensity of extreme
weather events over the longer term.
While uncertainties remain, it is clear
that economic growth and carbon
emissions must be decoupled if there
is any chance of keeping a global
temperature increase to a manageable
level. As this change occurs all
businesses will need to assess where
they are vulnerable and where there is
opportunity to be part of the solution
to climate change. As noted in the
case study from Laleham Healthcare
on page 53, leading multinationals are
increasingly focusing on carbon in their
supply chains.
At the UN Rio+ Earth Summit in June
2012, the UK Deputy Prime Minister
announced that companies listed on
the London Stock Exchange would be
required to report their greenhouse
gas emissions. DCC has already
been publicly reporting emissions
for a number of years so we are well
positioned to meet this mandatory
reporting requirement.
Greenhouse Gas Emissions
Details of our energy use and
greenhouse gas emissions are set out
in the table on page 54. 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 footprint4.
Total carbon emissions for the Group
increased by 6% from the prior year. The
increase in emissions is principally due
to three factors:
• acquisitions in the year and full year
contributions from acquisitions made
in the year ended 31 March 2012 (in
particular Butler Fuels and Oakwood
Fuels),
• increase in diesel fuel use in the
Energy division given the lower winter
temperatures, and
• increase in heating fuels (natural gas
and heating oils) used in our facilities
due to a colder winter compared to
the prior year.
The full year impact of reduced activity
in Allied Foods resulted in a decrease
of 3,220 tonnes CO2e and challenging
trading conditions in the Environmental
division reduced emissions by
approximately 1,600 tonnes CO2e.
Subsidiaries continue to identify
opportunities to reduce energy usage
through greater efficiency in vehicle
routing, improving driving techniques,
engine monitoring and the use of energy
efficient technologies. Through these
initiatives, progress is being made
towards our targeted reduction in
carbon intensity of 15% by 2015 against
a 2011 baseline. In 2013 we will be
updating our online carbon reporting IT
platform to a system which will improve
the efficiency of reporting and provide
management with more sophisticated
tools to monitor performance against
out targets.
DCC ANNUAL REPORT AND ACCOUNTS 2013 53
Gem Distribution is the UK’s exclusive xbox
distributor and largest UK distributor of
Logitech, Microsoft and Symantec products
to all the major retailers and E-tailers.
Gem’s 135,000 square foot warehouse facility in Altham
has 9,500 pallet locations and 8,500 picking locations. In
2012, company management reviewed options to replace
the existing lighting with energy efficient fluorescent lamps.
The replacement project was completed in January 2013
and includes PIR sensors which detect abrupt changes in
temperature/motion at a given point and also react to the
amount of daylight within the warehouse. Energy use has
reduced by over 40% compared to the same period in the prior
year. Annualised carbon savings are estimated at 150 tonnes
and payback for the project will be approximately 3 years.
Laleham Healthcare develops and
manufactures a wide range of cosmetic
products for a number of health and beauty
brand owners, including L’Oréal, owner of
The Body Shop. During 2012 Laleham was
invited as one of L’Oréal’s top 150 suppliers
to participate in the Carbon Disclosure
Project’s Supply Chain Program.
“In responding to L’Oreal’s invitation we were able to
demonstrate a common set of values and goals with one of
our key customers which by working together will enhance
our ability to achieve better results”. Tim O’Connor, Managing
Director, Laleham Healthcare.
Reporting data to the CDP has enabled Laleham as a business
to focus efforts on key sustainability objectives, investing in
water and energy efficient equipment and changes to work
practices to meet multi year reduction targets for carbon
emissions, water consumption and waste arising on site.
Transport and heating fuels from
non-renewable sources make up
the direct sources of primary energy
purchased within the Group. In total
they represented 1,214,321 Gigajoules
(GJ) of energy with road diesel and
natural gas accounting for 80% and
10% respectively of the total and other
fuels contributing 10%. Indirect energy
consumption amounted to 172,402 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
operational or financial 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 oils, LPG and natural gas sold by
DCC Energy subsidiaries accounted
for approximately 26 Mtonnes of CO2e
emissions, an increase from 21 Mtonnes
in the prior year reflecting increased
volumes of products sold in the year.
Carbon Disclosure Project
In 2012, DCC maintained its position in
the Irish Climate Leaders index which
is based on responses to the Carbon
Disclosure Project (CDP) investor
questionnaire. The CDP is a global
initiative, funded by the investment
community, which encourages
companies to formally report their
carbon emissions and the steps they
are taking to address the challenge of
climate change.
Overview Business Performance Governance Report Financial Statements Information 54
Business Performance
Sustainability Report (continued)
CO2e emissions (tonnes) by source
2013
2012
Scope 1
2013* %
10,262 8%
On site fuel use
Company transport 90,849 73%
2012
9,020
%
8%
85,187 73%
Scope 2
Electricity
Total
23,289 19%
22,657 19%
124,400
116,864
CO2e emissions (tonnes) by division
2013
2012
2013* %
72,320 58%
DCC Energy
DCC SerCom5
6,576 5%
DCC Healthcare
12,007 10%
DCC Environmental 27,239 22%
DCC Food & Beverage 6,258 5%
Total
124,400
2012
6,227
%
62,334 53%
5%
11,220 10%
27,700 24%
8%
9,383
116,864
Compliance and spills
No fines 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.
However, across our twenty one sites
with waste management licences, four
instances of non-compliance were
identified by regulators during the
year at four locations, resulting in a
lower compliance rating being applied
by the regulator to those sites. While
disappointing, no enforcement action
was taken and steps have been taken
to strengthen the understanding and
controls of licencing conditions and
regain our previously excellent site
ratings in the current year.
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 the EU Seveso II
Directive and are subject to regular
inspection by the regulatory authorities.
No significant spills were recorded in
the reporting period6. Given the potential
impact on the environment from even a
relatively small quantity of oil, all spills
are treated seriously and responded
to appropriately in accordance with
established emergency procedures.
Carbon Reduction Commitment Energy
Efficiency Scheme
Following a consultation review, the
UK Government has simplified the
CRC Scheme to reduce the reporting
requirements on participants. While
this is welcome, there is no net impact
on the CRC levy payable by DCC’s UK
subsidiaries, in the order of Stg£250,000
per annum. All energy efficiency
measures taken by subsidiaries to
reduce consumption of electricity and
natural gas save not only on the cost
of the energy itself, but also on the
CRC levy of Stg£12/tonne of carbon
emissions.
Ozone depleting substances
Very few of our businesses now use
ozone depleting substances (ODS) in
their refrigeration or cooling systems.
As ODS continue to be phased out
in accordance with international
agreements, fugitive emissions of ODS
from DCC subsidiaries continue to
decrease to immaterial levels.
In the year, a total of 22 kgs of R22
was lost to the atmosphere. This is
equivalent to 0.00121 tonnes of CFC-11
(0.0114 in prior year), the international
metric for measuring ODS. Ammonia
gas and other refrigerates used (e.g.
R404A, R410A, R407C) have an ozone
depletion potential of zero.
Economic Contributions
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 2013, €659
million of added value was created,
taking account of the cost of inputs
from suppliers of €12,366 million and
revenue of €13,025 million. This value
added is distributed in the form of
remuneration to employees of €395
million, corporate taxes of €32 million,
interest to lenders of €52 million and
dividends7 to shareholders of €72
million. €108 million is retained in the
business to fund further growth.
Total Income
€13,025m
(2012: €10,739m)
Goods and
Services
€12,366m
(2012: €10,177m)
Value
Added
€659m
(2012: €562m)
Corporate Taxes
€32m
(2012: €28m)
Interest
€52m
(2012: €50m)
Employees
€395m
(2012: €345m)
Retained
€108m
(2012: €74m)
Dividends to
Shareholders
€72m
(2012: €65m)
DCC ANNUAL REPORT AND ACCOUNTS 2013
55
1 Forum for the Future is a UK based
independent, non-profit organisation who
work internationally with businesses on
strategies for sustainability.
2 A Lost Time Injury is defined as any injury
that results in at least one day off work
following the day of the accident.
3 Control of Major Accident Hazards
4 Carbon dioxide emissions make up over
99% of the Group’s greenhouse gas
emissions. Other greenhouses gases
emissions include fugitive refrigerant gases
(198 tonnes CO2e) and fugitive landfill gas
emissions from a closed landfill in Scotland
where 80% of the methane is captured to
generate renewable energy (832 tonnes
CO2e).
5 Including DCC head office emissions (114
tonnes CO2e)
6 Significant is defined as a major
environmental event which exceed EC
reporting thresholds under Control of Major
Accident Hazards (COMAH) regulations.
7 Paid and proposed for the year ended 31
March 2013
Community Support
Across the DCC Group, subsidiaries are involved in activities to support local
communities and charities. Employees are actively involved in fundraising and
giving their time and effort to these campaigns, supported by direct financial
contributions.
Our partnership with Social Entrepreneurs Ireland – an independent, non-profit
organisation which identifies and supports social entrepreneurs in growing their
ideas from concept to reality – is in its third year. Last year saw an exceptional and
diverse group of finalists demonstrate the potential of their projects. They are now
receiving tangible assistance from SEI to scale up their ideas. One of the finalists,
James Whelton of Coder Dojo, is profiled below.
As the importance of computer literacy
and IT skills increases in the modern
economy, there is a challenge to
find appropriate ways to teach these
complex and ever changing skills. At
the same time, there is a growing body
of children who have a strong interest
in this area. While children who are
interested in sports or who thrive in
the traditional school environment are
well catered for, there is little support
available for children who enjoy coding
or other IT related activities.
When he was still in school, James
Whelton started a computer club for
his classmates to teach them about
computers and coding. So popular
was the initial class that there was
soon interest from neighbouring
schools and James realised the latent
demand that existed. In response to
the overwhelming demand, James
founded Coder Dojo, an Irish led,
global network of free not-for-profit
computer clubs where young people
learn to code and develop websites,
apps, games and more. Coding is
taught by professionals who volunteer
their time and is entirely free. Coder
Dojo has proven to be hugely popular
and highly scalable. There are now 53
Dojos in Ireland and 126 Dojos in total
around the world, from San Francisco
to Melbourne to Tokyo. The young
people who attend Coder Dojo make
friends, build confidence and develop a
stronger sense of purpose.
Overview Business Performance Governance Report Financial Statements Information 56
Business Performance
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 listed
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.
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
Standard Disclosure
Statement from Chief Executive
Organisational Profile
Profile, Boundary and Scope
Restatement
Governance
Stakeholder Engagement
Direct Economic Value
Direct Energy Consumption
Indirect Energy Consumption
Greenhouse Gases
Other Indirect Sources
Ozone Depleting Substances
Spillage
Non-Compliance
Workforce
Rates of Injury
Corruption
Political Contributions
Reported
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Partially
Partially
Fully
Fully
Report Page
49
2-5
49
49
68-73
50
55
53
53
54
53
54
54
54
50
52
51
67
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
2013 (‘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 2013
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 49 of the Report.
The scope of our work was restricted
to the Selected Sustainability
Information for the year ended 31
March 2013 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
DCC ANNUAL REPORT AND ACCOUNTS 2013
57
at https://www.globalreporting.org/
reporting/guidelines-online/G3Online/
Pages/default.aspx set out how
the Selected Sustainability Data is
measured, recorded and reported.
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
2012/2013, including re-performing a
sample of calculations;
• With respect to the carbon figures
disclosed on page 54 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 56
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 2013 is not
prepared in all material respects with
the Reporting Criteria; and
• DCC’s declared GRI application level
of C+ on page 49 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 Data;
• 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.
• Carried out analytical procedures over the
Selected Sustainability Data;
Our responsibilities
We are responsible for:
• 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 eight sites to
review systems and processes in place for
managing and reporting on sustainability
activities, and examined source
documentation on a sample basis;
• 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 Data
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 2013, to enable the
directors to show they have addressed
their governance responsibilities by
obtaining an independent assurance
report in connection with the Selected
Sustainability Data. 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
13 May 2013
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.
Overview Business Performance Governance Report Financial Statements Information 58
Business Performance
Principal Risks and uncertainties
The Board of DCC is responsible for
the Group’s risk management systems,
which are designed to identify, manage
and mitigate potential material risks to
the achievement of the Group’s strategic
and business objectives, and for the
approval of the Risk Management Policy,
Risk Appetite Statement and the Group
Risk Register.
There is a comprehensive process for the
identification and management of risk,
including individual subsidiary, divisional
and Group risk registers. Further details
of the Group’s risk management systems
and internal controls are set out under
‘Risk Management and Internal Control’
in the Corporate Governance Statement
on pages 68 to 73 and in the Audit
Committee Report on pages 74 to 77.
The principal risks and uncertainties
facing the Group in the short to medium
term are set out below, together with the
principal mitigation measures. This is not
an exhaustive statement of all relevant
risks and uncertainties. Matters which
are not currently known to the Board or
events which the Board considers to be
of low likelihood could emerge and give
rise to material consequences.
The mitigation measures that are
maintained in relation to these risks are
designed to provide a reasonable and not
an absolute level of protection against
the impact of the events in question.
Other longer term risks, such as
climate change, are discussed in the
Sustainability Report on pages 49 to 57.
Risk and Impact
Strategic risks and uncertainties
Economic downturn
The economic outlook for many of the markets in
which the Group has operations remains highly
uncertain. A further economic downturn could
adversely affect the Group’s profitability, increase
the risk of counterparty failure and reduce its
ability to access capital markets.
Acquisitions
Growth through acquisition is an integral part
of Group strategy. A failure to identify, execute
and properly integrate acquisitions could prevent
profit targets from being achieved and impede the
strategic development of the Group.
Operational risks and uncertainties
Weather impacts
on trading
Demand for some of the products sold by the
Group, most notably heating products sold by
the Energy division, is directly related to weather
conditions. The inherent uncertainty of weather
conditions therefore presents a risk to profits
generated by that division.
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
and customer
relationships
As certain Group subsidiaries derive a significant
part of their revenue from key suppliers and
customers, the loss of any of those relationships
would have a material financial impact on that
subsidiary.
Principal Mitigation Measures
Sensitivity analysis is applied to planning and budgeting models across
the Group. There is a constant focus on working capital management,
cash generation and meeting ROCE targets.
The Group transacts with a variety of highly 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.
Group and divisional management teams engage in a continuous
and active review of potential acquisitions.
All potential acquisitions are subject to an assessment of their
ability to generate a return on capital employed 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 any acquisition. Group and subsidiary
management have significant expertise in and experience of
integrating acquisitions.
Post-acquisition performance is reviewed to ensure anticipated
integration benefits, financial performance and returns on capital
employed are achieved.
The Energy division is expanding its operations in the non-heating
segments of the market, primarily in transport fuels (with a
particular emphasis on retail petrol stations), in marine and in
aviation.
The Group maintains a constant focus on this area with structured
succession planning, management development and remuneration
programmes, incorporating long and short term incentives, in place. A
graduate recruitment programme has also been established.
These programmes are reviewed regularly by Group Human Resources,
divisional management, the Chief Executive and the Board.
The Group as a whole trades with a very broad supplier and
customer base. Close commercial relationships exist with all our
suppliers and customers and there is a constant focus on providing a
value added service to them.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Overview Business Performance Governance Report Financial Statements Information
59
Risk and Impact
Operational risks and uncertainties (continued)
Major health
& safety or
environmental
incident
A major fire, explosion, multiple vehicle accident
or environmental incident could result in serious
injury, loss of life, damage to property and
significant disruption to operations. Incidents of
this nature could in turn give rise to legal liability,
significant costs and damage to the Group’s
reputation.
Product quality
Some of the Group’s subsidiaries operate
manufacturing or product processing facilities. Poor
product quality, most notably in the Healthcare and
Food & Beverage divisions, could affect customer
or public safety. Incidents of this nature could in
turn give rise to legal liability, significant costs and
damage to the Group’s reputation.
Compliance risks and uncertainties
Regulation and
compliance
DCC operates across five divisions in thirteen
countries and must comply with a broad range
of legislation and regulation. Failure to comply
with legal and regulatory obligations or react
appropriately where non-compliance is identified
could result in enforcement action, legal liability
and damage to the Group’s reputation. Changes to
the regulatory environment in which we operate
could also adversely affect our operations.
Crime
The Group is potentially subject to a variety of
criminal threats including fraud, particularly in
relation to payments, and theft of product.
Financial risks and uncertainties
Commodity price
fluctuations
The Group is exposed to commodity cost price risk
in its Energy division, in both its oil distribution
and LPG distribution businesses.
Principal Mitigation Measures
All Group subsidiaries operate environmental, health and safety
(EHS) management systems appropriate to the nature and scale
of their risks. Within the Energy division in particular there is a
strong focus on process safety and ongoing communication with the
relevant safety authorities.
Emergency response and business continuity plans are also in place
to minimise the impact of any significant incidents that take place.
Inspection and auditing processes are in place in relation to
EHS management systems. These checks are conducted by the
subsidiaries in question, by the Group EHS function and by external
assurance providers, as appropriate.
Insurance cover is maintained at Group level for all significant
insurable risks.
All manufacturing and product processing facilities operate quality
management systems, which are subject to regulatory review and
licencing requirements. quality assurance processes are in place to
ensure finished products are produced in accordance with regulatory
requirements and applicable specifications. External independent
resources are engaged where additional assurance is required.
All Group subsidiaries have recorded their key legal and regulatory
obligations and the controls they have in place to ensure those
obligations are met. Primary responsibility for compliance rests
with subsidiary management, who are supported by the Group
Compliance function which provides detailed support on legal and
regulatory issues and audits compliance across the Group.
The Group monitors significant proposals for change in its regulatory
environment and takes appropriate action to ensure compliance
where necessary.
The security of the Group’s IT and banking systems are subject to
both external and internal review and are updated and improved
as needed. Other internal controls against fraud are maintained in
every subsidiary and are monitored at Group level.
Suitable controls are in place against physical crime such as theft
and vandalism.
The Group also maintains fidelity insurance in relation to risks in this
area.
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.
Access to credit
The continued growth and expansion of the
Group’s operations increases demand for credit at
a time when credit availability has become more
restricted globally.
The Group’s financial position remains strong with significant
cash resources and relatively long term debt maturities. There is a
continued focus on working capital management, cash generation
and managing supplier and customer relationships.
Details of the internal controls in place for financial risks facing the Group are addressed in detail under ‘Financial Risk
Management’ in the Financial Review on pages 42 to 48.
60
Governance Report
Chairman’s Introduction
Dear Shareholder,
On behalf of the Board of DCC, I am pleased to present the
Governance Report for the year ended 31 March 2013, which
reports against the UK Corporate Governance Code (“the
2010 Code”) and the Irish Corporate Governance Annex.
The Board believes that the principles
of good corporate governance are well
applied in this Group and that we meet
all of those corporate governance
standards. We have already adopted
a number of the new provisions in the
revised UK Corporate Governance
Code, issued by the Financial Reporting
Council in September 2012 (“the 2012
Code”), earlier than formally required.
I expect to be able to report full
compliance with the 2012 Code in my
report on the year ended 31 March 2014.
I comment below on some of the
aspects of governance for which I have
specific responsibility as Chairman.
The Board and Board Effectiveness
Board composition and renewal remain
a main focus and I have sought to
refresh and strengthen the Board by
bringing in high calibre individuals
for non-executive appointments. In
accordance with the Board Diversity
Policy, we plan to increase the number
of female directors on the Board.
Other key attributes for new non-
executive Directors include substantial
direct senior experience in UK and/
or Continental European businesses,
relevant to the diverse business
sectors and geographies in which DCC
operates. Jane Lodge’s appointment to
the Board on 4 October 2012 met both
of the above criteria.
The effectiveness of the DCC Board was
validated by the positive results last
year from the first external evaluation
of Board performance, which was
undertaken by Towers Watson. This
year, David Byrne, the Deputy Chairman
and Senior Independent Director, and I
facilitated an internal evaluation, which
showed further progress. The results
of recent evaluations are showing
that the significantly greater diversity
of experience and expertise brought
to the table as a result of new Board
appointments over the past four years is
paying dividends, in terms of the quality
of Board discussion and its contribution
to decision-making.
As outlined in my Chairman’s statement
on page 6, the Board has a range of
skill-sets, domain knowledge and
deep commercial experience with the
average service of a non-executive
Director being 4.3 years. I continue to
spend a significant amount of time on
ensuring that we will continue to have
top class candidates available for future
appointments.
Induction and Development
We have a detailed induction process
for new non-executive Directors,
involving visits to a wide range of DCC
subsidiaries, as well as briefings by
senior management and the external
auditor, which takes place over several
months. New Directors are provided
with a calendar of meetings and are
asked to confirm that they can devote
sufficient time to discharge the role of
non-executive director effectively. My
role during the induction period is to
stay in close touch with new Directors,
to receive and give feedback on progress
and to identify new ways of improving the
effectiveness of the induction process.
We continue to focus our Board
development programme around
the specific needs and interests of
Directors. Each year, I discuss with each
Director their continuing professional
development requirements and the
Company Secretary facilitates their
attendance at a range of seminars in
that regard.
The Board’s learning is continued
through Board and Committee
meetings, in conjunction with external
seminars and speakers. In addition, all
non-executive Directors have access
to a library which is regularly updated
with relevant publications on areas
such as governance, remuneration, the
role of the board and committees and
legislative changes.
Independence
We recently conducted our annual
review of the independence of non-
executive Directors. I am pleased
to report that each fulfilled the
independence requirements of the 2010
Code. As noted in the Code, the test
is not appropriate to myself, but I did
fulfil the independence requirements
up to the date of my appointment as
Chairman. Each of the Directors will be
presenting themselves for re-election
at the forthcoming Annual General
Meeting.
DCC ANNUAL REPORT AND ACCOUNTS 2013 60 Chairman’s Introduction
62 Board of Directors and Senior Management
66 Report of the Directors
68 Corporate Governance Statement
74 Audit Committee Report
78 Nomination and Governance Committee Report
81 Remuneration Report
95 Statement of Directors’ Responsibilities
61
Conclusion
The following Governance Report
will provide a good understanding
of the systems of governance and
control which operate within the
Group. I believe the Board has robust
governance structures and operates
effectively within this framework.
Michael Buckley
Chairman
ThE BOARD IS RESPONSIBLE fOR SETTING “ThE TONE
AT ThE TOP” Of ThE ORGANISATION. IN ThAT REGARD,
IT SEEKS TO INSTIL A CULTURE OF STRONG BUSINESS
ETHICS AND COMPLIANCE IN THE GROUP.
Meetings, Commitment and Culture
The intention at Board meetings is to
achieve an appropriate balance between
strategic, operational, regulatory and
other matters. Of the eight scheduled
Board meetings convened during the
year, the Board held two meetings in
the UK.
I continue to receive strong commitment
from all Directors, both inside and
outside of Board meetings. Directors
put significant time individually into
visiting DCC subsidiaries to ensure
that they have met a wide range of
management and discussed strategy
and operational issues with them.
Above all else, I take it as a core
objective to foster a Board culture where
challenge and open debate is the order
of the day, but where the concept of the
unitary Board is continually fostered.
Risk, Compliance and Ethics
The Board is responsible for setting “the
tone at the top” of the organisation. In
that regard, it seeks to instil a culture of
strong business ethics and compliance
in the Group. In the year ended 31 March
2013, risk management, compliance and
diversity were key issues for the Board.
Following a detailed review and external
assessment by Ernst & Young of the
Group’s risk management structures,
processes and resources in 2012, the
agreed changes to the risk management
framework have been fully implemented.
Further detail on the Group’s systems of
risk management and internal control is
set out in the Audit Committee Report on
pages 74 to 77.
In 2012, the Board also completed a
review of the structures in place to
ensure compliance by the Group’s
subsidiaries with the applicable laws
and regulations in the countries in
which they operate. Following this
review, additional resources were put
in place at Group and divisional level,
including the appointment of a Head
of Group Compliance, who reports
to the Company Secretary and the
Audit Committee. During the current
year, the Head of Group Compliance
has been engaged in a number of
initiatives, including the appointment
of compliance coordinators and the
conducting of compliance workshops
in Group subsidiaries and a roll-out
of an online training course to refresh
awareness of the Group’s Business
Conduct Guidelines.
A Board Diversity Policy has been
approved by the Board and is available
on the Company’s website, www.dcc.ie.
In addition, the Board has approved a
Group Diversity and Equal Opportunities
Policy Statement, developed by Group
Human Resources, which will be
implemented in all Group subsidiaries,
in conjunction with local legislative
requirements.
Overview Business Performance Governance Report Financial Statements Information 62
Governance Report
Board of Directors
1. Michael Buckley MA, LPh, MCSI
3. Róisín Brennan BCL, FCA
(age 68) Non-executive Chairman; Chairman,
Nomination and Governance Committee; Member,
Remuneration Committee
(age 48) Non-executive Director; Member,
Nomination and Governance Committee; Member,
Remuneration Committee
Nationality: Irish
Nationality: Irish
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, work-out and healthcare
businesses, in Ireland, the UK, Central Europe, the
USA and the Far East.
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 prior to that, a senior public
servant in Ireland and the EU. From 2003 to
2012, he was a non-executive director of M and T
Bank Corporation, listed on the New York Stock
Exchange. From 2008 to 2011, he was a non-
executive director 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 in
Ireland and the USA. 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.
2. Tommy Breen B Sc (Econ), FCA
(age 54) Chief Executive
Nationality: Irish
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 27 years
with DCC.
Relevant qualifications: He is an economics
graduate of queens University Belfast and a
chartered accountant.
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 and on the Finance
and Administration Committee of the Institute of
International & European Affairs. She qualified as
a chartered accountant with Arthur Andersen.
4. David Byrne SC
(age 66) Non-executive Deputy Chairman
and Senior Independent Director; Member,
Nomination and Governance Committee; Member,
Remuneration Committee
Nationality: Irish
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) and Irish Life
& Permanent plc. He is the immediate past chair
of the National Treasury Management Agency
Advisory Committee and is Emeritus Chancellor of
Dublin City University.
Current external commitments/relevant
qualifications: He is a non-executive director of
Kingspan Group plc, where he is also the senior
independent director. He also serves on a number
of commercial international advisory boards.
1.
3.
2.
4.
5.
5. jane Lodge B Sc, FCA
(age 58) Non-executive Director; Chairman, Audit
Committee
Nationality: British
joined Board: Ms. Lodge joined the Board in
October 2012.
Key strengths: Ms. Lodge, as a senior audit
partner for 25 years, has extensive experience
with multinational manufacturing companies and
her strategic work with Deloitte has given her a
substantial international business perspective.
She has very strong and recent financial skills to
bring to the Audit Committee.
Previous board and management experience:
Until 2011, Ms. Lodge was a senior audit partner
with Deloitte, where she spent over 25 years
advising global manufacturing companies. She
was also the Deloitte partner in charge of the
firm’s UK manufacturing industry sector, where
she was responsible for strategy and marketing,
and was a member of the Deloitte Global
Manufacturing Executive. She was a member of
the CBI Manufacturing Council until 2011. While
at Deloitte, she served a term on the Board of
Partners of Deloitte UK and also co-chaired a
global team of partners to review the strategy of
the Global Deloitte Firm.
Current external commitments/relevant
qualifications: Ms. Lodge is a non-executive
board member of Devro plc and of Costain Group
PLC. She is also a director of three private limited
companies, Ives Estates Ltd, Ives Ventures Ltd and
Black Country Living Museum Trust Ltd.
DCC ANNUAL REPORT AND ACCOUNTS 2013
63
7. john Moloney B.Agr.Sc., MBA
9. Fergal O’Dwyer FCA
(age 58) Non-executive Director; Member, Audit
Committee
(age 53) Executive Director
Nationality: Irish
Nationality: Irish
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. He is a former director of the Irish Dairy
Board Co-operative Limited and a former council
member of the Irish Business and Employers
Confederation.
Current external commitments/relevant
qualifications: He is Group Managing Director of
Glanbia plc where he has been a board member
since 1997. He a non-executive director of
Greencore Group plc.
8. Donal Murphy B Comm, BFS, MBA
(age 47) Executive Director
Nationality: Irish
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 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.
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 23 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.
10. Leslie Van De Walle
(age 57) Non-executive Director; Chairman,
Remuneration Committee; Member, Nomination
and Governance Committee, Member, Audit
Committee
Nationality: French
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 non-executive Chairman of Robert
Walters plc. He is also a non-executive director of
La Seda de Barcelona S.A. and a non-executive
director of Cape plc.
7.
9.
6.
8.
10.
6. Kevin Melia FCMA, jDipMA
(age 65) Non-executive Director; Member, Audit
Committee
Nationality: American
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.
He is a former Joint Managing Director of Boulder
Brook Partners, a private investment company. Mr.
Melia also held a number of senior management
positions at Digital Equipment Corporation.
Current external commitments/relevant
qualifications: He is a 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.
Overview Business Performance Governance Report Financial Statements Information 64
Governance Report
Senior Management
Group and Divisional
Chief Executive
Chief Financial Officer
DCC Energy
Managing Director
Managing Director - Oil
Managing Director - LPG
Finance Director
Development Director
DCC SerCom
Managing Director
Finance & Development Director
DCC Healthcare
Managing Director
Finance & Development Director
DCC Environmental
Finance & Development Director
DCC Food & Beverage
Managing Director
Finance & Development Director
Company Secretary & Head of Enterprise Risk Management
Managing Director, DCC Corporate Finance
Head of Group Accounting
Head of Group Compliance
Head of Group HR
Head of Internal Audit
Head of Group IT
Head of Group Sustainability
Head of Group Tax
Head of Group Treasury
Tommy Breen
Fergal O’Dwyer
Donal Murphy
Eddie O’Brien
Henry Cubbon
Conor Murphy
Clive Fitzharris
Niall Ennis
Kevin Lucey
Conor Costigan
Redmond McEvoy
Thomas Davy
Frank Fenn
Stephen Casey
Ger Whyte
Michael Scholefield
Gavin O’Hara
Darragh Byrne
Ann Keenan
Stephen Johnston
Cormac Watters
John Barcroft
Yvonne Divilly
Niall Kelly
DCC ANNUAL REPORT AND ACCOUNTS 2013
65
Paul Vian
Tom Walsh
Christian Heise
Hans-Peter Hintermayer
Magnus Nyfjall
Ben Jordan
Lee Gannon
Richard Martin
Jan Wahlquist
Bauke van Kalsbeek
Gerry O’Keeffe
Chris Peacock
Claude Dupont
Stefan Riesser
John Dunne
Raj Advani
Jim Morgan
Kevin Henry
Andrew O’Connell
Stephen O’Connor
Adrian Williams
Tim O’Connor
Anders Göthberg
Michael Tracey
Paul Needham
Steve Tooley
Declan Ryan
Frank Fenn
Tom Gray
Jon Eagle
John Raleigh
Brian Hogan
Principal Businesses and joint Venture
DCC Energy
Oil
GB Oils
Oil Ireland
DCC Energi Danmark
Energie Direct - Austria
Swea
Fuel Card Services
LPG
Flogas Britain
Flogas Ireland
Flogas Scandinavia
Benegas
DCC SerCom
Micro P
Gem Distribution
Banque Magnetique
Comtrade
Sharptext
Advent Data
MSE
SerCom Solutions
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Chief Operations Officer
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Directeur Général
President
Managing Director
Managing Director
Managing Director
Chief Executive Officer
DCC Healthcare
DCC Vital
Health & Beauty Solutions (and Thompson & Capper)
EuroCaps
Laleham Healthcare
Vitamex Manufacturing AB
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
DCC Environmental
DCC Environmental Britain and William Tracey
Wastecycle
Oakwood
Enva Ireland
DCC Food & Beverage
Kelkin
Robert Roberts
Bottle Green
Allied Foods
Kylemore Services Group*
* Joint venture
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Managing Director
Chief Executive Officer
Overview Business Performance Governance Report Financial Statements Information 66
Governance Report
Report of the Directors
The Directors of DCC plc present
their report and the audited financial
statements for the year ended 31 March
2013.
Results and Review of Activities
Revenue for the year amounted to
€12,966.3 million (2012: €10,690.3 million).
The profit for the year attributable to
owners of the Parent amounted to €130.4
million (2012: €102.4 million). Adjusted
earnings per share amounted to 209.96
cent (2012: 163.51 cent). Further details of
the results for the year are set out in the
Group Income Statement on page 97.
The Chairman’s Statement on pages
6 to 9, the Chief Executive’s Review on
pages 10 to 13, the Operating Reviews on
pages 16 to 41 and the Financial Review
on pages 42 to 48 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
2013, 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 168.
Dividends
An interim dividend of 29.48 cent per
share, amounting to €24.66 million,
was paid on 30 November 2012. The
Directors recommend the payment of
a final dividend of 56.20 cent per share,
amounting to €47.04 million. Subject to
shareholders’ approval at the Annual
General Meeting on 19 July 2013, this
dividend will be paid on 25 July 2013 to
shareholders on the register on 24 May
2013. The total dividend for the year ended
31 March 2013 amounts to 85.68 cent
per share, a total of €71.70 million. This
represents an increase of 10% on the prior
year’s total dividend per share.
The profit attributable to owners of the
Parent, which has been transferred to
reserves, and the dividends paid during
the year ended 31 March 2013 are shown
in note 40 on page 155.
Company Listing
Following a review of the Company’s
listing arrangements, which included
consultations with a wide range of large
shareholders, the Board determined,
as announced on 26 February 2013,
that it was appropriate for DCC to seek
admission to the FTSE UK Index Series.
This entailed cancelling the listing of the
Company’s shares on the Irish Stock
Exchange (“ISE”) while maintaining the
Premium Listing of DCC’s shares on the
Official List of the United Kingdom Listing
Authority (“UKLA Official List”).
Consequently, with effect from the close of
business on 3 May 2013, DCC’s listing on
the Official List of the ISE was cancelled
and the trading of DCC’s shares on the
Main Securities Market of the ISE ceased.
Since 6 May 2013, DCC’s shares are traded
solely on the London Stock Exchange in
sterling.
Share Capital and Treasury Shares
DCC’s authorised share capital is
152,368,568 ordinary shares of €0.25 each,
of which 83,693,423 shares (excluding
treasury shares) and 4,535,981 treasury
shares were in issue at 31 March 2013.
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 4,700,907 (5.33% of the issued
share capital) with a nominal value of
€1.175 million.
A total of 164,926 shares (0.19% of the
issued share capital) with a nominal value
of €0.041 million were re-issued during
the year at prices ranging from €0.25
to €23.35 consequent to the exercise of
share options under the DCC plc 1998
Employee Share Option Scheme and the
DCC plc Long Term Incentive Plan 2009,
leaving a balance held as treasury shares
at 31 March 2013 of 4,535,981 shares
(5.14% of the issued share capital) with a
nominal value of €1.134 million.
At the Annual General Meeting held on
20 July 2012, 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 19 July
2013, 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 58 to 59.
Directors
The names of the Directors and a short
biographical note on each Director appear
on pages 62 to 63.
In accordance with the UK Corporate
Governance Code, all Directors 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 Remuneration Report on pages 81
to 94.
DCC ANNUAL REPORT AND ACCOUNTS 2013 67
Corporate Governance
The Corporate Governance Statement on
pages 68 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.
In September 2012, the FRC issued a
revised UK Corporate Governance Code
(‘the 2012 Code’), which replaced the
2010 edition of the Code. For DCC, the
2012 Code applies to the financial year
beginning on 1 April 2013. The Board has
adopted some of the new provisions in the
revised code earlier than formally required
and expects to be fully compliant with
the 2012 Code for the financial year to 31
March 2014.
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 9, the Chief
Executive’s Review on pages 10 to 13, the
Operating Reviews on pages 16 to 41,
the Financial Review on pages 42 to 48,
the Principal Risks and Uncertainties on
pages 58 to 59, the earnings per ordinary
share in note 18 on page 135, the Key
Performance Indicators on page 14 and
the derivative financial instruments in note
29 on page 142.
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 31 March 2013 and
13 May 2013:
As at 31 March 2013
As at 13 May 2013
% of Issued
Share
Capital
(excluding
treasury
shares)
No. of €0.25
Ordinary
Shares
% of Issued
Share
Capital
(excluding
treasury
shares)
No. of €0.25
Ordinary
Shares
FMR LLC and FIL Limited on
behalf of certain of its direct
and indirect subsidiaries*
Invesco*
Prudential plc group of
companies
Franklin Templeton
Investment*
Setanta Asset Management*
T. Rowe Price Associates Inc.
Jim Flavin
* notified as non-beneficial interests
9,941,374
7,210,066
11.88% 10,332,163
6,748,637
8.61%
12.34%
8.06%
4,776,485
5.71%
5,045,227
6.03%
3,257,901
3,026,308
2,741,333
2,532,850
3.89%
3.62%
3.28%
3.03%
3,647,501
2,995,464
n/a**
2,605,850
4.36%
3.58%
n/a**
3.11%
** Shareholding at 13 May 2013 was less than 3%
Principal Subsidiaries and joint Ventures
Details of the Company’s principal
operating subsidiaries and joint ventures
are set out on pages 169 to 173.
the Company are maintained at the
Company’s registered office, DCC House,
Brewery Road, Stillorgan, Blackrock, Co.
Dublin, Ireland.
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
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
exercise of share options or awards in the
event that a change of control occurs with
respect to the Company.
Auditors
The auditors, PricewaterhouseCoopers,
will continue in office in accordance
with the provisions of Section 160(2) of
the Companies Act, 1963. A resolution
authorising the Directors to determine
their remuneration will be proposed at the
Annual General Meeting.
Michael Buckley, Tommy Breen
Directors
13 May 2013
Overview Business Performance Governance Report Financial Statements Information 68
Governance Report
Corporate Governance Statement
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.
This statement also describes how
DCC has applied the principles set
out in the UK Corporate Governance
Code, which was issued by the UK’s
Financial Reporting Council (‘FRC’) in
June 2010 (‘the 2010 Code’) and an 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.
In September 2012, the FRC issued
a revised UK Corporate Governance
Code (‘the 2012 Code’), which replaced
the 2010 edition of the Code. For DCC,
the 2012 Code applies to the financial
year beginning on 1 April 2013. The
Board has adopted some of the new
provisions in the revised code earlier
than formally required and expects to be
fully compliant with the 2012 Code for
the financial year to 31 March 2014.
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. The composition and activities
of these Committees are detailed in
their individual reports on pages 74,
78 and 81. 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. Each
of the responsibilities have been set out
in writing and have 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.
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 70.
Chief Executive
The Chief Executive has day to day
management responsibility for the
running of the Group’s operations
and for the implementation of Group
strategy and policies agreed by the
Board. The Chief Executive also
has a key role in the process for the
setting and review of strategy. The
Chief Executive instils the company’s
culture and standards, which include
appropriate corporate governance,
throughout the Group. In executing his
responsibilities, the Chief Executive
is supported by the Chief Financial
Officer and the Company Secretary,
who, together with the Chief Executive,
are responsible for ensuring that high
quality information is provided to the
Board on the Group’s financial and
strategic performance.
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
DCC ANNUAL REPORT AND ACCOUNTS 2013 69
Board if the Chairman is unavailable or
is conflicted in relation to any agenda
item. He also leads the annual Board
evaluation of the performance of the
Chairman.
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 brief biographies of the Directors,
which highlight the range of experience
they bring to the Board table, are set out
on pages 62 to 63.
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’s objective is to have the
Board Gender Diversity
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 recent
Male
80%
20%
Female
years.
Board Geographical Spread
(by residency)
Ireland
UK
America
70%
20%
10%
Further detail in relation to Board
composition and renewal is set out
in the Nomination and Governance
Committee Report on pages 78 to 80.
Diversity
A key criterion in appointing new Board
members is to increase diversity in the
DCC boardroom, as reflected in Board
Diversity Policy. In recognition of this,
Jane Lodge was appointed as a Director
and member of the Audit Committee
on 4 October 2012 and as Chairman of
the Audit Committee on 5 November
2012. Ms. Lodge’s appointment is in
line with the Board’s renewal agenda
which includes the continuing objectives
of increasing gender diversity and the
number of Directors with substantial
direct senior experience in U.K. and/
or Continental European businesses,
in line with the fact that almost 90%
of DCC’s profits come from these
geographies.
Board Gender Diversity
Male
Female
80%
20%
Appointment
Board Geographical Spread
The Nomination and Governance
(by residency)
Committee formally agrees criteria
for new non-executive Director
appointments, including experience of
the industry sectors and geographies in
70%
20%
which the Group operates, professional
10%
background, nationality and gender.
The detailed appointment process is set
out in the Nomination and Governance
Committee Report on pages 78 to 80.
Ireland
UK
America
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. In accordance with our
practice since 2008 and the provisions
of the 2010 Code, all Directors 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 appropriate,
subject to the usual annual approval
by shareholders at the Annual General
Meeting.
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 non-executive Directors undertake
a rigorous induction process which
includes a series of meetings with
Group and divisional management,
detailed divisional presentations,
visits to key subsidiary locations and a
briefing with the external auditor.
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 and speakers. The
Chairman also discusses individual
training and development requirements
for each Director as part of the annual
evaluation process. In addition, a non-
executive director library is available
which is regularly updated with relevant
publications and changes in legislation.
Overview Business Performance Governance Report Financial Statements Information
70
Governance Report
Corporate Governance Statement (continued)
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. The non-executive Directors
have made a number of site visits to
Group subsidiaries during the year
as part of their ongoing training and
development.
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
During the year ended 31 March
2013, the Board held eight scheduled
meetings. Individual attendance at
these meetings is set out in the table
below. 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. A schedule of Board
and Committee meetings is circulated
to the Board in advance of the calendar
year, which includes the key agenda
items for each meeting. Board papers
are circulated electronically in the week
preceding the 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).
Board Time Allocation
83%
Business Issues
Governance Issues 17%
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. In
the year under review, the Board held
meetings at GB Oils in Warrington and
also in Nottingham, which included site
visits to Wastecycle and Oakwood Fuels.
The non-executive Directors meet a
number of times each year without
executives being present.
Board of Directors: Attendance at meetings during the year ended 31 March 2013
and length of service at 31 March 2013:
Director
Number
of
Board
Meetings1
Directors
Attendance
Length of
Service
on Board
8
8
8
8
8
8
Michael Buckley (Non-executive Chairman)
Tommy Breen (Chief Executive)
Róisín Brennan (Non-executive Director)
David Byrne (Non-executive Deputy Chairman
8
and Senior Independent Director)
Jane Lodge2, 3 (Non-executive Director)
3
8
Kevin Melia (Non-executive Director)
8
John Moloney (Non-executive Director)
8
Donal Murphy (Executive Director)
8
Fergal O’Dwyer (Executive Director)
8
Leslie Van De Walle (Non-executive Director)
Bernard Somers4 (Non-executive Director)
6
Note 1 Number of meetings held during the period the Director was a member of the Board
8
4
8
8
8
8
8
6
7.5 years
13 years
7.5 years
4 years
0.5 years
4 years
4 years
4 years
13 years
2.5 years
9 years
Note 2 Jane Lodge was appointed to the Board on 4 October 2012
Note 3 Jane Lodge’s absence from one Board meeting was due to a commitment which had been made
prior to her appointment to the DCC Board
Note 4 Bernard Somers retired from the Board on 5 November 2012
DCC ANNUAL REPORT AND ACCOUNTS 2013
71
Remuneration
Details of remuneration paid to
the Directors are set out in the
Remuneration Report on pages 81 to 94.
It has been the Company’s practice
since 2009 to put the Remuneration
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
Remuneration Report on pages 81 to 94.
The Board has adopted the 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 Policy 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 Policy specifies 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.
The Board has delegated responsibility
for the ongoing monitoring of the
effectiveness of this system to the Audit
Committee. Details in relation to the
Audit Committee’s work in this regard
are set out in the Audit Committee
Report on pages 74 to 77.
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 Board receives regular reports from
the Chairman of the Audit Committee
on its activities during the year and in
addition has considered a report from
the Audit Committee on the conduct
of and the findings and agreed actions
from the annual assessment of risk
management and internal control.
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.
Risk Management and Internal Control
Performance Evaluation
The Board is responsible for the Group’s
system of risk management and
internal control, which 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.
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.
In 2012, the entire performance
evaluation process was externally
defined and conducted by Towers
Watson in accordance with the
requirement to have it externally
facilitated every three years under
Provision B.6.2 of the UK Corporate
Governance Code. All action items
arising from the evaluation were
completed during the year ended
31 March 2013.
In 2013, the process was internally
facilitated and 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, succession
planning and the Directors’ continuing
education process.
The 2013 process commenced with
a questionnaire being circulated to
all Directors. The questionnaire was
designed to obtain Directors’ comments
regarding the performance of the Board
and its Committees, including any
recommendations for improvement.
Completed questionnaires were
returned directly to the Chairman or the
Senior Independent Director who each
held follow up discussions with each of
the Directors individually to clarify any
points raised in the questionnaire.
The Chairman and Senior Independent
Director then prepared a summary
report of matters raised during the
questionnaire and follow up discussion
phases.
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.
Overview Business Performance Governance Report Financial Statements Information 72
Governance Report
Corporate Governance Statement (continued)
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.
Each Board Committee 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, the
non-executive Directors, led by the
Senior Independent Director, concluded
on the performance evaluation of the
Chairman.
The Board then 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. The process in
respect of the year under review was
concluded at the May 2013 Board
meeting, with a number of actions being
agreed which the Chairman will be
undertaking in the current year.
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.
In 2011, an Investor Day took place
in London which was attended by the
Chairman and a number of the non-
executive Directors. Most of DCC’s
top shareholders as well as various
brokers, analysts and fund managers
were present at this Investor Day. The
next Investor Day is planned for 6 June
2013 in London and will be attended
by the Chairman and a number of the
non-executive Directors as well as
shareholders, brokers, analysts and
fund managers.
The Company Secretary engages
annually with proxy advisors in advance
of the Annual General Meeting and
shareholder queries are welcomed by
the Chairman at the Annual General
Meeting.
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.
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.
During 2012, a range of measures were
developed to ensure that employees
in Group subsidiaries remain aware of
the Guidelines and of the general need
to ensure that all our activities are
conducted in a compliant and ethical
manner. These measures include
an online training course, based on
the Guidelines, which reviews our
key compliance risks and how they
should be managed and also reminds
employees as to how they can raise
concerns using our whistleblowing
structures. All Group subsidiaries
will be undertaking training on the
Guidelines over the coming months.
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 AGM. At the AGM, 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 AGM are added to the
proxy votes received in advance of the
AGM and the total number of votes for,
against and withheld for each resolution
are announced.
DCC ANNUAL REPORT AND ACCOUNTS 2013 73
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.
Having assessed the relevant business
risks, 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 2013, with the
provisions set out in 2010 Code and the
Irish Annex.
Michael Buckley, Tommy Breen
Directors
13 May 2013
All other general meetings are called
Extraordinary General Meetings (‘EGM’).
An EGM called for the passing of a
special resolution must be called by
at least twenty one clear days’ notice.
Provided shareholders have passed
a special resolution to that effect
at the immediately preceding AGM
and the Company continues to allow
shareholders to vote by electronic
means, an EGM to consider an ordinary
resolution may be called at fourteen
clear days’ notice.
A quorum for an AGM or an EGM of
the Company is constituted by three
shareholders, present in person,
by proxy or by a duly authorised
representative in the case of a corporate
member. The passing of resolutions at
a general meeting, other than special
resolutions, requires a simple majority.
To be passed, a special resolution
requires a majority of at least 75% of the
votes cast.
Shareholders have the right to attend,
speak, ask questions and vote at
general meetings. In accordance
with Irish company law, the Company
specifies record dates for general
meetings, by which date shareholders
must be registered in the Register of
Members of the Company to be entitled
to attend. Record dates are specified in
the notes to the Notice convening the
meeting.
Shareholders may exercise their right
to vote by appointing a proxy/proxies,
by electronic means or in writing, to
vote some or all of their shares. The
requirements for the receipt of valid
proxy forms are set out in the notes to
the Notice convening the meeting.
A shareholder or a group of
shareholders, holding at least 5% of the
issued share capital 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 2013 AGM will be held at 11 a.m.
on 19 July 2013 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 AGM
or EGM 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 66
to 67.
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 10 to 13.
The financial position of the Company,
its cash flows, liquidity position and
borrowing facilities are described in the
Financial Review on pages 42 to 48.
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
Overview Business Performance Governance Report Financial Statements Information 74
Governance Report
Audit Committee Report
The Audit Committee comprises Jane
Lodge (Chairman), Kevin Melia, John
Moloney and Leslie Van de Walle. Leslie
Van de Walle was appointed to the Audit
Committee on 1 July 2012. Jane Lodge
was appointed as a Director and member
of the Audit Committee on 4 October
2012 and was appointed Chairman of the
Committee on 5 November 2012, following
the retirement of Bernard Somers from the
Board and the Audit Committee.
Dear Shareholder,
As Chairman of DCC’s Audit Committee, I am pleased
to present the report of the Audit Committee for the
year ended 31 March 2013 which has been prepared
by the Committee and approved by the Board. While a
comprehensive description of the Audit Committee’s
activities during the year is set out on pages 75 to 76, I
would like to highlight a number of aspects of our work.
DCC operates in diverse market sectors
and has a broad geographic spread of
operations and consequently there is
a focus on achieving best practice in
financial reporting, risk management and
internal control, while taking account of
the nature of the Group.
One of the Audit Committee’s key
responsibilities is to review the Company’s
internal control and risk management
systems. Following a detailed review
of our risk management structures
and resources in 2012, which included
an external assessment against best
practice, with a particular focus on FTSE
250 companies, a number of changes to
the Group’s risk management framework
were agreed with the Board, as detailed in
the Corporate Governance Report in the
2012 Annual Report. All of these changes
have been fully implemented.
level, including the appointment of a
Head of Group Compliance, who reports
to the Company Secretary and the Audit
Committee.
In addition to financial risks and controls,
the Audit Committee is also responsible
for the oversight of risks and controls
in relation to Environment, Health and
Safety, Compliance and IT. Executives
with responsibility for these risk areas
attend meetings of the Audit Committee,
as detailed under Meetings on page 75.
The Committee discussed reports from
Group Internal Audit, the Risk Committee,
Enterprise Risk Management, Group
Environment, Health and Safety and
Group Compliance with the Chief
Executive, the Chief Financial Officer and
the relevant risk executives and approved
changes to the control framework and
appropriate action plans.
Also in 2012, the Board completed a
review of the structures in place to ensure
compliance by the Group’s subsidiaries
with the applicable laws and regulations
in the countries in which they operate.
Following this review, additional resources
were put in place at Group and divisional
The revised UK Corporate Governance
Code issued in September 2012 (‘the 2012
Code’), which will apply to DCC’s financial
year commencing on 1 April 2013, will
affect the Audit Committee’s review of
financial statements and its relationship
with the external auditor.
Firstly, where requested by the Board, the
Audit Committee will provide advice on
whether the Annual Report and Accounts,
taken as a whole, is fair, balanced
and understandable and provides the
information necessary for shareholders
to assess the Company’s performance,
business model and strategy.
Secondly, the Audit Committee Report
in the Annual Report will be required
to disclose significant issues which the
Audit Committee considered in relation
to financial statements and how these
issues were addressed, having regard
to matters communicated to it by the
external auditor.
The Audit Committee has commenced an
assessment of these new requirements
and is engaged with Group management
and with the external auditor, with a view
to implementation in respect of the year
to 31 March 2014 as required by the 2012
Code.
A further change in the 2012 Code will
require all FTSE 350 companies to put the
external audit out to tender at least every
ten years. DCC concluded a formal audit
tender process in the year to 31 March 2012.
The Board, the Audit Committee and
Group management are fully committed
to continuous improvement of financial
and risk management within the Group.
DCC ANNUAL REPORT AND ACCOUNTS 2013 75
Composition
The Audit Committee comprises four
independent non-executive Directors,
as shown above. Each member’s length
of service at 31 March 2013 is set out
in the table on page 77. Biographical
details for these Directors are set out
on pages 62 to 63. The Board considers
that Jane Lodge has recent and relevant
financial experience, as required by the
2010 Code, and that the members of the
Audit Committee have an excellent mix
of skills and expertise in commercial,
financial and audit matters arising from
the senior positions they hold or held in
other organisations.
Role and Responsibilities
The role and responsibilities of the
Audit Committee are set out in full in its
written terms of reference, which are
reviewed annually and are available on
the Company’s website www.dcc.ie. The
terms of reference will be updated to
reflect the changes in the 2012 Code, as
noted above.
The activities undertaken by the Audit
Committee in respect of its principal
responsibilities during the year ended 31
March 2013 are summarised in the table
below.
Meetings
The Committee met four times during
the year ended 31 March 2013. Individual
attendance at these meetings is set out in
the table on page 77.
David Byrne, the Deputy Chairman and
Senior Independent Director, attends
meetings of the Audit Committee when
risk management matters are being
considered.
The Chief Executive, Chief Financial
Officer, Head of Enterprise Risk
Management, Head of Internal Audit,
Head of Group Sustainability, Head of
Group Compliance, Head of Group IT,
other Directors and executives and
representatives of the external auditor are
invited to attend all or part of any meeting.
The Company Secretary is the secretary
to the Audit Committee.
The Committee also meets separately
a number of times each year with the
external auditor and with the Head of
Internal Audit, without other executive
management being present.
Responsibility
Financial Statements:
Monitor the integrity of the
Group’s financial statements
and review significant financial
reporting judgments contained
in them.
External Auditor:
Make a recommendation to
the Board on the appointment,
reappointment and removal of
the external auditor.
Oversee the relationship with
the external auditor including:
• Approval of remuneration
Activity
The Audit Committee reviewed the financial disclosures in the Group’s Interim and Annual Reports
prior to their publication. This included a review of the accounting policies and practices, major
judgmental areas and compliance with stock exchange, legal and regulatory requirements.
The Audit Committee discussed these matters with the external auditor as part of the review of the
findings from the audit of the Group financial statements, as set out in their post audit reports. The
Committee also discussed with the external auditors their review of the interim financial statements.
The Audit Committee makes a recommendation to the Board on the reappointment of the
external auditor. A full audit tender process was concluded in 2012.
The external auditor’s fee proposals were approved by the Audit Committee. Details of the
amounts paid to the external auditor during the year for audit and other services are set out in
note 6 on page 125.
• Approval of terms of
engagement
The terms of engagement are reviewed annually by the Audit Committee and were approved at
the meeting held in April 2013, prior to the commencement of the audit.
• Assess the independence and
objectivity of the auditors
The Audit 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 auditor through its annual review of fees paid to the external auditor for audit and
non-audit work, seeking confirmation from the external auditor that they are in compliance with
relevant ethical and professional guidance and that, in their professional judgment, they are
independent from the Group.
The Audit Committee meets with the external auditors on a regular basis without the presence
of management.
• Assess the effectiveness of the
audit process
The Audit Committee reviewed the external audit plan at the meeting held in April 2013, prior to
the commencement of the audit. Following the audit, it met with the external auditor to review
the findings from the audit of the Group financial statements.
Overview Business Performance Governance Report Financial Statements Information 76
Governance Report
Audit Committee Report (continued)
• Develop a policy on non-audit
services
The Audit Committee has approved a policy on the engagement of the external auditor 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 auditor during the
year for non-audit services are set out in note 6 on page 125).
• Agree with the Board a policy
on the employment of former
employees of the Company’s
auditors.
The policy provides 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.
Internal Audit:
Review the operation and
effectiveness of the Group
Internal Audit function.
The Audit Committee approves the annual work programme for the Group Internal Audit
function, ensures that it is adequately resourced and has appropriate standing within the Group.
The Head of Internal Audit has direct access to the Chairman of the Audit Committee and the
Audit Committee meets with the Head of Internal Audit on a regular basis without the presence
of management.
The Audit Committee receives regular reports from Group Internal Audit, which include
summaries of the key findings of each audit in the period.
The Audit Committee ensures co-ordination between Group Internal Audit and the external
auditor.
Risk Management and Internal
Control:
Review the Company’s internal
control and risk management
systems and to review the
Company’s statements on
internal control and risk
management.
Other Responsibilities:
Review the Company’s
whistleblowing arrangements.
In addition to reports from Group Internal Audit, the Audit Committee also receives regular
reports from the Risk Committee and the Enterprise Risk Management, Group Environmental,
Health and Safety and Group Compliance functions.
The Audit Committee conducts, on behalf of the Board, an annual assessment of the operation
of the Group’s system of risk management and internal control. Further details of this review
are set out at page 71 under Risk Management and Internal Control.
The Audit Committee received reports from the Compliance Officer at the meetings held in
November 2012 and April 2013 on the operation of the Group’s whistleblowing arrangements,
including the confidential telephone line.
Conduct an annual evaluation
of performance of the Audit
Committee.
As detailed on page 71, the Board conducts an annual evaluation of its own performance and
that of its Committees and individual Directors. This process concluded that the performance of
the Audit Committee was satisfactory.
Reporting:
The Chairman of the Audit Committee reports to the Board at each meeting on the activities of
the Committee.
The Annual Report incorporates the Audit Committee Report.
The Chairman of the Audit Committee attends the Annual General Meeting.
DCC ANNUAL REPORT AND ACCOUNTS 2013 77
Risk Management and Internal Control
The Audit Committee has been
delegated responsibility by the Board
for the ongoing monitoring of the
effectiveness of the Group’s system of
risk management and internal control.
The following table sets out the key
risk management and internal control
procedures, which are supported by
detailed controls and processes:
Key risk management and internal
control procedures
• a Risk Management Policy and Risk
Appetite Statement, both approved by
the Board;
• 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;
• Risk registers at subsidiary, division
and Group levels;
• 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.
Audit Committee: Attendance at meetings during the year ended 31 March 2013
and length of service at 31 March 2013:
Member
Jane Lodge (Chairman)2
Kevin Melia
John Moloney
Leslie Van De Walle3
Bernard Somers4
Number of
Committee
Meetings1
Meeting
Attendance
Length of
Service
on Committee
1
4
4
2
4
1
4
4
2
4
0.5 years
4 years
4 years
0.75 years
7 years
Note 1 Number of Meetings held during the period the Director was a member of the Committee
Note 2 Jane Lodge was appointed to the Audit Committee on 4 October 2012 and as Chairman of the Audit
Committee on 5 November 2012
Note 3 Leslie Van de Walle was appointed to the Audit Committee on 1 July 2012
Note 4 Bernard Somers retired from the Board and as Chairman of the Audit Committee on 5 November 2012
The Chairman of the Audit Committee
has reported to the Board on the
conduct of and the findings and agreed
actions from this annual assessment of
risk management and internal control.
On behalf of the Audit Committee
jane Lodge
Chairman, Audit Committee
13 May 2013
As set out in the Chairman’s overview
and summary of activities, during the
year the Audit Committee received and
reviewed reports on internal control
and risk management from Group
Internal Audit, the Risk Committee,
Enterprise Risk Management, Group
Environment, Health and Safety and
Group Compliance. The Chairman of the
Audit Committee regularly reports to
the Board on these responsibilities.
The Audit Committee, on behalf of
the Board, has conducted an annual
assessment 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 Enterprise Risk Management and
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.
Overview Business Performance Governance Report Financial Statements Information 78
Governance Report
Nomination and Governance Committee Report
The Nomination and Governance
Committee comprises Michael Buckley
(Chairman) and three independent non-
executive Directors, Róisín Brennan, David
Byrne and Leslie Van De Walle.
Dear Shareholder,
As Chairman of DCC’s Nomination and Governance
Committee, I am pleased to present the report of the
Committee for the year ended 31 March 2013 which has
been prepared by the Committee and approved by the Board.
The Nomination and Governance
Committee is responsible for keeping
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
69 and summarised in the table on
page 79. The Committee uses the
services of independent consultants
to assist with the search for suitable
candidates.
The Nomination and Governance
Committee is cognisant of the significant
advantages of diversity at the level of
the Board, senior management and the
Group as a whole. There have been a
number of changes to the Board and
this has been an area of focus for the
Nomination and Governance Committee.
The Committee recommended the
appointment of Jane Lodge on 4 October
2012 as a new non-executive Director,
in place of Bernard Somers who retired
from the Board on 5 November 2012.
The Committee is also responsible
for reviewing corporate governance
developments and in particular has
reviewed the changes to the UK
Corporate Governance Code issued
in September 2012 (‘the 2012 Code’),
which will apply to DCC’s financial year
commencing on 1 April 2013.
Composition
The Nomination and Governance
Committee comprises the Chairman
and three independent non-executive
Directors, as shown above. Each
member’s length of service at 31 March
2013 is set out in the table on page 80.
Biographical details for these Directors
are set out on pages 62 to 63.
Role and Responsibilities
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 terms of
reference will be updated to reflect the
changes in the 2012 Code.
Meetings
The Nomination and Governance
Committee met four times during the
year ended 31 March 2013. Individual
attendance at these meetings is set out in
the table on page 80.
The Chief Executive, other executives
and external advisers are invited to
attend all or part of any meeting. The
Company Secretary is the secretary to the
Nomination and Governance Committee.
The Chairman of the Board does not chair
the Committee when it is dealing with the
matter of succession to the chairmanship.
DCC ANNUAL REPORT AND ACCOUNTS 2013
79
Diversity
Board diversity is a regular agenda
item which is considered at Committee
meetings during the year. The Committee
is aware of the need to improve gender
diversity at Board level. During the
year, the Committee developed a Board
Diversity Policy which was approved by
the Board. This Policy is available on the
Company’s website www.dcc.ie.
In addition, upon the recommendation of
the Committee, the Board has approved a
Group Diversity and Equal Opportunities
Policy Statement, developed by Group
Human Resources, which will be
implemented in Group subsidiaries
in conjunction with local legislative
requirements.
The activities undertaken by the
Nomination and Governance Committee
in respect of its principal responsibilities
during the year ended 31 March 2013 are
summarised in the following table:
Responsibility
Composition of the Board:
Review the structure, size and
composition (including skills, knowledge
and experience) required of the Board
and make recommendations to the
Board.
Review the leadership needs of the
organisation and consider succession
planning for Directors, in particular the
Chairman and Chief Executive, and Group
senior management.
Keep the Board Diversity Policy under
review and set measurable objectives for
implementing the Policy.
Identify and nominate, for the approval
of the Board, candidates to fill Board
vacancies as and when they arise and
before making a nomination, to evaluate
the balance of skills, knowledge,
independence and experience on the
Board.
In identifying suitable candidates, the
Committee shall (i) use such methods
to facilitate the search as it deems
necessary (ii) consider candidates on
merit against objective criteria and with
due regard to the Board Diversity Policy
and (iii) establish that candidates will
have sufficient time to devote to the
position.
Activity
At each of its meetings during the year, the Nomination and Governance
Committee considered the composition of the Board to ensure the Board has the
appropriate combination of skills, knowledge and experience.
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. A detailed succession management plan, prepared by the Chief Executive
was considered at a meeting during the year and was presented to the Board for
approval.
Taking account of the 2012 UK Corporate Governance Code and the Board Diversity
Policy, the Nomination and Governance Committee remains focused on increasing the
number of female non-executive Directors and those with experience in the sectors in
which we operate. Jane Lodge was appointed to the Board in 2012 and in the current
year it is expected that a further new non-executive Director will be appointed, in line
with the Board Diversity Policy.
The Nomination and Governance Committee conducted a search for a new non-
executive Director resulting in the appointment of Jane Lodge. An international
professional search firm, Egon Zehnder, assisted with this search.
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 individually by a number of the
executive and non-executive Directors. 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.
Overview Business Performance Governance Report Financial Statements Information 80
Governance Report
Nomination and Governance Committee Report (continued)
Corporate Governance:
Ensure, that on appointment to the
Board, that non-executive Directors
receive a formal letter of appointment
setting out clearly what is expected of
them in terms of time commitment,
committee service and involvement
outside Board meetings.
The terms and conditions of appointment of non-executive Directors are set out
in their letters of appointment, and include expected time commitment in respect
of Board and Committee meetings, boardroom development training and visits to
Group subsidiaries. The letters of appointment are available for inspection at the
Company’s registered office during normal office hours and at the Annual General
Meeting of the Company.
Monitor the Company’s compliance with
corporate governance best practice and
with applicable legal, regulatory and listing
requirements and recommend to the Board
such changes or additional action as the
Committee deems necessary.
The Nomination and Governance Committee advised the Board on significant
developments in the law and practice of corporate governance and monitors
the Company’s compliance with corporate governance best practice with
particular reference to the UK Corporate Governance Code. The Committee has
recommended any necessary action required to be adopted and implemented by
the Board in respect of the 2012 Code.
Oversee the conduct of the annual
evaluation of Board, Committee and
individual Director performance.
The Nomination and Governance Committee oversaw the annual evaluation
conducted by the Board 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 process is externally facilitated
every three years.
Reporting:
The Chairman of the Nomination and Governance Committee reports to the Board
at each meeting on the activities of the Committee.
The Nomination and Governance Committee reviewed and approved the
Governance Report in the Annual Report and other material being made public in
respect of the Company’s corporate governance.
The Chairman of the Nomination and Governance Committee attends the Annual
General Meeting.
Nomination and Governance Committee: Attendance at meetings during the year
ended 31 March 2013 and length of service at 31 March 2013:
Member
Michael Buckley (Chairman)
Róisín Brennan
David Byrne
Leslie Van De Walle
Number of
Committee
Meetings1
Meeting
Attendance
Length of
Service
on Committee
4
4
4
4
4
4
4
4
7.5 years
2 years
4 years
2 years
Note 1 Number of Meetings held during the period the Director was a member of the Committee
On behalf of the Nomination and Governance Committee
Michael Buckley
Chairman, Nomination and Governance Committee
13 May 2013
DCC ANNUAL REPORT AND ACCOUNTS 2013 81
Remuneration Report
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.
Dear Shareholder,
As Chairman of DCC’s Remuneration Committee, I am
pleased to present the Remuneration Report for the year
ended 31 March 2013 which has been prepared by the
Committee and approved by the Board.
We are mindful of the UK Department
of Business, Innovation and Skills
(‘BIS’) draft reporting regulations for
directors’ remuneration which, when
brought into law in the UK, will require
additional remuneration disclosures
for UK companies which will be helpful
to shareholders. Although this will not
be a legal requirement for DCC, being
an Irish incorporated company, our
intention is for next year’s remuneration
report to fully comply with the final
regulations. In the current year’s report
we have adopted a number of the BIS
proposals, in particular by the inclusion
of a single figure remuneration table,
scenarios charts and details of Chief
Executive remuneration paid over the
last five years.
Changes during the year ended
31 March 2013
There were no increases in the salaries
of executive Directors for the year ended
31 March 2013.
on exceptional circumstances relating
to the delivery of significant growth
opportunities in the Energy division for
which he has responsibility.
Remuneration Outcomes for the year
ended 31 March 2013
The Group has a very strong track
record of delivering profit growth,
returns on capital employed and return
for shareholders. In the year ended
31 March 2013, Group operating profit
increased by 21.3% over the prior
year on a constant currency basis and
adjusted earnings per share increased
by 26.0%, also on a constant currency
basis. Remuneration paid during the
year reflected this performance.
Bonuses payable to executive Directors
for the year ended 31 March 2013
are set out on page 90 and reflect
management’s strong delivery of
performance against financial and
strategic objectives.
There were no changes to the other
remuneration arrangements for
executive Directors during the year
ended 31 March 2013, save for an
increase in the bonus potential for
Donal Murphy from 75% to 100% of
base salary. This increase was based
In October 2012, the Remuneration
Committee determined that 25.84% of
the share options granted in August
2009 under the DCC plc Long Term
Incentive Plan 2009 had vested, based
on performance under the TSR and EPS
conditions.
The extent of vesting of the share
options granted in November 2010 will
be determined by the Remuneration
Committee in November 2013. It is
currently estimated that 50% of the
share options granted will vest.
Further details in relation to the DCC
plc Long Term Incentive Plan 2009 are
set out on page 86. Awards made to
executive Directors under the Plan in
November 2012 are set out on page 93.
Remuneration Changes for the year to
31 March 2014
During the year, the Committee
reviewed the effectiveness and
adequacy of the Group’s remuneration
structures.
The main objective of DCC’s remuneration
policy is to incentivise executive Directors
and other senior Group executives to
create shareholder value. It is pleasing to
note, as demonstrated in the charts on
page 82, that DCC has generated a TSR
of 198% over the last 9 years and a TSR of
178% over the last 4 years.
Overview Business Performance Governance Report Financial Statements Information
82
Governance Report
Remuneration Report (continued)
DCC’s TSR vs. the FTSE 250 since 31 March 2004
DCC’s TSR vs. the FTSE 250 since 31 March 2004
2004
2004
2006
2005
2006
2005
DCC FTSE
DCC FTSE
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
2012
2012
2013
2013
DCC’s TSR vs. the FTSE 250 since 31 March 2009
DCC’s TSR vs. the FTSE 250 since 31 March 2009
350
350
300
300
250
250
200
200
150
150
100
100
50
50
300
300
250
250
200
200
150
150
100
100
50
50
2009
2009
2010
2010
2011
2011
2012
2012
2013
2013
DCC FTSE
DCC FTSE
The charts above show the growth of a hypothetical €100 holding in DCC plc shares since 31 March 2004
and 31 March 2009 respectively, relative to the FTSE 250 index.
Another objective of the Group
remuneration policy is to offer competitive
base salaries and short term bonuses
by positioning them at the median of the
primary comparator group as detailed
more fully under ‘Group Remuneration
Policy’ on page 84. The most recent
comparator group exercise demonstrated
that base salaries for the executive
Directors and senior Group management
were broadly in line with that policy, with
the exception of Mr. O’Dwyer who was
positioned towards the lower quartile.
As regards annual performance related
bonuses, despite very strong financial and
strategic performance, average outcomes
have been low relative to the comparator
group, due to both a lower maximum
potential and more stretching/demanding
targets set by the Board.
Taking these factors into consideration,
the Remuneration Committee, while
conscious of the requirement to show
restraint in the area of executive pay,
has decided to make the following
changes to remuneration:
• an increase in the salary of Mr.
O’Dwyer from €400,000 to €430,000 to
reflect better the size and complexity
of the Group, his tenure in the role (19
years) and the increased scope of his
responsibilities going forward.
• an increase in the salary of Mr.
Murphy from €400,000 to €410,000.
Total salaries for the executive
Directors have therefore been
increased by 2.67%, as there has been
no change to Mr. Breen’s salary, which
has remained unchanged since 2008.
• an increase in the maximum bonus
potential for Mr. Breen to 120% of
base salary and for Mr. O’Dwyer
to 100% of base salary. A deferral
mechanism has been introduced
in relation to Mr. Breen’s bonus
arrangements.
The changes to remuneration
arrangements for the year to 31 March
2014 are explained in detail in the table
on page 85.
DCC ANNUAL REPORT AND ACCOUNTS 2013
83
practice, 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 during
the year, as well as each member’s
length of service at 31 March 2013, is
set out in the table below.
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 his or her own
remuneration. The Company Secretary
acts as secretary to the Committee.
External Advice
The Remuneration Committee seeks
independent advice when necessary
from external consultants.
Towers Watson acts as remuneration
advisors to the Committee and during
the year provided advice in relation to
market trends, competitive positioning
and developments in remuneration
policy. Towers Watson is a signatory to
the Remuneration Consultants Group
Code of Conduct and any advice was
provided in accordance with this code.
Towers Watson had no other connection
with the Group during the year,
having externally facilitated the Board
evaluation process in the prior year.
Mercer acts as pension advisors to the
Committee and provides specific advice
on pension practice and developments.
Mercer also provides services in relation
to the DCC plc Long Term Incentive Plan
2009 and act as actuaries and pension
advisors to a number of companies in
the Group.
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. The members of the
Committee have significant financial
and business experience, including in
the area of executive remuneration.
Further biographical details regarding
the members of the Remuneration
Committee are set out on pages 62 to 63.
Role and Responsibilities
The role and responsibilities of the
Remuneration Committee are set out
in full in its written terms of reference,
which are available on request and on
the Company’s website www.dcc.ie, and
the key matters are summarised below.
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
other remuneration developments, with
particular reference in the current year
to the draft reporting regulations for
directors’ remuneration as issued by the
UK Department for Business, Innovation
and Skills. 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, short term annual bonuses, long
term incentives, pension rights and
compensation payments.
The Committee consults with the Chief
Executive on remuneration for the other
executive Directors and for senior Group
management.
While the Remuneration Committee’s
specific oversight of individual executive
remuneration packages extends only to
the 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 plan,
determining whether the criteria for the
vesting of options or awards have been
met and giving consideration to any
necessary amendments to the rules of
the plan.
Meetings
The Committee met seven times during
the year ended 31 March 2013. The main
agenda items included remuneration
policy, remuneration trends and market
Remuneration Committee: Attendance at meetings during the year ended
31 March 2013 and length of service at 31 March 2013:
Member
Leslie Van de Walle (Chairman)
Róisín Brennan
Michael Buckley
Number of
Committee
Meetings1
Meeting
Attendance
Length of Service
on Committee
7
7
7
7
7
7
2.5 years
7.5 years
7.5 years
4 years
David Byrne
1. Number of meetings held during the period the Director was a member of the Committee.
7
7
Overview Business Performance Governance Report Financial Statements Information 84
Governance Report
Remuneration Report (continued)
Group Remuneration Policy
DCC’s remuneration policy is designed
and managed to support a high
performance and entrepreneurial
culture, taking into account competitive
market positioning.
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.
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.
Shareholder Engagement
The Committee engages in dialogue
with major shareholders on
remuneration matters, particularly
in relation to planned changes. The
Committee also takes into account the
views of proxy advisors.
The Committee acknowledges that
shareholders have a right to have a ‘say
on pay’ by putting the Remuneration
Report to a shareholder ‘advisory’ vote
at the Annual General Meeting each
year (since 2009) even though there
is no legal obligation to put such a
resolution to shareholders.
The basic policy objective is to have top
quartile overall remuneration for top
quartile performance and to have basic
pay rates and the short term element of
incentive payments at the median of a
market capitalisation comparator group.
The Remuneration Committee takes
external advice from remuneration
consultants on market practice to
ensure that remuneration structures
continue to support the key
remuneration policy objectives.
The table below shows the voting
outcome at the 2012 AGM in relation
to the 2012 Directors’ Remuneration
Report.
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.
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.
Vote
Total votes cast
Total votes for
Total votes
against
Total
abstentions
Advisory vote on 2012
Remuneration Report
63,197,578
63,177,825
(99.97%)
19,753
(0.03%)
57,706
DCC ANNUAL REPORT AND ACCOUNTS 2013 85
POLICY
Key elements of pay of executive Directors and other senior Group management
The table below summarises the key elements of pay policy, their purpose and linkage to strategy.
Element and link to
strategy
Base Salary
To help recruit
and retain senior
executives.
Policy and operation
Changes to policy for the year to
31 March 2014
Base salaries are reviewed annually on 1 April.
No change to policy.
The factors taken into account include:
- Role and experience
- Company performance
- Personal performance
- Competitive market practice and benchmarking
When setting pay policy, account is taken of movements in
pay generally across the Group.
Changes to salaries of the executive
Directors for the year to 31 March 2014 are
set out on page 90.
Benefits
To provide market
competitive benefits.
Benefits include the use of a company car, life/disability
cover, club subscriptions or cash equivalent.
No change to policy.
Annual Bonus
To reward the
achievement of growth
in Group earnings and
divisional operating
profit and overall
contribution and
personal performance
The maximum bonus potential, as a percentage of base salary,
for the executive Directors for the year ended 31 March 2013 is
as follows:
Executive Director
Tommy Breen
Donal Murphy
Fergal O’Dwyer
2012/13
100%
100%
75%
Bonus targets for executive Directors and other senior Group
executives are reviewed annually and are based on pre-
determined targets as set out below:
Executive Director
Performance Targets
Tommy Breen
Donal Murphy
70% of bonus based on Group earnings and
30% based on personal performance
40% of bonus based on DCC Energy
operating profit, 20% based on Group
earnings and 40% based on personal
performance.
Fergal O’Dwyer 70% of bonus based on Group earnings and
30% based on personal performance.
With the exception of changes to maximum
bonus potential, as detailed below, there
have been no other changes to policy and
operation in respect of annual bonuses.
The maximum bonus potential, as a
percentage of base salary, for the executive
Directors for the year to 31 March 2014 and
compared to the prior year are as follows:
Executive Director
Tommy Breen
Donal Murphy
Fergal O’Dwyer
Bonus
potential
120%
100%
100%
2012/13
100%
100%
75%
Mr. Breen’s maximum bonus potential
was increased to 120% to take account of
the fact that his bonus potential had fallen
well below the median bonus level of the
market capitalisation comparator group.
Overview Business Performance Governance Report Financial Statements Information
86
Governance Report
Remuneration Report (continued)
Element and link to
strategy
Policy and operation
Annual Bonus (continued)
The maximum bonus potential for other senior Group executives
range between 40% and 60% of base salary for the year ended
31 March 2013.
The performance targets for other senior Group executives are
based on growth in Group earnings and growth in divisional
operating profit, where applicable, 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 2013
were within the range of 0% to 70% of bonus potential for profit
performance and 30% to 100% of bonus potential for overall
contribution and personal performance.
Bonus levels are determined by the Committee after the year
end.
The Committee can apply appropriate discretion in respect
of determining the bonuses to be awarded based on actual
performance achieved.
In particular, the Committee has the discretion to reduce
bonuses in the event that target returns on capital employed are
not achieved.
A formal bonus clawback policy is in place for the executive
Directors and other senior Group, divisional and subsidiary
management.
The Committee has discretion in relation to bonus payments to
joiners and leavers.
Long Term Incentive Plan (‘LTIP’)
To align the interests
of executives with
those of the Group’s
shareholders and to
reflect the Group’s
culture of long term
performance based
incentivisation.
The LTIP provides for the Remuneration Committee to grant
nominal cost options to acquire shares to Group employees,
including executive Directors.
The market value of the shares subject to the options 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.
In addition to the detailed performance conditions, an award will
not vest unless the Committee is satisfied that the Company’s
underlying financial performance has shown a sustained
improvement in the period since the award date.
Changes to policy for the year to
31 March 2014
In regard to Mr. Breen’s bonus potential, any
actual bonus earned in excess of 100% of
salary, once the appropriate tax and social
security deductions were made, would be
invested in DCC shares which would be
made available to him after three years, or
on his employment terminating if earlier,
together with accrued dividends.
Mr. O’Dwyer’s maximum bonus potential
was increased to 100% in recognition of
his additional responsibilities in the area of
Group acquisitions and for investor relations
in the context inter alia of the Company’s
change of primary listing to the London
Stock Exchange and to take account of the
fact that his bonus potential had fallen well
below the median bonus level of the market
capitalisation comparator group.
No change.
DCC ANNUAL REPORT AND ACCOUNTS 2013
87
Element and link to
strategy
Policy and operation
Long Term Incentive Plan (‘LTIP’) (continued)
Changes to policy for the year to
31 March 2014
The extent of vesting for awards granted to participants will be
determined by the following performance conditions:
60% of shares vest depending on TSR performance over a
three year period starting on 1 April in the year in which the
award is granted, compared with the TSR of a designated
peer group, which 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.
TSR rank
Below median
Median
Median – 75th percentile
Above 75th percentile
% of total award vesting
0%
25%
25%-60% pro rata
60%
40% of shares vest depending on EPS growth over a three
year 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).
EPS growth in excess of CPI
% of total award vesting
Below 3%
3%
3% - 7%
Above 7%
0%
15%
15%-40% pro rata
40%
Vesting under the EPS performance condition is also contingent
on (i) the average share price over the 30 day period following
the annual or half yearly results announcement date prior to
vesting being higher that the average share price over the 30 day
period following the annual or half yearly results announcement
date prior to the award date and (ii) the Company’s EPS growth
over the three year performance period being positive.
No re-testing of the performance conditions is permitted.
Overview Business Performance Governance Report Financial Statements Information Changes to policy for the year to
31 March 2014
No change.
88
Governance Report
Remuneration Report (continued)
Element and link to
strategy
Pension
To reward sustained
contribution
Policy and operation
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 2011 limits. All of the executive Directors elected to cap their
benefits and receive a taxable non-pensionable cash allowance
in lieu of pension benefits foregone.
Other senior Group executives participate in a defined
contribution pension scheme.
Scenarios Charts
The current value and composition of the executive Directors’ remuneration packages at minimum, median and maximum
scenarios are set out in the charts below.
Tommy Breen, Chief Executive
Donal Murphy, Executive Director
Fergal O’Dwyer, Executive Director
€
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
Minimum
Median
Maximum
Minimum
Median
Maximum
Minimum
Median
Maximum
Fixed
Annual
Long
Notes
1. Fixed = base salary, benefits and retirement expense
2. Annual = bonus
3. Long = estimated value of options under the DCC plc Long Term Incentive Plan 2009.
4. Total pay for minimum performance comprises base salary, benefits and retirement expense (fixed).
5. Total pay for median performance comprises base salary, benefits and retirement expense (fixed), 50% of maximum bonus potential (annual) and 50% of
maximum LTIP opportunity (long).
6. Total pay for maximum performance comprises base salary, benefits and retirement expense (fixed), 100% of maximum bonus potential (annual) and 100%
of maximum LTIP opportunity (long).
7. In calculating any value that may be delivered in shares, no account has been taken of any potential increase or decrease in share price.
DCC ANNUAL REPORT AND ACCOUNTS 2013 89
Exit Payments Policy
The provisions on exit in respect of each of the elements of pay are as follows:
compensation for loss of office, other than
the notice period provisions set out above.
Salary and Benefits
Exit payments are only made in respect of base salary for the relevant notice
period. For the Chief Executive, the notice period is 12 months. For the other
executive Directors, the notice period is 3 months.
Annual Bonus
The Remuneration Committee can apply appropriate discretion in respect of
determining the bonuses to be awarded based on actual performance achieved and
the period of employment during the financial year.
Long Term Incentive Plan
To the extent that an option has vested on the participant’s cessation date, the
participant may exercise the option during a specified period following such date
but in no event may the option be exercised later than the expiry date as specified
in the award certificate.
In general, a share award or option that has not vested on the participant’s
termination date immediately lapses.
The Committee would normally exercise its discretion when dealing with a
participant who ceases to be an employee by reason of certain exceptional
circumstances e.g. death, injury or disability, redundancy, retirement or any other
exceptional circumstances. In such circumstances, any share award or option
that has not already vested on the participant’s cessation date would be eligible
for vesting on a date determined by the Remuneration Committee. The number
of shares, if any, in respect of which the share award or option vests would be
determined by the Remuneration Committee.
In the event that a participant ceases to be an employee by reason of a termination
of his employment for serious misconduct, each share award and option held
by the participant, whether or not vested, will automatically lapse immediately
upon the service of notice of such termination, unless the Committee in its sole
discretion determines otherwise.
Pension
The rules of the Company’s defined benefit pension scheme, of which the executive
Directors are members, contain detailed provisions in respect of termination of
employment.
Service Contracts
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. Mr. Breen’s
service contract provides that either
he or the Company can terminate his
employment by giving 12 months notice
in writing. The Company may, at its sole
discretion, require that Mr. Breen, instead
of working out the period of notice, cease
employment immediately in which case
he would receive compensation in the
form of base salary only in respect of
the notice period. The service contract
also provides for summary termination
(i.e. without notice) in a number of
circumstances, including material breach
or grave misconduct. The service contract
does not include any provisions for
Mr. O’Dwyer and Mr. Murphy have letters
of appointment which provide for 3
months notice periods.
Share Ownership Guidelines
DCC’s remuneration policy has at its core
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:
Executive
Chief Executive
Other executive
Directors
Senior Group
executives
Share ownership
guideline
3 times annual
base salary
2 times annual
base salary
1 times annual
base salary
The existing shareholdings held by the
executive Directors, as shown below,
are substantially in excess of these
guidelines.
Shareholding
as Multiple of
base salary
for year
ended 31
March 2013
11.6
18.1
5.9
Share
ownership
guideline
3.0
2.0
2.0
Executive
Tommy Breen
Fergal O’Dwyer
Donal Murphy
Overview Business Performance Governance Report Financial Statements Information 90
Governance Report
Remuneration Report (continued)
REMuNERATION OuTCOMES FOR THE YEAR ENDED 31 MARCH 2013
Executive and non-executive Directors’ remuneration details (single total figure)
The table below sets out the details of the remuneration payable in respect of Directors who held office for any part of the
financial year.
Salary and
Fees 1.2
Bonus3
Benefits4
Retirement
Benefit
Expense5
LTIP6
Total
2013
€’000
2013
2012
€’000 €’000
2013
2012
€’000 €’000
2013
2012
€’000 €’000
2013
2012
€’000 €’000
2013
2012
€’000 €’000
2012
€’000
700
400
400
1,500
700
400
400
700
400
300
1,500 1,400
210
75
90
375
84
32
32
148
93
39
39
171
338
96
232
666
543
334
259
130
259
190
654 1,061
303 2,365
119 1,187
132 1,223
554 4,775
1,640
763
851
3,254
190
68
103
39
68
68
53
81
670
190
68
103
-
68
68
80
74
651
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
190
68
103
39
68
68
53
81
670
190
68
103
-
68
68
80
74
651
Executive Directors
Tommy Breen
Donal Murphy
Fergal O’Dwyer
Total for executive Directors
Non-executive Directors
Michael Buckley
Róisín Brennan
David Byrne
Jane Lodge7
Kevin Melia
John Moloney
Bernard Somers8
Leslie Van de Walle
Total for non-executive Directors
Ex gratia pension to dependant of retired Director
Payment to former Director for services in respect of a successful legal claim in favour of the DCC Group9
Total
10
192
5,647
10
-
3,915
Notes:
1. Fees are payable only to non-
executive Directors and include Board
Committee fees.
2. The changes to the salaries of the
The salaries of other senior Group
executives increased by 3.7%
overall, with individual increases
reflecting development in roles and
responsibilities.
executive Directors as at 1 April 2013
and the prior year are as follows:
The salaries for the executive
Directors increased by 2.7% overall.
Executive Director
Salary 1 April
2013
Salary 1 April
2012
Tommy Breen
€700,000 €700,000
Donal Murphy €410,000 €400,000
Fergal O’Dwyer €430,000 €400,000
3. Bonus targets for executive Directors
and other senior Group executives
are reviewed annually and are based
on targets set in advance by the
Remuneration Committee.
Executive Director
Tommy Breen
Donal Murphy
Fergal O’Dwyer
% Increase
1 Apr 2013
% Increase
1 Apr 2012
0%
2.5%
7.5%
0%
0%
0%
There has been no change to Mr.
Breen’s salary since June 2008. The
salaries of Mr. Murphy and Mr. O’Dwyer
were last increased in January 2011.
In the case of the executive Directors,
the Group earnings and divisional
operating profit targets as well
as personal performance and
contribution targets for the year
ended 31 March 2013 were met in
full. The resultant bonus payments
for the year ended 31 March 2013
were as follows:
Executive Director
Bonus €
% of Salary
Tommy Breen
€700,000
Donal Murphy €400,000
Fergal O’Dwyer €300,000
100%
100%
75%
4. In the case of the executive Directors,
benefits include use of a company
car, life/disability cover, club
subscriptions or cash equivalent.
5. 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 €338,000 for
Tommy Breen, being a cash allowance
of €504,000 less the value of a reversal
of previously funded benefits, a cash
allowance of €96,000 for Donal
Murphy and a cash allowance of
€232,000 for Fergal O’Dwyer.
DCC ANNUAL REPORT AND ACCOUNTS 2013
6. The LTIP awards granted in August
2009 vested in October 2012 based
on TSR performance and EPS
performance over the three year
period ended 31 March 2012. The
Group’s TSR performance gave rise to
a vesting of 25.84% of the total award.
The EPS performance condition was
not met. Consequently 25.84% of the
2009 awards vested. For the year
ended 31 March 2012, the value of
the LTIP was calculated by taking the
number of options which vested in
October 2012 multiplied by the market
price at the date of vesting.
The LTIP awards granted in November
2010 will vest in November 2013
based on TSR performance and EPS
performance over the three year
period ended 31 March 2013. The
Group’s TSR performance is expected
to give rise to a vesting of 35% of the
total award. The EPS performance
condition is expected to give rise to
a vesting of 15% of the total award.
Consequently, 50% of the 2010 awards
are expected to vest. For the year
ended 31 March 2013, the value of the
LTIP is estimated by multiplying the
number of options expected to vest in
November 2013 by the market price at
31 March 2013.
7. Jane Lodge was appointed as a
Director on 4 October 2012.
8. Bernard Somers retired on 5
November 2012.
9. During the year, a payment was made
to a former Director, who retired in
2004, for services provided over a
number of years post retirement, in
respect of a successful Taiwanese legal
claim in favour of the DCC Group.
91
Chief Executive’s Remuneration
The chart below shows the total remuneration for the Chief Executive based on single
figure numbers for the five years from 1 April 2008 to 31 March 2013.
€
2500
2,500,000
2000
2000
2,000,000
1500
1500
1,500,000
1000
1000
1,000,000
500
500,000
500
0
0
0
2009
2009
2009
2010
2010
2010
2011
2011
2011
2012
2012
2012
2013
2013
2013
fixed pay
Fixed
fixed pay
variable pay
Annual
variable pay
long term pay
Long
long term pay
Notes:
Fixed = basic salary + benefits + pension
Annual = annual bonus
Long = value of options under the DCC plc 1998 Employee Share Option Scheme and DCC plc Long Term
Incentive Plan 2009
The chart below maps the total remuneration for the Chief Executive (as set out
above) against the five year trend in EPS and TSR, using a base of 100 for 2009 for
comparator purposes.
300
250
300
300
250
250
200
200
200
150
150
150
100
100
100
50
50
50
0
0
0
2009
2009
2009
TSR
TSR
TSR
2010
2010
2010
CEO
CEO
CEO
2011
2011
2011
EPS
EPS
EPS
2012
2012
2012
2013
2013
2013
Key Performance Indicator Chart
The chart below shows the change in executive Director pay and key performance
indicators for the year ended 31 March 2013 versus the prior year. A base of 100 is
used for comparator purposes.
160
160
160
140
140
140
120
120
120
100
100
100
80
80
60
60
80
60
40
40
40
20
20
20
50
0
50
Operating profit
Dividends
Operating profit
Operating profit
Dividends
Dividends
Year ended 31 March 2012
Group salaries Executive Director pay
Group salaries
Group salaries Executive Director pay
Year ended 31 March 2013
Executive
Director pay
TSR
TSR
TSR
EPS
EPS
EPS
Year ended 31 March 2012
Year ended 31 March 2012
Year ended 31 March 2013
Year ended 31 March 2013
Overview Business Performance Governance Report Financial Statements Information
92
Governance Report
Remuneration Report (continued)
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, in view of the
significantly increased responsibilities
which this role now entails.
The Chairman, Michael Buckley, received
a total fee of €190,000 for the year
ended 31 March 2013, 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 plan and do not receive any
pension benefits from the Company.
An office is provided for the use of the
Chairman.
Executive Directors’ Defined Benefit Pensions
The table below sets out the charge in the accrued pension benefits to which
executive Directors have become entitled during the year ended 31 March 2013 and
the transfer value of the charge in accrued benefit, under the Company’s defined
benefit pension scheme:
Charge in accrued
pension benefit (excl
inflation)
during the year1
€’000
Transfer value
equivalent to the
charge in accrued
pension benefit1
€’000
Total accrued
pension benefit
at year end2
€’000
(10)
0
0
(10)
(166)
0
0
(166)
328
115
162
605
Executive Directors
Tommy Breen
Donal Murphy
Fergal O’Dwyer
Total
Notes
1. The pensions of the executive Directors have been capped in line with the provisions of the Irish Finance
Acts as detailed on page 88.
2. Figures represent the total accrued pension payable from normal retirement date, based on pensionable
service at 31 March 2013.
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 2013 (together with
their interests at 31 March 2012) are set out below:
Executive Directors
Michael Buckley
Tommy Breen
Róisín Brennan
David Byrne
Jane Lodge**
Kevin Melia
John Moloney
Donal Murphy
Fergal O’Dwyer
Leslie Van de Walle
Bernard Somers***
Company Secretary
Gerard Whyte
No. of Ordinary Shares
At 31 March 2013
No. of Ordinary Shares
At 31 March 2012*
12,000
295,000
-
1,200
-
1,250
2,000
85,413
264,389
670
-
144,400
10,000
290,000
-
1,200
-
1,250
2,000
84,313
260,889
670
1,000
144,400
*
**
***
or date of appointment if later.
Jane Lodge was appointed on 4 October 2012.
Bernard Somers retired on 5 November 2012.
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 2013.
The shareholdings held by the executive Directors are substantially in excess of the
share ownership guidelines in place, which are set out on page 89 of this report.
The Company’s Register of Directors Interests (which is open to inspection)
contains full details of Directors’ shareholdings and share options.
DCC ANNUAL REPORT AND ACCOUNTS 2013
93
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:
Number of options
Performance period
Earliest exercise date
At 31
March
2012
Granted in
year
Lapsed in
year
At 31
March
2013
Executive Directors
Tommy Breen
Donal Murphy
Fergal O’Dwyer
Company Secretary
Gerard Whyte
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
-
-
-
37,070
37,070 (39,856) 138,486
(39,856)
-
-
-
13,887 1 April 2009 – 31 March 2012
39,529 1 April 2010 – 31 March 2013
48,000 1 April 2011 – 31 March 2014
37,070 1 April 2012 – 31 March 2015
20 August 2012
15 November 2013
15 November 2014
12 November 2015
(15,657)
-
-
-
-
-
17,652
-
17,652 (15,657)
5,456 1 April 2009 – 31 March 2012
18,894 1 April 2010 – 31 March 2013
22,857 1 April 2011 – 31 March 2014
17,652 1 April 2012 – 31 March 2015
64,859
20 August 2012
15 November 2013
15 November 2014
12 November 2015
(17,319)
-
-
-
-
-
17,652
-
17,652 (17,319)
6,034 1 April 2009 – 31 March 2012
18,894 1 April 2010 – 31 March 2013
22,857 1 April 2011 – 31 March 2014
17,652 1 April 2012 – 31 March 2015
65,437
20 August 2012
15 November 2013
15 November 2014
12 November 2015
-
-
-
8,109
8,109
(8,718)
-
-
-
(8,718)
3,038 1 April 2009 – 31 March 2012
8,647 1 April 2010 – 31 March 2013
10,500 1 April 2011 – 31 March 2014
8,109 1 April 2012 – 31 March 2015
20 August 2012
15 November 2013
15 November 2014
12 November 2015
30,294
Market
price on
award
€
15.63
21.25
17.50
22.66
15.63
21.25
17.50
22.66
15.63
21.25
17.50
22.66
15.63
21.25
17.50
22.66
Overview Business Performance Governance Report Financial Statements Information
94
Governance Report
Remuneration Report (continued)
DCC plc 1998 Employee Share Option Scheme
Details as at 31 March 2013 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
2012
Exercised
in year
Lapsed in
year
Weighted
average option
price
at 31 March 2013
€
At 31
March
2013
Options exercised
in year
Normal Exercise
Period
Exercise
price
€
Market price at
date of exercise
€
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
120,000
45,000
(20,000)
-
-
(45,000)
100,000
-
€19.20 Nov 2007 – May 2018
€10.38
€22.26
50,000
20,000
(5,000)
-
-
(20,000)
45,000
-
€18.23 Nov 2007 – May 2018
€10.38
€22.26
87,500
40,000
(15,000)
-
-
(40,000)
72,500
-
€18.52 Nov 2007 – May 2018
€10.38
€22.26
50,000
20,000
(5,000)
-
-
(20,000)
45,000
-
€17.94 Nov 2007 – May 2018
€10.38
€22.26
Notes:
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 1.2% 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.
The market price of DCC shares on 28 March 2013 was €27.45 and the range during the year was €17.55 to €27.50.
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 127.
On behalf of the Remuneration Committee
Leslie Van de Walle
Chairman, Remuneration Committee
13 May 2013
DCC ANNUAL REPORT AND ACCOUNTS 2013 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.
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 Financial Services
Authority, 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.
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 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 2012 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.
95
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 62 and
63, 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
Overview Business Performance Governance Report Financial Statements Information
96
Financial Statements
Report of the Independent Auditors
For the year ended 31 March 2013
To the Members of DCC plc
We have audited the financial statements
of DCC plc for the year ended 31 March
2013 which comprise the Group Income
Statement, Group and Company Balance
Sheets, Group and Company Cash
Flow Statements, Group and Company
Statements of Comprehensive Income,
Group and Company Statements of
Changes in Equity and the related notes.
The financial reporting framework that
has been applied in their preparation
is Irish law and International Financial
Reporting Standards (IFRSs) as adopted
by the European Union and, as regards
the Company financial statements, as
applied in accordance with the provisions
of the Companies Acts 1963 to 2012.
Respective Responsibilities of Directors
and Auditors
As explained more fully in the Statement
of Directors’ Responsibilities set out on
page 95, the Directors are responsible
for the preparation of the financial
statements giving a true and fair view.
Our responsibility is to audit and express
an opinion on the financial statements
in accordance with Irish law and
International Standards on Auditing (UK
and Ireland). Those standards require
us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
This report, including the opinions,
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 these
opinions, 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.
Scope of the Audit of the Financial
Statements
An audit involves obtaining evidence
about the amounts and disclosures in
the financial statements sufficient to give
reasonable assurance that the financial
statements are free from material
misstatement, whether caused by fraud
or error. This includes an assessment
of: whether the accounting policies
are appropriate to the Group’s and the
Company’s circumstances and have
been consistently applied and adequately
disclosed; the reasonableness of
significant accounting estimates made by
the Directors; and the overall presentation
of the financial statements. In addition,
we read all the financial and non-financial
information in the Annual Report to
identify material inconsistencies with
the audited financial statements. If we
become aware of any apparent material
misstatements or inconsistencies we
consider the implications for our report.
Opinion on Financial Statements
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 2013 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 2012, of the state of the Company’s
affairs as at 31 March 2013 and cash
flows for the year then ended; and
• the financial statements have been
properly prepared in accordance with
the requirements of the Companies Acts
1963 to 2012 and, as regards the Group
financial statements, Article 4 of the IAS
Regulation.
Matters on which we are Required to
Report by the Companies Acts 1963 to
2012
• 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 2013 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.
Matters on which we are Required to
Report by Exception
We have nothing to report in respect of
the following:
Under the Companies Acts 1963 to 2012
we are required to report to you if, in our
opinion, the disclosures of Directors’
remuneration and transactions specified
by law are not made.
Under the Listing Rules of the Irish Stock
Exchange we are required to review:
• the Directors’ statement, set out on
page 73, in relation to going concern;
• the part of the Corporate Governance
Statement relating to 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; and
• the six specified elements of disclosures
in the report to shareholders by the
Board on Directors’ remuneration.
Paul Hennessy
for and on behalf of
PricewaterhouseCoopers
Chartered Accountants and Statutory
Audit Firm
Dublin, Ireland
13 May 2013
DCC ANNUAL REPORT AND ACCOUNTS 2013 96 Report of the Independent Auditors
97 Financial Statements
97
Group Income Statement
For the year ended 31 March 2013
Revenue
Cost of sales
Gross profit
Administration expenses
Selling and distribution expenses
Other operating income
Other operating expenses
Operating profit before
amortisation of intangible assets
Amortisation of intangible assets
Operating profit
Finance costs
Finance income
Share of associates’ profit/(loss) after tax
Profit before tax
Income tax expense
2013
Pre
Exceptionals
2012
Pre
Exceptionals
exceptionals
Note
€’000
(note 11)
€’000
Total
€’000
exceptionals
€’000
(note 11)
€’000
Total
€’000
4 12,966,257
(12,057,508)
- 12,966,257 10,690,341
- (12,057,508)
(9,934,168)
- 10,690,341
(9,934,168)
-
908,749
(303,370)
(394,884)
23,460
(4,789)
229,166
(17,684)
211,482
(52,334)
35,075
32
194,255
(32,239)
5
5
4
4
12
12
14
15
-
-
-
6,869
(36,078)
(29,209)
-
(29,209)
(1,682)
-
(350)
(31,241)
-
908,749
(303,370)
(394,884)
30,329
(40,867)
756,173
(266,950)
(317,281)
16,583
(3,499)
199,957
(17,684)
182,273
(54,016)
35,075
(318)
163,014
(32,239)
185,026
(11,379)
173,647
(50,447)
32,578
(40)
155,738
(27,703)
-
-
-
17,676
(40,033)
(22,357)
-
(22,357)
-
670
(1,068)
(22,755)
(2,234)
756,173
(266,950)
(317,281)
34,259
(43,532)
162,669
(11,379)
151,290
(50,447)
33,248
(1,108)
132,983
(29,937)
Profit after tax for the financial year
162,016
(31,241)
130,775
128,035
(24,989)
103,046
Profit attributable to:
Owners of the Parent
Non-controlling interests
Earnings per ordinary share
Basic
Diluted
18
18
Michael Buckley, Tommy Breen, Directors
130,359
416
130,775
155.96c
155.47c
102,428
618
103,046
122.78c
122.46c
Overview Business Performance Governance Report Financial Statements Information
98
Financial Statements
Group Statement of Comprehensive Income
For the year ended 31 March 2013
Group profit for the financial year
Other comprehensive income:
Currency translation effects
Group defined benefit pension obligations:
- actuarial loss
- movement in deferred tax asset
(Losses)/gains relating to cash flow hedges
Movement in deferred tax liability on cash flow hedges
Other comprehensive (expense)/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
2013
€’000
2012
€’000
130,775
103,046
(13,807)
46,711
(11,747)
1,847
(2,368)
248
(25,827)
(8,791)
1,178
189
11
39,298
104,948
142,344
104,532
416
104,948
141,726
618
142,344
DCC ANNUAL REPORT AND ACCOUNTS 2013
Group Balance Sheet
As at 31 March 2013
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
99
Note
2013
€’000
2012
€’000
20
21
22
32
29
24
25
29
28
19
37
38
39
39
39
39
40
41
30
29
32
33
35
34
36
26
30
29
35
34
19
522,114
886,136
955
11,209
148,902
451,097
785,205
1,173
6,397
134,531
1,569,316
1,378,403
460,650
1,347,287
13,948
613,677
2,435,562
-
338,170
1,291,698
4,294
630,023
2,264,185
142,614
2,435,562
2,406,799
4,004,878
3,785,202
22,057
124,687
12,408
(933)
(92,232)
1,400
985,063
22,057
124,687
11,086
1,187
(78,425)
1,400
929,331
1,052,450
2,827
1,011,323
2,656
1,055,277
1,013,979
795,548
15,889
38,904
22,885
20,271
66,885
1,861
848,365
17,493
32,011
14,745
15,438
85,271
2,458
962,243
1,015,781
1,730,521
34,655
182,190
2,805
14,243
22,944
1,987,358
-
1,533,882
38,813
70,999
1,020
9,966
13,428
1,668,108
87,334
1,987,358
1,755,442
2,949,601
2,771,223
4,004,878
3,785,202
Overview Business Performance Governance Report Financial Statements Information 100
Group Statement of Changes in Equity
For the year ended 31 March 2013
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 2012
22,057
124,687
929,331
(64,752) 1,011,323
2,656
1,013,979
Profit for the financial year
Other comprehensive income/(expense):
Currency translation
Group defined benefit pension obligations:
- actuarial loss
- movement in deferred tax asset
Losses 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 2013
22,057
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
130,359
-
130,359
416
130,775
-
(13,807)
(13,807)
(11,747)
1,847
-
-
-
(2,368)
(11,747)
1,847
(2,368)
-
248
248
-
-
-
-
-
(13,807)
(11,747)
1,847
(2,368)
248
120,459
(15,927)
104,532
416
104,948
2,087
-
(66,814)
-
-
1,322
-
-
2,087
1,322
(66,814)
-
-
-
-
(245)
2,087
1,322
(66,814)
(245)
124,687
985,063
(79,357) 1,052,450
2,827
1,055,277
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
-
-
-
-
124,687
Michael Buckley, Tommy Breen, Directors
102,428
-
102,428
618
103,046
-
46,711
46,711
-
-
189
(8,791)
1,178
189
-
-
-
-
46,711
(8,791)
1,178
189
11
46,911
11
141,726
-
618
11
142,344
-
549
-
-
(64,752)
2,372
549
(62,964)
-
1,011,323
-
-
-
(196)
2,656
2,372
549
(62,964)
(196)
1,013,979
(8,791)
1,178
-
-
94,815
2,372
-
(62,964)
-
929,331
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements Group Cash Flow Statement
For the year ended 31 March 2013
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 finance lease liabilities
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
101
Note
42
2013
€’000
2012
€’000
324,519
(30,879)
(49,019)
(38,353)
206,268
277,322
(2,774)
(43,056)
(49,829)
181,663
36
46
17
41
6,184
-
14,376
31,387
51,947
4,614
13
(1,285)
27,155
30,497
(76,659)
(191,534)
(14,680)
(70,229)
(160,076)
(8,063)
(282,873)
(238,368)
(230,926)
(207,871)
2,087
1,748
3,835
-
(692)
(66,814)
(245)
(67,751)
(63,916)
(88,574)
(1,720)
600,079
2,372
-
2,372
(6,091)
(397)
(62,964)
(196)
(69,648)
(67,276)
(93,484)
27,435
666,128
600,079
31
509,785
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
28
31
19
613,677
(103,892)
-
509,785
630,023
(70,758)
40,814
600,079
Overview Business Performance Governance Report Financial Statements Information
102
Company Statement of Comprehensive Income
For the year ended 31 March 2013
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 2013
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
2013
€’000
49,268
49,268
2012
€’000
40,444
40,444
49,268
40,444
Note
22
23
25
28
37
38
39
40
26
2013
€’000
2012
€’000
-
170,065
170,065
373,264
3,998
377,262
547,327
22,057
124,687
344
74,121
221,209
43,694
43,694
282,424
282,424
326,118
547,327
250
168,065
168,315
409,656
867
410,523
578,838
22,057
124,687
344
89,580
236,668
43,694
43,694
298,476
298,476
342,170
578,838
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
103
Company Statement of Changes in Equity
For the year ended 31 March 2013
At 1 April 2012
Profit for the financial year
Total comprehensive income
Re-issue of treasury shares
Dividends
At 31 March 2013
For the year ended 31 March 2012
At 1 April 2011
Profit for the financial year
Total comprehensive income
Re-issue of treasury shares
Dividends
At 31 March 2012
Michael Buckley, Tommy Breen, Directors
Share
capital
€’000
Share
premium
€’000
Retained
earnings
€’000
Other
reserves
(note 39)
€’000
Total
equity
€’000
22,057
124,687
89,580
344
236,668
-
-
-
-
-
-
-
-
22,057
124,687
49,268
49,268
2,087
(66,814)
74,121
-
-
-
-
49,268
49,268
2,087
(66,814)
344
221,209
Share
capital
€’000
Share
premium
€’000
Retained
earnings
€’000
Other
reserves
(note 39)
€’000
Total
equity
€’000
22,057
124,687
109,728
344
256,816
-
-
-
-
-
-
22,057
-
-
124,687
40,444
40,444
2,372
(62,964)
89,580
-
-
-
-
344
40,444
40,444
2,372
(62,964)
236,668
Overview Business Performance Governance Report Financial Statements Information
104
Company Cash Flow Statement
For the year ended 31 March 2013
Cash generated from operations
Interest paid
Net cash flows from operating activities
Investing activities
Inflows
Interest received
Dividend received from subsidiary
Outflows
Acquisition of 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
2013
€’000
21,517
(1,986)
19,531
14,265
36,062
50,327
(2,000)
(2,000)
48,327
2012
€’000
19,977
(2,417)
17,560
13,869
30,000
43,869
-
-
43,869
2,087
2,087
2,372
2,372
17
(66,814)
(66,814)
(64,727)
(62,964)
(62,964)
(60,592)
3,131
867
3,998
837
30
867
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
105
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 2012 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 ultimate 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 2013 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:
• Amendment to IFRS 7 Disclosures - Transfer of financial assets. 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 did not have a significant impact on the Group’s financial statements.
• Amendment to IAS 12 Recovery of underlying assets. 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 did not have a significant impact on the Group’s
financial statements.
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 IAS 19 Employee benefits (effective date: DCC financial year beginning 1 April 2013). This amendment (which
was EU endorsed on 6 June 2012) makes significant changes to the recognition and measurement of defined benefit pension
expense and termination benefits, and significantly increases the volume of disclosures. The main impact on the Group, apart
from the additional required disclosures, is that the expected return on defined benefit pension assets included in the Income
Statement will no longer be based on an estimate of asset returns but will now be equal to the discount rate. As the Group
currently has a significant proportion of its defined benefit pension scheme assets invested in bonds where the expected
return is generally lower than the discount rate, it is expected that the Income Statement impact of this amendment will be
marginally favourable to the Group.
Overview Business Performance Governance Report Financial Statements Information
106
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
• Amendment to IAS 1 Presentation of items of other comprehensive income (OCI) (effective date: DCC financial year beginning
1 April 2013). This amendment (which was EU endorsed on 6 June 2012) 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 2014). This standard (which
was EU endorsed on 29 December 2012) 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 and the amendment to IAS 27 are not expected to 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 (which was EU endorsed on 29 December 2012) 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.
• IFRS 13 Fair value measurement (effective date: DCC financial year beginning 1 April 2013). This standard (which was EU
endorsed on 29 December 2012) 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). This amendment (which was EU endorsed on 29 December 2012) enhances current disclosures about offsetting
financial assets and financial liabilities. This amendment will not have a significant impact on the Group’s financial statements.
• Amendment to IFRS 1 Government loans (effective date: DCC financial year beginning 1 April 2013). The amendment is
subject to EU endorsement. The amendment adds an exception to the retrospective application of IFRSs to require that
first-time adopters apply the requirements of IFRS 9 Financial Instruments and IAS 20 Accounting for Government Grants
and Disclosure of Government Assistance prospectively to government loans existing at the date of transition to IFRS. This
amendment will not have a significant impact on the Group’s financial statements.
• Improvements to IFRSs (2009-2011); (effective date: DCC financial year beginning 1 April 2013). This amendment was EU
endorsed on 27 March 2013. The Annual Improvements process provides a vehicle for making non-urgent but necessary
amendments to IFRSs. These amendments 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).
The IFRIC was EU endorsed on 29 December 2012 and 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 not
have a significant impact on the Group’s financial statements.
• IFRS 11 Joint arrangements (effective date: DCC financial year beginning 1 April 2014). This standard (which was EU
endorsed on 29 December 2012) 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 2014). This standard
(which was EU endorsed on 29 December 2012) 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.
• Amendment to IAS 32 Offsetting financial assets and financial liabilities (effective date: DCC financial year beginning 1 April
2014). The amendment was EU endorsed on 29 December 2012 and 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.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 107
1. Summary of Significant Accounting Policies (continued)
• Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12); (effective date: DCC financial year beginning 1 April
2014). The amendments are subject to EU endorsement. The amendments clarify the IASB’s intention when first issuing the
transition guidance in IFRS 10 and provide similar relief from the presentation or adjustment of comparative information
for periods prior to the immediately preceding period. These amendments will not have a significant impact on the Group’s
financial statements.
• Amendment to IFRS 10 and IFRS 12 Investment Entities (effective date: DCC financial year beginning 1 April 2014). The
amendments are subject to EU endorsement. The amendment provides certain consolidation exemptions to funds and
similar entities from consolidating controlled investees in certain circumstances. These amendments 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. These amendments will not have a significant impact on the Group’s financial statements.
Basis of Consolidation
Subsidiaries
Subsidiaries are entities that are controlled by the Group. Control exists where the Group has the power, directly or indirectly, to
govern the financial and operating policies of the entity so as to obtain benefits from its activities. In assessing control, potential
voting rights that are currently exercisable or convertible are taken into account.
The results of subsidiary undertakings acquired or disposed of during the year are included in the Group Income Statement
from the date of their acquisition or up to the date of their disposal. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into line with those used by the Group.
Joint ventures
In accordance with IAS 31 Interests in Joint Ventures, the Group’s share of results and net assets of joint ventures, which are
entities in which the Group holds an interest on a long-term basis and which are jointly controlled by the Group and one or
more other venturers under a contractual arrangement, are accounted for on the basis of proportionate consolidation from
the date on which the contractual agreements stipulating joint control are finalised and are derecognised when joint control
ceases. All of the Group’s joint ventures are jointly controlled entities within the meaning of IAS 31. The Group combines its
share of the joint ventures’ individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with
similar items in the Group’s financial statements.
Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity
method of accounting and are initially recognised at cost. The Group’s investment in associates includes goodwill identified
on acquisition, net of any accumulated impairment loss. Goodwill attributable to investments in associates is treated in
accordance with the accounting policy for goodwill.
Overview Business Performance Governance Report Financial Statements Information 108
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the Group Income Statement, and its
share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its
interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate.
The results of associates are included from the effective date on which the Group obtains significant influence and are excluded
from the effective date on which the Group ceases to have significant influence.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains arising from such transactions, are eliminated in preparing
the consolidated financial statements. Unrealised gains arising from transactions with joint ventures and associates are
eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same manner as
unrealised gains, but only to the extent that there is no evidence of impairment.
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.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 109
1. Summary of Significant Accounting Policies (continued)
On disposal of a foreign operation, such cumulative currency translation differences are recognised in the Income Statement as
part of the overall gain or loss on disposal. In accordance with IFRS 1, cumulative currency translation differences arising prior
to the transition date to IFRS (1 April 2004) have been set to zero for the purposes of ascertaining the gain or loss on disposal of
a foreign operation.
Goodwill and fair value adjustments arising on acquisition of a foreign operation are regarded as assets and liabilities of the
foreign operation, are expressed in the functional currency of the foreign operation and are recorded at the exchange rate at the
date of the transaction and subsequently retranslated at the applicable closing rates.
Exceptional Items
The Group has adopted an Income Statement format which seeks to highlight significant items within the Group results for
the year. Such items may include restructuring, profit or loss on disposal or termination of operations, litigation costs and
settlements, profit or loss on disposal of investments, profit or loss on disposal of property, plant and equipment, IAS 39
ineffective mark to market movements together with gains or losses arising from currency swaps offset by gains or losses
on related fixed rate debt, acquisition costs, profit or loss on defined benefit pension scheme restructuring, adjustments
to deferred and contingent consideration (arising on business combinations from 1 April 2010) 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.
Overview Business Performance Governance Report Financial Statements Information 110
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
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.
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.
A financial liability is recognised in relation to the other shareholder’s option to put its shareholding, being the fair value of
the estimate of amounts payable to acquire the subsidiary shareholding. The financial liability is included in deferred and
contingent consideration. The discount component is unwound as an interest charge in the Income Statement over the life of
the obligation. Subsequent changes to the financial liability are 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.
A financial liability was recognised in relation to the other shareholder’s option to put its shareholding, being the fair value of
the estimate of amounts payable to acquire the subsidiary shareholding. The financial liability was included in deferred and
contingent consideration. The discount component was unwound as an interest charge in the Income Statement over the life of
the obligation. Subsequent changes to the financial liability were recognised as an adjustment to goodwill.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 111
1. Summary of Significant Accounting Policies (continued)
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.
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.
Overview Business Performance Governance Report Financial Statements Information 112
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
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).
The Group does not have any indefinite-lived intangible assets other than goodwill.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership of the asset to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are capitalised as assets of the Group at the inception of the lease at the lower of the fair
value of the leased asset and the present value of the minimum lease payments. The corresponding liability to the lessor
is included in the Balance Sheet as a short, medium or long term lease obligation as appropriate. Lease payments are
apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are recognised in the Income Statement.
Rentals payable under operating leases (net of any incentives received from the lessor) are charged to the Income Statement
on a straight line basis over the term of the relevant lease.
Inventories
Inventories are valued at the lower of cost and net realisable value.
Cost is determined on a first in first out basis and in the case of raw materials, bought-in goods and expense inventories,
comprises purchase price plus transport and handling costs less trade discounts and subsidies. Cost, in the case of products
manufactured by the Group, consists of direct material and labour costs together with the relevant production overheads based
on normal levels of activity. Net realisable value represents the estimated selling price less costs to completion and appropriate
selling and distribution costs.
Provision is made, where necessary, for slow moving, obsolete and defective inventories.
Trade 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.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 113
1. Summary of Significant Accounting Policies (continued)
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 has 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 has 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 recognised assets or liabilities or firm commitments that are attributable to hedged risks) or
cash flow hedges (which hedge exposures to fluctuations in future cash flows derived from a particular risk associated with
recognised assets or liabilities or highly probable forecast transactions).
The Group documents, at the inception of the transactions, 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 cash flow hedge reserve
in 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.
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 designated as
fair value hedges of firm commitments are recognised in the Income Statement. 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 the Income Statement.
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.
Overview Business Performance Governance Report Financial Statements Information 114
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Cash flow hedge
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability or
a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognised
as a separate component of equity. The ineffective portion is reported in the Income Statement in ‘Finance Income’ and ‘Finance
Costs’ where the hedged item is private placement debt, and in ‘Other Operating Income’ or ‘Other Operating Expenses’ for
all other cases. When a forecast transaction results in the recognition of an asset or a liability, the cumulative gain or loss is
removed from equity and included in the initial measurement of the asset or liability. Otherwise, the associated gains or losses
that had previously been recognised in equity are transferred to the Income Statement in the same reporting period as the hedged
transaction in Revenue or Costs of Sales (depending on whether the hedge related to a forecasted sale or purchase).
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the Income Statement. When a forecast transaction is no longer expected to occur, the cumulative gain
or loss that was reported in equity is immediately transferred to the Income Statement.
Interest-Bearing Loans and Borrowings
All loans and borrowings are initially recorded at fair value, net of transaction costs incurred. Loans and borrowings are
subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value
is recognised in the Income Statement over the period of the borrowings using the effective interest method.
Provisions
A provision is recognised in the Balance Sheet when the Group has a present obligation (either legal or constructive) as a result
of a past event, and it is probable that a transfer of economic benefits will be required to settle the obligation. Provisions are
measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and are
discounted to present value where the effect is material.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan and
announced its main provisions.
Provisions arising on business combinations are only recognised to the extent that they would have qualified for recognition in
the financial statements of the acquiree prior to the acquisition.
A contingent liability is not recognised but is disclosed where the existence of the obligation will only be confirmed by future
events or where it is not probable that an outflow of resources will be required to settle the obligation or where the amount of
the obligation cannot be measured with reasonable reliability. Contingent assets are not recognised but are disclosed where an
inflow of economic benefits is probable.
Environmental Provisions
The Group’s waste management and recycling activities are subject to various laws and regulations governing the protection
of the environment. Full provision is made for the net present value of the Group’s estimated costs in relation to restoration
liabilities at its landfill sites. The net present value of the estimated costs is capitalised as property, plant and equipment and
the unwinding of the discount element on the restoration provision is reflected in the Income Statement.
Finance Costs
Finance costs comprise interest payable on borrowings calculated using the effective interest rate method, net losses on
hedging instruments that are recognised in the Income Statement, facility fees 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.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 115
1. Summary of Significant Accounting Policies (continued)
The ‘mark to market of designated swaps and related debt’ and the ‘mark to market of undesignated currency swaps and
related debt’ are included in ‘Finance Costs’ in the case of a net loss. The ‘mark to market of designated swaps and related
debt’ comprises the gain or loss on interest rate swaps and cross currency interest rate swaps that are in hedge relationships
with borrowings, together with the gain or loss on the hedged borrowings which is attributable to the hedged risk. The ‘mark
to market of undesignated swaps and related debt’ comprises the gain or loss on currency swaps which are not designated as
hedging instruments, but which are used to offset movements in foreign exchange rates on certain borrowings, along with the
currency movement on those borrowings.
Finance Income
Interest income is recognised in the Income Statement as it accrues, using the effective interest method, and includes net
gains on hedging instruments that are recognised in the Income Statement. The expected return on defined benefit pension
scheme assets is recognised in the Income Statement in accordance with IAS 19.
The ‘mark to market of designated swaps and related debt’ and the ‘mark to market of undesignated currency swaps and
related debt’, both as defined above, are included in ‘Finance Income’ in the case of a net gain.
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 using the tax rates that are expected to apply in the
period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantially enacted
by the end of the reporting period.
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.
Overview Business Performance Governance Report Financial Statements Information 116
Notes to the Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Pension and other Post Employment Obligations
The Group operates defined contribution and defined benefit pension schemes.
The costs arising in respect of the Group’s defined contribution schemes are charged to the Income Statement in the period in
which they are incurred. The Group has no legal or constructive obligation to pay further contributions after payment of fixed
contributions.
The Group operates a number of defined benefit pension schemes which require contributions to be made to separately
administered funds. The liabilities and costs associated with the Group’s defined benefit pension schemes are assessed on the
basis of the projected unit credit method by professionally qualified actuaries and are arrived at using actuarial assumptions
based on market expectations at the balance sheet date. The Group’s net obligation in respect of defined benefit pension
schemes is calculated separately for each plan by estimating the amount of future benefits that employees have earned in
return for their service in the current and prior periods. That benefit is discounted to determine its present value, and the fair
value of any plan asset is deducted. Plan assets are measured at bid values.
The discount rate employed in determining the present value of the schemes’ liabilities is determined by reference to market
yields at the balance sheet date on high quality corporate bonds of a currency and term consistent with the currency and term
of the associated post-employment benefit obligations.
The net surplus or deficit arising in the Group’s defined benefit pension schemes are shown within either non-current assets or
liabilities in 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 both market and non-market based vesting conditions. 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 cumulative non-market based
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.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 117
1. Summary of Significant Accounting Policies (continued)
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.
Where the share-based payments give rise to the issue of new equity share capital, the proceeds received by the Company are
credited to Share Capital (nominal value) and Share Premium when the share entitlements are exercised. Where the share-based
payments give rise to the re-issue of shares from treasury shares, the proceeds of issue are credited to shareholders equity.
The measurement requirements of IFRS 2 have been implemented in respect of share options entitlements granted after 7
November 2002. In accordance with the standard, the disclosure requirements of IFRS 2 have been applied to all outstanding
share-based payments regardless of their grant date. The Group does not operate any cash-settled share-based payment
schemes or share-based payment transactions with cash alternatives as defined in IFRS 2.
Government Grants
Grants are recognised at their fair value when there is a reasonable assurance that the grant will be received and all attaching
conditions have been complied with.
Capital grants received and receivable by the Group are credited to government grants and are amortised to the Income
Statement on a straight-line basis over the expected useful lives of the assets to which they relate.
Revenue grants are recognised as income over the periods necessary to match the grant on a systematic basis to the costs that
it is intended to compensate.
Equity
Treasury Shares
Where the Company purchases the Company’s equity share capital, the consideration paid is deducted from total equity and
classified as treasury shares until they are cancelled. Where such shares are subsequently sold or re-issued, any consideration
received is included in total 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.
Overview Business Performance Governance Report Financial Statements Information 118
Notes to the Financial Statements (continued)
2. Financial Risk Management
Financial Risk Factors
The Group uses derivative financial instruments (principally interest rate, currency and cross currency interest rate swaps
and forward foreign exchange and commodity contracts) to hedge certain risk exposures, as detailed below, arising from
operational, financing and investment activities. The Group does not trade in financial instruments nor does it enter into any
leveraged derivative transactions.
Financial risk management within the Group is governed by policies and guidelines reviewed and approved annually by the
Board of Directors. These policies and guidelines primarily cover foreign exchange risk, commodity price risk, credit risk,
liquidity risk and interest rate risk. Monitoring of compliance with the policies and guidelines is managed by the Group Risk
Management function.
The Group’s financial risks are detailed in note 47.
Fair Value Estimation
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The
quoted market price used for financial assets held by the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined by using valuation techniques. The Group uses a variety of techniques and makes assumptions that are based on
market conditions existing at each balance sheet date.
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.
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 105 to 117.
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 €811.2 million at 31 March 2013. 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.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
119
3. Critical Accounting Estimates and Judgements (continued)
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 €139.8 million at 31 March 2013. At
31 March 2013 the Group also has plan assets totalling €116.9 million, giving a net pension liability of €22.9 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 2013 of €10.4 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.
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 the Group’s 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.
Overview Business Performance Governance Report Financial Statements Information 120
Notes to the Financial Statements (continued)
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 and his executive management team.
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 and services 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, Ireland and Continental Europe.
DCC SerCom sells, markets and distributes 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 sells, markets and distributes pharmaceutical and medical devices and provides related value added services
to the Irish and British hospital and community markets. DCC Healthcare also provides outsourced product development,
manufacturing, packaging 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 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.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 121
4. Segment Information (continued)
The segment results for the year ended 31 March 2013 are as follows:
Income Statement items
Segment revenue
9,948,666
2,269,127
393,173
142,393
212,898 12,966,257
Year ended 31 March 2013
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
DCC
Environmental
DCC Food &
Beverage
€’000
€’000
€’000
Total
€’000
Operating profit*
Amortisation of intangible assets
Net operating exceptionals (note 11)
130,206
(12,435)
(32,286)
50,872
(1,660)
3,026
27,218
(1,043)
(2,502)
13,362
(1,646)
442
7,508
(900)
2,111
Operating profit
Finance costs
Finance income
Share of associates’ loss after tax
Profit before income tax
Income tax expense
Profit for the year
85,485
52,238
23,673
12,158
8,719
229,166
(17,684)
(29,209)
182,273
(54,016)
35,075
(318)
163,014
(32,239)
130,775
* Operating profit before amortisation of intangible assets and net operating exceptionals
Segment revenue
7,822,971
2,181,212
330,022
132,702
223,434 10,690,341
Year ended 31 March 2012
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
DCC
Environmental
DCC Food &
Beverage
€’000
€’000
€’000
Total
€’000
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)
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
* Operating profit before amortisation of intangible assets and net operating exceptionals
185,026
(11,379)
(22,357)
151,290
(50,447)
33,248
(1,108)
132,983
(29,937)
103,046
Overview Business Performance Governance Report Financial Statements Information 122
Notes to the Financial Statements (continued)
4. Segment Information (continued)
Balance Sheet items
As at 31 March 2013
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
DCC
Environmental
DCC Food &
Beverage
€’000
€’000
€’000
Total
€’000
Segment assets
1,773,962
796,419
333,115
196,013
116,678
3,216,187
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
955
162,850
11,209
613,677
4,004,878
Segment liabilities
1,079,867
526,302
93,208
34,280
54,196
1,787,853
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
977,738
18,694
73,559
89,829
1,928
2,949,601
As at 31 March 2012
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
DCC
Environmental
DCC Food &
Beverage
€’000
€’000
€’000
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
919,364
18,513
70,824
98,699
2,525
87,334
2,771,223
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
123
4. Segment Information (continued)
Other segment information
Year ended 31 March 2013
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
DCC
Environmental
DCC Food &
Beverage
€’000
€’000
€’000
Total
€’000
Capital expenditure - additions
44,859
4,103
8,801
10,724
2,867
71,354
Capital expenditure - business combinations
63,734
577
13,490
-
-
77,801
Depreciation
44,002
5,068
5,376
9,024
3,042
66,512
Total consideration - business combinations
128,148
7,048
71,485
Intangible assets acquired - business combinations
75,197
5,385
48,523
Impairment of goodwill
-
-
-
-
-
-
586
207,267
276
129,381
-
-
Year ended 31 March 2012
DCC
Energy
€’000
DCC
SerCom
€’000
DCC
Healthcare
DCC
Environmental
DCC Food &
Beverage
€’000
€’000
€’000
Total
€’000
Capital expenditure
48,163
3,086
8,840
11,741
3,295
75,125
Capital expenditure - business combinations
21,804
90
685
Depreciation
32,585
5,815
4,213
3,645
9,289
-
26,224
3,533
55,435
Total consideration - business combinations
138,480
6,897
20,549
30,764
Intangible assets acquired - business combinations
125,670
6,800
16,771
28,512
41
41
196,731
177,794
Impairment of goodwill
-
5,500
-
-
5,869
11,369
Overview Business Performance Governance Report Financial Statements Information 124
Notes to the Financial Statements (continued)
4. Segment Information (continued)
Geographical analysis
The Group has a presence in 13 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
UK
Rest of the World
Total
2013
€’000
2012
€’000
2013
€’000
2012
€’000
2013
€’000
2012
€’000
2013
€’000
2012
€’000
Year ended 31 March
Income Statement items
Revenue
1,024,435
957,831
9,913,509
7,883,888
2,028,313
1,848,622 12,966,257 10,690,341
Operating profit*
Amortisation of intangible
assets
Net operating
exceptionals
24,592
26,526
168,869
125,349
35,705
33,151
229,166
185,026
(1,683)
(1,571)
(10,293)
(7,689)
(5,708)
(2,119)
(17,684)
(11,379)
(1,615)
(13,102)
(23,798)
(29)
Segment result
21,294
11,853
134,778
117,631
Balance Sheet items
(3,796)
26,201
(9,226)
21,806
(29,209)
(22,357)
182,273
151,290
Segment assets
418,511
409,698
2,342,087
2,093,840
455,589
362,632
3,216,187
2,866,170
Segment liabilities
178,169
184,489
1,317,569
1,140,857
292,115
248,618
1,787,853
1,573,964
Other segment
information
Non-current assets**
232,936
230,596
1,031,162
917,913
145,107
88,966
1,409,205
1,237,475
Capital expenditure
- business combinations
280
35
56,693
25,828
20,828
361
77,801
26,224
Depreciation
12,255
12,892
50,570
39,669
3,687
2,874
66,512
55,435
Total consideration
- business combinations
6,533
828
130,968
159,160
69,766
36,743
207,267
196,731
Intangible assets acquired
6,006
3,654
82,946
133,017
40,429
41,123
129,381
177,794
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.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
125
2013
€’000
2012
€’000
149
2,575
6,771
617
4,625
8,723
23,460
6,869
30,329
(1,322)
(1,966)
(196)
(1,305)
(4,789)
(36,078)
(40,867)
40
995
6,648
53
3,483
5,364
16,583
17,676
34,259
(549)
(857)
-
(2,093)
(3,499)
(40,033)
(43,532)
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
Fair value losses on non-hedge accounted derivative financial instruments - commodities
Other operating expenses
Other operating expenses included in net exceptional items
Total other operating expenses
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):
2013
Provision for impairment of trade receivables (note 47)
Profit on sale of property, plant and equipment
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
€’000
4,158
(1,271)
221
(584)
18,340
873
12,672
31,885
1,780
783
60
2,623
2012
€’000
1,830
(838)
268
(604)
14,749
788
11,559
27,096
1,454
623
102
2,179
Auditor statutory disclosure
The audit fee for the Parent Company is €16,300 (2012: €16,000). This amount is paid to PricewaterhouseCoopers, Ireland, the
statutory auditor.
Overview Business Performance Governance Report Financial Statements Information 126
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 Remuneration Report on
pages 81 to 94.
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 income (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 (decrease)/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
2013
€’000
2012
€’000
24,887
(16,133)
19,550
(12,339)
8,754
(7,208)
(481)
1,065
8
1,073
(127)
946
2013
€’000
7,314
3,593
10,907
5,888
-
5,019
5,019
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
10,907
10,986
2013
€’000
123
(1,036)
(913)
1,737
824
2012
€’000
1,165
(1,031)
134
1,603
1,737
824
824
1,737
1,737
The Group’s share of its joint ventures’ capital commitments for property, plant and equipment at 31 March 2013 is €0.703
million (2012: €0.584 million).
Details of the Group’s principal joint ventures are shown in the Group directory on pages 169 to 173.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 127
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)
2013
Number
2012
Number
4,507
1,573
1,280
903
890
9,153
2013
€’000
345,368
35,067
1,322
11,973
1,196
394,926
3,687
1,735
1,137
893
903
8,355
2012
€’000
298,705
36,581
549
7,773
1,477
345,085
10. Employee Share Options and Awards
The Group’s employee share options and awards are equity-settled share-based payments as defined in IFRS 2 Share-based
Payment. The IFRS requires that a recognised valuation methodology be employed to determine the fair value of share options
granted. The expense reported in the Income Statement of €1.322 million (2012: €0.549 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.
Overview Business Performance Governance Report Financial Statements Information
128
Notes to the Financial Statements (continued)
10. Employee Share Options and Awards (continued)
Impact on Income Statement
In compliance with IFRS 2 Share-based Payment, the Group has implemented the measurement requirements of the IFRS in
respect of share options that were granted after 7 November 2002 and had not vested by 1 April 2004.
The total share option expense is analysed as follows:
Date of grant
DCC plc Long Term Incentive Plan 2009
20 August 2009
15 November 2010
15 November 2011
12 November 2012
Grant
price
€
Minimum
duration of
vesting period
Number of
share awards/
options granted
15.63
21.25
17.50
22.66
3 years
3 years
3 years
3 years
255,406
212,525
252,697
215,489
DCC plc 1998 Employee Share Option Scheme
12 November 2002
22 December 2003
18 May 2004
9 November 2004
23 June 2006
20 May 2008
10.38 3 and 5 years
10.70 3 and 5 years
12.75 3 and 5 years
15.65 3 and 5 years
3 years
18.05
3 years
15.68
609,500
132,500
162,500
219,500
223,500
315,500
Total expense
Share options and awards
Weighted
average
fair value
€
8.97
12.00
9.17
12.09
2.81
2.76
3.42
4.15
4.54
4.32
Expense in
Income Statement
2013
€’000
2012
€’000
(572)
850
772
290
746
850
257
-
1,340
1,853
-
-
-
-
(18)
-
(18)
1,322
(748)
(192)
(212)
(220)
-
68
(1,304)
549
DCC plc Long Term Incentive Plan 2009
At 31 March 2013, under the DCC plc Long Term Incentive Plan 2009, Group employees hold awards to subscribe for 733,414
ordinary shares.
The general terms of the DCC plc Long Term Incentive Plan 2009 are set out in the Remuneration Report on pages 81 to 94.
The DCC plc Long Term Incentive Plan 2009 contains both market and non-market based vesting conditions. 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 cumulative non-market based 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.
A summary of activity under the DCC plc Long Term Incentive Plan 2009 over the year is as follows:
At 1 April
Granted
Exercised
Expired
At 31 March
2013
2012
Number of
Number of
share awards
share awards
714,755
215,489
(11,776)
(185,054)
733,414
462,058
252,697
-
-
714,755
The weighted average share price at the dates of exercise for share awards exercised during the year under the DCC plc Long
Term Incentive Plan 2009 was €22.16. The share awards outstanding at the year end have a weighted average remaining
contractual life of 5.5 years (2012: 5.6 years).
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements €
12.09
9.17
12.00
8.97
2012
1.88
2.50
30.0
5.0
129
10. Employee Share Options and Awards (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 2013
Granted during the year ended 31 March 2012
Granted during the year ended 31 March 2011
Granted during the year ended 31 March 2010
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:
2013
Risk-free interest rate (%)
Dividend yield (%)
Expected volatility (%)
Expected life in years
0.67
2.50
30.0
5.0
The expected volatility is based on historic volatility over the past 5 years. The expected life is the average expected period to
exercise. The risk free rate of return is the yield on zero coupon government bonds of a term consistent with the assumed
option life.
Analysis of closing balance - outstanding at end of year
Date of grant
Date of expiry
20 August 2009
15 November 2010
15 November 2011
12 November 2012
Total outstanding at 31 March
20 August 2016
15 November 2017
15 November 2018
12 November 2019
2013
2012
Number of
share awards
Number of
share awards
52,703
212,525
252,697
215,489
733,414
249,533
212,525
252,697
-
714,755
Analysis of closing balance - exercisable at end of year
As at 31 March 2013, 52,703 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 2013, under the DCC plc 1998 Employee Share Option Scheme, Group employees hold basic tier options to
subscribe for 867,350 ordinary shares and second tier options to subscribe for 157,000 ordinary shares.
The general terms of the DCC plc 1998 Employee Share Option Scheme are set out in the Remuneration Report on pages 81 to 94.
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.
Overview Business Performance Governance Report Financial Statements Information
130
Notes to the Financial Statements (continued)
10. Employee Share Options and Awards (continued)
A summary of activity under the DCC plc 1998 Employee Share Option Scheme over the year is as follows:
At 1 April
Exercised
Expired
At 31 March
2013
2012
Average
exercise
price in €
per share
Average
exercise
price in €
per share
Options
Options
15.51
13.61
10.50
1,443,000
(153,150)
(265,500)
17.09
1,024,350
14.42
11.27
10.70
15.51
1,896,000
(210,500)
(242,500)
1,443,000
Total exercisable at 31 March
17.94
867,350
17.29
1,024,500
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 €23.40 (2012: €18.61). The share options outstanding at the year end have a weighted
average remaining contractual life of 3.3 years (2012: 3.4 years).
Analysis of closing balance - outstanding at end of year
Date of grant
Date of expiry
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
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
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
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
Exercise
price in €
per share
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
Exercise
price in €
per share
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
2013
2012
Options
-
75,000
118,000
120,500
107,350
131,500
222,000
12,500
237,500
Exercise
price in €
per share
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
Options
332,000
84,000
119,500
120,500
120,000
162,000
226,000
12,500
266,500
1,024,350
1,443,000
2013
2012
Exercise
price in €
per share
10.38
10.70
12.75
15.65
16.70
18.05
23.35
19.50
15.68
Options
70,500
16,500
60,000
90,500
120,000
162,000
226,000
12,500
266,500
1,024,500
Options
-
7,500
58,500
90,500
107,350
131,500
222,000
12,500
237,500
867,350
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 11. Exceptionals
Restructuring costs
Acquisition and related costs
Adjustments to deferred and contingent acquisition consideration (note 34)
Other operating exceptional items
Net loss on disposal of subsidiaries
Restructuring of Group defined benefit pension schemes
Impairment of property, plant and equipment
Gain arising from Taiwanese legal claim
Impairment of goodwill
Operating exceptional items
Mark to market of swaps and related debt (note 12)
Impairment of associate company investment and loan receivable from associate
Net exceptional items before taxation
Exceptional taxation charge
Net exceptional items after taxation
131
2013
€’000
2012
€’000
(20,704)
(14,896)
6,869
(478)
-
-
-
-
-
(29,209)
(1,682)
(350)
(13,715)
(6,568)
-
(4,611)
(1,770)
3,587
(2,000)
14,089
(11,369)
(22,357)
670
(1,068)
(31,241)
(22,755)
-
(31,241)
(2,234)
(24,989)
The Group incurred an exceptional charge of €20.704 million in relation to the restructuring of acquired and existing
businesses. Most of this related to the planned integration into DCC Energy’s existing operations of certain oil distribution
assets previously owned by Total and of the BP UK LPG business, following the clearance of these acquisitions by the relevant
competition authorities.
Acquisition and related costs of €14.896 million include the professional and tax costs (such as stamp duty) relating to the
evaluation and completion of acquisitions. These costs also include the legal and other professional costs relating to the review
and ultimate clearance by the relevant competition authorities of the Total and BP UK LPG acquisitions.
In accordance with IFRS 3 (revised), deferred and contingent consideration is measured at fair value at the time of the business
combination. If the amount of deferred and contingent consideration changes as a result of a post-acquisition event then the
changed amount is recognised in the Income Statement. Net reductions in deferred and contingent consideration payable by
the Group amounted to €6.869 million during the year.
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 both fixed and floating rate sterling and euro. The level of ineffectiveness calculated under
IAS 39 on the fair value and cash flow hedge relationships relating to fixed rate debt, together with gains or losses arising from
marking to market swaps not designated as fair value hedges offset by foreign exchange translation gains or losses on that
related fixed rate debt, is charged or credited as an exceptional item. In the year to 31 March 2013 this amounted to a total
exceptional loss of €1.682 million.
Overview Business Performance Governance Report Financial Statements Information 132
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)
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
2013
€’000
2012
€’000
(26,212)
(148)
(17,146)
-
(295)
(1,806)
(1,373)
(22,252)
(1,106)
(19,576)
(41)
(86)
(739)
(1,015)
(46,980)
(44,815)
(5,354)
(1,682)
(5,632)
-
(54,016)
(50,447)
2,883
28,116
-
18
4,058
35,075
4,525
22,314
670
1,378
4,361
33,248
(18,941)
(17,199)
(5,065)
27,016
(23,745)
(1,794)
(6,444)
6,556
112
(1,682)
4,714
48,738
(53,165)
287
(8,969)
9,352
383
670
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)
2013
€1=Stg£
0.846
0.815
2012
€1=Stg£
0.834
0.868
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 133
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 profit/(loss)
Impairment of associate company investment and loan receivable from associate
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%
Exceptional taxation charge (note 11)
United Kingdom corporation tax at 24% (2012: 26%)
Other overseas tax
(Over)/under provision in respect of prior years
Total current taxation
Deferred tax
Irish at 12.5%
United Kingdom at 23% (2012: 24%)
Other overseas deferred tax
(Over)/under provision in respect of prior years
Total deferred tax (credit)/charge
Total income tax expense
(ii) Deferred tax recognised directly in Equity
Defined benefit pension obligations
Cash flow hedges
(iii) Reconciliation of effective tax rate
Profit on ordinary activities before taxation
Add back: share of associates’ loss after tax
Add back: amortisation of intangible assets
At the standard rate of corporation tax in Ireland of 12.5%
Adjustments in respect of prior years
Effect of earnings taxed at higher rates
Permanent and other differences
Income tax expense
Tax on exceptional gain
Deferred tax attaching to amortisation of intangible assets
Total income tax expense
2013
€’000
2012
€’000
6,171
5,732
42
(350)
(308)
(10)
(318)
-
(318)
(32)
(1,068)
(1,100)
(14)
(1,114)
6
(1,108)
2013
€’000
2012
€’000
4,539
-
21,373
9,832
(837)
34,907
(2,820)
(634)
1,057
(271)
(2,668)
4,514
2,234
11,402
10,187
175
28,512
(1,373)
2,696
88
14
1,425
32,239
29,937
(1,847)
(248)
(2,095)
(1,178)
(11)
(1,189)
163,014
318
17,684
181,016
132,983
1,108
11,379
145,470
22,627
(1,108)
14,841
(336)
36,024
-
(3,785)
32,239
18,184
189
12,884
(1,169)
30,088
2,234
(2,385)
29,937
Overview Business Performance Governance Report Financial Statements Information 134
Notes to the Financial Statements (continued)
15. Income Tax Expense (continued)
Income tax expense as a percentage of profit before share of associates’ profit/(loss) after tax,
amortisation of intangible assets and net exceptionals
Impact of associates’ profit/(loss) after tax, amortisation of intangible assets and net exceptionals
Total income tax expense as a percentage of profit before tax
2013
%
17.0%
2.8%
2012
%
18.0%
4.5%
19.8%
22.5%
(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% with effect from 1 April 2012. A tax rate of 23% applies
with effect from 1 April 2013 and this will reduce by a further 2% on 1 April 2014 when the tax rate will be 21%. The UK March
2013 budget announcement included a further proposal to reduce the tax rate to 20%. As the legislation to give statutory
effect to the reduction in the rate to 21% from 1 April 2014 has not been substantially enacted as at the balance sheet date, no
account has been taken of this change in these financial statements.
The Group has not provided deferred tax in relation to temporary differences applicable to investments in subsidiaries on the
basis that the Group can control the timing and realisation of these temporary differences and it is probable that the temporary
difference will not reverse in the foreseeable future. No provision has been recognised in respect of deferred tax relating to
unremitted earnings of subsidiaries as there is no commitment to remit earnings.
16. Profit Attributable to DCC plc
Profit after taxation for the year attributable to owners of the Parent amounting to €49.268 million (2012: €40.444 million) has
been accounted for in the financial statements of the Company. In accordance with Section 148(8) of the Companies Act 1963,
the Company is availing of the exemption from presenting its individual Income Statement to the Annual General Meeting. The
Company has also availed of the exemption from filing its individual Income Statement with the Registrar of Companies as
permitted by Section 7(1A) of the Companies (Amendment) Act 1986.
17. Dividends
Dividends paid per Ordinary Share are as follows:
Final - paid 50.47 cent per share on 26 July 2012
(2012: paid 48.07 cent per share on 21 July 2011)
Interim - paid 29.48 cent per share on 30 November 2012
(2012: paid 27.42 cent per share on 2 December 2011)
2013
€’000
2012
€’000
42,157
40,061
24,657
22,903
66,814
62,964
The Directors are proposing a final dividend in respect of the year ended 31 March 2013 of 56.20 cent per ordinary share
(€47.036 million). This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 18. Earnings per Ordinary Share
Profit attributable to owners of the Parent
Amortisation of intangible assets after tax
Exceptionals (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
Adjusted basic earnings per ordinary share
Weighted average number of ordinary shares in issue (thousands)
135
2013
€’000
2012
€’000
130,359
13,899
31,241
175,499
102,428
8,994
24,989
136,411
2013
cent
2012
cent
155.96c
16.63c
37.37c
209.96c
122.78c
10.78c
29.95c
163.51c
83,586
83,427
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
Adjusted diluted earnings per ordinary share
Weighted average number of ordinary shares in issue (thousands)
2013
cent
2012
cent
155.47c
16.57c
37.26c
209.30c
122.46c
10.75c
29.88c
163.09c
83,850
83,639
The earnings used for the purposes of the diluted earnings per share calculations were €130.359 million (2012: €102.428
million) and €175.499 million (2012: €136.411 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 2013 was 83.850 million (2012: 83.639 million). A reconciliation of the weighted average number of ordinary shares used
for the purposes of calculating the diluted earnings per share amounts is as follows:
Weighted average number of ordinary shares in issue
Dilutive effect of options and awards
Weighted average number of ordinary shares for diluted earnings per share
2013
‘000
2012
‘000
83,586
264
83,427
212
83,850
83,639
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 and awards are the Company’s only category of dilutive
potential ordinary shares.
Employee share options and awards, 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.
Overview Business Performance Governance Report Financial Statements Information 136
Notes to the Financial Statements (continued)
19. Assets Classified as Held for Sale
As at 31 March 2012, DCC SerCom’s Enterprise distribution business Altimate Group SA (‘Altimate’) was classified as a disposal
group held for sale. On 2 July 2012 the Group announced the completion of the disposal of Altimate following competition clearance
from the European Commission. Details of the disposal were set out in a DCC Stock Exchange announcement on 3 April 2012.
20. Property, Plant and Equipment
Group
Year ended 31 March 2013
Opening net book amount
Exchange differences
Arising on acquisition (note 46)
Additions
Disposals
Depreciation charge
Reclassifications
Closing net book amount
At 31 March 2013
Cost
Accumulated depreciation
Net book amount
Year ended 31 March 2012
Opening net book amount
Exchange differences
Arising on acquisition (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
Land &
buildings
€’000
Plant &
machinery
& cylinders
€’000
163,447
(1,557)
15,133
6,558
(1,372)
(3,721)
(1,290)
177,198
173,391
(4,188)
60,177
39,665
(1,340)
(32,330)
4,100
239,475
Fixtures &
fittings &
office
equipment
€’000
34,861
(152)
1,106
10,358
(124)
(10,528)
(2,805)
32,716
Motor
vehicles
€’000
79,398
(816)
1,385
14,773
(2,077)
(19,933)
(5)
72,725
Total
€’000
451,097
(6,713)
77,801
71,354
(4,913)
(66,512)
-
522,114
221,083
(43,885)
177,198
612,836
(373,361)
239,475
118,446
(85,730)
32,716
170,300
(97,575)
72,725
1,122,665
(600,551)
522,114
145,362
5,586
8,374
-
9,363
(106)
(3,407)
(2,000)
(2)
277
163,447
150,980
7,836
11,500
-
30,493
(1,131)
(24,737)
-
(3)
(1,547)
173,391
35,963
1,475
1,905
(127)
8,914
(424)
(10,154)
-
(2,957)
266
34,861
63,180
3,666
4,445
-
26,355
(2,115)
(17,137)
-
-
1,004
79,398
395,485
18,563
26,224
(127)
75,125
(3,776)
(55,435)
(2,000)
(2,962)
-
451,097
199,731
(36,284)
163,447
445,096
(271,705)
173,391
112,061
(77,200)
34,861
164,003
(84,605)
79,398
920,891
(469,794)
451,097
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
2013
€’000
2012
€’000
57,337
(55,601)
1,736
58,465
(57,626)
839
946
881
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 137
Goodwill
€’000
723,389
(8,313)
97,997
(1,912)
-
811,161
Customer
related
€’000
61,816
(541)
31,384
-
(17,684)
74,975
Total
€’000
785,205
(8,854)
129,381
(1,912)
(17,684)
886,136
834,516
(23,355)
811,161
145,017
(70,042)
74,975
979,533
(93,397)
886,136
597,597
24,392
143,658
(2,381)
(11,369)
(441)
-
(28,067)
723,389
38,517
1,984
34,136
-
-
-
(11,379)
(1,442)
61,816
636,114
26,376
177,794
(2,381)
(11,369)
(441)
(11,379)
(29,509)
785,205
747,562
(24,173)
723,389
114,993
(53,177)
61,816
862,555
(77,350)
785,205
21. Intangible Assets
Group
Year ended 31 March 2013
Opening net book amount
Exchange differences
Arising on acquisition (note 46)
Other movements (note 34)
Amortisation charge
Closing net book amount
At 31 March 2013
Cost
Accumulated amortisation
Net book amount
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
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 weighted average remaining amortisation
period is 3.4 years (2012: 3.9 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. A CGU is the smallest identifiable group of assets that generates cash inflows
that are largely independent of the cash inflows from other assets or group of assets. The CGUs represent the lowest level
within the Group at which the associated goodwill is assessed for internal management purposes and are not larger than the
operating segments determined in accordance with IFRS 8 Operating Segments. A total of 29 CGUs (2012: 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.
DCC Energy
DCC SerCom
DCC Healthcare
DCC Environmental
DCC Food & Beverage
Cash generating units
Goodwill (€’000)
2013
number
2012
number
2013
€’000
2012
€’000
11
5
4
4
5
29
6
5
4
4
5
24
475,265
81,766
138,755
90,698
24,677
811,161
426,481
79,260
101,372
91,779
24,497
723,389
Overview Business Performance Governance Report Financial Statements Information 138
Notes to the Financial Statements (continued)
21. Intangible Assets (continued)
In accordance with IAS 36 Impairment of Assets, the CGUs to which significant amounts of goodwill have been allocated are as
follows:
GB Oils Group
Fannin Healthcare Group
2013
€’000
2012
€’000
297,708
119,830
298,283
83,557
For the purpose of impairment testing, the discount rates applied to these CGUs to which significant amounts of goodwill have
been allocated were 9% (2012: 9%) for the GB Oils Group and 10% (2012: 10%) for the Fannin Healthcare Group.
The remaining goodwill balance of €393.623 million is allocated across 27 CGUs (2012: €341.549 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 (2013: 2.5%; 2012: 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, adjusted to reflect risks associated with each CGU. The range of discount rates applied ranged from 7% to 10% (2012:
7% to 10%).
Applying these techniques, no impairment charge arose in 2013 (2012: impairment charge of €11.369 million).
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 by increasing the discount rate by 2% and applying a terminal growth rate of 1.5% which
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.
22. Investments in Associates
At 1 April
Share of profit after tax (before impairment of associate company investment)
Impairment of associate company investment
At 31 March
Investments in associates at 31 March 2013 include goodwill of €0.422 million (2012: €0.422 million).
2013
€’000
1,173
32
(250)
955
2012
€’000
2,281
(40)
(1,068)
1,173
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 139
22. Investments in Associates (continued)
The Group’s geographical share of the assets (including goodwill) and liabilities of its associates is as follows:
As at 31 March 2013
Ireland
France
As at 31 March 2012
Ireland
France
Non-current
Current
Non-current
assets
€’000
457
5
462
516
7
523
assets
€’000
798
476
1,274
1,296
449
1,745
liabilities
€’000
-
(132)
(132)
-
(126)
(126)
Current
liabilities
€’000
(413)
(236)
(649)
(751)
(218)
(969)
Net
assets
€’000
842
113
955
1,061
112
1,173
Details of the Group’s associates are as follows:
Name and Registered Office
Nature of Business
Financial Year End
% Shareholding
Relevant Share Capital
Lee Oil (Cork) Limited,
Clonminam Industrial
Estate, Portlaoise,
Co Laois.
SAS Blue Stork Industry
300, rue du Président
Salvador Allende,
92700 Colombes,
France.
Sale and distribution of
oil products.
31 March
50.0%
100 ordinary shares of
€1.26 each.
Sale and distribution
of computer hardware,
software and
peripherals.
31 March
20.0%
740 ordinary shares of
€10 each.
Company
At 1 April
Impairment of associate company investment
At 31 March
23. Investments in Subsidiary Undertakings
Company
At 1 April
Additions
At 31 March
2013
€’000
250
(250)
-
2012
€’000
1,244
(994)
250
2013
€’000
2012
€’000
168,065
2,000
170,065
168,065
-
168,065
Details of the Group’s principal operating subsidiaries are shown on pages 169 to 173. Non-wholly owned subsidiaries
comprises DCC Environmental Britain Limited (70%) (which owns 100% of Wastecycle Limited and William Tracey Limited)
where put and call options exist to acquire the remaining 30%, Comtrade SA (94%) where a deferred purchase agreement is in
place to acquire the remaining 6% 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.
Overview Business Performance Governance Report Financial Statements Information 140
Notes to the Financial Statements (continued)
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
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
2013
€’000
2012
€’000
16,787
3,275
440,588
460,650
11,831
1,953
324,386
338,170
2013
€’000
2012
€’000
1,234,599
(24,577)
71,632
-
20,452
45,181
1,347,287
1,219,841
(26,217)
53,129
100
21,099
23,746
1,291,698
2013
€’000
2012
€’000
373,264
-
-
373,264
409,554
2
100
409,656
2013
€’000
2012
€’000
1,416,465
236,093
17,238
55,980
67
4,569
109
1,730,521
1,278,255
168,588
12,590
62,148
67
6,643
5,591
1,533,882
2013
€’000
2012
€’000
281,813
611
282,424
297,798
678
298,476
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
141
Trade
and other
Inventories
receivables
€’000
€’000
Trade
and other
payables
€’000
338,170
(6,673)
21,083
-
108,070
460,650
1,291,698 (1,533,882)
21,818
(54,237)
5,098
(169,318)
1,347,287 (1,730,521)
(14,453)
43,850
(470)
26,662
248,129
10,611
27,205
-
-
56,372
(4,147)
338,170
1,034,275
49,740
111,106
(219)
666
158,819
(62,689)
1,291,698
(1,149,786)
(56,883)
(131,960)
1,238
(12,142)
(261,785)
77,436
(1,533,882)
Total
€’000
95,986
692
10,696
4,628
(34,586)
77,416
132,618
3,468
6,351
1,019
(11,476)
(46,594)
10,600
95,986
Trade
and other
receivables
€’000
Trade
and other
payables
€’000
Total
€’000
409,656
(100)
(36,292)
373,264
(342,170)
-
16,052
(326,118)
67,486
(100)
(20,240)
47,146
414,314
(4,658)
409,656
(326,837)
(15,333)
(342,170)
87,477
(19,991)
67,486
2013
€’000
2012
€’000
333,833
279,844
613,677
241,336
388,687
630,023
27. Movement in Working Capital
Group
Year ended 31 March 2013
At 1 April 2012
Translation adjustment
Arising on acquisition (note 46)
Exceptional items, interest accruals and other
Increase/(decrease) in working capital (note 42)
At 31 March 2013
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
Company
Year ended 31 March 2013
At 1 April 2012
Exceptional item
(Decrease)/increase in working capital (note 42)
At 31 March 2013
Year ended 31 March 2012
At 1 April 2011
Decrease in working capital (note 42)
At 31 March 2012
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.
Overview Business Performance Governance Report Financial Statements Information 142
Notes to the Financial Statements (continued)
28. Cash and Cash Equivalents (continued)
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
29. Derivative Financial Instruments
Group
Non-current assets
Interest rate swaps - fair value hedges
Cross currency interest rate swaps - fair value hedges
Current assets
Cross currency interest rate swaps - fair value hedges
Forward contracts - cash flow hedges
Commodity contracts - cash flow hedges
Forward contracts - fair value 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
Cross currency interest rate swaps - cash flow hedges
Current liabilities
Forward contracts - cash flow hedges
Commodity contracts - cash flow hedges
Commodity price forward contracts - not designated as hedges
Forward contracts - not designated as hedges
Total liabilities
Net asset arising on derivative financial instruments
2013
€’000
2012
€’000
613,677
(103,892)
-
509,785
630,023
(70,758)
40,814
600,079
2013
€’000
3,998
2012
€’000
867
2013
€’000
2012
€’000
19,005
129,897
148,902
24,070
110,461
134,531
11,536
655
1,002
43
268
384
60
13,948
162,850
(10,937)
(3,957)
(995)
(15,889)
(1,125)
(1,281)
(153)
(246)
(2,805)
(18,694)
144,156
-
1,650
1,726
-
878
11
29
4,294
138,825
(17,493)
-
-
(17,493)
(389)
(614)
-
(17)
(1,020)
(18,513)
120,312
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.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 143
29. Derivative Financial Instruments (continued)
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 2013 total US$200.0 million, Stg£55.0 million and €20.0 million. At 31 March 2013, the fixed interest rates vary from
4.58% to 6.18% and the floating rates are based on US$ 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$683.0 million into
floating rate sterling debt of Stg£306.967 million and floating rate euro debt of €110.051 million. At 31 March 2013 the fixed
interest rates vary from 4.37% to 6.19%. These swaps are designated as fair value hedges under IAS 39.
As referred to in note 30 to the financial statements, on 28 February 2013 the Group committed itself to issuing US$
denominated debt of US$525.0 million, which was subsequently issued on 25 April 2013. The Group has entered a number of
cross currency interest rate swaps to hedge the interest rate and currency risk arising from this debt issuance. These cross
currency interest rate swaps swapped the fixed rate US$525.0 million issuance to floating rate euro debt of €194.9 million,
floating rate sterling debt of £92.3 million, fixed rate euro debt of €65.0 million and fixed rate sterling debt of £29.7 million. The
swaps to floating rate euro and sterling are designated as fair value hedges under IAS 39 and the swaps to fixed rate euro and
sterling are designated as cash flow hedges under IAS39.
Forward foreign exchange contracts
The notional principal amounts of outstanding forward foreign exchange contracts at 31 March 2013 total €95.312 million
(2012: €91.631 million). Gains and losses recognised in the cash flow hedge reserve in equity (note 39) at 31 March 2013 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 2013 total €19.187 million (2012:
€19.444 million). Gains and losses recognised in the cash flow hedge reserve in equity (note 39) at 31 March 2013 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
Finance leases*
Unsecured Notes due 2014 to 2025
Current
Bank borrowings
Finance leases*
Unsecured Notes due 2013
Total borrowings
*Secured on specific plant and equipment
2013
€’000
2012
€’000
733
794,815
795,548
103,892
854
77,444
182,190
977,738
287
848,078
848,365
70,758
241
-
70,999
919,364
Overview Business Performance Governance Report Financial Statements Information
144
Notes to the Financial Statements (continued)
30. Borrowings (continued)
The maturity of non-current borrowings is as follows:
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
2013
€’000
2012
€’000
222,916
220,385
352,247
795,548
76,792
360,429
411,144
848,365
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 2013.
Unsecured Notes due 2013 to 2025
The Group’s Unsecured Notes due 2013 to 2025 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’) and fixed rate debt of US$525 million issued in 2013 and maturing in
2020, 2023 and 2025 (the ‘2020/23/25 Notes’).
The 2013/15 Notes which are all denominated in US$ 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.
On 28 February 2013 the Group committed to issue fixed rate US$ denominated debt totalling $525.0 million maturing in
2020, 2023 and 2025. Of the 2020/23/25 Notes, $255.0 million has been swapped (using cross currency interest rate swaps
designated as fair value hedges under IAS 39) from fixed US$ to floating euro rates, repricing quarterly based on EURIBOR,
$140.0 million has been swapped (using cross currency interest rate swaps designated as fair value hedges under IAS 39)
from fixed US$ to floating sterling rates, repricing quarterly based on sterling LIBOR, $85.0 million has been swapped (using
cross currency interest rate swaps designated as cash flow hedges under IAS 39) from fixed US$ to fixed euro rates and $45.0
million has been swapped (using cross currency interest rate swaps designated as cash flow hedges under IAS 39) from fixed
US$ to fixed sterling rates. The 2020/23/25 Notes were drawn down on 25 April 2013. In accordance with IAS 39, the adjusted
value corresponding to the portion of the 2020/23/25 Notes which has been swapped using cross currency interest rate swaps
designated as fair value hedges has been included in the Group’s borrowings at 31 March 2013.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 145
2013
2012
6.1 years
5.0 years
4.96%
5.95%
4.58%
5.54%
5.95%
4.58%
1.84%
1.49%
2.39%
2.73%
30. Borrowings (continued)
The maturity and interest profile of the Unsecured Notes is as follows:
Average maturity*
Average fixed interest rates**
- US$ denominated*
- sterling denominated
- euro denominated
Average floating rate including swaps
- sterling denominated
- euro denominated
* Including the 2020/23/25 Notes
**Issued and repayable at par
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 2013 is as follows:
Cash and short term bank deposits
Overdrafts
Cash and cash equivalents
Finance leases
Unsecured Notes due 2013 to 2025
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)
Fair value adjustment
At 1
Income
Cash Flow
Translation
At 31
April 2012
Cash flow
Statement Hedge Reserve
adjustment
March 2013
€’000
€’000
€’000
€’000
€’000
€’000
670,837
(70,758)
600,079
(528)
(848,078)
120,312
(53,897)
(34,677)
(88,574)
(1,056)
-
(3,753)
-
-
-
-
(30,189)
28,507
-
-
-
-
-
(995)
(3,263)
1,543
(1,720)
(3)
6,008
85
613,677
(103,892)
509,785
(1,587)
(872,259)
144,156
(128,215)
(93,383)
(1,682)
(995)
4,370
(219,905)
(129,952)
(92,470)
(1,682)
(995)
4,370
(220,729)
Overview Business Performance Governance Report Financial Statements Information 146
Notes to the Financial Statements (continued)
31. Analysis of Net Debt (continued)
The reconciliation of opening to closing net debt for the year ended 31 March 2012 is as follows:
Fair value adjustment
At 1
Income
Cash Flow
Translation
At 31
April 2011
Cash flow
Statement Hedge Reserve
adjustment
March 2012
€’000
€’000
€’000
€’000
€’000
€’000
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)
Group net debt
(including share of net cash in joint ventures)
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)
700,340
(34,212)
666,128
(926)
(888)
(766,760)
57,263
(59,622)
(33,862)
(93,484)
929
397
5,386
(224)
(45,183)
(86,996)
(71,649)
(101,344)
-
-
-
-
-
(62,134)
62,804
670
670
(73,252)
(101,478)
670
-
-
-
-
-
-
-
-
-
-
30,119
(2,684)
27,435
(3)
(37)
(24,570)
469
670,837
(70,758)
600,079
-
(528)
(848,078)
120,312
3,294
(128,215)
3,294
(169,029)
3,294
(170,766)
Currency profile
The currency profile of net debt at 31 March 2013 is as follows:
Cash and cash equivalents
Borrowings
Derivatives
Euro
€’000
Sterling
€’000
US Dollar
Swedish Krona
€’000
€’000
109,967
(345,101)
18,770
(216,364)
456,609
(630,992)
125,832
(48,551)
13,207
(944)
(446)
11,817
26,220
(701)
-
25,519
Other
€’000
7,674
-
-
7,674
Total
€’000
613,677
(977,738)
144,156
(219,905)
The currency profile of net debt at 31 March 2012 is as follows:
Cash and cash equivalents
Borrowings
Derivatives
Euro
€’000
Sterling
€’000
US Dollar
Swedish Krona
€’000
€’000
82,025
(325,953)
12,150
(231,778)
520,543
(592,509)
106,291
34,325
8,108
(902)
1,871
9,077
19,306
-
-
19,306
Other
€’000
41
-
-
41
Total
€’000
630,023
(919,364)
120,312
(169,029)
Interest rate profile
Cash and cash equivalents at 31 March 2013 and 31 March 2012 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 2025 have been swapped to a combination of fixed rates and floating rates which reset on a quarterly or semi-annual basis
(note 30). The majority of finance leases are at fixed rates.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 147
32. Deferred Income Tax
The following is an analysis of the movement in the major categories of deferred tax liabilities/(assets) recognised by the Group
for the year ended 31 March 2013:
At 1 April 2012
Consolidated Income Statement movement
Recognised in Other Comprehensive Income
Arising on acquisition
Exchange differences and other
At 31 March 2013
Analysed as:
Deferred tax asset
Deferred tax liability
Short term
temporary
Retirement
differences
Intangible
Tax losses
benefit
and other
and credits
obligations
differences
€’000
€’000
€’000
(1,196)
338
-
(692)
(11)
(1,561)
(1,561)
-
(1,561)
(2,569)
591
(1,847)
-
30
(3,795)
(3,992)
197
(3,795)
Total
€’000
25,614
(2,668)
(2,095)
7,270
(426)
27,695
(688)
(1,088)
(248)
(150)
95
(2,079)
(4,636)
2,557
(2,079)
(11,209)
38,904
27,695
Property
plant and
equipment
€’000
12,402
864
-
288
(59)
13,495
assets
€’000
17,665
(3,373)
-
7,824
(481)
21,635
(1,020)
14,515
13,495
-
21,635
21,635
The following is an analysis of the movement in the major categories of deferred tax liabilities/(assets) recognised by the Group
for the year ended 31 March 2012:
At 1 April 2011
Consolidated Income Statement movement
Recognised in Other Comprehensive Income
Arising on acquisition
Disposal of subsidiary
Deferred tax attributable to assets classified as
held for sale (note 19)
Exchange differences
At 31 March 2012
Analysed as:
Deferred tax asset
Deferred tax liability
Short term
temporary
Retirement
differences
Intangible
Tax losses
benefit
and other
assets
€’000
13,154
(2,650)
-
6,902
-
-
259
17,665
-
17,665
17,665
and credits
obligations
differences
€’000
€’000
€’000
950
(2,191)
-
-
-
-
45
(1,196)
(1,344)
148
(1,196)
(3,180)
1,866
(1,178)
-
-
-
(77)
(2,569)
(2,569)
-
(2,569)
(6,888)
4,960
(11)
744
(2)
1,457
(948)
(688)
(776)
88
(688)
Property
plant and
equipment
€’000
12,070
(560)
-
64
-
-
828
12,402
(1,708)
14,110
12,402
Total
€’000
16,106
1,425
(1,189)
7,710
(2)
1,457
107
25,614
(6,397)
32,011
25,614
Deferred tax assets and liabilities require management judgement in determining the amounts to be recognised. In particular,
significant judgement is used when assessing the extent to which deferred tax assets should be recognised, with consideration
given to the timing and level of future taxable income in the relevant jurisdiction. The majority of the net deferred tax asset at 31
March 2013 of €11.209 million is expected to be settled/recovered more than twelve months after the Balance Sheet date.
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. Deferred income tax has
not been recognised for withholding and other taxes that may be payable on the unremitted earnings of certain subsidiaries
as the timing of the reversal of these temporary differences is controlled by the Group and it is probable that these temporary
differences will not reverse in the foreseeable future.
Overview Business Performance Governance Report Financial Statements Information 148
Notes to the Financial Statements (continued)
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 1 September 2009 and 1 April 2012. 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 2013 for IAS 19 by a qualified actuary.
The principal actuarial assumptions used were as follows:
Republic of Ireland schemes
Rate of increase in salaries
Rate of increase in pensions in payment
Discount rate
Inflation assumption
UK schemes
Rate of increase in salaries
Rate of increase in pensions in payment
Discount rate
Inflation assumption
The expected long term rates of return on the assets of the schemes were as follows:
Republic of Ireland schemes
Equities
Bonds
Property
Cash
UK schemes
Equities
Bonds
Property
Cash
2013
2012
2.00% - 3.25% 2.00% - 3.25%
0.00% - 2.50% 0.00% - 2.50%
4.50%
2.25%
3.70%
2.25%
0.00% - 4.20% 0.00% - 4.30%
2.20% - 3.50%
3.40%
4.40%
5.05%
3.50%
3.40%
2013
2012
6.70%
2.30%
5.70%
2.00%
6.80%
4.40%
5.80%
0.50%
7.00%
3.10%
5.50%
2.00%
7.00%
3.50%
6.00%
0.50%
The expected rate of return for equities and property has been calculated assuming that equities and property will outperform
bonds by 4.4% and 3.4% per annum respectively over the long term in the Republic of Ireland schemes and 2.4% and 1.4%
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.
2013
23.6
25.1
26.5
27.7
2012
23.4
25.0
26.5
27.6
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 33. Post Employment Benefit Obligations (continued)
The net pension liability recognised in the Balance Sheet is analysed as follows:
Equities
Bonds
Property
Cash
Total fair value at 31 March 2013
Present value of scheme liabilities
Net pension liability at 31 March 2013
Equities
Bonds
Property
Cash
Total fair value at 31 March 2012
Present value of scheme liabilities
Net pension liability at 31 March 2012
ROI
€’000
31,350
60,242
790
828
93,210
(109,886)
(16,676)
ROI
€’000
27,520
49,039
921
3,628
81,108
(90,400)
(9,292)
2013
UK
€’000
9,098
12,444
1,086
1,057
23,685
(29,894)
(6,209)
2012
UK
€’000
7,977
10,783
1,082
598
20,440
(25,893)
(5,453)
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
2013
€’000
(1,196)
(1,196)
-
-
(5,354)
4,058
(1,296)
149
Total
€’000
40,448
72,686
1,876
1,885
116,895
(139,780)
(22,885)
Total
€’000
35,497
59,822
2,003
4,226
101,548
(116,293)
(14,745)
2012
€’000
(1,477)
(1,477)
3,587
3,587
(5,632)
4,361
(1,271)
Based on the assumptions employed for the valuation of assets and liabilities at 31 March 2013, the net charge in the Group
Income Statement in the year ending 31 March 2014 is expected to be broadly in line with the current year figures.
Overview Business Performance Governance Report Financial Statements Information 150
Notes to the Financial Statements (continued)
33. Post Employment Benefit Obligations (continued)
The actuarial loss 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
The movement in the fair value of plan assets is as follows:
At 1 April
Expected return on assets
Actuarial gain
Contributions by employers
Contributions by members
Benefits paid
Acquisition of subsidiary
Exchange
At 31 March
The actual return on plan assets was a gain of €11.892 million (2012: gain of €5.583 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
2013
€’000
2012
€’000
7,834
1,678
(21,259)
(11,747)
1,222
1,849
(11,862)
(8,791)
2013
€’000
2012
€’000
101,548
4,058
7,834
5,995
463
(2,590)
-
(413)
116,895
83,723
4,361
1,222
8,971
480
(1,964)
3,712
1,043
101,548
2013
€’000
2012
€’000
116,293
1,196
5,354
19,581
463
(2,590)
-
-
(517)
139,780
103,058
1,477
5,632
10,013
480
(1,964)
3,857
(3,587)
(2,673)
116,293
Employer contributions for the forthcoming financial year are estimated at €6.0 million. The difference between the actual
employer contributions paid in the current year of €5.995 million and the expectation of €5.5 million included in the 2012
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 2012 financial statements.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
151
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
2013
€’000
2012
€’000
2011
€’000
2010
€’000
2009
€’000
116,895
(139,780)
(22,885)
101,548
(116,293)
(14,745)
83,723
(103,058)
(19,335)
79,953
(103,643)
(23,690)
52,265
(81,763)
(29,498)
Difference between the expected and actual return on scheme
assets
As a percentage of scheme assets
Experience gains and losses on scheme liabilities
As a percentage of the present value of the scheme liabilities
7,834
6.7%
1,678
(1.2%)
Total recognised in Other Comprehensive Income
As a percentage of the present value of the scheme liabilities
(11,747)
8.4%
1,222
1.2%
1,849
(1.6%)
(8,791)
7.6%
(2,030)
(2.4%)
1,344
(1.3%)
(2,590)
2.5%
13,178
16.5%
(21,904)
(41.9%)
2,231
(2.2%)
(1,595)
1.5%
(589)
0.7%
(9,517)
11.6%
Cumulatively since transition to IFRS on 1 April 2004, €47.713 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
Recognised in the financial year ended 31 March 2013
€’000
(7,742)
1,779
1,576
(9,086)
(9,517)
(1,595)
(2,590)
(8,791)
(11,747)
(47,713)
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 5.7%
Increase/decrease by 4.2%
Increase/decrease by 2.9%
Decrease/increase by 5.6%
Increase/decrease by 5.1%
Increase/decrease by 2.5%
Overview Business Performance Governance Report Financial Statements Information 152
Notes to the Financial Statements (continued)
34. Deferred and Contingent Acquisition Consideration
Group
The Group’s deferred and contingent acquisition consideration of €89,829 million (2012: €98.699 million) as stated on the
Balance Sheet consists of €71.291 million of sterling floating rate financial liabilities (2012: €77.702 million), €10.044 million
of euro floating rate financial liabilities (2012: €10.998 million) and €8.494 million of swedish krona floating rate financial
liabilities (2012: €9.999 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
Amounts no longer required (adjustment to goodwill, note 21)
Amounts no longer required (recognised in the Income Statement, note 11)
Paid during the year
Exchange and other
Deferred and contingent consideration attributable to assets classified as held for sale (note 19)
At 31 March
2013
€’000
22,944
9,011
57,874
89,829
66,885
22,944
89,829
2013
€’000
98,699
15,733
(1,912)
(6,869)
(14,680)
(1,142)
-
89,829
2012
€’000
13,428
8,186
77,085
98,699
85,271
13,428
98,699
2012
€’000
74,344
37,595
(441)
-
(8,063)
2,417
(7,153)
98,699
35. Provisions for Liabilities and Charges
The reconciliation of the movement in provisions for liabilities and charges for the year ended 31 March 2013 is as follows:
Group
At 1 April 2012
Provided during the year
Utilised during the year
Arising on acquisition
Exchange and other
At 31 March 2013
Analysed as:
Non-current liabilities
Current liabilities
Rationalisation,
restructuring Environmental
and
remediation
and
redundancy
€’000
€’000
10,426
11,853
(7,669)
1,790
(330)
16,070
9,884
1,103
(354)
-
(225)
10,408
3,668
12,402
16,070
10,278
130
10,408
Insurance
and other
€’000
5,094
1,743
(765)
1,964
-
8,036
6,325
1,711
8,036
Total
€’000
25,404
14,699
(8,788)
3,754
(555)
34,514
20,271
14,243
34,514
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
153
35. Provisions for Liabilities and Charges (continued)
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
Rationalisation,
restructuring
and
redundancy
Environmental
and
remediation
€’000
€’000
Insurance
and other
€’000
4,402
7,882
(1,095)
-
(675)
(88)
10,426
3,871
6,555
10,426
8,258
245
(1,817)
2,769
-
429
9,884
9,884
-
9,884
4,705
604
(497)
438
(232)
76
5,094
1,683
3,411
5,094
Total
€’000
17,365
8,731
(3,409)
3,207
(907)
417
25,404
15,438
9,966
25,404
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
(2012: four years).
Rationalisation, restructuring and redundancy
This provision relates to various rationalisation and restructuring programs across the Group. The majority of this provision
falls due within one year.
36. Government Grants
Group
At 1 April
Amortisation in year
Received in year
Exchange and other adjustments
At 31 March
Disclosed as due within one year (note 26)
2013
€’000
2,525
(584)
-
(13)
1,928
(67)
1,861
2012
€’000
2,991
(604)
13
125
2,525
(67)
2,458
Government grants relate to capital grants received and are amortised to the Income Statement over the estimated useful lives
of the related capital assets.
Overview Business Performance Governance Report Financial Statements Information 154
Notes to the Financial Statements (continued)
37. Share Capital
Group and Company
Authorised
152,368,568 ordinary shares of €0.25 each
Issued
88,229,404 ordinary shares (including 4,535,981 ordinary shares held as Treasury Shares) of €0.25
each, fully paid (2012: 88,229,404 ordinary shares (including 4,700,907 ordinary shares held as
Treasury Shares) of €0.25 each, fully paid)
2013
€’000
2012
€’000
38,092
38,092
22,057
22,057
As at 31 March 2013, the total authorised number of ordinary shares is 152,368,568 shares (2012: 152,368,568 shares) with a
par value of €0.25 per share (2012: €0.25 per share).
During the year the Company re-issued 164,926 Treasury Shares for a consideration (net of expenses) of €2.087 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 and awards granted under the Company’s share option and award schemes and the terms attaching
thereto are provided in note 10 to the financial statements and in the Remuneration Report on pages 81 to 94.
38. Share Premium
Group and Company
At 31 March
2013
€’000
2012
€’000
124,687
124,687
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 39. Other Reserves
Group
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
Currency translation
- fair value loss in year - private placement debt
- fair value loss in year - other
- tax on fair value losses
- transfers to sales
- transfers to cost of sales
- tax on transfers
Share based payment
At 31 March 2013
Company
At 31 March 2013 and 31 March 2012
Cash flow
Foreign
currency
hedge
translation
Other
reserve2
€’000
reserve3
reserves4
€’000
€’000
987
-
(125,136)
46,711
820
(103)
494
(1,125)
114
-
1,187
-
(995)
(3,110)
543
740
997
(295)
-
(933)
-
-
-
-
-
-
(78,425)
(13,807)
-
-
-
-
-
-
(92,232)
1,400
-
-
-
-
-
-
-
1,400
-
-
-
-
-
-
-
1,400
Share
options1
€’000
10,537
-
-
-
-
-
-
549
11,086
-
-
-
-
-
-
1,322
12,408
155
Total
€’000
(112,212)
46,711
820
(103)
494
(1,125)
114
549
(64,752)
(13,807)
(995)
(3,110)
543
740
997
(295)
1,322
(79,357)
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.
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
2013
€’000
2012
€’000
929,331
130,359
895,108
102,428
(11,747)
1,847
2,087
(66,814)
985,063
(8,791)
1,178
2,372
(62,964)
929,331
Overview Business Performance Governance Report Financial Statements Information
156
Notes to the Financial Statements (continued)
40. Retained Earnings (continued)
Company
At 1 April
Total comprehensive income for the financial year
Re-issue of treasury shares (net of expenses)
Dividends
At 31 March
2013
€’000
2012
€’000
89,580
49,268
2,087
(66,814)
74,121
109,728
40,444
2,372
(62,964)
89,580
The cost to the Group and the Company of €60.491 million to acquire the 4,535,981 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: €13.34) between 27 November 2003 and 19 June 2006 and are primarily held to satisfy exercises under the Group’s
share options and awards schemes.
41. Non-Controlling Interests
Group
At 1 April
Share of profit for the financial year
Dividends to non-controlling interests
At 31 March
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
2013
€’000
2,656
416
(245)
2,827
2012
€’000
2,234
618
(196)
2,656
2013
€’000
2012
€’000
130,775
103,046
32,239
318
29,209
18,941
211,482
1,322
66,512
17,684
(1,271)
(584)
(5,212)
29,937
1,108
22,357
17,199
173,647
549
55,435
11,379
(838)
(604)
(8,840)
(108,070)
(26,662)
169,318
324,519
(56,372)
(158,819)
261,785
277,322
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 42. Cash Generated from Operations (continued)
Company
Profit for the financial year
Add back non-operating (income)/expense
- net operating exceptionals
- net finance income
- dividend income
Operating profit/(loss) before exceptionals
Changes in working capital:
- trade and other receivables (note 27)
- trade and other payables (note 27)
Cash generated from operations
157
2013
€’000
2012
€’000
49,268
40,444
350
(12,279)
(36,062)
1,277
36,292
(16,052)
21,517
994
(11,452)
(30,000)
(14)
4,658
15,333
19,977
43. Contingencies
Guarantees
The Company and certain subsidiaries have given guarantees of €1,578.791 million (2012: €1,390.175 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 Distribution 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.
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
2013
€’000
2012
€’000
2,387
3,541
87,248
89,635
61,614
65,155
Overview Business Performance Governance Report Financial Statements Information 158
Notes to the Financial Statements (continued)
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
2013
€’000
2012
€’000
23,729
56,647
81,281
161,657
26,059
59,449
91,999
177,507
The Group leases a number of properties under operating leases. The leases typically run for a period of 10 to 25 years. Rents
are generally reviewed every five years.
During the year ended 31 March 2013, €31.885 million (2012: €27.096 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
2013
2012
Minimum
payments
€’000
857
749
1,606
(19)
1,587
Present
value of
payments
€’000
854
733
1,587
-
1,587
Minimum
payments
€’000
Present
value of
payments
€’000
243
295
538
(10)
528
241
287
528
-
528
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 159
46. Business Combinations
A key strategy of the Group is to create and sustain market leadership positions through bolt-on acquisitions in markets it
currently operates in together with extending the Group’s footprint into new geographic markets. In line with this strategy, the
principal acquisitions completed by the Group during the year, together with percentages acquired were as follows:
• the acquisition of 100% of Midsona Manufacturing AB, a Swedish based business providing product development, registration,
manufacturing and packing services, completed in June 2012;
• the acquisition of BP’s LPG distribution business (‘BP LPG’) in Britain, completed in September 2012;
• the acquisition of the trade, fixed assets, inventory and goodwill of Statoil Fuel & Retail ASA’s industrial LPG business in
Sweden and Norway, completed in December 2012;
• the acquisition of Benegas, BP’s LPG distribution business in the Netherlands and north Belgium, completed in October
2012; and
• the acquisition of 100% of Kent Pharmaceuticals (Holdings) Limited (‘Kent’), a British generic pharmaceuticals company,
completed in February 2013.
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)
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
Deferred and contingent acquisition consideration
Total non-current liabilities
Current liabilities
Trade and other payables (note 27)
Current income tax assets/(liabilities)
Provisions for liabilities and charges
Total current liabilities
Identifiable net assets acquired
Intangible assets - goodwill (note 21)
Total consideration (enterprise value)
Satisfied by:
Cash
Net cash acquired
Net cash outflow
Deferred and contingent acquisition consideration
Total consideration
2013
€’000
Kent
2013
€’000
BP LPG
2013
€’000
Others
2013
€’000
Total
2012
€’000
Total
10,920
7,668
779
19,367
11,180
12,142
23,322
(1,764)
-
-
-
(1,764)
(16,148)
183
-
(15,965)
24,960
37,390
62,350
56,722
(4,895)
51,827
10,523
62,350
35,577
4,680
-
40,257
527
9,355
9,882
(1,076)
-
-
-
(1,076)
(20,622)
-
-
(20,622)
28,441
19,793
48,234
51,296
(3,062)
48,234
-
48,234
31,304
19,036
38
50,378
9,376
22,353
31,729
(5,247)
-
(3,436)
-
(8,683)
(17,467)
230
(318)
(17,555)
55,869
40,814
96,683
95,961
(4,488)
91,473
5,210
96,683
77,801
31,384
817
110,002
26,224
34,136
81
60,441
21,083
43,850
64,933
27,205
111,106
138,311
(8,087)
-
(3,436)
-
(11,523)
(54,237)
413
(318)
(54,142)
109,270
97,997
207,267
203,979
(12,445)
191,534
15,733
207,267
(7,791)
(145)
(3,207)
(940)
(12,083)
(131,960)
(1,636)
-
(133,596)
53,073
143,658
196,731
199,512
(39,436)
160,076
36,655
196,731
Overview Business Performance Governance Report Financial Statements Information 160
Notes to the Financial Statements (continued)
46. Business Combinations (continued)
The acquisitions of Kent and BP LPG have been deemed to be substantial transactions 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:
Kent
Non-current assets (excluding goodwill)
Current assets
Non-current liabilities
Current liabilities
Identifiable net assets acquired
Goodwill arising on acquisition
Total consideration (enterprise value)
BP LPG
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
12,205
23,582
-
(15,503)
20,284
42,066
62,350
7,162
(260)
(1,764)
(462)
4,676
(4,676)
-
Book
value
€’000
Fair value
adjustments
€’000
35,577
10,825
-
(19,365)
27,037
21,197
48,234
4,680
(943)
(1,076)
(1,257)
1,404
(1,404)
-
Book
value
€’000
Fair value
adjustments
€’000
31,342
32,044
(3,777)
(17,459)
42,150
54,533
96,683
19,036
(315)
(4,906)
(96)
13,719
(13,719)
-
Book
value
€’000
Fair value
adjustments
€’000
79,124
66,451
(3,777)
(52,327)
89,471
117,796
207,267
30,878
(1,518)
(7,746)
(1,815)
19,799
(19,799)
-
Fair
value
€’000
19,367
23,322
(1,764)
(15,965)
24,960
37,390
62,350
Fair
value
€’000
40,257
9,882
(1,076)
(20,622)
28,441
19,793
48,234
Fair
value
€’000
50,378
31,729
(8,683)
(17,555)
55,869
40,814
96,683
Fair
value
€’000
110,002
64,933
(11,523)
(54,142)
109,270
97,997
207,267
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 161
46. Business Combinations (continued)
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect
of a number of the business combinations above given the timing of closure of these transactions. Any amendments to these
fair values within the twelve month timeframe from the date of acquisition will be disclosable in the 2014 Annual Report as
stipulated by IFRS 3.
The principal factors contributing to the recognition of goodwill on business combinations entered into by the Group are the
expected profitability of the acquired business and the realisation of cost savings and synergies with existing Group entities.
€18.134 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 €14.896 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 €46.862
million. The fair value of these receivables is €43.850 million (all of which is expected to be recoverable) and is inclusive of an
aggregate allowance for impairment of €1.494 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 €29.310 million.
There were no adjustments processed during the year to the fair value of business combinations completed during the year
ended 31 March 2012 where those fair values were not readily determinable as at 31 March 2012.
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
2013
€’000
2012
€’000
260,784
(213,100)
47,684
(35,106)
12,578
(765)
11,813
(2,679)
9,134
1,238,936
(1,175,091)
63,845
(49,827)
14,018
341
14,359
(3,322)
11,037
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
2013
€’000
2012
€’000
13,273,957 12,112,182
105,158
138,682
Overview Business Performance Governance Report Financial Statements Information
162
Notes to the Financial Statements (continued)
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.
Return on capital employed (‘ROCE’) is a key performance indicator for the Group. Further analysis of ROCE is included in the
Financial Review on pages 42 to 48.
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, 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
2013
€’000
2012
€’000
1,052,450
219,905
89,829
1,362,184
1,011,323
169,029
98,699
1,279,051
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 2012. 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,
other than the Group’s approach to the management of interest rate risk, which is outlined below.
(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
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements 163
47. Financial Risk and Capital Management (continued)
with the counterparty risk limits of the Board approved treasury policy. Of the total cash and cash equivalents at 31 March 2013
of €613.677 million, 20.3% (€124.770 million) was with financial institutions with a minimum rating in the P-1 (short-term)
category of Moody’s and 88.8% (€544.730 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 2013 derivative transactions were with counterparties with ratings ranging from AA- to B
(long-term) with Standard and Poors or Aa2 to Ba2 (long-term) with Moody’s.
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 2013 are balances of €132.677 million (2012: €106.031
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
2013
€’000
2012
€’000
99,202
25,002
6,125
2,348
132,677
80,620
19,069
4,823
1,519
106,031
Trade and other receivables which are not past due nor impaired at the reporting date are expected to be fully recoverable.
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
Subsequent recovery of amounts previously provided for
Amounts written off during the year
Arising on acquisition
Provision for impairment attributable to assets classified as held for sale
Exchange
At 31 March
2013
€’000
26,217
4,158
(527)
(6,577)
1,494
-
(188)
24,577
2012
€’000
31,202
1,830
(1,118)
(7,105)
1,635
(1,205)
978
26,217
Company
There were no past due or impaired trade receivables in the Company at 31 March 2013 (31 March 2012: 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 2013 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. Further analysis
of the Group’s debt covenants is included in the Financial Review on pages 42 to 48.
Overview Business Performance Governance Report Financial Statements Information 164
Notes to the Financial Statements (continued)
47. Financial Risk and Capital Management (continued)
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.
Group
As at 31 March 2013
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 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
Less than
Between
Between
1 year
1 and 2 years
2 and 5 years
€’000
€’000
€’000
Over
5 years
€’000
Total
€’000
(1,730,521)
(180,888)
(59,179)
(22,944)
(87,645)
(2,805)
(2,083,982)
-
(213,486)
(47,048)
(9,011)
(202,402)
-
(471,947)
-
-
(193,649)
(119,877)
(57,874)
(186,259)
-
(1,730,521)
(702,070) (1,290,093)
(344,105)
(118,001)
(89,829)
-
(732,934) (1,209,240)
(2,805)
(557,659) (1,553,005) (4,666,593)
-
3,677
128,506
132,183
2,163
221,464
223,627
4,574
257,991
262,565
-
820,071
820,071
10,414
1,428,032
1,438,446
Less than
Between
Between
1 year
€’000
1 and 2 years
2 and 5 years
€’000
€’000
Over
5 years
€’000
Total
€’000
(1,533,882)
(70,999)
(43,225)
(13,428)
(14,881)
(1,018)
(1,677,433)
-
(73,288)
(39,414)
(8,186)
(80,824)
-
(201,712)
-
(331,882)
(80,327)
(77,085)
(319,621)
-
(808,915)
-
(342,199)
(50,522)
-
(306,607)
-
(699,328)
(1,533,882)
(818,368)
(213,488)
(98,699)
(721,933)
(1,018)
(3,387,388)
3,182
36,621
39,803
3,182
107,570
110,752
5,555
347,834
353,389
398
362,223
362,621
12,317
854,248
866,565
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 2013
Financial liabilities - cash outflows
Trade and other payables
Company
As at 31 March 2012
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
282,424
-
43,694
-
326,118
Less than
Between
Between
1 year
€’000
1 and 2 years
2 and 5 years
€’000
€’000
Over
5 years
€’000
Total
€’000
298,476
-
43,694
-
342,170
The Company has sufficient cash resources and liquid assets to enable it to meet its trade and other payables.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
165
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 currency translation
loss during the year ended 31 March 2013 of €13.8 million as set out in the Statement of Comprehensive Income was primarily
due to the decrease in the value of sterling against the euro during the year of 1.4%. Included in this figure is a currency
translation loss of €8.9 million relating to the Group’s intangible assets, a significant portion of which are sterling denominated.
The Group has a moderate level of transactional currency exposure arising from sales or purchases by operating units in
currencies other than their functional currencies. Where sales or purchases are invoiced in other then the local currency
and there is not a natural hedge with other activities within the Group, DCC generally hedges between 50% and 90% of
those transactions for the subsequent two months. The Group also hedges a proportion of anticipated transactions in
certain subsidiaries for periods ranging up to fifteen months with such transactions qualifying as ‘highly probable’ forecast
transactions for IAS 39 hedge accounting purposes.
Sensitivity to currency movements
Group
A change in the value of other currencies by 10% against the euro would have a €14.8 million (2012: €10.4 million) impact on the
Group’s profit before tax, would change the Group’s equity by €76.2 million and change the Group’s net debt by €0.4 million (2012:
€76.1 million and €6.3 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 2013 or
at 31 March 2012 and consequently has no exposure to currency movements at 31 March 2013 (31 March 2012: 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 a combination of
fixed and 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 2013 a one percentage point (100 basis points) change in average floating
interest rates would have a €7.1 million (2012: €3.0 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.
Overview Business Performance Governance Report Financial Statements Information 166
Notes to the Financial Statements (continued)
47. Financial Risk and Capital Management (continued)
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.
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 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 Chief Executive and the Chief Financial Officer and are reviewed 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 (2012: nil) and a nil impact on the
Group’s equity (2012: 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 dependent 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:
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
167
2013
2012
Book value
Fair value
Book value
Fair value
€’000
€’000
€’000
€’000
162,850
1,347,287
613,677
2,123,814
162,850
1,347,287
613,677
2,123,814
138,825
1,291,698
630,023
2,060,546
138,825
1,291,698
630,023
2,060,546
977,738
18,694
1,730,521
2,726,953
976,364
18,694
1,730,521
2,725,579
919,364
18,513
1,533,882
2,471,759
897,084
18,513
1,533,882
2,449,479
2013
2012
Book value
Fair value
Book value
Fair value
€’000
€’000
€’000
€’000
373,264
3,998
377,262
373,264
3,998
377,262
409,656
867
410,523
409,656
867
410,523
326,118
326,118
326,118
326,118
342,170
342,170
342,170
342,170
47. Financial Risk and Capital Management (continued)
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
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 2013
Level 1
€’000
Level 2
€’000
Level 3
€’000
Total
€’000
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
Group
Fair value measurement as at 31 March 2012
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
-
-
-
-
Level 1
€’000
-
-
-
-
162,850
162,850
18,694
18,694
Level 2
€’000
138,825
138,825
18,513
18,513
-
-
-
-
Level 3
€’000
-
-
-
-
162,850
162,850
18,694
18,694
Total
€’000
138,825
138,825
18,513
18,513
Company
As at 31 March 2013 and 31 March 2012 the Company had no financial assets or financial liabilities which were carried at fair value.
Overview Business Performance Governance Report Financial Statements Information 168
Notes to the Financial Statements (continued)
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 105 to 117. A listing of the principal subsidiaries, joint ventures
and associates is provided in the Group Directory on pages 169 to 173 of this Annual Report.
Transactions are entered into in the normal course of business on an arm’s length basis.
Sales to and purchases from, together with outstanding payables and receivables to and from subsidiaries and joint ventures
are eliminated in the preparation of the consolidated financial statements.
Compensation of key management personnel
For the purposes of the disclosure requirements under IAS 24, the term ‘key management personnel’ (i.e. those persons
having authority and responsibility for planning, directing and controlling the activities of the Company) comprises the Board of
Directors which manages the business and affairs of the Company. Key management remuneration amounted to:
Short-term benefits
Post-employment benefits
Share-based payment (calculated in accordance with the principles disclosed in note 10)
At 31 March
2013
€’000
3,048
666
462
4,176
2012
€’000
2,046
654
410
3,110
Company
Subsidiaries, joint ventures and associates
During the year the Company received dividends of €17.0 million from its subsidiary DCC Food & Beverage Limited, €11.0
million from its subsidiary DCC Energy Limited and €8.0 million from its subsidiary DCC Management Services Limited. Details
of loan balances to/from subsidiaries are provided in the Company Balance Sheet on page 102, in note 25 ‘Trade and Other
Receivables’ and in note 26 ‘Trade and Other Payables’.
49. Events after the Balance Sheet Date
In April 2013, the Group completed a debt fundraising in the US Private Placement market raising $525 million (€404.1 million)
with maturity terms of seven, ten and twelve years (average maturity of ten years).
50. Approval of Financial Statements
The financial statements were approved by the Board of Directors on 13 May 2013.
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
Group Directory
Principal Subsidiaries and Joint Ventures
169
169 Group Directory
174 Shareholder Information
177 Corporate Information
178 Index
180 Five Year Review
181 Change in Presentation Currency
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
Great Gas Petroleum (Ireland) Limited
Market House,
Churchtown, Mallow,
Co. Cork, Ireland
DCC Energy Limited
Airport Road West,
Sydenham,
Belfast BT3 9ED, Northern Ireland
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 Kungsbacka,
Sweden
Fuel Card Services Limited
Alexandra House,
Lawnswood Business Park,
Redvers Close,
Leeds LS16 6QY, England
LPG
Flogas Britain Limited
81 Rayns Way,
Syston, Leicester LE7 1PF,
England
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
Procurement, sales, marketing and
distribution of petroleum products
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
Tel: +353 22 23 989
Fax: +353 22 23 980
Email: info@greatgas.com
www.greatgas.com
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
Procurement, sales, marketing and
distribution of petroleum products
Procurement, sales, marketing and
distribution of petroleum products
Sale and administration of petroleum
products through the use of fuel cards
Tel: +43 316 210
Fax: +43 316 210 2110
Email: info@energiedirect.at
www.energiedirect.at
Tel: +46 300 687000
Fax: +46 300 687050
Email: info@sweaenergi.se
www.sweaenergi.se
Tel: +44 113 384 6264
Fax: +44 844 870 9827
Email: info@fuelcardservices.com
www.fuelcardservices.com
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Tel: +44 116 2649 000
Fax: +44 116 2649 001
Email: enquiries@flogas.co.uk
www.flogas.co.uk
Overview Business Performance Governance Report Financial Statements Information 170
Group Directory
Principal Subsidiaries and Joint Ventures (continued)
DCC Energy
Company name & address
Flogas Ireland Limited
Knockbrack House,
Matthews Lane,
Donore Road,
Drogheda, Co. Louth, Ireland
Benegas BV
Zuiderzeestraatweg 1, 3882NC,
Putten, Nederland
Flogas Sverige AB
Brännkyrkagatan 63,
11822 Stockholm,
Sweden
Flogas Norge AS
Nydalsveien 153,
0484 Oslo,
Norway
DCC SerCom
Company name & address
DCC SerCom Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
Micro P Limited
Shorten Brook Way,
Altham Business Park, Altham,
Accrington, Lancashire BB5 5YJ,
England
Gem Distribution Limited
St. George House, Parkway,
Harlow Business Park, Harlow,
Essex CM19 5QF, England
Banque Magnetique SAS
Paris Nord 2, Parc des Reflets,
99 Avenue de la Pyramide,
95700, Roissy en France, France
Principal activity
Contact details
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Tel: +353 41 9831 041
Fax: +353 41 9834 652
Email: info@flogas.ie
www.flogas.ie
Tel: +31 3417 23300
Fax: +31 3413 60216
Email: info@benegas.com
www.benegas.nl
Tel: +46 08 6750080
Email: info@flogas.se
www.flogas.se
Tel: +47 90248000
Email: info@flogas.no
www.flogas.no
Principal activity
Contact details
Holding and divisional management
company
Procurement, sales, marketing and
distribution of IT and communications
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: sercom@dcc.ie
www.sercomdistribution.com
Tel: +44 1282 776 776
Fax: +44 1282 770 001
Email: enquiries@micro-p.com
www.micro-p.com
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
Procurement, sales, marketing and
distribution of computer peripherals and
accessories
Tel: +33 1 49 90 93 93
Fax: +33 1 49 90 94 94
Email: c.dupont@banquemagnetique.fr
www.banquemagnetique.fr
Comtrade SAS
300 rue du Président Salvador Allende,
92700 Colombes, France
Procurement, sales, marketing and
distribution of IT and communications
Tel: +33 1 56 47 04 70
www.comtrade.fr
Sharptext Limited
M50 Business Park,
Ballymount Road Upper,
Dublin 12, Ireland
Procurement, sales, marketing and
distribution of IT and communications
Tel: +353 1 4087 171
Fax: +353 1 4193 111
Email: sharptext@sharptext.com
www.sharptext.com
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
171
DCC SerCom
Company name & address
Advent Data Limited
Unit H4 Premier Way,
Lowfields Business Park,
Elland HX5 9HF, England
Multichannel Solutions for
Entertainment (MSE) Limited
M50 Business Park, Ballymount Road
Upper, Dublin 12, Ireland
SerCom Solutions Limited
M50 Business Park,
Ballymount Road Upper,
Dublin 12, Ireland
DCC Healthcare
Company name & address
DCC Healthcare Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
DCC Vital
DCC Vital Limited
Fannin House,
South County Business Park,
Leopardstown, Dublin 18, Ireland
Fannin Limited
Fannin House,
South County Business Park,
Leopardstown, Dublin 18, Ireland
Fannin (UK) Limited
42-46 Booth Drive, Park Farm South,
Wellingborough, Northamptonshire,
NN8 6GT, England
Kent Pharmaceuticals Limited
Joshna House,
Crowbridge Road,
Orbital Park, Ashford,
Kent TN24 0GR, England
Athlone Laboratories Limited
Ballymurray,
Co. Roscommon, Ireland
Squadron Medical Limited
Greaves Close,
Markham Vale, Chesterfield,
Derbyshire, S44 5FB, England
Principal activity
Contact details
Procurement, sales, marketing and
distribution of electronic office supplies
Tel: +44 871 222 3844
Fax: +44 871 222 3855
Email: sales@adventdata.co.uk
www.adventdata.co.uk
Procurement, sales, marketing and
distribution of home entertainment
products and accessories
Tel: +353 1 2826 444
Fax: +353 1 2826 532
www.msegroup.ie
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
Principal activity
Contact details
Holding and divisional management
company
Holding company for the operations of
the DCC Vital group of companies
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: healthcare@dcc.ie
www.dcc.ie
Tel: +353 1 2907 000
Fax: +353 1 2954 777
Email: info@dccvital.com
www.dccvital.com
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.eu
Sales, marketing, distribution and other
services to healthcare providers and
medical and pharma brand owners/
manufacturers
Tel: +44 1189 305 333
Fax: +44 1189 305 111
Email: enquiries@fanninuk.com
www.fanninuk.com
Sales marketing and distribution of
a broad range of pharmaceuticals to
hospital and community pharmacies in
Britain
Tel: +44 845 437 5565
Fax: +44 845 437 5567
Email: info@kentpharm.co.uk
www.kentpharm.co.uk
A leading manufacturer and supplier
of oral beta – lactam antibiotics for the
British, Irish and international markets
Tel: +353 9066 61109
Fax: +353 9066 61921
www.athlone-laboratories.com
Provision of value-added distribution
services to healthcare providers and
brand owners/manufacturers
Tel: +44 1246 822 822
Fax: +44 1246 820 410
Email: enquiries@squadronmedical.co.uk
www.squadronmedical.co.uk
Overview Business Performance Governance Report Financial Statements Information 172
Group Directory
Principal Subsidiaries and Joint Ventures (continued)
DCC Healthcare
Company name & address
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
Laleham Healthcare Limited
Sycamore Park,
Mill Lane, Alton,
Hampshire GU34 2PR, England
Vitamex Manufacturing AB
Box 715,
SE-601 16 Norrköping,
Sweden
DCC Environmental
Company name & address
DCC Environmental Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
William Tracey Limited
49 Burnbrae Road,
Linwood Industrial Estate, Linwood,
Renfrewshire, PA3 3BD, Scotland
Wastecycle Limited
Enviro Building, Private Road No. 4,
Colwick Industrial Estate,
Nottingham NG4 2JT, England
Principal activity
Contact details
Provision of value-added distribution
services to healthcare providers and
brand owners/manufacturers
Tel: +44 1236 739 668
Fax: +44 1236 738 376
Email: corporate@tpshealthcare.com
www.tpshealthcare.com
Manufactures fabric health care
products, primarily mattresses
Tel: +1 812 933 1121
Email: virtus@eircom.net
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
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
Development, contract manufacture and
packing of tablet and hard gel capsule
nutraceuticals
Tel: +46 11 23 00 00
Fax: +46 11 18 79 45
Email: info@vitamex.se
www.vitamex.se
Principal activity
Contact details
Holding and divisional management
company
Recycling and waste management
company
Recycling and waste management
company
Tel: +353 1 2799 400
Fax: +353 1 2831 017
Email: environmental@dcc.ie
www.dcc.ie
Tel: +44 1505 321 000
Fax: +44 1505 335 555
Email: info@wmtracey.co.uk
www.wmtracey.co.uk
Tel: +44 115 9403 111
Fax: +44 115 940 4141
Email: enquiries@wastecycle.co.uk
www.wastecycle.co.uk
DCC ANNUAL REPORT AND ACCOUNTS 2013 Financial Statements
173
DCC Environmental
Company name & address
Principal activity
Contact details
Oakwood Fuels Limited
Brailwood Road,
Bilsthorpe, Newark
Nottinghamshire, NG22 8UA, England
Specialist waste
treatment/management
services
Enva Ireland Limited
Clonminam Industrial Estate,
Portlaoise,
Co. Laois, Ireland
Specialist waste
treatment/management services
Tel: +44 1623 871 964
Fax: +44 1623 871 905
Email: mail@oakwoodgroup.uk.com
www.oakwoodfuels.co.uk
Tel: +353 578 678 600
Fax: +353 578 678 699
Email: info@enva.ie
www.enva.ie
DCC Food & Beverage
Company name & address
DCC Food & Beverage Limited
DCC House, Brewery Road,
Stillorgan, Blackrock,
Co. Dublin, Ireland
Kelkin Limited
Unit 1, Crosslands Industrial Park,
Ballymount Cross,
Dublin 12, Ireland
Robert Roberts Limited
79 Broomhill Road,
Tallaght,
Dublin 24, Ireland
KP (Ireland) Limited *
79 Broomhill Road,
Tallaght,
Dublin 24, Ireland
Allied Foods Limited
Second Avenue,
Cookstown Industrial Estate,
Dublin 24, Ireland
Bottle Green Limited
19 New Street,
Horsforth,
Leeds LS18 4BH, England
Kylemore Services Group *
McKee Avenue,
Finglas,
Dublin 11, Ireland
*50% owned joint venture
Principal activity
Contact details
Holding and divisional management
company
Procurement, sales, marketing and
distribution of branded healthy foods,
beverages and vms products
Procurement, sales, marketing and
distribution of food and beverages
Manufacture of snack foods
Chilled and frozen food distribution
Procurement, sales, marketing
and distribution of wine
Restaurant and hospitality service
provider
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: +353 1 4047 300
Fax: +353 1 4047 311
Tel: +353 1 466 2600
Fax: +353 1 466 2688
Email: info@alliedfoods.ie
Tel: +44 113 2054 500
Fax: +44 113 2054 501
Email: info@bottlegreen.com
www.bottlegreen.com
Tel: +353 1 814 0600
Fax: +353 1 814 0601
Email: info@kylemore.ie
www. info@ksg.ie
Overview Business Performance Governance Report Financial Statements Information
174
Information
Shareholder Information
Share Price Data
Share price at 13 May
Market capitalisation at 13 May
Share price at 28 March
Market capitalisation at 28 March
Share price movement during the year
- High
- Low
2013
£
€
2012
€
25.30
2,117m
29.97*
2,508m*
27.45
2,297m
18.56
1,550m
27.50
17.55
23.07
16.70
* On 3 May 2013, DCC’s Shares were delisted from the Irish Stock Exchange and after that date were traded solely on the
London Stock Exchange in sterling. The euro/sterling exchange rate on 13 May was €1=£ 0.8441.
By location
North America
UK
Europe/Asia
Ireland
Retail³
Total
36.0%
24.2%
8.2%
7.9%
23.7%
100.0%
By size of holding
Over 250,000
100,001 – 250,000
10,000 – 100,000
Less than 10,000
Total
81.0%
7.6%
7.8%
3.6%
100.0%
Shareholdings as at 31 March 2013
Geographic division²
North America
UK
Europe/Asia
Ireland
Retail³
Total
Number of Shares¹
30,147,447
20,306,315
6,856,121
6,573,631
19,809,909
83,693,423
% of shares
36.0
24.2
8.2
7.9
23.7
100.0
Range of shares held
Number of accounts
% of accounts Number of shares¹
% of shares
Over 250,000
100,001 – 250,000
10,000 – 100,000
Less than 10,000
Total
52
41
178
2,775
3,046
1.7
1.3
5.9
91.1
100.0
67,781,371
6,373,297
6,492,797
3,045,958
83,693,423
81.0
7.6
7.8
3.6
100.0
1 Excludes 4,535,981 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 Listing
Following a review of the Company’s listing arrangements, which included consultations with a wide range of large
shareholders, the Board determined, as announced on 26 February 2013, that it was appropriate for DCC to seek admission to
the FTSE UK Index Series. This entailed cancelling the listing of the Company’s shares on the Irish Stock Exchange (“ISE”) while
maintaining the Premium Listing of DCC’s shares on the Official List of the United Kingdom Listing Authority (“UKLA Official
List”). Consequently, with effect from the close of business on 3 May 2013, DCC’s listing on the Official List of the ISE was
cancelled and the trading of DCC’s shares on the Main Securities Market of the ISE ceased. Since 6 May 2013, DCC’s shares are
traded solely on the London Stock Exchange in sterling.
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.
DCC ANNUAL REPORT AND ACCOUNTS 2013
175
Dividends
DCC normally pays dividends twice yearly, in July and in December. The final dividend in respect of the year ended 31 March
2013, which will be paid in July, will be paid in euro, although shareholders have the option to elect to receive their dividends in
sterling.
This is the last dividend which DCC will declare in euro. As a result of the change in DCC’s listing arrangements as detailed
above and the change in reporting currency to sterling with effect from 1 April 2013, all subsequent dividends (paid after July)
will be declared in sterling. However, DCC will offer shareholders the option of receiving their dividends in euro.
Shareholders may also elect to receive dividend payments by electronic funds transfer directly into their bank accounts, rather
than by cheque. Shareholders should contact the Company’s Registrar for details of these options.
The Company is obliged to deduct Dividend Withholding Tax (“DWT”) at the standard rate of income tax in Ireland (currently
20%) from dividends paid to its shareholders, unless a particular shareholder is entitled to an exemption from DWT and has
completed and returned to the Company’s Registrar a declaration form claiming entitlement to the particular exemption.
Exemption from DWT may be available to shareholders resident in another EU Member State or in a country with which the
Republic of Ireland has a double taxation agreement in place and to non-individual shareholders resident in Ireland (for
example companies, pension funds and charities).
An explanatory leaflet entitled “Dividend Withholding Tax – General Information Leaflet” has been published by the Irish
Revenue Commissioners and can be obtained by contacting the Company’s Registrar. This leaflet can also be downloaded from
the Irish Revenue Commissioners’ website at www.revenue.ie. Declaration forms for claiming an exemption are available from
the Company’s Registrar.
Website
Through DCC’s website, www.dcc.ie, stakeholders and other interested parties can access information on DCC in an easy-to-
follow and user-friendly format. As well as information on the Group’s activities, users can keep up to date on DCC’s financial
results and share price performance through downloadable reports and interactive share price tools. The site also provides
access to archived financial data, annual reports, stock exchange announcements and investor presentations.
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
Ex-dividend date for the final dividend
Record date for the final dividend
Interim Management Statement
Annual General Meeting
Proposed payment date for final dividend
Interim results to be announced
Proposed payment date for the interim dividend
Interim Management Statement
14 May 2013
22 May 2013
24 May 2013
19 July 2013
19 July 2013
25 July 2013
5 November 2013
December 2013
February 2014
Annual General Meeting, Electronic Proxy Voting and CREST Voting
The 2013 Annual General Meeting will be held at The Four Seasons Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland
on Friday 19 July 2013 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.
Overview Business Performance Governance Report Financial Statements Information 176
Information
Shareholder Information (continued)
Shareholders may lodge a Form of Proxy for the 2013 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 Stephen Casey, Investor Relations Manager, DCC plc, DCC House, Brewery Road,
Stillorgan, Blackrock, Co Dublin, Ireland.
Tel: + 353 1 2799 400
Fax: + 353 1 2831 017
email: investorrelations@dcc.ie
DCC ANNUAL REPORT AND ACCOUNTS 2013 177
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
Corporate Information
Registered and Head Office
Bankers
DCC House
Brewery Road
Stillorgan
Blackrock
Co. Dublin
Ireland
Auditors
PricewaterhouseCoopers
Chartered Accountants
& Registered Auditors
One Spencer Dock
North Wall Quay
Dublin 1
Ireland
Registrar
Computershare Investor Services
(Ireland) Limited
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
Ireland
Allied Irish Banks
Bank of Ireland
Bank of America Merrill Lynch
Barclays
BNP Paribas
Danske Bank A/S
Deutsche Bank
HSBC
ING Bank N.V.
J.P. Morgan
KBC Bank
Lloyds Banking Group
Rabobank
Royal Bank of Scotland Group
Solicitors
William Fry
Fitzwilton House
Wilton Place
Dublin 2
Ireland
Overview Business Performance Governance Report Financial Statements Information 178
Information
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 Report
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 and Strategy
105
67
44
145
175
69
168
136
70, 77, 80, 83
74
67
46
107
105
74, 78, 83
69
70
69
62
69
143
159
72
51
04
Capital Expenditure Commitments
Carbon Disclosure Project
Cash and Cash Equivalents
Cash Flow
Cash Generated from Operations
Chairman
Chairman’s Statement
Change in Presentation Currency
Chief Executive
Chief Executive’s Review
Climate Change
Commitments Under Operating and Finance Leases
Commodity Price Risk Management
Community Support
Company Balance Sheet
Company Cash Flow Statement
Company Listing
Company Secretary
Company Statement of Changes in Equity
Company Statement of Comprehensive Income
Compliance Risks and Uncertainties
Compliance Statement
Contingencies
Corporate Governance Statement
Corporate Information
Credit Risk Management
Critical Accounting Estimates and Judgments
157
53
141
45
156
68
06
181
68
10
52
158
47
55
102
104
66
69
103
102
59
73
157
68
177
48
118
Deferred and Contingent Acquisition Consideration
Deferred Income Tax
Deputy Chairman and Senior Independent Director
Derivative Financial Instruments
Directors
Directors’ and Company Secretary’s Interests
Directors’ Emoluments and Interests
Directors’ Remuneration
Directors’ Statement pursuant to the Transparency
Regulations
Dividends
152
147
68
142
62, 66
92
126
81
95
45, 66, 134
Earnings per Ordinary Share
Electronic Communications
Employee Share Options and Awards
Employment
Environmental Provisions
Equity
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
Foreign Currency Translation
Foreign Exchange Risk Management
Free Cash Flow
General Meetings
Going Concern
Goodwill
Governance Report
Government Grants
Graduate Recruitment Programme
Greenhouse Gas Emissions
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
135
175
127
127
119
117
168
109
118
132
175
01
42
162
118
47
59
180
132
108
47
46
72
73
111, 118
60
153
50
52
02
99
101
169
97
125
100
98
DCC ANNUAL REPORT AND ACCOUNTS 2013
179
44
136
126
119
114
152
176
168
72
83
84
81
66
96
11
155
45
108
71
120
108
64
116
154
66
133
174
71
154
48
105
95
58
67
105
49
67
140
140
67
119
175
Health & Safety
Hedging
Income Tax
Income Tax Expense
Independence of Non-Executive Directors
Intangible Assets
Intangible Assets (other than Goodwill)
Interest-Bearing Loans and Borrowings
Interest Rate Risk and Debt/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 Report
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 Benefits
Post Employment Benefit Obligations
Presentation Currency
Principal Risks and Uncertainties
Profit Attributable to DCC plc
51
113
115
133
60, 70
137
111
114
48
140
138
139
48
14
21
37
41
33
27
112
73
141
78
156
111
92
105
16
34
38
28
22
58
125
155
09, 13
43
71
119
148
42
58
134
Profit before Net Exceptional Items,
Amortisation of Intangible Assets and Tax
Property, Plant and Equipment
Proportionate Consolidation of Joint Ventures
Provision for Impairment of Trade Receivables
Provisions
Provisions for Liabilities and Charges
Registrar
Related Party Transactions
Relations with Shareholders
Remuneration Committee
Remuneration Policy
Remuneration Report
Report of the Directors
Report of the Independent Auditors
Results Highlights
Retained Earnings
Return on Capital Employed
Revenue Recognition
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
Share Ownership and Dealing
Share Premium
Share Price and Market Capitalisation
Statement of Compliance
Statement of Directors’ Responsibilities
Strategic Risks and Uncertainties
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
Overview Business Performance Governance Report Financial Statements Information
180
Information
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
Non-controlling interests
Profit attributable to owners of the Parent
Earnings per share
- basic (cent)
- basic adjusted (cent)
Dividend per share (cent)
Dividend cover (times)
Interest cover (times)*
* excludes exceptional items
Group Balance Sheet
As at 31 March
Non-current and current assets
Property, plant and equipment
Intangible assets
Investments in associates
Cash/derivatives
Other assets
Total assets
Equity
Non-current and current liabilities
Borrowings/derivatives
Retirement benefit obligations
Other liabilities
Total liabilities
Total equity and liabilities
Net debt included above
Group Cash Flow
Year ended 31 March
Operating cash flow
Capital expenditure
Acquisitions
Other Information
Return on total capital employed (%)
Working capital (days)
Average number of employees
2009
€’m
2010
€’m
2011
€’m
2012
€’m
2013
€’m
6,400.1
6,725.0
8,680.6
10,690.3
12,966.3
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
229.2
(29.2)
(17.7)
182.3
(19.0)
(0.3)
163.0
(32.2)
(0.4)
130.4
142.36
169.13
158.76
177.98
174.48
203.15
122.78
163.51
155.96
209.96
62.34
67.44
74.18
77.89
85.68
2.7
8.5
2009
€’m
2.6
17.7
2.7
15.8
2.1
10.4
2.5
13.3
2010
€’m
2011
€’m
2012
€’m
2013
€’m
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
522.1
886.1
1.0
776.5
1,819.2
4,004.9
726.2
836.9
931.9
1,014.0
1,055.3
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
996.4
22.9
1,930.3
2,949.6
4,004.9
(90.7)
(53.5)
(45.2)
(128.2)
(219.9)
2009
€’m
304.9
57.0
101.7
2009
17.8%
11.9
7,182
2010
€’m
297.8
47.3
133.6
2010
18.4%
4.6
7,396
2011
€’m
269.6
83.4
78.3
2011
19.9%
4.9
7,925
2012
€’m
277.3
70.2
168.1
2012
14.2%
2.5
8,355
2013
€’m
324.5
76.7
206.2
2013
15.6%
2.2
9,153
DCC ANNUAL REPORT AND ACCOUNTS 2013 181
Change in Presentation Currency
On 26 February 2013 the Group announced that from the financial year beginning 1 April 2013 it will be changing the currency
in which it presents its financial results from euro to UK pounds sterling (‘sterling’). To assist shareholders during this change,
comparative financial information for the financial years ending 31 March 2010, 2011, 2012 and 2013 is re-presented in sterling below.
Basis of preparation
DCC plc will present its results in sterling with effect from 1 April 2013. For the financial years ending 31 March 2010, 2011,
2012 and 2013, the Company has presented a condensed Group Income Statement, Group Balance Sheet and Group Cash Flow
Statement as at 31 March for each of these years. This financial information will form the basis of the comparative financial
information expected to be included in the first complete set of financial statements of the Group presented in sterling for the
year ended 31 March 2014.
In order to satisfy the requirements of IAS 21 with respect to a change in presentation currency, the statutory financial
information as previously reported in the Group’s Annual Reports for the years ended 31 March 2010, 2011, 2012 and 2013 has
been restated from euro into sterling using the procedures outlined below:
• assets and liabilities of foreign operations where the functional currency is other than sterling were translated into sterling at
the relevant closing rates of exchange. Non-sterling trading results were translated into sterling at the relevant average rates
of exchange. Differences arising from the retranslation of the opening net assets and the results for the year have been taken
to the foreign currency translation reserve;
• the cumulative foreign currency translation reserve was set to nil at 1 April 2004, the date of transition to IFRS. All
subsequent movements comprising differences on the retranslation of the opening net assets of non-sterling subsidiaries
have been taken to the foreign currency translation reserve. Share capital, share premium and other reserves were
translated at the historic rates prevailing at the dates of transactions; and
• all exchange rates used were extracted from the Group’s underlying financial records.
The exchange rates used were as follows:
Euro/sterling exchange rate
Closing rate
Average rate
2013
2012
2011
2010
0.846
0.815
0.834
0.868
0.884
0.852
0.889
0.887
Overview Business Performance Governance Report Financial Statements Information
182
Information
Change in Presentation Currency (continued)
Condensed Group Income Statement
For the year ended 31 March
Revenue
Operating profit before exceptional items and
amortisation of intangible assets
Net operating exceptionals
Amortisation of intangible assets
Operating profit
Finance costs (net)
Share of associates’ loss after tax
Profit before tax
Income tax expense
Profit after tax for the financial year
Profit attributable to:
Owners of the Parent
Non-controlling interests
Earnings per ordinary share
Basic
Diluted
Adjusted earnings per ordinary share
Basic
Diluted
2013
£’000
2012
£’000
2011
£’000
2010
£’000
10,572,686
9,283,492
7,397,584
5,967,067
186,862
(23,817)
(14,420)
148,625
(15,444)
(259)
132,922
(26,288)
106,634
160,677
(19,415)
(9,882)
131,380
(14,936)
(962)
115,482
(25,997)
89,485
195,682
(10,780)
(9,342)
175,560
(13,806)
(204)
161,550
(37,301)
124,249
171,101
(8,664)
(5,457)
156,980
(10,798)
135
146,317
(29,465)
116,852
106,295
339
106,634
88,948
537
89,485
123,663
586
124,249
116,061
791
116,852
127.17p
126.77p
106.62p
106.34p
148.69p
148.20p
140.87p
140.12p
171.20p
170.66p
141.99p
141.63p
173.12p
172.55p
157.93p
157.09p
DCC ANNUAL REPORT AND ACCOUNTS 2013
183
2013
£’000
2012
£’000
2011
£’000
2010
£’000
441,500
749,317
808
9,478
125,912
1,327,015
389,526
1,139,266
11,794
518,925
2,059,511
-
2,059,511
3,386,526
376,170
654,782
978
5,334
112,185
1,149,449
282,000
1,077,147
3,581
525,376
1,888,104
118,926
2,007,030
3,156,479
349,490
562,134
2,016
8,243
74,563
996,446
219,272
913,989
3,148
618,890
1,755,299
-
1,755,299
2,751,745
318,491
529,273
2,128
10,820
90,649
951,361
208,918
820,044
1,194
635,847
1,666,003
-
1,666,003
2,617,364
14,688
83,032
9,445
(677)
57,017
932
725,514
889,951
2,391
892,342
672,715
13,436
32,897
19,352
17,141
56,558
1,574
813,673
1,463,330
29,304
154,060
2,372
12,044
19,401
1,680,511
-
1,680,511
14,688
83,032
8,367
1,052
55,201
932
680,070
843,342
2,215
845,557
707,452
14,587
26,694
12,296
12,874
71,107
2,050
847,060
14,688
83,032
7,890
878
63,751
932
650,351
821,522
1,974
823,496
673,595
26,636
22,476
17,086
12,598
57,607
2,531
812,529
1,279,102
32,366
59,206
851
8,311
11,198
1,391,034
72,828
1,463,862
1,016,068
52,516
35,827
471
2,747
8,091
1,115,720
-
1,115,720
14,688
83,032
6,706
(214)
61,531
932
574,798
741,473
2,890
744,363
705,884
17,193
20,882
21,070
10,165
43,893
3,271
822,358
924,655
63,769
51,736
495
5,667
4,321
1,050,643
-
1,050,643
2,494,184
2,310,922
1,928,249
1,873,001
3,386,526
3,156,479
2,751,745
2,617,364
Condensed Group Balance Sheet
As at 31 March
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
Overview Business Performance Governance Report Financial Statements Information DCC ANNUAL REPORT AND ACCOUNTS 2013
184
Information
Change in Presentation Currency (continued)
Condensed Consolidated Cash Flow Statement
For the year ended 31 March
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 finance lease liabilities
Increase in interest-bearing loans and borrowings
Outflows
Repayment of interest-bearing loans and borrowings
Repayment of finance lease liabilities
Dividends paid to owners of the Parent
Dividends paid to non-controlling interests
Net cash flows from financing activities
Change in cash and cash equivalents
Translation adjustment
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash and cash equivalents consists of:
Cash and short term bank deposits
Overdrafts
Cash and short term bank deposits attributable to asset held for sale
2013
£’000
2012
£’000
2011
£’000
2010
£’000
264,614
(25,179)
(39,970)
(31,273)
168,192
240,827
(2,409)
(37,390)
(43,272)
229,729
(7,614)
(36,880)
(48,016)
264,200
(11,395)
(14,179)
(18,232)
157,756
137,219
220,394
5,042
-
11,722
25,593
42,357
4,007
11
(1,116)
23,581
26,483
4,760
533
24,229
26,255
55,777
8,723
1,596
734
3,112
14,165
(62,508)
(156,177)
(11,970)
(230,655)
(188,298)
(60,987)
(139,010)
(7,002)
(206,999)
(180,516)
(71,057)
(63,586)
(3,161)
(137,804)
(82,027)
(41,941)
(114,919)
(3,662)
(160,522)
(146,357)
1,702
1,425
-
3,127
-
(564)
(54,480)
(200)
(55,244)
(52,117)
(72,223)
2,891
500,406
431,074
2,060
-
-
2,060
(5,289)
(345)
(54,678)
(170)
(60,482)
(58,422)
(81,182)
(7,069)
588,657
500,406
3,268
-
561
3,829
(18,030)
(1,052)
(49,457)
(187)
(68,726)
(64,897)
(9,705)
(1,948)
600,310
588,657
6,794
918
260,483
268,195
(38,530)
(548)
(46,302)
(244)
(85,624)
182,571
256,608
(5,491)
349,193
600,310
518,925
(87,851)
-
431,074
525,376
(59,005)
34,035
500,406
618,890
(30,233)
-
588,657
635,847
(35,537)
-
600,310
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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